FEDERAL COURT OF AUSTRALIA Ball v Hogg, in the matter of Horizon Administration Pty Ltd (in liq) [2016] FCA 1112 File number: NSD 712 of 2016 Judge: MARKOVIC J Date of judgment: 7 September 2016 Legislation: Federal Court Act 1976 (Cth) s 51A Federal Court Rules 2011 (Cth) r 5.23 Date of hearing: 7 September 2016 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: No Catchwords Number of paragraphs: 14 Solicitor for the Plaintiff: Ms M Pavey, Smith Leonard Fahey Lawyers Counsel for the Second Defendant: The Second Defendant did not appear ORDERS NSD 712 of 2016 BETWEEN: MITCHELL BALL AS THE LIQUIDATOR OF HORIZON ADMINISTRATION PTY LTD (IN LIQUIDATION) ACN 117 772 344 Plaintiff AND: MR MICHAEL HOGG AKA MICHAEL JOHN HOGG First Defendant MR EDWARD HOGG AKA EDWARD ROUGHTON HOGG Second Defendant JUDGE: MARKOVIC J DATE OF ORDER: 7 SEPTEMBER 2016 THE COURT ORDERS THAT: 1. The second defendant is to pay the plaintiff $409,031.00 being for the principal amount of $339,527.58 and interest calculated to 24 August 2016 in the amount of $69,503.42. 2. The second defendant is to pay the plaintiff's costs of the proceedings as agreed or taxed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT (REVISED FROM TRANSCRIPT) MARKOVIC J: 1 By originating process filed on 17 May 2016 proceedings were commenced against Edward Hogg, also known as Edward Roughton Hogg, as second defendant. The plaintiff is the liquidator of Horizon Administration Pty Limited (in liquidation) (Horizon). The second defendant is a director of Horizon. 2 In his further amended originating process, as against the second defendant, the plaintiff seeks, among others: (1) a declaration that the second defendant contravened s 588G(2) of the Corporations Act 2001 (Cth) (Corporations Act) by failing to prevent Horizon from incurring certain debts, whilst being aware that there were grounds for suspecting that Horizon was insolvent or whilst a reasonable person, in a like position to that of the second defendant in a company in Horizon's circumstances, would have been so aware; (2) a declaration that Horizon's creditors have suffered loss or damage in a quantified amount by reason of the debts incurred during the period 30 June 2011 to 4 June 2013; and (3) an order that the second defendant pay the plaintiff that quantified amount pursuant to s 588M(3) of the Corporations Act as a debt due to Horizon's creditors being the amount of the loss or damage suffered by Horizon's creditors. 3 The quantified amount sought by the plaintiff is $339,527.58. The plaintiff also seeks interest on that amount and his costs. There is an alternative claim made against the second defendant under s 598 of the Corporations Act for the same amount. 4 The originating process was personally served on the second defendant on 22 May 2016 together with the affidavit in support affirmed by Mitchell Ball on 12 May 2016. 5 When the matter came before me on 21 July 2016 there was no appearance by or on behalf of the second defendant. Orders were made requiring the second defendant to file a defence by 18 August 2016 and the plaintiff was required to serve a copy of the Court's orders on the second defendant by ordinary prepaid post to the address at which he had previously been served. 6 The proceeding was next listed before me on 25 August 2016. The second defendant had not filed a defence and there was no appearance by, or on his behalf, at that time. The plaintiff sought to apply for the entry of default judgment as against the second defendant at that time but, while there was evidence of service on the second defendant of the Court's orders made on 21 July 2016 and a letter notifying the plaintiff's intention to seek the final orders sought in the originating process in default of the filing of a defence or an appearance, I declined to hear the plaintiff's application on that day. 7 Rather, orders were made requiring the plaintiff to serve on the second defendant his amended originating application, in relation to which leave for filing was granted, his submissions in support of the application for default judgment, any other material upon which he proposed to rely in support of that application and a copy of the Court's orders. The proceeding was adjourned to 7 September 2016. 8 When the matter came before me today there was no appearance by or on behalf of the second defendant. There was evidence before me that the material required to be served on the second defendant by the orders made on 25 August 2016 had been served. 9 The plaintiff has applied for the entry of judgment against the second defendant pursuant to r 5.23 of the Federal Court Rules 2011 (Cth) (Federal Court Rules) which provides at subr (2)(b) that, if a respondent is in default, an applicant may apply to the Court for: … (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 … 10 Rule 5.22 of the Federal Court Rules provides that a party is in default if, among other things, it fails to comply with an order of the Court or attend a hearing in the proceeding. 11 The second defendant has failed to appear on each occasion the proceeding has been listed before the Court, despite having notice of those listings. He has also failed to file a defence in accordance with the orders of the Court. Further, an affidavit sworn by David Wilkinson, a solicitor in the employ of the plaintiff's solicitors, discloses that Mr Wilkinson had a telephone conversation with Leigh Adams of LA Lawyers on 24 August 2016. Mr Adams was calling on behalf of the defendants and, in the course of his conversation with Mr Wilkinson, informed him that the second defendant is 85 years old, is unwell and has no money. He further informed Mr Wilkinson that he was "not instructed to defend" and that "they", which I take to mean the defendants, "do not intend to file a defence". 12 The claim for insolvent trading against the second defendant is quantified. According to an affidavit sworn by the plaintiff on 24 August 2016 no payments have been received in relation to the relief claimed from the defendants or otherwise. The amount claimed by the plaintiff, as set out in the further amended originating process and the plaintiff's affidavit, is $339,527.58. 13 As noted above, the plaintiff also seeks interest on that amount pursuant to s 51A(1) of the Federal Court Act 1976 (Cth) which he has calculated, at the rate prescribed by Practice Note CM 16, up to 24 August 2016 at $69,503.42. Thus, the total amount claimed by the plaintiff and for which judgment should be entered is $409,031.00. The plaintiff also seeks his costs of the proceeding against the second defendant as agreed or assessed. 14 In light of the above, I will make the following orders: (1) the second defendant is to pay the plaintiff $409,031.00, being for the principal amount of $339,527.58 and interest calculated to 24 August 2016 in the amount of $69,503.42; (2) the second defendant is to pay the plaintiff's costs of the proceedings, as agreed or taxed. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Markovic. Associate: Dated: 21 September 2016