Responding to Proceedings & Judgment in Default PDF

Responding to Proceedings and Judgment in Default 93 CHAPTER 6 Responding to Proceedings and Judgment in Default 6.1 Introduction 93 6.2 Computation of time...

Responding to Proceedings and Judgment in Default 93 CHAPTER 6 Responding to Proceedings and Judgment in Default 6.1 Introduction 93 6.2 Computation of time 94 6.3 Acknowledgement of service (Part 10) 94 6.4 The defence (Part 15) 96 6.5 Admissions (Part 14) 97 6.6 Default judgments (Part 12) 99 6.7 Automatic stay 101 LEARNING OUTCOMES After reading this chapter you will have learned: how the time to take a particular step in litigation is calculated the different ways in which a defendant may respond to the service of proceedings what steps a claimant should take if the defendant admits the claim how to enter or apply for default judgment. 6.1 INTRODUCTION What is the first step that a defendant should take in court proceedings? It is when served with the particulars of claim that a defendant must respond, otherwise the claimant will be able to ‘win by default’. So where the defendant is served with a claim form marked ‘particulars of claim to follow’, there is nothing for the defendant to do but await service of the particulars of claim. The defendant will in these circumstances receive Form N1C (Notes for Defendants) explaining this. See the copy at Appendix A(2). When either the court or the claimant serves the particulars of claim on the defendant, the defendant must also be sent Form N9 (the response pack). A copy of this form appears at Appendix A(3). The response pack explains to the defendant how they should respond to the claim and the time limits for doing so. There are three ways in which a defendant may respond, namely: (a) by filing an acknowledgement of service; (b) by filing a defence; (c) by filing an admission. See further the flowcharts in Appendix C(6)–(10). Before considering these steps in turn, it is important to be clear about the rules relating to the calculation of the time for doing any act, such as filing an acknowledgement of service and/or a defence. As we shall see at 6.6, if the defendant does not respond within the appropriate time period, the claimant may enter judgment ‘in default’ of the defendant filing an acknowledgement of service and/or a defence. It is therefore essential that a party and their legal adviser are clear about the meaning of the various time periods prescribed in the rules. 94 Civil Litigation 6.2 COMPUTATION OF TIME Rule 2.8 sets out how to calculate any period of time for doing an act which is specified in the Rules, a Practice Direction, or by a judgment or order of the court. If the time for doing an act ends on a day when the court office is closed, the time does not actually expire until the end of the first day on which the court office is next open. Any order imposing a time limit should, wherever practicable, give a calendar date, ie the day, month, year and deadline time for compliance, for example ‘by [day], [date] [month] [year], by 4pm’. Any period of time expressed as a number of days will be a period of ‘clear days’, as defined by r 2.8. EXAMPLES 1. On 5 October, the defendant is served with the particulars of claim. The defendant has 14 days (not including the day of service of the particulars of claim) within which either to acknowledge service or file a defence. The deadline for doing so is therefore 19 October. 2. An application to the court has been fixed for hearing on a Monday. Generally, the notice of the application must be served on the other party at least three days prior to the hearing. The notice must be served on the preceding Tuesday (ie, where notice of a hearing is being given, both the day on which notice is served and the day of the hearing are excluded in calculating the clear days.) However, it should be noted that in computing a period of five days or less, any weekend or bank holiday must be ignored. 3. Month means a calendar month. So if a claim form for service within the jurisdiction is issued on 5 May, it must be served no later than four months later, namely by 5 September. 6.3 ACKNOWLEDGEMENT OF SERVICE (PART 10) 6.3.1 Time limits When served with the particulars of claim, the defendant usually has a choice of what to do: they may either simply acknowledge service, or they may file a defence. The defendant may acknowledge service if they are unable to file a defence in time, or if they wish to contest the court’s jurisdiction. If the defendant fails to respond within a set time, the claimant can usually enter judgment. This is because r 10.2 provides that: If— (a) a defendant fails to file an acknowledgment of service within the period specified in rule 10.3; and (b) does not within that period file a defence in accordance with Part 15 [see 6.4] or serve or file an admission in accordance with Part 14 [see 6.5], the claimant may obtain default judgment if Part 12 allows it [see 6.6]. The words ‘within that period’ in (b) indicate