In the matter of Bleecker Property Group Pty Ltd (In Liquidation)

Case •

[2023] NSWSC 1071

•

07 September 2023

No judgment structure available for this case.

Supreme Court


New South Wales

Medium Neutral Citation: In the matter of Bleecker Property Group Pty Ltd (In Liquidation) [2023] NSWSC 1071
Hearing dates: 4 and 5 September 2023
Date of orders: 7 September 2023
Decision date: 07 September 2023
Jurisdiction:Equity - Corporations List
Before: Williams J
Decision:

Application for default judgment dismissed; see below at [11]

Catchwords:

PRACTICE AND PROCEDURE – default judgment – where second plaintiff company and its liquidator seek orders under s 588FF(1)(a) of the Corporations Act 2001 (Cth) to recover from multiple defendants amounts equivalent to payments allegedly made by the second plaintiff to each defendant within the relation back period on the basis that the payments are voidable transactions because of s 588FE – where seventh defendant fails to file a defence – where second plaintiff seeks an order against seventh defendant under s 588FF(1)(a) by way of default judgment in respect of the payments allegedly made to that defendant – where s 588FF(1)(a) requires the Court to be satisfied that the payments are voidable transactions because of s 588FE – where that would require the Court in this case to be satisfied that the second plaintiff was insolvent at the time of the payments to the seventh defendant, or that the second plaintiff became insolvent as a result of those payments – where second plaintiff’s claims against other defendants will require the Court to determine at final hearing whether the second plaintiff was insolvent during the period in which it allegedly made payments to those other defendants, which coincides with the time period in which the payments to the seventh defendant were allegedly made – risk of inconsistent findings – HELD: Application for default judgment dismissed.

Legislation Cited:

Civil Procedure Act 2005 (NSW), ss 56, 61(3)

Corporations Act 2001 (Cth), ss 9, 286, 588E(1), 588E(4), 588E(9), 588FA, 588FA(1)(b), 588FB, 588FC, 588FDA, 588FDA(1)(b), 588FDA(1)(b)(i), 588FDA(1)(b)(ii), 588FDA(1)(b)(iii), 588FE, 588FE(2), 588FE(3), 588FE(4), 588FE(6A), 588FF, 588FF(1)(a)

Cases Cited:

Dean-Willcocks (as liq of SJP Formwork (NSW) Pty Ltd (in liq)) v Commissioner of Taxation (No 2) (2004) 49 ACSR 325; (2004) 22 ACLC 1034; (2004) 57 ATR 413; [2004] NSWSC 286

Hall and Another (as liquidators of Reynolds Vineyards Pty Ltd) v Commissioner of Taxation (2004) 51 ACSR 169; (2004) 22 ACLC 1495; [2004] NSWSC 950

In the matter of Bleecker Property Group Pty Ltd (in liquidation) [2023] NSWSC 858

Project Noah Holdings Pty Ltd (in liq) v Jacka [2022] FCA 778

The Property Investors Alliance Pty Ltd v C88 Project Pty Ltd [2021] NSWSC 1175

Wight, in the matter of I-Prosperity Pty Ltd (in liq) v LZYH Investments Pty Limited [2022] FCA 209

Wily v King [2010] NSWSC 352

Young v Commissioner of Taxation (2006) 56 ACSR 654; (2006) 24 ACLC 240; [2006] FCA 90

Texts Cited:

