Kailash Lawyers Pty Ltd v Patial [2025] FedCFamC2G 1432

Kailash Lawyers Pty Ltd v Patial [2025] FedCFamC2G 1432 | Case summary | Zoe

[29]

(a) The Law Society of New South Wales ("Law Society of NSW") Committee, the New South Wales Bar Association, and the Legal Services Commissioner be appointed as independent experts to provide expert opinion and assessment in relation to the matters raised in these proceedings pursuant to r 15.08 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) ("Rules").

(b) For the Court to appoint, pursuant to r 10.01(3)(o) of the Rules, an expert to provide a report no later than 22 May 2025 addressing the following:

(i) The validity of the "Agreement for General Use" signed between the parties.

(ii) Whether the "Agreement for General Use" was approved as standard practice by the Law Society of NSW for restricted practitioners.

(iii) Whether the Fair Work Commission's ("FWC") decision Prateek Patial v Kailash Lawyers Pty Ltd T/A Kailash Lawyers and Consultants [2021] FWC 4167 contains errors of law or jurisdiction, including:

(A) Whether there was legal error in the FWC's findings of the relationship between Kailash Lawyers and Mr Patial;

(B) Whether the FWC applied the correct authorities in determining the employment relationship;

(C) Whether the FWC correctly applied the multifactor test; and

(D) Whether the FWC exceeded its powers in relying on the Small Business Fair Dismissal Code, and whether this was a denial of procedural fairness.

(iv) Whether the FWC correctly calculated costs in Prateek Patial v Kailash Lawyers Pty Ltd T/A Kailash Lawyers and Consultants [2022] FWC 2721.

(v) The accurate calculation of legal costs payable by Mr Patial as assessed by an assessor approved by the Law Society of NSW.

(vi) Whether Kailash Lawyers has failed to pay Mr Patial's outstanding renumeration for work performed in August 2020.

(vii) Whether Kailash Lawyers had failed to pay an additional 10% of gross billings earned by Mr Patial for the period April 2019 to August 2020.

(viii) Whether Kalash Lawyers deducted the outstanding amount from the Bankruptcy Notice.

(ix) What the exact amount Mr Patial owes to Kailash Lawyers.

(c) For the matter to be referred to a Registrar, pursuant to r 19.01 of the Rules, to conduct an investigation and provide a report and recommendations by 22 May 2025 addressing legal and factual questions, set out in identical terms to those summarised at [5](b)(i)-(ix) above.

(d) That the Court, the expert referred to at [5](b) above, and the Registrar referred to at [5](c) above note, as material considerations, a number of listed points concerning evidence.

(e) Pursuant to r 18.05 of the Rules, the Court dispose of the proceedings.

(f) The proceedings be stayed pending the following:

(i) The completion of the reports as sought above;

(ii) The outcome of judicial review applications with file numbers NSD1/2025, NSD39/2025, and NSD129/2025;

(iii) The outcome of the proceedings in the Federal Court of Australia with file number NSD1016/2021;

(iv) The outcome of the Supreme Court of NSW proceedings with file number 2024/00283199 relating to professional negligence claims as against Kailash Lawyers and where Mr Patial has filed for default judgment;[2] and

(v) The outcome of the Supreme Court of NSW proceedings with file number 2024/00286813 relating to professional negligence, deficient legal advice, and deceptive conduct claims as against Mr Amit Pall ("Mr Pall", being the sole director of Kailash Lawyers) and where Mr Patial has filed for default judgment.

[86]

