CCGF Holdings Pty Ltd v Coegi Group Pty Ltd

The allegations in the ASOC 7 The applicant has three directors, one of whom is Christoph Gassauer-Fleissner. The applicant's sole shareholder is Anton-Ferdinand Gassauer-Fleissner. 8 The first respondent was Coegi Group Pty Ltd (Coegi Group). It is alleged that Mr Gordon was one of Coegi Group's three directors, and Ms Gordon was its secretary. 9 The ASOC alleges that from about March 2017 to 19 December 2017, both Mr and Ms Gordon were involved in negotiating an investment by the applicant involving the purchase of shares in Coegi Group. 10 Mr Gordon was also the sole director of Consol Group APAC Pty Ltd (Consol Group). The ASOC alleges that on 29 May 2017, Mr Gordon told Christoph Gassauer-Fleissner that Consul Group had, inter alia, designed and sold or intended to sell a product known as "Coegi Connect". That product is described as, "a connected car technology product for driver data collection, data storage, and driver data analytics". 11 The ASOC alleges that between October and December 2017, Mr Gordon made a series of misleading or deceptive representations to Mr Gassauer-Fleissner about investing in Coegi Group. Some of the allegations concern a company called Nova Mobility Systems Inc (Nova), which had a right to use technology in Australia and New Zealand that could be used to operate Coegi Connect. The ASOC also alleges that Mr Gordon represented to the applicant that Nova had, or was entitled to, a 20% shareholding in Coegi Group and had assigned its intellectual property to Coegi Group. 12 The ASOC alleges that on 4 December 2017, both Mr and Ms Gordon represented to the applicant that: …Nova would only not receive the full allocation of 20% shareholding in Coegi Group in the event that it failed to perform its obligations under the Coegi Nova Agreement. 13 It is alleged that the representation was made in writing in an attachment to an email dated 4 December 2017 from Ms Gordon to Mr Gordon which was, "stated to be for the purpose of being sent to Christoph", and which was subsequently forwarded to Mr Gassauer-Fleissner. 14 The ASOC alleges that Mr and Ms Gordon knew, inter alia, that Nova did not have a 20% shareholding in Coegi Group, and knew that Nova's share entitlement was not solely conditional on Nova's performance of its obligations. It is alleged that Mr and Ms Gordon refrained from notifying or warning the applicant of those matters. 15 The ASOC alleges that on 9 December 2017, Mr Gordon represented to the applicant that Coegi Group had raised $1.7 million by way of investment, and that Ms Gordon knew that that amount had not been raised, but refrained from notifying or warning the applicant of that matter. 16 The ASOC alleges that on or about 15 December 2017, Mr Gordon represented to the applicant that Coegi Group had no liabilities other than an office lease of $24,000 per annum, and that Ms Gordon knew that there were other liabilities, but refrained from notifying or warning the applicant of that matter. 17 The ASOC alleges that the conduct of Mr and Ms Gordon was misleading or deceptive, in contravention of s 18 of the Australian Consumer Law, or, alternatively, that Ms Gordon was "involved in" the misleading or deceptive conduct of Mr Gordon. 18 The ASOC alleges that, acting in reliance upon the misleading or deceptive representations, the applicant paid the sum of $500,000 for the purchase of shares in Coegi Group. The applicant alleges that as a result of the misleading or deceptive representations, it suffered loss and damage in the amount of $500,000. 19 Mr and Ms Gordon did not file any notice of address for service or defence or attend any case management hearings. On 19 July 2019, having been satisfied that they had been served with the proceedings and relevant orders, and that it was appropriate to do so, I entered judgement against each of them in the sum of $500,000 plus costs.