N/A

Category:Procedural rulings
Parties: Graeme Robert Beattie in his capacity as liquidator of the Second to Sixth Plaintiffs (First Plaintiff)
Bleecker Property Group Pty Ltd (In Liquidation) ACN 616 710 135 (Second Plaintiff)
Bleecker Property Group Pty Ltd (In Liquidation) as Trustee for NNG Properties Unit Trust ABN 18 872 534 725 (Third Plaintiff)
Greenacre Garden Development Pty Ltd (In Liquidation) ACN 636 176 602 (Fourth Plaintiff)
Greenacre Garden Development Pty Ltd (In Liquidation) as trustee for the Bankstown Development Trust ABN 42 665 236 015 (Fifth Plaintiff)
N & K Gazal Pty Ltd (In Liquidation) ACN 152 873 599 (Sixth Plaintiff)
N & K Gazal Pty Ltd (In Liquidation) as trustee for the Nathans Trust ABN 53 622 723 716 (Seventh Plaintiff)
Bleecker Development Pty Ltd (In Liquidation) ACN 625 763 215 (Eighth Plaintiff)
Nahi Gazal (First Defendant)
Nathan Gazal (Second Defendant)
Nazih Nasri Gazal (Third Defendant)
Bassem El Youssef (Fourth Defendant)
Susana Oliveira (Fifth Defendant)
Cash Supply Pty Ltd ACN 627 780 376 (Sixth Defendant)
NG Property Management Pty Ltd as trustee for Ramsgate Unit Trust ABN 57 699 815 797 (Seventh Defendant)
NNG Holdings Pty Ltd as trustee for NNG Family Trust ABN 74 497 353 852 (Eighth Defendant)
Belfield Development Pty Ltd as trustee for Belfield Development Unit Trust ABN 29 973 708 574 (Ninth Defendant)
Representation:

Counsel:
Mr P Lonergan (Plaintiff)
Submitting Appearance (1st, 4th, 8th, and 9th Defendants)

Solicitors:
Reuben George Lawyers (Plaintiff)
File Number(s): 2022/199859
Publication restriction: N/A

Judgment

  1. These proceedings were commenced by originating process filed on 8 July 2022 and are now proceeding by way of pleadings. The current iteration of the plaintiffs’ pleading is the amended statement of claim filed on 5 June 2023 (the Claim).

  2. The first plaintiff, Mr Graeme Beattie, is the liquidator of:

  1. the second plaintiff, Bleecker Property Group Pty Ltd (in liquidation) ACN 616 710 135, which is also named as the third plaintiff in these proceedings in its capacity as trustee for NNG Properties Unit Trust ABN 18 872 534 725 (Bleecker Property and the NNG Trust);

  2. the fourth plaintiff, Greenacre Garden Development Pty Ltd (in liquidation) ACN 636 176 602, which is also named as the fifth plaintiff in these proceedings in its capacity as trustee for the Bankstown Development Trust ABN 42 665 236 015 (Greenacre and the Bankstown Trust);

  3. the sixth plaintiff, N & K Gazal Pty Ltd (in liquidation) ACN 152 873 599, which is also named as the seventh plaintiff in these proceedings in its capacity as trustee for the Nathans Trust ABN 53 622 723 716 (NKG and the Nathans Trust); and

  4. the eighth plaintiff, Bleecker Development Pty Ltd (in liquidation) ACN 625 763 215 (Bleecker Development).

  1. Each of the plaintiff companies was wound up voluntarily by members’ resolutions passed on 22 September 2020.

  2. The plaintiffs allege that certain payments made by Bleecker Property and NKG to the defendants during the period from February 2018 to September 2020 are voidable transactions pursuant to s 588FE of the Corporations Act 2001 (Cth), and that some of those payments were made in breach of duties owed by the alleged directors and shadow directors of those companies.

  3. The allegedly voidable transactions include:

  1. payments totalling approximately $2,562,000 made by Bleecker Property to the seventh defendant, NG Property Management Pty Ltd as trustee for Ramsgate Unit Trust ABN 57 699 815 797 (NG Property), during the period from 15 October 2018 to 9 July 2020 (the NG Property Payments);

  2. payments totalling approximately $11,916,580 made by Bleecker Property to the first defendant, Mr Nahi Gazal, or to his close associates for his benefit, during the period from February 2018 to September 2020; and

  3. payments totalling approximately $107,227 made by Bleecker Property to the fourth defendant, Mr Bassem El Youssef, during the period from March 2018 to July 2020.

