Hall v Hemant Investments Pty Ltd (No 2) [2026] FCA 122

This case came out of an alleged private funding arrangement linked to a Queensland property development. Anthony and Anne Hall said they were encouraged to loan money to Hemant Investments Pty Ltd after discussions with Gerald Gavi, who they alleged was their former accountant and a director of the company.

The pleaded story was commercially straightforward but legally risky. Mr Gavi was said to have told the Halls that Hemant Investments owned land at Collingwood Park, that the land was being developed, and that they should invest in that development by loaning money to the company. The alleged promises were specific: repayment within 12 months, capitalised interest of 20%, and if repayment did not happen within that period, an allotment in the land equivalent to the amount of the loan and interest.

The Halls alleged that they relied on those statements, entered into a loan agreement on or about 13 September 2019, and advanced $300,000 on 16 September 2019. They then said the money was not repaid despite demand. Their claim against Mr Gavi was put in two ways under the Australian Consumer Law: first, misleading or deceptive conduct, and second, unconscionable conduct in the alternative.

The broader proceeding involved other respondents as well. Hemant Investments and Kent Byron Lange were also sued, but the claims against them were stayed by consent pending a Queensland Supreme Court proceeding. That meant this Federal Court decision was not a final determination of the whole commercial dispute. It was a decision about whether default judgment should be entered against Mr Gavi on the case pleaded against him.

The proceeding was commenced on 20 December 2024. Personal service on Mr Gavi was not practicable, so there was an interlocutory application for deemed service of the originating documents and substituted service of later documents. Those orders were made on 26 June 2025 in an earlier decision.

The Court recorded that, in accordance with the substituted service orders, Mr Gavi was served with the default judgment application and the supporting material. He was also notified that the application would be heard on 4 February 2026.

Despite that, the Court found that Mr Gavi had not properly participated in the proceeding. Other than sending the Court emails on 2 and 26 June 2025, he did not file a notice of address for service, did not file a defence to the statement of claim and did not appear at any hearing, including the default judgment hearing.

Those failures mattered because the Federal Court Rules treat a party as being in default if they fail to do required procedural acts or fail to defend the proceeding with due diligence. The Court held that Mr Gavi was plainly in default on both bases. It also drew the overwhelming inference that the defaults were deliberate and reflected a considered decision not to engage with the proceeding.

For business owners, the procedural lesson is simple. Once you are on notice of a Federal Court case, silence is not a strategy. If there is a service issue, raise it. If you need more time, seek it. If you dispute the claim, file the required documents and appear. Ignoring the matter can leave the Court deciding the case without your participation.

The Court had to deal with both a procedural question and a substantive one. Procedurally, it had to decide whether the discretion to enter default judgment under rule 5.23 of the Federal Court Rules 2011 (Cth) was enlivened. That required a finding that Mr Gavi was in default.

Substantively, the Court still had to be satisfied that the applicants were entitled to relief on the face of the statement of claim. In other words, default did not remove the need for the pleading to support the orders sought. The Court referred to authority explaining that the applicant does not need to prove the whole claim by evidence at this stage, but the Court must be satisfied that relief could be granted on the face of the pleading.

The pleaded ACL issues were these. First, whether the alleged representations about repayment within 12 months, 20% capitalised interest and an alternative allotment in land amounted to misleading or deceptive conduct under section 18. Second, whether the same conduct was unconscionable under sections 20 and 21, as pleaded in the alternative. The judgment also records that the applicants relied on section 4 of the ACL, alleging that the representations were with respect to future matters and that Mr Gavi did not have reasonable grounds for making them.

That future-matter point is commercially important. A statement about what will happen later is not automatically unlawful. But if a business makes a future-looking statement without reasonable grounds, that can create serious ACL risk. Promises about repayment dates, returns, refinancing, substitute assets or fallback arrangements are all examples of statements that should be backed by real facts, not optimism or sales pressure.

The Court entered judgment against Mr Gavi under rule 5.23(2)(d) for misleading and deceptive conduct, with damages to be assessed. It also made a declaration, expressly framed as being made upon admissions that Mr Gavi was taken to have made because of his non-compliance with the Federal Court Rules.

The declaration was specific. It stated that Mr Gavi engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, by representing that if the Halls loaned money to Hemant Investments, the money would be repaid within 12 months together with capitalised interest of 20%, and that if the company could not repay within 12 months, the Halls would receive an allotment in 7002 Woodlinks Way, Collingwood Park equivalent to the amount of the loaned money and interest.

