The Dekagram: 9th June 2025

This week Russell Wilcox and Thomas Clarke examine whether in applications to set aside default judgment there exists such a thing as a ‘co-defendant principle’; essential reading for all practitioners.

Co-defendants and Applications to Set Aside: the More the Merrier?

In the recent case of Leadingway Consultants v Saab & Anor [2025] EWCA Civ 582, the Court of Appeal considered whether or not there was such a thing as the ‘co-defendant principle’, wherein the existence of ongoing proceedings against a co-defendant could constitute an important factor in applications to set aside default judgment. The 1^st respondent to the appeal (the 1^st defendant in the original claim) argued that this ‘co-defendant principle’ derived from the decision in Hussain v Birmingham City Council and anor [2005] EWCA Civ 1570. By carefully examining the judgment of Chadwick LJ in Hussain, the Court concluded that in fact there was no such principle after all and that, as ever, it is the timeliness of these applications which counts.

The claim in Leadingway concerned a loan of €35 million that had been provided by the claimant to a company owned by the 1^st defendant. The claimant initially issued proceedings against the 1^st defendant only and, when no acknowledgment of service or defence were filed, default judgment for €45m was entered in August 2022. The 2^nd defendant was only joined by the claimant approximately one year later, due to extensive difficulties in effecting service in Cyprus. The claimant had initially tried to use a court registered bailiff in Cyprus but after four unsuccessful attempts they obtained an order authorising alternative means and managed to effect service with a combination of LinkedIn, Facebook and hand delivery. 

On 17^th June 2024 Knowles J (‘the Judge’) set aside the default judgment against the 1^st defendant as well as granting the 2^nd defendant relief from sanctions to enable him to challenge jurisdiction. The claimant appealed both decisions. The usual analysis of the Denton factors resulted in the Court of Appeal deciding that the Judge had been correct to grant relief from sanctions, but the set aside proved to be slightly more complicated. This was because the Judge had seemingly based his decision to set aside the default judgment on the fact that “there was no real sense of the proceedings or the dispute as a whole being over” (para 51). This fact was then held to outweigh the lateness of the 1^st Defendant’s application to set aside.

The appellant’s primary contention was therefore that the Judge should not have taken the co-defendant status into account. However, they also advanced an alternative position, which was that the fact of there being a co-defendant against whom the claim would be proceeding regardless of the outcome of the set aside application, might be considered as one potential factor but was not sufficiently important to outweigh the lateness of the application itself (para 50). The 1^st defendant argued that the Judge had merely correctly applied what it termed ‘the co-defendant principle’. 

CPR13.3 sets out the cases where the court may set aside or vary default judgment:

13.3—(1) In any other case, the court may set aside(GL) or vary a judgment entered under Part 12 if—

(a) the defendant has a real prospect of successfully defending the claim; or

(b) it appears to the court that there is some other good reason why—

(i) the judgment should be set aside or varied; or

(ii) the defendant should be allowed to defend the claim.

(2) In considering whether to set aside(GL) or vary a judgment entered under Part 12, the matters to which the court must have regard include whether the person seeking to set aside the judgment made an application to do so promptly.

Crucially, the only factor which is expressly mentioned and is said to be a mandatory consideration is whether the application was made promptly. The Defendant contended that the Court could also consider the fact that there was an extant claim against a co-defendant and that this principle was established in Hussain v Birmingham City Council and anor [2005] EWCA Civ 1570. Hussain concerned a claim for personal injury resulting from an accident in which a child fell from a window during a class at a local community centre. The claimant issued against both the council who ran the centre and the instructor who had been running the class. The council then brought in the governors of the local school who used the premises and obtained a default judgment against them for a contribution or indemnity. The claimant promptly followed suit and joined the governors as third defendants before obtaining their own default judgment against them. One year later, and on the eve of trial, the governors applied to set aside the judgment. They argued that they had a real prospect of successfully defending the claim on the basis that the council had been the occupier of the community centre all along. Their application was dismissed, and they appealed to the Court of Appeal.

At paragraph 29 of Hussain, Chadwick LJ, with whom Rix LJ and Keene LJ agreed, set out the unusual circumstances of that case and crucially, referred to the question of whether default judgment would have resulted in “finality” for the proceedings. It was this line of reasoning which was picked up by the 1^st Defendants in Leadingway.

