EV20 Consulting Group Pty Ltd v Paperless Warehousing Pty Ltd

This was a Federal Court dispute about warehouse management software, software support services, and the fallout that can follow when former employees move into a competing or related business. EV20 sued first. Its claim alleged misrepresentation and wrongful threats of copyright infringement by Paperless in relation to certain computer programs or compilations of computer programs.

Paperless then filed a cross-claim that changed the shape of the case. The Court summarised Paperless' position as alleging that EV20 had been established by former Paperless employees and had gone on to provide software maintenance services for software developed and authored by Paperless. Paperless alleged copyright infringement, breach of confidentiality, breach of employment contracts, and breach of customer licence arrangements.

That commercial setting matters. Software disputes often involve more than a simple allegation that one party copied code. They can also involve customer support arrangements, access to source code, use of confidential know-how, former staff obligations, and whether a new provider is servicing software that belongs to someone else. This case sits squarely in that category.

The proceedings began on 2 March 2021. Paperless filed its cross-claim on 20 July 2021. The case then went through numerous interlocutory skirmishes, including several partially successful strike-out applications, before a Third Further Amended Statement of Cross-Claim was filed under orders made on 22 May 2024.

By late 2024, the key defaulting cross-respondents were no longer properly participating. Their solicitors had filed notices of ceasing to act. Rule 4.05(2) of the Federal Court Rules 2011 (Cth) required each affected party to file a notice of address for service within 5 days after the notice of ceasing to act was filed. None of the defaulting cross-respondents did so.

The judgment also records that EV20 was placed in receivership on 1 May 2024, that Paperless was not informed until 17 June 2024, that EV20 entered administration on 6 November 2024, and that the administration ceased on 11 December 2024. Even with that background, the Court did not treat the company as excused from engaging with the proceeding.

At a case management hearing on 31 October 2024, the Court directed Paperless to file its foreshadowed default application and supporting material by 7 November 2024, and submissions by 4 December 2024. The Court also ordered cross-respondents who had not filed an address for service, including the defaulting cross-respondents, to do so by 14 November 2024 and to file submissions in answer by 11 December 2024. The application was listed for hearing on 18 December 2024.

The Court was satisfied that the relevant parties had been served. EV20, Mr McKerrell and Mr Pearce were served with the application and supporting affidavits on 7 November 2024. Mr Symons was not served at that time due to an apparent oversight, but was later served by process server on 16 December 2024. All defaulting cross-respondents were served on 6 December 2024 with a further affidavit and Paperless' outline of submissions. None appeared at the hearing or filed submissions in answer.

The Court identified three issues. First, whether EV20's own claim should be dismissed under r 5.23(1)(b). Second, whether the cross-claim and the evidence relied on established the causes of action alleged for the purposes of r 5.23(2). Third, what form of orders should be made.

Rule 5.23 works differently depending on who is in default. Under r 5.23(1), if an applicant is in default, a respondent may seek an order that the proceeding be stayed or dismissed. Under r 5.23(2), if a respondent is in default, an applicant may seek judgment for the relief claimed to which the Court is satisfied the applicant is entitled, or judgment for damages to be assessed, or another order.

The Court restated several important principles about default judgment. The power is discretionary and should be exercised cautiously. The rules should be administered sensibly, recognising that some delays are unavoidable, but also recognising the serious consequences of dismissal or default judgment. A history of non-compliance showing an inability or unwillingness to cooperate with the Court and other parties can justify the exercise of the power.

Most importantly, the Court said r 5.23 does not require the applicant to prove the whole case in the same way it would at trial. Instead, the Court must be satisfied on the face of the pleading that the applicant is entitled to the relief claimed. Relief can be granted if it could be granted on the face of the pleading. The Court may also have regard to limited further evidence, but not evidence that would alter the case as pleaded.

