Gelonesi v G. Abignano

Gelonesi v G. Abignano - [2020] FCA 898 - FCA 2020 case summary — Zoe

PERRY J: 1 INTRODUCTION [1] 2 EVIDENCE [8] 3 BACKGROUND [12] 3.1 Quit4Good and the Creditor [12] 3.2 The Loan Agreement entered into on 8 December 2012 [15] 3.3 Supreme Court proceedings for repayment of the loan and the first deed of settlement [18] 3.4 The Creditor's petition filed on 22 April 2015 [22] 3.5 Subsequent negotiations and the exchange of correspondence on 18 and 19 April 2016 [24] 3.6 The Second Deed of Settlement with respect to the creditor's petition proceedings on 26 September 2016 [35] 3.7 Issue of the Bankruptcy Notice against Mr Gelonesi on 13 December 2018 [42] 4 THE PRESENT APPLICATION [45] 4.1 The issues joined between the parties prior to the adjournment on 10 July 2019 [45] 4.2 The adjournment of the first trial date and Points of Claim filed on 24 July 2019 [50] 4.3 Case management hearing the day before the trial [55] 4.4 The submissions relied upon by the parties [57] 5 CONSIDERATION [59] 5.1 The legal and jurisdictional requirements to set aside a bankruptcy notice [59] 5.1.1 Relevant provisions of the Bankruptcy Rules [59] 5.1.2 Provisions relevant to an application to set aside a bankruptcy notice on the ground of an offsetting claim of equal or greater amount [62] 5.1.3 Provisions relevant to an application to set aside a bankruptcy notice on the ground that the amount claimed is excessive [68] 5.2 The additional grounds of opposition pleaded in the Points of Claim [70] 5.3 Should Mr Gelonesi be permitted to expand the grounds of opposition to include the additional claims? [74] 5.3.1 The offsetting claim [74] 5.3.2 The alleged overstatement of the Debt [79] 5.3.3 The contention that the Court should go behind the Judgment [85] 5.4 Grounds 1 and 2 of the original application to set the Bankruptcy Notice aside [87] 6 CONCLUSION [93]

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INTRODUCTION 1 On 13 December 2018, the Official Receiver issued Bankruptcy Notice No. 231937 addressed to the applicant, Antonio Gelonesi, (the Bankruptcy Notice). The Bankruptcy Notice, was grounded on the judgment debt entered by the Supreme Court of New South Wales on 29 December 2014 (the Judgment Debt). The Bankruptcy Notice claimed that the debt due by Mr Gelonesi to the respondent creditor, G. Abignano (Investment) Pty Limited (the Creditor), was comprised of the following elements: Amount of the judgment debt $1,066,008.38 Add interest accrued $250,105.94 Sub-total $1,316,114.32 Less payments made $328,800.00 Debt $987,314.32 2 The debt therefore that the Creditor claims is due is $987,314.32 (the Debt) inclusive of interest and payments deducted. 3 The Bankruptcy Notice was served on Mr Gelonesi on 20 December 2018 (affidavit sworn by Mr Gelonesi on 9 January 2019 (the first Gelonesi affidavit) at [2]). The Post-Judgment Interest Calculation is set out in the Schedule to the Bankruptcy Notice. 4 By an application filed on 10 January 2019 and within the time fixed for compliance with the Bankruptcy Notice, Mr Gelonesi sought orders that: (1) pursuant to s 41(6A)(b) of the Bankruptcy Act 1966 (Cth) (the Bankruptcy Act), time for compliance with the Bankruptcy Notice be extended; and (2) the Bankruptcy Notice be set aside. 5 A copy of the Bankruptcy Notice accompanied the application in compliance with r 3.01 of the Federal Court (Bankruptcy) Rules 2016 (the Bankruptcy Rules). The application was also accompanied by the first Gelonesi affidavit pursuant to rr 3.02 and 3.03 of the Bankruptcy Rules. 6 By reason of rolling orders made pursuant to s 41(6A) of the Bankruptcy Act, the time for compliance with the Bankruptcy Notice was extended, with the last such order made on 29 January 2020 extending time up to and including midnight on the date on which judgment is delivered (ie 26 June 2020). 7 For the reasons set out below, the application must be dismissed with costs.

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3.2 The Loan Agreement entered into on 8 December 2012 15 In December 2012, Mr Gelonesi and Mr Amodeo sought funding for Quit4Good from the Creditor in order to extract funds from the United States of America and for Quit4Good to pay certain financial obligations (T64.35-39 and 65.13 (Mr Gelonesi); second Abignano affidavit at [5]-[6]). The Creditor was an entity associated with Mr Amodeo's family through marriage, and with Mr Gelonesi through his golfing and personal relationship with the director of the Creditor, Mr Jim Abignano (T64.42-47 (Mr Gelonesi)). 16 On 8 December 2012, the Creditor, Quit4Good, Mr Amodeo and Mr Gelonesi entered into a Deed of Loan (the Loan Agreement) pursuant to which the Creditor loaned $880,000.00 to Quit4Good repayable with interest by 15 January 2013 (first Abignano affidavit at [5] and annexure A). Mr Amodeo and Mr Gelonesi guaranteed the loan jointly and severally (Loan Agreement at cl 15.1). 17 At the time of the Loan Agreement, Mr Gelonesi was no stranger to new ventures or to financial deals, as the Creditor submits. Among other things, Mr Gelonesi had held a number of roles with the French bank, Credit Lyonnais, over the period 1987 to 1993 including as a senior institutional dealer advising in equities, options and portfolio management and as the corporate treasurer in funding, derivatives and currency hedging. From 1993, he worked as the corporate treasurer for the old, established Italian Bank, Banca Monte dei Paschi di Siena, where he managed all areas of treasury for the Bank in Australia. From 2005, he worked as the executive chairman for the Asian office of Libertas Capital, a private UK investment company where he oversaw the expansion of its operations from London into Asia including overseeing the sourcing of funds. He had also established two companies, one being involved in investment, consulting and sponsorship in the sustainable environmental sector and emerging carbon driven markets, and the other being a company that manufactures golf clubs and sells them in Sydney and the USA (T61-63 (Mr Gelonesi)). Mr Gelonesi accepted that as a result of his work, he had "a good grasp" of financial markets, and that he understood how to value companies, the "ins and outs of obtaining funding", and that if a person gave a guarantee then they were liable for the Debt (T62.45-63.5 and 64.5; see generally id at T60.40-63.43 (Mr Gelonesi)).

