Default Judgment: When is a Judgment Entered?

A claimant may obtain a default judgment against a defendant who has not responded to an issued claim.

A default judgment is a judgment awarded at a very early stage and, due to the defendant’s lack of engagement and cooperation, will usually grant the claimant full recovery of the sums claimed plus interest and costs. Due to this, it is a very attractive proposition to a claimant, especially with the potential time and court fee savings in comparison to taking the matter to trial.

However, it is not always possible to obtain a default judgment and there are conditions under the CPR that must be met. Under CPR 12.3, a claimant may obtain a default judgment only if at the date on which judgment is entered, the defendant has not filed an acknowledgment of service or a defense and the relevant time limits for doing so have expired.

In the recent case of Galliani and another [2023] EWHC 3306 (Comm), the London Circuit Commercial Court provided clarification as to when judgment is “entered” for the purposes of obtaining a default judgment.

In short, the Court in Galliani had to consider the situation where the defendant had filed an Acknowledgement of Service (“AOS”) on the same day as the Court had made an order for default judgment but a day before that order was sealed.

The timeline in Galliani was as follows:

·       The defendant had until 1 June to file its AOS.

·       On 2 June, the claimant applied for default judgment.

·       On 13 June at 12:49, the defendant filed its AOS.

·       On 13 June at an unknown time, the Court ordered default judgment.

·       On 14 June, the order granting the default judgment was sealed.

So, when was judgment “entered” for the purposes of CPR 12.3 and was the default judgment correctly granted by the Court?

In looking at what constitutes “entry of judgment” the judge not only considered the current wording of the CPR but also case law dating back to 1889. This case law stated that: “Pronouncing judgment is not entering judgment; something has to be done which will be a record…”. In looking at the wording of the CPR, the judge explained that entering a judgment is when the judgment is finalised, which is now linked to the sealing of an order/judgment.

Taking this into account, it was held that the default judgment was incorrectly entered and should be set aside. It was held that the Court should not have drawn up the order and sealed it given the Defendant had filed an AOS which confirmed the intention to defend the claim.

It also confirmed that “entry of judgment” to obtain a default judgment is time sensitive and all steps needed to perfect and finalise the judgment must be taken before the AOS is filed in Court. Moving forward, it will be interesting to see how other courts apply this and whether any nuisance is introduced to the timeline for entry.

Conclusion

The Galliani case demonstrates the potential obstacles and hurdles a claimant must overcome should it wish to try and obtain a default judgment. However, notwithstanding the decision, it is not impossible for a claimant to obtain such a judgment and it remains an important tool in a claimant’s arsenal to encourage a defendant to engage with the issued claim.

If you or your business has any queries concerning a potential or ongoing dispute or requires legal advice please do not hesitate to reach out to Geldards LLP’s specialist Commercial Dispute Resolution teams who can assist with all your litigation queries and concerns.