  1. Central to Bleecker Property’s claims that these transactions are voidable pursuant to s 588FE is its contention that, in contravention of s 286 of the Corporations Act, the books and records of Bleecker Property failed to correctly record and explain its transactions and financial position, and did not enable true and fair financial statements to be prepared and audited for the company, and that Bleecker Property is therefore presumed to have been insolvent pursuant to s 588E(4). According to Mr Beattie’s affidavit sworn on 30 June 2022 in support of the originating process that was filed to commence these proceedings, he has been provided with tax returns, financial reports, GST calculation spreadsheets, minutes of meetings, and documents relating to transfers of shares and changes to company details for Bleecker Property. So far as Mr Beattie was aware at the time of swearing that affidavit, Bleecker Property had not kept records of invoices evidencing the expenses in respect of which it claimed GST credits, receipts evidencing payment of such expenses, books of prime entry, work in progress records, job or customer files, stock listings, creditors’ records, or wages and superannuation records.

  2. As explained in my reasons for judgment published on 24 July 2023,[1] the plaintiffs are prosecuting the Claim in circumstances where there is an ongoing criminal investigation. [2] For the reasons explained in that judgment, orders have been made dispensing with the pleading rules insofar as those rules would otherwise apply to the defences of Mr Nahi Gazal, Mr Bassem El Youssef, and the second defendant (Mr Nathan Gazal), to the extent that those rules would undermine those defendants’ privilege against self-incrimination. [3] Those three defendants have filed defences consistently with those orders. With the exception of NG Property, the remaining defendants have also filed defences to the Claim. NG Property has not filed any defence or notice of appearance in the proceedings.

    1. In the matter of Bleecker Property Group Pty Ltd (in liquidation) [2023] NSWSC 858.

    2. Ibid at [28]-[30].

    3. Ibid at [39]-[67].

  3. By notice of motion filed on 28 June 2023, Bleecker Property seeks default judgment against NG Property in the sum of $2,562,000, plus interest and costs. The sum of $2,562,000 is the total amount of the NG Property Payments that Bleecker Property alleges are voidable transactions, and which Bleecker Property claims NG Property should be directed to repay pursuant to s 588FF(1)(a) of the Corporations Act.

  4. The application for default judgment has an unfortunate history. It has been listed for hearing on several occasions, generally in conjunction with other interlocutory applications or directions hearings in the proceedings. On each occasion prior to 4 September 2023, the application was either not ready to proceed, or the Court was not prepared to allow it to proceed, because NG Property and the other respondents to the application had not been notified of the application and/or the date and time of the hearing of the application in accordance with orders previously made by the Court.

  5. The motion was listed for hearing again on 4 September 2023, by which time two of the three respondents to the application had filed defences in the proceedings. Bleeker Property pressed the application only against the remaining respondent, NG Property. Evidence was adduced which established that NG Property had been served with the originating process, the amended statement of claim, and directions made by the Court in relation to the filing of defences to the statement of claim. That evidence also established that NG Property had been notified of the date and time of the hearing of the application for default judgment. There was no appearance for NG Property. No other defendant sought to be heard in relation to the application.

  6. For the reasons that follow, the application for default judgment against NG Property must be dismissed.

  7. Rule 16.6 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR)—which confers power on the Court to give judgment for a plaintiff against a defendant to a liquidated claim if the defendant is in default within the meaning of r 16.2—does not strictly apply to these proceedings, which were commenced by originating process rather than by statement of claim. However, the Court has power under s 61(3) of the Civil Procedure Act 2005 (NSW) to give such order as it considers appropriate if a party has failed to comply with a direction. As counsel for Bleecker Property submitted, that power may be exercised to enter default judgment against a defendant who has failed to file a defence contrary to a direction requiring any defence to be filed within a specified time. In that way, Part 16 of the UCPR may be applied by analogy to proceedings commenced by summons or originating process through orders made under s 61(3) of the Civil Procedure Act. [4]

    4. The Property Investors Alliance Pty Ltd v C88 Project Pty Ltd [2021] NSWSC 1175 at [14] (Hammerschlag J).

  8. Section 588FF of the Corporations Act relevantly provides that:

“(1) Where, on the application of a company’s liquidator, a court is satisfied that a transaction of the company is voidable because of section 588FE, the court may make one or more of the following orders:

(a)   an order directing a person to pay to the company an amount equal to some or all of the money that the company has paid under the transaction.”