that judgment in default of both an acknowledgement of service and a defence is calculated by reference to the following time period prescribed by r 10.3: (1) The general rule is that the period for filing an acknowledgment of service is—  Responding to Proceedings and Judgment in Default 95 (a) 14 days after service of the particulars of claim where the defendant is served with a claim form which states that particulars of claim are to follow; and (b) 14 days after service of the claim form in any other case. We take the view that r 10.3(1)(a) applies to any situation where particulars of claim are served after the claim form has already been served. So, if a claim form states that particulars of claim are to follow but the particulars of claim are actually served with the claim form (for example, both documents are handed to the defendant at the same time or posted in the same envelope), r 10.3(1)(b) applies and the defendant has 14 days from the day of deemed service of the claim form to file an acknowledgement, defence or admission. These rules may be summarised as follows: When default judgment can be entered Claim form served with particulars of claim 15th day after (deemed) service of the claim form Particulars of claim served after claim form 15th day after (deemed) service of the served particulars of claim It can be seen from the above table why the defendant must be careful to calculate correctly the 14 days they have to respond; and equally why a claimant must accurately work out the first available date they can enter default judgment if the defendant fails to respond. This is because the date of deemed service of the claim form (see 5.5.5) may be different from the date of deemed service of particulars of claim (see 5.7.2). 6.3.2 Completing the acknowledgement form The acknowledgement of service form is part of the response pack (Form N9). On the form, the defendant should set out their name in full; and if their name has been incorrectly set out in the claim form, it should be correctly set out on the acknowledgement of service form, followed by the words ‘described as’ and the incorrect name (eg, ‘John Patrick Schiller described as Pat Schiller’). The defendant’s address for service, including full postcode, which must be within England or Wales, must be stated. This will either be the defendant’s residence or business address, or, if the acknowledgement of service form is signed by their solicitor, their solicitor’s address. The defendant must state on the form whether they intend to defend all of the claim, part of the claim, or wish to contest jurisdiction. The form must be signed by the defendant or their solicitor. The defendant must file the completed acknowledgement of service form at the court where the claim was issued. The court will then notify the claimant in writing. 6.3.3 Defendant is a partnership CPR, r 10.5(5) provides that where a claim is brought against a partnership, service must be acknowledged in the name of the partnership on behalf of all persons who were partners at the time when the cause of action accrued. The acknowledgement of service may be signed by any of those partners, or by any person authorised by any of those partners to sign it. 6.3.4 Defendant is a registered company What if the defendant is a registered company? Pursuant to r 10.5(3) and (4), a person holding a senior position in the company, such as a director, the treasurer, secretary, chief executive, manager or other officer, may sign the acknowledgement of service, provided they state the position that they hold. 6.3.5 Defendant disputes jurisdiction By r 11, if a defendant wishes to dispute the jurisdiction of the court, they must indicate this on the acknowledgement of service. After filing the acknowledgement of service, they must 96 Civil Litigation then challenge the jurisdiction by making an application within 14 days or they will be treated as having submitted to the jurisdiction. The application to the court to dispute the court’s jurisdiction must be supported by evidence as to why England and Wales is not the proper forum for the case. If the court grants the defendant’s application and finds that the claim should not have been brought in England and Wales, service of the claim form will usually be set aside. In effect, that brings the proceedings to an end. If the court refuses the defendant’s application then the original acknowledgement of service ceases to have effect and the defendant must file a further acknowledgement within 14 days or such other period as the court may direct. 