Gambaro v Tshopbiz Pty Ltd and Ors (No.2)

In the proceeding before Judge Jarrett of the Supreme Court of Queensland, the applicant, Mr. Gambaro, sought to set aside a default judgment entered against him in favour of the respondents, Tshopbiz Pty Ltd and Ors. The dispute arose from an alleged breach of contract, with the respondents having obtained default judgment after Mr. Gambaro failed to file a defence within the prescribed time. Mr. Gambaro contended that he had a meritorious defence to the claim and that the default judgment should be set aside on the grounds of irregularity or, alternatively, pursuant to the court's general discretion.

The primary legal issues before the court were whether the default judgment had been irregularly obtained, and if not, whether the court should exercise its discretion to set aside the judgment. This involved considering whether Mr. Gambaro had demonstrated a meritorious defence to the respondents' claim, and whether it was just and equitable to grant him leave to defend the proceedings out of time, notwithstanding his failure to comply with the court's rules. The court also had to assess the adequacy of the service of the originating process and the subsequent default judgment application.

Judge Jarrett found that the default judgment had not been irregularly obtained, as the service of the originating process and the application for default judgment had been effected in accordance with the rules. However, the court then considered its discretion to set aside the judgment. It was held that Mr. Gambaro had raised a defence that had sufficient merit to warrant a trial. Crucially, the court noted that the respondents had not demonstrated any prejudice that could not be adequately compensated by an award of costs. Therefore, applying the principles that a default judgment should not be lightly set aside where a party has failed to comply with rules, but that a meritorious defence coupled with a lack of prejudice weighs heavily in favour of setting aside, the court exercised its discretion.

The court ordered that the default judgment be set aside, conditional upon Mr. Gambaro filing and serving his defence within 14 days and paying the respondents' costs thrown away by the application.