Hall v Hemant Investments Pty Ltd

Australian Securities and Investments Commission v Kobelt [2019] HCA 18; (2019) 368 ALR 1

Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd & Ors [1987] FCA 84; (1987) 14 FCR 215

Dig It Landscapes Pty Ltd (in liq) v Bupa Aged Care Australia Pty Ltd [2022] FCA 47

Director of Consumer Affairs v Gibson [2017] FCA 240

EV20 Consulting Group Pty Ltd v Paperless Warehousing Pty Ltd [2025] FCA 328

Hall v Hemant Investments Pty Ltd [2025] FCA 776

Hipages Group Pty Ltd v Reach Aussie Pty Ltd [2017] FCA 112

Kim v Wang [2025] FCA 1244

Olson v O'Keefe (No 3) [2018] FCA 2001

Roberts v Booth (1893) 1 Ch 52

Titan Support Systems Inc v Nguyen [2014] FCA 884

Commercial Contracts, Banking, Finance and Insurance

1. Pursuant to r 5.23(2)(d) of the Federal Court Rules 2011 (Cth), judgment be entered against the Second Respondent for misleading and deceptive conduct with damages to be assessed.

UPON ADMISSIONS WHICH THE SECOND RESPONDENT IS TAKEN TO HAVE MADE CONSEQUENT UPON HIS NON-COMPLIANCE WITH THE FEDERAL COURT RULES 2011 (CTH), IT IS DECLARED THAT:

1. The Second Respondent engaged in conduct that was misleading and deceptive, or likely to mislead or deceive, within the meaning of s 18 of Sch 2 to the Competition and Consumer Act 2010 (Cth), by representing to the Applicants that:

(a) if they loaned moneys to the First Respondent, the moneys would be repaid within 12 months, together with capitalised interest of 20 per cent; and

(b) in the event that the First Respondent could not repay the loaned moneys within 12 months, in lieu of repayment, the Applicants would receive an allotment in 7002 Woodlinks Way, Collingwood Park in the State of Queensland (more particularly described as Lot 702 on SP 344046, Title Reference 51361174) equivalent to the amount of the loaned moneys and interest.

1. The costs of and incidental to the interlocutory application dated 1 October 2025 are reserved.

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

1. The Applicants (Mr and Mrs Hall) seek an order against the Second Respondent (Mr Gavi) for default judgment with damages to be assessed: Federal Court Rules 2011 (Cth), r 5.23(2)(d). The default judgment application concerns their claim against Mr Gavi for misleading or deceptive conduct and, in the alternative, unconscionable conduct under the Competition and Consumer Act 2010 (Cth), Sch 2 (ACL) in connection with an alleged loan agreement by which Mr and Mrs Hall advanced the First Respondent (Hemant Investments) moneys.

1. Mr and Mrs Hall commenced the proceeding on 20 December 2024 by originating application and statement of claim (originating documents). The relief sought in the proceeding is not confined to Mr Gavi. Mr and Mrs Hall also seek relief against Hemant Investments and the Third Respondent (Mr Lange) who, together with Mr Gavi, are the alleged directors of Hemant Investments. By consent order made 29 September 2025, the claim against Hemant Investments and Mr Lange, was stayed pending determination of a proceeding commenced by Hemant Investments in the Supreme Court of Queensland.

1. The claim against Mr Gavi centres upon a property development alleged to have been undertaken by Hemant Investments with respect to land it is said to own at Collingwood Park in the State of Queensland (Land).
2. Mr and Mrs Hall allege in their statement of claim that Mr Gavi was their former accountant and that:
   1. In the ordinary course of providing accounting advice to [Mr and Mrs Hall], [Mr Gavi]:

3.1. informed [Mr and Mrs Hall] he was a director of [Hemant Investments];

3.2. informed [Mr and Mrs Hall] that [Hemant Investments] was the registered proprietor of the Land and that the Land was being developed by [Hemant Investments];

3.3. advised [Mr and Mrs Hall] that they should invest in [Hemant Investments'] development of the Land by loaning monies to [Hemant Investments];

3.4. advised [Mr and Mrs Hall] that if they loaned monies to [Hemant Investments] the monies would be repaid within 12 months together with capitalised interest of 20%;

3.5. advised [Mr and Mrs Hall] that in the event [Hemant Investments] could not repay the loaned monies within 12 months, in lieu of repayment, [Mr and Mrs Hall] would receive an allotment in the Land equivalent to the amount of the loaned monies and interest; and

3.6. invited [Mr and Mrs Hall] to attend the Land and inspect [Hemant Investments'] development.