6.4 THE DEFENCE (PART 15) 6.4.1 Time limits As we have seen, a defendant can respond to proceedings first by acknowledging service (see 6.3) and then filing a defence, or by just filing their defence. What is the time limit, given the choice? That is laid down by r 15.4, as follows: (1) The general rule is that the period for filing a defence is— (a) 14 days after service of the particulars of claim; or (b) if the defendant files an acknowledgment of service under Part 10, 28 days after service of the particulars of claim. Arguably (a) above is inconsistent with the situation addressed at 6.3.1 where the claimant serves the claim form with particulars of claim. In those circumstances, r 10.3 suggests the defendant has 14 days after (deemed) service of the claim form to respond. We take the view that r 15.4 sets out the general position but r 10.3 applies in respect of default judgment. The point is not academic since the calculation of the day of deemed service of a claim form or particulars of claim (see 5.5.5. and 5.7.2 respectively) will not always be the same. However, (b) above is clear, and if the defendant files an acknowledgement of service then they have 28 days after (deemed) service of the particulars of claim within which to file a defence. EXAMPLE Assume a claim form with particulars of claim is deemed to have been served on Wednesday, 1 June (as to deemed service, see 5.7.2). By what date must the defendant acknowledge service and indicate an intention to defend or file a defence? The defendant must do so within 14 days of service, not including the day of deemed service. So, they must act by Wednesday, 15 June (otherwise the claimant can enter default judgment on Thursday, 16 June: see 6.6). If they choose to file an acknowledgement in time, they then have until Wednesday, 29 June to file their defence. 6.4.2 Extending the time limit The time for filing a defence may be extended by agreement between the parties for a period of up to 28 days. If the parties do reach such an agreement, the defendant must give the court written notice of the agreement (see r 15.5). Any further extension can only be authorised by the court. The court will usually grant an extension, but if the claimant has complied with the Practice Direction on Pre-action Conduct and Protocols or an approved pre-action protocol, such extension will probably be for a short period of time and will be granted at the defendant’s expense. If, however, the claimant did not so comply, the court is likely to conclude that the defendant should be granted a significant extension of time. If the claimant has unreasonably refused to grant a voluntary extension of time and/or has opposed the defendant’s application to the court unreasonably, the court may well order the claimant to pay the defendant’s costs of seeking the extension.  Responding to Proceedings and Judgment in Default 97 The court will expect the party applying for an extension to have good reasons justifying the extension. In the case of Jalla and another v Shell International Trading and Shipping Co Ltd and another EWCA Civ 1559, the Court of Appeal upheld the lower court’s decision to refuse the claimants a further extension of time for serving ‘date of damage’ pleadings and supporting evidence for limitation purposes. Although this was an ‘in-time’ application to extend time and did not involve an unless order, the court held that the Denton relief from sanctions principles applied by analogy. (See 9.3.1.) 6.4.3 Drafting There are forms the defendant can use that will have been served as part of the response pack. In the case of a claim for a specified amount, the appropriate form is Form N9B; and in the case of a claim for an unspecified amount or a non-money claim, the appropriate form is Form N9C. In practice, these forms will usually be used by defendants who are acting in person. Where solicitors are acting for a defendant, the defence is usually prepared as a separate document (see Chapter 7). 6.4.4 Filing and serving When the defence is filed, a copy must be served on all other parties. The court will effect service, unless the defendant’s solicitor has told the court that they will do so. 6.5 ADMISSIONS (PART 14) If a defendant wishes to admit either the whole or part of the claim, they should complete the appropriate sections of the response pack. The way in which the defendant should complete the forms and the consequences of doing so vary depending on the nature of the claim and whether the admission is in full or only in part. See the flowcharts in Appendix C(7) and C(8). 6.5.1 Admission in full of a claim for a specified amount If a defendant admits the whole of a claim for a specified amount, they should serve the appropriate form of admission (Form N9A) on the claimant. This should be done within 14 days of service of the particulars of claim. On Form N9A, the defendant has to give certain personal details, together with details of their income and expenditure, and they should also make an offer of payment, which can be an offer to pay either in full by a certain date, or by monthly instalments. Upon receipt of the form, the claimant may then file a request for judgment. If the claimant accepts the defendant’s offer to pay either by a certain date or by monthly instalments, the claimant simply accepts the defendant’s offer and files a request for judgment. See the flowchart in Appendix C(7). If the claimant rejects