Evidence of Darrin Ross Costello 20 Darrin Ross Costello, an Enforcement Officer Bailiff at the Southport Magistrates Court, has sworn a series of affidavits deposing as to service of various court documents filed in the proceedings. Mr Costello was not required for cross-examination. 21 Mr Costello deposes that on 25 January 2019, he served the Originating Application and Statement of Claim upon Ms Gordon. The affidavit is a standard form document that requires the insertion of information under headings and questions. One of the questions asks, "How were they served on the person?". Mr Costello marked a box that indicates the answer, "I handed them to the person at [address deleted]". Other evidence reveals that the address stated in the answer is the home of Mr and Ms Gordon. Mr Costello states in the affidavit that he identified the person served by asking "Are you Linda Gordon", to which she replied, "Yes". 22 Mr Costello also deposes in a separate affidavit that he served the Originating Application and Statement of Claim on Mr Gordon on the same day and at the same place. 23 Mr Costello deposes that on 1 April 2019, he attended the same address and served Mr and Ms Gordon with documents including an Order that I had made on 5 February 2019, an interlocutory application and submissions in support of an application for default judgment. Mr Costello states that he asked Mr Gordon, "Is Linda at home. I have the same court papers for her also". Mr Gordon replied, "Yes. She's too busy for this, I'll give it to her". Mr Costello states that Mr Gordon then took both sets of documents and closed the door. 24 Mr Costello deposes that on 24 May 2019, he attended the same address and "located Linda Gordon in the dwelling of the property". He states that he served Ms Gordon with a letter, the Amended Originating Application, the ASOC and Orders made on 1 and 14 May 2019. In a separate affidavit, he deposes that he served Mr Gordon with the same documents on the same date and had a conversation with him. 25 Mr Costello deposes that on 12 July 2019, he attended the address again. The door was answered by Mr Gordon. Mr Costello heard a female asking, "Do you want me to get that?". Mr Gordon responded, "It's OK, I'll get it Linda". Mr Costello handed Mr Gordon a letter dated 1 July 2019 and an Order made on 18 June 2019. Mr Gordon said, "Linda's inside. I'll give them to her". 26 In a further affidavit, Mr Costello states that he does not have any recollection of serving the documents beyond that which he deposed to in the affidavits of service. 27 There is also an affidavit of Francesco Starvaggi, a solicitor, annexing other affidavits of Mr Costello deposing that he left court documents in the letterbox at the address on 29 April and 3 May 2019.

Evidence of Ms Gordon 28 Ms Gordon has affirmed two affidavits. In the first, she deposes that she had no knowledge about the proceedings until she was informed of them by her husband on about 10 October 2019. Ms Gordon says that Mr Gordon told her he had been contacted by the liquidator of the Coegi Group, and had made enquiries and found out that judgment had been obtained against both of them and that bankruptcy proceedings were being taken against them. 29 Ms Gordon deposes that she does not recall being served with any documents in the proceeding. She states that if she was served with any court documents, she would probably have thought that they were for Mr Gordon's attention and would have either handed them to him or placed them on the desk in his office. She deposes that if she was aware of the proceeding, she would have dealt with them immediately by obtaining legal advice and instructing her solicitors to prepare a defence, as she has now done. 30 Ms Gordon refers to the affidavits of service sworn by Mr Costello. She deposes that she does not recall Mr Costello serving documents on her on 25 January 2019. She states that although she was at home at certain times on that date, she was working with members from "my team", but, as Mr Costello does not say when the documents were served, she cannot say with certainty where she was at that time. 31 Ms Gordon deposes that she does not recall being served with court documents on 24 May 2019. She does not recall being served with court documents on 1 April 2019 and 12 July 2019. 32 Ms Gordon deposes that because of her lack of involvement with Coegi Group, and the fact that she was unaware of "a large portion of the dispute", she did not expect to be served with any court documents. She says that if she had been served with court documents, she would have handed them to her husband without reading them. 33 Ms Gordon notes that Mr Costello swore an affidavit of service of a Bankruptcy Notice on 19 August 2019 in which he stated that on 26 July 2019, when he knocked on the door of the dwelling it was answered "by a female who identified herself as Eloise Gordon". Ms Gordon states that she does not have any children, and Mr Gordon does not have any children named Eloise, but that she and Mr Gordon have a friend called Eloise Hendrix, who looks after their dog at home at times. Ms Hendrix has sworn an affidavit stating that she was house-sitting for the Gordons on 26 July 2019 when she accepted service of documents. Ms Hendrix left the documents on Mr Gordon's desk and sent a message to him. She did not tell Ms Gordon about the documents being served. An issue that Ms Gordon seems to be raising is that, as Mr Costello made a mistake about Ms Hendrix' relationship with the Gordons, he may be mistaken about service on other occasions. However, the issue does not appear to go anywhere since Mr Costello was not required for cross-examination, and therefore his evidence concerning service of court documents for the primary proceeding is not challenged. Ms Gordon also affirmed a second affidavit suggesting that Mr Costello may have mistakenly left the court documents with guests staying at an apartment at the front of her property. Again, that does not go anywhere. 