Wakim v Senworth Capital Pty Ltd

The case of *Wakim v Senworth Capital Pty Ltd* concerned an application to set aside a default judgment. The applicant sought to appeal a decision that had refused to set aside the default judgment. The dispute centred on whether the applicant had a reasonably arguable defence on the merits to the claim brought against her.

The legal issues before the Court of Appeal were whether the primary judge erred in failing to consider the tension in existing authorities regarding the requirements for establishing a defence based on equitable unconscionability. Specifically, the court had to determine whether the unjustness of a contract could be established by reference to matters of which the counterparty was unaware at the time of contracting. Furthermore, the court considered the standard of knowledge required on the part of the stronger party concerning the weaker party's special disability or disadvantage, and whether mere inadvertence or indifference sufficed as opposed to exploitative conduct. The application of the rule in *Yerkey v Jones* concerning undue influence and its effect on third parties, and the requisite level of knowledge or notice of the weaker party's disadvantage, were also central to the determination.

The Court of Appeal found that the primary judge had failed to adequately consider the complexities and differing views within the authorities on equitable unconscionability and undue influence. The court highlighted the importance of the distinction between active and passive conduct by the stronger party and the relevance of the counterparty's knowledge. The court determined that the proposed defences raised arguable points of principle that warranted further consideration.

Consequently, the Court of Appeal upheld the appeal, set aside the primary judge's orders refusing to set aside the default judgment, and in lieu thereof, set aside the default judgment entered against the second defendant. The matter was remitted to the Common Law Division for trial, with directions regarding costs.