Council of the Law Society of the Australian Capital Territory v Ezekiel-Hart, in the matter of Ezekiel-Hart

Council of the Law Society of the Australian Capital Territory v Ezekiel-Hart, in the matter of Ezekiel-Hart - [2024] FCA 1341 - FCA 2024 case summary — Zoe

THE COURT ORDERS THAT:

The applicant creditors be granted leave to amend paragraph 1 of the Creditor's Petition to state that the costs of ACTCA 33 of 2019 and ACTA 34 of 2019 were certified on 8 December 2021.
The estate of Emmanuel Tam Ezekiel-Hart be sequestrated under the Bankruptcy Act 1966 (Cth).
The applicant creditors' costs of the petition be paid from the estate of the respondent debtor in accordance with the Bankruptcy Act.
A copy of this order is to be provided by the applicant creditors to the Official Receiver in Canberra within two (2) business days of the making of these orders. THE COURT NOTES THAT:
The date of the act of bankruptcy is 26 May 2023. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT 1 INTRODUCTION [1] 2 EVIDENCE [5] 3 PRELIMINARY MATTERS [8] 3.1 The application for an adjournment [8] 3.2 The Debtor's request for the Court to compel Mr Reis to give evidence [19] 4 BACKGROUND [22] 5 APPLICATION TO AMEND THE CREDITOR'S PETITION [26] 6 DISPOSITION OF THE CREDITOR'S PETITION [30] 6.1 Jurisdiction to make a sequestration order [30] 6.2 Satisfaction of conditions for creditor's petition (s 44 of the Bankruptcy Act) [34] 6.3 Satisfaction of requirements as to creditor's petition (s 47 of the Bankruptcy Act and rr 4.02, 4.04 of the Bankruptcy Rules) [37] 6.3.1 Relevant provisions [37] 6.3.2 Disposition [40] 6.4 Proof of matters required at proceedings on creditor's petition (s 52 of the Bankruptcy Act and rr 4.05 and 4.06 of the Bankruptcy Rules) [44] 6.4.1 Relevant provisions [44] 6.4.2 Disposition [50] 7 DEBTOR'S GROUNDS OF OPPOSITION [53] 7.1 The grounds of opposition [53] 7.2 Background to the grounds of opposition [59] 7.2.1 Federal Circuit Court of Australia Proceeding No CAG 92 of 2012 and application for the renewal of the Debtor's practising certificate in 2013 (Ground of Opposition 6) [59] 7.2.2 ACTSC Proceeding No SCA 75 of 2017 (Grounds of Opposition 1 and 2) [68] 7.2.3 ACTCA Proceeding No 33 of 2019 and ACTCA Proceedings No 34 of 2019 (Ground of Opposition 4) [73] 7.2.4 ACTSC Proceeding No 139 of 2023 and ACTA Proceeding No 1 of 2024 (Grounds of Opposition 1 and 2) [84] 7.3 Ground one: The Debtor has a counter-claim admitted by the Creditors [88] 7.4 Ground two: The Debtor has a set-off or cross demand exceeding the amount claimed in the Bankruptcy Notice [91] 7.5 Ground three: The present proceedings are oppressive against the Debtor [100] 7.6 Ground four: The Creditors have unreasonably refused to accept payments by instalment [104] 7.7 Grounds five and six: The Creditors have misled and lied to the Court and Tribunal [107] 7.8 The commencement by the Debtor of an appeal against the Set-Aside Decision [115] 8 CONCLUSION [117]

[5]

INTRODUCTION

On 23 November 2023, the applicants, the Council of the Law Society of the Australian Capital Territory and Mr Robert Reis, (together, the Creditors) filed a creditor's petition seeking a sequestration order under s 43 of the Bankruptcy Act 1966 (Cth) against the respondent's estate. The respondent (the Debtor) is Chief Emmanuel Tam Ezekiel-Hart (being the title by which the Debtor prefers to be described). The creditor's petition expires on 22 November 2024, absent an extension, having been issued on 23 November 2023. The creditor's petition relies upon an act of bankruptcy committed by the Bankrupt when he: failed to comply on or before 26 May 2023 with the requirements of a bankruptcy notice served on him on 5 May 2023 or to satisfy the Court that he had a counter-claim, set-off or cross demand equal to or more than the sum claimed in the Bankruptcy Notice, being a counter-claim, set-off or cross demand that he could not have set up in the action in which the judgment referred to in the Bankruptcy Notice was obtained.
The creditor's petition was accompanied by an affidavit verifying the petition sworn by John Matthew Hill, solicitor, on 23 November 2023 (the first Hill Affidavit) and an affidavit of service of Naomi Woodward, process server, affirmed on 11 May 2023 (the first Woodward Affidavit) deposing as to service of the bankruptcy notice and underlying documents.
On 12 March 2024, the Debtor filed a notice stating grounds of opposition to the petition (the opposition notice), together with his affidavit affirmed on 7 March 2024. The opposition notice sets out six grounds of opposition. Among other things, the Debtor claims to have a counter-claim admitted by the Creditors to be assessed, a set-off or cross demand exceeding the among claimed in the Bankruptcy Notice. The Debtor also alleges that the Creditors have acted oppressively and unreasonably, and that have knowingly mislead and lied to the Court and the Tribunal (referring to the ACT Civil and Administrative Tribunal). These allegations of misconduct, however, as I explain, are made at the highest level of generality notwithstanding their seriousness and are not supported by evidence. As such, the allegations ought not to have been made.
For the reasons set out below, the conditions for a sequestration order are met and none of the grounds of opposition have any merit. Accordingly, the sequestration order should be made.