the defendant’s offer to pay by a certain date or to pay by instalments then the court will decide the appropriate order. If the claim is for not more than £50,000, a court officer may decide the rate of payment without any court hearing; alternatively, the rate of payment will be decided by a judge. Where the rate of payment is to be decided by a judge, the proceedings must be automatically transferred to the ‘defendant’s home court’, if the defendant is an individual. So where is the ‘defendant’s home court’? In the County Court, it is the County Court in which the defendant resides or carries on business. For a High Court claim, it is the District Registry for the district in which the defendant resides or carries on business, or, where there is no such District Registry, the Royal Courts of Justice. Note that, for claims issued in the Civil National Business Centre, if the defendant is not an individual then the case will be transferred to the claimant’s preferred County Court hearing centre under r 14.7 (see 5.1.3). The judge may make the decision without any hearing, but if there is to be a hearing, the parties must be given at least seven days’ notice. In deciding the time and rate of payment, the court will take into account: 98 Civil Litigation (a) the defendant’s statement of means; (b) the claimant’s objections to the defendant’s request; and (c) any other relevant factors. 6.5.2 Part admission of a claim for a specified amount If a defendant admits only part of a claim for a specified amount, they must do so by filing Form N9A at the court within 14 days of service of the particulars of claim. The court will then give notice of the admission to the claimant, who must say whether they: (a) accept the offer in full satisfaction of their claim; or (b) accept the offer but not the defendant’s proposals for payment; or (c) reject the offer and wish to proceed with their claim. The claimant has 14 days in which to file their notice and serve it on the defendant. If they do not do so, the claim will be stayed until they do file their notice. If the claimant accepts the offer, they will request judgment. If the defendant has not requested time to pay, the claimant’s request can stipulate the time for payment and the court will enter judgment accordingly. If the defendant has requested time to pay, the procedure in 6.5.1 applies. If the claimant rejects the offer, the case continues as a defended action. See the flowchart in Appendix C(8). 6.5.3 Admission of a claim for an unspecified amount (no offer made) Where the defendant admits liability for a claim for an unspecified amount and makes no offer of payment, they must do so within the usual time for making an admission. The court will serve a copy of the admission on the claimant, who may then apply for judgment. The court will then enter judgment for the damages to be assessed. The hearing at which the damages are assessed is often called a ‘disposal hearing’. Where needed, the court will give directions to the parties as to the steps to be taken to prepare for the disposal hearing and may also allocate the case to a track if that is appropriate (see Chapter 9). See the flowchart in Appendix C(7). 6.5.4 Admission of a claim for an unspecified amount (offer made) Where the defendant admits liability for a claim for an unspecified amount and offers a sum of money in satisfaction of the claim, they must do so in the usual time for making an admission. The court will serve a notice on the claimant requiring them to return the notice stating whether or not they accept the amount in satisfaction of the claim. If the claimant does not file the notice within 14 days, their claim will be stayed until they do file the notice. If the claimant does not accept the amount offered, they will enter judgment for damages to be assessed at a disposal hearing. If the claimant accepts the offer and the defendant has not asked for time to pay, the claimant may enter judgment for the amount offered and will stipulate when payment should be made. If the defendant has asked for time to pay the usual procedure applies (see 6.5.1). 6.5.5 Challenging the court’s decision Where the court has decided the time and rate of payment, and the decision was made either: (a) by a court officer; or  Responding to Proceedings and Judgment in Default 99 (b) by a judge without any hearing, either party may apply for a re-determination by a judge. Such application must be made within 14 days of service of the determination on the applicant. If the original decision was made by a court officer, the re-determination will be made by a judge without a hearing unless the application notice requests a hearing. If the original decision was made by a judge, the re-determination must be at a hearing unless the parties agree otherwise. 