Chang, in the matter of Chang v Chang [2025] FCA 1259

1. The Applicant and Respondent are brother and sister. The Applicant ("Holly") has applied to have a bankruptcy notice issued at the request of the Respondent ("Victor") set aside. On 22 August 2025, a Registrar made orders under s 41(6A) of the Bankruptcy Act 1966 (Cth), extending the time for compliance with the bankruptcy notice until 21 days after the resolution of Holly's appeal proceedings in the Supreme Court of Victoria. Victor has applied under s 35A(5) of the Federal Court of Australia Act 1976 (Cth) for review of the Registrar's order. These reasons deal with that review application.
2. For the reasons set out below, I have found that there is no proper basis for ordering an extension of time until Holly's Supreme Court appeal proceedings have been determined (or 21 days after that date). However, the parties have advised that the Supreme Court has indicated that judgment will be delivered by 27 October 2025, 11 days from the date of this judgment. I would have made orders extending the time for compliance with the bankruptcy notice for a short period from the date of this judgment in any event, to give Holly a final opportunity to comply with that notice. In the circumstances, I will extend the time for compliance until 28 October 2025.

1. Costs orders made in Supreme Court proceedings (Nov 2024): The bankruptcy notice is based on costs orders made by Daly AsJ on 12 November 2024 in Supreme Court proceedings SECI 2021 01122 (brought by Victor against Holly, referred to as "Victor's proceeding") and SECI 2022 04357 (brought by Holly against Victor, referred to as "Holly's proceeding"). The procedural history is summarised by her Honour in Chang v Chang [2025] VSC 391 (Chang (Daly AsJ)).
2. Relevantly for present purposes, Daly AsJ's 12 November 2024 orders included the following:

· In Victor's proceeding, "[t]he defendant [Holly] is to pay the plaintiff's costs of and incidental to the hearing on 3 October 2024 in the amount of $22,168.08" (order 7). The recitals to these orders (under "Other matters") state that these costs were determined on an indemnity basis, and that these costs were payable "forthwith" (recitals J-L).

· In Holly's proceeding, "[t]he plaintiff [Holly] is to pay the defendant's costs of and incidental to the hearing on 3 October 2024 in the amount of $7,429.40" (order 7). Again, the recitals to these orders (under "Other matters") state that these costs were determined on an indemnity basis, and were payable "forthwith" (recitals H-J).

1. Holly did not attend the 12 November 2024 hearing: Chang (Daly AsJ) at [20].
2. Daly AsJ default judgment, dismissal of other proceeding (Feb 2025): On 4 February 2025, Daly AsJ made orders which (a) struck out the defence in Victor's proceeding, and gave judgment for the plaintiff (Victor); and (b) dismissed Holly's proceeding: Chang (Daly AsJ) at [14]. Holly did not attend the 4 February 2025 hearing: Chang (Daly AsJ) at [15].
3. Holly applied on 20 May 2025 to have the default judgment in Victor's proceeding set aside, and she applied on 2 June 2025 to have the dismissal of her proceeding set aside: Chang (Daly AsJ) at [22], [24], [36].
4. Bankruptcy notice issued (May 2025): On 29 May 2025, Bankruptcy Notice Number BN278403 was issued against Holly, in which Victor was the creditor, relying on the judgment debts in Supreme Court proceedings SECI 2021 01122 (of $22,168.08 plus $1,153.13 interest) and SECI 2022 04357 (of $7,429.40 plus $386.46 interest); a total claimed debt of $31,137.07.
5. Application to set aside Bankruptcy Notice (Jun 2025): On 17 June 2025, Holly applied to this Court to have the Bankruptcy Notice set aside.
6. Daly AsJ dismisses applications to set aside (Jun 2025): On 18 June 2025 (after a hearing on 11 June 2025), Daly AsJ delivered a written ruling dismissing the applications made by Holly to set aside a default judgment entered against her in Victor's proceeding and to set aside an order dismissing Holly's proceeding: Chang (Daly AsJ) at [1].
7. Holly files appeals in Supreme Court (Jun 2025): On 25 June 2025, Holly filed notices of appeal from an associate justice in both Supreme Court proceedings. Relevantly for present purposes, the notices of appeal include the following grounds of appeal:

· The notice of appeal in Holly's proceeding (SECI 2022 04357) relevantly contends:

1. The Associate Justice erred in awarding indemnity and fixed costs where:

• Ÿ No findings of misconduct were made against the Applicant;
• Ÿ The Applicant was self-represented and had made genuine attempts to comply with procedural obligations;
• Ÿ The quantum of costs was excessive and imposed without proper scrutiny or assessment.

