Moonwalk Pty Ltd v Assetta Developments Pty Ltd

[2024] VSC 468

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL COURT

COMMERCIAL LIST

S ECI 2024 03065

MOONWALK PTY LTD (AS TRUSTEE FOR THE DEGEL TRUST NO 8)	Plaintiff
v
ASSETTA DEVELOPMENTS PTY LTD (IN ITS OWN CAPACITY AND AS TRUSTEE FOR THE AUSTRAK DISCRETIONARY TRUST)	Defendant

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JUDGE:	COSGRAVE J
WHERE HELD:	Melbourne
DATE OF HEARING:	7 August 2024
DATE OF JUDGMENT:	9 August 2024
CASE MAY BE CITED AS:	Moonwalk Pty Ltd v Assetta Developments Pty Ltd
MEDIUM NEUTRAL CITATION:	[2024] VSC 468

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Catchwords:             PRACTICE AND PROCEDURE – Application for default judgment – Defendant’s failure to file an appearance within prescribed period – Defendant’s failure to file a defence within prescribed period – Where plaintiff seeks declaratory relief – Application granted.

Legislation Cited:     Civil Procedure Act 2010 (Vic); Supreme Court (General Civil Procedure) Rules 2015 (Vic); Supreme Court (Miscellaneous Civil Proceedings) Rules 2018 (Vic).

Cases cited:Ainsworth v Criminal Justice Commission (1992) 175 CLR 564; Australian Competition and Consumer Commission v MSY Technology Pty Ltd (2012) 201 FCR 378; CGU Insurance Ltd v One.Tel Ltd (in liquidation) (2010) 242 CLR 174; Ellis v Ellis [2015] WASC 77; Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421; Geneva Laboratories Ltd v Prestige Premium Deals Pty Ltd (4) (2016) 120 IPR 133; Goldspring v Jordan [2024] NSWCA 158; Metzger v Department of Health and Social Security [1977] 3 All ER 444; Patten v Burke Publishing Co Ltd [1991] 2 All ER 821.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Dr O Bigos KC with Mr L Freckelton	Arnold Bloch Leibler
For the Defendant	Mr M Assetta and Mr S Martinello in person

HIS HONOUR:

Introduction

1. In this proceeding, the plaintiff applies by summons filed 26 July 2024 for:

(a) leave pursuant to r 2.07 of the Supreme Court (Miscellaneous Civil Proceedings) Rules 2018 (Vic) to seek to enter judgment in default of appearance against the defendant; and

(b) orders pursuant to rr 21.01(2) and 21.04 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (“the Rules”) for judgment in default of appearance against the defendant upon the statement of claim contained in the writ filed on 18 June 2024.

1. In support of its application the plaintiff relies upon the following material:

(a)   the affidavit of Simon John Dollard sworn 23 July 2024;

(b)  the affidavit of Jeremy Samuel John Brown affirmed 23 July 2024;

(c)   another affidavit of Simon John Dollard sworn 5 August 2024 (in respect of which confidentiality orders are sought); and

(d)  a further affidavit of Jeremy Samuel John Brown affirmed on 7 August 2024.

Background

1. The plaintiff (“Moonwalk”) is the trustee of the Degel Trust No 8 and, in that capacity, it holds an 8% interest in the Assetta Developments Joint Venture (“Assetta Developments JV”). This is an unincorporated joint venture constituted by an agreement made in about June 1999 between, inter alia, the defendant (“Assetta Developments”) and Moonwalk.

1. Assetta Developments is and was at all material times the trustee of the Austrak Discretionary Trust. In its capacity as trustee, Assetta Developments holds an 82% interest in the Assetta Developments JV. Austrak AFM Pty Ltd (“Austrak AFM”) is the manager of the Austrak AFM Joint Venture (“the Austrak JV”). This is an unincorporated joint venture constituted by an agreement dated 8 October 2003 between, inter alia, Assetta Developments, Moonwalk and Austrak AFM.

1. At all times since 2003, the Assetta Developments JV has held a 50% participating interest in the Austrak JV (“the Austrak 50% participating interest”). That interest comprises both the beneficial ownership as a tenant in common in respect of 50% of an undivided share in all the joint venture assets of the Austrak JV and 1,200 ordinary shares in Austrak AFM.

1. Since 2003, Assetta Developments has participated in the Austrak JV as nominee and has held the Austrak 50% participating interest on bare trust for the participants in the Assetta Developments JV as tenants in common. This holding included the 8% interest which Moonwalk had as its proportionate participation in the Assetta Developments JV.

1. As a participant in the Assetta Developments JV and as a beneficiary under the bare trust, Moonwalk has a right to require the transfer of the title to that proportion of the Austrak 50% participating interest in which Moonwalk has a beneficial interest.