1. Mr and Mrs Hall plead that in reliance on the Representations, on or about 13 September 2019, they entered into a loan agreement with Mr Gavi for and on behalf of Hemant Investments. They allege that under the terms of the loan agreement they agreed to and (on 16 September 2019) did advance Hemant Investments $300,000 (principal sum). Mr and Mrs Hall contend in their statement of claim that, despite demand, and in breach of the terms and conditions of the loan agreement, Hemant Investments has neglected, failed or refused to repay them the principal sum.
2. Mr and Mrs Hall allege that the Representations were "with respect to a future matter" which Mr Gavi "did not have reasonable grounds for making": ACL, s 4. As such, they contend that the Representations comprise conduct that was misleading or deceptive, or likely to mislead or deceive in contravention of s 18 of the ACL. Mr and Mrs Hall plead that by reason of that contravention of the ACL by Mr Gavi, they have suffered loss and damage.
3. In the alternative, Mr and Mrs Hall allege that they were in a position of special disadvantage relative to Mr Gavi. Mr Gavi is said to have known this. They plead that Mr Gavi failed to act in good faith or without due regard to their legitimate interests and in so doing, engaged in conduct in trade or commerce that was, in all of the circumstances, unconscionable in contravention of s 20 and s 21 of the ACL. Again, Mr and Mrs Hall plead that by reason of that contravention of the ACL by Mr Gavi, they have suffered loss and damage.

1. If a respondent is in default, an applicant may apply to the Court under r 5.23(2)(d) of the Rules for an order giving judgment against the respondent for damages to be assessed, or any other order. A party will be in "default" if they fail to: do an act required to be done or to do an act in the time required by the Rules; or prosecute or defend the proceeding with due diligence: Rules, r 5.22(a) and (d).
2. In EV20 Consulting Group Pty Ltd v Paperless Warehousing Pty Ltd [2025] FCA 328, Burley J said of the exercise of the discretion under r 5.23 of the Rules to enter default judgment (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;

1. The discretion to grant default judgment is unfettered and necessarily informed by the facts and circumstances of each case, including the history of non-compliance, whether the relevant defaults were intentional, and if those defaults are likely to be remedied: Kim v Wang [2025] FCA 1244 at [18] (Owens J).
2. Where, as here, the matters alleged are capable of expression as a declaration or infringement of a right or standard set by statute, discretionary considerations arise: Australian Competition and Consumer Commission v Dataline.Net.Au [2006] FCA 1427; (2006) 236 ALR 655 at [53] to [56] (Kiefel J, as her Honour then was); EV20 at [97] to [102]. If the Court determines to make a declaration, it is important that there be no misunderstanding as to the basis upon which it is made. This can be addressed by a statement, preceding the declaration, that the orders are made upon admissions which the respondent is taken to have made, consequent upon their non‑compliance with orders of the Court (or the Rules): cf, Dataline.Net.Au at [59]; Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2007] FCAFC 146; 161 FCR 513 at [91] to [92] (Moore, Dowsett and Greenwood JJ).

1. Mr Gavi is plainly in default.
2. As outlined above, the proceeding was commenced on 20 December 2024. Despite all reasonable efforts being made, personal service of the originating documents on Mr Gavi did not prove practicable. There followed an interlocutory application for orders for deemed service of the originating documents and substituted service of any further documents filed in the proceedings. Those orders were made on 26 June 2025: Hall v Hemant Investments Pty Ltd [2025] FCA 776.
3. In accordance with the orders for substituted service, Mr Gavi was served with the default judgment application and the material Mr and Mrs Hall rely upon in support of the application. Mr Gavi was also notified that the default judgment application was listed for hearing on 4 February 2026.
4. Notwithstanding, other than sending the Court emails on 2 and 26 June 2025, Mr Gavi has not participated in the proceeding. He has not filed a notice of address for service, as required by r 5.02 of the Rules. He has not filed a defence to the statement of claim (deemed served 21 February 2025), as required by r 16.32 of the Rules. He has not appeared at any hearing, including the hearing of the default judgment application.
5. In the circumstances, I am satisfied that Mr Gavi is in default within the meaning of r 5.22 of the Rules. Mr Gavi has failed to do acts required by the Rules including, materially, filing a defence to the statement of claim: cf, Rules, r 5.22(a). Given that omission, and his lack of engagement with the proceeding as described above, he has also failed to defend the proceeding with due diligence: cf, Rules, r 5.22(d).

Is the discretion to order default judgment enlivened?

1. The overwhelming inference is that Mr Gavi's defaults are deliberate and reflect a considered decision on his part not to engage in the proceeding. Every reasonable effort has been made to draw the originating documents and the default judgment application to his attention, but to no avail. There is, consequently, no basis to infer that Mr Gavi's present default is temporary. I find that Mr Gavi has no present intention to participate in the proceeding: cf, Kim at [23] to [26]. As such, I am satisfied that the discretion to enter default judgment against Mr Gavi is enlivened.

1. The Court has jurisdiction in respect of the claims made against Mr Gavi under the ACL: Competition and Consumer Act, s 86(1); see also, Hipages Group Pty Ltd v Reach Aussie Pty Ltd [2017] FCA 112 at [26] (Perry J), citing Titan Support Systems Inc v Nguyen [2014] FCA 884 at [19] to [20] (Perry J).

