The 2014 case of Dunwoodie v Teachers Mutual Bank was heard in the NSW Court of Appeal PDF

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The 2014 case of Dunwoodie v Teachers Mutual Bank was heard in the NSW Court of Appeal. This case encapsulates the principle of discretion as the court set aside a default judgement. Under rule 16.2 part 1 of the UCPR, a default judgement is made if the defendant fails to file a defence within 28 days of a statement of claim. The Teachers Mutual Bank, now on referred to as the bank, had a policy to cash checks even if the money was not in the account. Dunwoodie, now on referred to as the account holder, acting under duress from a bikie gang withdrew money from his bank account, which caused his account to be overdrawn. The bank issued a statement of claim for the money owing and obtained a default judgment as the account holder did not respond within 28 days as under rule 16.2 and 16.3 of the UCPR. A defendant may not appeal entry of a default judgment but may apply to have the default judgment set aside under rule 36.16-part 2(a) of the UCPR. On an application to set aside a default judgement, the defence must explain the delay in filing a defence and show there is a defence to the claim that has merit. Three years later, the account holder sought to have it set aside, on the basis of fraud and duress and alternatively on the basis that the bank’s contract with account holders which permitted an account holder to draw against uncleared funds was unjust. The claims failed and the account holder appealed. The NSW Court of Appeal held that the fraud and duress defences were not arguable because there was no suggestion that the bank knew of either the fraud or the duress. However, the majority of the Court of Appeal found the Contracts Review Act defence arguable. The NSW Court of Appeal made orders to remit the matter to the District Court to hear and determine the application to set aside default judgment on the basis that there was an arguable case for relief under the Contracts Review Act. The matter of delay was assessed against the principle of justice and the court held delay is not critical when compared to justice. Accordingly, this case set precedent that a default judgment may be set aside if the defendant can provide a satisfactory explanation for the delay and show that a defence has merit....