· The notice of appeal in Victor's proceeding (SECI 2021 01122) relevantly contends:

1. Error in awarding interest and indemnity costs:

• Ÿ ...
• Ÿ There was no proper basis for awarding indemnity costs, particularly where the Applicant was self-represented and no finding of misconduct was made.

3. Misapplication of procedural rules in the 12 November 2024

• Ÿ ...
• Ÿ The Court erred in summarily fixing costs without assessment or providing the Applicant with a fair opportunity to be heard on quantum.

1. Registrar grants an extension of time (Aug 2025): Between 18 June and 7 August 2025, Registrars in this Court made various timetabling orders in relation to Holly's application to set aside the Bankruptcy Notice, with associated extensions of the time to comply with the Bankruptcy Notice. On 22 August 2025, a Registrar held a hearing at which the parties appeared in person. At that hearing, the Registrar ordered that the time for Holly to comply with the Bankruptcy Notice:

... is extended to 4:00pm (AEST) on the date which [is] 21 days after the hearing and determination of the Supreme Court Appeals.

1. The "Supreme Court Appeals" is defined in the Notes to the 22 August 2025 Order to mean the appeals filed by Holly on 25 June 2025 to set aside the orders made by Daly AsJ entered on 12 November 2024 that are relied on in the Bankruptcy Notice (see Notes A-C). This order is the subject of this review application.
2. Review application (Sep 2025): On 2 September 2025, Victor brought an interlocutory application seeking orders that the Registrar's order made on 22 August 2025 "be reviewed and set aside", and that the matter "be heard afresh before a Judge of the Court".
3. Case management orders (Sep 2025): On 18 September 2025, a different Registrar held a case management hearing, and made timetabling orders. Pursuant to those orders, the parties have filed the following material:

· Written submissions from Victor dated 23 September 2025 and reply submissions dated 5 October 2025.

· Written submissions from Holly dated 1 October 2025 (in addition to written submissions filed previously in support of her application to set aside the Bankruptcy Notice).

· Affidavits of Victor affirmed 2 August 2025 (annexing written submissions made to the Supreme Court about Holly's proposed appeals dated 24 July 2025; and the orders made by Daly AsJ on 12 November 2024) and 3 September 2025 (annexing orders made by a Registrar on 26 June 2025 and 7 August 2025; a transcript of the hearing on 22 August 2025; and a copy of Chang (Daly AsJ) and an earlier decision of the Court of Appeal concerning an earlier stage of Victor's proceeding).

· Affidavits of Holly sworn on 15 June 2025, 9 July 2025, and 1 October 2025 (annexing the notices of appeal from the orders of Daly AsJ).

1. Further submissions filed: The material listed above went to the issue of whether there should be an extension of time for compliance with the Bankruptcy Notice. Late on 15 October 2025 (the evening before the hearing), Holly filed submissions and further materials, seeking additionally to challenge the validity of the Bankruptcy Notice. These submissions and materials were not served on Victor.

Nature of a review under Federal Court Act s 35A

1. A preliminary issue is to explain the nature of a review of a Registrar's decision under s 35A(5) of the Federal Court Act. As will be seen next, the power to extend time to comply with a bankruptcy notice is conferred on "the Court". However, by s 35A(1)(h), a power of the Court that is prescribed by Rules of Court may be exercised by a Registrar, if the Court or a Judge so directs. One of the powers prescribed for this purpose is the power to extend time for compliance with a bankruptcy notice (Federal Court (Bankruptcy) Rules 2016 (Cth), r 2.02 and Sch 1Pt 1 item 4). That is, the Registrar here was exercising delegated judicial power.
2. In Bechara v Bates [2021] FCAFC 34; (2021) 286 FCR 166 at [17], the Full Court made the following points about the nature of a review under s 35A(5) of the Federal Court Act.

· For constitutional reasons, the review is a hearing de novo before a judge. This de novo hearing is the supervisory condition that enables the valid delegation of judicial power.

· The review does not hinge, or focus, upon error in the decision of the registrar; instead, the matter is considered afresh on the evidence and on the law at the time of the review before the judge.