34 Ms Gordon denies the facts alleged against her in the ASOC. She denies that she engaged in any deceptive or misleading conduct. She denies that she was involved in, or participated in, the transactions giving rise to the investment made by the applicant. 35 More particularly, Ms Gordon states that she became secretary of Coegi Group on 13 November 2018, after most of the representations made by Mr Gordon were made. She states that her only involvement was to record minutes of board meetings. She denies that she had any involvement in negotiating the applicant's investment. There were meetings between Mr Gordon and Mr Gassauer-Fleissner at her house, but she says her involvement was limited to making dinner and serving drinks. She says she did not get involved in the substance of the discussions. 36 Ms Gordon deposes that from time to time she would perform the type of tasks that a personal assistant would do for Mr Gordon. She states that, for example, Mr Gordon would create an excel spreadsheet containing data, and she would make sure it was formatted correctly and that the formulae used in the spreadsheet were correct. She says she did not prepare any spreadsheets herself or insert any substantive numbers, data or other information. She states that the same applies for any other documents she helped Mr Gordon with. 37 In her proposed Defence, Ms Gordon denies that she made any representation that Nova would only not receive the full allocation of 20% shareholding in Coegi Group in the event that it failed to perform its obligations under the Coegi Nova Agreement. That denial is made on the basis that she had no dealings with, and made no representations to, the applicant. She also pleads that her email of 4 December 2017 did not contain the alleged representation. Further, she pleads that even if the representation was made, the applicant did not rely upon it. 38 Ms Gordon annexes to her first affidavit an email from Mr Gassauer-Fleissner to Mr Gordon dated 29 November 2017 in which he says: Please see the attachment to this mail. We have some more questions regarding CCGF Holding shares in Coegi. 39 Ms Gordon does not annex the attachment to the email. She states that Mr Gordon asked her to forward the email to Michael Graham, the CFO of Coegi Group. She annexes her email to Mr Graham on the same day forwarding the email, and saying, "Here are the qs". 40 Ms Gordon annexes an email she sent to Mr Gordon dated 4 December 2017 which states: Please find attached answers for Christoph. I have attached a doc and pdf version depending on which you prefer to send. 41 Ms Gordon then annexes an email from Mr Gordon to the Gassauer-Fleissners dated 4 December 2017 which attached the answers to the questions. The answers include the statement that: In the instance that Nova or Fireseed do not perform their obligations and therefore do not receive the full allocation of 20% and 23.75% then any balance of their allocations will need to go towards others who then may need to fulfil these obligations. … The share % of 5% is fixed based on the $500K investment if Nova or Fireseed do not perform their obligations and therefore do not receive the full allocation of 20% and 23.75% then any balance of their allocations will need to go towards others who then may need to fulfil these obligations. 42 It appears that these are the statements that are alleged by the applicant to make the representation that Nova would only not receive the full allocation of 20% shareholding in Coegi Group in the event that it failed to perform its obligations under the Coegi Nova Agreement. 43 In her oral evidence, Ms Gordon qualified her affidavit evidence that she had no recollection of Mr Costello serving her with any documents on 25 January 2019. She said she recalled a man coming to the gate. He did not identify himself, but asked if she was Linda Gordon. She says she identified herself as Linda Gordon, but he did not give her anything. At the same time, Mr Gordon came to the door. She had her entire team there, and they were working from home. Ms Gordon says she did not deal with this man, but went inside, and dealt with her team. She says she does not recall being served these documents, but if she was she would have handed them to Mr Gordon, assuming that they were for his business, to deal with. She states that on each occasion, if she was served she would have given the documents to Mr Gordon. 44 Under cross-examination, Ms Gordon said that when she swore her affidavit she did not remember the man attending her home, and she had only remembered it on the day prior to the hearing. She said: It only came to me - it only came to me yesterday, when I was going through all of these documents, exactly what had occurred, and it popped into my head, and then I recalled what had occurred. 45 Ms Gordon recalls asking Mr Gordon to deal with the man, and then going inside. Later, she asked Mr Gordon what the man wanted and he replied, "There's nothing to worry about". 46 Ms Gordon denied that she and Mr Gordon had spoken about the evidence she would give in her affidavits before she swore them. 47 Ms Gordon denied that she had made a deliberate choice not to defend the proceedings, and said she had nothing to gain from such a course.

