Understanding Default Judgments in NSW: A Comprehensive Guide

Q: What Is Default Judgment?

Default judgment is when the court enters a judgment in favour of a party (typically, a plaintiff) as a result of the other party’s (typically, a defendant) failure to respond to legal proceedings or meet court deadlines. If default judgment is entered against a defendant for a sum of money, the plaintiff becomes the ‘judgment creditor’ and the defendant becomes the ‘judgment debtor’. Having a default judgment against you can have negative consequences. However, there are circumstances in which default judgments can be set aside. In this article, we will provide you with a guide on setting aside default judgments in NSW.

Q: What Are the Consequences of Default Judgment?

If default judgment is into entered against you, the judgment creditor might take enforcement action to recover the amount that the Court has ordered that you are liable to pay. This may result in (without limitation) your assets being seized and sold or your wages being garnished and paid to the judgment creditor. The judgment can also negatively impact your credit rating, affecting your ability to obtain loans. Further, you may become liable to pay additional costs if a judgment debtor has to take enforcement action against you.

Q: How Do You Apply to Set Aside Default Judgment?

Courts are often readily willing to set aside default judgments. This is because default judgment is an administrative form of judgment as opposed to a judgment based on the merits of a legal argument. However, to set aside judgment an applicant will have to satisfy the Court that the following elements are present:

Q: What Must You Show to Have Default Judgment Set Aside?

There was a reasonable explanation for not responding to the legal proceedings (or otherwise meeting the relevant Court deadline). There was no unreasonable delay in applying to set aside the default judgment. That, on the face of it, there is an arguable defence to the plaintiff’s claim. This does not require a full explanation of the defence, or even that there is a strong defence. There simply needs to be a potential to defend the matter. It is a low threshold to meet. It is not uncommon for parties to ignore default judgment in the hope that the matter will go away. As above, this can have negative consequences that can be avoided by making an application to set aside default judgment.

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Setting Aside Default Judgment in Queensland: Key Principles and Practical Steps

What Is Default Judgment?

Default judgment occurs when the court enters judgment in favour of one party—usually the plaintiff—because the defendant has failed to file a defence or otherwise respond to the claim within the time required under the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”). Once default judgment is entered, the plaintiff becomes the judgment creditor, and the defendant becomes the judgment debtor.

Having default judgment entered against you can have serious financial and legal consequences. Fortunately, Queensland courts allow applications to have default judgments set aside in appropriate circumstances.

What Are the Consequences of Default Judgment?

Once default judgment is entered, the judgment creditor may immediately commence enforcement action. This may include (without limitation):

seizure and sale of property,
redirection of wages or bank accounts, or
enforcement warrants affecting real property.

A default judgment can also negatively affect your credit rating and your ability to obtain future credit. Additional legal costs may accrue if enforcement action is pursued.

How Do You Apply to Set Aside Default Judgment?

The Queensland courts have the power to set aside default judgment under Rule 290 UCPR (setting aside judgment by default). Courts often take a flexible approach, recognising that default judgment is a procedural, not merits-based, determination.

However, to succeed, an applicant must satisfy the Court that certain key elements are met.

What Must You Show to Have Default Judgment Set Aside?

To set aside default judgment in Queensland, you generally must establish:

A Reasonable Explanation for the Default

You must provide a credible explanation for why you failed to file a defence or respond in time. Examples may include incorrect service, misunderstanding of process, illness, or other circumstances affecting your ability to comply.

No Unreasonable Delay in Making the Application

The application to set aside must be brought promptly after you become aware of the judgment. Unexplained delay can hinder your prospects of success.

A Prima Facie Defence on the Merits

The threshold is low. You do not need to prove you will win—only that there is a genuine, arguable defence. Affidavit material setting out the nature of your defence will be required.

These principles are consistently applied by Queensland courts, including in cases such as Cook v D A Manufacturing Co Pty Ltd [2004] QCA 52, where the Court emphasised that justice is usually best served by resolving matters on their merits.

It is common for parties to ignore default judgment in the hope that the matter will resolve itself. As noted above, this can lead to serious adverse consequences. If default judgment has been entered against you, seeking to set it aside promptly is essential.

Please contact Sebastian Brodowski of our Insurance & Dispute Resolution team if you are a plaintiff or defendant who requires assistance with default judgment on 02 9264 9111

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

Setting Aside Default Judgment in Queensland: Key Principles and Practical Steps

What Is Default Judgment?

What Are the Consequences of Default Judgment?

How Do You Apply to Set Aside Default Judgment?

What Must You Show to Have Default Judgment Set Aside?

A Reasonable Explanation for the Default

No Unreasonable Delay in Making the Application

A Prima Facie Defence on the Merits