Chamberlain Group, Inc v Giant Alarm System Co, Ltd

S&Q ASSET MANAGEMENT PTY LTD ACN 628 173 419 (and others named in the Schedule)

S&Q GROUP PTY LIMITED ACN 614 894 094 (and others named in the Schedule)

1. Pursuant to r 5.23 of the Federal Court Rules 2011 (Cth) (FCR), there be judgment for the cross claimants in the cross claim filed on 5 June 2025, for damages in a sum to be assessed.
2. Pursuant to r 28.61 of the FCR, the assessment of damages be referred to a Registrar of the Court acting as a referee, for report by 30 April 2026.
3. The cross respondents pay the cross claimants' costs of the cross claim and the interlocutory process filed on 5 November 2025 as agreed or assessed.
4. The proceeding be listed for hearing on a date to be advised after 15 May 2026, for consideration of:

(a) adoption of the referee's report on the assessment of damages; and

(b) disposition of remaining issues in the proceeding.

1. The parties have liberty to apply on 3 days' notice for case management orders in connection with the final hearing.
2. The referee has liberty to apply for an extension of the time for reporting if necessary.

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

1. The plaintiff (Mr Qi) is a director of the first defendant (S&Q Group), second defendant (S&Q Asset) and third defendant (S&Q Asset Management) (together, the S&Q companies).
2. By originating process filed on 22 April 2024 (the originating process), Mr Qi sought declarations to the effect that: he was not validly appointed a director of the S&Q Companies by way of a Form 484 lodged with the Australian Securities and Investments Commission (ASIC) on 22 March 2024; the fourth defendant (Mr Wei) did not cease to be a director of the S&Q companies on 29 February 2024 and remains a director of each of these entities; that the Form 484 lodged with ASIC by the fifth defendant (AUGE Accounting) and sixth defendant (Ms Chen) on 22 March 2024 be withdrawn from the registers; and damages for misleading and deceptive conduct in relation to the lodgement of the Form 484 pursuant to section 236 of the Australian Consumer Law.
3. Following a lengthy procedural history, by an interlocutory process filed on 5 November 2025, Mr Qi and the S&Q companies seek default judgment on a cross claim against Mr Wei and two other entities of which he is a director (ANC International Holdings and Gongwei Holdings).

1. Mr Qi resides in the Peoples Republic of China. Around early 2024, Mr Qi became aware that he had been appointed as a director of each of the S&Q companies. He alleges that documents recording this change and purporting to contain his signature had been made without his prior knowledge and filed with ASIC.
2. Nearly all the relevant forms were filed by AUGE Accounting and Ms Chen. Ms Chen was a director of AUGE Accounting.
3. The S&Q companies were joined as defendants in order to subject them to any orders calling for a general meeting to elect new directors. Pursuant to orders made by Cheeseman J on 2 May 2024, meetings of members of the S&Q companies were held.
4. The proceeding was referred to mediation on 21 August 2024 and that mediation occurred on 23 April 2025. Mr Wei did not attend. However, an agreement was reached between Mr Qi, Ms Chen and AUGE Accounting which required declarations and orders to rectify ASIC's database. The Court has not yet been approached in order to have these declarations and orders made, because Mr Wei has not stated his position in relation to them.
5. Mr Qi was at some stage properly appointed as a director of the S&Q companies. Following his appointment, orders made by a registrar on 16 May 2025 provided for the filing of: a defence to the originating process by 6 June 2025; a cross claim by the S&Q companies against Mr Wei by 30 May 2025; and any defence by Mr Wei to the cross claim by 11 August 2025 (cross claim).

1. The notice of cross claim and statement of cross claim were filed on 5 June 2025. The cross claimants are the S&Q companies. The cross respondents are Mr Wei, ANC International Holdings and Gongwei Holdings. The S&Q companies seek declarations that Mr Wei breached his duties as a director under ss 180-183 of the Corporations Act 2001 (Cth) (the Corporations Act); compensation; damages; and orders for delivery up of login credentials for the Xero software licenced by Mr Wei and Gongwei Holdings. The alleged breaches of s 180(1), 181(1), 182(1) and 183(1) involve a large number of transactions and agreements which Mr Wei is alleged to have entered into on behalf of the companies.

