Corporation of the City of Adelaide v Cosenza

BACKGROUND

1. On 2 August 2024, I delivered judgment with respect to applications brought by Mr Cosenza for declaratory relief in relation to service of the creditor's petition and an injunction restraining the applicant's solicitors from acting: Corporation of the City of Adelaide v Cosenza [2024] FCA 852. Much of the background relevant to this matter is contained in that judgment and familiarity with it is assumed for the purposes of this judgment.
2. The orders made on 2 August 2024 were as follows:
3. The interim application filed on 6 December 2023 be dismissed.
4. Pursuant to r 10.11 of the Federal Court Rules 2011 (Cth), the creditor's petition filed on 20 October 2023, the affidavit of Shane Eamonn Sankey filed on 18 October 2023 and the Declaration of Consent to Act as Trustee filed on 18 October 2023 be deemed to have been served on the respondent on 6 December 2023.
5. By 4:00pm AEST on 16 August 2024, the respondent file and serve any amended notice of grounds of opposition, and any further affidavits in support including, if the respondent relies on grounds of solvency, an affidavit which sets out his current financial position, including details of all assets, liabilities, income and expenses.
6. By 4:00pm AEST on 30 August 2024, the applicant file and serve any affidavits in reply and written submissions of no more than 10 pages in length.
7. By 4:00pm AEST on 13 September 2024, the respondent file and serve written submissions of no more than 10 pages in length.
8. By 4:00 pm AEST on 20 September 2024, the applicant file and serve any written submissions in reply of no more than 5 pages in length.
9. The hearing of the creditor's petition be listed on 2 October 2024 at 10:15am AEST.
10. Costs be reserved.
11. Pursuant to those orders, on 16 August 2024, Mr Cosenza filed an amended notice stating grounds of opposition, detailing the following grounds of opposition:
12. The debtor did not commit an act of bankruptcy as the bankruptcy notice was never effectively served/received upon the debtor by way of email service.
13. The debtor is able to pay the debt and is not insolvent.
14. On 16 August 2024, Mr Cosenza also filed an affidavit deposing as to the purported ineffective service of the bankruptcy notice, as well as his solvency. In that affidavit, he annexed two market appraisals for a property owned by him. The CCA filed an affidavit on 30 August 2024 deposing as to two other proceedings in which Mr Cosenza is involved. The parties then filed written submissions in relation to the hearing of the creditor's petition on 30 August 2024, 13 September 2024 and 20 September 2024.
15. On 30 September 2024, Mr Cosenza filed an affidavit setting out further information as to his financial position. As will be seen from the discussion below, and in particular in paragraph 63, this affidavit provided far more detail as to Mr Cosenza's finances.
16. Additionally, prior to the hearing of the creditor's petition, on 24 September 2024 and 1 October 2024 respectively, Mr Thomas Tigani and the State of South Australia, each filed a notice of appearance as supporting creditors and an affidavit in support of the creditor's petition. In his affidavit filed on 24 September 2024, Mr Turner, solicitor for Mr Tigani, annexed an order of the Federal Circuit and Family Court of Australia (Division 2) in which Mr Turner was awarded costs. Similarly, Ms Mitchell, solicitor for the State of South Australia, in her affidavit filed on 1 October 2024, annexed a number of interlocutory orders in which the State of South Australia was awarded costs in proceedings commenced by Mr Cosenza in the Supreme Court of South Australia (Supreme Court Proceeding).
17. Annexed to the affidavit of Mr Sankey filed on 30 August 2024 was a judgment in relation to proceedings commenced by Mr Cosenza against Mr Tigani in the Federal Circuit and Family Court of Australia (Division 2), as referred to above, in which Mr Cosenza had been unsuccessful and is subject to a costs order which does not appear to have yet been assessed. In addition, Mr Sankey's affidavit annexed a judgment relating to the Supreme Court Proceeding, in which Mr Cosenza had been awarded $40,000.00 in damages.
18. The CCA also filed final affidavits of search and debt pursuant to rr 4.06(3) and (4) of the Federal Court (Bankruptcy) Rules 2016 (Cth).
19. At the hearing of the creditor's petition on 2 October 2024, the CCA objected to the receipt of, and reliance on, the affidavit of Mr Cosenza filed on 30 September 2024 on the basis of the lateness of the filing of the affidavit, and argued that, should leave be granted, an adjournment should also be granted to enable it to respond to the affidavit. Mr Cosenza opposed the granting of any adjournment as he contended that the affidavit did not extend beyond what had already been put in the matter and he sought that the matter be resolved on that day.
20. Noting that Mr Cosenza was in person, I granted him leave to rely on the affidavit. Given the substantive changes the affidavit made to Mr Cosenza's case in relation to the second ground of opposition to the creditor's petition, I timetabled the provision by the CCA of affidavits and submissions in response to it and adjourned the hearing of the creditor's petition to 18 November 2024.
21. In the afternoon of 2 October 2024, the CCA made the urgent interim application the subject of these reasons. That was listed for hearing on 3 October 2024. By that date, Mr Cosenza had retained counsel but not had time to provide him with fulsome instructions. Accordingly, I granted an adjournment of this hearing until 4 October 2024 to enable Mr Cosenza to file any evidence in response and counsel for Mr Cosenza to take instructions. Before granting that adjournment, I drew counsels' attention to the decisions of Trust Company (PTAL) Ltd (Trustee for the LM Managed Performance Fund), Re Drake v Drake [2014] FCA 1445 at [10] and Winn v Boss Lawyers [2021] FCA 1652 at [35], in respect of which I asked that they be in a position to make submissions upon the resumption of the hearing.
22. As it transpired on 4 October 2024, according to submissions from the bar table, counsel for Mr Cosenza was impeded in obtaining instructions due to Mr Cosenza suffering a "dental emergency". Counsel for Mr Cosenza also submitted that he was further impeded as Mr Xenophon, whom he referred to as being Mr Cosenza's solicitor, was suffering from a critical health condition. It should be noted that no solicitor appeared on the record for Mr Cosenza.
23. At the hearing, the CCA relied upon the following material:
24. Consent to Act as Trustee filed on 18 October 2023
25. Creditor's Petition filed on 18 October 2023
26. Affidavit of Shane Sankey filed on 19 October 2023
27. Affidavit of Shane Sanket filed on 23 February 2024
28. Orders made on 2 August 2024
29. Corporation of the City of Adelaide v Cosenza [2024] FCA 852
30. Affidavit of Shane Sankey filed on 30 August 2024
31. Affidavit of Frederick Turner filed on 24 September 2024
32. Affidavit of Dean Cosenza filed on 30 September 2024
33. Affidavit of Janet Crook filed on 1 October 2024
34. Affidavit of Sarah Mitchell filed on 1 October 2024
35. Interim Application filed on 2 October 2024
36. Affidavit of Shane Sankey filed on 2 October 2024
37. Applicant's Written Submissions filed on 2 October 2024
38. Affidavit of Service of Shane Sankey filed on 3 October 2024
39. Affidavit of Sarah Mitchell filed on 3 October 2024
40. Affidavit of Dean Cosenza filed on 3 October 2024
41. Affidavit of Shane Sankey filed on 4 October 2024
42. Affidavit of Sarah Debattista filed on 4 October 2024
43. During the hearing, the parties were requested to provide to the Court a list of materials read, setting out which party had read what material. While the CCA provided its list, Mr Cosenza did not do so. By email correspondence sent to the Court, Mr Cosenza indicated that he consents to the affidavits in numbers 10 to 17 of paragraph 15 above. He also indicated that while his affidavit filed on 30 September 2024 had not been read, he consents to its use "on the basis to which the Court permitted it to be accepted at the 2.10.2024 hearing". As the transcript of the hearing on 2 October 2024 discloses, Mr Cosenza was granted leave to rely upon the affidavit on that date and in any case, it was read by the CCA.

