FEDERAL COURT OF AUSTRALIA

Simpson v Taylors Business Pty Ltd (No 2) [2025] FCA 1119

ORDERS

THE COURT ORDERS THAT:

1.    Within seven days of the date of this order, the Applicant file a revised scheme consistent with the reasons of the Court.

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

REASONS FOR JUDGMENT

BENNETT J:

1    By application dated 23 June 2025 the Applicant seeks default judgment pursuant to r 5.23 of the Federal Court Rules 2011 (Cth) (the Rules) in relation to a recently-added part of their claim in this proceeding. It is unusual for an application of the present kind to be made or granted. However, for the reasons that I have explained below, I have decided that it is appropriate in the novel circumstances of the present case for partial default judgment to be granted.

BACKGROUND

2    Taylors Business Pty Ltd (the Respondent or Taylors) is a company which operated a pawnbroking business in the Melbourne suburb of Delahey. The Respondent was in the business of providing funds to individuals under pawnbroking agreements. Individuals would surrender goods as “security” for the funds and in each instance entered into a standard form contract. The precise legal effect of the relationship, and whether it in fact involved a loan or the provision of credit, was the subject of a hearing on separate questions in respect of which judgment is reserved.

3    The present matter is a representative proceeding commenced by originating application and statement of claim dated 25 October 2023. The original representative applicant was a person who entered into a pawn contract with the Respondent. By the statement of claim, the Applicant, on behalf of the group members, impugned certain pawn contracts entered into during the Relevant Period, being between 15 November 2022 and 23 October 2023 (the Pawn Contracts). The statement of claim has been amended a number of times, including because the original representative applicant has been substituted under s 33T of the Federal Court of Australia Act 1976 (Cth) (the FCA Act), but the claim remains fundamentally the same (with the exception of the amendment discussed at [25] below).

4    It is alleged that during the Relevant Period the Respondent was not licenced to operate as a pawnbroker pursuant to the Second-Hand Dealers and Pawnbrokers Act 1989 (Vic) (SHDP Act). Thus, it was said by the Applicant that the Respondent was subject to the terms of the National Consumer Credit Protection Act 2009 (Cth) (the NCCP Act) and Schedule 1 to that Act, being the National Credit Code (the Code).

5    The statement of claim in its original form, and current form, alleges that:

(1)    Each of the Pawn Contracts charged an interest rate of 480% per annum (on a simple interest basis) and was therefore unenforceable by force of statute under s 39(1) of the Consumer Credit (Victoria) Act 1995 (Vic) (the CCV Act), and by reason of the contracts being illegal or contrary to public policy because entry into the contracts was prohibited under s 39(3) of the CCV Act and s 32A(1) of the Code.

(2)    The Respondent carried on “credit activities” without an Australian credit licence (as defined in s 35(1) of the NCCP Act), such that the Respondent’s entry into the Pawn Contracts was in contravention of s 29(1) of the NCCP Act and was therefore void and unenforceable by reason of being illegal or contrary to public policy.

(3)    The Pawn Contracts were unjust within the meaning of s 76 of the Code because of the Applicant’s and group members’ lack of bargaining power or ability to bargain, lack of opportunity to obtain legal advice, and the high interest rates offered which were not reasonably necessary to protect any legitimate interest of the Respondent.

(4)    The Pawn Contracts were consumer contracts and financial products under the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act) and were unfair within the meaning of s 12BG of the ASIC Act.

(5)    By entering into the Pawn Contracts in the pleaded circumstances, including where in some situations the group members were vulnerable, unsophisticated and low-income earners experiencing financial hardship who were required by the terms of the Pawn Contracts to pay their monthly interest charge in person at a store that had closed, the Respondent engaged in unconscionable conduct in contravention of s 12CB of the ASIC Act.

6    These causes of action raised a range of interconnected legal and factual issues.

7    Before any defence was filed, on 9 November 2023, following an interlocutory application, the Court issued an injunction (the Injunction) which restrained the Respondent and third parties from dealing with any of the goods offered as security for the Pawn Contracts (Pawned Goods). That order was expressly made on the basis that it did not prevent the Respondent from returning the Pawned Goods to the group members at the Respondent’s expense without requiring the payment of any charges under the Pawn Contracts.

8    There was an application for default judgment made on 8 February 2024. At the time of the application, the defence was overdue by several months. Opt-out notices had not at that time been issued. There was a question as to whether the default judgment hearing could proceed prior to the finalisation of the opt-out process (having regard to s 33J(4) of the FCA Act). At the hearing of that application, the Respondent was granted until 28 March 2024 to file a defence. A defence was filed on that date on behalf of the Respondent by solicitors that it had engaged.