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3.5 Subsequent negotiations and the exchange of correspondence on 18 and 19 April 2016 24 On 5 August 2015, Mr Gelonesi copied Mr Joseph Abignano and Mr Jim Abignano into an email to Quit4Good's accountant in which he advised that Quit4Good did not own the formula for the product sold by it or have any intellectual property in it, the product was not TGA approved (i.e. approved under the Therapeutic Goods Act 1989 (Cth)) which was necessary for pharmaceutical products before they could be marketed, and Quit4Good had not signed any sales and purchase agreement in relation to it (second Abignano affidavit at [9]-[10] and annexure D). The tenor of the email was that Mr Gelonesi considered that he had been misled about these aspects of the product. In the email Mr Gelonesi also raised questions about whether Mr Amodeo had misled him as to whether he was a medical doctor which Mr Gelonesi regarded important in terms of marketing the product (ibid). It is clear from his cross-examination that Mr Gelonesi felt very strongly about these matters and honestly believed that he was misled (T66.25-68.47). However, that issue does not fall for determination in this case. Relevantly for present purposes, these concerns had in Mr Gelonesi's view, as expressed in his email and repeated in his evidence, led to difficulties in getting investors "to run with [Quit4Good]" and Mr Gelonesi did not believe at the time of the email that it could be listed as an asset. In raising these issues, Mr Gelonesi explained that: … it related to my extensive experience of analysis, I was concerned that, given some of the things that were raised, it may have indicated that the Quit 4 Good shares had no value, really. And reading my summary of the company at that particular time, my goal in writing that summary was to convey to all parties, as a responsible guarantor for the loan, as a director at that time with - with Alan, that there were a number of anomalies that had existed. (T76.26-31) 25 On 25 November 2015, the then legal representatives for Mr Gelonesi wrote to the lawyers for Mr Amodeo proposing arrangements with Mr Amodeo to facilitate payment of the outstanding amounts and for a "parting of the ways" between Mr Amodeo and Quit4Good, given that Mr Gelonesi and Mr Amodeo "no longer see eye to eye in relation to, amongst other things, the direction of Quit 4 Good" (annexure D, first affidavit of Mr Gelonesi). 26 On 18 April 2016, Mr Joseph Abignano sent an email to Mr Gelonesi in the following terms: I suggest you send a letter to G Abignano (Investment) Pty Ltd based on the following, if you agree together with Share transfers: You confirm to transfer all shares owned by you and mark to GAI [ie the Creditor] together with all loans which you have provided Q4G both in your name and in any associated or related entity. GAI will hold shares and undertake to transfer them back to you upon payment of our loan of $988,868 by the 3rd May 2016 (we will discuss the discomfort finalisation at that time). Should you fail to complete by this date, we will attempt to sell the shares to other parties and recover any shortfall from you. If you can finalise this in the morning, we will look to delay or vacate the proceedings tomorrow afternoon. (annexure B, second Gelonesi affidavit) 27 I note that Clause 11 of the Loan Agreement provided that if the lender defaulted on the loan, the defaulting Guarantor was required on the provision of written notice by the Creditor to transfer the shares held by him in Quit4Good to the Creditor for an agreed purchase price of $1.00 (and the Shareholder's Loan for an agreed value of $10.00). There is a suggestion in Mr Joseph Abignano's first affidavit that Mr Gelonesi transferred his shares in compliance with this obligation in the Deed of Loan. However this email does not purport to constitute written notice given under Clause 11 of the Deed of Loan and require the transfer of the shares for $1.00. The terms on which the share transfer is proposed in Mr Joseph Abignano's email are also different in other respects. 28 Mr Gelonesi responded to Mr Joseph Abignano's offer by email on 19 April 2016 attaching a letter (the April 2016 letter). Also attached was a share transfer form signed by him and a witness for 100 shares in Quit4Good dated 18 April, with the consideration for the transfer and the space for the signature of an officer of the Creditor and witness to that signature left blank. A signed and witnessed share transfer form for Mark Walton's single share in Quit4Good was also otherwise left blank. The letter and share transfer forms were received by Mr Joseph Abignano on 19 April 2016 (first Abignano affidavit at [12])). In the letter, Mr Gelonesi stated: Please find attached signed executed share transfer forms for: Antonio Gelonesi (50 shares) Mark Walton (1 share) In favor of G Abignano Investments Pty Ltd. Please hold the shares in trust upon the understanding that I will settle the outstanding amount of $988,868 by 3 May 2016. Upon that settlement, you will return said shares. As sole director of 8180 Pty Ltd I withdraw my rights to monies owed to 8180 Pty Ltd from Quit 4 Good Pty Ltd and to my self that appear in the balance sheet. There are no other unrelated entity lines within the company connected to me. In the event that I do not settle on 3 May 2016, I give you the authority to market the shares and recover any shortfall from me. As I have no further interest in the company I would appreciate that the legal matter be vacated today, Tuesday, April 19, 2016. (annexure A, second Gelonesi affidavit) (errors in the original) 29 In my view, the exchange of correspondence on 18 and 19 April 2016 plainly constituted an offer by Mr Joseph Abignano followed by a counter offer by Mr Gelonesi which Mr Joseph Abignano, on behalf of the Creditor, must be taken by his silence and subsequent conduct to have accepted. This is also consistent with the Creditor's position that the shares were not a gift from Mr Gelonesi (T43.10). That being so, as counsel for the Creditor accepted, the terms of that agreement would be those contained in the letter from Mr Gelonesi on 19 April 2016 (T41.46-T42.3). However, for reasons I later explain, this does not ultimately assist Mr Gelonesi's case which must fail on multiple grounds in any event. 30 Mr Gelonesi did not pay the outstanding amount of $988,868.00 by 3 May 2016 (second Abignano affidavit at [17]; T78.36-38 (Joseph Abignano)). 31 Mr Joseph Abignano gave evidence that the shares were held until 3 May 2016 and beyond in accordance with the proposal in his email dated 18 April 2016, until an arrangement (to which Mr Joseph Abignano was not a party) was made between his father, Mr Jim Abignano, and Mr Amodeo for the transfer of the shares to Mr Amodeo (T87.35, 97.5-9 and 111.21-24 (Joseph Abignano)). By contrast, Mr Gelonesi alleged that the shares were transferred on 18 April 2016 contrary to the agreement which he claimed was reached as a consequence of the correspondence on 18 and 19 April 2016. 32 Plainly the shares could not have been transferred on 18 April 2016 pursuant to an agreement reached the following day. However I do accept that they were transferred pursuant to the agreement shortly after 18 April 2020, consistently with the tenor of Mr Gelonesi's evidence. This conclusion is supported by the Form 484 signed by Alan Amodeo on 14 July 2016 and filed with the Australian Securities and Investment Commission (ASIC) advising of changes to members' shareholding. (I note that for reasons which were not adequately explained, only one form was apparently lodged with ASIC by the Creditor's accountant which inaccurately showed a transfer of the shares directly from Mr Gelonesi to Mr Amodeo (first Abignano affidavit at [11]-[13]; see also second Abignano affidavit at [17]). The Creditor sought to rely upon the Form 484 in support of its submission that the date of the transfer was 14 July 2016 (respondent's outline of closing submissions (RCS) at [30] and fn 27). However, the difficulty with that submission is that the Form 484, which is signed as true and correct by Mr Amodeo as a director of Quit4Good, advised ASIC that the "earliest date of change", being the date of the transfer of shares to Mr Amodeo, was 18 April 2016 (annexure D, first Abignano affidavit). This is also the same date on which, according to the Form 484, Mr Gelonesi and Mr Mark Walton ceased holding office with Quit4Good. 33 Furthermore, Mr Joseph Abignano said that he did not recall any conversations relating to the transfer of the shares in Quit4Good prior to the conclusion of the Second Deed of Settlement in September 2016 (T87.24 (Joseph Abignano)), and he was adamant in his evidence that he was not a party to the arrangement between his father, Mr Jim Abignano, and Mr Amodeo for the transfer of the shares to Mr Amodeo and did not know the terms of the arrangement (see e.g. T87.35-40 (Joseph Abignano)). Nor was Mr Joseph Abignano apparently directly involved in the transfer of the shares. Furthermore, there was no evidence of any attempt to market the shares in the period between the April 2016 correspondence and the date on which the Form 484 was lodged with ASIC (as counsel for the Creditor accepted at T43.33) which might have explained the delay, despite Mr Joseph Abignano's assurances in his email on 18 April 2016 that the Creditor "will attempt to sell the shares to other parties and recover any shortfall from you". In this regard, Mr Joseph Abignano gave evidence that he was not aware of any marketing having occurred between 3 May and 14 July 2016 (T110.10-24). 34 Were it necessary therefore to determine this issue, I would have found that the information conveyed in the Form 484 should be preferred over Mr Joseph Abignano's evidence, given among other things he had very limited knowledge about the issue, and therefore that the transfer of shares took place shortly after 18 April 2016 following receipt of the transfer forms from Mr Gelonesi on 19 April 2016. However, for reasons I later explain, leave ought not to be granted to expand the grounds in the Points of Claim to which this evidence was directed and therefore the issue does not ultimately arise.