6.5.6 Interest Judgment where the defendant admits liability for the whole amount of a claim for a specified amount will include interest up to the date of judgment if: (a) the particulars of claim include the details required by r 16.4 (see 7.2.1); and (b) where interest is claimed under s 35A of the SCA 1981 or s 69 of the CCA 1984 (see 2.7.2.1), the rate is no higher than the rate of interest payable on judgment debts (currently 8% pa) at the date when the claim form was issued; and (c) the claimant’s request for judgment includes a calculation of the interest claimed for the period from the date up to which interest was stated to be calculated in the claim form to the date of the request for judgment. If the above conditions are not satisfied, the judgment will be for an amount of interest to be decided by the court, and the court will give directions as to how this should be achieved. For example, condition (b) will not be met if the claim was for a commercial debt and interest was claimed under the Late Payment of Commercial Debts (Interest) Act 1998 (see 2.7.2.1). 6.5.7 Varying the rate of payment By para 6.1 of PD 14, either party may apply to vary the time and rates of payment of a judgment on admissions if there has been a change of circumstances. 6.6 DEFAULT JUDGMENTS (PART 12) 6.6.1 Introduction Once the proceedings have been served upon the defendant, it may be that the defendant takes no action. The defendant may fail to return the acknowledgement of service or file a defence. In those circumstances, the claimant can obtain judgment in default against the defendant. This means that the claimant obtains judgment without there being a trial of the issues involved in the case. The claimant completes and files the appropriate form requesting judgment to be entered and the court will enter the judgment; the court has no power to order a hearing as to whether or not judgment should be entered as this court is required to take a purely administrative step (Edward v Okeke EWHC 1192 (KB)). See the flowchart in Appendix C(10). 6.6.1.1 Cases where default judgment is not available The claimant may not enter a default judgment in the following types of cases: (a) a claim for delivery of goods under an agreement regulated by the Consumer Credit Act 1974; (b) a Part 8 claim (see Chapter 8); (c) any other case where a rule or practice direction says that the claimant may not obtain default judgment. 100 Civil Litigation 6.6.2 Procedure The claimant applies for default judgment by filing a request using the relevant form if they are claiming money (whether or not it is a claim for a specified amount) or goods (if the claim form gives the defendant the option of returning the goods). There are different forms, depending on whether the claim is for a specified or an unspecified amount. (See Forms N205A, N205B, N225 and N227.) The claimant must satisfy the court that: (a) the particulars of claim have been served on the defendant; (b) the defendant has not acknowledged service or filed a defence (or any document intended to be a defence), at the date on which judgment is entered, and the relevant time period has expired; (c) the defendant has not satisfied the claim; (d) the defendant has not admitted liability for the full amount of the claim. So, the filing of an acknowledgment of service or a defence, even late, will prevent the entry of judgment in default. Where the amount of money is to be decided by the County Court, the proceedings will be sent to the claimant’s preferred hearing centre. 6.6.3 Claims for specified amounts A request for default judgment for a specified amount may indicate the date for full payment, or the times and rate at which it is to be paid by instalments. If it does not, the court will normally give judgment for immediate payment. Additional fixed costs are payable by the defendant (see CPR 1998, Part 45). 6.6.4 Claims for unspecified amounts A request for default judgment for a claim for an unspecified amount is a request for the court to decide the amount of the claim and costs. This will involve a full hearing before a trial judge to decide the amount of the claim (again often called a ‘disposal hearing’), and it may, therefore, be necessary to allocate the claim to a track and give directions (see Chapter 9). 6.6.5 Interest The default judgment may, in the case of a claim for a specified amount, include interest up to the date of judgment if: (a) the particulars of claim include the details required by r 16.4 (see 7.2.1.5); and (b) where interest is claimed under s 35A of the SCA 1981 or s 69 of the CCA 1984 (see 2.7.2.1), the rate is no higher than the rate of interest payable on judgment debts (currently 8% pa) at the date when the claim form was issued; and (c) the claimant’s request for judgment includes a calculation of the interest claimed for the period from the date up to which interest was stated to be calculated in the claim form to the date of the request for judgment. Otherwise the court will decide the amount of interest and will give directions for this. EXAMPLE: SPECIFIED CLAIM Assume County Court debt proceedings were issued on 1 June. Interest is claimed under s 69 of the CCA 1984 at 8% pa from when the debt was due to and including the day of issue. The daily rate of interest is £5.35. If default judgment is entered on 22 June, how much additional interest should be claimed? 