[6]

EVIDENCE

The creditors rely upon the following eight affidavits:
the first Woodward affidavit;
the first Hill affidavit;
Affidavit of John Matthew Hill, sworn on 24 November 2023 and accepted for filing on 27 November 2023 (the second Hill affidavit);
Affidavit of Naomi Woodward, affirmed on 6 December 2023 and accepted for filing on 14 December 2023 (the second Woodward affidavit);
Affidavit of Samuel William Harper, solicitor, affirmed on 19 March 2024 and accepted for filing on 19 March 2024 (the first Harper affidavit), together with Exhibit SWH1, which is filed in support of the creditor's petition and in reply to matters raised in the respondent's notice of opposition filed on 9 March 2024 and the respondent's affidavit file don 9 March 2024;
Affidavit of Samuel William Harper, affirmed on 25 October 2024 and accepted for filing on 25 October 2024 (the second Harper affidavit), together with Exhibit SWH3;
Affidavit of Samuel William Harper, affirmed on 25 October 2024 and accepted for filing on 25 October 2024 (the third Harper affidavit), together with Annexure SWH4. In this affidavit, Mr Harper deposes that searches of the National Personal Insolvency Index did not reveal any details of a debt agreement about the debt on which the applicant relies; and
Affidavit of Samuel William Harper, affirmed on 25 October 2024 and accepted for filing on 25 October 2024 relating to debt owed by respondent (the fourth Harper affidavit). In this affidavit, Mr Harper deposes among other things that as at 25 October 2024, the full amount of the debt owed by the respondent on which the applicants rely is still owing.
As earlier affidavits filed by the Creditors deposing as to the amount owing had been superseded, I made orders on 28 October 2024 for the Creditors to file and serve amended written submissions which were updated to refer to the up-to-date affidavits in place of the superseded affidavits.
The Debtor's affidavit affirmed on 7 March 2024 was relied on by him in support of his opposition notice (the Debtor's affidavit). In the circumstances outlined below, I took the Debtor's affidavit as read. I also had regard to the Debtor's detailed written submissions together with his detailed outline of oral submissions which he provided by email to the Court and the Creditors shortly before the hearing on 28 October 2024 and the oral submissions which the Debtor made before leaving the hearing to the extent that they were relevant to the substantive issues.

[7]

By an email at 10:39pm on Thursday 24 October 2024, the Debtor wrote to the Registry applying for an adjournment of the hearing of the Creditor's Petition in circumstances where the Debtor was ordered to pay security for costs to the Court in Ezekiel-Hart v Reis [2024] FCA 1203 on 18 October 2024 (the security for costs decision).
At the commencement of the hearing on 28 October 2024, the Debtor sought an adjournment of the hearing pending the determination of his appeal against the decision in Ezekiel-Hart v Reis [2024] FedCFamC2G 121 (the Set-Aside Decision) not to set aside the bankruptcy notice. The application for an adjournment was opposed by the Creditors, given among other things that the bankruptcy notice was due to expire on 22 November 2024 and that the matter had already been adjourned twice.
In support of the adjournment, the Debtor submitted in effect that his appeal had good prospects of success given, among other things, his allegation that an admission had been made by Mr Reis in the Tribunal that the Creditors had provided evidence that was not correct, and that the Court had had been misled or subject to a fraud on the Court. He also submitted that the fact that the creditor's petition would expire before the appeal was heard was effectively the Creditor's fault because of the orders made by me on 18 October 2024 in the Debtor's appeal of the Set-Aside Decision on the Debtor's application. In the security for costs decision, I made orders staying that appeal pending provision by the Debtor of security for costs in the sum of $20,000 and for the appeal to be dismissed if that security was not provided by 15 November 2024. By orders dated 8 November 2024, the date that security for costs was due to be paid was amended to 18 December 2024 to reflect the fact that payment was due two months after the date of the Court's orders.
At the hearing I refused the adjournment for reasons which I indicated briefly and will explain more fully in these reasons.
First, in considering the application for an adjournment, I took into account that "the Court's duty is not only to afford fairness to an unrepresented litigant, but also to the other parties … and the obligation of the Court and the parties under ss 37N and 37M" of the Federal Court of Australia Act 1976 (Cth) (FCA Act): Simjanovska v Department of Human Services [2019] FCA 499 at [16] (Perry J). Relevantly, s 37N imposes an obligation on the parties to civil proceedings to conduct proceedings in a way that is consistent with the overarching purpose of the civil practice and procedure provisions set out in s 37M, namely: "to facilitate the just resolution of disputes … as quickly, inexpensively and efficiently as possible". Under s 37M the overriding purpose includes the following objectives: (b) the efficient use of the judicial and administrative resources available for the purposes of the Court; (c) the efficient disposal of the Court's overall caseload; (d) the disposal of all proceedings in a timely manner; (e) the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute.
Secondly, for the reasons given by me in the security for costs decision, I consider that the Debtor's prospects of success on the appeal are low.
Thirdly, the submissions which the Debtor wished to make in support of his appeal, namely, that he has a claim of some kind based upon a fraud on the court or oppression, are the same arguments which the Debtor wished to make in opposition to the creditor's petition.
Fourthly, in the circumstances the Debtor's position vis-à-vis the appeal would not be prejudiced if the hearing were to proceed as listed on 28 October 2024. As I explained at the hearing and the Creditors accepted as correctly summarising their argument: there's no obvious prejudice [to the Debtor], because: (a) he can run the arguments here that he wants to run in the appeal anyway; and (b) if he ultimately succeeds on - if he loses before me on the creditors petition issue, there's nothing to stop him still proceeding with his appeal, assuming he pays security for costs, and [(c]) if he ultimately succeeds on the appeal, then it will follow, as I understand from [the Creditors'] submission, that he then can pursue processes to have orders I have made on the creditors petition to be set aside.
On the other hand, the applicants would suffer real prejudice by reason of the creditor's petition lapsing, subject to an extension being granted, before it could be heard and determined.
Finally, the application for an adjournment was made at the very last minute before the hearing of the creditor's petition and in circumstances where the creditor's petition had already been adjourned twice. In this regard, the matter was listed for hearing before a registrar on 15 December 2023 but it was adjourned pending delivery of the Set-Aside Decision. A second hearing listed before a registrar on 31 May 2024 was vacated after the applicant filed an interlocutory application on 23 April 2024 seeking the creditor's petition be determined by a Judge of the Federal Court pursuant to s 35A(7) of the FCA Act.
In these circumstances, I reached the view that it would not be in the interests of justice to grant the adjournment; nor would it serve the overarching purpose in s 37M of the FCA Act. Accordingly, the adjournment application was refused.

