Order, Supreme Court, New York County (David Saxe, J.), entered March 8, 1991, which granted defendants’ motion to vacate a default judgment entered on January 7, 1991, on condition that defendants pay plaintiffs $5,000, unanimously affirmed, without costs.
IAS ordered that defendants’ tax records, twice ordered to be produced, be turned over within two weeks. When defendants failed to do so, IAS struck their answer and granted judgment against them. However, several months later, IAS *431vacated this judgment finding that defendants’ failure to turn over the tax returns was not part of a course of generally obstructive conduct but was due to concern that plaintiffs would not keep the returns confidential, albeit on condition that defendants pay plaintiffs $5,000 as compensation for expenses incurred in attempting to obtain discovery to which they were held entitled and for the delay.
This was a proper exercise of discretion under CPLR 5015 (a) (1). There was a reasonable excuse for the non-production of the documents, and a showing of a meritorious defense that the funds plaintiffs seek to recover should be applied as a set off against liabilities arising out of the parties’ other business ventures. Concur—Sullivan, J. P., Carro, Rosenberger and Rubin, JJ.