1. In summary, the Court "is to rehear the case and decide the facts for itself" and "exercise the discretion unfettered by the decision of the Registrar": Paule v Kambouris [2025] FCA 539 at [18] (Stellios J), and the cases cited. In this case, that means that any submissions about any errors by the Registrar are not relevant in this hearing.

Extensions of time under Bankruptcy Act s 41(6A)

1. The time for compliance with a bankruptcy notice, and the power to extend that time, are governed by the following provisions of the Bankruptcy Act.
2. Bankruptcy notice and time for compliance (s 41(1), (2A)): By s 41(1)(b) of the Bankruptcy Act, the Official Receiver may issue a bankruptcy notice on the application of a creditor who has obtained against a debtor two or more final judgments or final orders that are of the kind described in s 40(1)(g), and taken together are for an amount of at least the statutory minimum (being $10,000). (Section 40(1)(g) describes a "final judgment or final order, being a judgment or order the execution of which has not been stayed", and is elaborated on in s 40(3).)
3. A debtor will commit an "act of bankruptcy" within s 40(1)(g) of the Bankruptcy Act if the debtor does not comply with the requirements of the notice (or satisfy the Court that he or she has a counter-claim, set-off or cross demand that could not have been set up in the proceeding in which the judgment or order was obtained) within the time fixed for compliance with the notice. The time for compliance must be at least 21 days after the debtor is served with the notice (see s 41(2A)(a), read with the definition of "statutory period" in s 5).
4. Extension of time (s 41(6A), (6C)): Section 41(6A) and (6C) of the Bankruptcy Act make the following provision for extending the period for complying with a bankruptcy notice:

(6A) Where, before the expiration of the time fixed for compliance with 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.

(6C) Where:

(a) a debtor applies to the Court for an extension of the time for complying with a bankruptcy notice on the ground that proceedings to set aside a judgment or order in respect of which the bankruptcy notice was issued have been instituted by the debtor; and

(b) the Court is of the opinion that the proceedings to set aside the judgment or order:

(i) have not been instituted bona fide; or

(ii) are not being prosecuted with due diligence;

the Court shall not extend the time for compliance with the bankruptcy notice.

1. Here, the Bankruptcy Notice required Holly to pay the amount specified within 21 days after service of the Bankruptcy Notice (which was issued on 29 May 2025). Holly's application to set aside the Bankruptcy Notice was lodged on 17 June 2025. That application therefore must have been made within 21 days of service, no matter the date on which service occurred (noting that Holly's application states that the Bankruptcy Notice was not served on her until 3 June 2025). The discretion to extend time in s 41(6A)(b) of the Bankruptcy Act is therefore engaged.
2. Extension of time - general principles: In Paule v Kambouris, Stellios J summarised the principles applicable to granting an extension of time under s 41(6A) as follows:

(a) The onus is on the applicant for an extension of time, as the moving party, to satisfy the Court that the circumstances warrant the exercise of the discretion to extend time: Paule v Kambouris at [28]. Here, Holly did not expressly seek an extension of time (but rather applied for the Bankruptcy Notice to be set aside). However, she takes the benefit of the extension of time, so I consider it appropriate that she be able to justify any extension.

(b) Subject to s 41(6C), the discretion in s 41(6A) is "unfettered" and "at large", and is to be exercised in the circumstances of each case: Paule v Kambouris at [29]; Alhalek v Quintiliani trading as Kells Lawyers [2020] FCA 1272 at [91] (Markovic J).

(c) Nonetheless, the Court is guided in the exercise of the discretion by the following matters that have been identified as relevant: Paule v Kambouris at [29], adopting Owen v Sandhu [2024] FCA 198 at [71] (Feutrill J):

(i) Whether proceedings to set aside the judgment or order have been instituted (including proceedings of that nature such as an appeal).

(ii) Whether a stay of the judgment or order has been sought or obtained.

(iii) That failure to comply with a bankruptcy notice is "an act of bankruptcy that is a different order of gravity for the change of status brought about by the making of a sequestration order".

(iv) The interests of the judgment creditor and other creditors of the judgment debtor in ensuring that, if ultimately a sequestration order is made, the relevant act of bankruptcy occurs earlier rather than later.

(v) In the absence of a stay of the judgment or order, the extent to which there is evidence of the means of the debtor to satisfy the judgment debt and, in any event, whether it would be appropriate to order security for the debt as a condition of any extension of the time for compliance.