Evidence of Mr Gordon 48 Mr Gordon deposes that he has read the affidavit of Ms Gordon and confirms that the first time he informed her of the existence of the proceedings or the judgment against her was on about 10 October 2019. He states that he had never raised those matters with her before that date. Mr Gordon's affidavit does not explain why he did not raise those matters with Ms Gordon earlier. 49 Under cross-examination, Mr Gordon's evidence was that on 25 January 2019, he intercepted his wife during the conversation she was having with the process-server and took the documents. He denied that he had read the documents, and said he had secreted them in his house. 50 Mr Gordon said that from about March/April 2018 to August 2019, he was in a severe state of depression. 51 Mr Gordon accepted that various court documents were served on him, but said he did not understand what they were about and did not read any of them. He said he destroyed most of them and that others were placed in a filing cabinet in the garage where his wife never attended. 52 When Mr Gordon was asked whether he had any conversations with his wife after the service agent left on 25 January 2019, he said he did not recall doing so, but if he did it would have been to say that there was nothing to be concerned about. 53 Mr Gordon was taken to an exchange of text messages he had on 30 July 2019 with Matt Gates, a real estate agent, who had been engaged to sell the Gordons' property. Mr Gates had forwarded Mr Gordon a message from Anton-Ferdinand Gassauer-Fleissner which advised Mr Gates that the applicant had recently obtained judgment against Mr and Ms Gordon, and indicating that he would be seeking to prevent the sale of the property and that his lawyers would get in touch. Mr Gordon responded to Mr Gates by text, saying he would call him the next day. After Mr Gates replied saying that the message had merely been sent for Mr Gordon's information and that Mr Gates did not care and it was not his business, Mr Gordon responded saying: We will leave it at that…a man that is seeking more on the closure of one of my businesses than I can give him. Although somewhat slanderous! 54 Mr Gordon denied that he had raised the text message from Mr Gates with his wife, saying, "No. Why would I?". That answer is surprising, given the news that legal action was going to be taken to prevent the sale of their house. 55 It was put to Mr Gordon that the judgment had come as no surprise to him. He said he was aware that there were actions going on and that papers had been served, but that he had no real understanding. He said that this was because he was fluctuating from severe depression to manic, given that he is bipolar. 56 In re-examination, he was asked why he had not told his wife about the court proceeding until October 2019. He responded to the effect that, in the context of his poor psychiatric state, he wanted to protect her.

