Baker v Punters Show Pty Limited, in the matter of Baker

Federal Court of Australia|2022-11-03|Before: Markovic J

To the extent necessary, pursuant to s 41(6A) of the Bankruptcy Act 1966 (Cth), extend the time by which the applicant is to comply with bankruptcy notice BN 255105 to 3 November 2022.
The interim application filed on 26 May 2022 is dismissed.
The applicant is to pay the respondent's costs of the interim application as agreed or taxed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

MARKOVIC J: 1 On 31 January 2022 bankruptcy notice BN 255105 was issued to the applicant, Dallas Matthew Baker, on the application of the respondent, Punters Show Pty Ltd (Bankruptcy Notice). 2 The Bankruptcy Notice required Mr Baker to pay, or to make arrangements to Punters Show's satisfaction for settlement of, the sum of $210,249 within 21 days after its service on him. 3 The Bankruptcy Notice was subsequently served on Mr Baker and, by originating application filed on 24 February 2022, Mr Baker sought to set it aside. 4 On 24 May 2022 a registrar of this Court made orders dismissing Mr Baker's application to set aside the Bankruptcy Notice and for Mr Baker to pay Punters Show's costs of that application. 5 On 26 May 2022 Mr Baker filed an interim application seeking a review, pursuant to s 35A(5) of the Federal Court of Australia Act 1976 (Cth), of the exercise of the power delegated to the registrar under s 35A(1) of the Federal Court Act in accordance with which he made the orders on 24 May 2022. 6 The nature of a review under s 35A(6) of the Federal Court Act of an order made by a registrar was discussed in Bechara v Bates (2021) 286 FCR 166 at [17]-[31]. At [17] the Court observed that: To underpin the validity of the delegation of judicial power of the Commonwealth to a non-judicial court officer there must be a rehearing de novo before a judge of the Court (whether Circuit Court or Federal Court). The review does not hinge, or focus, upon error in the decision of the registrar. It is a hearing de novo, in which the matter is considered afresh on the evidence and on the law at the time of the review, that is at the time of the hearing de novo. The importance of the de novo rehearing is Constitutional, being the supervisory condition that enables judicial power to be delegated to a registrar. All the jurisprudence stems from this requirement marked out by the High Court in the landmark decision in 1991 of Harris v Caladine 172 CLR 84, which is discussed in many of the cases referred to below. 7 Mr Baker's application for review of the registrar's order is to be approached in that way. That is as a hearing de novo in which I am to consider his application to set aside the Bankruptcy Notice afresh.

