Sandery v Kowalski - [2016] SASC 175

Supreme Court of South Australia
(Magistrates Appeals: Civil)
SANDERY v KOWALSKI & ANOR
[2016] SASC 175
Judgment of The Honourable Justice Doyle (ex tempore)
4 November 2016
MAGISTRATES - JURISDICTION AND PROCEDURE GENERALLY - PROCEDURE - ORDERS AND CONVICTIONS - SETTING ASIDE AND AMENDMENT
MAGISTRATES - APPEAL AND REVIEW - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT
The plaintiff appellant filed a claim in the Magistrates Court against the first and second defendant respondents, who are husband and wife. The defendants did not file a defence within the 21 day period prescribed by the rules and the plaintiff obtained a default judgment. The first defendant filed an application to set aside the judgment. The Magistrate allowed the application to set aside.
The plaintiff appealed on the grounds that the Magistrate erred in failing to apply the principles applicable to a set aside application; erred in entertaining the application by the second defendant on the basis that he never filed any application to set aside or affidavit material; and erred in concluding that the preconditions to the exercise of her discretion to set aside had been satisfied.
Held per Doyle J, allowing the appeal:
1. The Magistrate erred in concluding that the preconditions to the exercise of her discretion to set aside the default judgment had been satisfied.
2. The application to set aside the default judgment is dismissed.
Magistrates Court (Civil) Rules 2013 (SA) r 3(1)(a), r 52, r 87, referred to.
Cubelic v T & D Lock Pty Ltd [2009] SASC 397, discussed.
House v The King (1936) 55 CLR 499; Watson v Anderson (1976) 13 SASR 329; Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, considered.

SANDERY v KOWALSKI & ANOR
[2016] SASC 175
Magistrates Appeal
DOYLE J (ex tempore):

On 27 July 2016, a Magistrate set aside a default judgment in favour of the plaintiff against the first and second defendants. This is an appeal by the plaintiff against that decision.
Background
On 3 May 2016, the plaintiff filed a claim in the Magistrates Court against the first and second defendants, who are husband and wife.
The claim alleged that the plaintiff and defendants entered into an oral agreement in December 2014 involving the sale of the plaintiff’s massage business, operated from premises in Klemzig, to the defendants for the sum of $30,000. The claim also alleged that the plaintiff and defendants at the same time entered into an oral agreement to become 50 per cent partners with the plaintiff in a second massage business, to be established and operated from a premises in Birkenhead. According to the plaintiff, he thereafter incurred various expenses in assisting the defendants to operate the Klemzig business, and in establishing the Birkenhead business.
The plaintiff’s claim then alleged that the defendants failed to pay the amounts owing by them under these agreements. It sought an amount of $30,000 for the sale of the Klemzig business, and a further $7,000 in respect of the Birkenhead business (being 50 per cent of the amount outlaid by the plaintiff in establishing that business). It also sought an amount of $1,409 by way of legal fees and disbursements, taking the total claim to $38,409.
The claim was endorsed as having been served by ordinary post on 3 May 2016. Invoking the ordinary presumption as to service, service would have been effected 4 days later.[1]
[1] Magistrates Court (Civil) Rules 2013 (SA), r 52(1)(d).
No defence was filed within the 21 day period prescribed by the Magistrates Court (Civil) Rules 2013 (SA). On 31 May 2016, the plaintiff obtained a default judgment against the defendants in the amount of $38,409.
On 6 June 2016, the first defendant filed an application to set aside the judgment obtained against her. She did so without legal assistance. The application was supported by an affidavit that said only “This claim is false. The plaintiff was paid. No money is owed.”
The application came on for hearing on 22 June 2016. Both defendants appeared in person. The plaintiff was represented by his solicitor. I do not have the benefit of transcript of that hearing, but according to the plaintiff’s solicitor the first defendant informed the Court that the defendants had been served with the claim, albeit after the four days assumed in the case of service by post, and that this delay may have been because the defendants’ neighbour took the statement of claim from their post box by mistake. The first defendant did not give any further detail as to the neighbour in question, or identify precisely when the defendants did receive the statement of claim. No further submission was made to explain the failure to file a defence. The second defendant asserted that he had attempted to file a defence, but was told by the Registry of the Magistrates Court that the time to file a defence had expired and default judgment had been entered. However, no proposed defence was provided to the plaintiff or the Magistrate at this hearing.
