Michell v Cvetkovic

Case [2022] FCA 1295

FEDERAL COURT OF AUSTRALIA

Michell v Cvetkovic [2022] FCA 1295  

File number: VID 16 of 2021
Judgment of: MCEVOY J
Date of judgment: 28 October 2022
Date of publication of reasons: 31 October 2022
Catchwords: PRACTICE AND PROCEDURE – application for default judgment pursuant to r 5.23(2)(c) of the Federal Court Rules 2011 (Cth) – where defendant has taken no active part in the proceeding – where defendant has failed to file notice of address for service or defence – defendant in default of appearance – plaintiffs entitled to relief in relation to insolvent trading claims alleged – relief granted.
Legislation:

Corporations Act 2001 (Cth) ss 95A, 180-182, 286, 588E(4), 588G, 588M, 1317K

Federal Court Act 1976 (Cth) s 51A

Federal Court Rules 2011 (Cth) r 5.22, 5.23(2)(c)

Cases cited:

Arthur v Vaupotic Investments Pty Ltd [2005] FCA 433
Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd  (2007) 161 FCR 513; [2007] FCAFC 146

Chamberlain Group Inc v Giant Alarm System Co Ltd (No 2) [2019] FCA 1606

Edenden v Bignall [2007] NSWSC 1122
Powell vFryer (2001) 159 FLR 433; [2001] SASC 59

Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227

Yeo v Damos Earthmoving Pty Ltd, Re Beachwood Developments Pty Ltd (in liq) [2011] FCA 1129

Division: General Division
Registry: Victoria
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Number of paragraphs: 32
Date of hearing: 28 October 2022
Counsel for the Plaintiffs:  Mr Campbell
Solicitor for the Plaintiffs: Doherty & Colleagues Solicitors
Counsel for the Defendant: The defendant did not appear

ORDERS

VID 16 of 2021
BETWEEN:

STEPHEN JOHN MICHELL IN HIS CAPACITY AS LIQUIDATOR OF CONTINUITY & COMPLIANCE MANAGEMENT SERVICES PTY LTD (IN LIQUIDATION)

First Plaintiff

CONTINUITY & COMPLIANCE MANAGEMENT SERVICES PTY LTD (IN LIQUIDATION) A.C.N. 160 042 973

Second Plaintiff
AND:

STEPHEN CVETKOVIC

Defendant

IN THE INTERLOCUTORY APPLICATION:
BETWEEN: 

STEPHEN JOHN MICHELL IN HIS CAPACITY AS LIQUIDATOR OF CONTINUITY & COMPLIANCE MANAGEMENT SERVICES PTY LTD (IN LIQUIDATION)

First Plaintiff

CONTINUITY & COMPLIANCE MANAGEMENT SERVICES PTY LTD (IN LIQUIDATION) A.C.N. 160 042 973

Second Plaintiff
AND:

STEPHEN CVETKOVIC

Defendant

ORDER MADE BY:

MCEVOY J

DATE OF ORDER:

28 OCTOBER 2022

THE COURT ORDERS THAT:

1.Pursuant to s 588M of the Corporations Act 2001 (Cth), the defendant pay to the second plaintiff the sum of $204,694.75.

2.Pursuant to s 51A of Federal Court of Australia Act 1976 (Cth), the defendant pay interest on the amount in paragraph 1 from the date the first plaintiff was appointed as liquidator of the second plaintiff in the amount of $73,317.72, as calculated in the attached schedule.

3.The defendant pay the plaintiffs’ costs of the proceeding.

ANNEXURE A

Schedule – interest calculations on $204,694.75

Calculated in accordance with paragraph 2.2 of the Interest on Judgments Practice Note (GPN-INT)

Period Days Rate (pa) Amount
13 October 2015 – 31 December 2015 80 6% $2,691.88
1 January 2016 – 30 June 2016 182 6% $6,124.02
1 July 2016 – 31 December 2016 184 5.75% $5,933.34

Continue reading Michell v Cvetkovic

Sign in free to access the full text

Details
AGLC
Michell v Cvetkovic [2022] FCA 1295
Case
[2022] FCA 1295
Decision Date

