Kessly v Beadle as Trustee of the Bankrupt Estate of Evangelina Francisca Kessly

AND: KRISTEN BEADLE AS TRUSTEE OF THE BANKRUPT ESTATE OF EVANGELINA FRANCISCA KESSLY Respondent BENJAMIN & KHOURY PTY LTD Intervener

JUDGE: burley j DATE OF ORDER: 8 May 2020

1. The respondent file and serve any submission (of no more than 4 pages) going to the form of orders proposed in the judgment delivered on 8 May 2020 within 7 days.
2. The applicant and intervener file any submission in answer (of no more than 4 pages each) within 7 days thereafter.
3. The respondent file and serve any submission in reply (of no more than 2 pages) within 7 days thereafter. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT 1 INTRODUCTION [1] 2 BACKGROUND [5] 3 MRS KESSLY'S ARGUMENTS [31] 4 THE RELEVANT LAW [33] 5 THE SEQUESTRATION ORDER [49] 6 CONSIDERATION [53] 6.1 Solvency [53] 6.1.1 The submissions [53] 6.1.2 The evidence going to solvency [58] 6.1.3 Was Mrs Kessly solvent at the sequestration date? [70] 6.1.4 Is Mrs Kessly solvent now? [71] 6.2 The offer of security for the disputed BK debt [77] 6.3 Judgment liable to be set aside for breach of r 36.10(3) of the UCPR [82] 6.4 Entry of 14 February 2018 judgment without power and a denial of procedural fairness [89] 6.5 Judgment a nullity because of failure to provide bill [94] 6.6 Denial of procedural fairness: the white binder [102] 6.7 Costs liable to be set aside pursuant to r 36.15 of the UCPR [110] 6.8 Service of the creditor's petition [112] 7 SHOULD THE BANKRUPTCY BE ANNULLED, AND IF SO, ON WHAT TERMS? [114]

INTRODUCTION 1 The applicant, Evangelina Kessly, is an undischarged bankrupt. She seeks an annulment of her bankruptcy on the basis that the Court should be satisfied pursuant to s 153B(1) of the Bankruptcy Act 1966 (Cth) that the sequestration order "ought not to have been made" (annulment application). The sequestration order was made by Judge Street of the Federal Circuit Court of Australia (FCCA) on 18 July 2019: Benjamin & Khoury Solicitors v Kessly (No 2) [2019] FCCA 1979. The respondent, Kristen Beadle, is the Trustee of Mrs Kessly's bankrupt estate (Trustee). The petitioning creditor in the application for the sequestration order was Benjamin & Khoury Pty Ltd (BK). On 12 December 2019 I gave leave for BK to be joined as a party to these proceedings. The Trustee takes a neutral position in relation to Mrs Kessly's application, save for opposing the form of relief sought by Mrs Kessly. BK opposes the Orders sought. 2 The application was heard over two days. Mrs Kessly relies on: two affidavits sworn by her, two affidavits sworn by her husband David Kessly, five affidavits sworn by her solicitor John Bingham, an affidavit sworn by her tax agent Constantine Kambourakis, and an affidavit sworn by another solicitor, Thomas Bray. None of these witnesses were cross-examined. 3 The Trustee relies on an affidavit affirmed by Ms Beadle, which annexes a Report to Court dated 11 December 2019. 4 BK relies on an affidavit sworn by Dieb Khoury, a director and principal solicitor of BK, who was cross-examined.