LEGAL FRAMEWORK

1. Section 50 of the Act relevantly provides:
2. At any time after a bankruptcy notice is issued, or a creditor's petition is presented, in relation to a debtor, but before the debtor becomes a bankrupt, the Court may: + o - 1. direct the Official Trustee or a specified registered trustee to take control of the debtor's property; and 2. make any other orders in relation to the property. (1A) The Court may give a direction or make an order only if: (a) a creditor has applied for the Court to make a direction; and (b) the Court is satisfied that it is in the interests of the creditors to do so; and (c) the debtor has not complied with the bankruptcy notice. (1B) If the Court directs a trustee to take control of the debtor's property, the Court must specify when the control is to end.
3. Section 30(1) of the Act provides the following in respect of the general powers of the Court in bankruptcy: (1) The Court:

• • o - 1. has full power to decide all questions, whether of law or of fact, in any case of bankruptcy or any matter under Part IX, X or XI coming within the cognizance of the Court; and 2. may make such orders (including declaratory orders and orders granting injunctions or other equitable remedies) as the Court considers necessary for the purposes of carrying out or giving effect to this Act in any such case or matter.

1. In Ewert v Martin [2018] FCA 1931, Derrington J made the following observations regarding the nature of s 50: [16] The section is, in some respects, an unusual provision. But in reality it is, in fact, a codified power of Court to protect the integrity of its own proceedings. In this respect it is not unlike many other powers exercised by Courts when the judgments or processes are sought to be undermined by litigants who seek to dispose of their assets before judgment can be enforced. In Deputy Cmr of Taxation v Klein (1983) 14 ATR 540, Neaves J of this Court said of s 50, at page 545: The section is, clearly, a provision in aid of the creditors of a debtor who has already committed an act of bankruptcy and has a creditor's petition pending against him. It is a necessary and ancillary provision designed to enable appropriate steps to be taken to preserve and protect the property of a debtor so that, in the event of a sequestration order being made, that property will be available for distribution equitably amongst them in accordance with the statutory provisions contained elsewhere in the Bankruptcy Act 1966. That this is its purpose is reinforced by a consideration of the provisions contained in s 50(2) with their emphasis on obtaining information concerning the debtor or his trade dealings, property or affairs.
2. Further, I respectfully adopt the following summarised by Derrington J in Ewert: [18] However, before doing that it is important, to note that there are a number of prerequisites to the exercise of the power. The first is, of course, that the debtor has not complied with a Bankruptcy Notice and the creditor's petition has been presented. These matters have been satisfied in this case. Secondly, the creditor must seek directions as to the approximate expenses likely to be incurred by the trustee pursuant to the appointment before sequestration, and that has occurred. Thirdly, a trustee should be nominated and an affidavit obtained consenting to act as such. That has occurred in this case, and Mr Nick Combis of Vincents, who is a well-known and well-respected insolvency practitioner in Queensland, has agreed to act as a trustee. Finally, the Court must specify when the control of the debtor's property by the trustee is to end. That requirement can be satisfied in the orders which are to be made.