CaseChat Overview and Summary

In Michell v Cvetkovic, the applicants sought a default judgment against the defendant in relation to insolvent trading claims. The proceedings were commenced in the Federal Court of Australia by the filing of an originating application supported by a statement of claim. The defendant did not file a defence, or a notice of address for service, and was in default of the Court’s orders. The applicants sought an order for judgment against the defendant for the relief claimed in the statement of claim. The legal issue before the Court was whether the applicants were entitled to the relief sought, pursuant to r 5.23(2)(c) of the Federal Court Rules 2011 (Cth). The Court found that the applicants had complied with all the requirements of r 5.23(2)(c), and that the facts alleged in the statement of claim were sufficient to satisfy the Court that the applicants were entitled to the relief sought. The Court exercised its discretion to grant the applicants’ application for default judgment. The Court ordered the defendant to pay the applicants a sum of money, together with interest, and the applicants’ costs.

Orders

Orders of the court

1. Pursuant to s 588M of the Corporations Act 2001 (Cth), the defendant pay to the second plaintiff the sum of $204,694.75.

2. Pursuant to s 51A of Federal Court of Australia Act 1976 (Cth), the defendant pay interest on the amount in paragraph 1 from the date the first plaintiff was appointed as liquidator of the second plaintiff in the amount of $73,317.72, as calculated in the attached schedule.

3. The defendant pay the plaintiffs’ costs of the proceeding.

ANNEXURE A

Schedule – interest calculations on $204,694.75

Calculated in accordance with paragraph 2.2 of the Interest on Judgments Practice Note (GPN-INT)

Period

Days

Rate (pa)

Amount

13 October 2015 – 31 December 2015

80

6%

$2,691.88

1 January 2016 – 30 June 2016

182

6%

$6,124.02

1 July 2016 – 31 December 2016

184

5.75%

$5,933.34

1 January 2017 – 30 June 2017

181

5.5%

$5,582.84

1 July 2017 – 31 December 2017

184

5.5%

$5,675.37

1 January 2018 – 30 June 2018

181

5.5%

$5,582.84

1 July 2018 – 31 December 2018

184

5.5%

$5,675.37

1 January 2019 – 30 June 2019

181

5.5%

$5,582.84

1 July 2019 – 31 December 2019

184

5.25%

$5,417.40

1 January 2020 – 30 June 2020

182

4.75%

$4,848.18

1 July 2020 – 31 December 2020

184

4.25%

$4,385.51

1 January 2021 – 30 June 2021

181

4.1%

$4,161.75

1 July 2021 – 31 December 2021

184

4.1%

$4,230.73

1 January 2022 – 30 June 2022

181

4.1%

$4,161.75

1 July 2022 – 28 October 2022

120

4.85%

$3,263.90

TOTAL:

$73,317.72

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The application and supporting affidavit were personally served on the defendant on 25 September 2022. Nevertheless, nothing was received from the defendant, and when the application was called on 28 October 2022 the defendant did not appear. DEFAULT JUDGMENTPrinciples In order to be satisfied that an applicant is entitled to the relief sought pursuant to r 5.23(2)(c) of the Rules, the Court must be satisfied that the respondent has been served with the relevant documents and that the Court has jurisdiction to grant the relief: Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227 at [18] (Flick J). Rule r 5.23(2) relevantly provides that:If a respondent is in default, an applicant may apply to the Court for:…(c) if the proceeding was started by an originating application supported by a statement of claim or an alternative accompanying document referred to in rule 8.05, or if the Court has ordered that the proceeding continue on pleadings – an order giving judgment against the respondent for the relief claimed in the statement of claim or alternative accompanying document to which the Court is satisfied that the applicant is entitled; or …(e) an order mentioned in paragraph (b), (c) or (d) to take effect if the respondent does not take a step ordered by the Court in the proceeding in the time specified in the order. The principles applicable to the power to enter default judgment were essayed by Yates J in Chamberlain Group Inc v Giant Alarm System Co Ltd (No 2) [2019] FCA 1606 as follows:[13]The power to give judgment against a defaulting party is undoubtedly discretionary. The discretion must be exercised cautiously. Where the defaulting party is a respondent to a pleaded claim, the giving of judgment for final relief on the application will deliver complete success to the applicant without investigation of the merits of the pleaded claim: ACOHS Pty Ltd v Ucorp Pty Ltd [2009] FCA 577 at [27]. There is no requirement that the act or acts of default be intentional or amount to contumelious conduct. There is no requirement that the act or acts of default result in inordinate or inexcusable delay. That said, such features, if present, will be relevant to the exercise of the Court's discretion. So too will conduct that persuades the Court that the defaulting party is manifesting an inability or unwillingness to cooperate with the Court and the other party or parties to the proceeding.[14]Rule 5.23(2)(c) requires the Court to be satisfied that the applicant is entitled to the relief claimed in the statement of claim. This requirement has been interpreted as meaning that the Court must be satisfied that 'on the face of the statement of claim' the applicant is entitled to the relief that is claimed. It is not a requirement that the applicant prove its claim by way of evidence. Put another way, the facts alleged in the statement of claim are taken to have been admitted: Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2007] FCAFC 146; 161 FCR 513 at [42]. If, on inspection of the statement of claim, the Court is satisfied that the applicant would be entitled to the relief sought then this requirement of r 5.23(2)(c) will be met: CNIP Pty Ltd v Chan & Naylor Norwest Pty Ltd (No 2) [2011] FCA 1170 at [18] - [19]; Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227 at [23]. The Court may permit further evidence to be adduced, but not evidence that would alter the pleaded case: Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2006] FCA 1427; 236 ALR 665 at [45], [48] - [50]; United Broadcasting International Pty Ltd v Turkplus Pty Ltd (No 2) [2010] FCA 1413 at [42] - [44]; Australian Competition and Consumer Commission v Yellow Page Marketing BV (No 2) [2011] FCA 352; 195 FCR 1 at [62] - [63]. (Emphasis added)Consideration