According to the plaintiff’s solicitor, the Magistrate noted at this hearing that the second defendant had not filed an application to set aside the default judgment, and told the second defendant that he would need to file an application together with supporting material. The Magistrate gave the defendants leave to file any affidavits in support of their application within 21 days, and adjourned the matter to 27 July 2016. The Magistrate also suggested to the defendants that they obtain legal advice because the claim was a substantial one, and they would need to put material before the Court with the grounds for their application to set aside.
At the hearing on 27 July 2016, the first and second defendants again appeared in person, and the plaintiff appeared through his solicitor. While the defendants had not filed any further documents ahead of that hearing, the defendants relied upon an unfiled application and unfiled affidavit, both dated 21 July 2016. The application was signed by the first defendant, and the affidavit was sworn by the first defendant. However, both documents named, and appear to have been intended to be drawn on behalf of, both defendants. The 21 July 2016 application and affidavit may be contrasted in this respect with the earlier 6 June 2016 application and affidavit, which named only the first defendant.
The application sought orders on behalf of both defendants, and in particular that the judgment against both defendants be set aside, and that the defendants be granted leave to file a defence and counterclaim in the form annexed to the first defendant’s affidavit.
The first defendant’s affidavit included the following:
I did not nor did my husband receive any letter of demand in regards to the proceedings against me; nor the summons and particulars of claim.
I believe that the documents may have been taken from our post box at the front of our home by our neighbour, who is intellectually disabled and has taken our mail on previous occasions and forgotten to pass it on to us.
I believe that we have a good Defence and Counter Claim to the Plaintiffs claim as I never purchased a business from him as is alleged, and never agreed to pay any monies to him for work he alleges to have performed on the premises I moved into.
The defence and counterclaim attached to the affidavit provided some additional detail of the defendants’ proposed defence, but not much. The defence consisted largely of denials. In relation to the alleged agreement to buy the Klemzig business, the defendants not only denied any agreement to purchase the business for $30,000, but also alleged that while there were some fixtures and fittings at the Klemzig premises, there was no massage business operated from there by the plaintiff at the relevant time. The defendants pleaded that they merely agreed to take over the lease of the Klemzig premises from the plaintiff and to negotiate a new lease with the landlord. The defence did, however, acknowledge that a Ms Butterworth had previously conducted a massage parlour from the Klemzig premises, and that she had agreed to assist the defendants to establish a business from the Klemzig premises. The defence denied any agreement in relation to the Birkenhead business.
In their counterclaim, the defendants sought to recover some 35 payments from the plaintiff, totalling approximately $66,000, and largely said to represent amounts lent by the defendants to the plaintiff or amounts owing on account of goods taken by the plaintiff from the second defendant’s business. The detail of the counterclaim is not relevant for present purposes.
At the hearing on 27 July 2016, the solicitor for the plaintiff opposed judgment being set aside. He relied upon the terms of r 87(2), which required both that the defendants establish an arguable case and a reasonable excuse for not complying with the time frame for filing a defence, and the principles governing a set aside application, as explained by Duggan J in Cubelic v T & D Lock Pty Ltd.[2] The plaintiff’s solicitor emphasised the inadequacies in the defendants’ explanations for their delay.
[2] Cubelic v T & D Lock Pty Ltd [2009] SASC 397.
The Magistrate granted the defendants’ application to set aside the default judgment, and gave the following ex tempore reasons:
There are two parts to r 87. There needs to be evidence of the reasons for the delay in filing. This is not as important as the issue of meritorious defence.
The defence may well be without sufficient particulars but there is a defence and it raises issues that indicate there may be merit. There may be further particulars required and indeed they may not be able to establish the defence, but that needs to be a matter of evidence.
I consider that on the basis of the affidavit there is sufficient in order to overcome the criteria specified in r 87.
I will set aside the judgment in file 1569 of 16 and the defendants will be given leave to file a defence and counterclaim within 21 days. The parties are to make mutual discovery within 21 days. The plaintiff has its costs thrown away as a result of the defendant’s application fixed at $600.00.
