Sovereign Point Pty Ltd v Gu (No 2) [2020] FCA 1377

Sovereign Point Pty Ltd v Gu (No 2) [2020] FCA 1377

Although Mr Gu demonstrated an arguable defence to the unauthorised transfer claim and at best a weak defence to the Jhato securities claim, he gave no adequate explanation for his defaults and no acceptable explanation for the inordinate 10 month delay in applying to set aside the default judgment. Setting aside the judgment would cause serious prejudice to Sovereign Point, including because it had settled with Jhato after default judgment without the benefit of Mr Gu's later admission, and that prejudice could not be adequately compensated by costs or security. The discretion under r 39.05 was therefore not exercised in Mr Gu's favour.

Jurisdiction
Australia
Judgment Date
28 September 2020
Procedural Posture
Application to Set Aside Default Judgment / First Respondent's Application Under R 39.05 of the Federal Court Rules 2011 (cth) After Default Judgment Entered on 25 October 2019
Outcome
The first respondent's application to set aside the default judgment was dismissed with costs.
Legal Topics
['default Judgment' 'application to Set Aside Default Judgment' 'federal Court Rules 2011 (cth) R 39.05' 'delay' 'prejudice' "director's Duties" 'fiduciary Duties']
['practice and Procedure' 'commercial and Corporations'] ['default Judgment' 'application to Set Aside Default Judgment' 'federal Court Rules 2011 (cth) R 39.05' 'delay' 'prejudice' "director's Duties" 'fiduciary Duties']

Case Brief

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Procedural Posture

Application to Set Aside Default Judgment / First Respondent's Application Under R 39.05 of the Federal Court Rules 2011 (cth) After Default Judgment Entered on 25 October 2019

Legal Issues

  1. 1 ['Whether the Court should exercise its discretion under r 39.05 of the Federal Court Rules 2011 (Cth) to set aside the default judgment entered against Mr Gu.' 'Whether Mr Gu provided an adequate explanation for his defaults in failing to attend case management hearings and failing to file and serve a defence to the amended statement of claim.' 'Whether Mr Gu provided an acceptable explanation for the 10 month delay in applying to set aside the default judgment.' 'Whether Mr Gu disclosed a defence of sufficient merit to warrant setting aside the default judgment.' 'Whether setting aside the default judgment would cause Sovereign Point prejudice not adequately compensable by costs or security.']

Ratio Decidendi

Although Mr Gu demonstrated an arguable defence to the unauthorised transfer claim and at best a weak defence to the Jhato securities claim, he gave no adequate explanation for his defaults and no acceptable explanation for the inordinate 10 month delay in applying to set aside the default judgment. Setting aside the judgment would cause serious prejudice to Sovereign Point, including because it had settled with Jhato after default judgment without the benefit of Mr Gu's later admission, and that prejudice could not be adequately compensated by costs or security. The discretion under r 39.05 was therefore not exercised in Mr Gu's favour.

Court Disposition

The first respondent's application to set aside the default judgment was dismissed with costs.

Orders

  • ["The first respondent's application to set aside the default judgment entered against him on 25 October 2019 be dismissed." "The first respondent pay the applicant's costs of the application."]