background 8 The Bankruptcy Notice, which is based on a judgment of the New South Wales Court of Appeal (see [11] below), seeks payment of $210,249. 9 Mr Baker seeks to set aside the Bankruptcy Notice because he says that he has a counter-claim, set-off or cross demand made up of: (1) an order made by the Court of Appeal on 19 November 2021 in proceeding no 2019/407870 (Appeal Proceeding) that relevantly required Punters Show to pay 65% of Mr Baker's costs of the appeal (Court of Appeal Costs Order); and (2) an order made on 31 January 2022 in Supreme Court of New South Wales proceeding no 2016/344608 (First Instance Proceeding) that relevantly required Punters Show to pay his costs of that proceeding save for the costs of the "improper withdrawals claim" (Supreme Court Proceeding Costs Order). 10 The First Instance Proceeding was between Marc Alan Lambourne, the sole director and a shareholder in Punters Show, Glenn Craig Pollett, also a shareholder in Punters Show, and Punters Show as first, second and third plaintiff respectively and Mr Baker as first defendant and four others as the second to fifth defendants. Mr Silver of counsel instructed by Cockburn & Co acted for Mr Baker. The second to fifth defendants were represented by a separate firm of solicitors and counsel. 11 The Appeal Proceeding was between Messrs Lambourne and Pollett and Punters Show as the first, second and third appellants respectively and Mr Baker as first respondent and four others as second to fifth respondents. Cockburn & Co acted for all of the respondents. On 24 September 2021 the Court of Appeal made the following orders in the Appeal Proceeding: 1. Judgment be entered in favour of [Punters Show] against the [Mr Baker] in the sum of $210,249. 2. The appeal be otherwise dismissed. 3. The appellants further amended notice of motion filed on 23 June 2021 be dismissed. 3. There be no order as to costs in respect of the appeal and the proceedings below. 4. The parties may seek to reopen Order 3 by a notice of motion filed within 14 days in the ordinary course. 5. The record be altered to show that the name of the Third Respondent has been changed to "Betmakers Technology Group Limited". 12 By notice of motion dated 8 October 2021 filed in the Appeal Proceeding (Costs Notice of Motion), the respondents took up the invitation to vary the second Order 3 made in the Appeal Proceeding (i.e. the costs order), by seeking first, to set it aside, secondly, that a number of other orders be made in relation to the costs of the First Instance Proceeding and the Appeal Proceeding and thirdly, an order that: Upon an undertaking by [Mr Baker] to pay the judgment debt against him into court or into an account agreed by the parties or directed by the Court, the payment of the judgment debt to [Punters Show] by stayed until the date on which all costs orders in favour of the Respondents are assessed or agreed. 13 On 19 November 2021 the Court of Appeal made the following further orders in the Appeal Proceeding: 1. In addition to the orders made on 24 September 2021, order: 1A Set aside the orders made in the Equity Division on 13 December 2019. 2. Vary the two orders numbered 3 made on 24 September 2021 so that they read: 3 The appellants' further amended notice of motion filed on 23 June 2021 be dismissed. 3A There be no order as to costs in respect of the appeal and the proceedings below. 3. Set aside Order 3A made on 24 September 2021 and in place thereof make the following orders: 3A (1) Order that the appellants pay 65% of the respondents' costs of the appeal; (2) Remit the question of costs of the proceedings in the Equity Division to the Equity Division. 4. Otherwise dismiss the notice of motion dated 8 October 2021. 14 On 13 December 2021 the defendants to the First Instance Proceeding filed a notice of motion in that proceeding seeking orders in relation to the costs of that First Proceeding (First Instance Costs Application). On 31 January 2022 Orders were made by the Supreme Court in terms of paragraphs 1 to 4 and 7 of that notice of motion as follows: 1. The Plaintiffs to pay the [Mr Baker's] costs of the proceedings other than costs associated with the Improper Withdrawals Claim. 2. [Mr Baker] to pay the [Punter's Show] costs associated with the Improper Withdrawals Claim. 3. The Plaintiffs to pay the Second to Fifth Defendants' costs of the proceedings other than costs associated with the Money Claim. 4. Notwithstanding any orders made, all outstanding interlocutory costs orders in favour of any party not be disturbed. 7. To the extent that it is opposed, the Plaintiffs pay the Defendants' costs of this application. 15 As set out at [1] and [3] above, on 31 January 2022 the Bankruptcy Notice was issued and on 24 February 2022 Mr Baker filed his application to set it aside. 16 On 2 March 2022 the Court of Appeal delivered a further judgment in the Appeal Proceeding in relation to the Costs Notice of Motion: Lambourne v Baker (No 3) [2022] NSWCA 25. At [1]-[2] of its reasons the Court of Appeal recorded that: 1. The original judgment in this matter was delivered on 24 September 2021: Lambourne v Baker [2021] NSWCA 229. By a notice of motion filed on 15 October 2021, and in response to leave granted by the Court, the respondents sought a variation of the proposed costs order. That matter was the subject of a second judgment, delivered on 19 November 2021: Lambourne v Baker (No 2) [2021] NSWCA 282. The notice of motion also sought a stay of "the payment of the judgment debt to the third appellant". In an affidavit of 13 December 2021, the solicitor for the respondents suggested that the Court had misunderstood the subject-matter of the proposed stay and had not addressed that issue. A notice of motion filed on 14 December 2021 sought to have the question of the stay determined. 2. It is true that the Court did not deal with the stay sought by the respondents in Lambourne (No 2). While the appellants submitted that the notice of motion filed on 14 December 2021 was out of time, the respondents invited the Court to deal with the matter pursuant to the "slip rule" in the Uniform Civil Procedure Rules 2005 (NSW), r 36.17. That power may be exercised "at any time". The power was properly invoked in the present case; the request for a stay contained in the notice of motion of 15 October 2021 was misapprehended by the Court and not addressed. The circumstances fit the criteria for invoking the rule, as explained by Spigelman CJ in Newmont Yandal Operations Pty Limited v The J. Aron Corporation & The Goldman Sachs Group (2007) 70 NSWLR 411; [2007] NSWCA 195 at [24]-[27]. The appellants, having been granted an extension of time to file submissions, availed themselves of that indulgence, but sought to file further submissions and to raise "numerous other issues which the Court has unexplainedly chosen not to address at all". The Court should now determine the respondents' application. 17 At that time the Court of Appeal made the following orders: (1) Upon the [Mr Baker] paying into Court the judgment debt created by order (2) made on 24 September 2021, payment of that amount to [Punters Show] is stayed pending determination, by assessment or agreement, of the costs payable by the appellants pursuant to order 3A(1) entered on 19 November 2021. (2) The amount to be paid to [Punters Show] will be the balance, if any, after setting off the costs determined to be payable by the appellants to the respondents. (3) Order 4 made on 19 November 2021 (otherwise dismissing the notice of motion) is varied to the extent necessary to permit the making of the above orders. 18 On 16 March 2022 Mr Baker filed an application for assessment of his costs of the First Instance Proceeding and the Appeal Proceeding in the Supreme Court (Costs Assessment). In the Costs Assessment Mr Baker seeks $274,360.08, the make up of which is explained in the following way: c. What is the total amount claimed for the costs? (Do not include interest.) Costs in Supreme Court (i.e. $157,344.14) + Half of 65% of costs in Court of Appeal (i.e. 32.5% of $328,261.73 = $106,685.06) + Half of costs back in Supreme Court on question of costs (i.e $27,461.76/2 = $13,730.88) = $277,760.08 d. How much of the claimed amount has been paid by or on behalf of the costs respondent? Specify the date and amount of each payment. 15-12-20 $600 17-2-21 $800 12-3-21 $1500.00 16-6-21 $500 e. How much of the claimed amount remains unpaid? $274,360.08 19 Mr Baker also claimed interest pursuant to s 101(4) of the Civil Procedure Act 2005 (NSW) on the costs, amounting to $3,277.04 as at the date of the Costs Assessment and continuing. 20 The Costs Assessment includes, among other things, the following about: (1) the First Instance Proceeding: 3. In the Supreme Court (Equity Division), [Mr Baker] was represented by Hamish Cockburn trading as Cockburn & Co. The second to fifth defendants were represented by a separate firm. 4. On 17 May 2018 Mr Cockburn passed away. Mr Cockburn had not issued any invoices in this proceeding at the time of his death. 5. On 8 June 2018, Nicola Craven was appointed manager of Cockburn & Co and took over the Cost Applicant's matter. 6. Given that Mr Cockburn passed away on 17 May 2018 and he had not issued any invoices at the time of death, costs are not claimed prior to June 2018. 7. However, costs incurred by counsel prior to June 2018 are still claimed. Mr Peter Silver's invoices prior to June 2018 are attached at Attachment 9. (3) the Appeal Proceeding: 13. [Mr Baker] was the first respondent in the Court of Appeal proceeding. The second to fifth defendants were the second to fifth Respondents in the Court of Appeal proceeding. In the Court of Appeal, Nicola Craven of Cockburn & Co represented all five Respondents. Therefore, the costs tables and invoices relating to the Court of Appeal matter include costs incurred for all five Respondents. To calculate the costs incurred by [Mr Baker] only, costs incurred in the Court of Appeal have been halved between [Mr Baker] and the second to fifth Respondents. 14. Costs are halved and not divided into fifths because the third to fifth Respondents are companies directed by the second Respondent (Todd Buckingham) and the issues and allegations raised against Todd Buckingham were the same issues and allegations raised against the third to fifth respondent companies. 15. On 19 November 2021, the Court of Appeal ordered the Appellants to pay 65% of the Respondents' costs. 16. Thus, the sum of the costs claimed by [Mr Baker] is half of 65% of all costs incurred by the Respondents (i.e. 32.5% of all costs incurred by the Respondents) 21 On 21 March 2022 the sum of $210,249 was paid into the Supreme Court by or on behalf of Mr Baker. 22 On 6 May 2022 Ms K J Young was appointed as the costs assessor for the purposes of the Cost Assessment.