21 days have passed since issue, so a further £112.35 (21 x £5.35) should now be claimed when entering default judgment.  Responding to Proceedings and Judgment in Default 101 6.6.6 Co-defendants Where there are co-defendants, the claimant may enter a default judgment against one or more of the co-defendants while proceeding with their claim against the other defendants, provided the claim can be dealt with separately. Otherwise, the court will not deal with the default judgment until it deals with the claim against the other defendants. 6.6.7 Setting aside a default judgment A defendant against whom a default judgment has been entered may apply to have it set aside. Such applications are considered in Chapter 10. 6.6.8 Effect of stay on time limits Does the time for serving a statement of case still run if the court has imposed a stay? No, held the Court of Appeal in Grant v Dawn Meats (UK) EWCA Civ 2212: a stay operates to ‘halt’ or ‘freeze’ the proceedings. In general terms, no steps in the action, by either side, are required or permitted during the period of the stay. When the stay is lifted, or the stay expires, the position as between the parties should be the same as it was at the moment that the stay was imposed. The parties (and the court) pick up where they left off at the time of the imposition of the stay. (per Coulson LJ at ) 6.6.9 Summary A defendant might respond to a specified claim in any of the following ways: (a) admit the full amount and pay it. Alternatively, they can ask for time to pay, which, if rejected by the claimant, will be determined by the court; or (b) admit part of the claim and offer to pay it. Alternatively, they can ask for time to pay. If the claimant accepts the part admitted in full and final settlement but rejects the proposal as to payment, the court will determine the time for payment. However, if the claimant does not accept the part admitted in full and final settlement, the case will continue as a defended claim. A defendant might respond to a claim for an unspecified amount of money in any of the following ways: (a) admit liability but make no offer of payment. The court will enter judgment for damages to be assessed at a disposal hearing; or (b) admit liability and make an offer to pay a sum of money. Additionally, they may ask for time to pay that amount. If the claimant accepts the offer but rejects any proposal as to payment, the court will determine the time for payment. However, if the claimant does not accept the offer, they will enter judgment for damages to be assessed at a disposal hearing. Where a claimant enters default judgment on a specified claim, the judgment will be for a final sum of money as calculated by the claimant and they can immediately proceed to enforcement. Where a claimant enters default judgment on a claim for an unspecified amount of money, the judgment will be for damages to be assessed by the court at a disposal hearing. See further the flow diagrams in Appendix C(6)–(10). 6.7 AUTOMATIC STAY 6.7.1 Imposition of stay By r 15.11(1) where (a) at least 6 months have expired since the end of the period for filing a defence specified in rule 15.4 (see 6.4.1); (b) no defendant has served or filed an admission or 102 Civil Litigation filed a defence or counterclaim; and (c) no party has entered or applied for judgment under Part 12 (default judgment – see 6.6) or Part 24 (summary judgment – see 10.5.2); and (d) no defendant has applied to strike out all or part of the claim form or particulars of claim (see 9.3), the claim shall be stayed. The purpose of this rule providing for the automatic stay of proceedings is to avoid there being claims which continue in being but which are not being progressed nor otherwise subject to judicial case management. 6.7.2 Applying to lift the stay By rule 15.11(2) any party may apply for the stay to be lifted. The application must include an explanation for the delay in proceeding with or responding to the claim. The court will apply the three-stage approach set out in the case of Denton (see 9.4.1) when determining the application: The Denton test is sufficiently flexible to take account of those features of CPR 15.11 which distinguish it from the more conventional case where a rule or practice direction requires a party to take a particular step by a particular date and it fails to do so: the fact that it is a combination of the failure of both parties to take a particular step which brings the automatic stay into operation, and the difficult choice which a claimant who has brought proceedings in order to anticipate a claim which a defendant has intimated but not commenced may face if the defendant chooses not to engage in those proceedings. (per Foxton J in Bank of America Europe DAC v Citta Metropolitana Di Milano EWHC 1544 (Comm) at )