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3.6 The Second Deed of Settlement with respect to the creditor's petition proceedings on 26 September 2016 35 Mr Gelonesi and the Creditor entered into a Deed of Settlement with respect to the creditor's petition proceedings on 26 September 2016 (the Second Deed of Settlement) (applicant's first affidavit at [19]-[20] and at p. 43, annexure F; first Abignano affidavit at [19] and annexure F). Importantly, in the recitals to the Second Deed of Settlement, the parties acknowledged that: A. On 8 December 2012, [Quit4Good] and [the Creditor] entered into a Deed of Loan whereby [the Creditor] agreed to loan the sum of $880,000 to Quit4Good ("Quit4Good Loan"). The Quit4Good Loan was guaranteed by [Mr Gelonesi]. B. Quit4Good currently owes [the Creditor], under the Quit4Good Loan, a loan debt of not less than $850,000 ("Quit4Good Debt"). C. Judgment was entered in favour of [the Creditor] against [Mr Gelonesi] on 29 December 2014 for $1,066,008.38 ("Judgment"). Since entry of the Judgment, [Mr Gelonesi] has made various payments in reduction of the Judgment and has relinquished shares and loans held by [Mr Gelonesi] to [the Creditor] in accordance with a shareholder's loan entered into between the parties, but, as at 26 September 2006, the Judgment Debt is still greater than $850,000 ("Judgment Debt"). 36 Clause 1.1 of the Second Deed of Settlement required Mr Gelonesi to pay $350,000.00 (the Settlement Sum) to the Creditor by 26 September 2017 if the "Quit4Good Debt" as defined in recital B was not repaid to the Creditor in full, or secured or compounded to the Creditor's reasonable satisfaction. 37 By clause 7 of the Second Deed of Settlement, the parties acknowledged and agreed that: 7.1.1 The Judgment Debt remains due and owing to [the Creditor]; 7.1.2 If [Mr Gelonesi] pays the Settlement Sum in accordance with clause 1 of this deed, [the Creditor] will accept that payment in full and final settlement of the Judgment Debt; and 7.1.3 If [Mr Gelonesi] fails or refuses to pay the Settlement Sum in accordance with clause 1 of this deed, by 26 September 2017, the Judgment Debt will remain due and owing as at that time and that [the Creditor] will be entitled to recover the balance of the Judgment Debt in full, irrespective of whether [the Creditor] terminates this deed for breach. 38 Clause 6 of the second settlement deed also provided if Mr Gelonesi defaulted in his obligation under the deed including payment in accordance with clause 1: 6.1.1 [Mr Gelonesi] acknowledges and agrees that [the Creditor] will be entitled to terminate this deed for breach and recommence bankruptcy proceedings against him for the full amount owing to [the Creditor] under the Judgment Debt at that time, plus interest accrued thereon, together with [the Creditor's] costs and disbursements in respect of such proceedings; and 6.1.2 [Mr Gelonesi] will not be entitled to file any defence, set-off or cross claim to such proceedings or to defend the proceedings in any way. 39 By clause 3.1 of the Second Deed of Settlement, Mr Gelonesi agreed that he "releases and forever discharges [the Creditor], from all obligations, actions, suits, demands, costs, damages, accounts, and expenses ("Claims") arising out of or related in any way, either directly or indirectly, to the Judgment, Judgment Debt or the Proceedings". 40 Furthermore, clause 4.1 expressly provides that the parties may plead the Second Deed of Settlement as "a complete defence to any action, proceedings or suit, complaint, claim, demand and application which may be taken or commenced by either party in relation to the matters the subject of this deed". 41 Mr Gelonesi accepted that he was legally represented through the process of negotiating and executing the Second Deed of Settlement and throughout the present proceedings until approximately one week before the hearing on 29 January 2020 (T57.26-58.25 (Mr Gelonesi); second Abignano affidavit at [11]-[16]).

