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Have you ever missed a court date or failed to respond to a lawsuit? If so, you may be familiar with the term "default judgment". This legal term refers to a decision made by a judge in favour of the plaintiff when the defendant fails to appear or otherwise respond to a legal action.
A default judgment debt can have serious consequences, including financial penalties, enforcement action, and damage to your credit score. In this article, we'll explore what default judgment is, how it works in NSW, and what you can do if you find yourself facing one.
What Is a Default Judgment?
A default judgment is a court order made in favour of the plaintiff when the defendant fails to respond to a lawsuit within the required timeframe. In New South Wales, defendants have 28 days from being served with a statement of claim to file their defence or acknowledgment of the claim. If the defendant does not respond within this period, the plaintiff can apply to the court for default judgment.
These are court orders against defendants who fail to respond to a lawsuit. This means that the plaintiff who filed the lawsuit gets the relief he or she requested. This could include monetary damages or the return of property. The critical distinction is that default judgment is entered without a trial or hearing. The Local Court registrar makes the decision based on documents filed, and you do not have to attend court.
Not recognising that you were sued doesn't stop the court from ruling against you. One Sydney defendant discovered a $45,000 default judgment when applying for a home loan, stemming from unpaid commercial rent they'd disputed but never formally defended in court.
How Default Judgment Works in NSW
The default judgment process follows a specific sequence governed by the Uniform Civil Procedure Rules (UCPR). First, the plaintiff files and serves a statement of claim on the defendant. This document outlines the claim, the amount sought, and the legal basis for the action.
The defendant then has 28 calendar days from the date of service to file a defence, acknowledgment of liquidated claim form, or pay the money claimed. If the statement of claim is served by post, service is considered complete on the fourth working day following posting for individuals or businesses, or seven days from posting for partnerships or businesses using a business name.
If no response is received, the plaintiff must wait until at least 28 days have passed before applying for default judgment. The application requires two key forms: Form 38 (Notice of Motion for default judgment for liquidated claim) and Form 41 (Affidavit of Service). You will not need an affidavit of service form if the court served the statement of claim. You can get copies of the forms at the Local Court or the Uniform Civil Proceudre Rules forms list
The Local Court registrar then decides whether to grant default judgment without requiring anyone to attend court. Generally, the court will grant default judgment if the notice of motion and affidavit of service show that the defendant was properly served, more than 28 days have elapsed, the defendant has not paid the money claimed, and court records confirm no defence or acknowledgment was filed.
Proper service is the cornerstone of this process. If the statement of claim was not served correctly, the entire application fails. Courts scrutinise service requirements carefully to ensure defendants had genuine opportunity to respond.
Common Reasons Defendants Fail to Respond
There are several reasons why a defendant might fail to respond to a lawsuit from the other party. Some of the most common causes include not being aware that someone was suing them. This can happen if the plaintiff never properly served the defendant with the lawsuit, or if the plaintiff served it but the defendant did not understand what it meant.
Another common reason is thinking that they do not have to respond. This is a dangerous misconception. Even if a defendant believes they do not have a strong case and don't have further evidence to back their claims, they still need to respond to the lawsuit to protect their rights. Filing even a basic defence preserves your right to contest the matter.
Some defendants cannot afford to hire a solicitor. Legal fees can be expensive, and not everyone can afford legal representation to defend them in a lawsuit.
Not understanding the legal process is another barrier. The legal process can be complex, and it can be challenging for people to understand their rights and obligations. Legal documents use technical language that can intimidate those without legal training.
Some people mistakenly try to ignore the lawsuit, believing that if they ignore it, it will go away. However, this is emphatically not the case. A construction worker we assisted missed the deadline after his mother fell ill and he travelled interstate for three weeks. The documents sat unopened on his kitchen table, and by the time he returned, a default judgment had already been entered against him for $23,000.
