GE Commercial Finance Australia v Meredith [2009] NSWSC 327

In this case the lender listed the security property (a hotel) for sale by public auction. The day before the auction the borrower entered into an unconditional contract to sell the property for $2.9 million. The solicitor for the borrower advised the solicitor for the lender. Notwithstanding receiving that advice the lender proceeded with the auction and sold the property for $2.2 million. The lender then sued the borrower for a $511,000 shortfall.

At first instance, the borrower sought an adjournment which was refused by McDougall J and default judgment was entered against her. She then made the current application to set aside the default judgment. Einstein J held that because the borrower withdrew from the case after her adjournment application was refused, the judgment entered was in character a default judgment. He therefore determined that he had the jurisdiction to set it aside which he did noting:

In my view Ms Meredith is shown to have had a serious [as opposed to a specious] case provided that the matters within the further amended cross claim were able to be properly presented and supported by appropriate evidence.

Einstein J also seems to have given weight to the borrower’s claim that her solicitor withdrew from the first hearing suffering from depression.

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