The law concerning setting aside default judgment 57 Rule 39.05(a) of the Federal Court Rules 2011 (Cth) (the Rules) provides that the Court, "may vary or set aside a judgment or order after it has been entered if…it was made in the absence of a party". The Rules do not prescribe any matters to which the Court is to have regard in the exercise of its discretion. 58 In Adams v Kennick Trading (International) Ltd (1986) 4 NSWLR 503, Hope JA (with whom Glass JA agreed) held at 506: The existence of a bona fide ground of defence and an adequate explanation for the failure to defend and any delay are the most relevant matters to consider, but there may be other matters. A refusal of relief to an applicant is not automatically justified because he has failed to establish one relevant matter, such as an adequate explanation for the failure to defend or for delay; such a failure must be considered in the light of all the circumstances. The absence of an adequate explanation, particularly if it is coupled with prejudice, may justify the denial of relief, but only when considered with the other relevant circumstances of the case, bearing in mind what Lord Wright said in Evans v Bartlam: … if merits are shown the Court will not prima facie desire to let a judgment pass on which there has been no proper adjudication. (Citations omitted.) 59 In Davies v Pagett (1986) 10 FCR 226, the Full Court held at 231: Since the decision of the House of Lords in Evans v Bartlam, the settled course of authority in England and in this country has emphasised, as fundamental to the exercise of the judicial discretion to set aside a default judgment, the need for a defendant to show a prima facie defence on the merits. In the language of Lord Wright, in the passage cited by the learned judge, this is "the primary consideration". It is true, as Lord Atkin said in Evans v Bartlam, that it is inappropriate to lay down rigid rules to govern the exercise of the discretion. On the other hand, speaking generally, the cases show that a defendant who has an apparently good defence should not be refused the opportunity of defending, even though a lengthy interval of time has elapsed, provided that no irreparable prejudice is thereby done to the plaintiff. (Citations omitted.) 60 Accordingly, the Court must have regard to the whole of the relevant circumstances and decide whether or not sufficient cause has been shown to justify the relief, but ordinarily the most relevant matters will be: (a) the explanation given by the absent party for its absence; and (b) whether the evidence discloses a defence of sufficient merit to warrant setting aside the order and permitting the matter to go to trial. (See also 3D Funtimes Limited v Intellec Development Group Pty Ltd (No 2) [2011] FCA 407; at [6]; Lal v Minister for Immigration and Border Protection (No 2) [2014] FCA 892 at [9]). 61 The power under r 39.05 is to be exercised with caution, and is ordinarily only exercised in exceptional circumstances: Australian Securities and Investments Commission v ActiveSuper Pty Ltd (No 4) [2013] FCA 318 at [6]. The rule is not limited to cases of slip, oversight or fraud, but generally the jurisdiction is not to be exercised unless it can be shown that, without fault on the applicant's part, he or she has not been heard on a relevant question: Deputy Commissioner of Taxation v Berhad (No 2) (2010) 81 ATR 40; [2010] FCA 1296 at [10]; Wati v Minister for Immigration and Multicultural Affairs (1997) 78 FCR 543 at 550-3. 62 The applicant emphasises the judgment of the High Court in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175. That was a case directly concerned with the exercise of a discretion to allow amendment of a pleading, but the principles have broader relevance, including to the exercise of a direction to set aside a default judgment. The plurality observed: 97 The objectives of case management are now expressly stated in r 21 of the Court Procedures Rules…The purposes stated in r 21 cannot be ignored. The Court Procedures Rules make plain that the Rules are to be applied having regard to the stated objectives of the timely disposal of the proceedings at an affordable cost. There can be no doubt about the importance of those matters in litigation in the courts of the Australian Capital Territory. 