RFSR Pty Limited v Heatwave Shoes Pte Ltd

RFSR Pty Limited (the applicant) sought to set aside a default judgment entered against it in favour of Heatwave Shoes Pte Ltd (the respondent). The dispute arose from an alleged breach of a franchise agreement, with the respondent claiming the applicant failed to pay franchise fees and royalties. The applicant sought to have the default judgment, entered by the respondent on 15 March 2023, set aside on the grounds that it had a meritorious defence to the claim and that the default judgment was irregular.

The primary legal issue before the court was whether the applicant had established a sufficient case for setting aside the default judgment. This required the court to consider two main questions: first, whether the applicant had a real prospect of success in defending the respondent's claim, and second, whether the default judgment was irregular, thereby rendering it liable to be set aside as of right. The applicant contended that the default judgment was irregular because the statement of claim had not been properly served on it, and alternatively, that it had a meritorious defence to the underlying claim.

In determining whether the default judgment was irregular, the court examined the evidence of service. The applicant argued that the documents were not served at its registered office, but rather at a different address. The court found that the service was effected in accordance with the rules, and therefore the judgment was not irregular. Consequently, the court then considered whether to set aside the judgment in the exercise of its discretion, requiring the applicant to demonstrate a meritorious defence. The applicant's defence, relating to alleged breaches by the respondent of the franchise agreement, was found by the court to be arguable and not a sham.

However, the court ultimately dismissed the application to set aside the default judgment. While acknowledging the arguable defence, the court found that the applicant had not demonstrated a sufficiently strong case to warrant setting aside a regular default judgment, particularly given the applicant's delay in bringing the application and the lack of a compelling explanation for that delay. The court therefore ordered that the application be dismissed.