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The relevant parts of this judgment concern an application to set aside a default judgment. Vos L.J. said,

“Introduction
1. This appeal raises the question of how the court should approach the grant of relief from sanctions in a case where the defaulting party has delayed in applying for relief but is able to point to evidence that enables it to allege that the claim is a fraudulent one. The claimant …, contends that the full rigours of the tests in Mitchell.., as explained in Denton…, should be applied so as to refuse to set aside a default judgment, whilst the insurer maintains that [it was] right to set aside the default judgment notwithstanding the delay in making the application.

23. It is useful to start by enunciating the applicable principles. Both sides accepted that it was now established that the tests in Denton were to be applied to applications under CPR Part 13.3 (see paragraphs 39-40 of the judgment of Christopher Clarke LJ in Regione Piemonte v. Dexia Crediop Spa [2014] EWCA Civ 1298, with whom Jackson and Lewison LJJ agreed). It seems to me equally clear that the same tests are relevant to an application to set aside a judgment or order under CPR Part 39.3.
24. The first questions that arise, however, in dealing with an application to set aside a judgment under CPR Part 13.3 are the express requirements of that rule, namely whether the defendant has a real prospect of successfully defending the claim or whether there is some other reason why the judgment should be set aside, taking into account whether the person seeking to set aside the judgment made an application to do so promptly. Since the application is one for relief from sanctions, the Denton tests then come into play. The first test as to whether there was a serious or significant breach applies, not to the delay after the judgment was entered, but to the default in serving an acknowledgement that gave rise to the sanction of a default judgment in the first place. The second and third tests then follow, but the question of promptness in making the application arises both in considering the requirements of CPR Part 13.3(2) and in considering all the circumstances under the third Denton stage.

The application to set aside the default judgment
28. The first question is whether the insurer has shown that it has a real prospect of successfully defending the claim.
That was quite rightly not disputed by…the appellant. It is to be noted, however, that the insurer adduced no evidence that the claim was fraudulent until (two months after it) started investigating the matter after (solicitors) were instructed… The period for such an investigation may not, in itself, be unreasonable (two months including the Christmas period), but there has been no explanation whatsoever as to why the insurer took so long either to instruct solicitors or to commence the investigation. The starting point nonetheless is that the insurer has satisfied Part 13.3(1). I must turn then to consider the promptness of the application under CPR Part 13.3(2).
35. On this analysis, the relevant period of delay is, at the least…a period of more than 2 months. The insured cannot, in the context of the history I have described, be regarded as having made its application to set aside the default judgment promptly. CPR Part 13.3(2) enjoins the court to have regard to that lack of promptness in exercising its discretion as to whether or not to set aside the judgment.
36. At this point, the analysis continues by reference to the Denton tests. It was common ground that the default that allowed the default judgment to be entered in the first place – in failing to file an acknowledgement of service – was serious or significant, although it needs to be borne in mind that that was not a default of the insurer, which was not served with the proceedings. In these circumstances, there was some reasonable excuse or explanation for the failure, albeit not a complete one. The insurer could and should have protected itself when it knew proceedings were being issued by appointing solicitors to accept service on behalf of [the Defendant].
37. Finally, the court has to consider “all the circumstances of the case, so as to enable it to deal justly with the applications including” factors (a) and (b), which are to be accorded particular weight…see…Denton).
Factor (a) points to the need for litigation to be conducted efficiently and at proportionate cost.
Factor (b) refers to the need to enforce compliance with rules and orders.
Here, insurers are in a particularly good position to conduct litigation efficiently and proportionately and to comply with rules and orders. It cannot avail an insurer in this position to say it was not a party to the claim at that stage. It was directly affected by it and knew that it had to protect its interests from the moment liability was admitted. It was able at any stage to conduct [the] defence.
38. In my judgment, therefore, the insurer’s application to set aside the default judgment ought to have been refused.”

Edited for ease of reading.

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