9    The defence put in issue the question of whether the Pawn Contracts were, in fact, credit contracts. It was pleaded that the standard terms applicable to the Pawn Contracts had the effect that the pawnor was not obliged to repay any funds provided to them, but that if they did not do so, the Respondent became entitled to sell the goods. The Respondent also pleaded that the cancellation of its registration had been invalid and so denied the allegations based on unlicensed trading.

10    A reply was filed on 11 April 2024.

11    Orders concerning the form, content and distribution of opt out notices under s 33Y of the FCA Act were made on 23 August 2024 and were as follows:

3. The Opt Out Notice be distributed by the following procedure:

(a) the Applicant’s solicitors post on their website a copy of the Opt Out Notice;

(b) the Applicant’s solicitors post on their Facebook and Twitter accounts a link to their website post with a copy of the Opt Out Notice;

(c) the Applicant’s solicitors apply to the administrator of the ‘Brimbank Community’ group on Facebook to post a link to their website post with a copy of the Opt Out Notice;

(d) the Respondent provide to the Applicant’s solicitors by 4:00pm on 6 September 2024:

i. the name, address and (where this has been recorded by the Respondent) mobile phone number of each customer who entered into a Pawn Contract between 15 November 2022 and 26 October 2023; and

4. By 6 September 2024, the Applicant’s solicitors:

(a) to the extent that any Group Member has contacted the Applicant’s solicitors and provided their email address to the Applicant’s solicitors, email a copy of the Opt Out Notice to any such Group Member; and

(b) for all remaining Group Members:

i. where the Respondent has provided mobile phone numbers in accordance with the paragraph above, send an SMS text message to each Group Members mobile phone number with a link to a website containing a digital copy of the Opt Out Notice; and

ii. for all other Group Members, post a copy of the Opt Out Notice to each address for service of notices or alternative address for service of notices provided by the Respondent or if no such address is provided, to the residential address provided by the Respondent, pursuant to the paragraph above.

12    Pursuant to s 33J, the time and date for group members to opt out of the proceeding was ordered to be 4.00 pm on 27 September 2024.

13    At the same time, certain questions were identified as being appropriate to determine separately.

14    By order dated 5 September 2024, the Respondent was ordered to provide the Applicant with information about the Pawn Contracts including the loan amount, description of goods, and amounts repaid (if any). It appears that this order was complied with.

15    The Respondent’s solicitors ceased acting on 6 November 2024.

16    In late December 2024, a freezing order was sought in respect of funds held by the Respondent. That freezing order was made on 19 December 2024 by Neskovcin J, and extended by my orders on 20 January 2025. For the limited purpose of responding to the issues raised in relation to the interlocutory application, I granted leave to Mr Grainger, the sole director of the Respondent, to represent the Respondent at the hearing on 20 January. Following his submissions, there followed calls for documents, and a request to cross examine Mr Grainger in connection with his compliance with the freezing order. I made a referral for Mr Grainger to have pro bono assistance personally in relation to the cross examination, and he was represented by counsel on both the application to cross examine him, and for the cross examination itself. That took place on 27 February 2025.

17    Through his counsel on that date, Mr Grainger indicated that he was “unlikely” to seek leave to represent the Respondent moving forward in the proceeding.

18    There was an interlocutory application to substitute the representative applicant in this proceeding, and that order was made on 13 February 2025. Further consequential orders for the amendment of the pleading following the change to the representative applicant were made, and a further amended statement of claim was filed on 14 February 2025. There was no appearance or response from the Respondent in relation to these applications.

19    In the meantime, the Pawned Goods were held at premises which were formerly leased by the Respondent. Nhirushni Somasundaram, a solicitor for the Applicant, affirmed an affidavit on 17 January 2025 which stated that Mr Grainger had emailed the solicitor on 2 January 2025 to state that those premises had been re-possessed by the owner (and former landlord), and that the Pawned Goods had remained on the property at the time that the Respondent had vacated. Other goods belonging to the Respondent were removed by the Respondent at the time that they vacated the leased premises.

20    The Injunction prevented dealing with the Pawned Goods. That Injunction may affect third parties, and in any event, the owner who took possession of the premises retained the Pawned Goods.