1. Mr Wei had not filed his defence to the cross claim by 11 August 2025. Orders made by the Registrar on 22 August 2025 extended the time for filing to 27 August. No defence had been filed by 10 September 2025, and time was then extended to 19 September 2025. No defence had been filed by 2 October 2025, and time was then extended to 16 October 2025. No orders have been made extending the 6 June 2025 date by which Mr Wei was required to file his defence to the originating process.
2. As noted earlier, the cross claim was filed on 5 June 2025. A notice of acting was filed by Pancific Legal on behalf of Gongwei Holdings on 7 August 2025. On 22 August 2025, Gongwei Holdings was ordered by a registrar to file and serve any defence to the cross claim by 17 September 2025. However, Pancific Legal filed a notice of intention to cease to act on 16 September 2025. No defence had been filed by 2 October 2025, and time was extended to 16 October 2025. No notice of ceasing to act has been filed by Pancific Legal to date, however, Gongwei Holdings has since been unrepresented and no defence has been filed by it.
3. No orders were made with respect to ANC International Holdings, presumably because no notice of acting has been filed on its behalf and therefore it has not officially come onto the Court's record.
4. On 1 August 2025 an affidavit of Mr Wei was filed, purportedly by ANC International Holdings (even though it was unrepresented and not on the record) and Gongwei Holdings. This affidavit annexed a document entitled "Defence of David Wei" and another document apparently intended to be a cross claim by Mr Wei against Mr Qi and other parties.
5. I have not been able to find any further references to the purported "Defence of David Wei" in the Court's file. This document is missing its first page and is a discursive account of (seemingly) Mr Wei's version of the history of the S&Q companies. It is not in the form of a defence, in that it does not expressly traverse the specific allegations in Mr Qi's statement of claim, and it has not been formally filed as a defence. Nor has Mr Wei's purported cross claim been filed in its own right or pursued in any way.
6. No defence to the originating process or cross claim has been filed to date.
7. On 5 November 2025 the S&Q companies filed an interlocutory process seeking default judgment against the cross respondents to the cross claim and that the principal proceeding be listed for hearing.
8. It appears that Mr Wei was unrepresented until 7 November 2025 when a notice of acting was filed by Alton Legal (although he informed the Registrar on 2 October 2025 that he had obtained a legal representative). On 3 February 2026 Alton Legal filed a notice of ceasing to act. No material was filed on behalf of Mr Wei in the proceeding during this period and no material has since been filed.

1. The interlocutory process was listed before me on 4 February 2026. Having filed written submissions (in accordance with orders made by the Registrar on 24 November 2025), counsel appeared for Mr Qi and the S&Q companies. While pressing for the relief sought in the interlocutory process, he accepted that the appropriate relief was a matter for the court. (I note that Mr Qi is not named as a party to the cross claim. However, he was entitled to be heard at least in so far as the interlocutory process sought the listing of the principal proceedings for disposition. I have proceeded on the basis that he also seeks that listing.)
2. Mr Wei did not file written submissions, although he was apparently represented by solicitors until 3 February 2026. He appeared in person by video link and submitted that he had provided Alton Legal with the necessary information and did not know why "[t]hey never did anything". He informed me that Alton Legal had ceased acting for him on 21 January 2026; he had sought other representation and had recently engaged another firm of solicitors (Hallcross Legal); but they had not had sufficient time to respond to the material filed by the other parties. He sought an adjournment to allow his new representatives to file any necessary documents.
3. Just before the hearing, Mr Wei sent to the Court a written statement purporting to explain why there had been a delay in his response to the principal proceedings and the cross claim. The statement referred to him in the third person and may have been written for him by a person with legal training. However, it was not in the form of an affidavit and not sworn or affirmed by any person. He also provided copies of emails between Hallcross Legal and the solicitors for Mr Qi and the S&Q companies, in which it was said that he would consent to a guillotine order if they agreed not to proceed with their application for default judgment. However, Mr Wei professed himself to be unaware of the contents of this correspondence or what a guillotine order involved. This is one of several perplexing aspects of the proceeding. Another is that, having apparently agreed to act for Mr Wei, his solicitors left him to speak for himself at the hearing of the default judgment application. Yet another is that, as at the date of these orders, Hallcross Legal has not filed a notice of acting.
4. ANC International Holdings and Gongwei Holdings also did not file submissions. They appear not to have legal representation and have not sought any dispensation from the stipulation in r 4.01(2) of the Federal Court Rules 2011 (Cth) (FCR) that a corporation must not proceed other than by a lawyer. Mr Wei, as I understood him, did not purport to speak for them. The result is that ANC International Holdings and Gongwei Holdings have not responded to the cross claim in any way and did not appear at the hearing of the interlocutory process seeking default judgment.
5. Mr Wei also raised a concern that Mr Qi and the S&Q companies were represented by the same solicitors and counsel. This had previously been raised in his affidavit filed on 1 August 2025. Counsel explained that, while the S&Q companies had initially been joined as defendants in the main proceeding so that they would be bound by orders for the holding of meetings, their interests and those of Mr Qi were now aligned. The companies appear to have no further interest in the principal proceedings and Mr Qi, as noted earlier, is not named as a party to the cross claim. I am not aware of any reason why it is inappropriate for them to be represented by the same legal team.