1. Because the Assetta Developments JV has only a 50% interest in the Austrak JV, Moonwalk has beneficial ownership of 4% of an undivided share in all the joint venture assets of the Austrak JV and 96 shares in Austrak AFM.

1. By letter dated 3 May 2024, Moonwalk directed Assetta Developments to transfer to it the title in respect of its interest in the Austrak 50% participating interest. The letter said that if Assetta Developments did not comply with the direction by 5.00pm on 10 May 2024, Moonwalk would take steps to require it to do so without further notice. These steps could include Moonwalk issuing a proceeding.

1. Assetta Developments failed to comply with Moonwalk’s direction.

1. On 18 June 2024, the plaintiff issued a writ enclosing a statement of claim and served the writ upon Assetta Developments.

1. On 18 June 2024, Moonwalk sent an email to the two directors of Assetta Developments, Marco and Antonio Assetta, attaching a copy of the writ and statement of claim.

1. Pursuant to the Supreme Court (General Civil Procedure) Rules 2015 (Vic), Assetta Developments was required to enter an appearance within 10 days of service of the writ. Assetta Developments failed to enter an appearance and filed no defence.

1. On 9 July 2024, Moonwalk wrote to Assetta Developments noting that:

(a)   it had not received any response to its letter of 3 May 2024; and

(b)  Assetta Developments had not complied with Moonwalk’s direction to transfer legal ownership of the interest Assetta Developments held in the Austrak JV on trust as bare trustee for Moonwalk. Further, Assetta Developments had failed to file an appearance or defence in response to service of the writ and statement of claim. In the circumstances, Moonwalk asserted an entitlement to enter judgment in default of appearance and reserved its right to seek such judgment without further notice.

1. In an affidavit by its solicitor sworn on 5 August 2024, Moonwalk set out why Moonwalk sought an urgent hearing on its application for default judgment. At the hearing, Moonwalk drew my attention to confidentiality obligations to which the company is subject. I am satisfied that the circumstances of urgency exist and that the affidavit of urgency sworn by Simon John Dollard on 5 August 2024 should remain confidential in its unredacted form together with confidential exhibit SJD-2. This affidavit and exhibit should not be available for inspection by members of the public or other parties to this litigation.

Service

1. I am satisfied on the basis of affidavit material provided by Jeremy Brown that Moonwalk has appropriately served Assetta Developments with the writ and statement of claim. Similarly, Moonwalk through Mr Brown notified Assetta Developments of today’s hearing and provided a download link to the company which contained the substantive affidavit material relied upon for the application. If there had been any doubts about service of the relevant documentation, such doubts were dispelled by the attendance in court at the hearing of Mr Mark Assetta, a director of Assetta Developments, and managing director and chief executive officer of Austrak, and another colleague Sam Martinello.

Legal principles

1. A plaintiff cannot enter judgment in default of appearance in a Commercial List matter managed by a Commercial List judge unless the judge so orders. The effect of r 2.07(1) of the Supreme Court (Miscellaneous Civil Proceedings) Rules 2018 (Vic) is that judgment in default of appearance or defence cannot be entered administratively in matters governed by the rule.

1. Rule 21.01(2) of the Rules provides that, in a proceeding commenced by writ, where a defendant does not file an appearance within the time limited, the plaintiff may enter or apply for judgment against the defendant in accordance with Order 21.

1. To obtain judgment in default of appearance, the plaintiff must file a notice to the Prothonotary requesting the Prothonotary to search for an appearance by the defendant and an affidavit proving service of the writ on the defendant: r 21.01(3). If the plaintiff claims for the recovery of debt, damages or any property, a plaintiff may enter judgment against the defendant under r 21.03. In any other case, of which the present case is an example, the court may give judgment for the plaintiff upon the allegations made in the statement of claim: r 21.04.

1. It is well accepted that where the defendant has filed no appearance, each of the allegations in the statement of claim is taken to be admitted with the defendant being treated as if they had not defended the claim. The relevant enquiry is whether the pleaded material facts are sufficient to establish the causes of action relied upon and thus, an entitlement to the relief sought.

1. Of particular relevance in this case is that Moonwalk seeks declaratory relief against Assetta Developments. It has been said that, in general terms, a party seeking a declaration should secure a contradictor.[1] However, it appears that this requirement can be satisfied if there is a party who has a genuine interest in opposing the declaratory relief, whether or not the party actually opposes the grant of relief.[2] Thus, it seems the contradictor does not necessarily have to appear at the hearing of the application.[3] This approach has been justified on the basis that choosing not to appear at a hearing should not put a party in a stronger position than a party who does appear to argue against the plaintiff’s claims for relief. Hence, the fact that a party does not appear cannot of itself create an insurmountable obstacle to the grant of declaratory relief.