[9]

The Debtor also submitted that the Court should rely upon s 47(1) of the Bankruptcy Act to compel Mr Reis by affidavit to verify the creditor's petition as a person who knows the relevant facts. He denied that Ms Woodward, who had provided the verifying affidavit, was a person who in fact "knows the relevant facts" for the purposes of the statutory requirement. The Debtor submitted that absent Mr Reis' evidence, the Court would not know whether he was "caught up with lies" or "might be misleading the court". In particular, the Debtor contended that Mr Reis had made an admission before a tribunal (which is denied by the Creditors) that evidence led by the Creditors was incorrect. This underlies at least some of the Debtor's allegations of fraud and the like with respect to the issue of the bankruptcy notice. During the course of the hearing, the Debtor also indicated, that unless the Court required Mr Reis to attend Court for cross-examination, he would not proceed with the hearing because it would be oppressive if Mr Reis did not attend.
I encouraged the Debtor to remain at the hearing but also explained that the Court could not require him to remain and that it was ultimately a matter for him to decide whether or not to remain. However, I also explained that if he did leave the hearing prematurely, I would determine the matter having regard to the submissions that had already been made and otherwise on the papers, and that I would take the Debtor's submissions about the Creditor's failure to call Mr Reis to verify the creditor's petition into account in deciding whether the requirements of the Bankruptcy Act for the issue of a creditor's petition have been complied with. Specifically, I said: As I've explained, I will consider the submission you've made in deciding whether or not the creditor's petition should issue, and the requirements of the Act are being complied with. But as I've said, if you form the view then that you really do not wish to continue to participate, obviously the court won't compel you to do so, and I think that the fair thing to do in those circumstances would be for the court to assume that your affidavit has been read and relied upon by you, and to ask Ms Bindon [counsel for the Creditors] to identify the evidence she relies upon, and the court will decide the matter on the papers
The hearing of the creditor's petition on 28 October 2024 was not able to be completed when the Debtor decided that he no longer wished to participate in the hearing and left the hearing. In line with what I had explained while the Debtor was still present, the only matters proceeded with after the respondent left the hearing were confirmation of the evidence upon which the Creditors relied in support of the creditor's petition and the reserving of judgment. No further submissions were made. These matters were reflected in the orders made by me at the conclusion of the hearing on 28 October 2024 and explained briefly in the notations to those orders.

[16]