The first email address was used by Mr Patial on 11 September 2024 to send to Kailash Lawyers documents by way of service in proceedings SYG1123/2024 (which were proceedings relating to the previous creditor's petition as noted at [27] above). Indeed, in those proceedings, Mr Patial raised the very same issue as he does herein, that is, he denied receiving the documents which were served upon him by email, to the first email address, pursuant to an order for substituted service.
The first email address was used by Mr Patial on 30 September 2024 in correspondence to the Department of Home Affairs, requesting information in respect of his "immi account".[17]
The second email address was utilised by Mr Patial in his correspondence to the FWC at the time of the unfair dismissal proceedings and the costs orders which were made by Commissioner McKenna.[18]
There is no evidence, expert or otherwise, of any fault or malfunction of Mr Patial's emails, computer or similar, at the relevant time.
Kailash Lawyers has not received any automated notification, or similar, of failed email delivery.
Furthermore, the Act requires service of the bankruptcy notice, not proof of actual receipt by the debtor. Proof of non-receipt (as compared with proof of non-delivery) is not sufficient to displace a conclusion that service has been effected.[19]
On balance, the Court finds that the Bankruptcy Notice was served on Mr Patial on 17 September 2024.
A debtor who has been served with a bankruptcy notice has 21 days from the date of service to apply to the Court to set aside the bankruptcy notice, including on the ground of counter-claim, set-off or cross demand.[20] The debtor must act within the 21 days.
An application to set aside a bankruptcy notice can only be made before the time for compliance with the bankruptcy notice has passed.
Noting that Mr Patial was served with the Bankruptcy Notice on 17 September 2024, he had to act by the end of the day on 8 October 2024.
Mr Patial's application to set aside the bankruptcy notice, by way of the Interim Application filed 15 April 2025, was made well after 21 days of service of the notice, and therefore, after time for compliance had passed. The act of bankruptcy had already occurred. It occurred on 9 October 2024.
If an application had been made to the Court, before the expiration of time fixed for compliance to set aside the bankruptcy notice on the ground of counter-claim, set-off or cross demand, and the Court had not before the expiration of time determined that it was satisfied that the debtor has such counter-claim, set-off or cross demand, the time for compliance would have be deemed to have been extended.[21] However, no such application has ever been made.
It is well established that there is no statutory grant of power to annul an act of bankruptcy, or to extend the time for compliance with a bankruptcy notice other than in a case where the conditions of s 41(6A) of the Act have been satisfied.[22]
Therefore, the applications which Mr Patial makes by way of the Interim Application filed 15 April 2025, for the extension of time for compliance with the Bankruptcy Notice and that the Bankruptcy Notice be set aside, are brought too late and must be dismissed.
Lastly, in respect of the relief sought in [5] of the Interim Application filed 15 April 2025, namely, that the proceedings be stayed pending the determination of other proceedings, that application is part and parcel of the applications for extension of time and the setting aside of the Bankruptcy Notice, and is sought on the basis that those proceedings "have a material bearing on the existence, quantum and enforceability of the alleged debt". There is no utility in the stay given that the act of bankruptcy has already occurred, and that the Bankruptcy Notice cannot now be set aside nor extended.
In so far as the stay is sought in respect of the Creditor's Petition per se, for reasons which are explained below, a stay will not be granted.

[87]