1. Division 5.2 of the FCR concerns orders on default. Relevantly, r 5.22 provides for the circumstances in which a party is in default.

A party is in default if the party fails to:

(a) do an act required to be done, or to do an act in the time required, by these Rules; or

(b) comply with an order of the Court; or

(c) attend a hearing in the proceeding; or

(d) prosecute or defend the proceeding with due diligence.

1. The right for an applicant to seek an order of the court in respect of a respondent's default is relevantly conferred by r 5.23(2).

(2) If a respondent is in default, an applicant may apply to the Court for:

(a) an order that a step in the proceeding be taken within a specified time; or

(b) if the claim against the respondent is for a debt or liquidated damages - an order giving judgment against the respondent for:

(i) the debt or liquidated damages; and

(ii) if appropriate, interest and costs in a sum fixed by the Court or to be taxed; or

(c) if the proceeding was started by an originating application supported by a statement of claim or an alternative accompanying document referred to in rule 8.05, or if the Court has ordered that the proceeding continue on pleadings - an order giving judgment against the respondent for the relief claimed in the statement of claim or alternative accompanying document to which the Court is satisfied that the applicant is entitled; or

(d) an order giving judgment against the respondent for damages to be assessed, or any other order; or

(e) an order mentioned in paragraph (b), (c) or (d) to take effect if the respondent does not take a step ordered by the Court in the proceeding in the time specified in the order.

Note 1: The Court may make any order that the Court considers appropriate in the interests of justice - see rule 1.32.

Note 2: An order or judgment under this Division may be set aside or varied.

1. The relevant principles have been considered in numerous cases, including recently by Burley J in EV20 Consulting Group Pty Ltd v Paperless Warehousing Pty Ltd [2025] FCA 328 at [14]:

The principles relevant to the exercise of discretion under FCR r 5.23 may be summarised as follows:

(1) the power invoked by the Applicants is discretionary, it should be exercised cautiously;

(2) the discretion to enter a default judgment is enlivened when an applicant or cross-claimant applies to the Court for such an order and where a respondent is in default;

(3) the rule must be administered sensibly and with an appreciation both of the fact that some delays are unavoidable, and unpredictable, by even the most conscientious parties and their lawyers, and of the likely serious consequences to an applicant of staying or dismissing a claim;

(4) cases in which the history of non-compliance by an applicant is such as to indicate an inability or unwillingness to cooperate with the Court and the other party or parties in having the matter ready for trial within an acceptable period provide an example where the exercise of the discretion may be appropriate;

(5) the requirement imposed by FCR r 5.23 is not that an applicant prove by way of evidence the claim sought to be advanced; the requirement is that the Court needs to be satisfied on the face of the statement of claim that the applicant is entitled to the relief claimed. In this regard, FCR r 5.23 will be met upon the Court being satisfied that relief could be granted on the face of the pleading;

(6) in addition to the facts alleged in the statement of claim, the Court may permit recourse to further limited evidence but may not admit evidence that would alter the case as pleaded;

see Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227 at [20]- [25] (Flick J); Chamberlain Group, Inc v Giant Alarm System Co, Ltd (No 2) [2019] FCA 1606 at [13]- [14] (Yates J); Secretary, Department of Health v Evolution Supplements Australia Pty Ltd [2021] FCA 74 at [10]- [15] (Burley J); Hugo Boss AG v Hardge [2024] FCA 1325 at [20] (Neskovcin J).