21    The solicitors were able to ascertain that the Pawned Goods were moved on a number of occasions.

22    In cross examination on 27 February 2025, Mr Grainger gave evidence that the:

(a)    pawned goods that were not the subject of the Injunction were moved by the Respondent to Adelaide; and

(b)    Pawned Goods (the subject of the Injunction) were retained at the premises that had been leased by the Respondent.

23    The hearing of the separate questions proceeded on 15 April 2025. There was no appearance by the Respondent at that hearing and it did not file submissions. I reserved my decision.

24    An affidavit of Lucas Rutten, a solicitor for the Applicant, affirmed on 20 May 2025, stated that on 5 May 2025, a group member reported observing shipping containers at the premises. Inquiries by the solicitors for the Applicant to the owner of the premises revealed that the Pawned Goods were initially held in shipping containers outside the premises, but, following multiple reported attempts to break into the shipping containers, were re-located to a construction yard in the eastern suburbs. The Applicant’s solicitors asked Mr Grainger by email if he relinquished the Pawned Goods. No response was received.

25    By application dated 23 May 2025, the Applicant sought to amend its further amended statement of claim to add a new claim arising from the conduct of the Respondent since December 2024 in vacating the formerly leased premises. It alleged that the Respondent had vacated the premises and had left behind the Pawned Goods. It was alleged that this constituted an abandonment of the goods, such that the entitlement to the possession of the goods now resided with the Applicant and group members (the Possession Claim).

26    The Respondent did not appear or respond to the application to amend the pleadings. I made orders permitting the amendment, and providing a truncated timeframe for a defence to be filed, or for additional time to be sought to file a defence. The second further amended statement of claim was filed on 22 May 2025.

27    Mr Grainger sought additional time to file a defence, and I made orders that any such defence be filed by 20 June 2025.

28    By 23 June 2025 no defence had been filed, and an application for default judgment was filed by the Applicant. I notified the parties that I intended to list the matter. Mr Grainger indicated that he was not available on the date suggested by the Applicant. I fixed a date convenient for both the Applicant and Mr Grainger, being 21 July 2025.

29    On 16 July 2025, Mr Grainger purported to file documents on behalf of Taylors. He then sought leave to appear at the return of the present application on 21 July 2025. I considered that application, and for the reasons that I gave at the time, I refused him leave to act on behalf of the company, either by appearing or by filing documents (Simpson v Taylors Business Pty Ltd [2025] FCA 835). Without repeating my reasons on that application, it is appropriate to note that Mr Grainger proffered no explanation for his repeated failures to comply with the Court’s orders. Consequently, the materials that he purported to file were removed from the Court file. There has thus been no defence filed to the Possession Claim.

30    It is in the context that the application for default judgment comes before the Court for consideration.

DEFAULT JUDGMENT

General principles

31    Rule 5.22 of the Rules sets out the circumstances in which a party is in default. It states:

 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.

32    In the present application, default judgment is sought under r 5.23(2), which provides:

(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.

33    The Respondent is in default because it has failed to file a defence to the Possession Claim as required by orders of the Court dated 23 May and 3 June 2025 (r 5.22(b)).

34    Rule 5.23(2)(c) provides that judgment may be sought by an applicant if there has been a default and the “proceeding was started by an originating application supported by a statement of claim.” If those conditions are satisfied, then an applicant may seek an order giving judgment against the respondent for the relief claimed in the statement of claim to which the Court is satisfied the applicant is entitled. This proceeding was started by originating application and statement of claim.

35    The principles relevant to making an order for default judgment were summarised in Fair Work Ombudsman v IE Enterprises Pty Ltd [2020] FCA 848 (IE Enterprises) at [19] by Anderson J, as follows:

(a)     the power afforded to the Court is discretionary. The discretion should generally be exercised with caution;

(b)     the discretionary power to enter a judgment by default is enlivened when an applicant makes application to the Court for an appropriate order. In the absence of such an application, the power cannot be invoked;

(c)     there is a difference in the terms by which the limits of the power conferred by former O 35A r 3(2)(c) are expressed and the wording of the current r 5.23(2)(c). Notwithstanding that difference in language, the requirement imposed is not that an applicant prove by way of evidence the claim which is 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. The facts as alleged in the Statement of Claim are deemed to have been admitted by the respondent in default;

(d)     in order to be satisfied that an applicant is entitled to the relief claimed in the Statement of Claim, the Court needs to be satisfied that each element of the relevant civil wrong involved is properly and discretely pleaded in the Statement of Claim; and

(e)     in addition to the facts alleged in the Statement of Claim, the Court may permit recourse to limited further evidence. However, it may not admit evidence which would alter the case as pleaded.