CONSIDERATION

1. In this matter, the CCA nominated Mr Colin Louis Ambrose as trustee and provided evidence as to his likely expenses. While there is no affidavit before me from Mr Ambrose, there is, exhibited to Mr Sankey's affidavit of 2 October 2024, an email from Mr Ambrose consenting to act. As this is an interlocutory matter, hearsay evidence may be relied upon: s 75 of the Evidence Act 1995 (Cth). Furthermore, s 156A of the Act provides that a registered trustee may consent to act by an instrument signed by him or her in the context of acting as trustee of the debtor's estate in the event that the debtor becomes a bankrupt. Accordingly, I am satisfied that Mr Ambrose has been nominated, consents to act and that his anticipated expenses have been ascertained.
2. As to the date upon which the control of the property by the trustees is to end, as the application for interim relief makes clear, contrary to Mr Cosenza's submission, the time of the trustee's appointment will end either on the making of a sequestration order or the dismissal of the creditor's petition. In any case, that is a matter which can be dealt with by the Court when making orders pursuant to s 50 of the Act. Thus, that prerequisite is satisfied.
3. I now turn to the substantive issues in this application.

Has Mr Cosenza failed to comply with the bankruptcy notice as required by s 50(1A)(c) of the Act?

1. As will be seen from the discussion below, this issue also raised the question of the construction of s 50 of the Act.
2. The CCA urged that it was clear that s 50(1) contemplated that an order that a trustee take control of the debtor's property could be made on either the issuing of a bankruptcy notice, or the presentation of the creditor's petition. The CCA's position was that where an order is sought in the context of a creditor's petition it is clear that it is not intended that s 50(1A)(c) have application. In making this argument, the CCA referred the Court to the history of s 50 of the Act, referring to the decision of Wigney J in Trust Company as follows: [10] At the time of Neaves J's judgment, s 50 had no operation until a creditor's petition had been presented. Subsequent amendments make it plain that an order under s 50 can be made at any time after a bankruptcy notice has issued.
3. Counsel for the CCA took the Court to legislation in force prior to the amendment introduced by the Bankruptcy Legislation Amendment Act 1996 (Cth), which was:
4. If, on application by a creditor, it is shown to be necessary in the interests of the creditors, the Court may, at any time after the presentation of a creditor's petition and before sequestration, direct the Official Trustee or a specified registered trustee to take control of the property of the debtor and may make such orders in relation to that property as the Court considers just.
5. In 1996, by the Bankruptcy Legislation Amendment Act 1996 (Cth), that provision was repealed and replaced with: (1) At any time after a bankruptcy notice is issued in relation to a debtor, but before the debtor becomes a bankrupt, the Court may: (a) direct the Official Trustee or a specified registered trustee to take control of the debtor's property; and (b) make any other orders in relation to the property. (1A) The Court may give a direction or make an order only if: (a) a creditor has applied for the Court to make a direction; and (b) the Court is satisfied that it is in the interests of the creditors to do so; and (c) the debtor has not complied with the bankruptcy notice. (1B) If the Court directs a trustee to take control of the debtor's property, the Court must specify when the control is to end.
6. Thus, the "triggering precondition" became the issue of the bankruptcy notice rather than the presentation of the creditor's petition.
7. Further amendments in 2002 brought the legislation to its present form. According to the explanatory memorandum to the Bankruptcy Legislation Amendment Bill 2002 (Cth), the purpose of the amendment was as follows: 84 Item 24 proposes to amend subsection 50(1) of the Act to allow a creditor who wishes to have a controlling trustee appointed over a debtor's property to apply to the Court for such an appointment after a creditor's petition has been presented, as well as after a bankruptcy notice has been issued against the debtor. The amendment will restore to this group of creditors a right inadvertently taken from them as an unintended consequence of an amendment in 1996. By transitional provision item 207, this change will apply to any creditor's petition that is presented after commencement.
8. Given the evolution of the provision, the CCA submitted that the current form of s 50(1A)(c) must operate only by reference to the "first limb" of the provision, namely when a bankruptcy notice is issued, rather than a creditor's petition presented. The CCA's argument was that a creditor's petition does not always rely on non-compliance with a bankruptcy notice and therefore the precondition of non-compliance with a bankruptcy notice must relate only to the "first limb" of the provision.
9. On that basis, the CCA contended that I may be satisfied that as a creditor's petition has been presented in this case, the precondition contained in s 50(1A)(c) does not apply.
10. The CCA also submitted, that if that argument does not persuade me, I may accept that the preconditions in s 50(1A) are met on the basis that Mr Cosenza has, inter alia, failed to comply with the bankruptcy notice.
11. Mr Cosenza's argument was that the construction of s 50 advanced by the CCA was not available. Section 50(1A) is clear - each of the elements contained in sub-sections (a), (b) and (c) must be met.
12. Further, Mr Cosenza contended, the question of service of the bankruptcy notice remained at large. As set out above, that is one of the grounds of opposition to the creditor's petition. Mr Cosenza submitted that the service of bankruptcy notice should not be decided until the creditor's petition is decided, notwithstanding he opposed the granting of the adjournment on 2 October 2024 and was therefore prepared to argue the issue of the service of the bankruptcy notice on that date.
13. Mr Cosenza made no other submissions regarding service of the bankruptcy notice on the hearing of this application despite the detailed and forceful submissions of the CCA in relation to this issue, including those made on 3 October 2024.
14. In this case, I do not consider it necessary to resolve the question of the construction of s 50. I was referred to a number of cases which dealt with the issue of whether an order pursuant to s 50 of the Act should be made: Ewert; Malcolm Slater Pty Ltd v Thompson [2010] FMCA 120; Ambrose (Trustee), in the matter of Starr (Bankrupt) [2024] FedCFamC2G 593. It would appear that none of them arise in circumstances where service of the bankruptcy notice is challenged. Certainly, I was not taken to any such case.
15. However, I consider that it is appropriate to decide whether the bankruptcy notice has been served and then turn to whether there has been non-compliance with the bankruptcy notice. That is a matter which arises under the amended notice of opposition and in respect of which Mr Cosenza filed written submissions prior to the hearing of 2 October 2024, the adjournment of which he opposed.
16. The CCA relied on the affidavit of service of Mr Sankey filed on 18 October 2023 which exhibits email correspondence to Mr Cosenza sent on 15 September 2023 at 4:30 PM. It also exhibits correspondence from Mr Cosenza sent on 18 September 2023 which relevantly states: Dear Sir, I refer to your email below. I refer to repeated communications to your firm which continually appear to be disregarded as to my non receiving of any documents from your firm by email. I have continually and repeatedly advised that I will not accept service of any originating processes or any documents (by email) requiring any time limit for any reply as I have difficulty receiving any attachments from your firms email addresses. I NOTE YOUR FIRM NOW ON SEVERAL OCCASIONS HAS SOUGHT DEFAULT JUDGMENTS AND OTHER ORDERS (ONLY SERVING TO INCREASE COSTS UNNECCESARILY AND UNREASONABLY) TO BE TOLD BY THE COURT REPEATEDLY THAT SERVICE HAS NOT BEEN PROPERLY EFFECTED ! This has been repeatedly stated that should you wish to serve me with any document's [sic] that you must serve me personally. For avoidance of any doubt I have not been served any documents (which from your heading above appears to infer something about a bankruptcy notice). Nothing has been brought to my attention as it is unclear what precisely is required to be brought to my attention.
17. The affidavit also exhibits subsequent correspondence including by which Mr Cosenza asserts that whilst denying service occurred, he attempted to file an application to set aside the bankruptcy notice, but the registry refused to accept it, on the basis that he had not been served with the bankruptcy notice.
18. Pursuant to s 40(1)(g) of the Act, an act of bankruptcy is committed if the bankruptcy notice is not complied with within the prescribed period.
19. Regulation 102(1) of the Bankruptcy Regulations 2021 (Cth) provides that a bankruptcy notice may be served by various means.
20. Regulation 102(2) of the Regulations provides that: In the absence of proof to the contrary, the document is taken to have been received by, or served on, the person when the document would, in the due course of business practice, be delivered to that address or document exchange.
21. Section 28A of the Acts Interpretation Act 1901 (Cth) provides: + o 1. For the purposes of any Act that requires or permits a document to be served on a person, whether the expression "serve", "give" or "send" or any other expression is used, then the document may be served: 1. on a natural person: by delivering it to the person personally; or by leaving it at, or by sending it by pre‑paid post to, the address of the place of residence or business of the person last known to the person serving the document; or