In this matter, the Court also considered it appropriate to have regard to admissions made by the defaulting cross-respondents in their filed defences where those admissions elucidated or developed the case as pleaded. That is a useful practical point. Once pleadings and defences have been exchanged, the Court may look at the procedural history and the existing admissions when deciding whether default relief is justified.

The Court dismissed EV20's claim. Burley J noted that EV20 was the moving party on the originating application, had ceased to be represented by lawyers on 9 October 2024, had not filed an address for service as required, had not engaged with Paperless or the Court for more than 60 days, and did not attend the hearing. The Court accepted that communication difficulties may have arisen during receivership and administration, but still concluded that EV20 had demonstrated an inability or unwillingness to conduct its case. That was enough to establish default under r 5.23(1).

The Court therefore ordered that EV20's claim be dismissed and that EV20 pay the costs of the claim. Paperless had sought indemnity costs, but the Court refused that part of the request because no basis for indemnity costs had been put forward.

On the cross-claim, the Court granted default judgment only in part. Burley J concluded that default judgment should be entered against EV20 and Mr Symons in respect of copyright infringement and breach of confidential information, with appropriate orders to be made under r 5.23(2)(c) and r 5.23(2)(d). The Court said it would make no orders in relation to Mr McKerrell or Mr Pearce.

That distinction is important. Paperless had sought a wide range of relief against the defaulting cross-respondents, including declarations of direct infringement, authorisation, misuse of confidential information, breach of employment obligations, inducement of breach of contract, injunctions, an inquiry as to damages or an account of profits, delivery up or destruction, costs, and leave to seek costs against non-parties. The Court did not simply grant the whole package because the respondents were absent. The reasons indicate a more careful approach, especially where the pleadings were broad and the relief sought was extensive.

The orders section visible in the reasons states that Paperless was to provide draft short minutes of order in accordance with the reasons. That means the exact wording and scope of the final relief should be checked carefully in the entered orders before relying on the case for any precise proposition about declarations, injunctions or ancillary relief.

For software businesses, this case is a practical warning about both documents and conduct. On the documents side, ownership of software, source code, modules, updates and related confidential information should be clearly recorded. Customer licence terms should say what the customer can do, what third parties can do, and whether support by another provider is permitted. Employment contracts should deal properly with confidentiality and any post-employment restraints that are legally supportable.

On the conduct side, businesses should be careful when hiring former employees from a competitor and then offering support services to customers using software developed by that competitor. Even if the commercial opportunity looks straightforward, the legal position may involve copyright, confidential information, licence scope and accessorial liability issues all at once.

The chronology in the judgment also shows how restructures and asset movements can become relevant in litigation. The Court recorded matters including a deed of assignment of intellectual property, security interests, receivership, administration, incorporation of another company, and business name registrations linked to EV20 branding. None of those steps is necessarily improper on its own. But when they happen during active litigation about software rights, they can affect how the Court views the practical reality of the business and who may be carrying on the relevant operations.

There is also a clear litigation management lesson. If your business starts a proceeding, you must keep prosecuting it. If your lawyers cease to act, you must put a new address for service in place quickly. If you are served with a default application, silence is dangerous. The Court may dismiss your claim, enter judgment on a cross-claim, and make costs orders without a trial if your conduct shows an inability or unwillingness to continue.

Finally, if you are the party seeking default judgment, this case shows the value of disciplined pleadings. The Court may be willing to grant relief where the pleaded case is sufficiently specific and supported, but broad or loosely framed requests for declarations and injunctions may not succeed in full. Precision matters, even when the other side does not appear.

The judgment was delivered by Burley J on 8 April 2025 in the Federal Court of Australia. The hearing of the interlocutory application took place on 18 December 2024. The reasons state that Paperless was to provide draft short minutes of order by 15 April 2025 in accordance with the reasons.

Because the available reasons are incomplete, the safest reading is that the procedural outcome is clear, but the exact final form of relief should be checked against the entered orders. That is particularly important if you want to rely on the case for the wording or scope of declarations, injunctions, delivery up, destruction, damages inquiries, or any account of profits.