Background
Benjamin Hornigold Ltd sought default judgment against the fourth defendant, JB Markets Pty Ltd, in proceedings concerning three related-party loans. It alleged that JB Markets, as an Australian Financial Services Licensee, was responsible for conduct of John Bridgeman Limited as its authorised representative that caused Benjamin Hornigold to enter the loans as part of an investment portfolio managed by JB Markets.
JB Markets had no current directors, no effective defence to the amended statement of claim, and had not participated properly in the proceeding. Attempts to serve the default-judgment application at its registered office were unsuccessful, but the Court found the application had come to the attention of JB Markets and its former directors.
The Court’s Holding
Justice Needham granted default judgment for Benjamin Hornigold against JB Markets under r 5.23(2)(c) of the Federal Court Rules 2011 (Cth), awarding $8,971,569.52. JB Markets was in default by failing to attend hearings and failing to prosecute or defend the proceeding with due diligence.
The Court was satisfied, on the face of the amended pleading and in the absence of a defence, that Benjamin Hornigold would be entitled to the relief claimed. It held that the service efforts and the communications from former directors meant no substituted-service order was needed. The Court also ordered JB Markets to pay the costs of the default-judgment application and otherwise dismissed the proceeding.
Key Takeaways
- A company without directors may still face default judgment where it does not effectively defend proceedings.
- Actual notice to a company and relevant former directors can satisfy the Court that a default-judgment application has been brought to its attention.
- For default judgment on pleadings, the Court considers whether the pleaded case establishes entitlement to relief, rather than requiring proof of every allegation through evidence.
Why It Matters
The decision illustrates the Federal Court’s willingness to bring long-running corporate proceedings to an end where a corporate defendant has become unable or unwilling to engage. It also confirms the practical importance of the overarching purpose in resolving disputes efficiently while ensuring the defendant has received adequate notice.