Federal Court of Australia

Scott v Khouri, in the matter of Skycorp Construction Group Pty Ltd (in liq) [2026] FCA 636

ORDERS

THE COURT ORDERS THAT:

1.    Judgment be entered for the first plaintiffs against the second defendant as a debt due to the second plaintiff in the amount of $96,972.59 plus interest pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth) at the rate set out in para 2.2 of the Interest on Judgments Practice Note dated 18 September 2017.

2.    The second defendant pay the plaintiffs’ costs of the proceeding against the second defendant, including the costs of the interlocutory application dated 11 May 2026.

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

REASONS FOR JUDGMENT

Delivered ex tempore, revised from transcript

JACKMAN J:

1    By an interlocutory application filed on 11 May 2026, the plaintiffs seek orders for default judgment pursuant to r 5.23 the Federal Court Rules 2011 (Cth) (the Rules) against the second defendant, Mr Joseph Katrib. Mr Katrib was a director of Skycorp Construction Group Pty Ltd (in liq) (the Company) from 24 November 2022 until the Company was wound up. The first plaintiffs, Mr Honner and Mr Scott (the Liquidators) were appointed liquidators of the Company on 6 March 2024 (the date of liquidation). They have formed the view that Mr Katrib caused the Company to trade whilst insolvent in contravention of s 588G(2) of the Corporations Act 2001 (Cth) (the Act).

2    An ASIC search of the Company identifies Mr Katrib’s residential address as 3 Tara Street, Merrylands, NSW, 2160 (the Merrylands address). On 27 January 2026 a letter of demand was sent to Mr Katrib at the Merrylands address in respect of the Liquidators’ insolvent trading claim. The proceeding was commenced by originating process filed on 12 March 2026 (the Originating Process). On 16 March 2026, the originating process and the Liquidators’ supporting affidavit were personally served on Mr Katrib by a licensed process server. On 18 March 2026, Ms Rule notified Mr Katrib by SMS of the first case management hearing listed at 9.30 am on 26 March 2026, and that he was required to appear.

3    Mr Katrib failed to appear at the case management hearing on 26 March 2026. At that time I made orders requiring the filing and service of pleadings and evidence, including that the defendants file any defence by 23 April 2026. On 1 April 2026, the plaintiffs failed their statement of claim and served it (together with the Court’s orders made on 26 March 2026) on Mr Katrib by post at the Merrylands address. Mr Katrib failed to file and serve any defence in accordance with those orders.

4    On 1 May 2026, Ms Rule sent a further letter to Mr Katrib by Express Post to the Merrylands address placing him on notice that, absent a defence within seven days, an application for default judgment would be made (the Default letter). On 8 May 2026, a licensed process server attended the Merrylands address and left the Default letter with an adult occupant who undertook to provide it to Mr Katrib.

5    On 12 May 2026, Ms Rule served the interlocutory application seeking orders for a default judgment and the affidavit of Ms Rule affirmed 11 May 2026 by Express Post to the Merrylands address and notified Mr Katrib by SMS of the hearing listed for 21 May 2026.

6    Mr Katrib has failed to respond to any correspondence, including SMSs, or provide any indication that he intends to file any notice of appearance or otherwise participate in these proceedings. In those circumstances, the plaintiffs submit, and I accept, that Mr Katrib has been afforded ample opportunity to defend the proceeding, but has failed to do so.

7    Rule 5.23(2) of the Rules provides that if a respondent is in default, an applicant may apply to the Court for:

(c)    if the proceeding was started by an originating application supported by a statement of claim … 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 … to which the Court is satisfied that the applicant is entitled.

8    Pursuant to that subrule, the Court must be satisfied that the applicant is entitled to the relief claimed in the statement of claim. Justice Yates in Chamberlain Group, Inc v Giant Alarm System Co, Ltd (No 2) [2019] FCA 1606 at [13], [14] stated the following:

The power to give judgment against a defaulting party is undoubtedly discretionary. The discretion must be exercised cautiously. Where the defaulting party is a respondent to a pleaded claim, the giving of judgment for final relief on the application will deliver complete success to the applicant without investigation of the merits of the pleaded claim: ACOHS Pty Ltd v Ucorp Pty Ltd [2009] FCA 577 at [27]. There is no requirement that the act or acts of default be intentional or amount to contumelious conduct. There is no requirement that the act or acts of default result in inordinate or inexcusable delay. That said, such features, if present, will be relevant to the exercise of the Court’s discretion. So too will conduct that persuades the Court that the defaulting party is manifesting an inability or unwillingness to cooperate with the Court and the other party or parties to the proceeding.

Rule 5.23(2)(c) requires the Court to be satisfied that the applicant is entitled to the relief claimed in the statement of claim. This requirement has been interpreted as meaning that the Court must be satisfied that “on the face of the statement of claim” the applicant is entitled to the relief that is claimed. It is not a requirement that the applicant prove its claim by way of evidence. Put another way, the facts alleged in the statement of claim are taken to have been admitted: Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2007] FCAFC 146; 161 FCR 513 at [42]. If, on inspection of the statement of claim, the Court is satisfied that the applicant would be entitled to the relief sought then this requirement of r 5.23(2)(c) will be met: CNIP Pty Ltd v Chan & Naylor Norwest Pty Ltd (No 2) [2011] FCA 1170 at [18] – [19]; Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227 at [23]. The Court may permit further evidence to be adduced, but not evidence that would alter the pleaded case: Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2006] FCA 1427; 236 ALR 665 at [45], [48] – [50]; United Broadcasting International Pty Ltd v Turkplus Pty Ltd (No 2) [2010] FCA 1413 at [42] – [44]; Australian Competition and Consumer Commission v Yellow Page Marketing BV (No 2) [2011] FCA 352; 195 FCR 1 at [62] – [63].

9    The plaintiffs submit, and I accept, that the Court’s task on an application for default judgment is not to conduct a trial of the proceeding, but to determine whether the pleaded facts, if accepted, disclose a cause of action entitling the application to the relief sought.

10    The statement of claim pleads with sufficient particularity each element of the plaintiffs’ insolvent trading claim. In summary, it alleges that:

(a)    the Company was insolvent throughout the relevant period either by application of the presumption in s 588E(4) of the Act, or as a matter of fact;

(b)    Mr Katrib was a director of the Company at all material times from 24 November 2022 to the date of liquidation;

(c)    the Company incurred debts totalling $96,972.59 whilst it was insolvent during that period;

(d)    at the time the debts were incurred, there were reasonable grounds for suspecting the Company’s insolvency;

(e)    Mr Katrib was aware, or a reasonable person in his position would have been aware, of those grounds, and failed to prevent the Company from incurring those debts.

11    Those matters, taken as admitted, establish each element of liability under s 588G(2) of the Act and entitle the plaintiffs to the relief claimed. Further, the procedural history demonstrates sustained noncompliance and a failure by Mr Katrib to engage with the proceeding despite repeated notice. Accordingly, I make the above orders.

Associate:

Dated:    21 May 2026