36    It has been said to be manifestly harsh to exercise a discretion to terminate a proceeding summarily where it is apparent that the applicant wishes to be heard (Jarrett v Secretary, Department of Families, Community Services & Indigenous Affairs [2008] FCA 1043 at [7] (Flick J)). In this case, the Respondent has failed to appear, and has been in default of orders for the provision of a defence. A belated attempt at filing a defence was defective because the Respondent did not engage solicitors or obtain leave to permit it to do so. In addition, these matters arise in the context of a number of defaults in the conduct of the proceeding overall, including the failure to file a defence to the original statement of claim in the time required (noting the circumstance that the Respondent’s defence was multiple months late, and it was then granted an indulgence to file a defence following a default judgment application). In all the circumstances, I am comfortably satisfied that the Respondent is in default of the order to file a defence. This default is not an isolated one.

37    It is open to me to treat the absence of a defence as giving rise to deemed admissions under r 16.07(2) (Thunder Studios Inc (California) v Kazal (No 9) [2020] FCA 846 (Thunder Studios) at [32] (Rares J)). Even if not required, the Applicant submits that I can in any event be satisfied that the substantive allegations are established as an aid to the exercise of my discretion under r 5.23.

38    Whichever approach I adopt, I must be satisfied that the Applicant is entitled to relief on the statement of claim in the sense that the claim is clear and complete on the face of the pleading, and that this Court has jurisdiction to grant that relief (Speedo Holdings BV v Evans (No 2) [2011] FCA 1227 at [23]-[24] (Flick J)).

The availability of partial default judgment

39    The Applicant seeks default judgment only in respect of the Possession Claim. The facts underpinning that claim arose in late December 2024. They were identified and pleaded with reasonable expedition. The declaration that is sought would not impinge upon the balance of the questions raised by the proceedings: it concerns only the identification of the rights of ownership and possession of the Pawned Goods. It does not involve any adjudication as to the disputed aspects of the meaning of the Pawn Contracts, the scope of the legislative schemes in issue, or whether the Respondent was licensed in the Relevant Period.

40    The only remedy sought under the Possession Claim, other than ancillary orders, is a declaration that the Pawned Goods have been abandoned.

41    Rule 5.23(2) does not in terms contemplate partial judgment being granted on default (cf r 5.23(1)(b); r 26.01(1)(a)). However, nor does it expressly prevent such a course from being adopted. There is nothing in the text, context or purpose of r 5.23 that appears inconsistent with partial default judgment being granted in the correct case. In Henry v Sandlewood Aboriginal Projects Limited (No 3) [2021] FCA 728, the applicants sought default judgment for some of its claims against the fourth respondent, invoking r 5.23. Justice Rares granted the partial judgment, and said at [15]-[16]:

I am satisfied that [the applicant] is entitled to judgment in default in respect of the claims for the two amounts that it seeks to press, at the present time, while reserving its entitlement to seek relief in due course in respect of other claims against Ms Lacey.  

For these reasons, I will enter judgment for [the applicant] against Ms Lacey for its claims totalling $27,495.67 together with prejudgment interest up to today of $15,696.34. However, as the Attorney‐General has proposed, I will also order that any amount of the judgment sum be paid into Court until the Court otherwise orders. 

42    The balance of the claim could not be determined at the time of the default judgment application. Those matters were later determined in Henry v Sandlewood Aboriginal Projects Limited (No 5) [2021] FCA 1648 where default judgment was awarded in full.

43    Other judgments of this Court appear to have been entered on the basis that default judgment was available for part of a claim, albeit that the issue was not analysed in detail (see Hanwood Pastoral Co Pty Ltd v Kelly [2020] FCA 1020 at [35]-[37] (Rares J); IE Enterprises (Anderson J)).

44    I am satisfied, both based on an analysis of the terms of the Rules, and the apparent practice in this Court, that it is possible to grant default judgment over part of a claim in this Court. Of course, default judgment is discretionary. There are many judicial exhortations against the fragmentation of proceedings leading to waste and delay (Latitude Finance Australia v Australian Securities and Investments Commission [2025] FCAFC 124 at [17]-[18] (O’Bryan, Cheeseman and Bennett JJ): while that was in the context of appellate fragmentation, the principle remains apposite). Considerations of that kind would ordinarily weigh heavily against seeking or obtaining judgment in default over part of a claim while the balance of the proceedings remain on foot. Issues of finality, and of parties being vexed only once with an issue, are significant, as is the proper use of judicial resources in the resolution of disputes.