• • o - 1. on a body corporate - by leaving it at, or sending it by pre‑paid post to, the head office, a registered office or a principal office of the body corporate. Note: The Electronic Transactions Act 1999 deals with giving information in writing by means of an electronic communication.
• • o 1. Nothing in subsection (1): 1. affects the operation of any other law of the Commonwealth, or any law of a State or Territory, that authorises the service of a document otherwise than as provided in that subsection; or 2. affects the power of a court to authorise service of a document otherwise than as provided in that subsection

1. Section 9 of the Electronic Transaction Act 1999 (Cth) provides: Requirement to give information in writing

• • o 1. If, under a law of the Commonwealth, a person is required to give information in writing, that requirement is taken to have been met if the person gives the information by means of an electronic communication, where: 1. in all cases - at the time the information was given, it was reasonable to expect that the information would be readily accessible so as to be useable for subsequent reference; and 2. if the information is required to be given to a Commonwealth entity, or to a person acting on behalf of a Commonwealth entity, and the entity requires that the information be given, in accordance with particular information technology requirements, by means of a particular kind of electronic communication - the entity's requirement has been met; and 3. if the information is required to be given to a Commonwealth entity, or to a person acting on behalf of a Commonwealth entity, and the entity requires that particular action be taken by way of verifying the receipt of the information - the entity's requirement has been met; and 4. if the information is required to be given to a person who is neither a Commonwealth entity nor a person acting on behalf of a Commonwealth entity - the person to whom the information is required to be given consents to the information being given by way of electronic communication. Permission to give information in writing
• • o 1. If, under a law of the Commonwealth, a person is permitted to give information in writing, the person may give the information by means of an electronic communication, where: 1. in all cases - at the time the information was given, it was reasonable to expect that the information would be readily accessible so as to be useable for subsequent reference; and 2. if the information is permitted to be given to a Commonwealth entity, or to a person acting on behalf of a Commonwealth entity, and the entity requires that the information be given, in accordance with particular information technology requirements, by means of a particular kind of electronic communication - the entity's requirement has been met; and 3. if the information is permitted to be given to a Commonwealth entity, or to a person acting on behalf of a Commonwealth entity, and the entity requires that particular action be taken by way of verifying the receipt of the information - the entity's requirement has been met; and 4. if the information is permitted to be given to a person who is neither a Commonwealth entity nor a person acting on behalf of a Commonwealth entity - the person to whom the information is permitted to be given consents to the information being given by way of electronic communication. Certain other laws not affected (3) This section does not affect the operation of any other law of the Commonwealth that makes provision for or in relation to requiring or permitting information to be given, in accordance with particular information technology requirements: (a) on a particular kind of data storage device; or (b) by means of a particular kind of electronic communication. Giving information

