Find out what to do if your company receives a Judgment in Default. Keep reading to learn from Kim’s predicament and our civil litigation solicitor’s advice. But, first things first, what is this kind of judgment?
What is a Judgment in Default?
A Judgment in Default or Default Judgment is a decision made without a trial when a defendant fails to respond to a claim within the strict timeframes required by the Court. This is an administrative process that does not take into account the merits of the claim.
Obtaining a Default Judgment
To obtain a default judgment, certain conditions under The Civil Procedure Rules 1998, Part 12 (CPR 12) must be met. The defendant must have been properly served with the claim, failed to respond to the claim within the relevant time period, and not submitted an acknowledgement of service or defence. Once these conditions are satisfied, the claimant can apply for a default judgment through a simple request or a formal application under CPR 12, depending on the claim type and service method used.
The Problem
As the Company Secretary for a main contractor, I am seeking your assistance with a problem we are facing. We recently received a Judgment against us through the mail, and I am uncertain as to how we ended up in this situation.
In early 2015, we were working on a retail development project in Leicester and had just hired a painting contractor. The project was originally scheduled to be completed by July 2015, but due to the painting contractor’s fault, it was delayed by 9 weeks. We deducted a sum of money from the painting contractor’s account to cover the cost of the delay, which included liquidated damages.
In December 2015, we received a Court claim from the painting contractor for the unpaid amount on their invoices, but they did not account for the cost of the delay. We acknowledged the claim but overlooked filing a defence and counterclaim. My question is, are we now required to pay the Judgment?
Kim, Kibworth
Our Response
Hello Kim. The ruling you have received is commonly referred to as a Judgment in Default. In essence, the painting contractor secured the Judgment in Default since your company failed to submit a defence and/or counterclaim. You do have the option to dispute this decision, but it is imperative that you act swiftly and demonstrate to the court that you took prompt action as soon as you were made aware of the Judgment.
Setting Aside the Judgment
To cancel or set aside the default Judgment, you must file an application with the court using form N244. Along with the application, you must submit a witness statement that details the supporting evidence, as well as a draft order specifying the relief sought from the court. Additionally, your application should explain the grounds on which you are seeking to set aside the Judgment.
There are mandatory and discretionary grounds for setting aside the Judgment. The mandatory grounds are outlined in Part 13.2 of the CPR, which address situations such as when a defence has been filed, when the defendant has requested the claim to be dismissed, and when the entirety of the claim was satisfied prior to the entry of Judgment.
The discretionary factors consist of the applicant’s ability to demonstrate a genuine chance of successfully defending the claim, or if the court deems that there exists some valid justification for permitting the defendant to defend the claim.
Based on your outline, the basis for submitting the application would be at the court’s discretion. Nonetheless, if you are able to demonstrate in your witness statement that you have a viable defence, you will have a higher likelihood of a successful application. However, your outline suggests that you possess a counterclaim rather than a defence. Thus, if your application is not approved, you have the option to initiate a fresh process to claim for damages incurred due to the delay.
Judgment in Default Outcomes
The potential results of the application include setting aside the Judgment, denial of the application, or issuance of a conditional order. In situations where the application was filed belatedly but the court is convinced of the existence of a genuine defence, a conditional order may be issued. Under a conditional order, the applicant may be obligated to deposit the sum of the Judgment with the court or pay some or all of the Claimants costs.
It is important to keep in mind that if the application is dismissed, you will be liable for the other party’s expenses.
The guidance given is meant to serve as a general overview and should not be interpreted as offering a conclusive legal analysis.
If your business has received a default judgment, get in touch with our Civil Litigation solicitors today. Time is of the essence when defending legal proceedings for outstanding debts. Contact us at info@witansolicitors.co.uk.