Requirements to Obtain Default Judgment
To successfully obtain default judgment in NSW, plaintiffs must satisfy several strict requirements. First, the statement of claim must have been properly served on the defendant according to UCPR requirements. Improper service is the most common reason default judgment applications fail.
Second, a minimum of 28 days must have elapsed since the date of service. The calculation of this timeframe is critical. If service was by post, you must account for the additional days required for deemed service (four working days for individuals, seven days for partnerships).
Third, the defendant must not have filed a defence, acknowledgment of liquidated claim, or paid the debt claimed. If the defendant has taken any of these actions, they are not in default and the plaintiff cannot proceed with a default judgment application.
Fourth, the correct forms must be filed with the court. Form 38 (Notice of Motion) and Form 41 (Affidavit of Service) are required, and they must be completed accurately and filed within 14 days of executing the affidavit in the notice of motion.
Finally, court records must confirm no response from the defendant. The registrar will check the court file before granting judgment to ensure the defendant has not filed any document that would take them out of default.
Types of Default Judgment
Liquidated Claims
A liquidated claim involves a fixed debt or specific monetary amount that is certain and calculable. Examples include unpaid invoices, loan defaults, specific contract breaches, or rent arrears. For liquidated claims, the registrar can enter judgment for the exact amount claimed plus costs and interest without requiring a court assessment.
The plaintiff simply completes Form 38 specifying the amount owed, and if all requirements are met, the registrar signs and seals the judgment. A signed and dated copy is then sent to the plaintiff confirming the default judgment was entered. This streamlined process means liquidated default judgments can be obtained quickly, often within days of filing the application.
Unliquidated Claims
An unliquidated claim includes claims for damages that require assessment by the court. Examples include motor vehicle accidents, defamation claims, negligence cases, or building disputes where the quantum of damage must be determined.
Unliquidated claims are usually case managed. Even though the defendant is in default, the court must still evaluate the evidence and determine appropriate compensation. This requires additional steps beyond the simple registration process used for liquidated claims. The plaintiff must prove not only that the defendant is liable, but also the extent of damages suffered.
Consequences of Default Judgment
Default judgment carries significant financial and legal consequences. A default judgment becomes enforceable 28 days after the court makes it. Once enforceable, the plaintiff (now judgment creditor) can pursue enforcement action against the defendant (now judgment debtor) for 12 years from the date the judgment becomes enforceable. Exceptions exist in South Australia and Victoria, where the enforcement period extends to 15 years.
Enforcement options available to judgment creditors include garnishee orders (seizing money from bank accounts or wages), writs for the levy of property (where a sheriff seizes and sells assets), bankruptcy notices for individuals, and statutory demands for companies. These enforcement mechanisms give judgment creditors powerful tools to recover the debt.
The impact on credit files can last for years. Default judgments appear on credit reports and negatively affect credit scores, making it difficult to obtain loans, mortgages, or even rental properties. Many people only discover default judgments when they're rejected for credit.
For companies, default judgment can lead to winding up proceedings. A company that receives a statutory demand has 21 days to respond; otherwise, it is presumed to be insolvent and the creditor may apply to have that company wound up. During certain periods, this timeframe has been extended to six months as part of economic support measures.
One client we assisted faced potential bankruptcy over a $12,000 judgment from a disputed gym membership debt. The gym had continued charging monthly fees despite the client's cancellation notice, and when he stopped paying, they obtained default judgment. By the time enforcement action commenced, interest and legal costs had increased the debt to over $18,000.
How to Set Aside a Default Judgment
Grounds for Setting Aside
If someone has obtained default judgment against you, you can still apply to the court to have the judgment set aside under Rule 290 of the UCPR. There are two primary grounds on which a default judgment may be set aside.
First, you might be able to satisfy the court that the judgment was obtained irregularly. Irregularity means that the plaintiff hasn't complied with the UCPR or that there is a defect in the judgment. Examples include improper service, incorrect calculation of the 28-day period, or failure to file required forms correctly.
