Setting Aside Default Judgments (Qld)
Where a party to civil litigation files a statement of claim, and no defence is filed, a court may make a default judgment against the defendant. Default judgments can also be made where a defendant fails to pay any amount claimed within a given timeframe. This article deals with the process for setting aside default judgments in Queensland.
Default judgments will state what the defendant must pay to the plaintiff. If a defendant does not make the payment or apply for the judgment to be set aside, the default judgment can be enforced. This can be done through the following avenues:
- If the default judgment is for an amount of $5,000 or more, the defendant may be declared bankrupt;
- If it is for $2,000 or more, a statutory demand may be made against a defendant company; or
- Assets of the defendant may be seized or sold (there is no minimum amount of the default judgment for this to take place).
In addition to the above consequences, default judgments may be damaging to a defendant company or individual as they may adversely affect their credit rating.
How can a default judgment be set aside?
Due to the significant consequences that can flow from a default judgment, if you as an individual or a company you own or manage has one made against you, you will most probably want to apply to have it set aside.
In Queensland, courts have the discretion to set aside default judgements. There are two grounds upon which a default judgement can be set aside. These are:
- By demonstrating that the default judgment was obtained irregularly;
- The procedure has been properly followed, but there is another reason why the default judgment should be set aside.
The civil litigation procedures in Queensland are set out in the Uniform Civil Procedure Rules 1999 (the UCPR). If a defendant can show these rules were not followed, then a default judgment can be set aside. Some examples of where a default judgment may be set aside in these circumstances include:
- The defendant may not have been properly served with a statement of claim;
- The default judgment was obtained too soon; or
- The default judgment was too much (in this situation the amount of the judgment may be corrected rather than the judgment being set aside).
Improper service of a legal document on the defendant or an incorrect date of service are the two most common reasons for a default judgment being set aside due to an irregularity.
Where the default judgment was not obtained irregularly, the party applying to set it asidewill need to demonstrate the following:
- Provide an explanation that is satisfactory for failing to respond in time to the plaintiff;
- Satisfy the court that there has not been an unreasonable delay in making the application to set aside the default judgement; and
- Establish that it has a prima facie defence to the case (this means that the defence has merit).
The court’s discretion to set aside default judgements in these circumstances is unconditional. However, it is useful to consider cases where these applications were successful in the past. Among other explanations, courts have accepted the following explanations for defendants failing to “appear” (failing to respond appropriately to legal documents filed by plaintiffs):
- Absence due to work commitments;
- Incorrectly calculating the date for when documents were due for filing; and
- Filing a Conditional Notice to Defend and then allowing this to lapse without fully understanding the procedural rules of the Courts.
Some reasons that the courts have not accepted include the following:
- A failure to respond to the plaintiff for more than seven months and a lack of a prima facie case; and
- A failure to respond to the plaintiff for over six weeks and after being granted an extension failing to meet that extension due to being unable to pay legal fees.
Legal costs orders
Usually, the party which is successful in a legal proceeding is the one which has legal costs awarded in its favour. However, this does not always apply for applications to have default judgments set aside. This is because what the applicant is applying for in these circumstances is considered an “indulgence” from the court. The court has the discretion to award legal costs as it sees fit. However, what usually occurs is that a costs order will be awarded in favour of the applicant defendant where the reason for the default judgement was due to an irregularity. However, if the reason was not due to an irregularity, the applicant defendant, despite being successful, will be required to pay costs. If the applicant defendant is unsuccessful in setting aside the default judgment, it will most likely be required to pay the respondent plaintiff’s legal costs.
If you require legal advice or representation in any legal matter please contact Armstrong Legal.