ACN 125 120 283 Pty Ltd (in liq) (formerly Proweld Constructions Pty Ltd) v Henry [2026] FCA 70

1. Pursuant to r 5.23(2)(b) of the Federal Court Rules 2011 (Cth) judgment be entered in favour of the applicants against the respondents in the sum of $250,000 together with interest to the date of judgment in the amount of $13,435.46, being the total of $263,435.46.
2. The respondents pay the applicants' costs of these proceedings to be taxed on an indemnity basis.

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

1. On 6 February 2026 I made orders on default under r 5.23 of the Federal Court Rules 2011 (Cth) for payment of a debt due by the respondents to the applicants.
2. The first applicant is a company in liquidation. The second applicant is its liquidator.
3. In February 2023 the (then) liquidators commenced proceedings relevantly seeking compensation for insolvent trading debts and voidable transactions under Part 5.4 of the Corporations Act 2001 (Cth).
4. On 15 January 2024, and following a Court-ordered mediation, the parties entered into a Deed of settlement and release. Pursuant to the terms of the Deed, the respondents agreed jointly and severally to pay $1,300,000 by five instalments in certain amounts and on certain dates.
5. The Deed provided that if an instalment was not paid, the liquidator may issue a notice to rectify the breach. It also provided that if the notice was not complied with, then the liquidator could commence further proceedings to enforce the terms of the Deed without further notice.
6. The Deed did not contain an acceleration clause: that is, it did not specify that if an instalment was not paid, the balance of the debt would immediately become due and payable.
7. The Deed also provided for the payment of interest when payments were not made by the due date at the rate of 7% per annum, capitalised monthly in arrears. It provided that the respondents would indemnify the liquidator by way of payment of any enforcement costs on an indemnity basis.
8. The respondents paid the first, second and third instalments. As to the fourth instalment, an amount was paid but there was a shortfall of $250,000. The liquidator issued a notice requiring payment and the notice was not complied with.
9. Proceedings were issued on 13 August 2025 seeking payment of the balance of the fourth instalment and interest, and payment of the fifth instalment. The fifth instalment was due on 28 November 2025 and so was not due and payable under the Deed at the date when the proceedings were instituted.
10. Subsequently the fifth instalment became due and payable. It has not been paid.
11. I made orders programming the filing of defences by the respondents. No defences were filed pursuant to the orders or at all.
12. I am satisfied that the applicants complied with their obligations as to service of documents (including under certain orders), including service of those relating to the default judgment application. Affidavits of service were filed in that regard.
13. The respondents did not appear at any of the hearings, including the default judgment hearing.
14. The applicants sought default judgment under r 5.23(2)(b), on the basis that the respondents were in default of the orders to file a defence. The applicants sought judgment for the debt due by way of the balance of the fourth instalment together with interest as provided by the Deed. They also sought an order for payment of the fifth instalment.
15. Counsel for the applicant referred to the principles relating to the discretion to order default judgment, as outlined in Speedo Holdings BV v Evans (No 2) [2011] FCA 1227 at [20]‑[25]. Relevantly, it was accepted that I needed to be satisfied that on the face of the statement of claim the applicant was entitled to the relief claimed, and that each element of the relevant cause of action was properly pleaded.
16. I was satisfied on the basis of the statement of claim, and having viewed the Deed, that the applicants were entitled to judgment against the respondents for the balance of the fourth instalment ($250,000), together with interest as calculated by the applicants in a schedule provided to the Court, and indemnity costs having regard to cl 8.4 of the Deed.
17. The fifth instalment had become due and had not been paid by the time of the hearing. However, in circumstances where liability to pay the fifth instalment had not accrued when the proceedings were issued, there was no acceleration clause in the Deed, there was no amendment to the originating application, and no notice was issued under the Deed in relation to the fifth instalment, I was not satisfied that on the default judgment application the applicants were entitled to judgment extending to the fifth instalment.
18. However, as raised with counsel during the hearing, it would appear to be a straightforward task for the applicants to now pursue payment of the fifth instalment. Alternatively, if the debt the subject of the orders of 6 February 2026 is not paid, and winding up or bankruptcy proceedings ensue, there would seem to be no reason why the fifth instalment cannot be claimed by way of provable debt.
19. I made orders accordingly.

I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Banks-Smith.