The appeal
In his notice of appeal, the plaintiff raises various grounds of appeal which may be summarised as alleging:
1.   The Magistrate erred as a matter of principle in failing to apply the approach required by the reasons of Duggan J in Cubelic v T & D Lock Pty Ltd and by not attaching equal weight to the second limb of r 87(2) (requiring that there be a reasonable excuse for the defendants’ delay).
2.   The Magistrate erred in setting aside the judgment because no application had been filed on behalf of the second defendant prior to hearings on 22 June or 27 July 2016, or because the defendants failed to file any affidavit in support of the application to set aside within the 21 days contemplated by the Magistrate’s orders of 22 June 2016.
3.   The Magistrate erred in concluding that the affidavit material relied upon by the defendants established a reasonable excuse for their delay in filing a defence (and in filing their subsequent material in support of their application to set aside) and/or an arguable case on the merits.
The Magistrate’s discretion to set aside the default judgment regularly entered in the plaintiff’s favour was governed by r 87 of the Magistrates Court (Civil) Rules 2013 (SA):
87.     (1)   The Court may set aside or vary a judgment (not being a final judgment).
(2)   The Court must not set aside such a judgment unless the party seeking to set it aside establishes that he or she –
(a)     has an arguable case on the merits; and
(b)has a reasonable excuse for not having complied with these Rules, or an order of the Court, or any time limit fixed by these Rules or order of the Court, in respect of the action or proceeding.
(3) When setting aside a judgment the Court may order –
(a)     payment to the other party of costs thrown away;
(b)     payment or security under Rule 81.
A favourable exercise of the discretion was thus conditioned upon satisfaction of the two limbs in r 87(2)(a) and (b). The Magistrate’s discretion to set aside the judgment was only enlivened if both limbs of r 87(2) were satisfied. Insofar as the appeal is a challenge to the Magistrate’s conclusion that these limbs were satisfied, it is not subject to the principles of appellate restraint in House v The King.[3] Those principles would only apply in respect of a challenge to the Magistrate’s exercise of her discretion once satisfied that those limbs are made out.
[3] House v The King (1936) 55 CLR 499.
I note also the terms of r 3(1)(a) of the Magistrate Court (Civil) Rules, which relevantly provides that in interpreting, applying and enforcing observance of the rules, the Court must in all things promote the expeditious, economical and just conduct and resolution of an action or proceeding.
Against that background, I turn to consider the 3 grounds of appeal relied upon by the plaintiff, as distilled by me.
Ground 1: principles applicable to a set aside application
In Cubelic v T & D Lock Pty Ltd,[4] Duggan J heard an appeal from a Magistrate’s refusal to set aside a default judgment under an identically worded r 87 under the preceding version of the Magistrate Court (Civil) Rules.
[4] Cubelic v T & D Lock Pty Ltd [2009] SASC 397.
In that case, the plaintiff had personally served the defendant on 14 July 2009. After no response from the defendant, the plaintiff obtained a default judgment against the defendant on 12 August 2009. The plaintiff then sought to enforce the judgment through an application to charge a property in which the defendant had an interest with payment of the judgment debt. On 3 September 2009, at a directions hearing in respect of that application, the defendant was represented by a solicitor and foreshadowed an application to set aside the default judgment. The defendant’s solicitor filed an affidavit in support of the application to set aside the default judgment the following day.
The Magistrate dismissed the application to set aside on the basis that neither limb of r 87(2) had been satisfied. Duggan J dismissed the appeal from the Magistrate’s decision, upholding the Magistrate’s decision in respect of both limbs of r 87(2).
In respect of the first limb (which required that the defendant establish he had an arguable defence on the merits), Duggan J applied[5] the following passage from the reasons of Walters J in Watson v Anderson:[6]
… a mere statement by a defendant that he has a good defence is not sufficient to justify a review of the exercise of a judicial discretion. He must go further and demonstrate “a very compelling reason” for his failure to appear in the action, and, further, that he has a plausible defence either in law or in fact. True it is that on an application to set aside a judgment by default, the court does not pronounce on the law or the facts, but it seems to me that before allowing a defendant to come in and defend, the court should have before it materials which enable it to say how it came about that the defendant found himself bound by a judgment regularly obtained; that the defendant genuinely desires to be allowed to come in and present his case; and that issues are raised in such form as to require serious consideration of the defence which he would put forward. In the words of Jenkins L.J. in Grimshaw v Dunbar “the judge is entitled to satisfy himself that the party applying has a bona fide intention of defending the action, and that there is some possibility of his doing so with success”.
