What is a Default Judgment and how do you respond?
If you do not file a notice of appearance or defence in a proceeding, then a default judgment may be entered against you/your company.
It is extremely important to comply with the Court time frames, especially for filing a Notice of Appearance or Defence – you should never ignore Court proceedings.
What is a default judgment?
A default judgment is an order made by the Court without the need for a trial or a hearing.
What are the consequences of a default judgement?
If a default judgment is not set aside, the order stands.
This means that if you do not comply with the order (pay the amount ordered) in certain circumstances you may be made bankrupt or your company wound up.
Can I set aside a default judgment?
Yes, although it is not automatic.
The Court will look at the following:
- An acceptable explanation for your failure to file a notice of appearance or defence;
- Whether there is a prima facie defence on the merits;
- Whether the application to set aside the judgment was made promptly after the judgment came to the knowledge of the defendant; and
- Whether the plaintiff would suffer any prejudice which could not be adequately compensated by an award of costs.
Each of these criteria are required to be satisfied in order to set aside a default judgment.
What are the costs consequences?
Usually the party asking for the Court to set aside the default judgment will be required to pay the costs of the other party.
Prevention is always better than the cure – you should always seek legal advice early when being served with Court proceedings.
If a default judgment is entered against you, with the appropriate legal advice and in the right circumstances, the judgment may be set aside and the proceedings continue.
If you would like to discuss court proceedings in relation to your own situation, please contact Partner Catherine Ballantyne.