Misleading and deceptive conduct under s 18 of the ACL.

1. I am satisfied on the face of the statement of claim that Mr and Mrs Hall are entitled to judgment against Mr Gavi for misleading and deceptive conduct in contravention of s 18 of the ACL, with damages to be assessed. That is for three reasons.
2. First, each of the Representations pleaded at [3.4] and [3.5] of the statement of claim are with respect to a "future matter" within the meaning of s 4 of the ACL (operative representations). Mr and Mrs Hall specifically plead this at [10] of their statement of claim: cf_, Dig It Landscapes Pty Ltd (in liq)_ v Bupa Aged Care Australia Pty Ltd [2022] FCA 47 at [20] to [24] (Jackson J). Each of the operative representations are properly characterised as a prediction, promise or forecast with respect to the outcome of loaning moneys to Hemant Investments: cf, Australian Competition and Consumer Commission v Woolworths Group Limited (formerly called Woolworths Limited) [2020] FCAFC 162; (2020) 281 FCR 108 at [121] (Foster, Wigney and Jackson JJ).
3. The remaining Representations cannot be so characterised. That is because they are either not representations (ie, the invitation to attend and inspect the development as alleged at [3.6] of the statement of claim) or are not representations with respect to a future matter (ie, the statement that Mr Gavi is a director of Hemant Investments which owns and is developing the Land and the advice to invest in the development as pleaded at [3.1] to [3.3] of the statement of claim).
4. Second, in the absence of evidence that Mr Gavi had reasonable grounds for making the operative representations, they are deemed by s 4 of the ACL to be misleading: see generally, Director of Consumer Affairs v Gibson [2017] FCA 240 at [198] to [202] (Mortimer J, as her Honour then was).
5. Third, Mr Gavi is alleged to have made the operative representations "in the course of providing accounting advice" to Mr and Mrs Hall. The provision of professional services for reward comprises conduct "in trade or commerce" within the meaning of s 18 of the ACL: Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd & Ors [1987] FCA 84; (1987) 14 FCR 215 at [51] (French J, as his Honour then was) in reference to s 52 of the Trade Practices Act 1974 (Cth).

Unconscionable conduct under s 20 of the ACL

1. I am not, however, satisfied that Mr and Mrs Hall are entitled to default judgment against Mr Gavi for unconscionable conduct in contravention of s 20 of the ACL. That is for the following reasons.
2. As Mr and Mrs Hall highlight in their written submissions, for there to be unconscionable conduct it is essential that one party is at a special disadvantage or position of vulnerability to the other party, and the other party unconscientiously takes advantage of that special disadvantage or vulnerability: Australian Securities and Investments Commission v Kobelt [2019] HCA 18; (2019) 368 ALR 1 at [15] (Kiefel CJ and Bell J), at [111] (Gageler J), at [118] (Keane J) and at [147] (Nettle and Gordon JJ).
3. The difficulty is that the pleaded case with respect to unconscionable conduct under s 21 of the ACL comprises a series of bare assertions. As much appears from the relevant part of the statement of claim:
   1. Further, and or in the alternative to paragraphs 8 to 12 herein, [Mr and Mrs Hall] were in a position of special disadvantage relative to the Respondents.
   2. The Respondents knew that [Mr and Mrs Hall] were at such a disadvantage and failed to act in good faith or without due regard for the legitimate interests of the Applicants.
   3. By the conduct pleaded herein, the Respondents engaged in conduct that was, in all of the circumstances, unconscionable in contravention of sections 20 and 21 of the ACL.
4. That pleading is inadequate because, as Bromwich J observed in Olson v O'Keefe (No 3) [2018] FCA 2001 at [31], "the mere incantation of those conclusory words does not constitute any sufficient pleading". The statement of claim must (and fails to) state the material facts Mr and Mrs Hally rely upon to allege that they were at a "special disadvantage" and that Mr Gavi had knowledge of this and failed to act in good faith or with due regard to their legitimate interests: cf, Olson at [30] and Rules, r 16.02(1)(f).
5. In their written submissions, Mr and Mrs Hall provide further particulars as to the basis upon which it is alleged that they were placed at a "special disadvantage" relative to Mr Gavi. But recourse to such extraneous material is not permissible because it alters the pleaded case: EV20 at [14(5)] and [14(6)].
6. Given those matters, I am not satisfied on the face of the statement of claim that Mr and Mrs Hall are entitled to default judgment in respect of their claim of unconscionable conduct under s 20 of the ACL.

1. For all of the above reasons, it is appropriate to exercise the discretion to grant Mr and Mrs Hall default judgment against Mr Gavi in respect of their claim for misleading and deceptive conduct, with damages to be assessed. At the hearing of the interlocutory application, Mr and Mrs Hall sought to defer the question of costs if and until they seek an assessment of damages. As such, I will make an order reserving the costs of and incidental to the present application.

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