 “…it must be borne in mind that this was not a straightforward contest between a claimant and a single defendant, where the effect of a default judgment (if allowed to stand) would be that there will be no trial. In the present case, on any basis, there will be a trial between the claimant and the Council and [the instructor]; and, at that trial, the court will have to investigate the issue which would arise if the Governors were taking part in that trial – that is to say who, as between the Council and the Governors (or perhaps the Governing Body), was to be treated as having responsibility for the premises for the purposes of the Occupiers’ Liability Act 1957. The Court would have to investigate that issue because the issue lies at the heart of the Council’s defence to the claimant’s claim. So, although a factor to be taken into account, the failure to act promptly, of itself, must (as it seems to me) carry rather less weight than it would in a case where the effect of the default judgment, if left undisturbed, is that there would be finality. This is not a case where the default judgment – or judgments – relieves either the claimant or the first defendant of the need to go to trial; or relieves the Court of the need to decide the issue of responsibility under the 1957 Act.”

It is not hard to see why the 1^st defendant was heartened by Chadwick LJ’s reference to the failure to act promptly carrying “rather less weight” in such circumstances. The question for the Court in Leadingway was, to what extent the lack of finality represented by the ongoing proceedings against the 2^nd defendant could outweigh the lateness of the application. On this, Phillips LJ, with whom Bean LJ and Moylan LJ agreed, was fairly unequivocal. At paragraph 59:

“In my judgment Hussain did not establish, nor purport to establish, a “Co-Defendant” principle such as that suggested by Mr D’Cruz, but merely indicated that the weight to be given to the factor of promptness will be rather less where “on any basis” there will be a trial of the very same issues as would be engaged in the claim against the defendant who was applying to set aside judgment. This could equally be viewed as giving rather more weight to countervailing factors. Even then, it is clear, the lack of promptness might still outweigh all other considerations…”

Phillips LJ even pointed out that the fact there are ongoing proceedings against co-defendants could potentially weigh against a late application to set aside, as granting such an application could result in a greater degree of “delay and disruption” by impacting upon the other parties as they litigate the extant proceedings. Insofar as the “questions of finality” were relevant they weighed “heavily… in not re-opening a judgment that had been entered 16 months before and had previously been unchallenged”.

One interesting problem with the 1^st defendant’s argument stemmed from the fact that the claim against the 2^nd defendant had only been served 12 months after the default judgment was entered. This would mean that the co-defendant principle wouldn’t have come to the aid of the 1^st defendant until a year had passed and their co-defendant was joined. As Philips LJ noted, the co-defendant argument would therefore entail “the startling proposition that the claimant inadvertently revived the first defendant’s ability to apply to set aside judgment by finally achieving service on the second defendant.”

Although the Court rejected the idea of there being any such ‘co-defendant principle’ there is nonetheless the merest hint that in some cases such questions of finality might be, at the very least, one factor among many. At paragraph 61, Philips LJ observed that at the time the 1^st defendant should have made their application to set aside “Finality was not a significant issue” because they were at the “embryonic stage of proceedings” and “to the extent it was, the only claim that had been served was at an end”. This does seem to suggest that a court might consider the existence of ongoing proceedings against a co-defendant to be slightly more of a factor in those cases where things have moved slightly further along. However, the message of the Court is clear: timeliness is key, and the mere existence of co-defendants isn’t going to save a late application.

About the Authors

Dr Russell Wilcox was called to the Bar in 2000, and before joining chambers enjoyed an illustrious career in academia. He was an associate member of McNair Chambers in Qatar, where he worked on a number of large-scale cross-jurisdictional commercial disputes and on international arbitral proceedings, and acted as disclosure counsel in Athenasios Sophocleus & Others v Secretaries of State for Foreign and Commonwealth Affairs and Defence, relating to the actions of the Colonial Administration in Cyprus during the Cyprus Emergency of 1956 to 1959. He now accepts the full range of work undertaken by the travel team at Deka Chambers.

Thomas Clarke was called in 2022 and has a wide-ranging common-law practice across all of Chambers’ core areas. He is in court almost every day alongside a busy civil paperwork practice. He has a sensitive and patient manner with clients and witnesses alike. He has represented the families of recently deceased individuals in both inquests and clinical negligence proceedings and is part of a team at Deka Chambers working to update the vulnerable witnesses toolkit for the advocates’ gateway. Throughout 2024, Thomas has been brought in to assist with document work on multiple catastrophic injury claims by senior members of chambers and is currently being led by Giles Mooney KC in a childbirth hypoxia claim.