Second, and more commonly, you can apply to set aside on discretionary grounds. To succeed on this basis, you must demonstrate a reasonable explanation for not filing a defence within the required timeframe. The court will assess whether your explanation is credible and sufficient to justify setting aside the judgment.
You must also demonstrate that you have a genuine defence to the plaintiff's claim. This means presenting evidence that shows you could succeed if the case proceeded to trial. The court evaluates the strength of your defence to determine if it warrants setting aside the default judgment.
Finally, you must show that you have not delayed making the application to set aside the default judgment, or if there has been a delay, there is a reasonable explanation for doing so. Courts expect defendants to act promptly once they become aware of the judgment.
The Application Process
To set aside a default judgment, you must file Form 9 (Application) together with Form 46 (Affidavit) with the court where the default judgment was made. The Application should clearly state the orders you want (that the default judgment be set aside).
The Affidavit must explain why you didn't respond in time and outline your defence with supporting evidence. This is where many applications fail. It is important to explain the failure to file a defence honestly with the court. Vague or implausible explanations will likely be rejected.
You must file the original and two copies of each form with the court. The court will keep the originals and return sealed copies to you. Filing fees apply.
Once filed, you must serve the sealed application and affidavit on the plaintiff (judgment creditor), giving them notice of your intention to challenge the default judgment. Both parties must attend the hearing on the allocated date. You should bring an affidavit of service to prove you've served the documents.
At the hearing, both parties can present their arguments. The defendant must demonstrate a valid reason for the default and a credible defence to the claim. The court will consider the application and the arguments presented before making a decision. If the judgment is set aside, the case will proceed as if the default judgment never occurred, allowing the defendant to file a defence and participate in the legal process.
The Prima Facie Defence Requirement
A critical requirement that catches many defendants by surprise is the need to establish a prima facie defence on the merits with affidavit material. You need to present actual evidence that you will seek to rely on in your defence. This is a very important difference from the normal drafting of a defence, where you can simply plead facts without immediately proving them.
Your affidavit must include documents, correspondence, photographs, expert reports, contracts, or other evidence supporting your position. Mere allegations or denials are insufficient. The court wants to see that you have a genuine, evidenced defence, not just a desire to delay the inevitable.
One client successfully set aside a $78,000 building dispute default judgment by providing comprehensive affidavit evidence. We compiled the original building contract showing scope of works, progress photographs demonstrating work completed to specification, and an independent engineer's report confirming compliance with building codes. This evidence established a clear prima facie defence that the works were completed properly, contradicting the plaintiff's defective workmanship claim.
When to Seek Legal Advice on Default Judgment
You should seek legal advice at several critical points in the default judgment process. If you are facing a lawsuit, contact a solicitor immediately upon receiving the statement of claim. Don't wait until the 28-day deadline approaches. Early advice gives you time to gather evidence and prepare a proper defence.
If you have failed to file a defence within 28 days, seek urgent legal advice. A solicitor may be able to negotiate with the plaintiff to agree not to proceed with the default judgment application in exchange for filing your defence late.
If you have received a default judgment, contact a solicitor as soon as you discover it. Time is critical. The longer you wait, the harder it becomes to explain the delay to the court. Every day that passes strengthens the plaintiff's argument that you've sat on your rights.
If you are being garnished or have a lien placed on your property, you need immediate legal assistance. Enforcement action moves quickly, and you need to file an application to set aside the judgment urgently to stop the enforcement process.
If you are in need of help understanding the legal process or your legal rights, an attorney can help you understand both and can represent you in court if necessary. The legal process can be complex, particularly the technical requirements around service, timeframes, and affidavit evidence.
For plaintiffs, you should seek legal advice before applying for default judgment to ensure proper procedure. Simple errors in calculating service dates or completing forms can result in the application being rejected. If the defendant files an application to set aside your judgment, you need legal representation to oppose it effectively.