Just as important is what the Court did not clearly do on the published material. The catchwords say the Court was only partially satisfied that the applicants were entitled to relief on the face of the statement of claim. The operative orders clearly grant relief for misleading or deceptive conduct under section 18. They do not clearly show a final grant of relief on the alternative unconscionable conduct claims. So the safest reading is that the Court scrutinised the pleading, did not simply grant all relief sought, and confined the orders to the misleading conduct case that it was satisfied was properly supported.

The Court also reserved the costs of the interlocutory application dated 1 October 2025. Damages were not quantified in this judgment. They were left to be assessed later.

There are two practical themes in this case. The first is about commercial communications. The alleged statements were not mass advertising. They were direct statements made in the context of an existing professional relationship and a proposed investment or loan into a development project. That is a reminder that ACL risk does not only arise from websites, brochures and formal campaigns. It can arise from conversations, meetings, emails and relationship-based recommendations.

The second theme is about future-looking promises. Businesses often speak confidently when raising funds or negotiating finance. But statements about what will happen later need a proper basis at the time they are made. If you say a loan will be repaid within a set period, that a particular return will be achieved, or that a substitute asset will be provided if things go wrong, you should be able to point to the facts that justified saying that. If you cannot, the statement may expose the business and the speaker personally to ACL claims.

This is especially important where roles overlap. The pleaded case said Mr Gavi was the Halls' former accountant and also represented himself as a director of the company seeking funds. When advisory relationships and fundraising roles blur together, the risk of reliance increases. Businesses should be careful about who speaks, what authority they have, and whether the factual basis for their statements has been checked.

The litigation side of the case is equally practical. If your business or one of its directors is sued, engage early. A court can infer that repeated non-compliance is deliberate. Once that happens, the respondent loses the chance to shape the factual and legal contest in the ordinary way. Even if the claimant still has to show that the pleading supports relief, that is a much weaker position than defending the case properly from the outset.

For many businesses, especially closely held companies and property ventures, capital is raised informally through existing networks. That can be commercially common, but it is legally fragile if the arrangement depends on oral assurances or relationship trust. A short written agreement is not enough on its own if the surrounding statements are inaccurate or unsupported, but proper documentation does reduce the scope for later disputes about what was promised.

Businesses should also think about internal approval processes. If a director, adviser or employee is discussing repayment timing, interest, security, land entitlements or fallback rights, there should be a clear process for checking whether those statements are accurate and supportable. If the business is relying on future sales, refinancing, development approvals or asset transfers to meet those promises, that should be documented and tested before statements are made externally.

Where a business uses trusted professional relationships to source funding, the legal risk can increase rather than decrease. A long-standing accountant, adviser or consultant may be seen as especially persuasive. That does not mean such relationships cannot be involved in commercial opportunities, but it does mean the business should be careful about conflicts, authority, disclosure and record keeping.

On the dispute side, this case shows that procedural conduct matters. The Court noted that Mr Gavi had sent two emails to the Court in June 2025, but that did not amount to proper participation. Businesses should not assume that informal contact with the Court replaces the need to file the documents required by the rules. If you are in litigation, procedural compliance is part of the defence strategy.

The key dates visible from the judgment are these. The proceeding was commenced on 20 December 2024. The statement of claim was treated as deemed served on 21 February 2025. Orders for deemed service of the originating documents and substituted service of later documents were made on 26 June 2025. By consent order made on 29 September 2025, the claims against Hemant Investments and Mr Lange were stayed pending determination of a Queensland Supreme Court proceeding. The default judgment application was heard on 4 February 2026, and judgment was delivered on 3 March 2026.

The present decision does not finally resolve the whole dispute. It gives default judgment against the second respondent for misleading and deceptive conduct and leaves damages to be assessed. It also does not finally determine the stayed claims against the other respondents.

This page reflects the published Federal Court judgment in Hall v Hemant Investments Pty Ltd (No 2) [2026] FCA 122 delivered on 3 March 2026. The published reasons clearly record the pleaded representations, the procedural defaults, the Court's finding that the second respondent was in default, and the orders entering judgment for misleading and deceptive conduct with damages to be assessed.

The published reasons available here are truncated. Because of that, the full reasoning on the alternative unconscionable conduct claims is not fully visible. The operative orders should therefore be read carefully: the clear public outcome is a declaration and default judgment limited to misleading or deceptive conduct against the second respondent.