Rix Electrical Contracting Pty Ltd (in liquidation) v Aitchison, in the matter of Rix Electrical Contracting Pty Ltd [2026] FCA 566

This Federal Court decision arose out of the liquidation of Rix Electrical Contracting Pty Ltd, an electrical services business. Before liquidation, the company carried on domestic, commercial and industrial electrical work. Rick Aitchison was not just involved in the business, he was its sole shareholder, sole director and secretary.

After the company went into liquidation on 26 March 2025, the company and its liquidators sued Mr Aitchison. The claims were substantial. They included an insolvent trading claim, a claim concerning alleged unreasonable director-related transactions, and a separate alleged debt owed by him to the company. The amounts claimed were $424,378.75, $386,641.92 and $387,055.53 respectively.

But the court did not end up deciding whether those allegations were true. Instead, the parties settled the proceeding by signing a Deed of Settlement and Release on 30 January 2026. That deed required Mr Aitchison to pay $70,000 by 16 March 2026. If he paid, the parties would seek dismissal of the proceeding with no order as to costs. If he did not pay and failed to fix the default after notice, the deed gave the company and liquidators enforcement options.

That is what turned this from a large insolvency dispute into a much narrower enforcement case. Once the payment was missed, the practical question was no longer whether the original claims would succeed. It became whether the deed's default mechanism had been triggered and whether the company was entitled to judgment for the unpaid settlement amount.

The originating application was filed on 4 December 2025. According to the judgment, the plaintiffs relied on ss 588G, 588M and 588FF(1)(a) of the Corporations Act 2001 (Cth). The relief sought included an amount equal to debts allegedly incurred while the company was insolvent, an amount equal to payments allegedly made to Mr Aitchison that were said to be unreasonable director-related transactions, and a further amount said to be a debt owed by him to the company.

Commercially, that background matters for two reasons. First, it shows that the deed was a compromise of a much larger and more serious dispute. The settlement figure of $70,000 was far lower than the total amount claimed in the proceeding. Second, it explains why the deed was drafted with a detailed default regime. When parties settle a high-value dispute for a lower fixed amount, they often want certainty about what happens if the payment is not made.

The judgment also records that the deed was entered into without admission of liability. That is important. It means the settlement did not involve a court finding that Mr Aitchison had engaged in insolvent trading or received unreasonable director-related transactions. The compromise simply resolved the proceeding on agreed terms, subject to performance of the payment obligation.

The deed contained several practical features that drove the outcome.

First, it was conditional on approval under s 477(2A) of the Corporations Act by 17 February 2026. The judgment records that creditors approved the liquidators and the company entering into the deed on 10 February 2026, so the condition was satisfied.

Second, the deed set a clear payment obligation. Mr Aitchison had to pay $70,000 to the company by 16 March 2026.

Third, the deed set out what would happen on default. If payment was not made and the default remained unremedied for 7 days after written notice, the unpaid amount became immediately due and payable as the Default Sum. At that point, the company and liquidators could choose between two paths. They could elect to reinstate and prosecute the original claims in the proceeding, or they could proceed to recover the Default Sum and apply for summary judgment.

Fourth, the deed included admissions designed to support enforcement. For the purpose of obtaining summary judgment, Mr Aitchison agreed and admitted that the Default Sum would be a debt due and payable to the company and that he had no defence to a claim for it. The deed also said it could be produced to the court as evidence of his irrevocable consent to such judgment, and that an affidavit from the liquidators' solicitors would be sufficient evidence of default, service of the default notice and the amount payable.

Those clauses are commercially significant. They reduce the room for later argument about whether the claimant must re-prove the whole background dispute. Instead, the focus shifts to whether the deed exists, whether the payment date passed, whether notice was given, and whether the default was remedied in time.

Mr Aitchison did not pay the settlement sum on 16 March 2026. On 17 March 2026, the liquidators' solicitor gave written notice of default and demanded that the default be remedied within 7 days. The default was not remedied by 24 March 2026, and by the hearing date on 7 May 2026 no part of the settlement sum had been paid.

There was also a procedural change in the liquidation. On 30 March 2026, Roberto Crispino resigned as liquidator, leaving Richard Albarran as sole liquidator. The plaintiffs then sought procedural orders to remove Mr Crispino as a party and to deal with his future costs exposure.

At a case management hearing on 2 April 2026, the liquidator foreshadowed an application for judgment under the deed. Mr Aitchison appeared by video at that hearing. Orders were made for the filing of the application and for Mr Aitchison to file any responsive evidence and submissions. On 9 April 2026, he filed a notice of address for service, but he did not file evidence or submissions in response to the application.

