The High Court has granted relief from sanction in the recent case of Newland Shipping and Forwarding Ltd. –v- Toba Trading & Ors  EWHC 1986 (Comm); despite finding the non-compliance was non-trivial and deliberate and; the Defendant had delayed in making an application seeking relief.
One of the Defendant’s to the action had failed to file an Acknowledgment of Service. The Claimant obtained default judgment and it was this default judgment the Defendant sought relief against.
Mr. Justice Males noted that CPR 13.3 cross-referred to CPR 3.1(3), and he stated that: “This indicates, to my mind, that when considering the exercise of discretion under CPR 13.3, the court should bear in mind that the entry of a default judgment may operate as an extreme sanction and that justice may be done by making the setting aside of such a judgment subject to conditions… That may represent a more proportionate sanction.”
What makes this case interesting is that Males J noted that; although the setting aside of the default judgment would have no real adverse impact on the overall progress of the action, as the prospects of successfully defending the action were “borderline”, “to maintain the judgment in default deprives him [Defendant] of any prospect of vindicating his defence and clearing his name, and importantly the judgment may well be for an excessive sum to which the claimant is not fully entitled”.
Males J concluded the “usual expectation” of a sanction in line with the outcome in Mitchell was not appropriate but, he did make a conditional order requiring a $4.75m payment into court, the payment of an outstanding costs order, together with costs of the application payable within 21 days; failing which the default judgment would stand.