Conflicting First Instance Decisions On Whether Default Judgment Can Be Granted Where Acknowledgement Of Service Filed Late

In a recent judgment, the High Court rejected an application for default judgment on the basis that the defendant's acknowledgement of service, though late, had been filed shortly before the application: Cunico Resources NV v Daskalakis [2018] EWHC 3382 (Comm).

The decision turned on the interpretation of CPR 12.3(1), which sets out the conditions to be satisfied before a claimant may obtain judgment in default of an acknowledgement of service. This provision has been the subject of conflicting first instance decisions and we understand it is under review by the Civil Procedure Rules Committee.

In the present case, the judge rejected the submission that default judgment may be granted where an acknowledgement was filed late, even though it was filed before judgment was entered or even before the application for default judgment was made. This contrasts with the most recent decision on the point, in McDonald & McDonald v D&F Contracts Ltd [2018] EWHC 1600 (TCC), which supports the opposite conclusion.

In the present case it was not necessary for the judge to decide whether default judgment could have been entered if the acknowledgement was filed after the application but before judgment. The judge said his own view was that it could not, but he would have decided otherwise in light of the preponderance of views in the prior case law.

In practice, given the unsettled state of the law in this area, and pending clarification by the Rules Committee or a Court of Appeal judgment, defendants should take care to file timely acknowledgements of service and claimants seeking default judgment should act quickly. Where default judgment is entered, a defendant can apply to have it set aside, but the burden of proof will be on the defendant to show that it has a real prospect of successfully defending the claim, or that there is some other good reason why the judgment should be set aside.

Francesca Ruddy, an associate in our dispute resolution team, considers the decision further below.

Background

The claimant, a Dubai-based trading company, brought a claim against two Swiss-domiciled individuals, who used to work for the claimant's group of companies.

The first defendant failed to acknowledge service of the claim within the required time limit. It eventually filed a late acknowledgement of service, almost a month after the deadline and just one hour before the claimant applied for default judgment under CPR 12.3(1), which provides that:

The claimant may...