Solicitors can review your situation and assess options within days, not weeks. They gather evidence including contracts, correspondence, medical records, and accident reports to determine fault and build your case. They prepare comprehensive affidavit material with supporting documentation that meets the prima facie defence standard. For many claims, No Win No Fee arrangements are available, making legal help accessible without upfront costs.
A good lawyer knows how to effectively negotiate with opposing parties for favourable outcomes, including payment arrangements that avoid enforcement. They handle all procedural requirements and strict timeframes, ensuring forms are filed correctly and on time.
Default Judgment vs Summary Judgment
Default judgment and summary judgment are distinct legal concepts that are sometimes confused. A default judgment occurs when the defendant fails to respond to the statement of claim at all. The plaintiff obtains judgment because of the defendant's procedural default, not because the court has assessed the merits of the case.
Summary judgment, in contrast, occurs when the defendant has responded by filing a defence, but the court determines there is no arguable defence and no genuine dispute. The court examines the merits of the claim and defence and concludes that one party must succeed, making a trial unnecessary.
Both result in judgment being entered without a full trial, but the legal tests differ significantly. Default judgment is purely procedural – did the defendant respond within 28 days? Summary judgment is substantive – does the defendant have an arguable defence? The application process also differs. Default judgment applications are typically decided by the registrar based on documents alone, whereas summary judgment applications require a court hearing before a magistrate or judge.
Enforcement Options for Default Judgment
Once a default judgment becomes enforceable (28 days after entry), the judgment creditor has numerous enforcement options available. Garnishee orders allow the creditor to seize money from the debtor's bank accounts or directly from wages paid by an employer. The bank or employer must pay the garnished funds to the judgment creditor rather than the debtor.
An examination notice requires the defendant to attend court and disclose their assets under oath. This helps the judgment creditor identify what assets are available for enforcement. Failure to attend an examination hearing can result in arrest warrants.
A writ for levy of property authorises the sheriff to seize and sell the debtor's assets to satisfy the judgment debt. The sheriff can take possession of vehicles, equipment, stock, or other valuable personal property. A charging order places a charge on land or property owned by the debtor. When the property is sold, the judgment creditor receives payment from the sale proceeds.
For individuals, a bankruptcy notice is a formal 21-day demand requiring payment of the judgment debt. If the debtor fails to comply, the creditor can present a creditor's petition seeking a bankruptcy order. During certain periods, temporary protection procedures have increased this period from 21 days to six months to prevent recovery action by unsecured creditors.
For companies, a statutory demand is a 21-day demand for payment. If the company fails to respond or pay, it is presumed to be insolvent, and the creditor may apply to have the company wound up. Before seeking winding up, the creditor can ask the court to examine the company's director to determine what assets the company has and whether it can pay the debt. This process is called enforcement.
Frequently Asked Questions About Default Judgment
What happens if I ignore a statement of claim?
If you ignore a statement of claim, the plaintiff can apply for default judgment against you after 28 days. The court will likely grant judgment in the plaintiff's favour without hearing your side of the story. This judgment can then be enforced through garnishee orders, property seizure, or even bankruptcy proceedings. Ignoring legal documents never makes them go away – it only makes your situation worse.
Can a default judgment be removed from my credit file?
A default judgment will remain on your credit file even after you pay it. However, if you successfully apply to set aside the default judgment, it should be removed from your credit file as the judgment is reversed. This is why acting quickly to set aside an unjust default judgment is so important. If the judgment was entered incorrectly or you have a genuine defence, setting it aside protects your credit rating.
How long do I have to set aside a default judgment?
There is no strict time limit for applying to set aside a default judgment, but you must act promptly once you become aware of it. Courts expect you to apply without unreasonable delay. The longer you wait, the harder it becomes to provide a reasonable explanation for the delay, and the more likely the court will refuse your application. If you've only just discovered a default judgment, seek legal advice immediately.
Do I need a lawyer to set aside a default judgment?