statutory framework and legal principles 23 The Official Receiver may issue a bankruptcy notice on the application of a creditor who has obtained a final judgment or order against a debtor which is of the kind described in s 40(1)(g) of the Bankruptcy Act 1966 (Cth) and is for an amount less than the statutory minimum: s 41(1) of the Bankruptcy Act. 24 Section 40(1)(g) of the Bankruptcy Act provides that: A debtor commits an act of bankruptcy in each of the following cases: … (g) if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not: (i) where the notice was served in Australia - within the time fixed for compliance with the notice; or (ii) where the notice was served elsewhere - within the time specified by the order giving leave to effect the service; comply with the requirements of the notice or satisfy the Court that he or she has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter-claim, set-off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained; 25 Sections 41(6A) and (7) of the Bankruptcy Act provide: (6A) Where, before the expiration of the time fixed for compliance with the requirements of a bankruptcy notice: (a) proceedings to set aside a judgment or order in respect of which the bankruptcy notice was issued have been instituted by the debtor; or (b) an application has been made to the Court to set aside the bankruptcy notice; the Court may, subject to subsection (6C), extend the time for compliance with the bankruptcy notice. … (7) Where, before the expiration of the time fixed for compliance with a bankruptcy notice, the debtor has applied to the Court for an order setting aside the bankruptcy notice on the ground that the debtor has such a counter-claim, set-off or cross demand as is referred to in paragraph 40(1)(g), and the Court has not, before the expiration of that time, determined whether it is satisfied that the debtor has such a counter-claim, set-off or cross demand, that time shall be deemed to have been extended, immediately before its expiration, until and including the day on which the Court determines whether it is so satisfied. 26 The applicant, in this case Mr Baker, bears the onus of satisfying the Court that he has a counter-claim, set-off or cross demand of the type required by s 40(1)(g) of the Bankruptcy Act: see Wilson v Arwon Finance Pty Ltd [2021] FCA 1052 at [28]. 27 In Blair v Owners of Strata Plan No 71656 [2016] FCA 1522 at [20] I observed that: The terms "counter-claim", "set-off" and "cross demand" in s 40(1)(g) of the Bankruptcy Act are not subject to limits. The word "counter-claim" likely refers to claims in equity and the word "set-off" likely refers to those claims the subject of a set-off at common law while "cross demand" refers to claims other than those encompassed in the expressions "counter-claim" or "set-off" and can include a claim for unliquidated damages for a tort or damages for breach of contract: see Re Brink; Ex parte Commercial Banking Company of Sydney Ltd (1980) 44 FLR 135 (Re Brink) (per Lockhart J) at 138-139. 28 The applicant must establish a prima facie case by producing evidence of an off-setting claim, although that evidence does not need to be admissible as it would before a court trying the claim: Wilson at [31]. 29 In Guss v Johnstone (2000) 171 ALR 598; [2000] HCA 26 the High Court (Gleeson CJ, Gaudron, McHugh, Kirby and Callinan JJ) considered whether the appellant had a counter-claim, set-off or cross demand equal to or exceeding the amount of the debt the subject of a bankruptcy notice served on him that he could not have set up in the proceeding in which the costs order the subject of the bankruptcy notice was obtained. At [40] the High Court said: The state of satisfaction referred to in ss 40(1)(g), and 41(7), involves weighing up considerations as to the legal and factual merit of the claim relied upon by the debtor, and the justice of allowing the bankruptcy proceedings to go ahead or requiring them to await the determination of the claim. 30 In Glew v Harrowell, in the matter of Glew (2003) 198 ALR 331; [2003] FCA 373 Lindgren J considered an application to set aside a bankruptcy notice on the ground that the applicants had a counter-claim, set-off or cross demand against the respondent equal to or exceeding the amount claimed in the bankruptcy notice which met the requirements of s 40(1)(g) of the Bankruptcy Act. At [9]-[12], without intending to provide a definitive statement, Lindgren J set out the nature of the matters which an applicant seeking to set aside a bankruptcy notice on the basis that he or she had a counter-claim, set-off or cross demand for the purposes of s 40(1)(g) of that Act will need to establish: 9 There are authorities suggesting that Glew and Tresidder must satisfy me of the following interrelated and sometimes overlapping matters: • that they have a "prima facie case", even if they do not adduce evidence which would be admissible on a final hearing making out that case (Ebert v The Union Trustee Co of Australia Ltd (1960) 104 CLR 346 ("Ebert") at 350; Re Brink; Ex parte Commercial Banking Company of Sydney Ltd (1980) 44 FLR 135 ("Brink") at 141; Gomez v State Bank of NSW Ltd [2002] FCAFC 101 at [17], [18]); • that they have "a fair chance of success" or are "fairly entitled to litigate" the claim: Brink at 141; Re Gould; Gould v Day [1999] FCA 1650 at [27], [28]; Re Capsanis; Capsanis v The Owners - Strata Plan 11727 [2000] FCA 1262 at [11]); and • that they are advancing a "genuine" or "bona fide" claim (Re Capsanis; Capsanis v The Owners - Strata Plan 11727 [2000] FCA 1262 at [11]). It may be that the first and second formulations are intended to cover the same ground. In Brink Lockhart J treated (at 141) the reference to a "prima facie case" in Ebert as a reference to "a fair chance of success". 10 In Brink Lockhart J said (at 141) that the Court is not required to "undertake a preliminary trial of the counter-claim, set-off or cross demand". But, clearly, the application of the criteria above requires the Court to make some kind of preliminary assessment, though obviously not to determine the counter-claim, set-off or cross demand finally. And in Guss v Johnstone (2000) 171 ALR 598, Gleeson CJ, Gaudron, McHugh, Kirby and Callinan JJ stated (at 606): "[40] The state of satisfaction referred to in s 40(1)(g), and s 41(7), involves weighing up considerations as to the legal and factual merit of the claim relied upon by the debtor, and the justice of allowing the bankruptcy proceedings to go ahead or requiring them to await the determination of the claim." 11 Plainly, in order to "satisfy" the Court for the purposes of par 40(1)(g), the debtor is not required to prove, as on a final hearing, the asserted entitlement to recover from the creditor. Accordingly, evidence tendered on an application to set aside is to be tested for admissibility, not as if the proceeding were one in which the debtor's claim was being finally determined, but by reference to the question whether the Court should be satisfied that the debtor has a claim deserving to be finally determined. 12 Perhaps little more can usefully be said than that a debtor must satisfy the Court that there is sufficient substance to the counter-claim, set-off or cross demand asserted to make it one which the debtor should, in justice, be permitted to have heard and determined in the usual way, rather than be forced to comply with the bankruptcy notice by payment or to commit an act of bankruptcy. 31 In Royal v Nazloomian, in the matter of Royal [2019] FCA 555 the applicants (Royals) sought to set aside a bankruptcy notice issued on the application of the respondent, Mr Nazloomian, on three alternative bases including relevantly that they had a counter-claim, set-off or cross demand within the meaning of s 40(1)(g) of the Bankruptcy Act equal to or exceeding the judgment underlying the bankruptcy notice. The bankruptcy notice claimed a sum of $11,679.37 and was based on an order of the Local Court of New South Wales which was entered following the filing of a cost assessor's certificate under r 36.11 of the Uniform Civil Procedure Rules 2005 (NSW): Royal at [2] and [6]. 32 The Royals relied on a costs order made on 27 June 2018 in another proceeding in this Court requiring that Mr Nazloomian pay 75% of their costs up to 25 June 2018 on a party-party basis and that after that date each party bear their own costs. While at the time those costs had not been taxed the Royals relied on evidence that estimated their total costs in that proceeding to be $7,555. They then applied a proportion of 65% to arrive at their party-party costs of $4,918.75 and, in accordance with the order made in their favour, calculated 75% of that amount as $3,683.06. That amount was referred to by Stewart J as the "Royals' costs claim": Royal at [19]-[21]. 33 At [81] Stewart J observed that to succeed on that aspect of their claim the Royals had to establish that they had a counter-claim, set-off or cross demand equal to or exceeding the judgment or sum payable under the final order, whichever is applicable, being a counter-claim, set-off or cross demand that they could not have set up in the action or proceeding in which the judgment was obtained. At [83] his Honour also observed that such a claim is to be established on a prima facie basis. 34 In resolving the question before him, at [88]-[90] his Honour said: 88 The word "has" in s 40(1)(g) is not satisfied by proof that a debtor has "an inchoate set-off which may at some future time ripen, but an effective set-off existing as at the date of the application to set aside the bankruptcy notice": Ganke; Ex parte Ganke v Somerset [1995] FCA 195 per Lindgren J at [32] quoting from Re A Debtor; Ex parte Commissioner of Taxation (1963) 19 ABC 296. See also Guss v Johnstone (above) at [43]-[47]. 89 In Ganke, Lindgren J held that the debtor had not established a counter claim, set-off or cross-demand to the applicable standard where he was unable to show that he would be entitled to a refund from the creditors, his erstwhile solicitors, until their bill of costs had been taxed. That is a different situation from the present where the Royals have by the costs award in their favour a clear entitlement to the costs; nothing more is required to establish the entitlement. All that they do not know is the exact sum to which they are entitled and they have instead conservatively estimated that sum as being $3,683.06 which has not been challenged. 90 In my view, a costs claim of that nature is for present purposes akin to a claim for unliquidated damages. See Watkins Ltd v Ranger Uranium Mines Pty Ltd (1985) 35 NTR 27 at 42 per Nader J. Such a claim can properly be the subject of a s 40(1)(g) cross-claim etc. on the authorities I have referred to above. 35 At [91] his Honour concluded that the Royals' costs claim could be taken into account as a set-off under s 40(1)(g) of the Bankruptcy Act and that it was established to the requisite standard, at least to the sum of $3,683.06.

