Federal Court of Australia

Qi, in the matter of S&Q Group Pty Ltd (No 2) [2026] FCA 664

ORDERS

THE COURT ORDERS THAT:

1.    The interlocutory process filed by the first, second and third cross-respondents (the cross-respondents) on 27 February 2026 be dismissed.

2.    The cross-respondents pay the cross-claimants’ costs of the interlocutory process as agreed or assessed.

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

REASONS FOR JUDGMENT

KENNETT J:

1    On 13 February 2026 I gave judgment for the cross-claimants (S&Q Group Pty Limited and S&Q Asset Pty Limited and S&Q Asset Management Pty Ltd, together the S&Q Companies) on a cross-claim against David Wei and two entities of which he is a director (referred to in these reasons as ANC and Gongwei). I will refer to Mr Wei, ANC and Gongwei collectively as the cross-respondents.

2    Judgment was given under r 5.23 of the Federal Court Rules 2011 (Cth) (the Rules) for reasons which are set out in Qi, in the matter of S&Q Group Pty Ltd [2026] FCA 85 (the default judgment).

3    The cross-respondents filed an interlocutory process on 27 February 2026 seeking orders that the default judgment be set aside, they pay the cross-claimants’ costs thrown away and they have leave to file a defence in the form annexed to the interlocutory process. The setting aside of the default judgment is sought under r 39.04 of the Rules. Rule 39.04(1) provides in general terms that the Court may vary or set aside a judgment or order before it has been entered. Rule 39.04(2) provides that, if an application to set aside a judgment or order is made within 14 days after it was entered, the Court may determine that application as if the judgment or order had not been entered.

4    In Ashby v Slipper (No 2) [2014] FCAFC 67 at [13]-[15] (Ashby), the Full Court (Mansfield, Siopis and Gilmour JJ) summarised the proper approach to an application under r 39.04 in the following way.

The exercise of the discretion to vary or set aside orders, including under r 39.04 FCR, is a power to be used only sparingly, with great caution and rarely, having regard to the public interest in the finality of litigation.

The discretion is exercised to cure injustice, particularly where it would otherwise be irremediable. Grounds upon which a variation can be made are varied. They include error, oversight, a misapprehension of the law, or a decision given in ignorance or forgetfulness of a statutory provision.

As Kenny J stated in Inspector-General in Bankruptcy v Bradshaw [2006] FCA 22 at [24]: “[i]n every case the overriding principle to be applied is whether the interests of justice are better served by allowing or rejecting the application for leave to re-open”.

(Citations omitted.)

5    One feature of the circumstances in which the default judgment came to be pronounced was that, at the time the application seeking that relief was filed and heard, neither ANC nor Gongwei was legally represented. Solicitors had been on the record for Gongwei between 7 August and 16 September 2025. ANC had at no stage been represented or filed a notice of address for service. Neither company had sought dispensation from the usual rule requiring a corporation to be represented by a legal practitioner. Technically, therefore, the default judgment was given in their absence and r 39.05(a) therefore provides an additional source of power to set it aside. A party who has suffered an adverse judgment given in its absence may, if there is a proper explanation for that absence and an arguable case on the merits, have a strong claim to have that judgment set aside. In Amirbeaggi as trustee of the bankrupt estate of John Mamdouh Hanna v Kamel (No 3) [2020] FCA 1202, the circumstances of the case led Yates J to set aside a default judgment even though the explanation for party’s absence was not adequate.

6    However, here, ANC and Gongwei were absent because they were not legally represented. They were not ignorant of the application for default judgment in that their director, Mr Wei, was also a party and was present at the hearing. Mr Wei is also the only witness for the cross-respondents on the present application and has not sought to give any separate explanation for the lack of engagement with the proceeding by ANC and Gongwei. Their non-appearance should therefore be understood to be an aspect of Mr Wei’s inadequate engagement with the proceeding. To the extent that there is a difference between the principles applicable to rr 39.04(2) and 39.05(a), therefore, I consider that it is the former that should be applied here.

7    The cross-respondents do not point to any error or misconception in the default judgment. Nor do they submit that the earlier procedural orders with which they had failed to comply involved any lack of procedural fairness. They therefore face a difficult task in seeking the exercise of a discretion which is to be exercised “with great caution” and “to cure injustice”. The default judgment was not premised on any view one way or another as to whether there was an arguable defence on the cross-claim and thus proceeded on the assumption that it was possible that such a defence existed; and it was delivered in the knowledge that, if not set aside, it would bring the cross-claim to a conclusion (save for the assessment of damages) and would in that sense cause irremediable prejudice to the cross-respondents. To conclude that the interests of justice require the default judgment to be set aside therefore requires something powerful, such as a compelling explanation for the default or a powerful case on the merits that was not before the Court when the default judgment was pronounced.