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4.1 The issues joined between the parties prior to the adjournment on 10 July 2019 45 As earlier explained, this application was accompanied by a supporting affidavit sworn by Mr Gelonesi on 9 January 2019 pursuant to rr 3.02 and 3.03 of the Bankruptcy Rules. 46 Mr Gelonesi's first affidavit identified two reasons why the Bankruptcy Notice should be set aside as follows. (1) Mr Gelonesi ensured that certain arrangements to which he deposes at [12]-[17] of his first affidavit were carried out to "secure and/or compromise the Quit4Good Debt to [the Creditor's] satisfaction" (first Gelonesi affidavit at [24]), namely: (a) the transfer of his shares in Quit4Good in or about March 2016 said to be "worth significantly more than the amount of the Loan" on the basis of an alleged oral agreement between Mr Gelonesi and Mr Joseph Abignano, as the Creditor's representative, that they would be applied to repay the loan (first Gelonesi affidavit at [15]-[16]); and (b) "over $500,000 in funds that I paid to [Mr Alan Amodeo] on or about this time, in the form of my reasonable attempts to procure the discharge of the Loan along the lines that I agreed with Mr Joseph Abignano that I would" (first Gelonesi affidavit at [12]-[17] and [24]). (2) The amount in the Bankruptcy Notice is overstated (applicant's first affidavit at [26]). 47 No mention was made in this affidavit of the alleged transfer by Mr Gelonesi to the Creditor in April 2016 of the shareholder's loan made by Mr Gelonesi in the sum of $500,000.00 to Quit4Good (Shareholder's Loan); nor was any mention made of the exchange of correspondence between Mr Joseph Abignano and Mr Gelonesi on 18 and 19 April 2016. Yet both of these are central to Mr Gelonesi's case as articulated later in his Points of Claim. 48 On 14 May 2019, the Creditor filed a notice stating grounds of opposition to the application in which it foreshadowed that it intended to oppose the application on the following grounds: 1. The application does not disclose any proper basis for the [Bankruptcy Notice] to be set aside. 2. To the extent that the Applicant seeks to assert that there is a misstatement in the Bankruptcy Notice, the nature of the misstatement is not specified in either the application or the affidavit sworn by the Applicant on 9 January 2019. 3. The applicant is prohibited from commencing an application to set aside the Bankruptcy Notice under clause 6.1.2 of the deed of settlement, entered between the Applicant and the Respondent and dated 26 September 2016. 49 On 8 July 2019, the Creditor filed an outline of submissions (ROS) submitting that each of the grounds of the application should fail on their own merits and further contending that clauses 3.1, 4.1, 6 and 7.1.3 of the Deed applied to preclude Mr Gelonesi from making the application in any event (ROS at [35]-[36]). In the Creditor's submission, as the application concerns Mr Gelonesi's alleged efforts to satisfy cl 1.1 of the Second Deed of Settlement, it relates to the matters the subject of the Deed and thereby enlivens cl 4.1 entitling the Creditor to plead the deed as a complete defence.

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4.2 The adjournment of the first trial date and Points of Claim filed on 24 July 2019 50 On 8 July 2019, being two days before the matter was originally listed for hearing before Justice Lee (then docket judge), Mr Gelonesi filed his second affidavit. On the morning on which the matter was originally listed for hearing Mr Gelonesi's then legal representatives filed his outline of submissions which sought to expand the grounds of opposition beyond those identified in the first Gelonesi affidavit in support of Mr Gelonesi's application. As a result, the hearing on 10 July 2019 was adjourned over the Creditor's objection and Mr Gelonesi was ordered to pay the Creditor's costs of the day. 51 In addition, Justice Lee made orders that Mr Gelonesi file points of claim by 24 July 2019 which identified with particularity the factual and legal bases upon which he relied to set aside the Bankruptcy Notice, as well as providing for the filing of points of defence in response. 52 On 24 July 2019, Mr Gelonesi filed Points of Claim. In line with the orders made by Lee J, these must be taken to have identified with particularity all of the factual and legal bases on which Mr Gelonesi relies in these proceedings, save those which Mr Gelonesi properly withdrew over the course of the litigation. Those contentions abandoned were as follows: (1) the allegation that the Bankruptcy Notice ought not to have been issued at [38(c)] of the Points of Claim based upon an alleged breach of fiduciary duties in respect of which equitable compensation was said to be owed as pleaded at POC [36]-[38] (Applicant's Outline of Submissions filed by Mr Gelonesi's then legal representatives on 17 December 2019 (AOS) at [49]); (2) the allegation that any attempt by the Creditor to rely on an estoppel in the Second Deed of Settlement could not assist the Creditor because the Second Deed was the product of fraud, unconscionable conduct, and/or misleading and deceptive conduct, and should be set aside (see Points of Claim at [60]-[65], AOS at [72]-[75], T32.17-21); (3) a proposed further claim that cl 11 of the Deed is a penalty set out in draft amended Points of Claim and addressed at [76]-[80] of the AOS; and (4) the allegations of fraud and misleading and deceptive conduct (T32.17-21; POC at [44]-[46] and [60]-[62]). 53 Putting to one side these paragraphs of the Points of Claim, the Creditor alleged among other things that paragraphs 3 to 9, 11 to 15, 21, 24 to 47, and 57 of the Points of Claim introduced additional grounds which were not articulated in the supporting affidavit filed on 10 January 2019 (amended points of defence filed on 30 October 2019 at [66]). The Creditor opposed the additional grounds, namely: (1) that Mr Gelonesi has a counterclaim, set-off, or cross demand (offsetting claim) which he could not have set up when Judgment was entered because it related to events after the entry of Judgment (Points of Claim at paragraphs 34(a), 38(a), 42(a), 46(a), 62(a) and 64(a)): (2) allegations that the Bankruptcy Notice exceeds the amount due to the Creditor because the Creditor failed to reduce the Judgment by an unquantified amount which includes the value of; (a) the Shares in Quit4Good transferred to it on 19 April 2016; and (b) a shareholders' loan that Mr Gelonesi had made to Quit4Good (Shareholders Loan) which was transferred to the Creditor; on the basis of the exchange of correspondence between Mr Joseph Abignano and Mr Gelonesi on 18 and 19 April 2016; (paragraphs 34(c), 38(c), 42(c), 46(c) and 64(c)); and (3) a claim that the Court ought to look behind the Judgment to determine whether the Debt is owed (Points of Claim at paragraphs 34(d), 38(d), 42(d), 46(d), and 62(b). (Respondent's outline of submissions in response to Mr Gelonesi's submissions filed 17 December 2019 (respondent's responsive submissions or RRS)) at [11]; and RCS at [34]). 54 In this regard, the Creditor correctly submitted that the burden of authority as to enlarging grounds does not support any freestanding right or entitlement to litigate later advanced additional grounds in support of an application to set aside a Bankruptcy Notice and indeed that there is a public interest in ensuring the opposite (citing Coshott v Prentice, in the matter of Coshott (No 2) [2016] FCA 1531 (Coshott) at [48]-[50]). As a result the Creditor contended that Mr Gelonesi ought to be confined to the grounds stated in his first affidavit supplemented by any additional evidence which supports those grounds, and not permitted to enlarge the grounds of his application to include the additional grounds which have no prospect of success (RRS at [12]-[13]; RCS at [34]).