1. This section applies to a requirement or permission to give information, whether the expression give, send or serve, or any other expression, is used.
2. For the purposes of this section, giving information includes, but is not limited to, the following: (a) making an application; (b) making or lodging a claim; (c) giving, sending or serving a notification; (d) lodging a return; (e) making a request; (f) making a declaration; (g) lodging or issuing a certificate; (h) making, varying or cancelling an election; (i) lodging an objection; (j) giving a statement of reasons.
3. Regulation 102(3) of the Regulations provides that paragraphs 9(1)(d) and (2)(d) of the Electronic Transactions Act do not apply to documents that are required or permitted by the Act or the Regulations to be given or sent to, or served, on a person.
4. Therefore, as is summarised by Feutrill J in Owen v Sandhu [2024] FCA 198 at [32]: A bankruptcy notice is a document that is, at least, permitted by the Bankruptcy Act to be given, sent or served on a person within the meaning of reg 102 of the Bankruptcy Regulations and s 28A of the Interpretation Act. Service of a bankruptcy notice also falls within the meaning of giving information in s 9(5)(c) of the Electronic Transactions Act. Therefore, a bankruptcy notice may be served (given) to a person by means of an electronic communication without the person to whom the information is given consenting to service by electronic communication because s 9(1)(d) and s 9(2)(d) of the Electronic Transactions Act do not apply to service of a bankruptcy notice by operation of reg 102(3) of the Bankruptcy Regulations.
5. Mr Cosenza asserted, in correspondence exhibited to Mr Sankey's affidavit that he has "difficulty receiving any attachments" to correspondence received from the solicitors for the CCA. There was no independent evidence to support that assertion. The CCA submitted that Mr Cosenza's failure to provide such evidence should be viewed in the context that "evidence is to be weighed against the ability of a party to bring evidence to prove a fact or assertion or disprove a fact or assertion".
6. The CCA further submitted that Mr Cosenza's failure to exhibit to his affidavits the native form of the relevant email, but rather to always exhibit email chains which by their very nature will not disclose attachments to earlier emails, gives rise to an inference that his assertions as to not receiving the attachments should not be accepted. As well, the CCA submitted that, in accordance with s 9 of the Electronic Transactions Act, "it was reasonable" for it "to expect that the information would be readily accessible, so as to be usable for subsequent reference" as it is the ordinary course that emails are sent with attachments.
7. By asserting that he could not receive attachments, it would appear that Mr Cosenza was attempting to apply Re Rustic Homes Pty Ltd (1988) 13 ACLR 105 in relation to purported non-delivery of the bankruptcy notice. While it is not clear whether Mr Cosenza's written submissions were formally read, I consider it appropriate to infer that they were relied upon at least insofar as they relate to the service of the bankruptcy notice.

What is the effect of the purported payment of $16,000 by Mr Cosenza?

