Violi v CBA [2015] NSWCA 15

The bank obtained default judgment against a family company which operated a vineyard, guaranteed by three brothers. One of the brothers applied to have judgment set aside on the basis of unjustness under the Contracts Review Act, and said the statement of claim did not come to his attention until months after default judgment was given. The lower court did not accept the brother’s excuse for not having filed a defence in time, because the court found he did not have reliable recollection of when and how he first became aware of the proceedings and refused to set aside default judgment. The brother appealed and also for the first time raised the issue of irregularities in substituted service.

The court noted that there was no evidence of service in accordance with the order for substituted service and that is essential for obtaining default judgment because it is purely administrative. The court found that judgment was entered irregularly and went on to consider whether the brother had an excuse for the delay and an arguable defence. The alleged unjustness was based upon the unfair tactics of the bank in requiring the brother to sign the guarantee when it was brought to him in a field while he was farming, without explanation of it and without an opportunity to take independent legal or financial advice, limit his liability or read it. The majority of the Court of Appeal found that even if the brother had no adequate explanation for his delay of at least 4 months after the default judgment came to his attention before applying to have it set aside, his defence did outweigh this since it had reasonably strong prospects of success.

The Court of Appeal set aside default judgment.

Click here to read the full judgment.

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