Default judgment - scope and effect

So the worst has happened and for whatever reason your client has had default judgment entered against them and either your client has unsuccessfully applied to set it aside or a pragmatic view has been taken that such an application is unlikely to succeed – but what exactly is the scope and effect of a default judgment.

In this post I’ll discuss what exactly a default judgment covers and what can and cannot be argued at any future hearings on liability, causation and quantum and why a default judgment may not be the end of the matter.

Where a party obtains default judgment for a specified sum of money, if no other relief is being sought that will be the end of the matter. However, where a party obtains default judgment for a sum to be determined or an unspecified amount – as will typically be the case in a personal injury claim, most breach of covenant claims, some breach of contract claims or where the non-defaulting party has otherwise pleaded as much – in the absence of settlement the court will typically hold a disposal hearing to determine the quantum of the claim.

There are a handful of cases addressing this issue (both here and abroad) but perhaps the most helpful case is that of Symes v St George’s Healthcare NHS Trust [2014] EWHC 2505 (QB) and paragraphs 29 to 46 of the judgment of Simon Picken QC sitting as a Deputy Judge of the High Court where he very helpfully summarises the pre and post-CPR authorities on this issue working his way forwards from the Privy Council’s decision in Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] AC 993.

The one difficulty that I have both now and in the skeleton arguments I prepare addressing such issues is that the core principles are not easily or concisely summarised from what is a very narrative and detailed judgment – though that’s no reason not to try(!). The following can be seen as the main points at their core:

1. Default judgment only estops the bare essence of what must have necessarily been decided and with complete precision have been determined thereby (para 31);
2. Default judgment is determinative of liability but not necessarily causation and/or quantum, though the Defendant may be precluded from arguing that the Claimant has not suffered any loss depending on the claim (para 37);
3. On assessment of damages, the Defendant will typically be precluded from taking any point which is inconsistent with the statement of claim, including contributory negligence, failure to mitigate, causation and quantum (as regards denying causation/quantum completely) (para 38);
4. A party who fails to address an element of liability (by way of filing a Defence) relevant to quantum cannot thereafter 'roam freely' across issues of liability as they wish (para 45);
5. The starting point is to look at the Particulars of Claim which are to be regarded as a ‘proxy’ for the default judgment (para 44 and 57);

Symes is a helpful summary on the overall position but when faced with an application one would be well-placed (if not instructing counsel!) to consider some of the judgments referenced in Symes.

Default judgment in cases involving tortious liability will ultimately preclude arguments that there has been no loss because the finding of loss is necessary for there to be a judgment on a claim for a tort. Conversely contract claims or more specifically breach of covenant claims (where losses more likely to require determination) are potentially open to the point that there has been no loss either at all or on a point of causation but a defendant would not be able to argue, amongst other things, a failure to mitigate.

So whilst default judgment might often mean your client’s case is severely restricted it may not be a completely open and shut case but the extent of any restriction on your client will depend on the nature of the claim and how the particulars of claim are framed.

It may be that your client wishes to take issues of causation or quantum to a hearing, or it may be that they want to start making Part 36 offers to give themselves protection at such a hearing. They’re almost certainly going to have to open their chequebook but it may still be open to them to argue how many zeroes they will have to write down.