98 Of course, a just resolution of proceedings remains the paramount purpose of r 21; but what is a "just resolution" is to be understood in light of the purposes and objectives stated. Speed and efficiency, in the sense of minimum delay and expense, are seen as essential to a just resolution of proceedings. This should not detract from a proper opportunity being given to the parties to plead their case, but it suggests that limits may be placed upon re-pleading, when delay and cost are taken into account. The Rule's reference to the need to minimise costs implies that an order for costs may not always provide sufficient compensation and therefore achieve a just resolution. It cannot therefore be said that a just resolution requires that a party be permitted to raise any arguable case at any point in the proceedings, on payment of costs. … 102 The objectives stated in r 21 do not require that every application for amendment should be refused because it involves the waste of some costs and some degree of delay, as it inevitably will. Factors such as the nature and importance of the amendment to the party applying cannot be overlooked. Whilst r 21 assumes some ill-effects will flow from the fact of a delay, that will not prevent the parties dealing with its particular effects in their case in more detail. It is the extent of the delay and the costs associated with it, together with the prejudice which might reasonably be assumed to follow and that which is shown, which are to be weighed against the grant of permission to a party to alter its case. Much may depend upon the point the litigation has reached relative to a trial when the application to amend is made. There may be cases where it may properly be concluded that a party has had sufficient opportunity to plead their case and that it is too late for a further amendment, having regard to the other party and other litigants awaiting trial dates. Rule 21 makes it plain that the extent and the effect of delay and costs are to be regarded as important considerations in the exercise of the court's discretion. Invariably the exercise of that discretion will require an explanation to be given where there is delay in applying for amendment. 103 The fact that an explanation had been offered for the delay in raising the defence was regarded as a relevant consideration in JL Holdings. Generally speaking, where a discretion is sought to be exercised in favour of one party, and to the disadvantage of another, an explanation will be called for. The importance attached by r 21 to the factor of delay will require that, in most cases where it is present, a party should explain it. Not only will they need to show that their application is brought in good faith, but they will also need to bring the circumstances giving rise to the amendment to the court's attention, so that they may be weighed against the effects of any delay and the objectives of the Rules. There can be no doubt that an explanation was required in this case. 63 In Amirbeaggi as trustee of the bankrupt estate of John Mamdouh Hanna v Kamel (No 3) [2020] FCA 1202, Yates J held: 12 The second question is whether the party seeking to set aside the default judgment has demonstrated an arguable defence to the claim in respect of which the judgment has been given. In this context, "arguable" means a defence of such merit that, in the interests of justice, the default judgment should not be allowed to stand: Dunwoodie v Teachers Mutual Bank Ltd [2014] NSWCA 24 at [43]. The obvious rationale for this inquiry is to ascertain whether any useful purpose would be served by setting aside the judgment that has been given: Vacuum Oil Pty Co Ltd v Stockdale (1942) 42 SR (NSW) 239 at 243. This inquiry does not involve the Court embarking on a hearing of the full merits of the defence that is raised. However, the defence, as then advanced, must be supported by evidence that is appropriate to persuade the Court that it is sufficiently meritorious and is raised bona fide. 13 In exercising the discretion, the Court must be mindful of the requirements of s 37M(3) of the Federal Court of Australia Act 1976 (Cth), which provides that the civil practice and procedure provisions (which include the FCR) must be applied, and any power conferred by those provisions must be exercised, in a way that promotes the overarching purpose of facilitating the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible. Provisions such as s 37M(3) have brought about "a new statutory balance among the various factors in litigation including court and party efficiency and the delivery of individual justice": Hans Pet Constructions Pty Limited v Cassar [2009] NSWCA 230 at [36].

