Article by Ben Schefe, Michael Mapp and Conor Harvey
A default judgment is an order made by the Court against the defendant without having the need for a hearing/trial in court. This primarily occurs when the defendant does not take the appropriate steps to respond to the service of a claim and statement of claim.
Receiving a court document can be daunting, and your first thoughts may be to ignore such a document. However, it is imperative that once you have been served with a claim and statement of claim, you must take action. Court proceedings can lead to all sorts of litigious complications, and should never be ignored.
Once served with a claim, the defendant will have twenty-eight (28) days to file a notice of intention to defend and defence notice of intention to defend. If the defendant fails to do so, the plaintiff will have the right to file a request for default judgment, in which case the court may order against the defendant, including orders for interest and costs.
Disputing Default Judgments
If you become aware that default judgment has been entered against you, and you dispute the default judgment, and believe that it ought not have been entered into by the Court, it is important to that you seek advice on taking steps to ‘set aside’ the default judgment.
The setting aside of a default judgment is ultimately at the discretion of the Court, and even with a strong case, the Court can either set aside the default judgment, or refuse to do so.
The Court will take into consideration the following before determining whether or not a default judgment ought to be set aside:
- Whether the judgment was entered into ‘irregularly’, and the correct procedures were adhered to as per the Uniform Civil Procedure Rules 1999 (Qld);
- Whether the defendant has a satisfactory explanation for not responding to a claim and statement of claim within the Court time frames;
- Whether the defendant has delayed an application to set aside default judgment;
- Whether the defendant has a prima facie defence against the plaintiff’s claim; and
- Whether the plaintiff would be prejudiced if the judgment is set aside and cannot be adequately compensated by a suitable award of costs.
Consequences of Default Judgments
If the default judgment is not set aside as per the Court’s discretion, the order will remain. If the orders of the default judgment are not adhered to, the plaintiff may take steps to enforce the judgment, which may eventually lead to potential bankruptcy, or company wind up proceedings (as relevant).
It must be noted that the Plaintiff is not required to serve the default judgment. Accordingly, you may be subject to enforcement proceedings before you are even aware of the default judgment against you.
Where We Can Assist
If you are ever served with a statement of claim and/or a default judgment thereafter, it is important that you receive advice on how to commercially protect your interests, and prevent further litigation costs from the outset. If you would like further advice on this topic, MDL’s experienced commercial litigation team can assist.