The interlocutory application sought summary judgment under s 31A of the Federal Court of Australia Act 1976 (Cth) and r 26.01 of the Federal Court Rules 2011 (Cth), together with interest and costs. The application was supported by affidavits from the plaintiffs' solicitor and from Mr Albarran. At the hearing, the plaintiffs also relied on a further affidavit from another solicitor recording emails from Mr Aitchison's solicitor stating that he would not file evidence, intended to file for bankruptcy, and had filed a debtor's petition. A search on the National Personal Insolvency Index on 7 May 2026 showed no record of him becoming bankrupt.

That procedural history matters because summary judgment is not automatic. The court still had to be satisfied that the statutory test was met. But where the deed clearly provided for the debt to become due on default, the required notice had been given, the default remained unremedied, and the defendant put on no evidence or submissions, the path to judgment was much easier for the plaintiffs.

Justice O'Bryan first dealt with the procedural consequences of Mr Crispino's resignation. The court ordered that he cease to be a party, granted leave to amend the originating application to remove him, and discharged him from further liability for costs incurred after he ceased to be a party, without affecting any earlier liability.

The substantive issue was the plaintiffs' request for summary judgment. The court referred to s 31A(1) of the Federal Court of Australia Act, which allows judgment where the court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of it.

On the facts before it, the court was satisfied that Mr Aitchison was in default of his obligation to pay the settlement sum, that he remained in default despite notice, and that the terms of the deed entitled the company to the relief sought. The court was also satisfied that he had no reasonable prospect of success in defending the interlocutory application.

The orders required Mr Aitchison to pay the company $70,000 as a debt due, interest on that amount at the penalty interest rate fixed under s 2 of the Penalty Interest Rate Act 1983 (Vic) from 17 March 2026 to the date of the orders, and fixed costs of $13,000. The proceeding was otherwise dismissed.

The costs point is worth noting. The plaintiffs had sought a specific amount based on costs incurred and estimated future costs. The court adjusted the amount after considering that some estimated work was not needed because Mr Aitchison filed no affidavit material, but that further work had still been done in corresponding with his solicitor and preparing the additional affidavit. The final fixed amount was $13,000.

Importantly, the court did not make findings on the merits of the original insolvency and debt claims. The judgment enforced the compromise the parties had made. Businesses should read the case as a decision about deed enforcement and summary judgment, not as a final ruling on the underlying allegations.

For directors, owner-managers and companies in dispute, the practical message is straightforward. A settlement deed is not just a record of a commercial compromise. It is an enforceable contract that may be drafted to give the other side a fast and relatively simple route to judgment if you default.

This is especially important in insolvency-related disputes. A liquidator may be willing to compromise larger claims for a lower fixed amount to avoid the cost and uncertainty of litigation. But in exchange, the deed may include strict default rights, admissions about debt due, interest provisions and costs consequences. If the payment is missed, the commercial benefit of the compromise can disappear quickly.

For claimants, the case shows the value of careful drafting. The deed here specified the payment date, the notice period, the consequences of non-payment, the election between reviving the original claims and suing for the Default Sum, the basis for interest, and the evidentiary role of a solicitor's affidavit. That structure made enforcement more direct.

For defendants, the case is a warning against signing a deed that depends on uncertain future cash flow. If there is any real risk that the payment cannot be made on time, the deed may create a worse position rather than a safer one. It can also be dangerous to assume that silence, delay or a possible bankruptcy filing will stop the court process. On the facts recorded here, the application still proceeded and judgment was entered.

In day-to-day business terms, settlement management should be treated like any other critical financial obligation. Record the due date, confirm how notice must be given, understand whether time is effectively of the essence, and act immediately if a problem arises. If you receive a default notice, do not wait to see what happens next. The deed may already have set up the legal pathway for judgment.

The key dates in the judgment show how quickly a settlement default can move into enforcement. The company was wound up in March 2025. The proceeding was commenced in December 2025. The deed was signed in January 2026, approved in February 2026, and the payment was due in March 2026. After default and notice, the plaintiffs moved to judgment by early May 2026.

The final orders were made on 7 May 2026. The court enforced the deed and otherwise dismissed the proceeding. That means the judgment resolved the matter through the settlement enforcement route rather than through a trial of the original claims.

This page is based on the Federal Court of Australia judgment in Rix Electrical Contracting Pty Ltd (in liquidation) v Aitchison, in the matter of Rix Electrical Contracting Pty Ltd [2026] FCA 566, delivered by O'Bryan J on 7 May 2026.

The reasons are concise and focused on the deed, the default, the summary judgment test, interest and costs. They do not provide a full narrative of the factual basis for the underlying insolvency and debt allegations. For that reason, this page should be read as a case note on settlement deed enforcement in an insolvency setting.