CONSIDERATION

Has the basis for the declaration been established?

45    The second further amended statement of claim amended the claim to add allegations that:

(1)    Taylors was served with a notice by its landlord for breach of the lease of its store due to non-payment of rent;

(2)    the notice required Taylors to remedy the breach of the lease by 17 December 2024;

(3)    on or around 15 December 2024, Taylors:

(a)    removed its property from the store;

(b)    left behind the Pawned Goods;

(c)    otherwise vacated the store; and

(d)    abandoned its lease for the store.

46    It is alleged that the above facts constitute abandonment of possession of the Pawned Goods by the Respondent. It is then pleaded that the title of the goods never passed from the owners, being the Applicant and the group members. Finally, it is alleged that because of the foregoing matters, the persons entitled to the possession of the Pawned Goods are their owners, being the Applicant and the group members.

47    Based on these matters, and the Respondent’s default in providing a defence to these matters, the Applicant has sought:

A declaration that the persons entitled to possession of the Pawned Goods are the Applicant and the Group Members.

48    In the defence filed on 28 March 2024, the Respondent asserted that if a customer failed to pay a specified sum of money under the Pawn Contract by a specified time, then the Respondent became entitled to sell the goods the subject of that contract. At common law a pawnbroking arrangement does not involve any transfer of title to the goods. Rather, the authorities recognise that a pawn is a bailment of property, with the legal effect that the pawnbroker takes possession and gains a form of “special property” which has been described as “the right to detain the goods for the pledgee’s security and ‘is in truth no property at all’”, but does not acquire title to the goods (Palgo Holdings Pty Ltd v Gowans [2005] HCA 28; 221 CLR 249 at [17] (McHugh, Gummow, Hayne and Heydon JJ), citing The Odessa; The Woolston [1916] 1 AC 145 at 158 (Lord Mersey)). Thus, it is clear that the entitlement to the Pawned Goods which the Respondent had was contractual and possessory. Title did not pass unless and until the Respondent sold the Pawned Goods. It is not in dispute that has not happened in this instance.

49    The Pawned Goods were provided to the Respondent on the basis of a warranty, signed by each of the Applicant and each of the group members. That warranty states that the Pawned Goods are “not subject to any… third party encumbrance or claims to be entitled to possession”. Similarly, I have been provided with an affidavit annexing correspondence with the former landlord who currently has possession of the Pawned Goods. It is clear from the Applicant’s solicitor’s correspondence with the former landlord that:

(1)    the former landlord has not had any further contact from the Respondent since around the time that it re-took possession of the premises at the start of this year;

(2)    the Pawned Goods are presently being kept in shipping containers in Bentleigh; and

(3)    it is apparent from the correspondence that the former landlord does not claim any interest in the Pawned Goods (and indeed is seeking to avoid the cost of storing those Pawned Goods).

50    I am satisfied that the allegations pleaded are admitted (Thunder Studios at [32]). While not necessary to do so, I have also had regard to the evidence filed by the Respondent which comfortably satisfies me that:

(1)    the Respondent has taken no steps to retain ownership of the Pawned Goods and has permitted possession to pass to the former landlord;

(2)    at no stage in the proceeding has the Respondent asserted ownership of the Pawned Goods, but rather simply an entitlement to sell them if certain contractual conditions are met; and

(3)    there are no other claims for ownership or possession of the Pawned Goods competing with those of the Applicant and the group members.

Is partial default judgment and the declaration appropriate?

51    I have had careful regard to the principles discussed above at [34]-[38]. Ultimately, I have decided that this is one of a narrow group of cases in which partial default judgment is appropriate. The core matters which lead me to this conclusion are the following:

(1)    The facts underpinning the cause of action only came into existence in December 2024 and so could not have been expounded sooner.

(2)    The determination of the Possession Claim is discrete and does not trespass into the legal or factual issues which are relevant to the balance of the claim. Critically, the Respondent never asserted that title to the Pawned Goods passed to them: their pleading (and the standard terms of the contract itself) were to the effect that if a customer failed to pay the required amount in the specified period, then the Respondent gained the right to sell the goods. The purchaser would then have good title to the Pawned Goods, based on the terms of the Pawn Contracts.

(3)    The evidence suggests that there is a risk to the Pawned Goods in their current location because they are now held by the Respondent’s former landlord, who reports a variety of attempted break-ins (albeit at their previous location). The apprehended risk to the Pawned Goods in circumstances where there might otherwise be substantial delay in resolving the proceedings is an important factor.