Relevant provisions

Section 47(1) of the Bankruptcy Act requires that "a creditor's petition must be verified by an affidavit of a person who knows the relevant facts". The affidavit verifying a creditor's petition for the purposes of s 47(1):
can be sworn or affirmed by a solicitor if they have knowledge of the relevant facts, "even if that knowledge was acquired in the course of their acting for the creditor, including knowledge acquired from the creditor, so long as that knowledge amounted to more than mere instructions"; and
may be sworn on information and belief. (ACW v Du Bray (No 2) [2020] FCA 994 at [120] (Wigney J) (following Re Cirillo; Ex parte Deputy Commissioner of Taxation [1992] FCA 408; (1992) 36 FCR 279; and Daly v Watson [1994] FCA 361; (1994) 50 FCR 544)).
Rule 4.02(2) of the Federal Court (Bankruptcy) Rules 2016 (Cth) (Bankruptcy Rules) also requires that: The affidavit (the verifying affidavit) verifying the petition required by subsection 47(1) of the Bankruptcy Act must: (a) be included in the petition in accordance with Form B6; or (b) accompany the petition.
In addition, rule 4.04(1) of the Bankruptcy Rules provides that a creditor's petition founded on an act of bankruptcy specified in s 40(1)(g) of the Bankruptcy Act must be accompanied by the following: (a) an affidavit stating: (i) that the records of the Court and the records of the Federal Circuit Court have been searched and no application in relation to the bankruptcy notice has been made; or (ii) that an application was made in the Court or in the Federal Circuit Court (as the case may be) for an order setting aside the relevant bankruptcy notice and the application has been finally decided; or (iii) that an application was made in the Court or in the Federal Circuit Court (as the case may be) for an order extending the time for compliance with the bankruptcy notice and the application has been finally decided; and (b) an affidavit of service of the relevant bankruptcy notice. Disposition
I am satisfied that the conditions in s 47(1) of the Bankruptcy Act have been met. First, the creditor's petition is in the form prescribed, being Form B6 as required by s 47 and r 4.02(a). Secondly, the first Hill affidavit verifies the creditor's petition in accordance with s 47(1). Specifically, Mr Hill as the solicitor for the applicants has deposed of his own knowledge to the truth of the statements made in the creditor's petition and other relevant matters. Thirdly, as required by r 4.02, the first Hill affidavit accompanied the creditor's petition.
Furthermore, the creditor's petition was accompanied by an affidavit of service of the bankruptcy notice, being the first Woodward affidavit, in compliance with r 4.04(1)(b) of the Bankruptcy Rules. That leaves the question of compliance with r 4.04(1)(a) of the Bankruptcy Rules.
The Creditors accept that no affidavit was filed with the creditor's petition which met the requirements set down in r 4.04(1)(a). However, they point to the fact that r 4.04(1)(a) does not allow for, or otherwise contemplate, an accompanying affidavit that states that an application to set aside a bankruptcy notice had been made but not finally decided, which was the case in the present proceeding. Given that lacuna in the rules, in the Creditors' submission, this is an appropriate case for the exercise by the Court of its implied power to dispense with the requirement that the Creditor's Petition be accompanied by an affidavit required by r 4.04(1)(a) of the FCA Rules. In particular, the Creditors rely upon the following circumstances: In circumstances where the deadline for presenting a creditor's petition founded on Ezekiel-Hart's act of bankruptcy committed on 26 May 2023 was 26 November 2023 and where the Set Aside Decision was not handed down until 15 February 2024, it was not possible for the Creditor's Petition founded on the stated act of bankruptcy to have been accompanied by an affidavit of the type required by rule 4.04(1)(a). However, paragraphs [6] to [8] of the Hill Affidavit depose as to the status of the Set Aside Application as at 23 November 2024, when the Creditor's Petition was presented. Paragraph [45] of the Reply Affidavit states that the Set Aside Application was dismissed. The Applicants accept that it was appropriate for Judge Manousaridis to reserve his decision on the Set Aside Application given the multitude of the issues he was required to decide. However, it would be an undesirable outcome if a creditor were not able to present a Creditor's Petition founded on an act of bankruptcy due to delay occasioned by a matter outside of the creditor's control.
I accept that in these circumstances where:
it was not possible for the Creditors to file an affidavit of the kind required by r 4.04(1)(a) with the Creditor's Petition because judgment on the Debtor's Set-Aside Application was still reserved;
the first Hill affidavit (which accompanied the creditor's petition) deposed as to the status of the Debtor's Set-Aside Application; and
the first Harper affidavit deposed that the Set-Aside Application had been determined; it is appropriate for the Court to exercise its power to dispense with the requirement that the creditor's petition be accompanied by one of the affidavits required by r 4.04(1)(a) of the Bankruptcy Rules.

[18]

Relevant provisions

Section 52(1) of the Act provides that: At the hearing of a creditor's petition, the Court shall require proof of: (a) the matters stated in the creditor's petition (for which purpose the Court may accept the affidavit verifying the creditor's petition as sufficient); (b) service of the creditor's petition; and (c) the fact that the debt or debts on which the petitioning creditor relies is or are still owing and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor…
Rule 4.05 of the Bankruptcy Rules provides that the following documents must be served on the debtor five days before the date fixed for the hearing of a creditor's petition: (a) the creditor's petition; and (b) a copy of the affidavit, or affidavits, verifying the petition required by subsection 47(1) of the Act; and (c) if applicable, a copy of the affidavits relating to the petition required by rule 4.04; and (d) a copy of any consent to act as trustee of the debtor's estate filed under section 156A of the Bankruptcy Act.
(In this case, I note that no consent to act as trustee of the debtor's estate has been filed under s 156A of the Bankruptcy Act so r 4.05(d) is not engaged.)
Rule 4.06(2) of the Bankruptcy Rules also provides that before the hearing of a creditor's petition, the applicant creditor must file an affidavit: (a) states that the documents required to be served under rule 4.05 have been served, and when and how they were served; and (b) has attached to it a copy of the documents that were served and proof of service in relation to the documents.
Rule 4.06(3) of the Bankruptcy Rules further provides that the applicant creditor must, no earlier than the day before the hearing of the creditor's petition, file an affidavit of a person who has performed a search of the National Personal Insolvency Index that sets out the things required by that rule.
Rule 4.06(4) of the Bankruptcy Rules provides that the applicant creditor must file an affidavit of a person who knows the relevant facts that: (a) was sworn as soon as practicable before the hearing date for the petition; and (b) states that each debt on which the applicant creditor relies is still owing. Disposition
I am satisfied that the above requirements are met for the following reasons. First, regarding proof of service of petition and the requisite accompanying documents, I am satisfied on the basis of the second Woodward affidavit that the respondent was personally served with the creditor's petition, together with the first Hill affidavit verifying the petition and the first Woodward affidavit confirming service of the Bankruptcy Notice at 11.49am on 28 November 2023. As service of these documents was effected more than five days before the hearing of the petition, I am satisfied that the conditions in r 4.06(3) of the Bankruptcy Rules have been met. I note, in this regard, that for the reasons earlier stated, this is an appropriate case in which to dispense with the requirement for the petition to have been accompanied by an affidavit meeting the description in r 4.04(1)(a).
I am further satisfied that a National Personal Insolvency Index search was conducted, as deposed to in the fourth Harper affidavit. The affidavit confirms that a search of the National Personal Insolvency Index was performed and did not reveal any details of a debt agreement about the debt on which the Creditors rely.
Finally, on the basis of the fourth Harper affidavit, I am satisfied that the debt referred to in the creditor's petition is still owing by the Debtor to the Creditors.