[5] Cubelic v T & D Lock Pty Ltd [2009] SASC 397 at [18].
[6] Watson v Anderson (1976) 13 SASR 329 at 341 (omitting citations).
Duggan J went on to hold that there needed to be more than a bare and unsupported claim by the defendant. There must be an affidavit as to the merits of sufficient particularity to at least enable the Court to make an assessment of the genuineness of the defence and whether it is arguable on the merits. While the defendant in that case denied that he was acting in the capacity alleged by the plaintiff, his affidavit did not address the circumstances relevant to this issue. In circumstances where the defendant relied merely upon bald assertions, Duggan J upheld the Magistrate’s conclusion that the defendant had fallen short of establishing an arguable case on the merits.
In respect of the second limb (which required that the defendant establish that he had a reasonable excuse for the default), Duggan J again relied upon Watson v Anderson.[7] He referred in this context to a passage from the reasons of Bray CJ in that case in which his Honour referred to the words on the summons that made it plain that a response was necessary within a particular timeframe. Bray CJ held that if the defendant in that case had read those words, then he must have understood what was required; and that if he did not, then he was the author of his own misfortune. Either way, there was no reasonable excuse for the default.[8]
[7] Watson v Anderson (1976) 13 SASR 329.
[8] Watson v Anderson (1976) 13 SASR 329 at 333.
Applying that approach, Duggan J relied upon the clear words on the claim served on the defendant requiring that a defence be filed within 21 days, and the Magistrate’s finding that the defendant simply chose to ignore the claim for a period of time. Duggan J held that the combination of these matters justified the Magistrate’s conclusion that the defendant had not established a reasonable excuse for not filing a defence.
Cubelic v T & D Lock Pty Ltd[9] represents a relatively rigorous approach to the setting aside of judgments. However, that approach is required by r 87(2), particularly when interpreted in light of the overarching requirements of r 3(1)(a). In the case of commercial litigation, there is an imperative to ensure that the rules are interpreted and enforced in a manner conducive to the expeditious determination of proceedings. While this should not occur at the expense of doing justice to the parties and more generally, which remains the paramount concern of the courts, this does not mean that parties will be given unlimited opportunity to pursue or contest a claim. If they have not taken an earlier opportunity reasonably available to them to identify and pursue a proper basis for contesting a claim, then even achieving justice between the parties may not require that they be afforded a further opportunity. But certainly once regard is had to the interest in the just and expeditious administration of civil justice more generally, and in particular the need to ensure that the public’s confidence in the courts’ ability to efficiently determine matters is not undermined, it can readily be seen that there must be limits to the parties’ entitlement to contest claims where they have fallen into default in their conduct of the litigation.
[9] Cubelic v T & D Lock Pty Ltd [2009] SASC 397.
Some rigor in the courts’ approach, as demonstrated by the reasons of Duggan J in Cubelic v T & D Lock Pty Ltd,[10] is consonant with, if not required by, the approach of the High Court to applications to amend in Aon Risk Services Australia Ltd v Australian National University.[11] As the reasons of the various members of the Court in that case make plain,[12] commercial litigation has a particular claim to expedition. Delay and disruption in the ordinary course of litigation not only exacerbate the time, cost and inconvenience to the parties, and the uncertainty and strain of litigation to which they are subjected, they also have an undesirable impact on the availability of judicial and court resources to other parties, and upon the public’s confidence in the courts’ ability to administer justice in a commercial setting.
[10] Cubelic v T & D Lock Pty Ltd [2009] SASC 397.
[11] Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175.
[12] In particular, per Heydon J at [137].

Turning to the terms of r 87 of the Magistrates Court (Civil) Rules, I consider that the Magistrate’s reasons evidence an erroneous approach to the court’s task under that section. As mentioned, the first step in that task is to determine whether or not the two limbs of r 87(2) have been satisfied. It is only once both of those limbs have been satisfied that the court’s discretion to set aside is enlivened. It is thus only at that second stage that it becomes relevant to weigh or balance the considerations relevant to the discretion. I bear in mind that the Magistrate’s reasons were delivered ex tempore, and hence were understandably brief. Nevertheless, her Honour’s failure to make an express finding in relation to the second limb of r 87(2), and her Honour’s reference to the second limb being less important than the first limb, lead me to conclude that her Honour overlooked the need to be satisfied that both limbs were established. At that first stage of the court’s task under r 87(2), it does not make sense to speak of one limb being more important than the other.
