Understanding and Setting Aside Default Judgments in ACT: A Broad Guide

Default Judgments in the ACT: Consequences and How to Apply to Set Them Aside

What Is Default Judgment?

Default judgment in the Australian Capital Territory is entered when a defendant fails to respond to legal proceedings within the time required under the Court Procedures Rules 2006 (ACT) (“CPR”).

Under Rule 1117 CPR, a defendant is taken to be in default if they fail to file a Notice of Intention to Respond or a Defence within the required timeframe or any extension granted by the Court.

Default judgment is administrative in nature and can be entered by the Registrar without a hearing. Once entered, the plaintiff becomes the judgment creditor, and the defendant becomes the judgment debtor.

What Are the Consequences of Default Judgment?

If default judgment is entered against you, the judgment creditor may commence enforcement action, including:

• seizure and sale of property;
• garnishee orders over wages or bank accounts;
• charging or sale orders over real estate.

Enforcement may significantly impact your credit rating and financial stability. Additional costs may also accrue if enforcement steps are required.

Enforcement procedures arise under Part 2.16 CPR (ACT).

How Do You Apply to Set Aside Default Judgment?

Applications to set aside default judgment in the ACT are made under Rule 6572 CPR, which gives the Court a wide discretion to set aside a judgment where the interests of justice require it.

Because default judgment is not a decision on the merits, ACT courts are generally prepared to set it aside provided certain requirements are met.

What Must You Show to Have Default Judgment Set Aside?

To succeed in an application to set aside default judgment, an applicant will generally need to establish the following elements.

1. A Reasonable Explanation for the Default

The Court requires a credible explanation for why no response was filed within the required timeframe.

A leading ACT example is Eastman v Commissioner for Housing for the Australian Capital Territory (2006) 200 FLR 272. In this case, the applicant failed to appear because of mail delays and communication issues. The Court held these to be reasonable explanations, and that refusing even a short adjournment denied natural justice. The appeal was allowed.

The case demonstrates that a reasonable explanation may include:

• issues with service or receipt of documents;
• delays in mail or communication;
• genuine misunderstanding;
• personal or medical issues;
• reliance on flawed administrative or procedural information.

What matters is that the explanation is genuine and adequately supported by evidence.

2. No Unreasonable Delay in Bringing the Application

You must act promptly once you become aware of the default judgment.
Unexplained delay can result in refusal of the application.

The ACT Supreme Court has repeatedly emphasised the importance of timeliness to avoid prejudice to the judgment creditor.

3. An Arguable Defence on the Merits

The applicant must demonstrate a prima facie defence, a low threshold requiring only that there is a genuine issue to be tried.

In Stormer Building Group Pty Ltd v Johnson [2014] ACTSC 23, the Court held that the defendants had an arguable defence where they alleged:

• the respondent commenced construction without authority, and
• that this conduct created difficulty in securing finance.

The Court found no significant delay, no real prejudice to the respondent, and therefore set aside the default judgment.

This case illustrates that:

• the applicant need not prove they will win;
• the defence must not be frivolous or hopeless;
• affidavit evidence must outline the factual basis of the defence.

ACT courts balance the importance of finality in litigation with the need to avoid injustice. Because default judgment is not a determination on the merits, the Court will generally set it aside if these elements are met and the interests of justice require it.

Ignoring a default judgment only increases the financial and legal consequences. Prompt action gives an applicant the strongest chance of success.