Acting promptly in debt recovery

Debt recovery is a critical process for both creditors and debtors. When a creditor secures a default judgment and seeks to enforce it—particularly through a writ of execution over a debtor’s property—time is of the essence. Delays in responding to legal proceedings can severely limit a debtor’s ability to challenge enforcement actions, as demonstrated in the Supreme Court of New South Wales decision in Perpetual Corporate Trust Limited v Colevski Pty Limited [2024] NSWSC 607. This case underscores the importance of timely and well-prepared legal responses, particularly when facing eviction as a result of debt enforcement.

Background of the Case

The proceedings began on 7 June 2023, when Perpetual Corporate Trust Limited (the plaintiff) sought possession of three mortgaged properties located in Wattle Grove, Edmondson Park, and Casula. The properties were owned by different individual defendants, while the loan was originally obtained by Colevski Pty Limited (the first defendant), with the second to eighth defendants acting as guarantors. The loan agreement, secured on 30 September 2022, was defaulted on by the first defendant, leading to a letter of demand on 20 January 2023 and a formal Notice of Default under section 88 of the National Consumer Credit Code (Schedule 1 of the National Consumer Credit Protection Act 2009 (Cth)) on 9 February 2023.

By 5 June 2023, the total amount due had exceeded $3.4 million, with ongoing interest and fees. The plaintiff subsequently filed for default judgment, which was granted on 21 July 2023, along with a writ of possession over the three properties.

Key Issues Considered by the Court

1. Delays in Filing a Defence

One of the most significant aspects of this case was that the defendants never filed a defence. Affidavits of service confirmed that each defendant had been personally served with the statement of claim in June 2023. Despite this, no response was submitted. Default judgment was entered on 21 July 2023, yet the defendants failed to take meaningful action to contest the claim for almost a year.

Justice Lonergan noted that the failure to file a defence—despite multiple opportunities—seriously undermined the defendants’ last-minute request to stay enforcement of the writ of possession. The Court observed that the defendants had "ample opportunity to file a defence if they truly had one" but instead "left their application to the last second and not argued it with adequate evidentiary material."

2. Multiple Stay Applications and Lapses in Legal Representation

The defendants had previously applied for stays of execution on two separate occasions:

• September 2023: A stay was granted but expired on 21 September 2023.
• January 2024: Another stay was granted but was lifted by consent on 1 February 2024.

Despite these reprieves, the defendants failed to take further legal steps to contest the judgment or negotiate repayment. Additionally, issues with legal representation contributed to the delays. The defendants initially engaged one solicitor, Christopher Cole, at Mathews Folbigg Solicitors. However, he later moved to Oakbridge Lawyers, reportedly continuing to have conduct of the matter. No formal notice of change of solicitor was filed until 16 May 2024, just one day before the final stay application.

Justice Lonergan highlighted concerns about a potential conflict of interest, given that the affidavit submitted by Valentina Colevski (one of the defendants) included allegations of incompetence against the solicitor who had been handling the matter in 2023—who was, at the time of the application, still involved in the case at a new law firm.

3. The Third and Final Stay Application—"Too Little, Too Late"

The defendants filed their third application to stay the execution of the writ on Friday, 17 May 2024. The application sought to set aside the default judgment or at least pause enforcement pending further legal proceedings. However, there were several critical issues with the application:

• No Valid Defence Was Articulated – The defendants did not submit a draft defence or provide any substantive argument for why the judgment should be set aside.
• Affidavit Contained False and Irrelevant Information – The supporting affidavit from Ms Colevski made claims that the defendants had not received the statement of claim, despite sworn affidavits of service proving otherwise. The Court found these assertions to be untruthful.
• Delay in Filing and Lack of Urgency in Notifying the Court – The application was only filed on the afternoon of Friday, 17 May 2024, without any urgent request to the duty judge. The scheduled evictions were set to occur on Monday, 20 May 2024, at 9:00 am and 10:00 am. By the time the Court was notified on Monday morning, the eviction at Casula had already taken place.

Justice Lonergan was critical of the delay, noting that "the defendants have done nothing until the very last minute." The Court dismissed the motion with costs, concluding that allowing further delay would be inconsistent with the principles of justice outlined in sections 56 and 58 of the Civil Procedure Act 2005 (NSW).

• Section 56 - the overriding rules of Court are to "facilitate the just, quick and cheap resolution of the real issues in the proceedings" and that "a party to civil proceedings is under a duty to assist the Court to further the overriding purpose".
• Section 58 - the Court is required to act in accordance with the "dictates of justice", which includes taking into consideration a multitude of factors, including the degree to which the respective parties have fulfilled their duties.

Key takeaways

1. Act Promptly in Legal Proceedings

This case serves as a stark reminder that when served with legal documents—particularly in debt recovery matters—immediate action is required. Failure to respond can result in default judgment, leaving a debtor with limited options to contest enforcement.

2. Ensure Proper Legal Representation and Follow Through

The issues surrounding the defendants’ legal representation highlight the importance of clear communication and proper legal oversight. Engaging a solicitor early and ensuring they remain proactive throughout the proceedings can prevent last-minute, ineffective legal manoeuvres.

3. Court Discretion and the Dictates of Justice

Under sections 56 and 58 of the Civil Procedure Act 2005 (NSW), the Court must consider whether granting a stay of execution is in the interests of justice. Key factors include the timeliness of a party’s actions and whether they have used available opportunities to present a valid defence. In this case, the Court found that the defendants had "ample opportunity" but failed to take meaningful steps, leading to the dismissal of their motion.

4. Affidavits Must Be Truthful and Substantive

Ms Colevski’s affidavit was found to contain demonstrably false claims and lacked any valid grounds for defence. When submitting an affidavit, it is crucial to ensure that all statements are truthful, relevant, and supported by evidence.

Conclusion

The Supreme Court’s decision in Perpetual Corporate Trust Limited v Colevski Pty Limited highlights the consequences of delay in debt recovery matters. The defendants had multiple chances to contest the default judgment but failed to act in a timely and effective manner. When dealing with legal proceedings—especially those involving debt enforcement and property possession—it is essential to engage legal counsel early, respond promptly, and ensure all legal arguments are properly substantiated. The case serves as a clear warning: failing to act quickly can result in the loss of valuable legal rights.