31st Jan 2023 | News
In Lux Locations v Yida Zhang  UKPC 3, an appeal from Antigua and Barbuda, in a long-running commercial law dispute in which judgment was handed down today, Lord Leggatt, speaking for a unanimous Privy Council, has given important guidance on the correct approach to requests for default judgment in those instances where, because the remedy sought is not merely the payment of a sum of money, the matter goes before a judge, who:
“shall give such judgment as the claimant is entitled to on the statement of case”
(see CPR r. 12.12(1)).
In Football Dataco Ltd v Smoot Enterprises Ltd  EWHC 973 (Ch),  1 WLR 1978, Briggs J said that a judge tasked with considering this question is not called upon to form any view about the merits of the case. Several other cases have followed this approach (see Otkritie International Investment Management Ltd v Jemai  EWHC 3739 (Comm); Chelsea Football Club Ltd v Greenwood  EWHC 190 (QB); Sloutsker v Romanova  EWHC 2053 (QB); and Brett Wilson LLP v Person(s) Unknown  EWHC 2628 (QB),  4 WLR 69.
The Privy Council has now qualified this significantly, pointing out that in none of these cases was the defendant actively seeking to contest the claim or the application for default judgment; and stating that in any event (and whether or not the defendant appears and opposes the application) the court should not give default judgment if it appears to the court that the claimant’s statement of case does not disclose any reasonable ground for bringing the claim or is an abuse of the court’s process.
The Privy Council has, moreover, held that in considering what “the claimant is entitled to on the statement of case” the court need not necessarily take the claimant’s allegations there at face value, if they are not credible ones:
“In judging whether a case falls into this category, the court is not confined merely to looking at the statement of case itself but is entitled to take account of other matters, including the history of the proceedings and the degree of implausibility of the allegations.”
The Privy Council has also held that even if the claimant does appear to be entitled to relief on the face of the statement of claim, the court should not enter a default judgment if there is other material before the court (including material in any late-filed defence) which would later justify setting such judgment aside.
Lord Leggatt confirms in addition that, contrary to the view of the Court of Appeal of the Eastern Caribbean in this case (reported at  2 LRC 620), a judge’s decision about what, if any, form of default judgment to enter is an appealable judgment: the defendant is not limited to making an application to set the default judgment aside.
Finally, the Privy Council’s judgment, which arises from an action to set aside an earlier consent order between the same parties, also clarifies the circumstances in which a court may set aside a consent order on the ground that counsel lacked authority to agree to it. Lord Leggatt explains that although the court has a jurisdiction to refuse to embody an agreement between lawyers in a consent order if the client’s lack of consent to the terms of the order is drawn to the judge’s attention before it is drawn up, the position is different where a compromise has been embodied in a perfected order of the court. In the latter case, it is too late to set it aside by reference to any alleged defect in counsel’s authority.