(vi) While, in general, it is undesirable to undertake a provisional review to determine the correctness of the judgment or order, the merits may be relevant at least where it is apparent that prospects of success are either "slight" or "unusually strong". In this regard, if an appeal has already been dismissed and the proceeding in question is an application for special leave to make a further appeal, that would be a relevant consideration reinforcing the Court's reluctance to extend time in the absence of a stay.

1. Application to this case: The following applies these principles, particularly factors (i)-(vi) listed in [25](c) above, to the facts of this case.
2. Appeal proceedings have been instituted: On factor (i), Holly has filed a notice of appeal in both Supreme Court proceedings, and seeks to challenge (among other things) the costs orders made by Daly AsJ which underpin the Bankruptcy Notice. However, this appeal was filed late, and only after the Bankruptcy Notice had been issued. As Stellios J has observed, the mere existence of an appeal is only a jurisdictional condition that enlivens the power to extend time: Paule v Kambouris at [35].
3. The Court has been provided with emails from the chambers of Hannon J in the Supreme Court dated 25 August 2025 and 9 October 2025. It appears from those emails that there was a hearing on 21 August 2025. The parties agree that this hearing dealt with both the appeal from Holly's proceeding (S ECI 2022 04357), and the appeal in Victor's proceeding (S ECI 2021 01122). These emails also indicate that the Supreme Court has indicated that judgment will be delivered in those matters by 27 October 2025.
4. Prospects of appeal are not strong: A great deal of attention was devoted in written submissions to Holly's prospects of success. It is important that this Court should not trespass on the role of the Supreme Court. It is sufficient to make two points:

· First, Holly's appeal faces significant procedural hurdles: she needs to obtain an extension of time from the Supreme Court, as the costs orders were made on 12 November 2024, but the notices of appeal were not filed until 25 June 2025. Victor raises a further potential procedural obstacle: Daly AsJ made these orders in Holly's absence, meaning (it is said) that Holly should have challenged these costs orders by seeking to have these default orders set aside: Chang v Chang [2022] VSCA 256 at [23] (the Court). However, as discussed next, Holly has made a (belated) application for a stay of the various costs orders made against her, including the two orders that underpin the Bankruptcy Notice.

· Second, a very preliminary assessment of Holly's arguments in the notices of appeal suggests a number of obstacles. The power to award costs is both procedural and discretionary. Appeal courts therefore do not readily intervene. Further, Victor points out that these costs were costs "thrown away" due to a failure by Holly to take action. In outline, Holly contends that: the Court did not give Holly a fair opportunity to be heard; there was no proper basis for awarding indemnity costs, given there was no finding of misconduct by Holly; and the quantum of costs was excessive and imposed without proper assessment: see [11] above. As to the first, Holly did not attend the 12 November 2024 hearing. As to the other matters, the recitals to the orders made by Daly AsJ explain her Honour's reasons for ordering indemnity costs, and their quantum: see orders in Victor's proceeding (SECI 2021 01122), recitals K-M; orders in Holly's proceeding (SECI 2022 04357), recitals I-K.

1. I do not wish to pre-empt the role of the Supreme Court, and will confine my assessment to stating that Holly's prospects of success do not appear to be so strong as to be a factor in favour of granting an extension of time.
2. Belated application for stay of the costs orders; no evidence of means: On factor (ii), it appears that the costs orders of Daly AsJ have not been stayed. Holly applied on 28 August 2025 for a stay of costs orders made in Victor's and Holly's proceedings, including the costs orders made on 12 November 2024. That application was made well after the hearing of the appeals in the Supreme Court, and after the orders of Registrar Wilson in this Court. There is no evidence before the Court of Holly's means to pay the judgment debt underlying the Bankruptcy Notice (factor (v)).
3. The failure to obtain a stay, or to provide evidence of the person's financial circumstances, can sometimes be a significant factor weighing against granting an extension of time: Harris v Moses, in the matter of Harris [2025] FCA 886 at [49]- [50] (O'Sullivan J); cf Paule v Kambouris at [38]-[43]. As just noted, Holly applied for a stay, albeit very recently, and that application has not yet been determined. Even so, the absence of a stay or of evidence of Holly's financial circumstances does tend against an extension of time being granted to an extent.
4. Remaining factors tend against granting an extension: The remaining factors mentioned in [25](c) above are general matters, tending against granting an extension of time.