the parties' submissions 36 Mr Baker first addressed the costs orders in his favour. Insofar as the costs order made in the Court of Appeal was for the benefit of all of the respondents he submitted the order made by the Court of Appeal is joint and several and that as one of its beneficiaries he is able to enforce it. In respect of each of the costs orders, the persons liable to pay included Punters Show. I pause to observe that there did not appear to be any dispute about these propositions. 37 Insofar as the requirements of s 40(1)(g) of the Bankruptcy Act are concerned, Mr Baker submitted that the test requires that he satisfy the Court that there is sufficient substance to the counter-claim, i.e. a prima facie case. He contended that there is ample evidence to demonstrate a sufficiently substantial or prima facie claim to costs which, in all likelihood, will exceed the amount of the judgment claimed in the Bankruptcy Notice. He further submitted, weighing up the competing considerations, particularly having regard to the stay ordered by the Court of Appeal on 2 March 2022, that the interests of justice do not favour the bankruptcy proceeding going ahead. He observed that funds sufficient to satisfy the judgment debt are sitting in the Supreme Court. 38 Mr Baker submitted that he prepared the Costs Assessment based on a reduced amount. That is, in the Costs Assessment he claims less than his actual costs incurred. He contended that the amount claimed in the Costs Assessment thus represents his party-party costs. He referred to the costs claimed in the Costs Assessment in relation to the Appeal Proceeding and noted that, although the order made by the Court of Appeal was that the appellant pay 65% of the respondents' costs, he only sought 32.5% of the costs incurred and that he applied that discount because he thought it was appropriate to discount the costs to reflect what is ordinarily recoverable on a party-party basis. 39 Punters Show submitted that Mr Baker had not identified on which of the three limbs, i.e. counter-claim, set-off or cross demand, he relied. It also submitted that Mr Baker had not explained why he failed to commence the costs assessment process until well past 24 February 2022, the date by which he was required to comply with the Bankruptcy Notice and what prevented him from having those costs assessed from 13 December 2019, when the costs orders were made in his favour, nor when the issue was clearly before the Court of Appeal in late 2021. 40 Punters Show contended that, on the evidence which was before the registrar, Mr Baker cannot satisfy the Court that he has a claim that would be equal to or would exceed the judgment debt on which the Bankruptcy Notice is based. He said that the application for review should be dismissed with costs on an indemnity basis because it is without foundation and is vexatious. 41 Punters Show submitted that, in any event, Mr Baker had not demonstrated why the Court should exercise its discretion to grant his application and that the Court should be persuaded that was so because Mr Baker did not pay the judgment debt into open court. The amount was paid from an account in the name of "Operis Momentum", an entity associated with the four other defendants. Further, the payment into court should not, per se, satisfy the Court that the interests of Mr Baker's creditors are being properly safeguarded. 42 Punters Show submitted that the Court could not be satisfied that Mr Baker, as opposed to the defendants jointly and severally, is entitled to costs which will equal or exceed the judgment debt of $210,249. Punters Show then set out a number of matters which it said supported that submission. It also submitted that there would be a substantial dispute about counsel's fees claimed by Mr Baker. 43 Despite some of the matters raised by Punters Show in its written submissions summarised above, at the hearing it conceded that there was no dispute that Mr Baker had a set-off based on the costs orders in his favour. But it disputed that Mr Baker had established that the set-off is an amount equal to or exceeding the judgment debt on which the Bankruptcy Notice is based. 44 In support of that submission, Punters Show addressed the quality of the evidence relied on by Mr Baker to establish the quantum of his set-off. 45 First, Punters Show submitted that the approach adopted in Royal in establishing the quantum of a costs order in favour of a debtor was fairly standard. That is, the debtor relied on evidence of total costs incurred and evidence of the likely recovery, given by an appropriately qualified person, on an assessment. It noted that approach and evidence of that nature was lacking here. 46 Secondly, Punters Show submitted that the document titled "Standard Costs Agreement and Disclosure" which is annexed to the Costs Assessment is not the costs agreement between Mr Baker and his solicitors, Cockburn & Co, but a standard costs agreement. It contended that if there is no costs agreement, which it assumes is the case, there are ramifications which flow in terms of the costs assessment and that costs have to be paid under the relevant legislation. 47 Thirdly, Punters Show submitted that counsel's fee notes included in the Costs Assessment were not sufficiently particularised, were excessive and that a review of counsel's tax invoices will show that there was a gross over reliance on counsel. It submitted that, to the extent Mr Baker contended that he would recover 100% of the amount claimed in the Costs Assessment, it was relevant to look at the tax invoices rendered by counsel to determine whether that is likely. 48 Fourthly, Punters Show observed that Mr Baker has claimed GST in the total claimed, which it can claim back. It submitted that the fact that Mr Baker has done so results in an immediate reduction of about 10% from the total costs claimed in the Costs Assessment because the amount of GST should be excluded.