[19]

In the Debtor's notice stating grounds of opposition to the creditor's petition, dated 7 March 2024 and accepted for filing on 12 March 2024, the Debtor outlined six grounds of opposition on the basis of which he alleged that the application for the creditor's petition should be "dismissed as abuse of process occasioning oppression", namely:
The Respondent have a counter-claim admitted by the creditor and asked for assessment
The Respondent have a set-off or cross-demand exceeding the amount claimed in the Bankruptcy Notice
In the current circumstances of oppressive conduct by the Applicants against the Respondent commencing since 2008 by Mr Robert Reis, the Respondent could not have set up the counter-claim, set-off or cross demand in the action in which the judgment in respect of which the bankruptcy notice has been issued was obtained.
The Applicants have unreasonably refused to accept payments by instalments.
The Applicants have variously misled and knowingly lied to the Court and Tribunal
The Applicants' Application was made for ulterior motives including ulterior motive to withhold the Respondent's practising certificate forever while lying to the Court that they had issued the Respondent with conditional practising certificate, and further lying that it would not used the bankruptcy against the Respondent practising certificate, but at the time of lying to the Court, the Applicants have paid and received and adopted advice that bankruptcy should be used to withhold the Applicant's certificate and they adopted that option while lying to the Court to mislead Judge Neville. Also to prevent their criminal prosecution in breach of section 26 of the AHRC Act 1986.
The Creditors also treated the fact that there is an undecided appeal of the Set-Aside Decision as an additional ground of opposition.
While the Debtor's affidavit was apparently filed in support of his opposition notice, it is difficult, as the Creditors submit, to discern the connection between the grounds of opposition and the matters addressed in his affidavit.
Section 52(2) of the Bankruptcy Act provides that the Court may dismiss a creditor's petition if it is satisfied by the debtor: (a) that he or she is able to pay his or her debts; or (b) that for other sufficient cause a sequestration order ought not to be made.
Although not explicitly linked, I accept that the Debtor's grounds of opposition potentially afford grounds upon which the Court may dismiss the creditor's petition under either s 52(2)(a) or (b). The onus of establishing these grounds lies squarely on the Debtor. Thus, as Goodman J explained in Bullen v Mangano [2024] FCA 1199 at [9], with respect to determining whether grounds on which to dismiss the creditor's petition under s 52(2) of the Bankruptcy Act exist: The respondent [debtor] bears the onus of proving that she is able to pay her debts: Culleton v Balwyn Nominees Pty Ltd [2017] FCAFC 8; (2017) 343 ALR 632 at 644 to 645 [44] (Allsop CJ, Dowsett and Besanko JJ). This onus on the debtor to establish their solvency is an onus on the balance of probabilities: Coates Hire Operations Pty Ltd v D-Link Homes Pty Ltd [2011] NSWSC 1279 at [66] (White J, as his Honour then was); Deputy Commissioner of Taxation v Bayconnection Property Developments Pty Ltd [2012] FCA 363; (2012) 127 ALD 64 at [60] to [61] (Robertson J). The nature of the evidence necessary to discharge the onus will vary from case to case. One would ordinarily expect a debtor resisting a creditor's petition on the basis that they are solvent to adduce the most cogent evidence available to them. Of course, and relatedly, all evidence falls to be assessed by reference to the relative capacity of each party to adduce evidence on the particular subject matter: Blatch v Archer (1774) 1 Cowp 63.
Before addressing each ground of opposition in turn, it is necessary briefly to summarise prior proceedings which underlie various of the debtor's ground of opposition. The relevant facts pertaining to those proceedings are set out in the first Harper affidavit.

[20]

Federal Circuit Court of Australia Proceeding No CAG 92 of 2012 and application for the renewal of the Debtor's practising certificate in 2013 (Ground of Opposition 6)