  1. Accordingly, before making an order under s 588FF(1)(a)—whether by default judgment or otherwise—the Court must be satisfied that the relevant transaction or transactions are voidable because of s 588FE.

  2. As counsel for Bleecker Property submitted, it is open to the Court to arrive at that state of satisfaction on the basis of admissions, including any admissions that are taken to have been made by a defendant’s failure to file a defence responding to the relevant allegations in the plaintiff’s statement of claim. [5]

    5. UPCR r 14.26(1); Dean-Willcocks (as liq of SJP Formwork (NSW) Pty Ltd (in liq)) v Commissioner of Taxation (No 2) (2004) 49 ACSR 325; (2004) 22 ACLC 1034; (2004) 57 ATR 413; [2004] NSWSC 286 (Austin J); Hall and Another (as liquidators of Reynolds Vineyards Pty Ltd) v Commissioner of Taxation (2004) 51 ACSR 169; (2004) 22 ACLC 1495; [2004] NSWSC 950 (Barrett J); Young v Commissioner of Taxation (2006) 56 ACSR 654; (2006) 24 ACLC 240; [2006] FCA 90 (Tamberlin J); Wight, in the matter of I-Prosperity Pty Ltd (in liq) v LZYH Investments Pty Limited [2022] FCA 209 (Derrington J); Project Noah Holdings Pty Ltd (in liq) v Jacka [2022] FCA 778 (Derrington J).

  3. Bleecker Property submitted that the Court should be satisfied that the NG Property Payments totalling $2,562,000 were voidable transactions, and so should enter default judgment against NG Property, on the basis of the allegations relating to those payments that are pleaded in the Claim, deemed admissions said to arise from the NG Property’s failure to file any defence responding to those pleaded allegations, and Mr Beattie’s affidavit sworn on 30 June 2022 to which I have referred at [6] above. Mr Beattie’s affidavit was read at the hearing of the application for default judgment.

  4. Paragraph 32 of the Claim pleads that Mr El Youssef or, alternatively, Mr Nahi Gazal, caused Bleecker Property to make the NG Property Payments to NG Property during the period from 15 October 2018 to 9 July 2020. The Claim pleads that Mr El Youssef was a director of Bleecker Property during that period. NG Property’s failure to file a defence responding to that pleaded allegation operates by reason of UCPR r 14.26(1) as an admission that NG Property received payments from Bleecker Property totalling $2,562,000 during the period from 15 October 2018 to 9 July 2020. As counsel for Bleecker Property correctly submitted, that admission operates only against NG Property. It is not an admission against any of the other defendants. In their defences filed on 26 July 2023 and 9 August 2023 (respectively), Mr Nahi Gazal and Mr El Youssef have not admitted paragraph 32 of the Claim, invoking their privilege against self-incrimination.

  5. The grounds on which Bleecker Property alleges that the NG Property Payments are voidable transactions are pleaded in paragraphs 119 to 127 of the Claim. It is pleaded that the NG Property Payments are uncommercial transactions within the meaning of s 588FB, unfair preferences within the meaning of s 588FA, and/or unreasonable director related transactions within the meaning of s 588FDA of the Corporations Act. Each of those pleadings is a global allegation directed to all of the NG Property Payments. The Claim does not address each of the transactions included in the NG Property Payments individually.

