Principles
83The applicants did not take issue with the primary Judge's identification of the three factors particularly relevant to the exercise of the discretion conferred by UCPR, r 36.16(2)(a) (see at [66] above). The applicants also did not take issue with the primary Judge's proposition, derived from Reinehr Industrial Lease & Finance Pty Ltd v Jordan (New South Wales Court of Appeal, 4 June 1974, unreported), that ultimately it is necessary to consider whether it is in the interests of justice to allow the party seeking to set aside a default judgment to be permitted to defend the proceedings on the merits; see too, Adams v Kennick Trading (Int) Ltd (1986) 4 NSWLR 503, at 506-507, per Hope JA (with whom Glass JA agreed).
84While there was no dispute as to these matters, it is necessary to add two observations. First, as the primary Judge noted (at [52]), the Court is under a duty in exercising a power such as that conferred by UCPR, r 36.16(2)(a), to give effect to the "overriding purpose" stated in s 56(1) of the Civil Procedure Act 2005 ("CP Act"). That purpose is:
to facilitate the just, quick and cheap resolution of the real issues in the proceedings.
A party and his or her legal representatives are under a duty to assist the Court to further the overriding purpose: s 56(3), (4).
85Section 57 of the CP Act provides as follows:
(1) For the purpose of furthering the overriding purpose referred to in section 56 (1), proceedings in any court are to be managed having regard to the following objects:
(a) the just determination of the proceedings,
(b) the efficient disposal of the business of the court,
(c) the efficient use of available judicial and administrative resources,
(d) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties.
(2) This Act and any rules of court are to be so construed and applied, and the practice and procedure of the courts are to be so regulated, as best to ensure the attainment of the objects referred to in subsection (1).
86Section 58(1) of the CP Act requires the court, in deciding whether to make any order for the management of proceedings, including an order of a procedural nature, to act in accordance with "the dictates of justice". For the purpose of determining what are the dictates of justice in a particular case, s 58(2) provides that the court:
(a) must have regard to the provisions of sections 56 and 57, and
(b) may have regard to the following matters to the extent to which it considers them relevant:
(i) ...
(ii) the degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities,
(iii) the degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective parties,
(iv) the degree to which the respective parties have fulfilled their duties under section 56 (3),
(v) the use that any party has made, or could have made, of any opportunity that has been available to the party in the course of the proceedings, whether under rules of court, the practice of the court or any direction of a procedural nature given in the proceedings,
(vi) the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction.
87Section 59 of the CP Act deals with the question of delay, as follows:
In any proceedings, the practice and procedure of the court should be implemented with the object of eliminating any lapse of time between the commencement of the proceedings and their final determination beyond that reasonably required for the interlocutory activities necessary for the fair and just determination of the issues in dispute between the parties and the preparation of the case for trial.
88It is important to appreciate that, as Allsop ACJ pointed out in Hans Pet Constructions Pty Limited v Cassar [2009] NSWCA 230, at [36], these provisions:
bring about a new statutory balance among various factors in litigation including court and party efficiency and the delivery of individual justice.
As his Honour also pointed out in that case (at [38]), the effect of s 58(2)(a) of the CP Act, where the Court is considering whether to make any order or direction for the management of proceedings, is that the criteria stated in ss 56 and 57 are relevant considerations for the Court, in the sense that these matters have to be taken into account. The criteria include the "just determination of the proceedings". The approach taken by Allsop ACJ is consistent with the High Court's recent emphasis on the importance of the overriding purpose stated in s 56(1) of the CP Act and of the duty of the parties and their lawyers to assist the court in furthering that purpose: Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd [2013] HCA 46, at [51], [56]-[57], per curiam.
89The second observation is that the authorities consistently state that, as a general rule, a defendant who seeks to set aside a judgment by default regularly obtained must show that he or she has a bona fide defence. This ordinarily requires the defendant to file an affidavit demonstrating a prima facie defence on the merits. The rationale for this requirement is that in the exercise of its "unfettered, though judicial, discretion" the Court will consider:
(a) whether any useful purpose would be served by setting aside the judgment, and
(b) how it came about that the applicant found himself bound by a judgment regularly obtained.
Vacuum Oil Co Pty Ltd v Stockdale (1942) 42 SR (NSW) 239, at 243, per Jordan CJ (with whom Davidson and Roper JJ concurred), citing Evans v Bartlam [1937] AC 473, at 482, per Lord Russell; Magnate Projects Pty Ltd v Youma Constructions (No 2) Pty Ltd [2005] NSWCA 331, at [48]-[51], per Hodgson JA (with whom MW Campbell AJA agreed) (holding that the principles stated in Vacuum Oil have not materially been affected by the reasoning of the High Court in Taylor v Taylor [1979] HCA 38; 143 CLR 1, and Allesch v Maunz [2000] HCA 40; 203 CLR 172).
90The authorities referred to in the previous paragraph were all cases in which a judgment had been obtained after a hearing on the merits, but at which the defendant did not appear. In the present case, the respondents entered judgment in consequence of the applicants' failure to comply with a direction to file a defence. However, the principles stated in Vacuum Oil v Stockdale have also been applied to an application to set aside a default judgment entered after a defence has been struck out or the defendant has failed to file a defence.
91In Rubin v Eacott [1912] HCA 55; 15 CLR 386, for example, the High Court refused leave to appeal in a case where the Supreme Court of Western Australia had refused to set aside a default judgment entered in the absence of a defence. The case is striking because the defendant was out of the country and the principal witness had died. Barton J, with whom Isaacs J agreed, said (at 388) that the Supreme Court:
was obviously right in refusing the motion to set aside the interlocutory judgment for the plaintiff without the customary evidence that a good defence on the merits existed.
See also at 388, per Isaacs J. Similarly, in Ex parte Vigilant Finance (NSW) Pty Ltd; Re Cameron Smith [1964] NSWR 1282, Herron CJ, with whom Brereton J agreed, observed (at 1285) that the principles applicable to an application to set aside a judgment in default of a defence were not in doubt and had been stated in Evans v Bartlam and Vacuum Oil v Stockdale. See also Davison v Queensland [2006] HCA 21; 226 CLR 234, at [33], per Kirby J; Saunders v Hammond [1965] QWN 39, at 48, per Wanstall J; Commonwealth Bank of Australia v Humphreys [2010] NSWSC 581, at [3], per McClellan CJ at CL, where the principles are helpfully summarised.
92In determining whether the defendant has a bona fide defence on the merits, the court does not embark on a hearing of the full merits of the case: Adams v Kennick Trading, at 507; CBA v Humphreys, at [3]. All that is necessary is for the defendant to show that the defence is asserted bona fide and that there is an arguable or triable issue. The nature of the evidence required in a particular case may depend on the circumstances, including the cogency of the defendant's explanation for the delay or failure to comply with the orders of the court: Adams v Kennick Trading, at 506; Nash v Swinburne.
93The application of these principles must now be subject to the provisions of the CP Act. If, for example, the circumstances of a particular case are such that it would be contrary to "the just determination of the proceedings" (s 57(1)(a)) to require a defendant to adduce affidavit evidence demonstrating a bona fide defence, the Court would be unlikely to reject the defendant's application to set aside a default judgment solely on the ground that no such affidavit had been filed. Each case must of course depend on its own facts. But it is fair to say that the principles articulated in the cases decided before the enactment of the CP Act are consistent with the criteria laid down in the legislation.