Consideration 64 At the hearing, I allowed cross-examination of both Mr and Ms Gordon over the objection of their counsel. I will give my reasons for that ruling. 65 In Wu v Avin Operations Pty Ltd (No 3) [2006] FCA 1321, Kenny J observed at [18]: The Court has a discretion to permit or refuse an application made in an interlocutory proceeding to cross-examine a deponent on an affidavit that he or she has made, although the discretion to permit such cross-examination is exercised cautiously and, as Nicholson J said in Scanlon v American Cigarette Co (Overseas) Pty Ltd (No 1) [1987] VR 261 at 272, "normally" "somewhat sparingly". Branson J cited this statement of his Honour with approval in Friends of Hinchinbrook Society Inc v Minister for Environment (No 1) (1996) 69 FCR 1 at 17. 66 Ms Gordon's application to set aside the judgment was based substantially upon her evidence that she was unaware of the existence of the proceedings until about 10 October 2019. The only explanation given in her affidavit for this was that she did not recall being served and, if she was served, she would have passed the documents on to Mr Gordon without reading them. Mr Gordon's affidavit merely asserted that he had not told his wife about the proceedings, without providing any explanation for that unusual course. The veracity of the evidence of Mr and Ms Gordon's evidence was fundamental to the application. I considered that it would be unjust to refuse the applicant the opportunity to challenge their evidence through cross-examination. 67 Turning to the application to set aside the judgment, Ms Gordon's explanation for failing to defend the proceeding is that she was unaware of its existence until after default judgment had been entered. Her case is that she was unaware of the proceeding because her husband concealed it from her. Mr Gordon claims to have concealed the proceeding from his wife because he was affected by a serious mental illness and somehow wanted to protect her. 68 The applicant submits that it is more likely that Ms Gordon chose to ignore the proceeding until confronted with the reality of the bankruptcy proceedings being taken against her. 69 I am not satisfied that Ms Gordon has demonstrated that she was unaware of the proceeding until after the default judgment. 70 There are important aspects of the evidence of Mr and Ms Gordon that are not credible. 71 Ms Gordon's affidavits do not mention the oral evidence she gave that, on 25 January 2019, a man had come to her door and asked if she was Linda Gordon and that she left her husband to deal with him. Her explanation that this recollection just "popped into" her head the day before the hearing has an air of unreality about it. Further, her evidence that she asked Mr Gordon about why the man had come to the door but then simply accepted his statement that it was nothing to worry about is implausible. It is most unlikely that she would not have asked why the man had asked for her by her name in such a scenario. 72 Ms Gordon's evidence that if she was served with documents, she would have assumed they were for Mr Gordon's business and simply handed them to him to deal with is also implausible. Ms Gordon ran her own business, has experience in a range of other businesses and seemed to me to be an intelligent and astute woman. It seems fanciful to think that if she was served with court documents, she would not have examined the documents to understand why she had been served. 73 Further, Ms Gordon's evidence that she had not discussed her evidence with her husband does not seem realistic or credible. Mr Gordon deposes that he read Ms Gordon's affidavit. It does not ring true that they had not discussed important issues such as the events of 25 January 2019, the other occasions of service and what had happened to the documents that were served. 74 There are several aspects of Mr Gordon's evidence that are not credible. Mr Gordon accepted that various court documents were served on him, but he said he did not understand what they were about and did not read any of them. However, his text message exchange with the real estate agent expressed no surprise that a judgment had been obtained against both of them, and made it clear that he was aware that an amount was being sought from him that was greater than he could pay. He gave no plausible explanation for why he would not have told his wife that the sale of their home was in jeopardy. Further, he gave no plausible explanation for hiding the court documents from his wife and failing to tell her about the judgment. The absence from his affidavit of any mention of his severe mental illness as the reason why he did not inform his wife of the proceedings or the judgment is surprising. 75 In addition, Mr Costello's affidavit of service on 25 January 2019 expressly indicated that he "handed" the Originating Application and Statement of Claim to Ms Gordon. Mr Costello was not required for cross-examination and his evidence was not challenged. I accept his evidence. It is inconsistent with Ms Gordon's evidence that the documents were not handed to her. I reject Ms Gordon's evidence. Further, I do not accept that she may have simply handed them to her husband without reading them to ascertain why she had been served. It follows that she must have been aware of the proceeding from 25 January 2019. 