Galliani v Sartori: No time like the present to respond to a claim and avoid a CCJ

In this article, we continue to explore recent decisions surrounding applications to set aside a judgment/CCJ entered in default. More specifically, here, we consider the High Court decision in Galliani & Anor v Sartori & Ors [2023] EWHC 3306 (Comm), which considered whether a judgment that had been entered in default was irregular and therefore ought to be set aside.  

Background to the case

The pre-issue facts to this claim are not strictly relevant to the decision but, in brief, the claim largely concerns allegations of misrepresentations. Rather, focus is spent on the procedural history and the events that followed the Claimants issuing their claim against the Defendants.  

 Prior to issuing the claim, the Claimants sent a letter of claim to the Defendants without receiving a response, and sent a further letter in September 2022 to chase a response. However, unbeknown to the Claimants at the time, Mr Sartori (a Defendant) was receiving legal advice as to the allegations made against him. 

Given the absence of a response, the Claimants proceeded to issue their claim with the Court on 20 April 2023 and obtained permission to serve the court papers outside of the jurisdiction by 14 May 2023. The Claimants successfully served Mr Sartori personally on 16 May 2023. 

 Mr Sartori was to file an acknowledgement of service by no later than 01 June 2023. On 02 June 2023, the Claimants proceeded to file an application with the Court for default judgment to be entered against Mr Sartori. Thereafter, Mr Sartori sought to instruct new solicitors only to later file an acknowledge of service on 13 June 2023, precisely at 12.49pm. On that same day that Mr Sartori’s acknowledgement of service was filed, but at an unknown time, the Court accepted the Claimants’ application and entered default judgment.  

 On 14 June 2023, whilst unaware of the default judgment, Mr Sartori applied for an extension of time to file an acknowledgement of service and, in turn, relief from sanctions. However, after later becoming aware of the default judgment already being entered, on 27 June 2023 Mr Sartori proceeded to issue his application to set aside the default judgment. 

Decision

At the hearing, the Court was to determine whether the default judgment entered against Mr Sartori was wrongly entered (otherwise known as an irregular judgment) and, in turn, ought to be set aside.  

Upon dissecting this point, the Court set out the following: –  

• CPR 13.2 provides that a default judgment must be set aside if certain conditions contained under CPR 12 have not been satisfied upon entering judgment.  

• Amongst others, CPR 12 provides that a judgment can only be entered in default in circumstances where “at the date on which judgment is entered”, the Defendant has not filed an acknowledgement of service or a defence (as appropriate) to the claim. 

• However, in this case, Mr Sartori had filed an acknowledgement of service to the claim on the same day of which default judgment was ordered, however a day before that judgment was drawn up and sealed by the Court. As a result, there laid the question of what is meant by “judgment is entered” with reference to CPR 12. The Court went on to consider whether its initial ordering for default judgment, or its later sealing of that order the day after, is deemed as judgment being entered. Clearly, if not the former, the default judgment entered against Mr Sartori would be deemed ‘irregular’ and ought to be set aside. 

• In its analysis, the Court appreciated how it may revise a judgment between the time at which it is pronounced and the time at which an order is drawn up and sealed. In particular, the Court considered the case of Holt v Hodgson (1889) 24 QBD 103 where it was observed that “Pronouncing judgment is not entering judgment; something has to be done which will be a record, and so the judgment that the judge has pronounced is the judgment which is to be entered”. The Court further took account of CPR 40.2(2)(b) in that “Every judgment or order must be sealed by the court.” 

• It follows that the Court soon found that the default judgment entered against Mr Sartori in these circumstances was irregular, and ought to be set aside.  

After drawing these conclusions, it was not strictly necessary for the Judge to determine the remainder of Mr Sartori’s application, since it was premised in the circumstances that the default judgment was not found to be irregular. However, the Judge went on to address the full application, and in doing so made the following observations: –  

• First, the Judge held that Mr Sartori demonstrated a real prospect of defending the claim, per CPR 13.3(1). More specifically, the Court acknowledged Mr Sartori’s manifold issues raised in defence to those allegations of misrepresentation and considered that “collectively they do raise a defence with a real, as opposed to fanciful, prospect of success.”  

• Second, the Court was also satisfied that the short period of 13 days between default judgment being entered and Mr Sartori filing the application to set aside that judgment was not significant, but rather made ‘promptly’, and ultimately satisfying CPR 13.3(2).  

• Third, and in any event, the Court turned to Mr Sartori’s inherent application for relief from sanction and the three-stage Denton test, a requirement in such applications following the decision in FXF v Karate Federation Limited [2023] (see previous article). At the first stage, the Court was not of the view that there had been serious failure to comply with the rules as to the filing of an acknowledgement of service, or one in which there was no excuse for the failure to comply. Next, the Court noted that Mr Sartori was experiencing difficulty in obtaining legal representation at the time, with those firms initially approached unable to act. As to the third and final limb of the Denton test, the Court went so far as to conclude “without hesitation, that it warranted the grant of relief from sanctions.” 

The High Court concluded that, as Mr Sartori had filed an Acknowledgement of Service prior to the default judgment being sealed and thus entered, the default judgment was (i) entered without those provisions under CPR 12 being met beforehand; (ii) irregular; and therefore (iii) ought to be set aside in accordance with CPR 13.2.  

Comment

The Galliani v Sartori decision provides some clarity on the window (however short-lived that may prove) between the Court pronouncing judgment in default and that judgment actually being drawn and sealed by the Court. Indeed, as much is the case as ever, particularly given the considerable backlog and subsequent delays experienced by the Court at present, that ‘window’ can be a lot wider than one (especially a Claimant in these circumstances) would hope.  

Aside from serving as a stern reminder of the current state of the English justice system (albeit in this case there being a reasonably short window), this High Court decision underscores the Court’s willingness to acknowledge procedural irregularity and administer justice accordingly.  

Whilst the Claimants (understandably) likely felt hard done by given that default judgment was all but entered – just that the Court had not yet got round to drawing and circulating the same amongst the parties – on balance Mr Sartori’s reasoning for any delay in adequately responding to the claim was enough to convince the High Court that justice would be served in allowing him to defend the claim.  

Ultimately, Galliani v Sartori is a graphic illustration that every passing minute counts when complying with Court deadlines, even when that deadline has passed, and that legal advice should be sought at the earliest opportunity otherwise you run the risk of facing Court sanction.  

How can Ellis Jones help?

Ellis Jones has significant experience in assisting with either the pursual or objection to an application seeking the set aside of a default judgment. Please do get in touch with our Dispute Resolution team on 01202 525333 or by emailing resolution@ellisjones.co.uk if you need advice with such an application.