  6. During the hearing of the application for default judgment, counsel for Bleecker Property accepted with commendable candour that the Claim did not plead all of the elements that Bleecker Property would need to establish in order for the Court to be satisfied that the NG Property Payments (or any of them) were unfair preferences or unreasonable director related transactions. In relation to the unfair preferences allegation, the Claim does not plead that the NG Property Payments (or any of them) were made in respect of an unsecured debt owed by Bleecker Property to NG Property. [6] In relation to the unreasonable director related transactions allegation, the Claim does not plead that the NG Property Payments (or any of them) were made to a recipient falling within s 588FDA(1)(b) of the Corporations Act. It is self-evident that NG Property is not, and has never been, a director of Bleecker Property or a close associate of a director of Bleecker Property. [7] The Claim does not plead that NG Property received the NG Property Payments on behalf of, or for the benefit of a director of Bleecker Property or a close associate of a director of Bleecker Property. [8]

    6. See s 588FA(1)(b).

    7. See s 588FDA(1)(b)(i) and (ii), together with the definitions of “close associate” and “relative” in s 9 of the Corporations Act.

    8. See s 588FDA(1)(b)(iii).

  7. For those reasons, NG Property’s failure to file a defence to the allegations in paragraphs 122 to 127 of the Claim does not give rise to an admission that the NG Property Payments are unfair preferences or unreasonable director related transactions. It was not submitted that Mr Beattie’s affidavit sworn on 30 June 2023 or its extensive exhibit included any evidence directed to the unpleaded elements of ss 588FA and 588FDA that would enable the Court to be satisfied that the NG Property Payments (or any of them) are unfair preferences or unreasonable director related transactions.

  8. It remains to consider paragraphs 119 to 121 of the Claim, in which Bleecker Property pleads that the NG Property Payments are uncommercial transactions. It is convenient to set out those paragraphs of the Claim in full:

“119    A reasonable person in Bleecker Property’s Group’s circumstances would not have entered into any of the NG Property Payments having regard to:-

a)    The benefits (if any) to Bleecker Property Group entering into the transaction; and

b)    The detriment to Bleecker Property Group entering into the transactions; and

c)    The respective benefits to other parties to the transactions of entering into it.

120    By reason of the matters referred to in paragraphs [42] and [119] above, each of the NG Property Payments constituted:-

a) A transaction within the meaning of section 9 of the Act;

b) An uncommercial transaction within the meaning of s588FB of the Act;

c) An insolvent transaction within the meaning of section 588FC of the Act; and

d) A voidable transaction within the meaning of section 588FE(2), 588FE(3), 588FE(4) and/or 588FE(6A) of the Act.

121    By reason of the matters referred to in paragraphs [31] and [119] to [120] above, insofar as they relate to Bleecker Property, NG Property the Seventh Defendant is liable to Bleecker Property in the amounts $2,562,000.00.”

  1. In relation to paragraph 120(b) of the Claim, s 588FB of the Corporations Act relevantly provides:

“(1)     A transaction of a company is an uncommercial transaction of the company if, and only if, it may be expected that a reasonable person in the company's circumstances would not have entered into the transaction, having regard to:

(a)     the benefits (if any) to the company of entering into the transaction; and

(b)     the detriment to the company of entering into the transaction; and

(c)     the respective benefits to other parties to the transaction of entering into it; and

(d)     any other relevant matter.”

  1. Paragraph 119 of the Claim is the only pleading of those elements in respect of the NG Property Payments. Paragraph 119 merely recites the statutory criteria in s 588FB(1), inserting the name Bleecker Property. The Claim does not plead the material facts relied on as supporting the allegations that the NG Property Payments (or any of them) satisfied each of those criteria. Counsel for Bleecker Property submitted that it was tolerably clear from reading the Claim as whole that the NG Property Payments were alleged to be detrimental to Bleecker Property because it is alleged to have been insolvent at the time that each of those payments was allegedly made. I proceed on that basis. For reasons that will become apparent, it is not necessary for me to take time to consider whether a defendant who fails to file a defence responding to a voidable transaction allegation can fairly be treated as having made any admission, where that allegation is pleaded in terms that do nothing more than recite the statutory criteria for the relevant species of voidable transaction.