Counsel for the first defendant contended that I should read the Magistrate’s reasons as implicitly accepting that both limbs were satisfied and hence as addressing the relative weighting of the two limbs in the exercise of the court’s discretion (the second stage of the court’s task under r 87).
Even allowing for the flexible approach that is appropriate in construing ex tempore reasons, I am not satisfied that this is how the reasons should be construed. In my view, in circumstances where a central plank of the plaintiff’s argument was that the second limb was not satisfied, the failure to express any finding or conclusion on this issue, and the reference to the second limb being of less importance, demonstrate error.
The existence of the above error in approach does not of itself, however, require that the appeal be allowed. It simply requires that I consider for myself whether the two limbs were satisfied, and if so, how the discretion to set aside ought then to be exercised. These are matters addressed below in the context of the third ground of appeal.
Ground 2: inadequacy of the material filed by the defendants
Insofar as the plaintiff contends that the Magistrate erred in entertaining an application by the second defendant on the basis that he never filed any application to set aside or affidavit material, I do not accept this contention.
True it is that the second defendant was dilatory in his approach to setting aside the default judgment against him. Some of that dilatoriness may be referable to the second defendant’s inability to understand precisely what was required in terms of the material to be filed. More importantly, by the time the Magistrate came to consider the application to set aside on 27 July 2016, there was before the Court an application to set aside and an affidavit in support of that application. It was of little significance in my view that those documents had not been formally filed. Further, while the documents were signed by the first defendant, they were drawn in terms that suggested they were to be relied upon by both defendants. There is no requirement that the second defendant file a separate affidavit of his own. While the failure to do so may be relevant to whether or not an arguable defence was disclosed, it was not a precondition to the competence of the application. In my view, it was appropriate for the Magistrate to permit both defendants to rely upon the 21 July 2016 application and affidavit, and to entertain the application to set aside on that basis.
While the plaintiff complains of further defaults by the defendants in their pursuit of the application to set aside (for example, the failure to comply with the Magistrate’s 22 June 2016 order that they file affidavits in support of their application within 21 days), I do not consider that any such defaults rendered it erroneous for the Magistrate to entertain and determine the defendants’ application to set aside. These matters were relevant only to the enquiry as to the two limbs under r 87(2) (for example, in determining whether the defendants have a bona fide intention to defend the claim under the second limb of that rule), or the exercise of the discretion to set aside if enlivened.
Ground 3: the two limbs of r 87(2) not satisfied
For the reasons that follow, I do not consider that either limb of r 87(2) was satisfied on the material before the Magistrate.
No arguable case on the merits
As the references to Cubelic v T & D Lock Pty Ltd[13] and Watson v Anderson[14] earlier in these reasons demonstrate, it is not enough to simply articulate, or baldly assert, the existence of a defence. The defendant must put before the Court sufficient evidence to enable the Court to be satisfied that the defence is one that the defendant genuinely intends to pursue and has an arguable basis for pursuing.
[13] Cubelic v T & D Lock Pty Ltd [2009] SASC 397.
[14] Watson v Anderson (1976) 13 SASR 329.
In assessing the adequacy of the material placed before the Magistrate in this case, it is appropriate that I bear in mind that the defendants were at that stage unpresented, and that I make due allowance for any difficulty they might have had in expressing themselves in the terms, and with the detail and precision, that one might expect of a legal practitioner.
However, even bearing those matters in mind, there are various aspects of the defendants’ material that leave me with concerns as to the arguability and genuineness of their proposed defence.
The first matter of concern is the apparently fundamental shift in the defendants’ response to the claim. The first defendant’s affidavit of 6 June 2016 asserted simply that the claim was false; that the plaintiff was paid, and that no money was owed. This sits uncomfortably with the defendants’ position as subsequently articulated in their documents of 21 July 2016, which was to the effect that there was never any agreement to pay the plaintiff the monies claimed. In the absence of any explanation for this apparent change in the defendants’ position, it leaves me with a concern as to the genuineness of the defendants’ intended defence of these proceedings.
