Wealth Trail Pty Ltd (in liq) v Del Vecchio

This case began with alleged misconduct by a person who sat inside the applicants' business structure in more than one capacity. Anthony Del Vecchio had been employed within the Freedom Finance group and was also an authorised representative of Wealth Trail, an AFSL holder. According to the pleaded case described by the Court, he purported to act for the applicants and obtained money from third parties on the false basis that the funds would be used to acquire investments.

The applicants alleged that substantial amounts obtained in that way were instead used to feed Del Vecchio's gambling habit, and that this happened without their knowledge or approval. The third parties from whom money was obtained were referred to as Associates. The commercial problem for the applicants was not limited to the original conduct. Once it came to light, claims and complaints began to emerge from affected people, and the applicants said those claims exposed them to liabilities and legal costs that were still developing.

That wider fallout is what made the case commercially significant. The reasons refer to claims raised by correspondence, complaints to AFCA, a County Court of Victoria proceeding, Supreme Court of Victoria litigation involving related parties, and the possibility of further claims. By the time the Federal Court dealt with the default judgment application, both applicant companies were in liquidation and their total loss was still uncertain.

The proceeding was commenced on 29 December 2023. The applicants' claims were later set out in an amended statement of claim dated 4 April 2025. Before the proceeding itself, ex parte freezing orders had already been obtained against Del Vecchio. The reasons also record that he later pleaded guilty to 24 counts of obtaining a financial advantage by deception and, on 16 April 2025, was sentenced to imprisonment.

The path to default judgment was not simply a matter of non-participation. The Court carefully recorded the procedural steps. On 6 February 2025, Del Vecchio was ordered by consent to file and serve his defence by 24 March 2025. No defence was filed. He then did not appear at a case management hearing on 4 April 2025, and the Court again ordered that he file and serve a defence, this time to the amended statement of claim, by 2 May 2025. Again, no defence was filed.

There was then a practical service issue because Del Vecchio was in jail and had not received the amended statement of claim when it was sent to the email address he had nominated for service after becoming self-represented. The Court addressed that by ordering service through prison authorities and requiring him to confirm whether he intended to defend the case. On 3 July 2025, he advised by email via prison authorities that he did not intend to file a defence. The Court treated that against the background of the earlier missed deadlines and held that he was in default for the purposes of the Federal Court Rules.

This procedural history mattered. Default judgment is not automatic. The Court emphasised that the power is discretionary and should be exercised cautiously. But once the respondent was in default, the applicants were entitled to seek judgment of the kind permitted by the Rules.

The central issue was procedural, but with real commercial consequences. The Court had to decide whether, after the respondent failed to file a defence, it should enter judgment and, if so, what form that judgment should take. The unusual feature was that the applicants did not ask the Court to fix damages immediately. Instead, they sought judgment for damages and/or equitable compensation to be assessed later.

That request departed from the usual preference for finality and a once-and-for-all assessment of damages when a proceeding is determined. The applicants said they could not presently know the full extent of their loss because their exposure depended on third-party claims by Associates, legal costs in defending or assessing those claims, and the possibility of future claims by other persons. The reasons also refer to the applicants' insurers and to the fact that the companies were in liquidation, which added to the practical complexity.

The Court therefore had to consider two linked questions. First, did the pleaded facts, taken as admitted because no defence had been filed, entitle the applicants to relief for breach of contract and/or breach of fiduciary duty? Second, was it appropriate to defer the assessment of damages or equitable compensation rather than forcing an immediate estimate?

The reasons show that the Court considered authorities dealing with exceptions to the usual once-and-for-all approach. The applicants relied on cases recognising that where a plaintiff's loss depends on actual or potential liabilities to third parties, it may be appropriate to defer dealing with that head of damage until the extent of the plaintiff's liability is clearer. The Court also referred to the importance of finality in litigation and the need to avoid leaving matters entirely at large.

Button J held that the Court's power to enter default judgment had been enlivened because Del Vecchio was in default. The Court repeated the established position that where no defence is filed, the facts pleaded in the statement of claim may be treated as admitted for the purpose of the application. The Court was satisfied that those pleaded facts entitled the applicants to damages for breach of contract and/or equitable compensation for breach of fiduciary duty.

The Court also accepted that the amount could not yet be quantified on the pleaded facts and evidence before it. The reasons state that neither the pleaded facts nor the evidence allowed the sum of damages or equitable compensation to be quantified at that stage. Rather than refusing relief or forcing an artificial estimate, the Court entered judgment against the respondent for damages and/or equitable compensation to be assessed within 12 months of the orders.

Importantly, the Court did not leave the issue open-ended. It granted leave for the applicants to apply for an extension of that 12 month period, but only with supporting affidavit evidence. That is a practical control on delay. It recognises that some losses crystallise over time, while still requiring the applicants to come back with proper material if they need more time.

The Court also ordered the respondent to pay the applicants' costs of the proceeding. The published orders clearly show those outcomes. The catchwords also indicate that the Court considered whether a permanent injunction should be granted and whether freezing orders should continue pending assessment, but the published reasons available here do not fully show the final reasoning on those aspects, so they should be treated cautiously.

The most useful part of this decision for many businesses is the Court's treatment of timing. In ordinary litigation, courts usually prefer to assess damages once and for all. That promotes finality. But the reasons recognise that there are situations where that approach does not fit the commercial reality.