  1. In relation to paragraph 120(c) of the Claim, s 588FC of the Corporations Act relevantly provides:

“A transaction of a company is an insolvent transaction of the company if, and only if, it … an uncommercial transaction of the company, and:

(a)     any of the following happens at a time when the company is insolvent:

(i)     the transaction is entered into; or

(ii)     an act is done, or an omission is made, for the purpose of giving effect to the transaction; or

(b)     the company becomes insolvent because of, or because of matters including:

(i)     entering into the transaction; or

(ii)     a person doing an act, or making an omission, for the purpose of giving effect to the transaction.”

  1. Paragraphs 37, 41, and 42 of the Claim plead that, from at least 21 June 2017, Bleeker Property is presumed to have been insolvent pursuant to s 588E(4) of the Corporations Act by reason of its alleged failure to keep financial records correctly explaining its transactions and financial position and performance, and that would enable true and fair financial statements to be prepared and audited, in contravention of s 286 of the Corporations Act. A presumption of insolvency under s 588E(4) applies in a “recovery proceeding”—including an application under s 588FF—except so far as the contrary is proved for the purposes of the proceeding concerned. [9]

    9. See s 588E(9) and the definition of “recovery proceeding” in s 588E(1).

  2. Each of the allegations in paragraph 120(d) of the Claim—that the NG Property Payments are voidable because of s 588FE(2), s 588FE(3), and/or s 588FE(4)—require Bleecker Property to demonstrate that the NG Property Payments are insolvent transactions within the meaning of s 588FC of the Corporations Act.

  3. The allegation in paragraph 120(d) of the Claim that the NG Property Payments are voidable because of s 588FE(6A) may be disregarded, because that sub-section relevantly provides that a transaction is voidable if it is an unreasonable director-related transaction. As explained above, Bleecker Property has not pleaded that the NG Property Payments (or any of them) have all of the elements of unreasonable director-related transactions.

  4. To summarise, the presumed insolvency allegations in paragraphs 37, 41, and 42—referred to at [25] above—are central to the voidable transactions allegations in paragraphs 119 to 121 of the Claim. As explained at [13] and [14] above, the Court only make an order by way of default judgment against NG Property under s 588FF(1)(a) of the Corporations Act if the Court is satisfied that the NG Property Payments transaction or transactions are voidable because of s 588FE. Any such default judgment would necessarily convey to the parties, and stand as a record that, the Court was so satisfied. By reason of the way in which the voidable transaction claims have been pleaded in this case, that state of satisfaction would in turn convey and record that the Court was satisfied that the NG Property Payments were insolvent transactions, which would in turn convey and record that Bleecker Property was presumed insolvent at the time of the NG Property Payments by reason of its failure to keep the financial records required by s 286 of the Corporations Act. As I have already mentioned, that presumption applies in these proceedings except so far as the contrary is proved.

  5. The presumed insolvency allegations are also central to many of the claims pleaded by Bleecker Property against other defendants to the proceedings. By way of example only, Bleecker Property pleads in paragraphs 43 to 52 and paragraphs 87 to 95 of the Claim that the payments made by Bleecker Property to Mr Nahi Gazal during the period from February 2018 to September 2020 totalling approximately $11,916,580, and the payments made by Bleecker Property to Mr El Youssef during the period from March 2018 to July 2020 totalling approximately $107,227, were voidable transactions because, inter alia, they were made at a time when Bleecker Property was insolvent. In their defences filed on 26 July 2023 and 9 August 2023 (respectively), Mr Nahi Gazal and Mr El Youssef have not admitted those claims, invoking their privilege against self-incrimination.