1. In his affidavit of 16 August 2024, Mr Cosenza deposes to having offered to pay the CCA on various occasions. He specifically deposes that he made an offer to pay the CCA on 11 August 2024, but that the CCA failed to accept or respond to the offer.
2. On 3 October 2024, counsel for Mr Cosenza initially stated from the bar table that the amount owing had now been paid. Mr Cosenza submitted that payment went to both the question of his solvency, and as to whether an order pursuant to s 50 was appropriate. However, his primary submission was that now the CCA had been paid, the application should be dismissed.
3. After a brief adjournment, further affidavits were filed with the Court. Mr Cosenza deposed as follows:
4. I am the respondent in this matter and affirm the contents of this affidavit in support of my application to have the applicant's creditors petition dismissed.
5. I admit to owing the amount of $16,000 to the City of Adelaide.
6. I admit having made several attempts previously for payment to City of Adelaide for the amount of $16,000. The applicant previously refused payment.
7. On 3.10.2024, at approximately 8.36am, I contacted the City of Adelaide accounts payable by telephone on 82037203. I was advised that the City of Adelaide would accept my payment by way of direct electronic funds or direct cash payment into their nominated bank account.
8. I was advised that the City of Adelaide has only one (1) bank account for payments which includes payments made in relation to all other business such as council rates, expiation notices, licence and permit fees and invoicing to creditors.
9. I was given at that time the bank details of the City of Adelaide as being: …
10. At 9.30am, I thereafter attended the Commonwealth Bank at Arndale branch where I attended to the immediate payment of the $16,000 by way of direct cash transfer into the nominated bank account.
11. Prior to doing so I requested the bank to confirm the account details were in fact the correct details for the City of Adelaide. The bank confirmed the account was in fact the bank account for the City of Adelaide as referred to above and confirmed the monies were deposited and received by way of cleared funds into the City of Adelaide bank account.
12. I paid the amount from my CBA account which permitted the monies to be immediately cleared as the CBA is also the bank for the applicant.
13. A receipt for the payment of $16,000 was given to me by the bank. The receipt/transaction number is T427704760254 which evidences payment made at 9.44am. The payment transfer is referenced as Cosenza payment costs. Now produced and marked as annexure DC 1 is a true copy of the receipt for payment in amount of $16,000 into account number ending in 5533.
14. I note the above facts of my own knowledge except where otherwise appears. (Emphasis in original.)
15. Ms Mitchell also filed a further affidavit on 3 October 2024 which exhibited a Copy of Record in relation to the Supreme Court proceeding. The Copy of Record indicated that the Supreme Court Proceeding had been running since 2016.
16. Subsequently, further affidavits were filed - one of Mr Sankey exhibiting an email from him confirming that the CCA does not accept the purported payment of the money, and one from Ms Debattista annexing an email from Ms Janet Crook, Team Leader in Corporate Governance and Legal of the City of Adelaide. The email stated: Accounts payable did not speak to anyone named Dean Cosenza yesterday. The phone number he quoted is not the Accounts Payable phone number. It is the Customer Centre phone number listed on the City of Adelaide website. The first incoming call to Accounts Payable was at 10.00am. Furthermore payments received are dealt with by the Accounts Receivable team. Therefore, if a team member from the Accounts Payable department had spoken to Mr Cosenza, he would have been transferred to Accounts Receivable. The Accounts Receivable Team have also confirmed that they did not have any communication with Mr Cosenza. A request has been put through the Team Leader in the Customer Centre to find out whether the Customer Centre received a call from Mr Cosenza at the nominated time yesterday. If so, we will hopefully be able to obtain a copy of the recording.
17. The CCA's position with respect to the tender by Mr Cosenza of the money was that, as the period for compliance with the bankruptcy notice had passed, it was entitled to refuse to accept tender, based on well-established principles, which it contended were similarly applicable to an application for a s 50 order. The relevant principles were comprehensively considered by Charlesworth J in Psevdos v Commonwealth Bank of Australia (No 2) [2017] FCA 19 at [65] - [70], in which her Honour concluded as follows: There were three limbs to Mr Psevdos' submissions concerning the payment of the Deposit into the trust account of CBA's solicitors. The first is that the refusal to accept the payment evidenced CBA's collateral purpose and rendered the continuation of the creditor's petition an abuse of process. The second limb of the argument is that the learned primary judge erred in failing to find that the debt specified in the bankruptcy notice remained due and payable. The third limb is that the learned primary judge erred in failing to determine that Mr Psevdos' willingness and ability to pay the Deposit proved his solvency. In McIntosh v Shashoua (1931) 46 CLR 494 (McIntosh) a debtor refused to accept payment of an assigned judgment debt after the creditor's petition in respect of the debt had been lodged. Starke J said (at 508): "It would be quite contrary to the spirit of the Bankruptcy Act to compel a creditor to receive payment of the debt after an available act of bankruptcy had been committed." Gavan Duffy CJ and Dixon J said (at 505): "The fact that after the presentation of the petition, the debtor tended payment of the assigned debt and the tender was refused cannot in this case affect the result. A petitioning creditor is entitled to refuse payment and proceed with the petition. The refusal of the tender in this case is consistent with the conclusion, if it does not strengthen it, that the petition are truly desired to obtain a sequestration order; and it in no way tends to show that the reason why such an order was desired was anything but legitimate." (footnote omitted) See also McTiernan J (at 521). The Bankruptcy Act as in force at the time when McIntosh was decided required, on the presentation of a creditor's petition, proof of the debt of the petitioning creditor, of service of the creditor's petition and of the act of bankruptcy relied upon: Bankruptcy Act 1924 (Cth), s 56(2). The requirements of proof were not materially different from the requirements of proof now prescribed in s 52(1) of the Bankruptcy Act. CBA was entitled, in accordance with the principles stated in McIntosh to refuse to accept the Deposit: Tov-Lev v Lowbeer (No 2) [2014] FCA 379 at [84] (Rares J); Picone v Velos [2007] FCA 1183 at [16] (Sundberg J). Accordingly, the making of the Deposit did not bring about the result that the debt upon which CBA relied had been paid or was not "still owing" within the meaning of s 52(1) such that there could be no power to make a sequestration order. The learned primary judge did not err in so finding.
18. Psevdos was cited with approval by the Full Court in Allison v Murphy [2021] FCAFC 232 at [46] as follows: However, there is a fundamental difficulty for Mr Allison's case to the effect that the monies should be treated as being available to reduce the debt such that it could not be relied upon to support the creditor's petition of Mr Murphy. Once the act of bankruptcy had been committed by Mr Allison, there was no obligation on the part of Mr Murphy to accept the tender of payment of the debt the subject of the bankruptcy notice: see McIntosh v Shashoua (1931) 46 CLR 494 at 505, 508; Taylor v Deputy Commissioner of Taxation [1999] FCA 195 at [39]; and Psevdos v Commonwealth Bank of Australia (No 2) [2017] FCA 19 at [70]. He was entitled to reject the tender made at that time and proceed with his petition. On the evidence, it was clear that Mr Murphy would accept nothing less than full payment. Therefore, even accepting the claim by Mr Allison that there had been such a tender (or a desire to make such tender) by the time of the review, that was not a sufficient basis upon which to conclude that there was error by the primary judge in making the sequestration order. Put another way, if the primary judge had found that there had been payment of the amount of $47,384 to Mr Murphy then that would not have been a sufficient reason, in itself, for the creditor's petition to have been dismissed. By reason of the act of bankruptcy in failing to satisfy the bankruptcy notice, it was only if the payment had been accepted by Mr Murphy that the debt would have been reduced. On the evidence, it was not accepted. Therefore, the debt remained outstanding.
19. The further submissions of the CCA were that to the extent that Mr Cosenza's affidavit of 3 October 2024 suggested that it had accepted the tender of the $16,000, that proposition cannot be maintained, as it reveals a number of gaps in the evidence. First, Mr Cosenza's affidavit references an unnamed person to whom he claims to have spoken. Secondly, he does not depose to disclosing that the debt in question is the subject of the creditor's petition. Third, nor does it depose to why Mr Cosenza contacted what he claims to be the accounts payable department when he knew that this matter was in the hands of others specifically "charged by the City Council to deal with this debt". Fourthly, and in any event, any person to whom Mr Cosenza claims to have spoken could not have the authority to bind the CCA in respect of this debt.
20. The CCA also relied on the affidavit of Ms Debattista to demonstrate that aspects of Mr Cosenza's evidence were contested.
21. I accept the submissions of the CCA. As it identified, as well as its own interests, there are the interests of other creditors, two of which support the creditor's petition. Contrary to Mr Cosenza submission, the evidence before the Court makes it clear that there are other "claims at large" already identified. Further, as the CCA submitted, it is unclear what additional claims there may be. Accordingly, I accept that the CCA has "sufficient cause" to refuse the payment of the $16,000.

Is the making of the order in the best interest of the creditors?