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4.3 Case management hearing the day before the trial 55 On 14 January 2020, Mr Gelonesi's solicitors filed a notice of ceasing to act. As a result, a case management hearing was held on 28 January 2019. At that hearing: (1) Mr Gelonesi indicated that he was taking steps to endeavour to re-engage his lawyers but that his efforts may be unsuccessful and in any event, he would be attending the trial and be available for cross-examination; (2) Mr Gelonesi confirmed that he wished to rely upon the Points of Claim, his two affidavits, and the two sets of submissions filed by his former legal representatives in their entirety; (3) the Creditor stated that it did not press its objections to Mr Gelonesi's affidavits; (4) while the Creditor maintained its objection to the issues raised in the Points of Claim, the trial would proceed as if he were entitled to agitate the issues raised in the Points of Claim (see also T39.15-18); (5) Mr Gelonesi was informed that if there were factual matters in Mr Joseph Abignano's affidavits with which he took issue, it would be necessary for Mr Gelonesi to put those matters to Mr Joseph Abignano in cross-examination in order to afford him an opportunity to respond; (6) counsel for the Creditor indicated that its written submissions did not comprehensively identify the factual issues in dispute between the parties and therefore that it would be prudent for Mr Gelonesi to compare the two Abignano affidavits with his own affidavits in order to identify those issues on which to cross-examine; (7) the Creditor confirmed that it wished to cross-examine Mr Gelonesi; (8) I indicated that I would allow Mr Gelonesi a short break after his cross-examination by the Creditor in order to allow him time in which to consider whether there were any issues which he should add to his list of matters on which to cross-examine Mr Joseph Abignano arising from Mr Gelonesi's own cross-examination; (9) the Creditor agreed to provide hard copies of the authorities on which it intended to rely with pinpoint citations to Mr Gelonesi as soon as possible after the case management hearing; and (10) given that Mr Gelonesi was unrepresented, he should be allowed the opportunity to prepare closing submissions in writing after the trial, in which regard both parties agreed that the Creditor would provide closing submissions in writing to Mr Gelonesi before his submissions in closing were due, with the Creditor therefore having a right of reply. 56 As to the last of these matters, the Creditor was content (time permitting) to also make brief closing submissions orally at the hearing and agreed that the closing submissions would update the submissions in chief filed prior to the hearing.

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5.1.2 Provisions relevant to an application to set aside a bankruptcy notice on the ground of an offsetting claim of equal or greater amount 62 Section 40(1)(g) of the Bankruptcy Act sets out one of the circumstances in which a debtor commits an act of bankruptcy subject to a carve-out in certain circumstances where "a counter-claim, set-off or cross demand" is relied upon to offset the debt: (g) if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not: (i) where the notice was served in Australia - within the time specified in the notice; or (ii) where the notice was served elsewhere - within the time fixed for the purpose by the order giving leave to effect the service; comply with the requirements of the notice or satisfy the Court that he or she has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter-claim, set-off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained; (emphasis added) 63 Where the debtor has an offsetting claim within s 40(1)(g), s 41(7) in turn provides for an automatic extension of time within which to comply with the bankruptcy notice as follows: (7) Where, before the expiration of the time fixed for compliance with the requirements of a bankruptcy notice, the debtor has applied to the Court for an order setting aside the bankruptcy notice on the ground that the debtor has such a counter-claim, set-off or cross demand as is referred to in paragraph 40(1)(g), and the Court has not, before the expiration of that time, determined whether it is satisfied that the debtor has such a counter-claim, set-off or cross demand, that time shall be deemed to have been extended, immediately before its expiration, until and including the day on which the Court determines whether it is so satisfied. 64 The meaning of the terms "counter-claim, set-off or cross demand" for the purposes of s 40(1)(g) and s 41(7) of the Bankruptcy Act was considered in the oft-cited decision of Re Judd; Ex parte Pike (1924) 24 SR (NSW) 537 at 539-540: There is no authority of which I am aware deciding what limits (if any) ought to be placed on the words "counter-claim, set-off or cross-demand". I think that the Legislature by the word "counter-claim" probably referred to those claims which might be the subject of a counter-claim in equity and by the word "set-off" to those claims which might be the subject of a set-off at common law. The other term "cross-demand", however, is not a technical term and must in my opinion refer to claims other than those which would be comprised in the two expressions "counter-claim" and "set-off". Taking the ordinary meaning of the word itself, I can see no reason why "cross-demand" should not be held to include a claim for unliquidated damages for a tort. The case of Re Griffin; Ex parte Soutar (1 B.C. 29) shows that "cross-demand" includes a claim for unliquidated damages for breach of contract. In the case of Re Smyth; Ex parte North (3 B.C. 17) a common law action of Smyth v. North is referred to as constituting a cross-demand. I have sent for and perused the papers in this case and here again it appears that the cause of action was a claim for unliquidated damages for breach of contract. Two recent cases in England - In re G.E.B. ([1903] 2 K.B. 340) and In re A Debtor ([1914] 3 K.B. 726) - show that the cross-demand need not have any connection with the cause of action out of which the judgment debt arose - so much so, that a judgment debtor may even buy up a claim against the judgment creditor in order to have a "cross-demand". These cases are all in favour of an unrestricted meaning being given to the word. 65 However, as I explain below, the offsetting claim must be "mutual and due in the same right": see below at [77]. 66 In Coshott, Bromwich J explained that in order for an application to set aside a bankruptcy notice based on an offsetting claim to be competent and to trigger the automatic extension of time for compliance in s 41(7): 40. … the offsetting claim must be 'effective' or 'real' at the time the application is made; it must be bona fide; it must on its face show a relevant offsetting claim. Such a jurisdictional requirement for a competent application cannot be supplemented after the time for compliance has expired because that is too late to engage jurisdiction and trigger an extension of time. The terms of s 41(7) do not contemplate or allow the automatic extension of time to take place unless the application is made within the time for compliance contained in the bankruptcy notice. The application is either competent and thus valid at the time it is made, and triggers the automatic extension of time, or it is not competent and is thus invalid and no such extension of time is triggered. 41. The above ostensibly bright-line test will not always be easy to assess, because it requires a determination as to what is meant by "effective", "real", bona fide or showing a relevant offsetting claim. It may also give rise to a live question as to what must be determined at the outset as a question of validity, and what can properly await the final determination of the application on its merits. 42. At the very least, on its face the application must be legally capable of succeeding on the basis of the offsetting claim then identified as existing and relied upon, even if more evidence might be required by the time of the hearing in order for the court to reach the requisite degree of satisfaction for a final determination. It is in the nature of a legal capacity test, rather than a sufficiency of evidence test. It is directed to enabling the application to proceed to a hearing, rather than determining its ultimate success. If the application on its face is not capable of succeeding because of a manifest defect or deficiency, then it will not be valid and nothing can later be done to remedy this. 67 However, in cases where a valid application has been made within the time for compliance with the bankruptcy notice, Bromwich J in Coshott explained the approach to an application, such as that made here, to enlarge the grounds of opposition to a bankruptcy notice as follows: 48 The burden of authority as to enlarging grounds does not support any freestanding right or entitlement to litigate later advanced additional grounds in support of an application to set aside a bankruptcy notice, assuming a valid application was made within the time for compliance with that notice. Moreover, there is a public interest in ensuring that the enforcement of debts by way of bankruptcy notices does not become mired in the sort of litigation that often gave rise to a judgment debt in the first place. In part that is because bankruptcy notices are an important part of the means by which civil laws are enforced and the orders of courts are thereby given real substance and meaning. While bankruptcy is a dire consequence of not paying debts arising from enforceable orders of the court, it is a vitally important ultimate remedy that helps to enhance the overall integrity of civil justice. 49 Even if leave may be given to amend an otherwise valid application to set aside a bankruptcy notice and even if leave may be given to supplement the grounds in support of such an amendment such as by way of a further accompanying affidavit, that should be treated in the same manner as final pleadings, with such amendments and supplements not lightly countenanced. The now well-established principles in relation to amending pleadings in Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 239 CLR 175 at 211-213 [93]-[98] and since reflected in ss 37M, 37N and 37P of the Federal Court of Australia Act 1976 (Cth) should apply to any power to amend the effective pleadings constituted by the affidavit accompanying an application to set aside a bankruptcy notice. An application for leave to enlarge the grounds upon which a bankruptcy notice is sought to be set aside should be closely scrutinised. Leave, assuming there is power to grant it, should not be given to rely upon additional unmeritorious or otherwise questionable claims, especially if they have the effect of inordinately delaying determination of the application. 50 The focus in considering any permissible application to enlarge the grounds sought to be relied upon in an application to set aside a bankruptcy notice must at all times remain on the dictates of justice and not merely on individualistic ideas of what is fair in a given case, as mandated by Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Limited [2013] HCA 46; (2013) 250 CLR 303 at 323 [57]. At the same time, considerable weight should be given to the modern view of bankruptcy notices, namely that any alleged defects sought to be relied upon to set them aside should truly involve the debtor being misled as to what he or she must do in order to comply with the notice: see Adams v Lambert [2006] HCA 10; (2006) 228 CLR 409, discussed in some detail below. That is not to say that some defects in a bankruptcy notice cannot be so fundamental that it cannot survive even without such a capacity to mislead, but that is now a very narrow category that ordinarily should be apparent if so misleading or fundamental as to be identified at the outset. The reasoning in Adams v Lambert, both in relation to s 306(1) of the Bankruptcy Act and more generally, discourages unduly technical and pedantic objections to bankruptcy notices, and should discourage the exercise of any power by the Court to grant leave to run additional grounds of that nature.

