How Can Defendants Set Aside A Default Judgment?

If your business is facing a default judgment, you might be wondering whether you can set it aside. A default judgment is when the courts make an automatic decision about a claim because the defendant has failed to respond within the allocated timeframes. If you receive a default judgment, you will need to act fast. This article explains what is a default judgment and how you can set aside a default judgment. 

What is a Default Judgment?

Default judgment is when the courts make an automatic decision about a claim because the party defending a claim has failed to file:

• an acknowledgement of service of the claim; or 
• a defence of the claim within the timeframes the Civil Procedure Rules set out. 

As a result, the court will not hear any evidence or arguments from the defendant. Commonly, claimants obtain default judgment for debt claims against a defendant. This means you should:

• comply with the judgment by paying the sum demanded; or 
• apply to vary the judgment’s terms if you cannot afford to pay. 

Alternatively, if you disagree with the default judgment and want it to be reversed, you can apply to set it aside. 

How Can Defendants Set Aside a Default Judgment?

You will need to make a formal application to set aside a default judgment. The Civil Procedure Rules (‘CPR’) allow the court to set aside default judgments on:

• mandatory grounds, meaning the default judgment was granted incorrectly; or
• discretionary grounds, meaning the default judgment was granted correctly, but the court decides that it should be set aside, such as where the defendant can show it had a very good chance of successfully defending the claim. 

There are several issues to consider when applying to set aside a default judgment. Some of the key issues are highlighted below. 

1. Gather Evidence

Consider your reasons for the application and gather any relevant evidence. For example, you should collate evidence to show why you did not respond to the claim within the required time limits. It is also advisable to let the claimant know you will be making your application and seek their consent to set aside the default judgment. This could make the process faster and reduce costs.

2. Apply to the Court 

You must then send an application form (form N244) to the court, together with the required fee. Your application will need to state the grounds for applying for default judgment. You will need to attach a draft order to your application. You will also need to include supporting evidence, showing your reason to set aside the judgment. 

For example, your reason for the application might be:

• you did not receive the claim form; 
• the claimant applied for the judgment too early; or
• you believe you have a real prospect of defending the claim.  

The court will confirm receipt of your application and usually schedule a hearing. 

3. Send Your Application Form to the Claimant 

You should then send your application to the claimant (or their legal team) as soon as possible and within the timeframes prescribed. This is usually three days before the court is to deal with the application.

4. Hearing

A hearing judge will then consider your application. Both parties (or their legal representatives) will attend the hearing. The judge will hear the arguments and decide whether the default judgment should be set aside. The claimant might oppose your application and make its own arguments as to why the default judgment should remain in place. 

If the court agrees to set aside the default judgment, the judgment will be cancelled. The claimant will not be able to enforce it, and the claim will proceed as normal. However, if the court does not set the default judgment aside, the claimant will be able to enforce it, and you will need to comply with it. 

Tips for Setting Aside a Default Judgment

Applying to set aside a default judgment can be a complicated and stressful process for defendants. If you are a defendant, you should consider the following:

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Key Takeaways

Applying to set aside a default judgment is a complicated process. Various steps need to be followed, and preparing your arguments and evidence is vital. The court will only set aside a default judgment in specific and very limited circumstances. If you are unsure about any aspects of the application process, you should seek urgent legal advice on the process and your options. 

If you need legal advice on setting aside a default judgment, our experienced disputes lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page