1. There are two affidavits before the Court which are particularly relevant to this issue. They are the affidavits of Mr Cosenza filed on 30 September 2024 and the affidavit of Mr Sankey of 2 October 2024.
2. Mr Cosenza's affidavit goes to his claimed solvency and relevantly deposes to, as of 30 September 2024, having cash available in the amount of $67,481.65 in a Commonwealth Bank of Australia account and of $146,158.50 in a National Australia Bank account. Mr Cosenza also deposes to, as of 25 September 2024, having a mortgage with a closing balance of $601,405.38 in favour of the Commonwealth Bank. Mr Cosenza's affidavit also annexes an independent valuation of the relevant property, being $1,200,000.00. Mr Cosenza's affidavit exhibits no bank statements or other documents demonstrating the history of his bank accounts.
3. Mr Sankey deposes to a Certificate of Title search for the relevant property, which relevantly reports a discharge of the CBA mortgage which was lodged on 25 September 2024 with a completion date of 30 September 2024. The search also records that the NAB mortgage was lodged on 25 September 2024 with a completion date of 30 September 2024.
4. Mr Sankey's affidavit also annexed a Valuer General's Valuation which showed that the relevant property has a current site value of $720,000.00 and capital value of $780,000.00.
5. With respect to the differences between the two affidavits, the CCA's written submissions were as follows: 6.8. However, the Respondent's affidavit of 30 September 2024 is silent about the new NAB mortgage, implies by omission that the CBA Mortgage and loan value remains current as at 30 September 2024, and when considered in light of the various property search information supports a strong inference that the balance standing in the NAB Bank account represents the proceeds of a refinances loan secured against the property, whereby the Respondent has taken steps to liquidate all or as much available equity in the Property as possible. 6.9. The Applicant is concerned that the refinance is an attempt by the Respondent to realise into cash as much of the available equity in the Property in order to frustrate a trustee's would-be efforts, post sequestration, to realise assets to fund a dividend. 6.10. It is the Applicant's respectful submission that the granting of the orders is in the interests of creditors, as the granting of such Orders are required to 'preserve the status quo'. (Emphasis in original.)
6. The CCA contended that the circumstances were similar to those in one of the cases to which I had referred the parties, namely Winn v Boss, in which Rares J, at [34], referred to Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361 at 385 [64] as follows: [a] failure of a party-witness to tell the whole truth may support an inference that the party suppressed evidence which would have been damaging to the party-witness. A litigant has no duty to call particular witnesses or to procure that any witnesses called by that litigant are asked particular questions. A litigant who enters the witness box, on the other hand, is under a positive duty to tell the whole truth in answer to the questions asked.
7. His Honour concluded that the principle equally applies to affidavit evidence as follows:
8. I am of opinion that this principle also applies where the litigant witness fails to give the relevant evidence in affidavits upon which he or she relies, so that it can be inferred that the evidence would not assist the litigant: Jones v Dunkel (1959) 101 CLR 298, indeed would have exposed facts unfavourable to the party: Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Australian Competition and Consumer Commission (2007) 162 FCR 466 at 525 -526 [230] per Weinberg, Bennett and Rares JJ; Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418E - 419D per Handley JA.
9. The CCA contended that Mr Cosenza's conduct overall is relevant. Mr Cosenza filed an affidavit as to his financial position on 16 August 2024 which does not identify any debts. In response, the CCA filed an affidavit which referred to the debt owed to Mr Tigani, now one of the supporting creditors, which was "taken up" by Mr Cosenza who filed a further affidavit of 30 September 2024 which identified a number of debts, some of which the CCA contended were only included because they had been ascertained by the CCA. Subsequently, Mr Sankey filed a further affidavit which revealed that Mr Cosenza's affidavit of 30 September 2024 failed to mention the refinancing of his home, notwithstanding such refinancing concluded on the same day as that upon which the affidavit was affirmed.
10. Mr Cosenza, in addressing the differences between the affidavits submitted that: …to be plain, the respondent does not deny that there was a refinancing that occurred in relation to the property, that the property is now encumbered, as indicated by the annexes to the Sankey affidavit, to the NAB, but that the position, as identified in paragraph 2 of the Cosenza affidavit is unchanged - but that once the refinancing is taken into account, the effect on the total surplus asset position, as set out in paragraph 14, is diminished by an amount of $150,000.
11. Mr Cosenza also submitted that the CCA had failed to address another difference between the affidavits with respect to the competing valuations.
12. Mr Cosenza's contention is that his creditors are not at risk due to any refinancing. He acknowledged that his financial position has "diminished" by $150,000, but advances that such diminution does not prejudice the position of any creditors. In that regard, Mr Cosenza contended that he had been awarded damages of $40,000 payable by the State of South Australia which would offset any orders for costs made in relation to interlocutory applications. As stated above, there are a number of costs orders against Mr Cosenza arising from interlocutory applications filed in the Supreme Court Proceeding, as annexed to Ms Mitchell's affidavit filed on 1 October 2024. Similarly, he submitted, the amount of $16,000 owed to the CCA could not be at risk as a result of the refinancing and further that the tender of the money is evidence that he has the capacity to pay that amount.
13. Generally, with respect to the creditors' interests, Mr Cosenza submitted that the CCA's position was "extraordinary", and that the evidence was "vacuous in respect of any risk to the creditor's interests". He further submitted that an order pursuant to s 50 is not one which is easily made, referring to Smith v Varley [2006] FMCA 1572 at [2], which relied on Re Penning & Anor; Ex Parte State Bank of South Australia & Anor (1989) 89 ALR 417 as follows: The authorities make it fairly clear that this is not a section to be called in aid lightly and that the court must have before it some reasonable information concerning the activities of the debtor and the concern which the creditor has that those assets might be dissipated so that the interests of all creditors could be harmed: Re Penning and Anor; Ex Parte State Bank of South Australia & Anor (1989) 89 ALR 417 as per von Doussa J at [425].