76 Further, Mr Costello deposes that on 24 May 2019, he served Ms Gordon with the Amended Originating Application, the ASOC and Orders made on 1 and 14 May 2019. Ms Gordon says merely that she has no recollection of being served with those documents. Mr Costello's evidence that he did serve her must be accepted. Accordingly, Ms Gordon does not dispute that she was served with the documents on that date. Again, I do not accept that she may have simply handed them to Mr Gordon without reading them to ascertain why she had been served. 77 I am not satisfied that Ms Gordon failed to defend the proceeding because she was unaware of its existence until after the judgment had been obtained. I am not satisfied that she has provided any reasonable explanation for her default. That provides a strong reason to refuse to set aside the judgment. 78 However, it must also be considered whether Ms Gordon has demonstrated a defence of sufficient merit to warrant setting aside the Orders and permitting the matter to go to trial. 79 The only direct allegation in the ASOC that Ms Gordon herself caused a misleading or deceptive representation to be made to the applicant is that she was responsible for writing or compiling the "answers for Christoph" attached to her email of 4 December 2017 to Mr Gordon. It is apparent that she intended that the answers be forwarded to Mr Gassauer-Fleissner. However, Ms Gordon asserts that she merely provided secretarial services for Mr Gordon and did no more than merely forward emails. She expressly denies that she answered the questions. 80 Further, Ms Gordon denies that the answers should be interpreted as making the representation alleged by the applicant. There is also an issue as to whether the applicant relied upon the alleged representation in making its investment. There appears to be some substance in these arguments. 81 The remaining allegations against Ms Gordon in the ASOC are pleaded at a level of generality. For example, it is pleaded that she was involved in negotiating the applicant's investment including meeting Christoph Gassauer-Fleissner and preparing documents to give effect to the investment. The ASOC also alleges that Ms Gordon was "involved in" the making of the representations by Mr Gordon within ss 236(1) and 237(1) of the Australian Consumer Law, but it is not explained how she was knowingly concerned with those representations or otherwise a party to them. Ms Gordon denies that she was involved in any negotiations and says that her involvement was limited to making dinner and getting drinks at her home and forwarding the emails already discussed. 82 The ASOC alleges that in December 2017, Mr Gordon represented to the applicant that Coegi Group had raised $1.7 million by way of investment, and that Ms Gordon knew that that amount had not been raised but refrained from notifying or warning the applicant of that matter. It also alleges that in December 2017, Mr Gordon represented to the applicant that the Coegi Group had no liabilities other than an office lease of $24,000 per annum, and that Ms Gordon knew that there were other liabilities but refrained from notifying or warning the applicant of that matter. The ASOC does not explain why Ms Gordon had an obligation to notify or warn the applicant of those issues, and the effect of her evidence is to deny that the circumstances gave rise to any such obligation. 83 There would no doubt be issues as to the credibility of Ms Gordon's evidence at a trial. However, her credibility cannot be determined at this stage. I consider that Ms Gordon has established a prima facie defence. 84 On the other hand, Ms Gordon has not demonstrated any reasonable explanation for failing to defend the proceeding. I am conscious that the authorities indicate that generally the power to set aside a default judgment should only be exercised in exceptional circumstances and should not be exercised unless it can be shown that there is an absence of fault on the part of the person applying for the order. Further, since the analysis of provisions like s 37M of the Federal Court of Australia Act 1976 (Cth) in Aon Risk Management, the existence of a prima facie defence can no longer be regarded as the overriding factor it once was. There are also issues of costs, delay and the need for finality of litigation to consider. 85 However, it remains the position that a party with a prima facie defence should not be lightly deprived of the opportunity to defend. The matter is finely balanced, but I am satisfied that Ms Gordon has established a prima facie defence which is of sufficient merit to warrant setting aside the judgment and permitting the matter to proceed to trial, subject to the question of costs. 86 The question of the costs thrown away as a result of setting aside the judgment cannot be divorced from the question of whether the judgment should be set aside. The ordinary position would be that Ms Gordon should pay the costs thrown away and of the application to set aside the judgment. In order to minimise the prejudice to the applicant, it may be that any order for costs should be on an indemnity basis, and that the applicant should be permitted to enforce the costs order immediately. However, the parties have indicated that they wish to be heard as to costs. I will give them that opportunity before making any substantive orders. For the present, I will make orders for the exchange of material dealing with costs. I certify that the preceding eighty-six (86) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Rangiah.

SCHEDULE OF PARTIES QUD 870 of 2018 Respondents Fourth Respondent: GRAHAM HENRY GORDON Fifth Respondent: LINDA ANNE GORDON Sixth Respondent: MICHAEL GRAHAM Seventh Respondent: FIRESEED CAPITAL PTY LTD ACN 601 798 850