While not formally a ground of opposition, or part of the Interim Application, Mr Patial raises issue with the name of the applicant. Exhibit 6 shows that "Kailash Lawyers Pty Ltd" (being the entity name) and "Kailash Lawyers & Consultant" (being the business name) have the same ABN. Exhibit 6 also shows that Mr Pall personally has an ABN, which is the same ABN for the trading name "kailash lawyers and consultant".[23] Nothing turns on this.
The Court is not satisfied that the Bankruptcy Notice issued in the name of "KAILASH LAWYERS PTY LTD T/AS KAILASH LAWYERS AND CONSULTANTS ABN/ACN90604582550/604582550", is invalid due to the use of the word "and" instead of the use of the ampersand.
Any difference in the trading (or business) name, said to arise by the use of the word "and" instead of the ampersand, is at most a formal defect.[24] The Court is not satisfied that the use of "and" instead of "&" has misled Mr Patial, or could reasonably have misled Mr Patial as to what was necessary to comply with the Bankruptcy Notice.[25]
The orders of 12 March 2024 use the ampersand in the name of the applicant, but do not refer to the ACN. Once again, this cannot of itself invalidate the Bankruptcy Notice which does have the ACN noted.
Likewise, nothing turns on the difference, if any, in the name of the applicant as it appears in the court orders made on 12 March 2024, and in these proceedings. The applicant is one and the same.
In Ground 1, Mr Patial alleges that the Bankruptcy Notice has not been validly served. The Court has already dealt with this issue at [41]-[57].
Ground 1 is not made out.
In Ground 2, Mr Patial alleges that the discrepancy in the debt amounts as between the Bankruptcy Notice and the Creditor's Petition, means that the petition should be set aside. He offers no authority for such a proposition.
The appeal against the orders of Judge Humphreys has been dismissed. The debt the subject of the Bankruptcy Notice is not an alleged debt. It is a judgment debt.
Kailash Lawyers is a judgment creditor who is owed as at the date of the act of bankruptcy, being the failure to comply with the Bankruptcy Notice, more than the statutory minimum and as such has standing to petition for Mr Patial's bankruptcy.[26] There is, however, no requirement that the debt relied upon by the petitioning creditor be a judgment debt,[27] or that it be the amount the subject of the Bankruptcy Notice.[28]
Mr Patial relies on s 41(5) of the Act. There is no evidence that Mr Patial had given the requisite notice, within the time fixed for compliance with the Bankruptcy Notice, that he disputes the validity of the notice on the ground that the sum specified in the notice exceeds the amount in fact due. Section 41(5) is concerned with the Bankruptcy Notice, not the amount said to be owed in the Creditor's Petition or any discrepancies between the two. Mr Patial's reliance on s 41(5) is misguided.
Ground 2 is not made out.
In Ground 3, Mr Patial alleges the existence of a counter-claim, set-off or cross demand, as a basis for the opposition to the Creditor's Petition.
Mr Patial further alleges that Kailash Lawyers falsely stated in the Creditor's Petition that he has no counter-claims, set-offs or cross demands, and relies upon s 40(1)(g) of the Act to support this assertion that the Bankruptcy Notice has thus been invalidated.
The Court has already noted that Mr Patial did not apply to the Court, before the expiration of time fixed for compliance, to set aside the Bankruptcy Notice on the ground of counter-claim, set-off or cross demand, and that there is no power to extend time for compliance other than where the conditions of s 41(6A) of the Act have been satisfied (and noting the provision of s 41(7) of the Act has not been triggered).
Mr Patial's reliance on s 40(1)(g) of the Act is misguided. That section goes to the act of bankruptcy having been committed by Mr Patial. Kailash Lawyers has obtained a final judgment or final order which has not been stayed, it has served the Bankruptcy Notice, and Mr Patial has neither complied with the requirements of the notice nor satisfied the Court, within the time fixed for compliance, that he has a counter-claim, set-off or cross demand as applicable.
In the outline of submissions filed 14 May 2025, Kailash Lawyers correctly sets out the relevant principles that apply where an alleged offsetting claim is relied upon in resisting a sequestration order:

[90]

(a) Proceedings NSD1016/2021 - These proceedings were initiated by Mr Patial seeking compensation arising out of employment with Kailash Lawyers. The original statement of claim was struck out on 9 June 2022, and Mr Patial was granted liberty to replead. On 6 March 2024, Mr Patial was refused leave to file a new statement of claim as it failed to plead a cause of action. While Mr Patial has filed an interlocutory application for leave to file a third statement of claim, no such statement of claim has been filed. There is no basis to conclude that these proceedings have any merit.

(b) Proceedings NSD1/2025, NSD 39/2025, and NSD129/2025 - These are judicial review proceedings of decisions of the Full Bench of the FWC. There is no evidence as to the merit of these proceedings, nor towards provision of "sufficient reason" justifying going behind the judgment debt. There is no basis to conclude these proceedings have any merit. Furthermore, when considered alongside Mr Patial's history of litigation challenging the decisions of the FWC, there is no evidence before the Court to indicate or suggest that these proceedings deal with any new matter not previously considered and, consequently, have any greater chance of success. There is no basis to conclude that these proceedings have any merit.

(c) Proceedings NSD491/2025 and NSD468/2025 - These are proceedings which have been transferred to the Federal Court of Australia from the District and Supreme Courts of NSW in which Mr Patil seeks compensation from Mr Pall and Kailash Lawyers arising out of employment with Kailash Lawyers. The claim brought in the District Court of NSW by Mr Patial, seeks compensation and pecuniary penalties for deceptive statements by Mr Pall, alleged to have been made to the Law Society of NSW, Legal Aid NSW, Office of Migration Agents Registration Authority, and FWC. The claim brought in the Supreme Court of NSW by Mr Patial seeks an order for a review of the contract between Mr Patial and Kailash Lawyers (and interestingly, refers to Kailash Lawyers' trading name with the use of "and" instead of the ampersand which Mr Patial raises as a basis of invalidity of the Bankruptcy Notice in these proceedings). Mr Patial also claims compensation from Kailash Lawyers for professional negligence and damages for breach of duty of care. The statements of claim allege unfair contract, professional negligence, and deceptive conduct. There is no basis to conclude these proceedings have any merit.

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