52    In this respect, while the separate questions may lead to the resolution of the proceeding, they will not necessarily resolve the question of ownership, particularly in the circumstances of the alleged abandonment, because the separate questions were formulated before the facts underpinning that issue had arisen. Crucially, a declaration regarding abandonment does not encroach upon the issues to be determined in the separate questions.

53    I am therefore satisfied that it is appropriate to make the declarations sought.

SCHEME FOR THE RETURN OF GOODS

Analysis of the proposed scheme

54    After the present application was made, I requested that the Applicant identify a scheme setting out the procedure by which group members are to be notified of the declaration, to establish a process by which they are able to reclaim their goods, and to make provision for unclaimed goods. On 1 September 2025 an affidavit of Lucas Rutten was filed providing evidence relevant to, and annexing, a proposed scheme for the return of the Pawned Goods, together with submissions in support of that scheme. The basis of the Court’s power to make the orders for the proposed scheme has not been identified, but I consider that the order falls within the Court’s powers under s 33Z(1)(g) or s 33ZF(1) of the FCA Act.

55    In summary, the proposed scheme contemplates:

(a)    the transfer of the goods that are currently in shipping containers kept by the former landlord to the scheme administrator’s possession;

(b)    the goods will be stored at a secure storage facility which has been selected to account for accessibility to group members;

(c)    the administrator will obtain from Taylors (or the company that operated the software which Taylors used) information about group members, to identify who owns what goods;

(d)    the administrator will sort the goods to work out which pawned goods are accounted for and which are not, and will file with the Court a list setting out this information;

(e)    the goods accounted for will be the subject of a process for collection whereby group members are notified of the goods by text and, if applicable, email, and group members will be able to collect the goods;

(f)    uncollected goods will be disposed of or sold (at the administrator’s discretion) if of uneconomic value for sale (<$100), or put up for sale for a period of four weeks if economically viable to do so (or sold in bulk) and, if not sold in this time, may be disposed of at the administrator’s discretion;

(g)    proceeds of any sales will be distributed to group members whose goods have not been accounted for up to an amount of three times the amount they were loaned under the Pawn Contract (this figure having been calculated based on an approximation of the average value of goods relative to the loaned amount); and

(h)    the scheme administrator will keep the Court informed of the progress of the implementation of the scheme.

56    It is contemplated that the Applicant’s solicitors (the Consumer Action Law Centre) would be appointed the administrator of the scheme, would bear the cost of executing the scheme at the first instance, and would in large part rely upon its own employees to implement it. Mr Rutten’s affidavit states that the Consumer Action Law Centre is “continuing to explore options” for a third party to take some or all of its responsibilities as administrator. The scheme permits the Court to appoint a third party.

57    Doubts have been expressed about the appropriateness of appointing solicitors to act as scheme administrators. A brief history of those concerns was set out in Gill v Ethicon Sarl (No 10) [2023] FCA 228 at [10]-[12] (Lee J). However, in this instance, there is no question that appointment of the Consumer Action Law Centre as scheme administrator is the most efficient manner in which to manage the return of goods. Because the scheme does not involve distribution of a settlement sum, it is contemplated that the cost of the scheme will be borne by the Respondent.

58    There are features of the proposed scheme that are worth particular emphasis:

(1)    Insurance: The administrator of the scheme would take out insurance over the goods, the cost of which would be borne, at first instance, by the Consumer Action Law Centre.

(2)    Immunity: The proposed scheme confers immunity on the administrator (see Rowe v Ausnet Electricity Services Pty Ltd [2015] VSC 232 at [34] (Emerton J)). Given the risks to the administrator in dealing with the goods, this appears appropriate.

(3)    Costs: The costs of the scheme are to be borne by the Respondent. That is appropriate in circumstances where the Respondent has been unsuccessful in the part of the proceedings that has been determined by default, and this scheme arises directly from those matters.

59    There are certain aspects of the proposed scheme that I do not consider appropriate as presently proposed. Those aspects are:

(1)    Notification to group members: The scheme contemplates that the administrator will send a text message to those who have been identified as being owners of Pawned Goods, to state either (a) that their Pawned Goods have been identified and may be collected, (b) that their Pawned Goods have not been identified, or (c) that some of their Pawned Goods have, and others have not, been identified. Group members for whom Pawned Goods have been identified, who respond and seek to collect their goods, will be asked to provide proof of identity to collect the goods.