BACKGROUND 5 There is a protracted background to these proceedings, and the annulment application comes as the next stage in an extensive dispute between Mrs Kessly and BK over legal fees. The following summary may be discerned from the evidence. 6 In Land and Environment Court proceedings decided in 2014, Mrs Kessly was found to be in contempt of court for failure to give effect to consent orders made on 17 December 2004 requiring her to grant an easement over her land: Grustein v Hasapaki (No 2) [2014] NSWLEC 174. In June 2015 BK was retained by Mrs Kessly to conduct an appeal in the New South Wales Court of Appeal from that decision (Court of Appeal proceedings). 7 In the period from 30 June 2015 until 13 October 2015 BK rendered bills of costs to Mrs Kessly, totalling about $119,000. 8 On 26 October 2015 BK sent a letter to Mrs Kessly that relevantly provided (the 26 October 2015 letter) (emphasis added): We enclose herein Supreme Court Form 2: application by Legal Practice for Assessment of Costs containing copies of our Statement of Account by way of service on you. We confirm that in good faith, we have provided you with discounts on every Bill of Costs ranging from 12.5% to 17.5% and you have made part payment of same, leaving a balance outstanding of $73,868.40 at 13 October 2015. By way of further assistance to you, we are prepared to give you a further discount/reduction of 10% off the outstanding amount, leaving a figure of $66,481.56 outstanding, which we are prepared to accept in full payment of the above. We confirm if you do not pay our reduced Legal Costs by the expiry of the 21 days from the day you receive this letter, we will file this costs Assessment Application at the Supreme Court of New South Wales, resulting in additional costs and expenses etc. 9 The "part payment" to which this letter refers is a payment in the amount of $40,500 that was earlier made by Mrs Kessly. An issue arises as to whether relevant documentation was provided to Mrs Kessly at this point in time. 10 On 29 October 2015 BK again wrote to Mrs Kessly, noting that she objected to the payment of any further costs. On 4 November 2015 BK wrote a further letter to Mrs Kessly concerning the disputed fees and stating that if the offer of a reduced figure was not accepted by 17 November 2015, an application would be filed in the Supreme Court for a costs assessment. 11 On 29 October 2015 the NSW Court of Appeal delivered judgment in the Court of Appeal proceedings setting aside the orders with respect to finding Mrs Kessly guilty of contempt of court and costs, but made no order for costs in her favour: Kessly v Hasapaki [2015] NSWCA 316. 12 On 19 November 2015 an application for a costs assessment was filed by BK. 13 On 9 June 2016 the Manager of Costs Assessment issued a certificate of determination of BK's costs and accompanying reasons, which upheld the fees claimed by BK as reasonable and determined that Mrs Kessly was liable to pay $119,968.67, less $40,500 for partial payment (being a total of $79,468.67) (costs assessment). A second certificate issued on the same day made Mrs Kessly liable to pay the costs of the assessment in the amount of $1,732.50. The certificates were sent on 24 June 2016 (costs assessment certificates). 14 On 1 July 2016 judgment was entered in the Supreme Court in case No. 2016/00200224 (Supreme Court proceedings) requiring Mrs Kessly to pay BK the sum of $121,701.17 (1 July 2016 judgment). No allowance was made in this amount for the part payment of $40,500. 15 On 21 July 2016 Boyd House & Partners, the solicitors for Mrs Kessly at the time, filed an application for a review of the costs assessment. 16 On 22 November 2016 the Costs Assessment Review Panel upheld the costs assessment and issued two certificates for the same amount as the costs assessment plus the costs of the review in the amount of $3,339.05, also noting that credit was given for the $40,500 already paid by Mrs Kessly (review decision). The review decision certificates were sent on 19 December 2016. 17 On 31 March 2017 BK informed Boyd House & Partners of the filing of a Writ for the Levy of Property arising from unpaid fees. Attempts to pursue the Writ were pursued until August 2017 and then abandoned. 18 On 27 November 2017 a first Bankruptcy Notice (No. 218500) was issued claiming a debt of $134,470.13 being $121,707.17 plus interest accrued since 1 July 2016. 19 On 19 January 2018 Mrs Kessly and BK consented to the entry of Orders withdrawing the first Bankruptcy Notice. Mr Khoury gives evidence, which I accept, that it was withdrawn because the $40,500 part payment by Mrs Kessly was not taken into account in the amount claimed under the Notice. 20 On 14 February 2018 a further judgment was entered in the Supreme Court proceedings, requiring Mrs Kessly to pay $81,201.17 (rather than $121,701.17) (14 February 2018 judgment). Mr Khoury gives evidence, which I accept, that this judgment was entered as part of the discussions and agreement between the parties arising from the withdrawal of the first Bankruptcy Notice. 