On 31 May 2013 the Debtor applied to the Law Society for the renewal of his unrestricted practising certificate for the 2013-2014 practising year (Renewal Application). On 6 June 2013, Registrar Wall of the Federal Circuit Court of Australia (as it was then known) made a sequestration order against the Debtor in proceeding CAG 92 of 2012. On 7 June 2013, the Debtor filed an application for review of Registrar Wall's decision to make a sequestration order.
On 18 June 2013, Mr Larry King, the then-CEO of the Law Society, wrote to the Debtor regarding the Renewal Application. In the letter, Mr King:
informed the Debtor that the Council would be considering the Renewal Application on 26 June 2013;
set out conduct on the part of the Debtor that the Council was concerned about for the purpose of determining the Renewal Application; and
invited the Debtor to address the Council's concerns within seven days.
On 19 June 2013, Mr King sent a further letter to the Debtor in which he provided further particulars of the conduct that the Council was concerned about for the purpose of determining the Renewal Application.
On 21 June 2013, proceeding CAG 92 of 2012 came before Judge Neville for a directions hearing.
On 16 August 2013, Mr King wrote to the Debtor advising that:
the Council held the provisional view that the Debtor was not a fit and proper person to hold an unrestricted practising certificate; and
the Debtor should be given a final opportunity to provide any further submissions in relation to the Renewal Application within 14 days.
Mr King's letter of 16 August 2013 also identified further matters that the Council proposed to consider in addition to the matters described in his earlier letters dated 18 and 19 June 2013.
As at 10 September 2013, the Council had not made a decision in relation to the Renewal Application.
On 10 September 2013, the Debtor wrote to the President of the Law Society and notified the President that he was withdrawing his Renewal Application.
On 6 March 2014, Judge Neville dismissed the Debtor's application for review in CAG 92 of 2012: Ezekiel-Hart v The Law Society of the Australian Capital Territory & Ors [2014] FCCA 400. ACTSC Proceeding No SCA 75 of 2017 (Grounds of Opposition 1 and 2)
On 19 October 2017, the Debtor commenced Supreme Court proceeding SCA 75 of 2017 against the Creditors and others.
On 19 September 2018, McWilliam AsJ (as her Honour then was) made orders including to dismiss an application in SCA 75 of 2017 made by the Creditors and other respondent s to the proceedings for a vexatious proceedings order. As a result, her Honour ordered the Creditors and other respondents to the proceeding to pay any legal costs and disbursements incurred by the Debtor on the application. However, such costs were not to be recoverable until the resolution of the proceedings: Ezekiel-Hart v Reis [2018] ACTSC 264. These costs have not been assessed.
On 25 July 2019, Crowe AJ dismissed the Debtor's claim in SCA 75 of 2017 and ordered him to pay the Creditors' costs: Ezekiel-Hart v Reis (Leave to Appeal) [2019] ACTSC 193.
On 23 November 2021, the Supreme Court assessed the Creditors' bill of costs in SCA 75 of 2017 and issued a certificate of costs assessment for $48,388.65.
The Debtor was self-represented throughout these proceedings. ACTCA Proceeding No 33 of 2019 and ACTCA Proceedings No 34 of 2019 (Ground of Opposition 4)
In Court of Appeal proceedings ACTCA 33 of 2019 and ACTCA 34 of 2019, Mossop J made costs orders in the Creditors' favour, in the course of dismissing the Debtor's applications for leave to appeal: Ezekiel-Hart v Reis [2019] ACTCA 31. It will be recalled that the certificate of costs assessment in the amount of $25,530.45 subsequently issued by the ACTCA (along with the associated costs order) now form the basis upon which the creditor's petition is made.
On 20 November 2019, McInnes Wilson Lawyers (MCW), the then-solicitors for the Creditors, wrote to Debtor and made an offer on the Creditors' behalf to accept $12,000 within 28 days in full and final settlement of the Creditors' costs in ACTCA 33 of 2019 and ACTCA 34 of 2019. The debtor did not respond to MCW's letter.
On 1 July 2020, MCW wrote to the Debtor and offered on behalf of the Creditors to accept $16,000 by 10 July 2020 in satisfaction of the Creditors' costs in ACTCA 33 of 2019 and ACTCA 34 of 2019.
On 9 July 2020, the Debtor wrote to MCW and sought an extension of time within which to reply to the offer communicated in MCW's letter of 1 July 2020.
On 10 July 2020, MCW wrote to the Debtor and advised that:
the request for an extension of time was rejected;
it was open for the Debtor to make a counter-offer; and
MCW held instructions to file the bill of costs for assessment if no agreement in relation to costs could be reached by close of business on 13 July 2020.
On 13 July 2020, the Debtor wrote to MCW in response to MCW's letter dated 10 July 2020.
On 24 July 2020, the Debtor wrote to MCW stating that: ... I have now considered my position in relation to your offer and will accept to pay the proposed $12000 and to pay it over 4 years, If you change your mind to ask for $18,716.831 will have no problem with that but will seek reasonableness, however I will make payment over 4 years. I make the following proposal in relation to the whole of my cost relative to your client cost. 1. I forgive your client the whole of my $35,000, and neither party owe the other and we work peacefully with one another. … However, in relation to the current Human Rights matters before the ACT Supreme Court, and Discrimination matter before the ACT Human Rights Act, I will accept $50,000 for my damages and my certificate and will withdraw all the claims ...
On or about 24 August 2020, the Creditors caused a bill of costs referable to ACTCA 33 of 2019 and ACTCA 34 of 2019 to be filed in the Supreme Court.
On 12 November 2020 the Supreme Court assessed the Creditors' costs in ACTCA 33 of 2019 and ACTCA 34 of 2019, and issued a certificate of costs assessment in the sum of $25,530.45.
On 4 October 2021, the Debtor wrote to MCW and said: Very good morning, I refer to your letter dated 30 September 2021 and the other bill of costs I note that on 24 July 2020 I accepted your offer. … I accept your offers and will pay on instalments over 4 years pending when Mr Robert Reis release my work certificate to quickly pay it off.
On 8 October 2021, MCW wrote to the Debtor and advised that: (a) no agreement had been reached regarding the Applicants' costs in ACTCA 33 of 2019 and ACTCA 34 of 2019; and (b) MCW was instructed to enforce payment of the amount referred to in the certificate of costs assessment that had been issued in ACTCA 33 of 2019 and ACTCA 34 of 2019. ACTSC Proceeding No 139 of 2023 and ACTA Proceeding No 1 of 2024 (Grounds of Opposition 1 and 2)
At [38]-[39], [45]-[46] and [49] of the Set-Aside Decision, Mansouradis J considered the ACTSC proceeding SC 139 of 2023 in the course of rejecting an argument that the Debtor had 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 the subject of the Bankruptcy Notice. Proceeding SC 139 of 2023 was commenced by the Debtor against nine defendants, including the Creditors.
Subsequently, on 2 February 2024, Curtin AJ of the ACTSC made orders in SC 139 of 2023 including:
striking out the statement of claim filed by the Debtor; and
awarding judgment for the first to sixth defendants against the Debtor (Ezekiel-Hart v Council of the Law Society of the ACT (No 7) [2024] ACTSC 12).
In his reasons for striking out the statement of claim, Curtin AJ held at [361]-[363] that: The statement of claim is wholly defective. It does not serve the purpose of a pleading, which is to clearly inform the defendants of the case they have to meet. It is supposed to do so by clearly setting out the material facts in relation to the elements of each cause of action pleaded. The statement of claim contains claims that the applicant seeks to pursue which are fundamentally flawed and based upon an erroneous understanding of relevant legal principles. I would make the same observations Kennett J did of the statement of claim before his Honour in Ezekiel-Hart v Council of the Law Society of the ACT (No 3) [2022] ACTSC 300 at [23] (see proceedings #23 and save only for the fact only one admission was pleaded in the present case), namely: [23] More significantly, the FASC presents as a document drafted and settled by a person who has at best a tenuous grasp of legal principle and principles of pleading, and who has such strong opinions about the subject matter as to be incapable of any degree of detachment. It is convoluted, repetitive and conclusory. To the extent that it identifies specific facts it does not proceed chronologically, and often does not identify the date of the event or document that is being referred to. It refers to alleged "admissions" without identifying when or how they were made, or properly identifying their content. It makes no separation between allegations of fact and more or less sweeping conclusions (often of bad faith and sometimes of outright dishonesty) based - although it is hard to be sure - on those facts.
On 8 February 2024, the Debtor filed a notice of appeal by which he appealed the orders made by Curtin AJ on 2 February 2024. The filing of the notice of appeal commenced the ACTCA proceeding ACTCA 1 of 2024. This is the only proceeding in which the Debtor has claimed monetary relief against either of the Creditors.

