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If you have been served with a default judgment for the first time, you may be feeling confused and overwhelmed. You are probably wondering what it is, what you have to do and what can happen if you do not respond. A default judgement is a judgment made by a court without a court hearing. This usually occurs when one party (Party B) fails to respond to a statement of claim brought by another party (Party A). Typically, this happens in debt recovery cases where Party B realises the importance of Party A’s statement of claim but does not:

  • pay the money claimed by Party A; or 
  • file a defence (or respond) to the Statement of Claim within the time provided; or
  • respond to the statement of claim at all.

Default judgments are serious. If made against you, they can have major negative consequences on your financial situation and reputation. This article will outline what a default judgment is and what to do if one is made against you.

 What Can Happen if a Default Judgment is Made Against You? 

If you receive a statement of claim, you must deal with it as soon as possible – either by:

  • paying the judgment debt (if the other party is claiming a debt);
  • negotiating with the other party; or
  • filing a defence.

You will usually have 28 days from the date you receive the statement of claim to file a defence.

You must read the statement of claim carefully and identify any timeframes you have to meet. This can include dates by which you must file a response or a defence or dates you must attend court.

However, if the court makes a default judgment against you and you fail to comply with it (for example, by not paying money or doing something required by the judgment in time), the other party can start an action to enforce the default judgment against you. This is known as ‘enforcement action’. Enforcement actions can include the: 

  • sheriff seizing and selling your personal property;
  • court making your bank take money out of your bank account or making your employer take money out of your wages;
  • court declaring you bankrupt or making an order to dissolve your company; or 
  • sheriff seizing and selling your house. 

The other party can also seek other fees and interest from you as part of an enforcement action. 

A default judgment usually becomes enforceable 28 days after the court makes it. However, in most Australian states, the other party can enforce the default judgment for 12 years from the date on which the default judgment becomes enforceable. 

What Steps Can I Take?

If you have a default judgment served against you, the first step is to try and negotiate with the other party to see if they can agree to have the default judgment set aside. Sometimes, they may agree to this based on certain conditions. These could include:

  • satisfying the judgment;
  • paying some of their legal costs; or
  • any other condition considered necessary.

If the other side does not agree to this, you can file an application with the Court to set aside the default judgment. This is sometimes known as a notice of motion. However, making an application with the court can be an expensive and time-consuming process. Therefore, you should only file this application if you have a good enough excuse and reason to do so. If so, you should make an application as soon as possible. 

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How Do I Set Aside a Default Judgment with the Court? 

To make an application to set aside a default judgment, you must file the application with the court together with an affidavit (statement) explaining, among other things:

  • the reason why you did not respond to the statement of claim in time;
  • that you have a genuine and apparent defence to the other party’s claim; and
  • the reason why you would like the default judgment to be ‘set aside’.

Your affidavit should also attach a copy of your draft defence to the statement of claim. This helps the court to see that you have a genuine and apparent defence. You should always make sure you have the required court documents.

What Happens at the Hearing?

After the other party has had an opportunity to respond to your application and provide its evidence, the court will set the matter down for a hearing. 

At the hearing, the court will hear submissions from each party supporting their case and then decide whether or not to set aside the default judgment. 

If you are successful, then the court will allow you the opportunity to file your defence or response to the statement of claim. After this, the matter will proceed to a full hearing.

If you are not successful, the default judgment will stand and you will need to take steps to satisfy it. The court might also order that you pay the other party’s legal costs.

Key Takeaways 

A default judgment is a very serious matter and can have negative financial and reputational consequences if made against you. Therefore, you must act quickly once you find out about any default judgment made against you. This could be by attempting to set it aside through informal negotiations with the other party or by filing an application with the court to set it aside. 

LegalVision has experienced litigation lawyers who can help you if a default judgment has been made against you. Get in touch with LegalVision’s dispute resolution lawyers today on 1300 544 755 or fill out the form on this page.  

Frequently Asked Questions

How much time do I have to file a defence?

You will usually have 28 days after you receive the statement of claim to file a defence.

What happens if I do not succeed at the hearing?

If you are not successful, the default judgment will stand, and you will need to take steps to satisfy it. This could include paying the money claimed or doing something required by the judgment. You may also need to pay the other party’s legal costs.

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