21 On 15 February 2018 a judgment was entered in the Supreme Court proceedings requiring Mrs Kessly to pay BK the sum of $3,669.05 (15 February 2018 judgment). This was for the costs paid by BK in the review. 22 On 19 February 2018 a second Bankruptcy Notice (No. 221948) was issued to Mrs Kessly. It claimed a debt in the amount of $94,908.25, being $84,870.22 (the 14 and 15 February 2018 judgment debts) plus interest calculated on the sum of $81,201.17 (that is, the 14 February 2018 judgment amount) since the date of the 1 July 2016 judgment. 23 On 12 March 2018 Mrs Kessly applied to the Federal Circuit Court of Australia (FCCA) to set aside the second Bankruptcy Notice. Her application was heard by Judge Baird, who on 18 October 2018 gave judgment dismissing the application: Kessly v Benjamin & Khoury Pty Ltd [2018] FCCA 2918. Mrs Kessly was represented by counsel and solicitors. It is apparent from that judgment that two grounds were raised. First, that the amount set out in the second Bankruptcy Notice of $84,870.22 was an overstatement because one of the two judgments comprising the amount claimed, being in the amount of $3,669.05, was not a final judgment owing in favour of BK but rather in favour of the Manager of Costs Assessment. Accordingly the whole second Bankruptcy Notice was a nullity. Secondly, because the two judgments were not "attached" to the Bankruptcy Notice in accordance with s 41 of the Bankruptcy Act and reg 4.02 of the Bankruptcy Regulations 1996 (Cth). Judge Baird rejected both arguments. It is to be noted that the present challenges made to the 14 February 2018 judgment were not advanced before her Honour. 24 On 24 April 2018, Mrs Kessly sought an extension of time to file a summons and for leave to appeal in the District Court of New South Wales against the review decision (District Court proceedings). She was more than 16 months out of time. She was represented by counsel and solicitors. A hearing was conducted before Judge P Taylor in August and November 2018, who delivered judgment on 16 November 2018: Kessly v Benjamin & Khoury Pty Ltd [2018] NSWDC 369 (District Court judgment). He found that Mrs Kessly's explanation for the delay in bringing the application for leave to appeal was not satisfactory and that the prejudice to BK was real. He also found that Mrs Kessly relied on an alleged failure on the part of the Review Panel to afford her procedural fairness, but that this was not established because the evidence indicated that she had the application and documents relied upon by BK before she applied for the review. Mrs Kessly also contended that the estimate of costs given by BK was not disclosed pursuant to s 309(1)(c) of the Legal Profession Act 2004 (NSW) with the consequence that she was entitled to a reduction in costs under s 317(4) of that Act. This ground was found, on the facts, not to be reasonably arguable. The application for leave to appeal was refused. 25 On 14 February 2019 BK filed a creditor's petition in the FCCA based on the failure to pay the 14 February 2018 judgment debt. 26 On 9 May 2019 orders were made for the substituted service of the creditor's petition and supporting materials. Service was effected in accordance with those orders on 10 May 2019. 27 On 30 May 2019 procedural directions were made for the hearing of the creditor's petition. The proceedings were listed for hearing on 27 June 2019. 28 On 12 June 2019 Mrs Kessly applied for an adjournment of the hearing, which was granted. The creditor's petition was then listed for hearing on 18 July 2019. 29 On 18 July 2019 (the sequestration date) the creditor's petition was called for hearing in the FCCA. Mrs Kessly applied for and was refused an adjournment. The sequestration order was made. 30 On 21 November 2019 Mrs Kessly filed her annulment application, some 4 months after the sequestration order was made. She explains the delay in her affidavit evidence as being because first, she was unsure what lawyers to instruct. On 12 September 2019 she contacted Mr Bingham to discuss her position and, as she says, it took some time to gather the information and documentation required. Secondly, she suffered poor health in 2019. Mr Bingham adds to this explanation in his affidavit evidence. He says: he has had difficulty getting instructions because of Mrs Kessly's poor English, poor health, poor hearing and tendency to become confused when giving an account of her "complex financial affairs" and 4 year dispute with BK; that there have been delays because, as an undischarged bankrupt, Mrs Kessly is not in a position to provide legal fees on a monthly basis, and so there have been limited resources available which has led to delay; that it has been time-consuming making enquiries and obtaining documentation relevant to the annulment application, and liaising with the Trustee.