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5.2 The additional grounds of opposition pleaded in the Points of Claim 70 The Creditor contends that the additional grounds have no reasonable prospects of success. For the reasons set out below, I agree. 71 As earlier mentioned, the Points of Claim filed on 24 July 2019 sought to expand the grounds of opposition to include the following additional claims. (1) First, Mr Gelonesi has an offsetting claim for damages for breach of contract, breach of fiduciary duty, and/or breach of trustee's duties (cumulatively the alleged breaches of duty). The offsetting claim is said to be equal to, or in excess of, the amount of the Debt and is a claim which he could not have set up when judgment was entered because it related to events after entry of judgment, namely, the alleged transfer of the shares in Quit4Good to Mr Amodeo on 18 April 2016 (POC at 34, 38, 42, and 46). (2) Secondly, the bankruptcy notice exceeded the amount due to the Creditor because the Creditor failed to reduce the Judgment by an unspecified amount which includes the value of: (a) the shares transferred to it on 19 April 2016; and (b) the Shareholder's Loan made by Mr Gelonesi to Quit4Good which was transferred to the Creditor; based on the exchange of correspondence between Mr Gelonesi and Mr Joseph Abignano on 18 and 19 April 2016. (POC at 34, 38, 42, 46) (3) Thirdly, the Court ought to "look behind" the Judgment to determine whether the Debt is in fact owed given the Creditor's alleged breaches of duty (POC at 34, 38, 42, and 46). 72 Specifically, Mr Gelonesi said that the email exchange between Mr Abignano to Mr Gelonesi (quoted at [26]-[28] above) gave rise to an agreement to the following effect: (1) if $988,868.00 was paid to the Creditor by 3 May 2016, the shares would be returned to Mr Gelonesi; (2) if $988,868.00 was not paid by 3 May 2016, the Creditor would sell the shares and the proceeds would be applied in reduction of the Judgment and the Creditor would take steps to recover the balance of the Judgment only after the payments were deducted; (3) the Creditor would not take steps to enforce the Judgment before 3 May 2016 or until the shares were marketed and sold; and (4) the Judgment Debt would be reduced by $500,000.00, being the amount of the shareholders loan. (POC at [26]-[28]). 73 In the alternative, Mr Gelonesi contended that the correspondence gave rise to a fiduciary relationship whereby the Creditor held the shares as agent for Mr Gelonesi or as trustee of an express trust (POC at [36] and [40]). Mr Gelonesi contended that the Creditor acted in breach of agreement, the fiduciary relationship or the trust when it transferred the shares to Mr Amodeo allegedly on 18 April 2016, failed to sell the shares for fair value, failed to account for the proceeds of the sale, and preferred its own interests in preference to those of Mr Gelonesi (POC at [32], [37] and [41]).