[24]

The Debtor submits that he has a set-off or cross demand exceeding the amount claimed in the Bankruptcy Notice.
Section 40(1)(g) of the Bankruptcy Act provides that a judgment debtor on whom a bankruptcy notice is served does not commit an act of bankruptcy if they can: 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…
In Guss v Johnstone [2000] HCA 22; 171 ALR 598, on which the Creditors relied, the High Court held at [39]-[40] that: In Vogwell v Vogwell, Latham CJ said, in relation to a corresponding provision: "[T]he authorities show that the matter to which the court looks is this, - whether it is just that the claim should be determined before the bankruptcy proceedings are allowed to continue; in other words, whether it is a claim which it is proper and reasonable to litigate." 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.
The relevant principles with respect to s 40(1)(g) were helpfully summarised by Lindgren J in Glew v Harrowell [2003] FCA 373 at [9]-[10] as follows: There are authorities suggesting that [the debtor applicants] 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". 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…

However, as Lindgren J also held at [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.
Although these authorities are concerned with an application to set aside a bankruptcy notice, I agree with the Creditors that similar principles can be considered in cases where, as here, a debtor seeks to oppose a sequestration order on the basis that such an order would be unjust on the ground that they have an arguable set-off, counter-claim, or cross demand.
However, as the Creditors submit, the Debtor here has not provided any details of the purported set-off or cross demand which is alleged to exceed the amount of the Bankruptcy Notice. Further, the only proceeding in which the Debtor has claimed monetary relief against either Creditor is the appeal in ACTCA 1 of 2024. This is an appeal from the orders of Curtin AJ in SC 139 of 2023 relevantly striking out the statement of claim in that proceeding on the basis that it was "fundamentally flawed and based upon an erroneous understanding of relevant legal principles" (Ezekiel-Hart v Council of the Law Society of the ACT (No 7) [2024] ACTSC 12 at [400]). Furthermore, as Middleton J stated in Woodridge v Australian Securities and Investments Commission [2015] FCA 349 at [11], there is "a prima facie assumption that the judgment the subject of the appeal is correct". Accordingly, as the Creditors submit, this Court must assume that Curtin AJ's judgment is correct on its face, notwithstanding the Debtor's appeal and therefore that Curtin AJ's reasons for judgment are correct.
In these circumstances, I accept the Creditor's submission that I should proceed on the basis that the statement of claim in SC 139 of 2023 remains "incapable of supporting a finding that the claims Mr Ezekiel-Hart makes in the proceedings have any, or any sufficient substance to permit them to heard and determined in the usual way". This necessarily means that the statement of claim would be incapable of satisfying the Court that the Debtor has a prima facie case for a set-off or cross demand against either of the Creditors or that any such case would be genuine or bona fide.
In these circumstances, and in the absence of any evidence from the Debtor capable of establishing any viable set-off or cross-demand, ground two must be rejected.

[28]

By ground four, the Debtor contends that the Creditors have unreasonably refused to accept payment by instalments. The Creditors, however, submit that it was not unreasonable for them to reject any offer by the Debtor to make payments by instalment in circumstances where the evidence establishes the following: (a) there was no offer of the Applicants capable of being accepted on 24 July 2020, when Ezekiel-Hart purported to accept their offer; (b) as at 24 July 2020, the most recent offer made by the Applicants was the offer of 1 July 2020 that [the debtor] pay the sum of $16,000 in satisfaction of the costs of ACTCA 33 of 2019 and ACTCA 34 of 2019 and the amount of $2,716.83 for the cost of obtaining the bill of costs (totalling $18,716.83); (c) even if any offer that had been made by the Applicants had been capable of acceptance on 24 July 2020, Ezekiel-Hart did not accept these offers. Rather, Ezekiel-Hart's email of 24 July 2020 should be understood to have made one of the following three-counter offers: (i) that Ezekiel-Hart pay the Applicants the sum of $12,000 over a four-year period in satisfaction of the costs orders made in ACTCA 33 of 2019 and ACTCA 34 of 2019; (ii) that Ezekiel-Hart pay the Applicants the sum of $18,716.83 over a four-year period in satisfaction of the costs orders made in ACTCA 33 of 2019 and ACTCA 34 of 2019 and for the costs of obtaining a bill of costs; and (iii) that Ezekiel-Hart forgive the Applicants' purported debt to him of $35,000 and that neither party owe the other money in respect of various unsatisfied costs orders; (d) the Applicant did not accept any of the counter offers made on 24 July 2020. In circumstances where three significantly different offers were made, including an offer that Ezekiel-Hart pay no amount, it is not clear which of these offers would have been capable of being accepted; (e) the Applicants' solicitors understood Ezekiel-Hart' statement purporting to accept the Applicants' offers and that he would pay the amount over four years pending him being provided a 'work certificate' on 4 October 2021 to be an offer and rejected it.
I set out the text of the email of 24 July 2020 from the Debtor at [79] above and I agree that the Creditors' submissions accurately interpret this as making three counter-offers as described above.
In my view, the Creditors' submission that it was plainly reasonable for them to reject the Debtor's counter-offers for payment by instalments, given that they involved payment over an extended period of four years. Ground four must therefore be rejected.

