Lu v AC and R Kitchens Pty Limited

The applicant, Lu, sought a review of a sequestration order made by the Registrar. The dispute arose from a judgment debt obtained by AC and R Kitchens Pty Limited against Lu. Lu contended that the judgment debt was procured through fraud or that the contract of guarantee underpinning the default judgment was signed under duress. The proceedings were heard in the Supreme Court of the Australian Capital Territory.

The central legal issue before the court was whether Lu was estopped from raising the defences of fraud and duress in the review proceedings, given her conduct in the original proceedings that led to the default judgment. Specifically, the court had to determine if Lu's failure to file a defence in the ACT Supreme Court proceedings, despite being legally represented at the time, precluded her from now asserting these substantive defences.

Judge Neville reasoned that Lu, having been legally represented when the original proceedings commenced, had a clear opportunity to raise the issues of duress and fraud at that time. By choosing not to file a defence and allowing a default judgment to be entered, Lu was estopped from subsequently raising these matters in the review proceedings. The court applied the principle that a party cannot elect to stand by and permit a judgment to be entered against them, and then later seek to set aside that judgment by raising defences that could and should have been litigated in the original proceedings.

Consequently, the Review Application filed on 20th February 2014 was dismissed with costs, to be agreed or taxed.