consideration 49 The question for resolution on this application is whether, as Mr Baker contends, he has a set-off equal to or exceeding the judgment debt of $210,249 on which the Bankruptcy Notice is based, being a counter-claim, set-off or cross demand that he could not have set up in the proceeding in which the judgment was obtained. Mr Baker bears the onus of satisfying the Court that he has such a claim. 50 As set out at [43] above, Punters Show does not dispute that the costs orders made in favour of Mr Baker in the First Instance Proceeding and all respondents, including Mr Baker, in the Appeal Proceeding constitute a set-off which could not have been set up in the proceeding in which the judgment the subject of the Bankruptcy Notice was obtained. That is so. The costs orders in Mr Baker's favour are sufficient to establish that Mr Baker has a genuine claim to a set-off and is entitled to recover an amount, which is yet to be liquidated, from Punters Show for his costs. Given the set-off arises as a result of costs orders made at the conclusion of the proceeding upon Mr Baker and the other respondents seeking a variation of the costs orders first made in the Appeal Proceeding in the circumstances described at [9] to [22] above and after the conclusion of the question of liability, it is clear that Mr Baker could not have set up his claim to a set-off in the course of the Appeal Proceeding, which is the proceeding from which the judgment debt arises. 51 However, Punters Show contends that Mr Baker has not satisfied the Court that his set-off is equal to or in excess of its judgment, namely that he has a set-off which arises as a result of the costs orders that is equal to or in excess of $210,249. 52 In order to consider whether that is so, it is necessary to examine the evidence Mr Baker relies on. That evidence is comprised in the Costs Assessment which is described at [18]-[22] above. 53 Mr Baker submitted that in the Costs Assessment he claimed less than the total actual costs incurred and that he thereby accounted for the difference in solicitor-client costs and party-party costs. As I understood that submission, I was invited to infer that, given the difference between the total costs Mr Baker in fact incurred in defending the First Instance Proceeding (including in pursuing the First Instance Costs Application) and the Appeal Proceeding, as evidenced by the tax invoices which form part of the Costs Assessment, and the amount claimed in the Costs Assessment, the latter constitutes Mr Baker's party-party costs. I was also invited to infer that it would follow that it was that amount, i.e. $277,760.08, or the net amount, taking into account payments made by Punters Show to date, of $274,360.08 which Mr Baker would be likely to recover as a result of the costs assessment process. 54 However, for the following reasons Mr Baker's submissions are not borne out by the evidence before me. 55 First, in the Costs Assessment Mr Baker claims a net amount of $274,360.08 made up of a total amount claimed of $277,760.08 less the amounts already paid by Punters Show. Mr Baker sets out how he arrived at the amount claimed (see [18] above). 56 The Costs Assessment includes attachment 5 titled "First Defendant's (Cost Applicant's) professional fees in the Equity Division (2016/00344608)" and attachment 7 titled "First to Fifth Respondents' (includes Cost Applicant as First Respondent) legal fees in the Court of Appeal" (which I will refer to respectively as Attachment 5 and Attachment 7). Attachment 5 and Attachment 7 respectively provide a summary of Mr Baker's professional fees and disbursements incurred in the First Instance Proceeding and a summary of Mr Baker's and the second to fifth respondents' professional fees and disbursements incurred in the Appeal Proceeding. 57 Upon reviewing Attachment 5 and Attachment 7 and comparing the amounts claimed in those attachments with the tax invoices referred to therein, which are also attached to the Costs Assessment, it is apparent that Mr Baker has not applied any reduction to the professional fees and disbursements claimed in each of the tax invoices. That is, Attachment 5 and Attachment 7 each simply record the tax invoices referrable to the First Instance Proceeding and the Appeal Proceeding and the total claimed in each of those invoices. The total amount of those invoices are used as a basis for the calculation of the total costs claimed in the Costs Assessment of $277,760.80. It is therefore not apparent that any steps have been taken to reduce the amount of professional fees and disbursements incurred in the First Instance Proceeding and the Appeal Proceeding such that I would infer that the Costs Assessment reflects a claim for party-party costs, as opposed to solicitor-client costs. 58 Secondly, in arriving at the total costs claimed for the purpose of the Costs Assessment, Mr Baker includes all of the costs incurred in the First Instance Proceeding, half of the costs incurred in relation to the First Instance Costs Application and 32.5% of the costs incurred in the Appeal Proceeding. That approach was adopted because in the First Instance Costs Application, Mr Baker and his four co-defendants, and in the Appeal Proceeding, Mr Baker and his four co-respondents, were represented by the same solicitors and counsel, Cockburn & Co and Mr Silver of counsel and each of them is a beneficiary of the relevant costs orders while in the First Instance Proceeding Mr Baker was separately represented. 59 As set out at [20] above, the explanation given in the Costs Assessment for the approach adopted in relation to the calculation of Mr Baker's share of the costs incurred in relation to the First Instance Costs Application and the Appeal Proceeding is that the costs incurred were halved as between Mr Baker and the balance of the respondents/defendants because "the third to fifth Respondents are companies directed by the second Respondent (Todd Buckingham) and the issues and allegations raised against Todd Buckingham were the same issues and allegations raised against the third to fifth respondent companies". In other words the reduction in the costs claimed by Mr Baker in relation to the Appeal Proceeding was not, as counsel appearing for Mr Baker submitted, a reduction to reflect a claim for party-party, as opposed to solicitor-client costs. 60 Thirdly, there is nothing in the evidence relied on by Mr Baker or in the Costs Assessment to the effect of Mr Baker's submission that the Costs Assessment claims only the party-party costs incurred. In fact the contrary seems to be the case. In her affidavit sworn on 1 June 2022 Nicola Angela Craven, Mr Baker's solicitor, says that the Costs Assessment "was seeking to have $274,360.08 assessed". 61 Therefore, contrary to Mr Baker's submission, based on the evidence before me, I would conclude that the total costs claimed in the Costs Assessment and to be assessed are made up of his share of the legal fees and disbursements actually incurred and not a reduced amount to reflect party-party costs. 62 There is no evidence before me of the nature of that relied on by the applicants in Royal which provides an estimate of Mr Baker's likely recovery in the Costs Assessment. For example, neither Ms Craven, assuming she is suitably experienced, nor a costs consultant or assessor has given evidence of the percentage amount which, in their experience, might ordinarily be recovered in a costs assessment, having regard to the nature of the proceedings and the costs incurred. The only evidence before me is that Mr Baker's total claim for costs is for $277,760.08. 63 Given my finding that the costs claimed by Mr Baker in the Costs Assessment are his proportion of the total costs he in fact incurred (even having regard to the fact that he has reduced his individual entitlement for the purposes of the First Instance Costs Application and the Appeal Proceeding) I would infer that amount would be reduced by some percentage on an assessment. However, there is no evidence as to the likely level of reduction or, put another way, the likely percentage recovery. 64 The effect of that finding is that, while I accept that by reason of the costs orders Mr Baker has established his entitlement to a set-off in relation to the judgment debt the subject of the Bankruptcy Notice, being a set-off that he could not have set up in the proceeding in which the judgment was obtained, he has not satisfied me that the amount of the set-off will be equal to or exceed the amount of the judgment debt. There is no evidence before me based on which I could be satisfied of the likely quantum of Mr Baker's set-off. 65 For that reason, Mr Baker's application to set aside the Bankruptcy Notice must fail. 66 That said I make the following further observation about the proceeding generally. 67 As set out above, after the issue and service of the Bankruptcy Notice the Court of Appeal ordered a stay of payment of the judgment sum which is the subject of the Bankruptcy Notice. The operation of the stay is subject to an amount equal to the judgment sum being paid into the Supreme Court. That has occurred and the stay remains in place and will remain in place until the determination, by assessment or agreement, of the costs payable pursuant to the costs order made in the Appeal Proceeding. 68 Mr Baker submitted that I would take the operation of the stay into account in considering the "justice of allowing the bankruptcy proceedings to go ahead". While the stay, and the fact of payment of the judgment debt into court, provide cogent reasons in support of Mr Baker's contention that the Bankruptcy Notice be set aside, in the absence of evidence of the likely quantum of his claim for a set-off, they do not of themselves provide a sufficient basis to accede to his application. 69 On the other hand, for so long as the stay remains in place, Punters Show cannot proceed to file and serve a creditor's petition. Thus those very factors act to preserve the status quo and, on one view, suggest that Punters Show's pursuit of the Bankruptcy Notice may be futile.

other matters 70 Below I briefly address three further matters: one which arose in the course of the hearing and two which arose after the hearing.

The operation of s 41(7) of the Bankruptcy Act 71 In his interim application seeking a review of the registrar's decision, Mr Baker sought an order extending time for compliance with the Bankruptcy Notice until the Court reviews the exercise of power by the registrar on 24 May 2022 in accordance with s 41(7) of the Bankruptcy Act. 72 When I asked counsel appearing for Mr Baker at the hearing about that prayer for relief, he indicated that it was not pressed. He contended that the expiration of the time for compliance and the commission of an act of bankruptcy would not practically matter because of the stay that was in place. Conversely, the solicitor appearing for Punters Show suggested that it would matter to the extent that Mr Baker was seeking to set aside the Bankruptcy Notice in circumstances where an act of bankruptcy had already been committed. There was then some discussion about the effect of an application for review of the exercise of power by the registrar in the present circumstances on the operation of s 41(7) of the Bankruptcy Act. 73 Accordingly, I invited the parties to provide additional submissions on the question of whether, in the circumstance of an application for review of a registrar's decision refusing to set aside a bankruptcy notice, there was a need to press for an order pursuant to s 41(7) of the Bankruptcy Act extending the time for compliance with the bankruptcy notice until such time as the Court completes its review (question). Both parties provided submissions.

