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Default judgment, setting aside

Perpetual Ltd v Marwa Dilati [2011] NSWSC 891. Harrison AsJ.

[22] The authorities on setting aside default judgment are Evans v Bartlam [1937] 2 All ER 646; Vacuum Oil Pty Ltd v Stockdale(1942) 42 SR (NSW) 239; Cuttle v Brandt (1947) 64 WN (NSW) 96; and Adams v Kennick Trading (International) Ltd & Ors (1986) 4 NSWLR 503.

Counsel referred to Adams v Kennick Trading (International) Ltd , where Hope JA (with whom Glass and Mahoney JJA agreed) held that in determining whether "sufficient cause" has been shown to set aside a default judgment, the court must look to the whole of the relevant circumstances which include, inter alia,

* the existence of a bona fide grounds of defence on the merits,
* an adequate explanation for the failure to defend and any delay;
* and in determining whether there are bona fide grounds of defence the court must not try the issues to be determined at the trial:
* what is required is that the court determine that the facts sworn to as providing a defence, if established at the trial, would afford a defence and that the defence is set up bona fide.

[23] One of the considerations to be taken into account when determining whether default judgment should be set aside was expressed by Priestley JA in Cohen v McWilliam (1995) 38 NSWLR 476 at 481 quoting from the Federal Court in Davies v Pagett (1986) 10 FCR 226:

"It is, however, another question whether concern about the extent of delays, either in a particular case or generally, should, in the absence of prejudice in the particular case, be taken into account in exercising a discretion to set aside a default judgment.

"The fundamental duty of the court is to do justice between the parties.

"It is, in turn, fundamental to that duty that the parties should each be allowed a proper opportunity to put their cases upon the merits of the matter. Any limitation upon that opportunity will generally be justified only by the necessity to avoid prejudice to the interests of some other party, occasioned by misconduct, in the case, of the party upon whom the limitation is sought to be imposed.

"The temptation to impose a limitation through motives of professional discipline or general deterrence is readily understandable; but, in our opinion it is an erroneous exercise of the relevant discretion to yield to that temptation. ..."

[24] This court should look to the whole of the relevant circumstances including an adequate explanation for delay and the existence of a bona fide defence on its merits. Delay is not in issue here. Mr Khalid acted expeditiously when he became aware that judgment for possession had been entered. Overall the fundamental duty of this court is to do justice between the parties.

Adelaide Bank Limited v John Abdelkodous & Anor [2011] NSWSC 32. Hoeben J. 10.02.11.

[13] Rule 36.16(2)(a) of the Uniform Civil Procedure Rules 2005 provides that a Court may set aside or vary a judgment or order after judgment is entered if the order or judgment is a default judgment. The principles applicable for setting aside a default judgment were stated by Hislop J in Hamafam Pty Limited v Saadullah [2007] NSWSC 818 at [7] as follows:

"7.  Factors relevant to the consideration of that issue include:
(a) whether the defendants have shown a satisfactory explanation for the delay in filing a defence or moving to set aside the judgment;
(b) whether the default judgment was obtained without notice to the defendants;
(c) whether the proposed defence is asserted bona fide;
(d) whether, if the judgment was set aside, prejudice would be occasioned to the plaintiffs;
(e) whether the proposed defence presents an arguable or triable issue;
(f) whether it would be futile to set aside the judgment."

National Australia Bank v Priestley (No 3) [2012] NSWSC 1171. Schmidt J. 

9 It is settled that where an application is made to set aside a default judgment, in order that a defence which depends on facts may be advanced, the applicant must lead some evidence of the facts on which the defence will be established on the merits.

Assertions as to a belief that a defence has merit, or is valid, or that the facts on which it is based are true, is not sufficient (see Davies J's discussion in National Australia Bank Ltd v McCann [2010] NSWSC 766 by reference to Magnate Projects Pty Ltd v Youma Constructions (No 2) Pty Ltd [2005] NSWCA 331; Hodgson JA and Vacuum Oil Co Pty Limited v Stockdale (1942) 42 SR(NSW) 239 at 243.)


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