However, there may be circumstances where a defendant has not filed a Notice of Appearance or a Defence in proceedings and the entitlement to default judgment arises. Due to the nature of the claims, the Liquidator cannot just file an application for default judgment which is the usual course which can be taken regarding debts or other liquidated claims. Instead, an application for judgment must be made with supporting affidavit material to substantiate all elements of the Liquidator’s claims and it must be determined by the Court at a hearing.

FCW Lawyers acted for a Liquidator recently and successfully obtained judgment against a director defendant at a hearing before Associate Justice Gobbo. The proceedings were issued in August 2023 against two defendants. An application for substituted service was made in respect of the director defendant and orders were made for the director to file a Notice of Appearance and subsequently, orders were made for a Defence to be filed. The claims against the other defendant were resolved.

The relevant principles and requirements to be satisfied in these types of applications include the following:

1. The application for judgment was made pursuant to rule 2.07 of the Supreme Court (Miscellaneous Civil Proceedings) Rules 2018, rules 21.01 – 21.04 of the Supreme Court (General Civil Procedure) Rules 2015 and section 51(g) of the Civil Procedure Act 2010 (Vic).
2. The Affidavits which were required to be filed in support of the Interlocutory Process were made by:
   • Catherine Pulverman, the solicitor, in relation to all of the steps undertaken to effect service of the documents upon the director pursuant to the orders for substituted service and all other communications in an attempt to get the director to engage in the proceedings as well as the defaults by the director to file the Notice of Appearance and/or the Defence in the proceeding;
   • The Liquidator which was voluminous as it was required to set out all of the evidence to prove the elements of the claims including insolvent trading.
3. Orders were sought in the Interlocutory Process pursuant to the relevant Court Rules for judgment to be entered against the director in default of a Notice of Appearance and/or a Defence and based on a failure to comply with Court orders.
4. Even though the proceedings were commenced by Originating Process and not Writ, there are cases which provide that judgment in default can be given in proceedings commenced by Originating Process where the default comprises a contravention of an order of the Court – the Court made orders for the filing of documents by the director and there was non-compliance with those orders.
5. The most significant evidence which was required to be filed by the Liquidator was in respect of the insolvent trading claim and required proof of the debts incurred, the insolvency of the company and the fact that there were reasonable grounds for suspecting that the company was insolvent or would become insolvent – evidence about the reasonable grounds for suspecting insolvency was the overdue Commonwealth taxes and the company’s inability to produce timely and accurate financial information to display its financial position. Evidence was also given about the entitlement to compensation under section 588M of the Corporations Act 2001 (Cth), the loss and damage which was suffered by the specific creditors who had lodged proofs of debt and recovery of that loss as a debt due to the company.
6. One of the issues that was required to be addressed on the application was the service requirements, the Rules regarding service and notification to the director by email and text message and whether sufficient notice had been given to the director about the application. The Supreme Court Rules in relation to service requirements and particularly what must be specified in the email or the text message are quite specific – including the page numbers of the documents, the details of the sender and the recipient including contact details, that service is made pursuant to the relevant rule in the Supreme Court Rules and that a hyperlink attaching documents must be left open for 120 days.
7. The Liquidator also had a claim for a debt in respect of monies advanced by the company to the director. Evidence was provided of all the payments made to the director and that they were for the director’s benefit and despite demand, the director had failed to repay the debt.
8. In the alternative to the debt claim, the claim was made as a voidable transaction but given the further evidence which would be required for that claim, an election was made by the Liquidator that the alternative claim would not be pursued in the application.
9. In the Affidavit material, evidence was given as to the legal costs on a standard basis by providing a table of the relevant tasks, the item number in the relevant Court scale and the calculations so the costs could be fixed in the judgment.
10. The Liquidator was also entitled to claim interest and whilst ordinarily, would have been entitled to claim interest from the date of demand, interest was claimed from the date of issue of proceedings pursuant to the Supreme Court Act 1986 (Vic) which was 18 months of interest on a judgment totalling almost $500,000.
11. The written submissions concisely addressed the entitlement to make the application for judgment, the evidence which was adduced in the Affidavit material and the legal principles for entry of judgment in matters of this kind. Based on the significant evidence which had been adduced in support of the Interlocutory Process, the Liquidator was entitled to judgment for each of the claims, interest and costs. Associate Justice Gobbo was impressed as to the structure of the written submissions which addressed every requirement which was needed to be satisfied in order for judgment to be granted.

Catherine Pulverman of FCW Lawyers has considerable experience in this area concerning insolvent trading claims, voidable transaction claims, debt claims and applications for judgment on behalf of Liquidators and the evidence which is required to satisfy the Court that judgment should be granted. If you require advice in relation to issues concerning these types of applications, Catherine and her team would be happy to provide assistance.