In this case, the Court of Appeal considered the approach to applications for relief from sanctions and setting aside a judgement in default in a case where the defaulting party delayed in applying for relief, but was alleging that the claim was fraudulent.
Allowing the Claimant’s second appeal, the court dismissed the insurer’s applications for relief. Cases where fraud is alleged are not exempt from the application of the rules and the test in Mitchell and Denton. A default judgement will not be set aside as a matter of course because a claim is potentially fraudulent.
Going through the Denton guidance, it was accepted that the breach was serious or significant, there was some excuse for the failure to act but there was inexcusable delay in making the applications.
The applications failed the last stage in Denton. When considering all the circumstances of the case and the factors in CPR 3.9(1)(a) and (b), Vos LJ indicated that insurers, as professional litigants, “are in a particularly good position to conduct litigation efficiently and proportionately and to comply with rules and orders”. The fact that the insurer was not a party to the claim was no excuse, the insurer should have taken positive steps to protect its interests from the moment it admitted liability.
Vos LJ, remarked that the decision ‘may seem harsh’ but explained that “Mitchell and Denton represented a turning point in the need for litigation to be undertaken efficiently and at proportionate cost, and for the rules and orders of the court to be obeyed” and insurers, as professional litigants, were “particularly qualified to respect this change and must do so”.
It is a reminder of the importance of acting promptly in an application for relief from sanctions and an application to set aside judgment.
Emily Davies / 4th Apr 2016
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