Kara Kar Holdings Pty Ltd v Knudsen (No 2)

Kara Kar Holdings Pty Ltd (the applicant) sought to set aside a default judgment entered against it in favour of the respondent, Mr. Knudsen. The dispute arose from an alleged breach of a loan agreement. The application to set aside the default judgment was heard in the Court of Appeal of New South Wales.

The primary legal issue before the Court of Appeal was whether the applicant had established a meritorious defence to the claim brought by Mr. Knudsen, which is a prerequisite for setting aside a default judgment. This involved considering whether the applicant had demonstrated a real prospect of success in defending the claim, or whether it had raised a defence that was arguable and not a sham.

The Court of Appeal applied the principles governing applications to set aside default judgments, which require the applicant to show both a defence on the merits and that it is just and convenient to set aside the judgment. The Court found that the applicant had failed to demonstrate a meritorious defence. It was not satisfied that the applicant had raised a defence that was more than a mere assertion and had a real prospect of success. The Court considered the evidence presented by the applicant and concluded that it did not establish a defence that would warrant setting aside the default judgment.

The Court of Appeal dismissed the application to set aside the default judgment.