[30]

Ground five of the notice of opposition alleges that the Creditors have "variously misled and knowingly lied to the Court and Tribunal". By ground six, the Debtor also submits that the application was brought for ulterior motives, including the motive "to withhold the Respondent's practising certificate forever…". Both grounds, however, are unparticularised.
Furthermore, in the Debtor's affidavit and submissions, the Debtor makes a multitude of allegations to the effect that the Creditors have engaged in egregious and dishonest conduct, including that they misled and knowingly lied to the Court and Tribunal, committed a fraud on the Court, acted to pervert the course of justice, have acted repeatedly with malice and hatred towards the Debtor including by maliciously reporting him to the police, and failed to honour an undertaking to the Court with respect to his practising certificate. However, the allegations in the affidavit are unparticularised and no evidence is provided in support of them. For example, there is not a scintilla of evidence adduced by the Debtor to support his allegations that the judgment debt should be set aside because it was obtained by a fraud on the Court (Debtor's affidavit at [163]). Nor is there any evidence that the Creditors acted in bad faith and were "motivated to achieve a collateral purpose which is not a 'legitimate' purpose of a creditor's petition as a remedy for attempted recovery of the alleged indebtedness through insolvency administration", being the "endless retaining of my practising certificate using this process" (at [161]).
Allegations of so serious a nature are not lightly to be made: see, eg, SZFDE v Minister for Immigration and Citizenship [2007] FCA 35; (2007) 232 CLR 189 at [15] (the Court); Forrest v Australian Securities and Investments Commission [2012] HCA 39; (2012) 247 CLR 486 at [26] (French CJ, Gummow, Hayne and Kiefel JJ). The fact that the Debtor is unrepresented, or feels strongly that he has been wronged, does not afford him a license to make whatever ill-founded allegations he wishes against the Creditors. As, for example, Samuels JA held in Rajski v Scitec Corporation Pty Ltd unreported, New South Wales Court of Appeal, 16 June 1986 at 27: An unrepresented party is as much subject to the rules as any other litigant. The court must be patient in explaining them and may be lenient in the standard of compliance which it exacts. But it must see that the rules are obeyed, subject to any proper exceptions. To do otherwise, or to regard a litigant in person as enjoying a privileged status, would be quite unfair to the represented opponent. (Cited with approval in Nobarani v Mariconte [2018] HCA 36; (2018) 265 CLR 236 at [47] (the Court)).
These are constraints of which the Debtor can be taken to be well aware. For example, in Ezekiel-Hart v The Law Society of the Australian Capital Territory [2012] ACTSC 103, which involved the Debtor, Refshauge J stated at [130]-[131] that: Perhaps more significantly, it is important that, as the NSW Court of Appeal said in Saltoon v Lake [1978] 1 NSWLR 52 at 58; "[a]n allegation of fraud, or participation in a fraud, is not lightly to be made". This is re-inforced by the obligations of detailed pleading required by Banque Commerciale SA En Liquidation v Akhil Holdings Ltd. As explained by Harper J in NIML Ltd v MAN Financial Australia Ltd (No 2) [2004] VSC 510 at [6]: Allegations of fraud should only be made on the basis of evidence worthy of serious consideration, which points to dishonesty in the subject of the allegation. Loose allegations of fraud are a blot on the adversarial system, and may - where, for example, they are made in terrorem - amount to an abuse of process. It is therefore important that those inclined to make such a serious allegation on an inadequate, or no, foundation be discouraged in their purpose by the prospect of having to pay costs as between solicitor and client.
Furthermore, as the Creditors point out, the Debtor has also been cautioned against making unfounded allegations of dishonesty in material filed in the Federal Court and the Federal Circuit and Family Court: Ezekiel-Hart v Law Society of the Australian Capital Territory [2013] FCA 257 at [37]-[38] (Foster J) and Ezekiel-Hart v The Law Society of The ACT [2014] FCCA 658 at [65] (Neville J) respectively. As recently as 15 February 2024, Manousaridis J stated in the Set-Aside Decision that the debtor's unparticularised and unfounded assertions of misconduct against the Law Society should not have been made: Set-Aside Decision at [31].
Given this history, the nature of the bald allegations made against the Creditors in this case and their repetition yet again in this proceeding lend, with respect, significant support to the view expressed by Curtin AJ in Ezekiel-Hart v The Law Society of the ACT (No 7) [2024] ACTSC 12 at [368] that the Debtor: lacks insight, lacks any ability to examine past events rationally and objectively, and lacks any ability to separate legal causes of action, and their elements, from his emotionally charged views and conclusions arising from past events.
In short, in the circumstances I have described, the allegations against the Creditors in the Debtor's notice of opposition, submissions and affidavit are plainly scandalous, vexatious, irrelevant, and embarrassing, and I have not given them any weight. As Stewart J, for example, observed in Singh v Khan (No 2) [2021] FCA 463 at [3], parties are entitled to know with clarity the case asserted against them, and they are entitled not to have to respond to irrelevant, scandalous, frivolous and vexatious material.
It follows that these grounds lack any merit and must be rejected.

At a glance

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