The parties' submissions 74 Mr Baker submitted that, where a judicial registrar dismisses an application to set aside a bankruptcy notice and where the debtor seeks review of that decision, s 41(7) of the Bankruptcy Act automatically operates to extend the time for compliance with the relevant bankruptcy notice until the review is complete. 75 In the alternative, Mr Baker submitted that if, contrary to his principal submission, the time for compliance is not automatically extended, s 35A(6) of the Federal Court Act together with s 41(6A) of the Bankruptcy Act, alternatively s 37(1) of the Bankruptcy Act, permit the Court to make an order, in effect, extending the time for compliance. 76 Punters Show submitted that s 41(7) of the Bankruptcy Act does not automatically operate in the circumstances of this case to extend the time for compliance with a bankruptcy notice and that the Court cannot, on a review, make a retrospective order to extend that time when the time has already expired, in this case, on 24 May 2022. 77 Punters Show submitted that most of the issues now raised by Mr Baker were not considered when the matter was heard on 16 August 2022. At that time the focus of the argument was on the quantum of costs claimed by Mr Baker which constituted his set-off for the purposes of s 40(1)(g) of the Bankruptcy Act. 78 Punters Show contended that it believed that I appeared to have already announced that I would reserve my decision at the end of the substantive hearing but then announced that Mr Baker should be provided with an opportunity to address the question. It noted that the circumstances surrounding what it described as my "belated intervention and unilateral decision to formulate the question", which is addressed in written submissions made by each party, would be addressed elsewhere. Punters Show made a number of submissions about the question which I invited the parties to address by the filing of further submissions and making orders to that effect. It is not of assistance to the consideration of the question for me to repeat or address those submissions, they have no bearing upon its resolution. 79 Punters Show submitted that the simple point, which is not addressed by Mr Baker, is that his lawyers should have asked for an extension of time when the matter was before the registrar but did not do so. It contended that Mr Baker could have relied upon any of the statutory provisions which he now refers to at the time, but that did not occur. 80 Punters Show submitted that Mr Baker does not explain how, what it refers to as the "immediate automatic extension", brought about by s 41(7) of the Bankruptcy Act would be triggered and then un-triggered should Mr Baker's application for review be challenged or found to be incompetent, for example for non-compliance with mandatory statutory or regulatory provisions. It noted that such challenges may take substantial time. 81 Punters Show submitted that Mr Baker's primary argument, made in the abstract at the Court's invitation, is more seriously flawed when applied to the actual circumstances of the "matters" remaining before the Court for determination and that the argument is predicated upon several untenable assumptions when it comes to the actual facts in the matter. They are that: (1) Mr Baker's applications filed on 24 February 2022 and 26 May 2022 were each validly made; (2) Mr Baker may rely upon the provisions of s 41(6A) of the Bankruptcy Act, notwithstanding non-compliance with the mandatory provisions of rr 2.01(1), (3) and (4) and 3.03 of the Federal Court (Bankruptcy) Rules 2016; (3) Mr Baker did not rely on s 35A(6) of the Federal Court Act or s 41(6A) of the Bankruptcy Act in his interim application; (4) there was no evidence that Mr Baker was solvent; and (5) the moneys paid into the Supreme Court were paid not by Mr Baker but by (and with the express authority) of Mr Buckingham, one of Mr Baker's co-defendants and co respondents in the First Instance Proceeding and the Appeal Proceeding respectively. 82 Punters Show submitted that Mr Baker's argument must be rejected because his interpretation of s 41(7) of the Bankruptcy Act is against the spirit, and otherwise expressed and well accepted intentions, of that Act which contemplates prompt determination of issues in the interests of the public generally. It contended that any creditor, not just Punters Show, is entitled to rely upon Mr Baker's putative act of bankruptcy. 83 Punters Show submitted that Mr Baker's primary argument is flawed because it is contrary to the clear line of authority which effectively establishes that the registrar's dismissal of Mr Baker's application on 24 May 2022 was a final order of the Court with the same legal effect as an order made by a judge of the Court, referring to Bechara v Bates at [3] and [7]. He said that the concept of, and process relating to, the delegated exercise of power by a registrar of a Ch III Court was intended to reduce the workload of the judges of the relevant court, referring to Harris v Caladine (1991) 172 CLR 84 at [22]-[23]. Punters Show submitted that the right of review of the exercise of power by a registrar was not designed to render the registrar's decision, made under powers delegated by judges, voidable until reviewed or affirmed by a judge. It was designed to reduce the workload of judges while still complying with a Constitutional requirement that the judicial power of the Commonwealth must be exercised by Ch III judges. 84 Punters Show contended that Mr Baker's argument that the registrar's decision may at any time be "voidable" is not supported by the weight of authority and that the question posed, that is whether Mr Baker was required to seek an extension of time of his bankruptcy notice, must be answered "yes". 85 Punters Show submitted that it must follow that Mr Baker has already committed an act of bankruptcy, if not earlier, in any event, on 24 May 2022 and the Court does not, in the circumstances of this case, have the power to render null and void ab initio the registrar's exercise of power as reflected in his decision to dismiss Mr Baker's contention that he had a relevant claim requiring the Court to set aside the Bankruptcy Notice. 86 In relation to Mr Baker's alternative argument, Punters Show submitted that the Court ought not to have invited, let alone directed, Mr Baker to make written submissions in the way that it did at the conclusion of the hearing. It said that the hearing was complete, there has been no application by Mr Baker for leave to reopen and Mr Baker cannot, without formally amending his application, now rely upon the alternative basis upon which he says an order for an extension of time to comply with the Bankruptcy Notice could in any event be made. Punters Show observed that these newly identified provisions were not listed in any of the applications filed by Mr Baker in this proceeding and that the leave granted by the Court on 16 August 2022 for further submissions concerned only the interim relief applied for by Mr Baker pursuant to s 41(7) of the Bankruptcy Act. Punters Show submitted that the formulation of the question posed by the Court does not contemplate a fall-back position.

