Once you have been served with a statement of claim, you have 28 days from the date of service to file your defence with the Court. If you fail to do so, the plaintiff can make an application to have a default judgment entered against you. Once a default judgment has been entered, the plaintiff is entitled to take steps to enforce the judgment.
If you discover that default judgment has been entered against you, not all is lost. In some circumstances, you can make an application asking the Court to set aside the default judgment. In this article, we will look at what you need to know about setting aside a default judgment in NSW.
Reasons for Setting Aside Default Judgment in NSW
The obvious reason for wanting to set aside a default judgment is that you dispute the claim being made against you, either in part or the whole of the claim, and you wish to file a defence and have the matter proceed to a formal hearing.
If a default judgment has been entered against you, the judgment will appear on your credit rating. This will likely effect your ability to obtain credit in the future and is another reason to consider making an application to set aside a default judgment.
Criteria for Setting Aside Default Judgment
There are three main factors that you must establish before the Court will set aside a default judgment.
- You must have a good reason for failing to file your defence within time. For example, you may not have been served with the statement of claim and were unaware of the claim being made against you or you may have been hospitalised or overseas and unable to file your defence. There are many valid reasons for not filing a defence.
- You must have some evidence in support of your defence. You do not need to establish that you will be successful in the substantive proceedings if the default judgment is set aside, but rather, you must establish that you have a bona fide defence. You will be required to provide some factual evidence to support your defence. For example, if you are claiming in your defence that you have paid part of the debt being claimed, you will need to provide evidence to the Court, which may include bank statements or cheque receipts, etc.
- You must be able to indicate to the Court that you are making the application to set aside the default judgment as soon as possible. If you have delayed making your application in any way, you must provide an explanation to the Court in respect of that delay.
What if the Judgment Debt is Being Enforced?
Once a default judgment has been entered against you, the judgment creditor is entitled to take steps to enforce that judgment. Judgment creditors commonly enforce the judgment through garnishee orders, a writ of possession of property or through an application to have the judgment debtor either made bankrupt (if an individual) or wound up (if a company).
If a judgment creditor is taking steps to enforce a default judgment, you can make an application for a stay of proceedings together with your application to set aside a default judgment. If a stay of proceedings is granted, it will prevent the judgment creditor from taking any further enforcement steps against you, until your application to set aside default judgment has been finalised.
LegalVision’s experienced litigation team can provide you with advice regarding your prospects of having your default judgment set aside as well as making the necessary application to the Court.