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5.3.1 The offsetting claim 74 As the Creditor submits, there are a number of reasons why the offsetting claims cannot succeed, each of which individually is fatal. As such, leave to rely upon the additional grounds contained in the Points of Claim should be refused. 75 First, applying the principles identified in Coshott, in order to engage the jurisdiction of the Court, the application and supporting affidavit must comply with ss 40(1)(g) and 41(7) of the Bankruptcy Act and rr 2.01 and 3.02 of the Bankruptcy Rules. However, neither the application nor the first Gelonesi affidavit, or indeed any other document relied on by Mr Gelonesi, disclose any offsetting claim that equals or exceeds the Judgment Debt or sum payable under the final order as required by ss 40(1)(g) and s 41(7): see further below. Nor does the application (or Points of Claim) specify that the application is brought pursuant to s 40(1)(g) or s 41(7) of the Bankruptcy Act contrary to rule 2.01 of the Bankruptcy Rules. Furthermore, neither of the Gelonesi affidavits state the matters required to be stated under r 3.02(3) or attach the Bankruptcy Notice contrary to the submission by the applicant (AS at [5]). 76 Secondly, as the Creditor submits, Mr Gelonesi's offsetting claim cannot succeed because the offsetting claims relied upon in the Points of Claim could not equal or exceed the Judgment Debt or sum payable under the final order so as to enliven the Court's jurisdiction under s 40(1)(g) and s 41(7) of the Bankruptcy Act for the following reasons. (1) First, contrary to Mr Gelonesi's submissions, there is no evidence of the transfer of the Shareholder's Loan to the Creditor or any other loan (as the Creditor submits at RRS at [18] and RCS at 41). (2) Secondly, despite the statement by Mr Gelonesi in his April 2016 letter that, as director of 8180 Pty Ltd, he withdrew his rights to monies owed to 8180 Pty Ltd from Quit4Good and to himself, Mr Gelonesi acknowledged in the same letter that it was incumbent upon him to "settle the outstanding amount of $988,868 by the 3rd of May 2016". It was not in issue that there were no further payments by Mr Gelonesi, as I have earlier explained. (3) Given that no loan was transferred to the Creditor by Mr Gelonesi, the Creditor correctly submits that any offsetting claim must be limited to the value of the shares in Quit4Good (RCS at 41). In this regard, the time by which the value of any offsetting claim must have been quantified is at the hearing of the application because it is necessary to determine whether the offsetting claim equals or exceeds the Judgment Debt: Ghougassian v Arnautovic, in the matter of Ghougassian [2019] FCA 1569 at [55] (Farrell J). In this regard, Mr Gelonesi submitted at [52] of his submissions that the shares: … had a significant value because (a) they represented a controlling interest in Quit4Good which imputes a value, (b) in February 2017, Quit4good completed a capital raising and issued 999,900 shares and raised $455,045, and (c) the Second Deed provided that Mr Gelonesi was to pay $350,000 to discharge the Judgment Debt which was a significant discount to the amount of the Judgment Debt and this may impute a value to the Shares. (AS at [52]) (4) However, there was no expert evidence led by Mr Gelonesi as to the value of the shares at any time, let alone as at the hearing of the application. In the absence of any such evidence, it is unclear whether the first and second matters on the basis of which Mr Gelonesi invites the Court to infer that the shares had "significant value" at [52] of his submissions, could have any bearing upon the value of the shares at the time of the hearing of this application. Nor in the absence of any other evidence could it be inferred that the amount agreed by the parties for the discharge of the Judgment Debt in the Second Deed of Settlement if the monies were paid by a certain date had any logical connection to the parties' assessment of the value of the shares, let alone their actual value. In any event, even if Mr Gelonesi's case were taken at its highest and the shares were valued at $455,000.00 or thereabouts, that amount would still fall well short of the Judgment Debt and the amount set out in the Bankruptcy Notice. (5) In this regard, even though the evidence did not establish the value which might be ascribed to the shares at the date of the hearing, I do not accept the company's submission (at T43.41-45) and Mr Abignano's evidence (e.g. T81.35 and T104.1) that the shares had "zero" value at all when they were transferred to Mr Amodeo and as at the date of the hearing given the following. (a) The Creditor accepted that the transfer of the shares was not a gift (as earlier mentioned (T43.8-11)); (b) Mr Abignano gave evidence that the Creditor transferred the Quit4Good shares to Mr Amodeo "so that a new investor could acquire those shares, in accordance with a separate agreement between the [Creditor] and Mr Amodeo" (first Abignano affidavit at [14]); (c) Mr Abignano did not take issue with Mr Gelonesi's account of a meeting with him on 24 July 2017 at Frenchs Forest at which he refused to tell Mr Gelonesi how much was raised on the sale of the shares transferred to Mr Amodeo, told him that it was none of his business, and he should "go ## yourself" (first Gelonesi affidavit at [18]; second Gelonesi affidavit at [9]; first and second Abignano affidavit refuting other conversations but not this conversation; and the chronology (agreed)). (d) Mr Gelonesi gave evidence that while, if the product were TGA approved and able to be scripted by doctors "it would be a different product", "potentially if it markets to the correct people it's a viable product as clearly it is now" (T68.12-18) and that, despite the concerns which he raised in his letter dated 5 August 2015 (see above at [24]), "the company continues to trade" (T76.33). 77 Finally, it is well established that an offsetting claim must be "mutual and in the same right": Re Anderson; ex parte Alexander (1927) 27 SR (NSW) 296, 298. As for example, Beaumont, Branson and Sundberg JJ explained in Stec v Orfanos [1999] FCA 457 at [24], "The requirement that the two claims be 'in the same right' is directed to the capacities in which the claimants claim. Thus a claim by a judgment creditor personally cannot be answered by a claim against the Creditor as a member of a partnership or as an executor or trustee." Equally, it is apparent from Mr Gelonesi's letter dated 19 April 2016 that at least part of the offsetting claim described by him is a claim by 8180 Pty Ltd. As such, the offsetting claim to this extent is plainly not "in the same right". 78 It follows that the offsetting claims which Mr Gelonesi sought to raise in the Points of Claim have no reasonable prospects of success.