Consideration 87 As set out above Mr Baker's primary submission is that, where a registrar dismisses an application to set aside a bankruptcy notice and the debtor seeks a review of that decision, s 41(7) of the Bankruptcy Act automatically operates to extend the time for compliance with the bankruptcy notice until the review is complete. 88 Section 41(7) of the Bankruptcy Act is set out at [25] above. It has two requirements: firstly, that before the expiration of the time fixed for compliance with a bankruptcy notice the debtor has applied to the Court for an order setting it aside on the ground that he or she has a counter-claim, set-off or cross demand of the nature referred to in s 40(1)(g) of the Bankruptcy Act; and secondly, that the Court has not before the expiration of that time determined whether it is satisfied that the debtor has such a counter-claim, set-off or cross demand. If those requirements are met, the time for compliance with the bankruptcy notice will be deemed to be extended up to and including the day on which the Court determines the debtor's application. 89 As Mr Baker points out, in this case he satisfied the first limb of s 41(7) of the Bankruptcy Act by filing his application to set aside the Bankruptcy Notice on 24 February 2022, before the date of its expiration. The question that arises for determination is whether, properly construed, the second requirement of s 41(7) operates where the decision of a registrar to dismiss the application to set aside the Bankruptcy Notice is the subject of an application for review of that decision pursuant to s 35A of the Federal Court Act. 90 As is apparent, s 35A of the Federal Court Act enables certain powers set out therein, if the Court or a judge directs, to be exercised by a registrar. That section also relevantly provides that: (5) A party to proceedings in which a Registrar has exercised any of the powers of the Court under subsection (1) may, within the time prescribed by the Rules of Court, or within any further time allowed in accordance with the Rules of Court, apply to the Court to review that exercise of power. (6) The Court may, on application under subsection (5) or of its own motion, review an exercise of power by a Registrar pursuant to this section and may make such order or orders as it thinks fit with respect to the matter with respect to which the power was exercised. 91 In Bechara v Bates, the Full Court considered the nature of the exercise of delegated judicial power and the Constitutional imperative that in order for the exercise of delegated power to be effective it must be amenable to review by a judge. At [2]-[7] the Full Court said: 2 It is now an accepted incident of judicial power that it may be exercised in this way, namely by an order being made pursuant to a delegation, but only if the order may be reversed or otherwise corrected by a judge on review. In such cases, however, it is important to recognise that the review (or by de novo "appeal") is not concerned with correcting error and in that respect is to be differentiated from the statutory rights of appeal that have gradually become an established part of the judicial system. Nor is it a review de novo as a further stage in a tiered process. Rather, the review is an attribute of a recognised mechanism by which the exercise of judicial power may be delegated to an officer of the Court who is not a judge, such as a registrar. The right to seek review attaches to the delegation and is an attribute of the nature of the delegated authority. 3 So, if a registrar exercises delegated judicial power within a formal structure that enables review by the Court, the order of the registrar takes effect as an exercise of judicial power by the judges of the Court, but the exercise of that delegated power depends for its validity upon the availability of review by the judges of the Court. The exercise of the delegated power is not deferred until there has been a review or confirmation of the order by a judge. Nor does the exercise of delegated judicial power operate in some provisional manner pending a review. Rather, the registrar's order takes effect as an order of the judges of the Court but on the basis that a judge may be asked to make an order in place of the exercise of delegated authority. 4 Then, if the review process is validly invoked in respect of an order made by a registrar, there is the possibility that by subsequent decision of a judge of the Court a different order will be made in place of the existing order. In effect, the delegated exercise of power is undone or revoked and a decision by a judge is made in its place. 5 In consequence, where an application is brought to review the exercise of a delegated judicial power it is often emphasised that the review by the judge should be undertaken promptly. The nature of the delegation produces the potential that parties may act on the basis of the delegated exercise of judicial power only to have the decision reversed when the process of judicial oversight that is reserved as part of the delegation is invoked successfully. 6 If there is a concern about steps being taken by parties based upon the order that has been made in the exercise of delegated power then interim relief could be sought pending the outcome of the review. However, the nature of the review means that matters can be addressed when the decision is made on review because inherent in the nature of the delegation is a reservation by the Court of an ability to revisit the order by way of review and make whatever order may have been made by the officer in the exercise of the power of delegation. There are limits upon the extent to which such delegations (themselves being an exercise of judicial power) can be the subject of control by Parliament. Nevertheless, it is well established that laws can be made by which a power to delegate of the kind just described may be recognised. 7 If an order is made by a registrar in the exercise of delegated judicial power and there is a review that results in a different conclusion by a judge to that reached by the registrar then an order is required to bring the operation of the existing order to an end. The Court, on review, does not determine that the earlier order was made without authority. Rather, by way of oversight, it makes a new order to replace the registrar's order and does so in the exercise of the power of review which is a condition of the delegation. The fact that the nature of the review conducted by the Court is a de novo review does not mean that the review proceeds as if no order had been made by the registrar or that the Court, if persuaded to make a different decision, makes orders as if there had been no order by the registrar. 92 It follows from the above, that an order made by a registrar exercising a delegated judicial power takes effect as an order of the Court. Upon a review by a judge, a different conclusion may be reached which will necessitate the making of an order to bring the first order made by the registrar to an end. Upon a review there may also be a need to make orders addressing circumstances which have arisen as a result of the exercise of delegated power and orders made pursuant to that power, either as interim relief or upon making a final determination on the review. 93 In Robson as former trustee of the estate of Samsakopoulos v Body Corporate for Sanderling at Kings Beach CTS 2942 (2021) 286 FCR 494 a Full Court of this Court (Allsop CJ, Markovic, Derrington, Colvin and Anastassiou JJ) considered the nature of the orders that can be made upon the dismissal of a creditor's petition by a judge upon a de novo review of a sequestration order made by a registrar. Among the issues considered by the Full Court was the amplitude of the power in s 104(3) of the Federal Circuit Court of Australia Act 1999 (Cth) (now repealed) and its cognate provision, s 35A(6) of the Federal Court Act. Among other things, consideration was given to the period between the making of a sequestration order by a registrar exercising delegated power and the later dismissal of the creditor's petition based upon which that order was made by a judge of the Court on a review and how the steps taken in that period could, to the extent necessary, be addressed. 94 As Allsop CJ observed at [22] at the time a registrar makes a sequestration order, there is a valid order of the Court which engages the operation of the Bankruptcy Act and pursuant to which certain things occur, not the least of which is the change of status of the debtor, and steps are taken consequent upon the appointment of a trustee. At [23] his Honour agreed, for the same reasons as expressed by Colvin J, that "the terms of s 104(3) (and s 35A(6)) should be construed as ample and sufficient to untangle and unravel as far as possible, and to the extent that it is just, the rights and positions of the parties involved". 95 The context in which the Court was considering the question was different from that which presents itself here and, as Allsop CJ observed, involved more than just the parties to the litigation. In that context his Honour recognised that upon the dismissal of the creditor's petition by a judge on review (and the setting aside of the order made by the registrar, being a matter on which the Full Court was divided but which it is not necessary to address here) consequential orders can be made, relevantly, pursuant to s 35A(6) of the Federal Court Act to protect the position of those third parties. His Honour said at [24]-[25]: 24 … Those consequential orders can proceed on the basis, as was the case, that there was a valid order of the Court in place such that those who acted upon the order are protected in what they did. Such not only accords with long-standing authority: Dimes v Proprietors of Grand Junction Canal (1852) 3 HL Cas 759 at 786; 10 ER 301 at 312; Phillips v Eyre (1870) LR 6 QB 1 at 22, but also with the statutory and Constitutional structure of hearing and rehearing de novo and the non-provisional nature of the order of the Court when made by the registrar. 25 Thus, the content of s 104(3) of the FCCA Act (and s 35A(6) of the FCA Act) and the nature and contours of, and limits upon, the consequential orders that can be made are set or framed by the Constitutional imperative that facilitates the delegation. 96 That approach must also inform the resolution of the question in this case, particularly as concerns Mr Baker's secondary fall-back position. 97 I return to Mr Baker's primary submission. 98 Mr Baker contends that the question can be resolved having regard to the proper construction of the relevant legislative provisions. The text of s 41(7) of the Bankruptcy Act is clear and, as described above, it has two limbs, the first of which has been satisfied by the filing by Mr Baker of his application to set aside the Bankruptcy Notice before its expiry. 99 As for the second limb its operation can be understood having regard to the legislative intent behind s 41(7) of the Bankruptcy Act. That is, as Mr Baker submitted, that a bankruptcy notice should not be permitted to expire by effluxion of time where a debtor has applied to set it aside on the basis that he has a counter-claim, set-off or cross demand of the type referred to in s 40(1)(g) of the Bankruptcy Act. 100 The same legislative intent must be evident in s 41(6A) of the Bankruptcy Act (see [25] above) which confers on the Court a discretion to extend the time for compliance with a bankruptcy notice in the circumstances set out in that section. Like s 41(7) it has as a condition of its operation that the application to set aside the relevant bankruptcy notice was made or, in the alternative, that the proceeding to set aside the judgment or order in respect of which the bankruptcy notice was issued, before the expiration of the time fixed for compliance with the bankruptcy notice. 101 Thus both s 41(7) and s 41(6A) of the Bankruptcy Act recognise first, that an application to set aside a bankruptcy notice can and should be filed expeditiously; and secondly, that thereafter the determination of the application by the Court may take some time longer. In the interim, the debtor ought not to be subjected to the consequences of failing to comply with the bankruptcy notice, by committing an act of bankruptcy. 102 Neither s 41(6A) nor s 41(7) of the Bankruptcy Act say anything about their respective operation in circumstances where a decision is made on an application to set aside a bankruptcy notice by a registrar exercising delegated power which is then subject to a review by a judge pursuant to s 35A(5) of the Federal Court Act. 103 What then is the effect of an application for review of a decision by a registrar in relation to an application to set aside a bankruptcy notice? The registrar's order in relation to that application is a valid order of the Court. It takes effect on the date it is made. But the exercise of delegated power by the registrar and the order made consequent upon that exercise of power are "burdened with the prospect of an application for review": see Samsakopoulos at [72] (per Colvin J). Further, upon a review the decision on review overtakes the delegation. The Court on review makes its own decision and then makes its own order which overtakes the order of the registrar: Samsakopoulos at [67] (per Colvin J). 104 The review is by way of a hearing de novo and as Allsop CJ observed in Bechara v Bates (at [17]) the earlier exercise of jurisdiction is not the subject of debate. The rehearing, in this case, of the application to set aside a bankruptcy notice brings with it the attendant possibility of the Court making a different order to that made by the registrar. That is, on review the Court may make an order setting aside a bankruptcy notice in circumstances where the registrar did not do so or the Court may refuse to set aside a bankruptcy notice and dismiss the debtor's application in circumstances where the registrar made the contrary order. There is also a third possibility, which is the one that presents itself here, where the registrar and the Court, upon a rehearing, reach the same conclusion and refuse the application to set aside a bankruptcy notice. 105 One might expect, given the policy behind s 41(7) of the Bankruptcy Act and the right of a party to seek a review of the delegated exercise of power that until such time as the Court makes its determination on the review, s 41(7) of the Bankruptcy Act would continue to operate. If that is not the case then in some circumstances a review application may be of little utility to a debtor as, notwithstanding the outcome, he or she would be taken to have already committed an act of bankruptcy. The construction urged by Punters Show would result in that outcome and would restrict the operation of s 41(7) of the Bankruptcy Act where a debtor's application to set aside a bankruptcy notice is heard by a registrar of the Court. 106 There is however an alternate avenue by which, in circumstances such as the present, the Court may order an extension of time to comply with a bankruptcy notice. Section 35A(6) of the Federal Court Act empowers the Court, on review, to make such order or orders as it thinks fit with respect to the matter in relation to which the power was exercised by the registrar. The power in this case was the power under s 30(1) of the Bankruptcy Act to set aside a bankruptcy notice. The matter in relation to which the power was exercised was the Bankruptcy Notice and an extension of time to comply with that notice pursuant to s 41(6A) of the Bankruptcy Act is, in my opinion, connected to that matter. That is, the operation of s 35A(6) of the Federal Court Act enables the Court to make consequential orders on the rehearing including an order pursuant to s 41(6A) to make an order extending the time for compliance with a bankruptcy notice pending the outcome of the review. 107 Punters Show submitted that I would not make such an order because the hearing was complete before I invited submissions on the question and Mr Baker did not apply to re-open to make an application or an extension of time pursuant to s 41(6A) of the Bankruptcy Act. 108 In his application Mr Baker sought an order that the time for compliance with the Bankruptcy Notice be extended until the Court reviews the exercise of power by the registrar, albeit that extension of time was sought pursuant to s 41(7) of the Bankruptcy Act. While Mr Baker did not initially press for that order, it became apparent that whether s 41(7) operated to automatically extend the time for compliance with the Bankruptcy Notice until the resolution of the hearing de novo was an issue between the parties. It is clearly in the interests of all parties that all issues that arise in a proceeding are resolved. Further given the nature of this jurisdiction where, upon the commission of an act of bankruptcy a creditor can proceed to present a creditor's petition seeking a sequestration order of the debtor's estate, the interests of justice require that issues affecting creditors' and debtors' rights be resolved. 109 Further, given the power to make consequential orders discussed at [106] above and s 37M of the Federal Court Act, it was not necessary for Mr Baker to apply to re-open his case and to formally make an application for an extension of time pursuant to s 41(6A) of the Bankruptcy Act.

