Some Other Good Reason - Default Judgment and the Court's Discretion

The Court can set aside default judgment where either: (a) the defendant has a real prospect of successfully defending the claim; or (b) it appears to the court that there is some other good reason why the judgment should be set aside or varied or the defendant should be allowed to defend the claim.

The recent case of Latmar Holdings Corp v Media Focus Ltd & Others ¹ provides an example of the circumstances in which the court will set aside default judgment on the "some other good reason" grounds in CPR13(1)(b).

The defendants in this case were a number of individuals who were alleged to have misappropriated US$5.2 million using bogus services agreements and backdated documentation.   Default judgment had been entered against them for failure to disclose their assets. 

Although the court was not satisfied that the defendants had shown that they had a real prospect of successfully defending the claim (CPR13(1)(a)) the court nevertheless set aside the default judgment under CPR 13.3(1)(b) on the basis that:

• although the defence had no real prospect of success, it was not "hopeless";
• the sums for the individual Defendants were considerable and the allegations of fraud were serious;
• the period of delay in applying to set aside the default judgments had not been "long and inordinate."

This judgment follows other recent decisions Berezovsky v Russian Television and Radio Broadcasting Co² where the courts have set aside default judgment on the basis that the defendants should be permitted to defend the case due to the seriousness of the allegations.  However, in Latmar the judge stated that he was setting aside the judgment with "some considerable reluctance" suggesting that this decision is at the boundaries of the court's powers under CPR13.3(1)(b).

1. [2012] EWHC 262 (Comm)

2. [2009] EWHC 1733