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If your business is embroiled in a commercial dispute, the court may make a ‘default’ judgment. A default judgment is when the courts make an automatic decision about a claim without the case going to trial. If you do not acknowledge a service of claim or fail to file a defence in time, your business could face a default judgment. As a result, your business can be liable for the debt in issue without the claim going to trial. This article will explain a default judgment and what it means for the party defending a claim.
When Can a Default Judgment Arise?
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.
Usually, a court can make a default judgment without a hearing or further notice given to the defendant. As part of the process, the court will not assess the claim nor its merits. A default judgment will simply be made because the defendant failed to respond to the claim correctly.
Default judgments can arise in many contexts, such as where:
- defendants have no knowledge of the claim, such as when it was sent to the wrong address;
- defendants fail to respond to claims because they are too busy;
- defendants fail to understand what they need to do in response to a claim; and
- there are administrative errors in the court process.
What Can Defendants Do About Default Judgments?
Being the recipient of a default judgment can be extremely worrying. If you receive one, you must comply with it. Depending on the judgment, you will likely need to:
- make payment if the judgment requires you to settle a debt; or
- apply to get the judgment ‘set aside’.
1. Making Payment
If you agree to pay the debt but cannot afford to, you may be able to ask to vary the terms of the judgment. Once default judgment has been made, the party who issued the claim against you will have various options to enforce it.
For example, they could instruct bailiffs to help recover the debt or even initiate insolvency proceedings against you. As a result, the court’s decision could severely affect your credit score.
2. Set Aside the Default Judgment
You can make an application to set it aside. In simple terms, setting aside means cancelling the judgment made against you. The courts have the power to set aside default judgments in certain circumstances if there is a good reason to do so. For example, default judgments could be set aside if you can show that:
- you do not owe the money; or
- there was a defect in the service of the claim made.
Applying to set aside the court’s decision can also be extremely complicated. Applications should be made urgently. As part of the process, you will need to make an application and prepare supporting evidence. You or your legal representatives will also need to attend court as part of the process.
If possible and within your budget, you should take urgent legal advice on default judgments. Legal advice from the outset can help you better understand your options.
This guide outlines how to resolve commercial disputes.
Key Takeaways
A court can make a default judgment when a defendant to a claim has not responded within the required deadlines. Default judgments are extremely serious, and defendants must act fast when it is made against them. There are limited options for resolving default judgments, such as applying to set it aside. However, applying to set aside a default judgment is very challenging. If you receive a default judgment against you or your business, you should take immediate action. Given the serious implications, you should seek legal support if you need help understanding the procedures involved.
If you need legal advice regarding 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.
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