   [1]Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421, 437-8.

   [2]Australian Competition and Consumer Commission v MSY Technology Pty Ltd (2012) 201 FCR 378, [14] & [30].

   [3]Geneva Laboratories Ltd v Prestige Premium Deals Pty Ltd (4) (2016) 120 IPR 133, [79].

1. Courts retain an overriding discretion in respect of the grant of declaratory relief. Broadly speaking, a court should not make a declaration unless there is a real legal controversy to be determined that is not hypothetical, and the declaration will produce foreseeable consequences for the parties.[4]

   [4]Ainsworth v Criminal Justice Commission (1992) 175 CLR 564. 582, 596.

1. In Metzger v Department of Health and Social Security[5] Megarry V-C said:

The court does not make declarations just because the parties to litigation have chosen to admit something. The court declares what it has found to be the law after proper argument, not merely after admissions by the parties. There are no declarations without argument: that is quite plain.

[5][1977] 3 All ER 444, 451.

1. At least in Australia, any reluctance to order declaratory relief in the context of a default judgment should be seen as a rule of practice, and not of law. Where a plaintiff cannot obtain “the fullest justice to which [he or she] is entitled without such a declaration”,[6] declaratory relief can be appropriate.

   [6]Patten v Burke Publishing Co Ltd [1991] 2 All ER 821, 823.

Analysis

1. I am satisfied that Moonwalk:

·served the writ and statement of claim upon the defendant;

·Assetta Developments did not enter an appearance or file a defence;

·the statement of claim pleads the necessary facts to make good the essence of Moonwalk’s claim – namely, that Assetta Developments holds Moonwalk’s 8% interest in the Assetta Developments JV as bare trustee; that as a result, Moonwalk has a beneficial interest in 4% of all the assets of the Austrak JV and 96 shares in Austrak; and

·Assetta Developments should transfer to Moonwalk the legal title to its share of the assets held as bare trustee.

1. In my opinion, Moonwalk should have the relief, including the declaratory relief, which it seeks in this case. The relevant facts are taken to be admitted due to Assetta Developments’ failure to enter an appearance. In order for Moonwalk to obtain the transfer of the trust property, it is appropriate to declare its interest in the Assetta Developments JV and its beneficial ownership of a share in the assets of the Austrak JV. This order declaring the rights of Moonwalk puts an end to any legal controversy about the issue.

1. As the High Court noted in CGU Insurance Ltd v One.Tel Ltd (in liquidation),[7] the trustee of a bare trust has no interest in the trust assets other than those which exist by reason of the office of trustee and the holding of legal title. The trustee of a bare trust has no active duties to perform except for those which exist by virtue of the office of trustee. As a result, the trustee holds the trust property pending a transfer to the beneficiaries or some other disposition of the trust property at their direction. This means that Moonwalk, as the party beneficially entitled, can demand the trustee transfer the trust property to it and the trustee must comply with such demand.

   [7](2010) 242 CLR 174, [36].

1. The action for an account arises from the fiduciary relationship of trustee and beneficiary. It does not require a breach of trust. It represents a remedy to enforce or permit a trustee to discharge the fiduciary obligation to account to the beneficiaries.[8]

   [8]Ellis v Ellis [2015] WASC 77, [91].

1. Moonwalk is entitled to require the account and such relief is necessary to assist in connection with the primary relief it seeks. Moonwalk has in its proposed orders adapted some which were recently considered by the New South Wales Court of Appeal in Goldspring v Jordan.[9]

   [9][2024] NSWCA 158, [17].

1. At the hearing, Mark Assetta intimated that he, his family and possibly the company itself had suffered serious, but unspecified difficulties, in recent times. He asked that I not make any order against the company because it would reflect badly upon the company and him personally. He said that he had no intention of taking advantage of Hersh Cooper, the person who effectively controls Moonwalk, and intended to pay Moonwalk its entitlement when due.

1. Mr Assetta told the Court that he was not a lawyer and had not been able to get proper legal advice because he had previously relied upon either Mr Cooper or the firm of solicitors which acted in a recent transaction and was thereby conflicted. Mr Assetta did not seek to adjourn or postpone the application so that Assetta Developments could obtain legal advice or representation.

1. The essence of Mr Assetta’s submissions appeared to be that he would ensure Assetta Developments complied with its obligations to Moonwalk and that it would cause him and the company embarrassment and/or harm if the Court made the orders sought by Moonwalk.

1. Notwithstanding Mr Assetta’s comments, Moonwalk in reply insisted that its application proceed. It said that if the Court made the orders sought and Moonwalk obtained its relief, it might consider agreeing to set aside any judgment against Assetta Developments.

