In Stanley v London Borough of Tower Hamlets  EWHC 1622 the High Court considered an application to set aside a judgment entered in default against the defendant. The claimant served proceedings on the defendant at its offices by post two days after the UK entered lockdown in response to the coronavirus pandemic. In setting aside the default judgment, the Court noted that the world had “shifted on its axis” and it was incumbent upon legal practitioners to recognise the change in circumstances.
The claimant issued proceedings against the London Borough of Tower Hamlets (the Council) in December 2019 for an alleged breach of the General Data Protection Regulation (or GDPR). The claimant’s solicitor sought to engage the Council in pre-action correspondence, but the Council did not respond. In February 2020, the claimant’s solicitor telephoned the Council and was informed by a case handler that the Council would only accept service by post.
On 23 March 2020, the UK Government placed the UK into lockdown. The Council’s offices were at that time effectively closed, with only a skeleton staff attending, while most staff worked from home. Two days later, the claimant served the proceedings on the Council by post at its offices. As the Council did not respond to the proceedings by filing an acknowledgment of service or a defence, judgment in default was entered against the Council on 17 April 2020.
In applying to set aside the default judgment, the Council filed evidence that no one in its legal department had received the proceedings in the period between 25 March and 17 April 2020.
In considering the evidence filed in support of the application, the Court was satisfied that the default judgment should be set aside on multiple grounds under CPR r 13.3. Of particular note, the Court concluded there was “some other good reason why” the default judgment should be set aside. This was because by the time the proceedings were served on the Council, many offices across the UK had been required to close and rapidly adjust to new ways of working. Although the Council’s failure to respond to the claimant’s pre-action correspondence was not acceptable, the claimant’s solicitor, as a responsible solicitor and officer of the court, ought to have contacted the Council to confirm how proceedings could be served in light of the significant change in circumstances.
The Court held it was not fair or reasonable for the claimant to rely on the Council’s previous request for proceedings to be served by post given circumstances had changed so dramatically, and it would be unconscionable to allow the claimant to benefit from the emergency measures put in place by the UK Government in response to COVID-19.
The Court also had regard to CPR PD 51ZA which concerns extensions of time limits and other matters in light of COVID-19. The Court held that but for the lockdown, the Council would have responded to the proceedings, and the claimant’s solicitor was at fault for failing to consider whether it was still reasonable to serve proceedings by post.
The decision is in line with others that have applied CPR PD 51ZA (COVID-19 special measures), with the Courts being sympathetic to issues faced by parties arising out of the coronavirus pandemic. In particular, the Courts have been concerned to ensure that rules are not applied too strictly in circumstances where that could lead to injustices (see, for example, Muncipio de Mariana v BHP Group Plc  EWHC 928).
As the UK moves out of lockdown and with offices starting to reopen, this decision gives food for thought. CPR r 13.3 provides the Courts with a wide discretion in considering whether or not to set aside judgments entered in default. In particular, the Courts can set aside default judgments where there is a “good reason” to do so. Courts can and often do exercise that wide discretion to set aside default judgments, in particular where it is apparent there has been some kind of oversight on the part of the defendant.
Whilst entering judgment in default against a defendant can be worthwhile where there is no oversight but rather a defendant is not engaging, care should be taken to ensure that judgment in default is not applied for too readily in circumstances where it can result in wasted time and increased costs. In that regard, claimants entering judgment in default are at risk of adverse costs awards, as in this case with the Council being .