Here, the applicants said their loss depended on whether Associates obtained leave to proceed against companies in liquidation, whether those Associates established losses arising from Del Vecchio's conduct, what liabilities the applicants would ultimately bear, and what legal costs would be incurred in defending or assessing those claims. The reasons also refer to insurance, including a professional indemnity policy with a $300,000 excess per claim, which meant some claims under that threshold might not be indemnified. That is a concrete example of why loss may not be straightforward to calculate at an early stage.

The Court referred to authorities discussing circumstances in which assessment of some heads of damage can be deferred. The applicants relied on those authorities to argue that where a plaintiff seeks relief in respect of potential liabilities to third parties, the appropriate course will often be to defer dealing with that head of damage until the extent of the liability has been established. The Court accepted that this was a case where immediate quantification was not possible on the material before it.

For businesses, the practical message is not that damages can always be postponed. The Court still stressed caution, finality and the need for proper boundaries. But where the real loss depends on a rolling set of customer claims, ombudsman outcomes, settlements, defence costs and future proceedings, the Court may allow liability to be determined first and quantum later. That can be especially important where forcing a final number too early would understate the business's exposure or require guesswork.

The pleaded case in this matter drew on several different kinds of business records and relationships. The reasons refer to an employment contract, the transfer of employment on the same terms, acknowledgements given by Del Vecchio in becoming an entrusted person with Wealth Trail, and pleaded fiduciary duties. They also refer to the events by which Associates transferred funds, the complaints and proceedings that followed, and the legal and insurance consequences for the applicants.

That mix is a reminder that recovery claims after internal misconduct are rarely built on one document alone. Businesses often need to piece together authority structures, employment terms, client communications, payment pathways, branding use, complaint records, insurer correspondence and related litigation. If the business later needs to explain why its loss is still unfolding, those records become even more important.

The relief sought by the applicants also shows the kinds of conduct businesses may want to restrain when a relationship breaks down. The interlocutory application sought permanent restraints on dealings or communications with current or former clients, soliciting clients to transfer money, using company letterhead or branding, representing authority to provide financial advice or sell investment products, and assisting others to do those things. Even though the published reasons available here do not fully show the final outcome on those requests, they illustrate the practical risk areas that can arise after alleged misconduct by a former insider.

Business owners should read this case as a reminder that litigation strategy may need to match the way loss actually develops. If a staff member, representative or contractor appears to have acted on the business's behalf without authority, the first wave of damage may be reputational and operational. The second wave may be legal and financial, through customer claims, ombudsman complaints, court proceedings, settlements and insurer involvement. Those later consequences may take months or years to settle.

This decision shows that a court can respond to that reality by entering judgment on liability first and leaving damages or equitable compensation to be assessed later. But that outcome depends on careful pleading and a clear explanation of why the amount cannot yet be fixed. It is not a shortcut around proof. The applicants still had to plead the contractual and fiduciary duties, the unauthorised conduct, the claims already made, and the categories of loss they had suffered or would suffer.

There is also a governance point. Both applicant companies were in liquidation, and the reasons note that the liquidator had consented to the proceeding being pursued, while the proceeding appeared to be conducted on instructions given by the applicants' insurers. Businesses in distress, or businesses with insurance responding to claims, should expect recovery proceedings to involve multiple stakeholders. That makes early coordination important.

Finally, this is not a case about unfair contract terms. Its value lies in what it says about default judgment, admitted pleadings, third-party exposure and the timing of damages assessment where the commercial consequences of wrongdoing are still unfolding.

Can a business sue before every customer claim is finalised? Sometimes, yes. This case shows that a court may enter judgment on liability and leave damages or equitable compensation to be assessed later where the loss depends on third-party claims that are still unfolding.

Does liquidation stop a company from pursuing recovery? Not necessarily. Here, both applicants were in liquidation, and the reasons record that the liquidator consented to the proceeding being pursued.

What if insurance is involved? Insurance can affect the practical picture, especially where there are excesses, settlement discussions or questions about which claims are covered. The reasons refer to insurer involvement and a professional indemnity excess.

What if the wrongdoer is in prison or does not engage? The Court still looks carefully at service and procedural fairness. In this case, the Court dealt with service through prison authorities before proceeding to default judgment.

Is this authority for delaying damages in every case? No. The Court recognised the usual importance of finality. The decision is useful where loss genuinely depends on unresolved third-party liabilities and immediate quantification is not possible on the material available.

Did the Court finally decide the injunction and freezing order issues? The catchwords show those issues were considered, but the published reasons available here do not fully show the final reasoning on them, so they should be checked carefully if they matter to your situation.

The judgment was delivered on 20 August 2025 by Button J in the Federal Court of Australia. The proceeding had been commenced on 29 December 2023. The amended statement of claim was dated 4 April 2025. Del Vecchio was sentenced in related criminal proceedings on 16 April 2025. Wealth Trail entered liquidation on 30 April 2025 and Freedom Finance Australia Wealth Pty Ltd entered liquidation on 2 May 2025.

The Court's orders entered judgment for damages and/or equitable compensation to be assessed within 12 months of 20 August 2025, with leave to apply for an extension supported by affidavit evidence. The published reasons clearly support that procedural outcome.