It is contemplated that the group members must collect their goods within 6 weeks of notification. In the history of this matter, there has been evidence of difficulty of communication with some group members, including the difficulty that necessitated the change in the representative applicant. I am therefore concerned that group members are given only six weeks to collect their goods. I propose to increase the period of time to eight weeks to ensure that group members have the opportunity to receive communications and respond to them. I also consider that a follow-up communication should be sent four weeks after the initial correspondence, to group members who have not responded.

(2)    Treatment of non-Pawned Goods: There is a risk that the shipping containers will contain intermingled Pawned Goods and non-Pawned Goods, including goods that were pawned outside the Relevant Period. At present the evidence suggests that the goods held by the former landlord are only Pawned Goods, but it is impossible to verify this at this stage. The scheme provides for such goods to be sold. I do not see the basis for that sale. Such goods are not the subject of a declaration as to their ownership, and there is no basis for the step to be taken without first seeking to identify the owners of such goods through reasonable inquiries. I will therefore require the scheme to be amended to require those reasonable inquiries to be made. Once those steps are taken, the Applicant may apply for a declaration in relation to the goods based on the outcome of those inquiries.

(3)    Return of funds to group members whose goods are missing: The proposed scheme contemplates the return of funds to group members whose Pawned Goods are missing, from the sale of goods, which the Applicant’s submissions state would be “in satisfaction of damages that Taylors would otherwise be liable for (since missing goods give rise to a claim for conversion…”. A payment of that kind is premature and appears to relate to a claim for conversion that is not the subject of the present application and has not been pleaded. At present, the Court has determined it is appropriate for default judgment to be entered on the basis of the abandonment of the goods. Remedies arising from a foreshadowed or potential further cause of action based on conversion cannot be entered by their inclusion in a scheme without pleading, proof or process. Orders of that kind are not appropriate, nor is a provision in the scheme that:

Any payments do not prejudice the Applicant from seeking further relief on behalf of such Group Members.

It is not clear who is to be bound by notation of that kind. It has not been specifically drawn to the Court’s attention. It is not appropriate in light of the failure to plead an entitlement to damages by way of the default judgment process.

Accordingly, any funds realised by the administrator must be held on trust and subject to further order of the Court.

Amendments to the proposed scheme

60    Because of the concerns that I have expressed in relation to the realisation of any funds following the sale of goods, and other matters, I am not willing to approve the scheme in its present form. However, I consider that the scheme is broadly appropriate and would be prepared to approve it subject to the following amendments:

(1)    Group members must be granted at least eight weeks from the time of notification to claim their goods, and communication must be sent four weeks after that first communication to group members who have not yet responded.

(2)    Any funds from the sale of goods must be held on trust by the administrator and not distributed until further order and until the basis for such an order has been made clear.

(3)    In relation to any goods identified which are not Pawned Goods, all reasonable steps must be taken to identify the owners of those goods before the administrator may apply for a declaration in respect of those goods.

(4)    Processes for the provision of information by the Respondent and an appointment of the Applicant’s solicitors as power of attorney for the purpose of accessing the Respondent’s information technology systems extend significantly beyond other orders sought (as explained at [67] below). I am not willing to approve the scheme with such a broad provision. I have instead considered the “ancillary orders” about access to information already sought (discussed below). Because I will make those orders, I do not consider that the parts of the scheme which deal with the same subject matter are appropriate.

61    I will order that the Applicant file a revised scheme addressing these matters. Substantive orders (including a declaration) can only be made after the scheme has been assessed as appropriate by the Court. That is because once possession passes pursuant to the declaration that the Pawned Goods have been abandoned, they will arguably no longer be ‘Pawned Goods’ within the meaning of the injunction.

OTHER ORDERS SOUGHT

Ancillary orders

62    Following the hearing of the partial default judgment application, I sought confirmation that no possessory claim was made by the person with current possession of the Pawned Goods, being the landlord. For that reason, I gave leave to file a further affidavit.

63    At the end of the hearing of the default judgment application, and without prior notice, the Applicant sought further orders (styled as “ancillary orders”) to facilitate access to the Pawned Goods. The terms of those orders were not clear to me, and so I asked for submissions identifying with precision the orders sought, and the basis for such orders.

64    On 31 July 2025, submissions were filed along with an affidavit of Lucas Rutten, seeking the following “supplemental orders”:

1.    By [a date determined by the Court], the Respondent provide to the Applicant’s solicitors the opening instructions and combination to any safes or security boxes containing any of the Pawned Goods.

2.    By [a date determined by the Court], the Respondent provide to the Applicant’s solicitors the names and corresponding pawn ticket numbers of each Group Member.

