Threshold to be reached to Set-Aside Judgment

July 24, 2014

A recent High Court case has re-iterated the now established position regarding the thresholds to be reached to set-aside a judgment.

The particular case involved an application to set aside a judgment in default, obtained in respect of personal guarantees.

Mr Justice Weatherup held the setting aside of a judgment is a matter in the discretion of the Court, to be exercised (or not) following an assessment of the justice of the case as between the parties. The proper approach to be adopted by a Court when deciding whether or not to set aside a judgment in default has been the subject of debate.

The Court adhered to the approach adopted by Girvan J in McCullough v BBC [1996] NI 580 and Higgins J in Tracy v O’Doud and Others [2002] NIQB 48 on the issue of the nature of the merits test before a judgment may be set aside, and on the issue of the nature of the assessment of the material to be undertaken by the Court.

Against the background of those cases, the Court stated –

(i) In order to set aside a judgment it is necessary that a defendant establishes that there is an arguable defence.

(ii) It is not necessary that a defendant establishes that the defence has a real prospect of success.

(iii) It is not necessary for the Court to form a provisional view of the probable outcome ofthe case.

(iv) The Court will not set aside a judgment if there is no defence to the claim apparent from the materials before the Court. The merits threshold will require the defendant to establish an arguable defence. This has also been expressed as a prima facie defence, a serious defence, a real triable issue, a defence with merits to which the Court should pay heed.

This represents a rejection by the Commercial Court of the stricter approach to the issue taken by the English Court of Appeal in Saudi Eagle [1996] 2 Lloyds Law Reports 221. In that case, the Court held where a defendant applied to set aside a judgment obtained in default, he had to show that his defence had a real prospect of success. The Court of Appeal had also held that, in order to arrive at a reasoned assessment of the justice of the case, the Court must form a provisional view of the probable outcome if the judgment were to be set aside.

Alan Gibson, Associate, Cleaver Fulton Rankin

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