MRS KESSLY'S ARGUMENTS 31 The reasons advanced by Mrs Kessly as to why the sequestration order ought not to have been made are many and diffuse. They were consolidated by counsel for Mrs Kessly into the following points: (1) She is now and was solvent at the date of the sequestration order. She is offering to pay into Court the amount of the disputed debt. This is addressed in section 6.1 below. (2) That it is a relevant consideration that she tendered a bank cheque for $347,000 to prove available funds during her adjournment application on the day of the hearing of the creditor's petition. After the adjournment application was refused, during the hearing of the creditor's petition, she relied upon the cheque to establish her solvency and that it was available to secure the disputed debt. This is said to be a basis for annulment, citing Bleeze v Fopp [1911] HCA 53; 13 CLR 324. This is addressed in section 6.2 below. (3) The 14 February 2018 judgment was irregular and is liable to be set aside. She submits that there is an arguable case for impeaching that judgment on the basis of the following matters: (a) It was procured in breach of r 36.10(3) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) because no affidavit of debt accompanied the making of the 14 February 2018 Order. This argument is addressed in section 6.3 below. (b) It was procured in circumstances of a serious denial of procedural fairness because the 14 February 2018 judgment was made in response to an ex parte application by Mr Dieb Khoury to a counter clerk in the Supreme Court, with no apparent judicial intervention, and otherwise than in accordance with rr 36.15, 36.16 or 36.17 of the UCPR. This argument is addressed in section 6.4 below. (c) The costs assessment and therefore the 14 February 2018 judgment are nullities because the bill of costs upon which the costs assessment and the review decision were made was not served within 30 days as required by s 352(4) of the Legal Profession Act. This argument is addressed in section 6.5 below. (d) The costs assessment and the review decision were procured in circumstances where Mrs Kessly was denied procedural fairness because she was not provided relevant documents for the costs assessment in what is referred to in her evidence as the "white binder" until 16 July 2016, after the costs assessment was complete. This argument is addressed in section 6.6 below. (e) The costs charged are said by Mrs Kessly to be liable to be set aside under r 36.15 of the UCPR because they are grossly in excess of the disclosed estimates of her retainer, and incurred in respect of work said not to have been performed by BK, which is said to amount to fraudulent conduct on the behalf of BK. This argument is addressed in section 6.7 below. (4) The creditor's petition was served on Mrs Kessly on 10 May 2019 by substituted service three months after it was filed when it could have been provided to her at her known email address. The application for substituted service involved a "charade" designed to ensure that Mrs Kessly did not have adequate time to respond to the petition. This argument is addressed in section 6.8 below. 32 For the above reasons and others, Mrs Kessly submits that the Court should exercise its discretion to annul her bankruptcy under s 153B(1) of the Bankruptcy Act. This is addressed in section 7 below.

THE RELEVANT LAW 33 The power in s 153B(1) of the Bankruptcy Act to annul a bankruptcy is discretionary but the power is made conditional upon the Court being satisfied that the sequestration order ought not to have been made. The subsection provides: (1) If the Court is satisfied that a sequestration order ought not to have been made or, in the case of a debtor's petition, that the petition ought not to have been presented or ought not to have been accepted by the Official Receiver, the Court may make an order annulling the bankruptcy. 34 The power to make a sequestration order may be exercised only where a debtor has committed an act of bankruptcy: Bankruptcy Act s 43(1)(a). One act of bankruptcy specified in s 40(1)(g) of the Bankruptcy Act is: (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 fixed for compliance with the notice; or (ii) where the notice was served elsewhere - within the time specified 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… 35 Section 52(1) of the Bankruptcy Act provides that the Court may make a sequestration order against the estate of a debtor if it is satisfied with proof of: (a) the matters stated in the petition; (b) the service of the petition; and (c) the fact that the debt or debts on which the petitioning creditor relies is or are still owing. 