1. After the conclusion of the hearing Mr Assetta sent the Commercial Court Registry an email in which he said that he wanted to confirm his commitment to settling this matter and to directing HSF[10] to pay the amount of proceeds due to Moonwalk following settlement. A second email which Mr Assetta sent a few minutes later purported to be a formal instruction to David Sinn of HSF to ensure that Moonwalk was remitted its full entitlement as a member of the Assetta Developments JV. 

   [10]I assume this is a reference to Herbert Smith Freehills.

1. In circumstances where:

·the requirements of order 21 were satisfied;

·Moonwalk was entitled to the relief sought;

·Assetta Developments filed no affidavit material explaining its conduct in connection with the proceeding or seeking any adjournment of the application.

I consider it is appropriate to make the orders sought by Moonwalk.

Conclusion

1. For the reasons set out, I make the following orders:

1Pursuant to r 2.07 of the Supreme Court (Miscellaneous Civil Proceedings) Rules 2018 (Vic), the plaintiff has leave to enter judgment in default of appearance against the defendant.

2Pursuant to r 21.01(2) and r 21.04 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic), there be judgment for the plaintiff.

3Pursuant to section 47(1) of the Civil Procedure Act 2010 (Vic) and rules 28A.06(1) and 28.05(4) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic), paragraphs 8 to 14 of the affidavit of Simon John Dollard sworn and provided to the Court on 5 August 2024 together with confidential exhibit SJD-2 to that affidavit are, and shall remain, confidential. Subject to any subsequent order of the Court, the said affidavit and exhibit shall be stored electronically on the Court file in such a way that they remain confidential and can only be inspected by any judicial officers or staff of the Court.

THE JUDGMENT OF THE COURT IS THAT:

Declaration as to Trust Assets held on bare trust by the defendant for the plaintiff

THE COURT DECLARES THAT:

4         The defendant holds on bare trust for the plaintiff:

(a)a proportionate 8% interest in the Assetta Developments Joint Venture;

(b)the beneficial ownership as a tenant in common in respect of 4% of an undivided share in all the joint venture assets of the Austrak AFM Joint Venture; and

(c)96 ordinary shares in Austrak AFM Pty Ltd ACN 082 161 662

(together, Trust Assets).

AND THE COURT ORDERS THAT:
Transfer of the Trust Assets from the defendant to the plaintiff

5The defendant shall transfer the title to the Trust Assets to the plaintiff forthwith, and take all necessary steps to effect the transfer.

Account

6Within 3 weeks of the date of this order, the defendant serve on the plaintiff a complete form of accounts in respect of the Assetta Developments Joint Venture and the property comprising the Trust Assets commencing from June 1999, verified by affidavit, which account includes:

(a)the nature and value of the Trust Assets, by way of inventory of such property;

(b)all moneys (capital and income), received, but not limited to the settlement figures in respect to the sale of assets realised, contract notes for the sale of securities, and rent;

(c)       any assets that have been reinvested;

(d)any monies disbursed by the defendant or by any other person on its behalf;

(e)the dealings and transactions, including, but not limited to the transfer of unrealised assets;

(f)       any assets transferred, including an in specie distribution;

(g)      any assets that remain undistributed and unrealised;

(h)if any asset loss has occurred, the nature and value of that loss;

(i)any amounts expended on professional assistance such as a solicitor, accountant, valuer or real estate agent and any authority to pay the amounts so expended; and

(j)a reconciliation of the funds held as at the date of the filing of the accounts.

7        Such accounts are also to specify:

(a)in respect of each payment, or receipt, the date and amount thereof;

(b)to whom the payment was made, or from whom the payment was received; and

(c)the purpose or account for, or to which, the account was paid, or received,

as the case may be.

8         Any items of such account statement be numbered consecutively.

9The defendant prepare a folder containing all invoices, receipts for disbursements, bank statements, deposit books, or documents evidencing electronic deposits or disbursements, bills for all professional work, receipts for any distributions to participants in the Assetta Developments Joint Venture, including any assets transferred in-specie to such participants and any additional receipts, or other evidence of transactions shown in the accounts, as may be appropriate.

10The defendant provide to the plaintiff, by its legal representatives, a complete copy of the folder of documents prepared in accordance with the above paragraphs at the cost of the plaintiff.

11The form of accounts be served in Word format upon the plaintiff to enable the plaintiff to respond by acceptance or objection in regard to each item shown on the account.

Other

12The defendant pay the plaintiff's costs of and incidental to the proceeding, such costs to be taxed on the standard basis in default of agreement and payable forthwith.

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