14. Mr Cosenza submitted that the evidence could not "establish anything other than error". He also submitted that a refinancing could be to enable a person to "meet the daily requirements of living, [uphold] their standard of living, [pay] their debts and [be] solvent".
15. In respect of the submissions made by the CCA as to the principles set out in Winn v Boss and the cases referred to therein, Mr Cosenza contended: In my respectful submission, the concept of a Jones v Dunkel inference is a matter that your Honour and the applicant may well rely upon, however, there are three riders to that. Firstly, your Honour ought not be seduced into accepting a position where a Jones v Dunkel inference can rise as high as the test in Briginshaw for the purposes of fraud or an untruth. Secondly, the status …of the Cosenza affidavit is, respectfully, at large. The Cosenza affidavit has not been tested by cross-examination, and full and frank submissions have been made in respect of issues arising from the annexures within the Sankey affidavit. But neither of those matters derogate from the position that was earlier submitted in respect of the effect that the contents of the Sankey affidavit and/or the National Australia Bank refinancing has on the applicant's ability to pay what is otherwise in aggregate a very modest amount.
16. Mr Cosenza also made submissions as to the prejudice he would likely suffer if the orders sought were made. They include as to Mr Cosenza's ability to conduct "ongoing actions" and "carry out commercial operations", for example "his ability to obtain licenses in respect of earnings to be made from regulated sporting events". It might also include Mr Cosenza's license with respect to "acting as a real estate agent" and "his prospects of being admitted … as a solicitor and barrister of the Supreme Court of South Australia". While Mr Cosenza deposed to the impact a sequestration order may have on his ability to work, he adduced no independent evidence in support of this proposition, nor directed at the making of an order pursuant to s 50 of the Act.
17. Mr Cosenza took the Court to a number of cases in which an order pursuant to s 50 of the Act had been made. He attempted to distinguish them on their facts - submitting that those orders had been made in different circumstances from those which prevail in this case. For example, he submitted, in those cases there was evidence of the debtor having property on the market or being based offshore.
18. The submissions of the State of South Australia, as a supporting creditor, were that there was no evidence before me such that I could conclude that any costs orders in favour of the State "would be encompassed by the $40,000 judgement debt that is currently owing to the respondent".
19. In the circumstances, I consider that it is in the creditor's interests that an order be made.
20. First, Mr Cosenza's evidence has been consistently less than fulsome and I do not accept that his failure to refer to the refinancing of his house and the diminution of equity he therefore holds in relation to that house, in the context of the documentary evidence, can be characterised as an error. Rather, I consider that it reflective of an attempt to overstate the available equity in his home and his liquidity in the hope that on the hearing of a creditor's petition he would be found to be solvent in accordance with the cash flow test.
21. Second, I do not consider that Mr Cosenza's submission that he has made full and frank disclosure regarding the matters raised by Mr Sankey's affidavit holds much weight. This is because it was only made after Mr Sankey raised the matters and, importantly, they go to a critical issue of the value of his assets.
22. Third, nor do I consider that Mr Cosenza has made satisfactory disclosure of his debts as may be seen by the contrast between his affidavit of 16 August 2024, and that of 30 September 2024. As is clear, the costs orders arising from interlocutory applications made in the Supreme Court Proceeding were all made before 16 August 2024, on which date Mr Cosenza deposed to the damages awarded in his favour but made no mention of the costs orders against him.
23. Fourth, even after Mr Sankey's affidavit annexed the judgment of the Supreme Court Proceeding, Mr Cosenza omitted any mention of the interlocutory costs made against him. They were only revealed by Ms Mitchell's affidavit filed on 1 October 2024.
24. Fifth, there was no evidence to support Mr Cosenza's submission that the refinancing may have been to enable him to meet the daily requirements of living, uphold his standard of living, pay his debts and remain solvent. In any case, in the absence of any independent evidence as to Mr Cosenza's income, that submission tends to support an inference that Mr Cosenza is diminishing his assets.
25. Sixth, I do not consider Mr Cosenza's attempt to distinguish this case on its facts, from others where orders have been made can be maintained in light of the way in which his evidence has evolved.
26. Seventh, I do not consider anything turns on the CCA's "failure" to address the difference in the valuations relied upon.
27. Eighth, as to Mr Cosenza's submissions regarding the prejudice he claims he would suffer should an order be made, I do not regard that as outweighing the risks to the interests of creditors. Further, there is no evidence before the Court to support Mr Cosenza's contention that the damages of $40,000.00 are likely to offset the costs orders which have been made in that matter. It should be noted that the orders made in the Supreme Court Proceeding were as follows:
28. The applicant is awarded $10,000 in damages for each of the four trespasses made out.
29. The matter is adjourned for directions on Tuesday, 15 October 2024 at 9.30am.
30. Pursuant to r 182.2 of the Uniform Civil Rules 2020 (SA), the judgment in this matter is not to come into effect until the date of the next hearing, being Tuesday, 15 October 2024 at 9.30am.
31. For all of these reasons, the creditors' interests are served by the making of the orders.
32. While the CCA sought an order dispensing with the requirements of service of the interim application upon Mr Cosenza in its interim application, the CCA did not press for that order at the hearing.
33. At the conclusion of the hearing on 4 October 2024, and immediately after I made the orders, Mr Cosenza, through his counsel, indicated his intention to appeal and sought that I stay the orders pending the outcome of that appeal. That application was refused on the basis that it would altogether frustrate the making of the order.

conclusion

1. It is for those reasons that orders have been made substantially in accordance with those proposed by the CAA. I certify that the preceding ninety-one (91) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Meagher.