Definition of default judgement
Default judgment is a binding judgment in favor of either party based on some failure to take action by the other party. Most often, it is a judgment in favor of a plaintiff when the defendant has not responded to a summons or has failed to appear before a court of law. Federal Rule 37(b)(iii) also states that a balky plaintiff can be found in default and have his case dismissed if the plaintiff repeatedly fails to comply with things like court orders and discovery requests. The failure to take action is the default. The default judgment is the relief requested in the party's original petition, which is why initial pleadings are often so exaggerated.
Default can be compared to a forfeit victory in sports. In a civil trial involving damages, a default judgment will enter the amount of damages pleaded in the original complaint. If proof of damages is required, the court may schedule another hearing on that issue. A party can have a default judgment vacated, or set aside, by filing a motion, after the judgment is entered, by showing of a proper excuse.
England and Wales
- How judgment arises
In England and Wales, a Claimant starts a case by issuing a Claim Form. This either states a monetary figure on it, together with fixed costs and court fees; alternatively if the amount cannot be determined, it will be for an amount 'to be assessed'. A Claimant may not wish to recover money at all, in which case the Claim Form states this.
The Claim Form (together with other documents, known as Particulars of Claim and a Response Pack) are served on the Defendant.
If the Defendant fails to reply within 14 days of service, the Claimant can apply for Judgment in Default, either by simply requesting the court's administrative staff enter judgment filing a request for judgment (which is sufficient for routine cases), or by making a formal application to the Procedural Judge. The judgment is known as Judgment in Default of Acknowledgment of Service.
If the Defendant did acknowledge to the court that the papers were served within the 14 day period, then the Defendant is given 28 days to take a further step. If the Defendant fails to do so, again judgment can be entered as above, this time formally known as Judgment in Default of Defense.
If money is claimed, the Claimant can choose how their judgment will be phrased. Almost always there will be a request that the money claimed, the court fee, and interest at 8% on the money from when the Claim Form was issued up until date of judgment, and if legally represented a fixed contribution to legal costs, be ordered to be paid immediately. However, the Claimant could simply request the Defendant be ordered to pay at a later date or in installments.
If money is claimed but the amount is not fixed, a Disposal Hearing is listed to determine the amount of money.
If any other remedy is claimed, the Claimant would have had to apply to the procedural judge for the Judgment in Default, and therefore the Judge will determine what happens next.
Judgments in Default are covered by Part 12 of the Civil Procedure Rules 1998.
- Effect of judgment
The judgment is binding and failure to comply with it means that enforcement action could be taken.
The Defendant's name is also entered onto a register (although if they pay within a month it will be removed) which is open to everyone, and is particularly used to vet the credit-worthiness of people.
In the case of Masters -v- LeaverEWCA Civ 2016 it was held that a judgment in default means just that - it is a judgment obtained due to default. It does not mean that the court has agreed with what was claimed, or favors one or other case. Therefore if the issue arises again, the Defendant is not prevented from arguing the facts again.
That case also refers to Texan and US law being similar, although of course the English Court has no jurisdiction to determine that point.
- Varying default judgment
If a Defendant accepts the judgment, and the amount, but can't pay, the Defendant should apply to Vary the judgment. A process is gone through whereby the Defendant states how soon they can afford to pay the debt (usually monthly installments) and the Claimant can either accept this, or request another amount. The court's staff will suggest a figure and ultimately a District Judge (N.B. In England and Wales a District Judge is one of the lowest levels of judge) will make a decision. The decision is binding, even if it means the Claimant is out of their money for a considerable amount of time, and even if interest cannot be charged on the outstanding sum (which it usually can't).
- Setting aside default judgment
There are three grounds for canceling ('setting aside') the Default judgment.
- The documents were not served correctly. The Defendant has to show that the documents were not served, which obviously would explain why the Claimant had ability to enter judgment. This has to be done by way of an 'Application on Notice' (motion). Evidence has to be shown to the procedural judge. This used to be called setting aside an 'irregular judgment'
- There is some good reason why judgment in default should be set aside. This covers any situation but is commonly used when service was effected properly, but still did not come to the attention of the Defendant (perhaps they were on a long vacation, or in hospital). Many jurisdictions also require the defendant to proffer a meritorious defense before vacating the default judgment.
- The Claimant entered judgment when they were not entitled so to do. For example, perhaps a Defense was filed in time, but the Claimant still attempts to enter judgment. The court staff usually check for things like this, but occasionally things slip through the net. It used to be the obligation of the Claimant to apply to set aside their own judgment in these circumstances, but this obligation has recently (in 2005) been dropped.
In the last circumstance of the above, the Defendant can get the judgment canceled as of right. Otherwise, the Defendant needs to show what their Defense will be, and if the court thinks that the defendant is effectively 'stalling for time' they will not get the judgment set aside.
In practice an application to set aside Default Judgment is almost always granted. This fact is seized upon by so-called 'credit repair' companies. A person whose credit record is adversely affected by a registered judgment pays a credit repair company who advises them how to apply to have it set aside. This is usually of little effect: the judgment will be re-entered very quickly if there is no actual defense, and there are usually other records which affect a person's credit rating, not just the judgment.
Pragmatic reasons why judgments are set aside are mainly because on balance, it is seen as better to give a person who may have a good defense extra time, and avoid a potentially devastating judgment, and thereby keep a claimant out of their money for a further two to four weeks, than give the claimant the benefit.
However the court can, and often does, order conditions to be satisfied, such as a draft defense being filed first, money paid into court, or similar conditions.
Setting aside Judgment in Default is covered by Part 13 of the Civil Procedure Rules.
See default judgment.
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