· The first of those remaining factors is that the failure to comply with a bankruptcy notice is "an act of bankruptcy that is a different order of gravity for the change of status brought about by the making of a sequestration order" (factor (iii)). That is, although committing an act of bankruptcy is serious, there is no immediate change of status, unlike a sequestration order: see Paule v Kambouris at [62]. If the Bankruptcy Notice is not set aside and the time for compliance is not extended, it would remain open to Holly to seek to have any hearing of the creditor's petition adjourned, pending the determination of her appeal in the Supreme Court: Harris at [40]. Whether an adjournment should be granted would be a matter for the Court dealing with any creditor's petition.

· The final factor is that the interests of the judgment creditor and other creditors of the judgment debtor in ensuring that, if ultimately a sequestration order is made, the relevant act of bankruptcy occurs earlier rather than later (factor (iv).

1. Other matters raised by the parties: Resolution of the issues before me does not require me to enter into other issues raised by the parties' submissions. These issues include:

· Allegations by each party that the other had committed an abuse of process;

· A referral by Holly of Victor to the Director of Public Prosecutions for what she says were false affidavit evidence;

· The background to the Supreme Court proceedings (going beyond the summary in Chang (Daly AsJ)).

1. Conclusions: The factors set out above do not support granting an extension until the resolution of Holly's Supreme Court appeals. None of the factors considered by the courts favour granting an extension of time.
2. Even so, that does not mean that Holly's application to set aside the Bankruptcy Notice should be dismissed without any extension of time. To do so would mean that she would immediately have committed an act of bankruptcy. It is appropriate to extend the time for compliance for a short period to give her a final opportunity to comply with the Bankruptcy Notice: see Alhalek at [96], [98]. Here, the Supreme Court has indicated that there will be judgment in the appeals in Holly's and Victor's proceedings by 27 October 2025, 11 days from this judgment. In those circumstances, it is appropriate to give Holly until 28 October 2025 to comply with the Bankruptcy Notice.
3. Do not deal with other matters raised in Holly's 15 October submissions: As noted, Holly sought belatedly to raise a number of issues in submissions filed late on 15 October 2025 (the evening before the hearing), including the validity of the Bankruptcy Notice. These submissions went beyond the scope of the hearing before me, which is to determine Victor's application. These submissions were not served on Victor. These submissions seem to make arguments that were not made in Holly's original submissions dated 24 June 2025 in support of the application to set aside the Bankruptcy Notice; for example, Holly now argues that the Bankruptcy Notice is defective because it includes post-judgment interest, and because it was served by post and not personally. Those arguments face some immediate hurdles:

· The arguments that a bankruptcy notice cannot include post-judgment interest would appear at first glance to be contrary to Kleinwort Benson Australia Ltd v Crowl [1988] HCA 34; (1988) 165 CLR 71 at 77 (Mason CJ, Wilson, Brennan and Gaudron JJ).

· As to the method of service, it is clear that Holly has in fact received the Bankruptcy Notice (her application states it was received on 3 June 2025). The Bankruptcy Regulations 2021 (Cth) permit documents to be served by sending it by pre-paid post to the last known business or residential address of the person: see r 102(1)(c), read with s 28A(1)(a)(ii) of the Acts Interpretation Act 1901 (Cth).

1. It is not necessary to resolve these issues. The orders I make today do not finally determine Holly's application to set aside the Bankruptcy Notice. It will be a matter for the Registrar handling the matter to determine what steps should be taken to resolve Holly's application, in the light of this decision dealing with the extension of time issue.

1. This Court will therefore order that the time for compliance with the Bankruptcy Notice Number BN278403 issued on 29 May 2025 is extended to 4:00pm on 28 October 2025. I note that I would not be minded to grant any further extensions of time, if the Supreme Court for whatever reason were unable to deliver judgment by the anticipated date.
2. Victor's interlocutory application is therefore allowed, although the sequence of events means that these orders may not be very different in operation from the orders made by Registrar Wilson. The parties are both self-represented in this proceeding, so there will not be any order as to costs. However, the Respondent is entitled to his disbursements (in this case, the filing fee for the interlocutory application): AMO25 v Administrative Review Tribunal (No 2) [2025] FCA 376 [12] (Wheatley J), and the cases cited.

I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Hill.