You can lodge your own application to set aside a default judgment without using a lawyer, but it's important to include all required details and evidence in your application. The prima facie defence requirement means you need to provide affidavit evidence supporting your defence, not just allegations. Most people find the technical and evidential requirements challenging without legal assistance. Statistics show that applicants with legal representation have significantly higher success rates than those who represent themselves.
What is the difference between setting aside and appealing a default judgment?
Setting aside a default judgment is an application to the court that made the judgment, asking it to reverse the judgment and allow you to defend the case. An appeal involves asking a higher court to review the lower court's decision for legal error. For default judgments, setting aside under Rule 290 of the UCPR is the appropriate remedy, not an appeal. The application is made to the same court that entered the judgment.
Can I get a default judgment if the defendant was never properly served?
No. Proper service of the statement of claim is an essential requirement for obtaining default judgment. If the defendant was not properly served according to UCPR requirements, the court will refuse the default judgment application. This is why the affidavit of service is required – it proves to the court that the defendant had proper notice of the claim and opportunity to respond. Service defects are the most common reason default judgment applications fail.
What amount can I claim in a default judgment?
For a liquidated claim (fixed debt or specific amount), you can claim the exact amount owed plus interest and costs. For an unliquidated claim (damages requiring assessment), the court must determine the appropriate amount through case management and assessment. You should claim the genuine amount you're owed, supported by invoices, contracts, or other evidence. Inflated or unsupported claims may be rejected or reduced by the court.
Will the court notify me if a default judgment is entered against me?
Not necessarily. Default judgment applications are heard ex parte, meaning without the parties needing to appear and sometimes without notification to the defendant. This is why proper service of the original statement of claim is so critical – it's your notice that legal action has commenced. Once judgment is entered, the court will send a sealed copy to the plaintiff, but the defendant may not receive direct notification until enforcement action begins. This is why many people discover default judgments months or years later when they affect credit applications or trigger enforcement.
How JB Solicitors Can Help with Default Judgment
At JB Solicitors, we understand that default judgment situations are stressful and time-sensitive. Whether you're facing a default judgment or seeking to obtain one, our experienced team provides comprehensive assistance tailored to your specific circumstances.
We review your situation promptly and assess your options. If you've received a statement of claim, we examine the allegations, evaluate potential defences, and advise on the strength of your position. If a default judgment has been entered against you, we assess the prospects of setting it aside based on the circumstances of your case.
Our solicitors gather all the evidence required for your matter. This includes contracts, correspondence, medical records, accident reports, photographs, expert opinions, and any other documentation that supports your case. We understand what evidence courts require and how to present it effectively.
We prepare comprehensive affidavit material with supporting documentation that meets the strict prima facie defence standard required for setting aside default judgments. Our affidavits are detailed, well-organised, and backed by substantive evidence, not mere assertions.
We file all applications to obtain or set aside default judgments, ensuring every procedural requirement is met. We calculate service dates correctly, complete forms accurately, and file within required timeframes. These technical details matter enormously in default judgment applications.
We represent you at court hearings with persuasive arguments grounded in law and evidence. Our solicitors are familiar with local court procedures and specific rules that apply in NSW courts. This local knowledge gives you an advantage in navigating the system effectively.
We negotiate with opposing parties for favourable outcomes. Sometimes the best resolution involves a payment arrangement, partial settlement, or agreed set-aside of the judgment with conditions. We explore all options to achieve the best result for you.
We handle all communication with insurance companies and opposing solicitors, pushing back on unreasonable positions to secure fair outcomes. You don't have to deal with aggressive creditors or their lawyers – we manage all correspondence on your behalf.
We provide clear cost estimates including disbursements upfront. You'll know what to expect financially before proceeding. Solicitors should provide a written estimate of total costs, including disbursements such as court filing fees and affidavit preparation.
If you have any questions or concerns about default judgment, don't hesitate to contact us today. Time is of the essence in default judgment matters, whether you're within the 28-day response window or seeking to set aside a judgment already entered.
Contact us today for expert default judgment assistance.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
