Commercial Law

Setting Aside Default Judgements

Firstly, what are default judgements?

Default judgments occur when people do not respond to a lawsuit or debt collector, and a judge resolves the case without ever hearing the defendant’s side. In effect, they are found guilty because they never actually entered a defence, therefore, a judgement is made, setting out the amount of money (or the reimbursement of something) that one party must pay to another.

While this situation is not ideal, there are ways to challenge the judgement, including negotiating it or have it set aside.

Here is how:

When are default judgements made?

In court, the default position if a defendant does not provide a defence or comply with court requirements is that they are admitting liability. As a result, default judgements are made.

The justification for this default judgement is based on the assumption that:

  • the summons was properly served;
  • the defendant understands the summons and procedures to dispute the claim;
  • the venue and hours of the hearing are suitable to the defendant;
  • the defendant has the confidence necessary to press their defence in court; and
  • the claim is large and important enough for the defendant to spend time and effort disputing it.

However, this is not always a fair assumption and in many cases, it can be challenged by the defendant with the right legal team, if done in a timely manner.

When can you set aside a judgement?

Should a default judgment be made in error, you may have grounds to challenge it and have it vacated, or set aside. This also applies if you have already paid the money owed to the Plaintiff, if you never owed the debt, if you were not notified of the lawsuit, or if you would like to argue the case was mismanaged.

It is always best to talk with a legal advisor as soon as you are made aware of a judgement, as judgements can be set aside less than a month after they are granted.

If you are looking to set aside a judgement, you need to have this filed within 12 months after the date on which the judgement was given (unless the defendant can sufficiently demonstrate they had no knowledge of the judgement).

What do you need to do to set aside a judgement?

If you will be submitting an application to have a judgement set aside, you will need to provide the Court with:

Once these documents have been filed, you will be given a Court date. You will need to bring an original affidavit of service showing when you gave the application and affidavits to the enforcement creditor to the hearing.

What’s the cost of setting aside a default judgement?

The cost of setting aside a judgement will typically see the defendant (applicant to set aside) pay the plaintiff’s costs thrown away by reason of the entry of judgement and the cost and inconvenience of the application to set aside. However, this rule has some flexibility and will depend on the circumstances of the case and will ultimately be up to the Court to decide on the costs.

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