The Court of Appeal in Leadingway Consultants Limited v Ayoub Farid Michel Saab & Anor [2025] EWCA Civ 582 expressed compassion for a 1-day delay, but not a 16-month delay. 

Background

The proceedings were served personally on the First Defendant in Cyprus on 24 March 2022. Since an acknowledgement of service or defence was not filed by 25 April 2022, on 4 August 2022, a default judgment was granted.

Service on the Second Defendant required three extensions of the validity of the claim form and involved four unsuccessful attempts at service in Cyprus. Following an order permitting service by alternative means, service was deemed to have been effected on 30 August 2023.

The Second Defendant filed an acknowledgement of service on 18 September 2023, confirming their intention to challenge jurisdiction. Following an agreed extension, the Second Defendant had until 13 November 2023 to make such an application, which was the maximum extension that could be agreed without court approval.

On 13 November 2023, the Second Defendant applied for a further extension, which was agreed by the Claimant on terms that if the Second Defendant failed to file a jurisdiction challenge within 21 days of the proposed order, he would be debarred from challenging jurisdiction and from defending the claim. The Second Defendant agreed to those terms. Subsequently, an Unless Order was granted on 29 November 2023 in the form agreed between the parties;

“Unless the Second Defendant files an application pursuant to CPR Part 11 disputing the Court’s jurisdiction within 21 days, by 4.30pm, of the date of this order the Second Defendant will be barred from filing any application to dispute the Court’s jurisdiction and/or defending the Claim and the Claimant will be entitled to apply for Judgment in default without further order of the Court”

Despite the Order being dated 29 November 2023, it was sealed on 30 November 2023 and subsequently expired at 4.30pm on 20 December 2023. The Second Defendant filed an application on 21 December 2023 with an explanation from their instructing solicitors that the failure to comply “arose due to an innocent mistake…in counting the days for compliance from the date of the seal, rather than the date of the order itself..”

The application notice of 21 December 2023 also included an application by the First Defendant to set aside the default judgment and a challenge to the jurisdiction by him.

Once the Claimant’s solicitors identified that the Second Defendant’s application was out of time, they responded with a further application on 29 December 2023, seeking an extension, to which the Claimant further responded with an application for Default Judgment.

The First Defendant said he “vaguely” recalled being served with the claim form but that he was “extremely busy with four ongoing litigation matters”. The Second Defendant explained that the time extensions were required “due to difficulties my uncle and I experienced in retaining solicitors and Counsel in England”.

The appeal against the relief to the Second Defendant

The Court of Appeal accepted that the Judge was right to focus primarily on the non-compliance, the reason for it and its effect. The Court saw no error in the Judge’s approach and dismissed this aspect of the appeal.

However, the Court noted that the Judge did not consider the fact that the Unless Order failed to comply with the requirement of CPR PD40, para 8.2, to the extent that it did not set out the specific date by which the application must be filed. Whilst the Second Defendant apportioned this blame on the Claimant and its solicitors, the Court disagreed, submitting that the blame must be shared, given the Second Defendant revised the terms of the Order with the assistance of their legal representatives. The Court considered this to be a significant factor, on the basis that if the Order had clarified the deadline, the mistake probably would not have occurred.

Despite this, the Court determined that because the Second Defendant was only one day late, it was well within the reasonable scope of the Judge’s discretion for him to decide that it was just to relieve him from sanctions.

The appeal against setting aside judgment against the First Defendant

The First Defendant argued that the Judge’s brief reasons for setting aside judgment in the first instance suggested that the Judge applied “the Co-Defendant principle” derived from Hussain v Birmingham City Council and anor [2005] EWCA Civ 1570, submitting that the court is required to attach less weight to promptness in setting aside a default judgment where the same claim would continue against a co-defendant in any event.

The Court did not agree with this interpretation ,emphasising that the need to file applications promptly applies with full force, perhaps even more so if the proceedings against other defendants are progressing in the interim, and setting aside judgment will involve delay and disruption. The First Defendant had a regular judgment against him for 16 months by which point the Second Defendant had only just reached the point of a jurisdiction challenge.

Whilst the Judge in the first instance exercised his discretion to set aside judgment, the Court does not consider that any factor was identified which could reasonably outweigh the fact that the First Defendant did not challenge the judgment against him for 16 months without any good reason for that failure. Therefore, the appeal was allowed.

Significance

This judgment reinforces the importance of ensuring court orders are explicitly clear and that promptness is a crucial factor when determining an application to set aside default judgments.