  6. The state of satisfaction on the part of the Court upon which a default judgment against NG Property would be founded—referred to at [28] above—may ultimately prove to be inconsistent with the Court’s determination of those claims against those other defendants after a final hearing. For example, a determination by the Court on this application that it was satisfied that the NG Property Payments were voidable transactions, including because Bleecker Property is presumed to have been insolvent during the period from 15 October 2018 to 9 July 2020 when those payments were made, would be inconsistent with any finding following a contested hearing of Bleecker Property’s claims against the other defendants that the Court was not satisfied that the payments made to those other defendants were voidable transactions because Bleecker Property was in fact solvent during the periods of time in which those payments were made (which time periods cover the whole of the period in which the NG Property Payments were made). In my opinion, if that risk of inconsistency were to be realised, it would bring the administration of justice into disrepute because default judgment for $2,562,000 would have been entered against NG Property on a premise which the Court would have subsequently found, in the same proceedings, to be incorrect. Whilst that might cause NG Property to apply to set aside the default judgment under r 36.16(2)(b) of the UCPR, that would not avoid the administration of justice being brought into disrepute, particularly if Bleecker Property and its liquidator had enforced the judgment in the meantime, and if NG Property was unable to recover the judgment sum in full. The Court would be seen as having rushed to judgment against NG Property, rather than determining all of the plaintiffs’ claims in the proceedings together. In the scenario under consideration, that alternative course would be seen as one that would have been more efficient and more likely to achieve a just resolution of all of the plaintiffs’ claims in these proceedings.

  7. Contrary to the submissions made by counsel for Bleecker Property, I do not consider that the risk of inconsistency, or the risk of the administration of justice being brought into disrepute, is removed or avoided by acknowledging that the first decision would be made on the basis of admissions that Bleeker Property contends arise from NG Property’s failure to file a defence responding to the allegations in paragraphs 119 to 121 of the Claim, and that any such admissions do not bind the other defendants. The question of Bleecker Property’s solvency or insolvency at the relevant times is a common question that affects all of the claims against all of the defendants. For the reasons explained above, it would bring the administration of justice into disrepute if the Court were to arrive at differing conclusions in relation to that question within these proceedings.

  8. My research has not discovered any previous case in which this issue has arisen in proceedings where a plaintiff has sought an order under s 588FF(1)(a) against a defendant by way of default judgment. In the cases referred to at [15] above, the default judgment was sought against either the sole defendant in the proceedings, or against all defendants in the proceedings. The risk of inconsistency in the present case arises from the fact that the Bleecker Property has applied for default judgment against only one of several defendants, in circumstances where the insolvency allegation is common to its claims under s 588FF(1)(a) against all of the defendants.

  9. The Court’s power to enter default judgment is discretionary. [10] The discretion must be exercised in a manner that seeks to give effect to the overriding purpose of facilitating the just, quick and cheap resolution of the real issues in the proceedings. [11] Assuming that I were satisfied on the basis of NG Property’s failure to file any defence responding to the allegations pleaded in paragraphs 37, 41 to 42, and 119 to 121 of the Claim, together with Mr Beattie’s evidence referred to at [6] above, that the NG Property Payments were voidable transactions, it is my opinion that it would be inconsistent with the overriding purpose to exercise the discretion to make an order under s 588FF(1)(a) against NG Property by way of default judgment in the present case for all of the reasons explained above. The plaintiffs’ motion for default judgment must be dismissed for that reason, and it is not necessary for me to determine whether I am satisfied that the NG Property Payments are insolvent transactions.

    10. Wily v King [2010] NSWSC 352 at [17] (Barrett J), referring to Charles v Shepherd [1892] 2 QB 622 at 624 (Esher MR).

    11. Civil Procedure Act 2005 (NSW), s 56.

  10. My dismissal of the default judgment application does not affect the ability of Bleecker Property and its liquidator to prosecute the claims against NG Property, and to have an order made in their favour under s 588FF(1)(a) of the Corporations Act if each element of those claims is established at the final hearing of these proceedings.

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Endnotes

Decision last updated: 07 September 2023

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