National legal practice Piper Alderman was unable to hold onto the default judgment entered against former client and the director of Care A2, meaning their lengthy costs dispute will resume.
The NSW District Court set aside the default judgment entered against Kerry Anne Hyland, director of Care A2, who has been embroiled in a legal costs dispute with Piper Alderman since late 2023.
Judge John Catsanos SC said he was satisfied Hyland had a “bona fide defence”, in the sense it was arguable, and setting aside the judgment would not cause Piper Alderman to suffer prejudice.
“At the end of the day, the prejudice the plaintiff faces is delay and additional costs. However, in circumstances where it is arguable the defendant has a defence to a further claim by the plaintiff, it cannot be said that setting aside the judgment is futile,” the judge said.
“In my view, any prejudice to the plaintiff is not such as would override the potential preclusion of rights contended by the defendant.”
Piper Alderman billed Hyland and Care A2 around $435,000 for work on Federal Court litigation concerning an alleged defaulted loan.
In July 2024, Hyland filed a costs assessment application that contended the proper amount of costs was about $356,000.
Around this time, Care A2 was the subject of a winding-up application, which Piper Alderman had been substituted into as plaintiff.
A few months later, Hyland agreed to a deed of settlement that would see her pay $200,000 in return for a release by Piper Alderman of liability, inter alia, for debt being claimed in respect of the legal fees.
When Hyland failed to make the payments, Piper Alderman commenced proceedings. Having then failed to file a defence, the District Court awarded default judgment in June.
In her submissions to have the default judgment set aside, Hyland alleged that Piper Alderman was negligent in the provision of legal services, which exposed Care A2 to liability and the wind-up application.
Hyland also alleged Piper Alderman used its position as petitioning creditor to “exert illegitimate pressure” to enter the settlement deed.
In a crossclaim, Hyland has sought a declaration that the deed was void and validly rescinded, in addition to damages for alleged negligence and breach of contract. She also sought “equitable compensation for [the alleged] breach of fiduciary duty and an indemnity against any liability the defendant is found to have to the plaintiff”.
Piper Alderman said the proposed defence was not bona fide, contending the arguments were “recently invented and arose only after the defendant was confronted with a bankruptcy notice”.
The firm added that the allegations of unconscionable conduct and duress were “so devoid of merit that one would conclude the defence is effectively a sham”. It relied on the fact that Hyland was legally represented during negotiations and the deed was in her benefit.
Judge Catsanos said those were “all matters for evaluation”.
“As the transcript of argument will show, the parties, with some vigour, advanced competing arguments as to the bona fides of the various aspects of the proposed defence,” Judge Catsanos said.
“Those exchanges serve to demonstrate that the matters raised by the plaintiff said to go to the bona fides of the defence can only be determined after a contest and consideration on the merits of the matters pleaded.
“The merits of the proposed defences are questions for another day.”
The case: Moore trading as Piper Alderman v Hyland [2025] NSWDC 464.
Naomi Neilson is a senior journalist with a focus on court reporting for Lawyers Weekly.
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