Ratio Decidendi

Legal Principle Established

The principles applicable to the power to enter default judgment were essayed by Yates J in Chamberlain Group Inc v Giant Alarm System Co Ltd (No 2) [2019] FCA 1606 as follows:[13]The power to give judgment against a defaulting party is undoubtedly discretionary. The discretion must be exercised cautiously. Where the defaulting party is a respondent to a pleaded claim, the giving of judgment for final relief on the application will deliver complete success to the applicant without investigation of the merits of the pleaded claim: ACOHS Pty Ltd v Ucorp Pty Ltd [2009] FCA 577 at [27]. There is no requirement that the act or acts of default be intentional or amount to contumelious conduct. There is no requirement that the act or acts of default result in inordinate or inexcusable delay. That said, such features, if present, will be relevant to the exercise of the Court's discretion. So too will conduct that persuades the Court that the defaulting party is manifesting an inability or unwillingness to cooperate with the Court and the other party or parties to the proceeding.[14]Rule 5.23(2)(c) requires the Court to be satisfied that the applicant is entitled to the relief claimed in the statement of claim. This requirement has been interpreted as meaning that the Court must be satisfied that 'on the face of the statement of claim' the applicant is entitled to the relief that is claimed. It is not a requirement that the applicant prove its claim by way of evidence. Put another way, the facts alleged in the statement of claim are taken to have been admitted: Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2007] FCAFC 146; 161 FCR 513 at [42]. If, on inspection of the statement of claim, the Court is satisfied that the applicant would be entitled to the relief sought then this requirement of r 5.23(2)(c) will be met: CNIP Pty Ltd v Chan & Naylor Norwest Pty Ltd (No 2) [2011] FCA 1170 at [18] - [19]; Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227 at [23]. The Court may permit further evidence to be adduced, but not evidence that would alter the pleaded case: Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2006] FCA 1427; 236 ALR 665 at [45], [48] - [50]; United Broadcasting International Pty Ltd v Turkplus Pty Ltd (No 2) [2010] FCA 1413 at [42] - [44]; Australian Competition and Consumer Commission v Yellow Page Marketing BV (No 2) [2011] FCA 352; 195 FCR 1 at [62] - [63]. (Emphasis added)Consideration I am satisfied that the defendant was personally served with the originating process, statement of claim and affidavit in support in accordance with the Rules. The defendant was obliged to file a notice of address for service as required by r 5.02, and he failed to do so. The defendant is in continuing default of r 5.22(a) in this regard. I am satisfied that the defendant was on notice of each of the returns of the originating application before Anastassiou J on 4 March 2021 and 4 October 2021, and before me on 19 May 2022. Noting that the defendant did not appear today, I am satisfied that he is also in default of r 5.22(c).