8    Mr Wei affirmed three affidavits on the present application. The first of these, dated 27 February 2026, dealt with his failures to adhere to court orders. He deposed as follows.

(a)    Initially he had some assistance in connection with the proceeding from solicitors retained by his wife (Dong Chen) and her accounting firm (Australia United Genuine Ethic Accounting Pty Ltd), which were parties to the proceeding, but this arrangement had to be discontinued due to potential conflicts arising and his wife and her firm ceasing to be parties.

(b)    In 2025 he was under significant financial pressure and did not have the financial resources to retain lawyers. He explained that from March 2024 to October 2025 he was enrolled as a full time student in a diploma course and none of the companies he operated were generating substantial income.

(c)    During that time, he was also facing “significant psychological stress arising from financial difficulties and the ongoing litigation”. This caused him “serious family issues, including disputes and emotional distress” between him and his wife.

(d)    He engaged a firm of solicitors to act for him in the proceeding in October 2025. That firm filed a notice of acting in the proceeding on 6 November 2025. He became frustrated with that firm and it filed a notice of intention to cease to act for him on 23 January 2026. On the same day, he approached another solicitor whom he had previously instructed in other matters on behalf of the cross-claimants (and who therefore had a potential conflict of interest), but that solicitor was unable to act for him because of the conflict. He had a preliminary discussion with his current solicitors on 30 January 2026 and retained them on 2 February 2026, two days before the hearing of the application for default judgment.

9    I am prepared to accept that Mr Wei had limited financial resources up to around October 2025 but infer that this was at least in part a result of his decision to continue in full time study rather than seek paid work in order to fund the litigation in which he was involved. He is by his own description an Australian Fellow Certified Practising Accountant with over 20 years of business experience, and may be assumed to have some earning capacity. He is also married to Ms Chen, who apparently runs an accounting firm. I also accept that being involved in the litigation as a self-represented litigant was stressful. However, that is far from unusual, and Mr Wei provides no detail as to how this affected him. For example, he does not assert that he required or received any medical attention for the stress that he was enduring. According to his evidence, that stress did not prevent him from commencing proceedings against the cross-claimants in the District Court of New South Wales on 8 April 2025 and maintaining them until 21 November 2025 (when they were discontinued, according to Mr Wei, because he intended to bring the same claims in the present proceeding).

10    As recounted in the reasons for the default judgment, the cross-claim was filed on 5 June 2025. Orders were made by consent extending the time for Mr Wei and Gongwei to file their defences on 22 August 2025 and the date for Mr Wei’s defence was further extended on 10 September 2025 and 2 October 2025. The last of these extensions was to 16 October 2025 and it was the failure to comply with this deadline (together, one assumes, with the lack of any response by ANC and Gongwei) that led to the filing of the application for default judgment on 5 November 2025. Mr Wei’s former solicitors apparently commenced acting for him some time in October 2025 and came on to the record on 6 November 2025. From around this time, therefore, Mr Wei was no longer representing himself and the circumstances referred to in the previous paragraph ceased to explain his failure to file a defence.

11    Mr Wei’s engagement with legal practitioners after October 2025 was noted in the default judgment (see at [17], [20]) and it was observed that he might not have been well served by the lawyers acting for him (at [29(b)]). The extent to which he had been let down by legal representatives, however, was not explored in any detail or supported by evidence other than Mr Wei’s assertions. The evidence on the present application does not take the point much further.

12    Mr Wei’s second and third affidavits on the present application were directed to the substantive merits of the cross-claim. Counsel for the cross-respondents did not put this point any higher than to say that there was evidence showing on a prima facie basis that the cross-respondents had “an arguable defence to the Cross-Claim”. Counsel for the cross-claimants accepted that there was an arguable defence to one aspect of the cross-claim. However, an arguable defence is no more than a starting point in the present circumstances. As noted above, the default judgment was not based on a perception that there was no arguable defence to the cross-claim. To justify the setting aside of the default judgment, it would be necessary for the cross-respondents to demonstrate something more: for example, that there was a complete answer to the cross-claim that had not been brought to the Court’s attention. In these circumstances, I have not found it necessary to recount the evidence and the submissions that were put concerning the strength of the cross-respondents’ substantive defence.

13    Recalling the language used in Ashby, the cross-respondents have therefore not demonstrated the existence of any “injustice” arising out of the default judgment that requires curing. The application to set aside the default judgment will therefore be refused with costs.

Associate:

Dated:    28 May 2026

SCHEDULE OF PARTIES