65    The Applicant also sought a lump sum costs order, with the basis for that order being explained in the affidavit accompanying the 31 July 2025 submissions. This is considered at [71]ff below.

66    Orders of this kind are said by the Applicant to be supplemental in the sense explained in Remington Products Australia Pty Ltd v Energizer Australia Pty Ltd [2008] FCAFC 47; 246 ALR 113 (Remington) at [18]-[19] (Tamberlin, Jacobson and Edmonds JJ). Sections 22 and 23 of the FCA Act are said to be the sources of power for the Court to make such orders.

67    The scheme now provides for the same process to be carried out. The apparent duplication in orders sought has not been explained. The orders sought in the proposed scheme are broader than those initially sought in that they provide that, in the absence of compliance with the orders identified in paragraph [64] above, the administrator be appointed attorney for the Respondent and be authorised to make all enquiries with the operator of the software previously used by the Respondent. That is a significant order that is being sought without notice and as part of a process after the close of the hearing. I am not satisfied that this order is appropriate, and I decline to make it.

68    The affidavit of Lucas Rutten filed on 31 July 2025 sets out the attempts that have been made to obtain the passcode to the safe. It is clear on the face of the materials that the Respondent has not voluntarily provided the combination. An order requiring the Respondent to provide instructions for opening the safe and any combinations, and information about the names and corresponding pawn ticket numbers for each group members are orders which the Court has power to make if the Court considers that they are “reasonably required or legally ancillary to the accomplishment” of the principal relief granted (Remington at [19], citing Pelechowski v Registrar, Court of Appeal (NSW) [1999] HCA 19; 198 CLR 435 at [51] (Gaudron, Gummow and Callinan JJ)).

69    The evident purpose of the declaration sought is to clarify ownership of the Pawned Goods. If, upon receiving that clarification, it is not possible to act upon it, then there is a risk that the Court’s order will be inutile. Moreover, even if the orders were effective in a legal sense, they may lack practical application. In the circumstances, including the long history of this matter, I consider it appropriate to order that the Respondent provide the safe combination, and the names and corresponding pawn ticket numbers of each group member. It should be noted that the order is directed against the Respondent and that no order has been sought in relation to any individual. I will make the orders sought by the Applicant to ensure that the orders of the Court (and the scheme approved by the Court) can be adhered to.

Lump sum costs

70    The Applicant also sought a lump sum costs order in respect of this application. The basis for that order was set out in Lucas Rutten’s affidavit filed on 31 July 2025. The costs sought are:

71    The solicitor’s fees have been itemised consistently with the scale of costs set out in Schedule 3 to the Rules.

72    The amounts are connected with the Possession Claim only, which include the costs of amending the pleading to include that claim, and the costs of the application for orders in default.

73    No amounts for “care, skill and responsibility” have been claimed.

74    The Court’s Costs Practice Note (GPN-COSTS) at [4.1] makes clear that:

The Court's preference, wherever it is practicable and appropriate to do so, is for the making of a lump-sum costs order.

75    The amounts sought are self-evidently reasonable in the complex legal and factual circumstances of this application. However, in circumstances where the Respondent has not had the opportunity to be heard in relation to those issues, it is appropriate that any order that I make is subject to consideration of any contrary submission by the Respondent.

76    I am therefore prepared to make the supplementary orders and costs orders on the basis that they will take effect only after 21 days. If, within 21 days, I receive a submission from the Respondent in respect of those orders, then they will not come into effect unless and until I make a further order after considering the submissions of the Respondent. An order to this effect will be made upon approval of the scheme.

CONCLUSION

77    For the foregoing reasons, I will make no order until the scheme has been revised in accordance with these reasons. I will order that a revised scheme be filed within seven days of the date of these reasons. Following approval of the scheme by the Court, and for the reasons set out above, orders may be made to the following effect:

(a)    that there be a declaration in the form sought by the Applicant;

(b)    that default judgment be entered in respect of the Possession Claim;

(c)    that the injunction of 9 November 2023 be discharged insofar as it applies to a Pawned Good upon the passing of possession of that good to the Applicant or a group member;

(d)    to approve a scheme in a form similar to that already provided to the Court, subject to amendment consistent with my comments at [60] above;

(e)    that there be the ancillary orders identified in [64] above; and

(f)    that there be a lump sum costs order, subject to a 21-day period to receive any submissions from the Respondent as to the appropriateness of making the order, or the quantum of that order.

78    The balance of the proceeding will remain on foot.

Associate:

Dated:    15 September 2025