The circumstance in which a default judgment can be set aside

The default judgment is a powerful tool for claimants, however consideration must be given to the circumstances in which a default judgment could be set-aside. A defendant has 14 days to file an acknowledgment of service or defence from the date of the particulars of claim being deemed served. In the absence of filing, a claimant has the right to request judgment by default.

When considering a set-aside application, the court will take into account whether the application has been made promptly and consider the following circumstances:

• if judgment has been entered wrongly
• other circumstance in which the court has discretion to set aside or vary the default judgment

“Wrongly entered” default judgments

The court must set aside a default judgment that has been wrongly entered even if there is no defence on the merits. This will occur in the following circumstances:

• An acknowledgment of service or defence has been filed within the time limits set.
• An application has been made for a summary judgment before default judgment was entered.
• Before default judgment was entered, the defendant filed and served on the claimant an admission of liability to pay all the money claimed in a money claim, together with a request for time to pay.
• The entirety of the claim was satisfied before judgment was entered.

Court’s discretion to set aside default judgment

The court has discretion to set aside or vary a default judgment in the following circumstances:

• The defendant has a real prospect of successfully defending the claim; or
• It appears to the court that there is some other good reason why:
  • The default judgment should be set aside or varied; or
  • The defendant should be allowed to defend the claim.

In other words, it is not sufficient for the defendant to show that he has an arguable defence, but must demonstrate that he has a sufficient real chance of successfully defending the claim. The “some other good reason ground” is a free-standing alternative ground which offers the court a broad discretion. If the court is likely to grant the application to set the judgment aside, the claimant ought to consider consenting to the judgment being set aside before the application is heard. The reason being, opposing an application might be costly and an adverse cost order might be awarded.