What is a default judgment?
A default judgment is a judgment delivered by the court in favour of a Plaintiff because of a Defendant’s failure to comply with the procedural requirements of the court. For example, if the court orders the Defendant to file its defence by a certain date and it fails to do so, the court may deliver a default judgment.
It can be quite alarming to have a default judgment made against you. The Plaintiff is not required to serve the default judgment on you, so you may not find out about it until enforcement action is taken. Alternately, you may find out about it when you apply for credit, as a default judgment shows up on your credit file. It might even have gotten to the point where the Plaintiff applies for a creditor’s petition in an attempt to bankrupt you, before you realise a default judgment has been made.
If you believe the default judgment should not have been entered, it is important to know your rights and the law in relation to seeking to have the default judgment set aside. The court may set aside or amend a default judgment if it considers it appropriate (Uniform Civil Procedure Rules (UCPR), Rule 290)
If you wish to have a default judgment set aside, you must apply to the Court seeking such an order. The Court considers the following before deciding whether to set the default judgment aside.
Judgment irregularly entered
If a default judgment is “regularly entered” this means that the Plaintiff followed all procedures correctly and in accordance with the UCPR. The UCPR is the legislation that provides rules as to how litigants are to proceed through the litigation process. If a judgment is “irregularly entered” it means there has been a defect in how the judgment was entered and, therefore, the proper procedures were not followed. If this is the case, the Defendant has the right to have the judgment set aside.
One of the most common procedural defects is a defect in the service of the Originating Process. The Originating Process is the court documentation which sets out the Plaintiff’s case against the Defendant. The Originating Process must be filed with the Court and served on the defendant to commence the court proceeding. A Plaintiff must prove service of the originating process on a Defendant before default judgment may be given.
In order for proper service of the Originating Process to occur the plaintiff must comply with Rule 105 of the UCPR, which provides that the Defendant must be served personally. This means that the defendant must be handed the documents by a process server or another qualified person. The only exception to rule 105, is rule 111 of the UCPR in the case of Magistrates Courts proceedings. If the proceeding is in the Magistrates Court, the Plaintiff may serve the Defendant by leaving it with an adult living at the relevant address.
However, sometimes a process server improperly serves the originating process so that the Originating Process does not come to the defendant’s attention. For example, a plaintiff may say that the Defendant was served at their home on 15 November 2017 at 2.00pm, however the Defendant is able to provide evidence that he or she was at work at that time. In that case, the defendant would have a strong case that service was not affected properly. This would mean the Court would be likely to set aside the default judgment on the basis that it was entered irregularly.
Even if a default judgment was not irregularly entered, the court may still decide to set it aside. Under Rule 290 of the UCPR, the court has a discretion to set aside a default judgment (or refuse to do so) taking into account:
- Any satisfactory explanation for the Defendant’s failure to respond to the originating process;
- Any delay in making the application to set aside the default judgment; and
- Whether the defendant has a prima facie defence.
A defendant must respond to a claim and statement of claim, within 28 days of being served with it. A defendant responds by filing court documents called a “notice of intention to defend” and a “defence”. An example of a satisfactory explanation for the defendant failing to respond to the originating process within 28 days, is that the defendant has been in hospital for the past three months.
Delay in making the application
The Court frowns upon defendants who delay in bringing an application to set aside a default judgment. For instance, if the defendant was notified of the default judgment in January 2015, but didn’t make an application to set aside the judgment until November 2015, this will not be satisfactory to the Court. Nonetheless, if the Defendant can provide an explanation for the delay in bringing the application, the Court may allow the application to proceed.
Prima facie defence
If a Defendant has a strong defence against a Plaintiff’s claim, the Court is more likely to set aside the default judgment. For instance, if the claim is in relation to the Defendant’s breach of contract for non-payment of invoices for work completed, but the defendant has a strong case that the work was defective and that some of the invoices were actually paid, this constitutes a prima facie (or ‘on the face of it’) defence. If, however, the claim is for outstanding funds owed by the defendant in relation to a credit card, which the Defendant has clearly signed up, it is unlikely there is a prima facie defence.
As the setting aside of a default judgment is at the court’s discretion, the above considerations do not need to be satisfied. Even if a Defendant presents a strong case in relation to all three of the above considerations, the Court has the discretion to either set aside the default judgment or refuse to do so.
If you have been notified of a default judgment against you, you may have a case to set that default judgment aside. It is important you get legal advice as soon as possible, as interest will accrue and enforcement action may be commenced by the Plaintiff at any time.