Croissant King Pty Limited v Elbio Luis Perez

Croissant King Pty Limited (the applicant) sought to set aside a default judgment entered against it in favour of Elbio Luis Perez (the respondent). The dispute arose from an alleged breach of a commercial lease agreement. The application to set aside the default judgment was heard in the District Court of New South Wales.

The primary legal issue before the court was whether the applicant had established sufficient grounds to set aside the default judgment. This involved considering whether the applicant had a meritorious defence to the respondent's claim and whether it had provided a satisfactory explanation for its failure to file a defence within the prescribed time. The court also had to determine if it was in the interests of justice to set aside the judgment.

In reaching its decision, the court applied the principles established in cases such as *Meates v. Sutherland Shire Council* and *Commonwealth Bank of Australia v. Al-Khouri*. His Honour Judge McDonagh considered the applicant's affidavit evidence, which detailed the reasons for the delay in filing the defence, including issues with service of the statement of claim and internal administrative oversight. The court found that while there was a delay, the applicant had demonstrated a potentially arguable defence and had acted with reasonable promptness once it became aware of the default judgment. The court also noted that the respondent would not suffer significant prejudice if the judgment were set aside.

Consequently, the court ordered that the default judgment be set aside, conditional upon the applicant filing its defence within 14 days and paying the respondent's costs thrown away by the application.