1. Important considerations in the exercise of the court's discretion to order default judgment are the particular facts and circumstances of the case, the nature and extent of the non-compliance, whether the defaults were intentional, and the likelihood of those defaults being remedied (cf Kim v Wang [2025] FCA 1244 at [18] (Owens J) (Kim v Wang).

1. Mr Wei's defence to the originating process was to be filed by 6 June 2025 and the defences to the cross claim were to be filed by 22 August 2025. Mr Wei and the other cross respondents have failed to comply with either of these deadlines. Neither the repeated extension of the deadline in relation to the cross claim nor the filing of the interlocutory process has prompted the filing of defences. This is in circumstances where Mr Wei had failed to attend a mediation (in breach of an order requiring him to do so) and frustrated the other parties' efforts to resolve the principal proceedings by consent.
2. These failures have not been explained in any satisfactory way. As far as I have been able to ascertain, ANC International Holdings has not taken any step to respond to the cross claim. Gongwei Holdings got as far as appointing a legal representative, but that representative filed a notice of intention to cease to act a few weeks later and nothing further has been done. Mr Wei, having engaged with the main proceeding to a limited extent, obtained representation for himself after the interlocutory process was filed and then parted ways with his solicitors before it came on for hearing. As noted above, Mr Wei informed me at the hearing that he had retained a new firm of solicitors; however, the fact that he then appeared for himself, the form of the material that he submitted and the fact that the new solicitors are not on the record leave me unconvinced as to the nature of that retainer. For example, a competent legal practitioner consulted by Mr Wei would, at least, have stressed to him that ANC International Holdings and Gongwei Holdings needed to be formally represented if they were to take any step to resist the cross claim.
3. If this history is considered by reference to the factors identified in Kim v Wang, the following conclusions emerge.

(a) Mr Wei has not filed a defence in the principal proceeding, having been ordered to do so by 6 June 2025. He may have thought he had responded adequately by annexing his purported defence to the affidavit he filed on 1 August 2025, although its deficiencies are obvious; and this default does not seem to have been agitated at the case management hearings before the Registrar. Nevertheless, the principal proceeding has been in abeyance for a long period as a result of default by Mr Wei. Non-compliance with the Court's orders in respect of the filing of Mr Wei's defence to the cross claim has been total. Nothing substantial has been done and no satisfactory explanation has been offered. On no occasion has an extension of time been sought before the relevant time expired. Almost six months have passed since the original deadline and no progress has been made.

(b) While it may be the case that Mr Wei has not been well served by his legal representatives in recent months, he waited until several deadlines had expired before retaining solicitors (and meanwhile does not appear to have done anything on his own behalf by way of filing documents). ANC International Holdings and Gongwei Holdings, which can only act through lawyers, have not obtained representation and have taken no steps to respond to the cross claim. This is indicative of deliberate decisions not to engage with the proceeding.

(c) In the light of this history, it cannot be said to be likely that the defaults will be remedied in any timely way. ANC International Holdings and Gongwei Holdings are still unrepresented and the Court has no evidence about their decision making processes. Mr Wei claimed to have retained solicitors, but the nature of that retainer is presently uncertain.

1. These considerations have led me to the conclusion that the relief sought by the cross claimants should be granted. I am not persuaded that anything other than more delay would be achieved by extending the time for filing defences further, even if that extension were accompanied by a self-executing order.

I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Kennett.

AUSTRALIA UNITED GENUINE ETHIC ACCOUNTING PTY LIMITED ACN 163 329 299

ANC INTERNATIONAL HOLDINGS PTY LIMITED ACN 103 457 307