We acted for a corporate freeholder ("our client") who had a default judgment of over £100,000 entered against it in a County Court claim brought by the leaseholder of a flat within its building. The claim concerned alleged non-compliance with Building Regulations. Acting at speed, we obtained specialist counsel's advice, identified serious jurisdictional and pleading defects in the claim, and used that advice to negotiate the judgment's removal by consent. The matter concluded via a Tomlin order that set aside the default judgment and stayed proceedings on agreed terms, without the need for a contested hearing.
Background & Key Facts
Our client, a company, owned the freehold of a residential building comprising two flats. The claimant, the leaseholder of the ground floor flat, had purchased his lease from our client some years earlier.
In November 2020, the local authority's Building Control department wrote to the claimant indicating that certain Building Regulations approvals for works carried out at the property had not been complied with, citing multiple Approved Documents covering fire safety, sound insulation, ventilation, drainage and energy performance.
A dispute over responsibility for remedying this non-compliance escalated over several years:
In late 2023, the claimant issued a small claim against our client for £665 in respect of a Building Regulations application fee.
That claim proceeded to a hearing in August 2024, where judgment was given against our client for a modest sum, which our client paid.
The claimant then issued a second, much larger claim in October 2024 seeking approximately £73,376, plus court fees and statutory interest, for the cost of remedial building works, alternative accommodation and storage while those works were carried out.
Our client did not respond to the second claim in time. The claim form had been sent to our client's registered office, which was its accountants' address; the accountants did not forward it. As a result, the claimant obtained default judgment for £100,441.48 in November 2024.
Our client only became aware of the judgment when the accountants forwarded a copy after the event, and instructed us shortly afterwards.
Legal Issues & Our Approach
This matter raised a mix of procedural and substantive issues, all under significant time pressure given the sums involved and the enforcement steps already threatened by the claimant.
Service and the mandatory ground to set aside - because the claim form had, in fact, been sent to our client's registered office, service was technically valid, meaning our client could not rely on non-service as an automatic (mandatory) ground to set aside the default judgment.
The discretionary ground to set aside - the realistic route was therefore the discretionary jurisdiction to set aside a regular default judgment, which required our client to show a real prospect of successfully defending the claim, or some other good reason for the judgment to be set aside, together with an explanation for the earlier default and evidence that the application was made promptly.
Defects in the pleaded claim - on analysis, the claim as issued was defective in more than one respect: it did not, on its face, articulate any recognisable cause of action against our client, and it also appeared to overlook that the leasehold title was held jointly with a second person who had not been joined to the proceedings.
Jurisdiction - properly analysed, the substance of the claimant's grievance concerned statutory remediation of building safety defects, a form of relief that falls within the exclusive jurisdiction of the First-tier Tribunal, not the County Court. This meant that, even if perfectly pleaded, the County Court would have had no power to grant the relief the claimant was really seeking.
Our Strategy
We moved quickly to protect our client's position and to convert a weak procedural starting point into a strong negotiating one.
Immediate steps on instruction - we wrote promptly to the claimant to confirm our instruction, request that all further steps be paused, and put down a marker that our client intended to apply to set aside the judgment.
Specialist counsel's advice - we instructed specialist counsel to advise on the merits of a set-aside application. Counsel's advice confirmed that, while the mandatory ground under CPR 13.2 was not available, our client had good prospects under the discretionary ground in CPR 13.3, given the deficiencies in the pleaded claim and the jurisdictional issue, provided the application was made promptly and properly explained the earlier default in accordance with the well-established three-stage test for relief from sanctions.
Building the evidence - we worked with our client to prepare the evidence needed to support the application, addressing the circumstances in which the claim form went unanswered, the date the judgment came to light, and the steps taken thereafter, to demonstrate the application was made with all reasonable speed.
Leveraging the merits in negotiation - rather than proceeding straight to a contested set-aside hearing, we used the strength of the identified defects, particularly the jurisdictional point, as leverage to engage the claimant in settlement discussions, making clear that the default judgment was vulnerable and that continued reliance on it carried real risk for the claimant.
Outcome
Our approach achieved a resolution that avoided a contested hearing on either the set-aside application or the underlying claim.
The parties reached agreement on terms recorded in a consent order (a Tomlin order) which set aside the default judgment entirely and vacated the scheduled set-aside hearing and associated questioning appointment.
All further proceedings were stayed on agreed terms, with permission for either party to apply to enforce the settlement without needing to bring a new claim, and with no order as to costs.
This removed a six-figure default judgment from our client's record and replaced an unfavourable, procedurally compromised position with a negotiated resolution on terms our client could accept.
Key Takeaways
A default judgment obtained on valid service is not automatically vulnerable, but a discretionary set-aside application can still succeed where the underlying claim is poorly pleaded or brought in the wrong forum.
Jurisdictional defects, such as seeking relief that only a specialist tribunal can grant, can be decisive even where a claim has already resulted in judgment.
Acting quickly to explain a default, and applying to set aside promptly, is essential to satisfying the court's discretionary test.
Early, well-targeted specialist advice can convert a weak procedural position into a credible negotiating position, avoiding the cost and uncertainty of a contested hearing.