Secondly, even putting to one side the earlier position, the defence as articulated in the 21 July 2016 documents does not rise any higher than the assertion of a defence. The first defendant’s counsel on appeal contended that little more could be expected in circumstances where the defence was, in effect, that the agreements sued upon by the plaintiff were a fiction. In my view, this is too simplistic an approach. It is apparent from the defendant’s documents that they accept that there were some discussions with the plaintiff about the Klemzig premises, and that some arrangement or agreement with him (and separately with Ms Butterworth) was reached. In circumstances where the difference between the parties turns upon the nature of the dealings between the defendants and the plaintiff in relation to the Klemzig premises, it was incumbent upon the defendants to go into evidence as to their version of those dealings. As was the case in Cubelic v T & D Lock Pty Ltd,[15] the failure to address in evidence the key matter in issue was in my view fatal to the defendants’ ability to satisfy the Magistrate that they had a genuine and arguable defence. It may not have been necessary for both defendants to file affidavits addressing this issue despite them both apparently being present at the relevant discussions, but in the circumstances of this case it was incumbent upon at least one of them to do so.
[15] Cubelic v T & D Lock Pty Ltd [2009] SASC 397.
In my view, the Magistrate erred in not concluding that the first limb of r 87(2) was not made out.
No reasonable excuse for delay
Again bearing in mind that the defendants were without legal representation at the relevant time, I consider it appropriate to consider the reasonableness of their excuse for not filing a defence within the required 21 days by reference to the material available to the Magistrate as at 27 July 2016, and hence including the 21 July 2016 affidavit of the first defendant. I also approach the matter on the basis that since 6 June 2016 the defendants have been attempting to defend the matter, despite their continuing defaults, such that my focus is upon the adequacy of the explanation for the delay prior to 6 June 2016.
The only explanation proffered by the defendants in the first defendant’s affidavit of 21 July 2016 is problematic, somewhat speculative and in any event incomplete.
It is problematic because the assertion that the defendants simply did not receive the summons or particulars of claim cannot be squared with their earlier suggestion that they tried to file a defence prior to realising that default judgment had been obtained. That proposed defence has never surfaced, and was not mentioned in the affidavit of 21 July 2016. However, its asserted existence does render problematic any intended assertion by the defendants that they did not receive, or become aware of, the summons or claim until some time after judgment was entered. While counsel for the first defendant informed me from the bar table that his instructions were that the claim was not received until after judgment had been entered, it is not appropriate that I rely upon this assertion from the bar table given the history of this matter and the continuing lack of specificity as to when and how the claim was ultimately received.
To the extent that the defendants’ position was merely that there was some delay in the summons and statement of claim coming to their attention, their explanation remains somewhat speculative and incomplete. It is speculative because the explanation given for the apparent delay in receiving the document was in terms that their neighbour “may” have intercepted their mail. There is no reference to any steps taken by the defendants to ascertain whether that is what occurred. It is incomplete because they do not go on to say when and how they did ultimately receive the claim, and what steps, if any, they took to address the claim once they became aware of it. These gaps in the defendants’ evidence are critical. In my view they prevent the Court being satisfied that the defendants have a reasonable excuse for their delay.
The claim was endorsed with a clear statement that any defence or counterclaim needed to be filed within 21 days, and that “if you do nothing, the plaintiff may get judgment against you.” Even if I were to accept that there was some delay in the document coming to the defendants’ attention, an explanation for some of the delay is not enough. Without a clear understanding of the precise chronology of events from the time the document came to their attention through to the set aside application, and an explanation for the nature and timing of the steps taken by the defendants during that period, I am left in a position similar to that confronted by the Court in Cubelic v T & D Lock Pty Ltd[16] and am unable to be satisfied as to the second limb of r 87(2).
[16] Cubelic v T & D Lock Pty Ltd [2009] SASC 397.
In my view, the Magistrate erred in not concluding that the second limb of r 87(2) was not made out.
Conclusion
For the reasons set out, I have concluded that the Magistrate erred in concluding that the preconditions to the exercise of her discretion to set aside the default judgment had been satisfied. It follows that her Honour erred in setting aside that judgment.
I order that the appeal be allowed, and that the first and second defendants’ application to set aside the default judgment be dismissed.