Punters Show's further submissions and Mr Baker's email sent on 9 September 2022 110 The second matter which arises and which I briefly address is that on 5 September 2022 Punters Show provided to my Associate and the solicitors for Mr Baker submissions titled "Punters Show Application for Her Honour Justice Markovic to recuse herself". Those submissions which, as their name suggests, set out contentions on the part of Punters Show as to why I would recuse myself from, I infer, determining Mr Baker's application. However those submissions were not accompanied by an application seeking relevantly an order that I recuse myself nor did Punters Show take any steps to relist the proceeding to permit argument on the issue, including by providing Mr Baker with an opportunity to respond to the contentions included in the submissions. 111 For that reason, I do no more than to note that the submissions were provided to my Associate. I otherwise have not addressed nor considered them in these reasons and, in the absence of the filing of an application seeking appropriate orders, I do not intend to do so. 112 The final matter concerns an email from Mr Baker's solicitors sent on 9 September 2022 in which they noted that the costs claimed in Costs Application had been amended to exclude any claim for GST. No application to reopen to tender this email in evidence was made. For that reason I have not had regard to it.

Conclusion 113 It follows from the matters set out above that Mr Baker's interim application filed on 26 May 2022 should be dismissed, that the registrar's order will remain in place and that an order should be made extending the time for compliance with the Bankruptcy Notice. 114 As Mr Baker has been unsuccessful, he should pay Punters Show's costs of the interim application excluding any costs associated with the submissions referred to at [109] above. I note that in its written submissions, Punters Show sought its costs on an indemnity basis because it contended that the application is "vexatious" (see [40] above). Mr Baker was entitled to file the application for review and was entitled to a rehearing of his application to set aside the Bankruptcy Notice. The exercise of that right cannot be described as vexatious and is not a reason for an order that costs be paid on an indemnity basis. 115 I will make orders accordingly. I certify that the preceding one hundred and fifteen (115) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Markovic.

Bankruptcy Act 1966(Cth)ss 40(1)(g), 41(6A), 41(7)

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