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5.3.2 The alleged overstatement of the Debt 79 To the extent that Mr Gelonesi seeks to challenge the Bankruptcy Notice on the ground that it misstated the amount due to the Creditor by failing to give credit for certain unspecified sums, that claim must also fail. 80 First, the applicant to this extent fails to engage the Court's jurisdiction for the reasons that: (1) neither the application nor the first Gelonesi affidavit or indeed any other document relied upon by Mr Gelonesi comprises a notice which complies with s 41(5) of the Bankruptcy Act (see below); (2) contrary to rule 2.01, the application does not specify that it is brought pursuant to s 41(5) of the Bankruptcy Act (nor do the Points of Claim, even if they were capable of remedying the difficulty); and (3) neither of Mr Gelonesi's affidavits attach the Bankruptcy Notice contrary to rule 3.02. 81 Secondly, s 41(5) of the Bankruptcy Act provides that: A bankruptcy notice is not invalidated by reason only that the sum specified in the notice as the amount due to the creditor exceeds the amount in fact due, unless the debtor, within the time allowed for payment, gives notice to the creditor that he or she disputes the validity of the notice on the ground of the misstatement. 82 With respect to the need for an application to comply with s 41(5), the Full Court observed in obiter in Seovic Civil Engineering Pty Ltd v Groeneveld [1999] FCA 255; (1999) 87 FCR 120 (Seovic) that: 36. … the better view is that a notice by the debtor which simply asserts, without more, that the amount specified in the bankruptcy notice exceeds the amount actually due, does not comply with the requirements of s 41(5) of the Bankruptcy Act. The expression "the misstatement" strongly suggests that the debtor must do more than merely assert that there is a misstatement in the bankruptcy notice. The subsection requires the debtor to provide sufficient information in the notice to enable the creditor to identify what is said to be the alleged misstatement. Only then does the debtor's notice displace the general rule established by s 41(5), that the bankruptcy notice is not invalidated only by reason that the sum specified therein as the amount due to the creditor exceeds the amount in fact due. (original emphasis) 83 In support of this construction, the Full Court in Seovic emphasised the policies underlying the requirement, namely: "to draw to the creditor's attention the misstatement, thereby giving the creditor the opportunity to consider, for example, whether the bankruptcy notice should be withdrawn and a fresh notice, correcting the misstatement, issued"; and to protect against "the considerable risk" that the debtor will take unmeritorious advantage of minor errors resulting in unnecessary and wasteful litigation if permitted to give no hint as to the nature of the misstatement (at [37]). 84 In common with Seovic, this case is not one where the Points of Claim, to the extent that they were intended to act as a separate notice under s 41(5), merely failed to identify the alleged misstatement in the Bankruptcy Notice. Rather, as earlier explained the Points of Claim allege that the Debt in the Bankruptcy Notice is overstated because it failed to give credit for the value of the shares in Quit4Good transferred to the Creditor on 18 April 2016 and failed to give credit for the transfer of the Shareholder's Loan of $500,000.00. However, for the reasons I have earlier given, both of those allegations were factually incorrect thereby rendering the notice misleading and ineffective by reason of a failure to comply with s 41(5). As the Full Court considered in Seovic, "… a debtor's notice which wrongly identifies a mis-statement in the bankruptcy notice, and does not provide sufficient information to enable the true mis-statement (if any) to be identified by the creditor, does not comply with s 41(5) of the Bankruptcy Act" (at [40]).

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5.4 Grounds 1 and 2 of the original application to set the Bankruptcy Notice aside 87 The Creditor submitted that Mr Gelonesi should be confined to the grounds raised by his original affidavit, supplemented by any further evidence that supports those grounds. On one view, given the terms of the orders made by Lee J on 10 July 2019, the Points of Claim should be taken to represent the applicant's attempt to set out comprehensively and with precision the grounds on which he relied in opposition to the Bankruptcy Notice as I have earlier explained. Those grounds have been dealt with in my reasons above. Nonetheless, given that Mr Gelonesi was unrepresented at the trial and the position fairly taken by the Creditor, I consider that I ought to consider the grounds stated in Mr Gelonesi's first affidavit prior to the filing of the Points of Claim on the assumption that these were still pressed. 88 I summarised the two grounds relied on by Mr Gelonesi in his first affidavit in support of his application to set aside the Bankruptcy Notice at [46] above. Both grounds must be dismissed. 89 Contrary to ground one, the evidence does not establish that the Debt was secured or compounded to the Creditor's satisfaction. As the Creditor submitted, since 29 December 2014, Mr Gelonesi's obligation to the Company has been to satisfy the Judgment Debt in accordance with the Judgment entered against him on that date. While clause 1.1 of the Second Deed of Settlement gave Mr Gelonesi the opportunity to satisfy that obligation by paying the Settlement Sum to the Creditor if the Quit4Good Debt was not repaid in full or compounded to the Creditor's reasonable satisfaction before 26 September 2017, the Quit4Good Debt was defined in the deed as defined as an amount in excess of $850,000.00 still outstanding under the original Loan Agreement. It is common ground that neither the Settlement Sum nor the Quit4Good debt were paid before 26 September 2017 or indeed thereafter. 90 Mr Gelonesi sought to rely upon the transfer of his shares in Quit4Good on the basis of an alleged oral agreement and the alleged payment of over $500,000.00 to Mr Amodeo at about the same time "in the form of my reasonable attempts to procure the discharge of the Loan along the lines that I agreed with Mr Joseph Abignano" (first Gelonesi affidavit at [16]). However, even taking this case at its highest, these steps were taken many months before the conclusion of the Second Deed of Settlement and therefore could not logically be said to meet Mr Gelonesi's obligations under the Second Deed of Settlement. To the contrary, by recital C to the Second Deed, Mr Gelonesi and the other parties expressly recognised that even taking account of the relinquishment by Mr Gelonesi of shares and loans, as well as the payments made by Mr Gelonesi in reduction of the Judgment, the amount of the Judgment Debt outstanding was greater than $850,000.00. As such, as the Creditor submitted, Mr Gelonesi's evidence ultimately goes no higher than to establish his unsuccessful attempts to secure or compound the debt (ROS at [27]). Nor as I have earlier held was any evidence led as to the value of the shares at the time of the hearing. It follows, that ground 1 must be dismissed. 91 Ground 2 merely asserted that the amount in the Bankruptcy Notice was overstated without identifying any misstatement in the Bankruptcy Notice (first Gelonesi affidavit at [26]). As earlier explained, this is not sufficient. It follows, as the Creditor submits, that paragraph [26] of Mr Gelonesi's first affidavit does not constitute proper notification in accordance with s 41(5) of the Bankruptcy Act and the ground must fail on the face of the application. 92 Finally, by its defence and at [35]-[36] of its submissions filed on 8 July 2019, the Creditor stated that it relied upon clauses 3.1, 4.1, 6 and 7.1.3 of the Second Deed of Settlement to contend that Mr Gelonesi was precluded from making the application to set aside the Bankruptcy Notice. However, the issue was not developed in writing or orally beyond bare assertions. In those circumstances and given that the application must be dismissed in any event, it is unnecessary for me to determine this issue.

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