Judgement in Default

By November 25, 2016Problem Solved
[ultimate_heading main_heading=”Problem” main_heading_color=”#101010″ sub_heading_color=”#666666″ alignment=”left” main_heading_font_size=”desktop:18px;” margin_design_tab_text=”” main_heading_margin=”margin-bottom:15px;” sub_heading_font_size=”desktop:13px;” sub_heading_line_height=”desktop:20px;”]I am the Company Secretary for a main contractor and hope that you may be able to assist with a problem. I am not quite sure how we got into this situation, but we have just received through the post a Judgement against us.

Early in 2015, we were working on a retail development in Leicester, and had just engaged a painting contractor. At the time, the project was due for completion in July 2015, but it ended up being delayed by 9 weeks. The delay was solely the fault of the painting contractor, and we set-off a sum of monies against the painting contractor’s account for the cost of the delay, including liquidated damages.

In December 2015, we received a claim via the Court from the painting contractor. The claim was for the monies that was unpaid on its invoices, but made no allowance for the cost of the delay. We filed an acknowledgement of service but, due to an oversight, we did not file a defence and / or counterclaim. Do we have to pay the judgement now?

Kim, Kibworth[/ultimate_heading][ultimate_heading main_heading=”Response” main_heading_color=”#101010″ sub_heading_color=”#666666″ alignment=”left” main_heading_font_size=”desktop:18px;” margin_design_tab_text=”” main_heading_margin=”margin-bottom:15px;” sub_heading_font_size=”desktop:13px;” sub_heading_line_height=”desktop:20px;”]Hello Kim. The judgement that you received is known as a judgement in default. Essentially, the painting contractor obtained the judgement in default of your company failing to file a defence and / or counterclaim. You are able to challenge this, but you must act quickly, showing the court that you acted once you became aware of the judgement.

You will need to make an application to the court to set aside (cancel) or vary the default judgement. Accompanying the application must be a witness statement (which sets out the supporting evidence) and a draft order (saying what you want the court to do). Your application must also outline what grounds you have to set aside the judgement.

There are mandatory and discretionary grounds. The mandatory grounds are found at Part 13.2 of the Civil Procedure Rules (“CPR”) and include where a defence has actually been filed, the defendant has made an application for the claim to be struck out or the whole of the claim has been satisfied before judgement was entered. The discretionary grounds include if the applicant can show that it has a real prospect of successfully defending the claim or, it appears to the court that there is some other good reason why the defendant should be allowed to defend the claim.

From your outline, the ground for making the application would be a discretionary one. However, you will have more of a chance of being successful with your application if you can show, via your witness statement, that you have a real prospect of defending the claim (ie, you have a defence). That said, from your outline, it appears that you do not have a defence but a counter-claim. If you are therefore unsuccessful with your application, you can always commence a new claim for the damages of the delay.

The possible outcomes are that a) the judgement is set aside; b) the application is refused; and c) the court makes a conditional order. A conditional order will usually be made if, for example, the application was made late but the court is satisfied that there is a bona fide defence, and the applicant will be made to pay the amount of the judgement into court.

Also you must remember that if your application is not successful, you will be responsible for paying the other side its costs.

© Michael P. Gerard
February 2016

The advice provided is intended to be of a general guide only and should not be viewed as providing a definitive legal analysis.

Author background

Michael is a Solicitor, Chartered Builder, Registered Construction Adjudicator & Accredited Expert in quantum and planning matters. He is Managing Director of Michael Gerard & Co., and a Director of Cato Solicitors.[/ultimate_heading]

John Cato

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