NAB v Darroch [2010] NSWSC 1129

This case demonstrates how long possession proceedings can drag out when indulged the Court is overly compassionate:

  • 20 August 2008 the lender obtained default judgment
  • 30 October 2008 the borrower obtained stay of the writ of possession
  • 20 November 2008 the stay was extended
  • 4 December 2008 the stay was extended
  • 11 December 2008 the stay was extended
  • 19 February 2009 the stay was extended
  • 27 April 2009  the borrower served a draft defence
  • 28 April 2009  the default judgement was set aside
  • 23 October 2009 the parties were ordered to prepare for mediation
  • 24 June 2010  the parties attended a mediation but the matter did not settle
  • 4 August 2010  the borrower was made bankrupt
  • 6 September 2010 foreshadowed an application to move the proceedings to the Family Court.
  • 24 September 2010 the Court refused to consider the plaintiff’s application to enter judgment until after the borrower’s application to annul her bankruptcy had been decided.
  • 1 October 2010  The lender sought default judgement.

The application for default judgement was based on the argument that because of s 60 of the Bankruptcy Act 1966 the borrower had no right to appear to prosecute her cross-claim or to propound her defence. The judge agreed that she could not prosecute her cross-claim but pointed out that s60 on its plain wording does not apply to restrict a bankrupt’s right to argue a defence.

The judge also pointed out that default judgement is only appropriate where a defence has not been filed. In this case there was a detailed defence on file that had never been struck out or withdrawn, and so remained current. Accordingly, an application for summary judgment would be more appropriate. The case was adjourned so everyone could research the law on what to do with a bankrupt borrower.

Click here to read the full judgment

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