Manhari Recycling Pty Ltd v Compass Global Holdings Pty Ltd

Manhari Recycling Pty Ltd and another party (the applicants) sought to set aside a default judgment entered against them in favour of Compass Global Holdings Pty Ltd (the respondent). The applicants also sought the return of funds that had been garnished pursuant to a garnishee order made on the basis of that default judgment. The matter came before the Court of Appeal of the Supreme Court of New South Wales.

The primary legal issues before the Court of Appeal were whether the default judgment had been irregularly entered, and if so, whether the applicants had demonstrated a bona fide defence on the merits to the respondent's claim. The court was also required to determine the appropriate orders to be made concerning the default judgment and the garnishee order if the judgment was found to be irregular or if a defence was established.

The Court of Appeal found that the default judgment had been irregularly entered. Applying the principles for setting aside default judgments, the court determined that the applicants had sufficiently demonstrated a bona fide defence on the merits. Consequently, the Court of Appeal allowed the appeal, set aside the default judgment and the subsequent garnishee order, and ordered the respondent to return the garnished amount to the applicants. The proceedings were remitted to the District Court for further determination.