36 Mrs Kessly submits that the requirement in (c) is not satisfied in the present instance. She submits that the 14 February 2018 judgment does not represent a valid basis for this Court to conclude that she is indebted to BK because the judgment is only prima facie evidence of the debt. The Court should in the present application go behind the 14 February 2018 judgment to determine whether there is in truth a debt owed. 37 The requirement that the creditor prove that the debt relied upon is still owing will ordinarily be more easy to fulfil in respect of a judgment debt, the judgment being prima facie evidence of the debt: Corney v Brien [1951] HCA 31; 84 CLR 343 at 355 (Fullagar J); Shaw v Yarranova Pty Ltd [2017] FCAFC 88; 252 FCR 267 at [16] (North, Perry and Charlesworth JJ). However, a judgment debt is not immune to scrutiny by a court in bankruptcy. 38 In Wren v Mahony [1972] HCA 5; 126 CLR 212, Barwick CJ considered Lord Esher's statement in Re Flatau; Ex parte Scotch Whisky Distillers Ltd (1888) 22 QBD 83 at 85 - 86 to the effect that the power to go behind the debt is a "mere discretion". Barwick CJ said at 224 - 225: His Lordship, in using this expression, was not intending, in my opinion, to weaken the emphasis he had always placed on the need for the Court of Bankruptcy to be satisfied of the existence of the petitioning creditor's debt. Rather, if one reads all his expressions in the several cases I have cited, he was pointing out that the Bankruptcy Court could in general accept a judgment debt as sufficient proof of that debt particularly where it resulted from a fully heard contest between parties but that it always had the power to go behind the judgment and if the case was a proper one, should do so. The judgment is never conclusive in bankruptcy. It does not always represent itself as the relevant debt of the petitioning creditor, even though under the general law, the prior existing debt has merged in a judgment. But the Bankruptcy Court may accept the judgment as satisfactory proof of the petitioning creditor's debt. In that sense that court has a discretion. It may or may not so accept the judgment. But it has been made quite clear by the decisions of the past that where reason is shown for questioning whether behind the judgment or as it is said, as the consideration for it, there was in truth and reality a debt due to the petitioning creditor, the Court of Bankruptcy can no longer accept the judgment as such satisfactory proof. It must then exercise its power, or if you will, its discretion to look at what is behind the judgment: to what is its consideration. It is not the law, in my opinion, that whether in any case the Court of Bankruptcy will consider whether there is satisfactory proof of the petitioning creditor's debt is a mere matter of its own discretion. Nothing in Corney v Brien lends support for such a view. Rather the emphasis is upon the paramount need to have satisfactory proof of the petitioning creditor's debt. The Court's discretion in my opinion is a discretion to accept the judgment as satisfactory proof of that debt. That discretion is not well exercised where substantial reasons are given for questioning whether behind that judgment there was in truth and reality a debt due to the petitioner. 39 Where substantial reasons are asserted for going behind the judgment, the bankruptcy court should engage in a preliminary investigation about the merits of the attack that is made. The invitation to go behind the judgment may be rejected at that preliminary stage. However, once the court decides it will go behind the judgment, the "whole [of the] matter is open": Corney at 358. It is in this sense that the task of the bankruptcy court in examining a judgment debt may involve a two-stage process: Makhoul v Barnes [1995] FCA 953; 60 FCR 572 at 584 (Hill, Cooper and Branson JJ); Shaw at [18]. 40 These observations concern the powers of a bankruptcy court in determining whether or not a sequestration order should be made on a creditor's petition. With respect to Mrs Kessly's annulment application and the exercise of the power conferred by s 153B of the Bankruptcy Act, the statutory question is whether or not the sequestration order made by Judge Street "ought not to have been made". 41 The principles applicable to the exercise of the power conferred by s 153B were summarised by Tracy J in Bulic v Commonwealth Bank of Australia Limited [2007] FCA 307; 5 ABC(NS) 122 (in a passage approved by the Full Court in Francis v Eggleston Mitchell Lawyers Pty Ltd [2014] FCAFC 18 at [16] (Rares, Flick and Bromberg JJ)). Tracy J said at [12]: (1) An order can be made under s 153B(1) of the Act notwithstanding that the applicant has been discharged from bankruptcy; Re Oates; ex parte Deputy Commissioner of Taxation (1987) 17 FCR 402. (2) An applicant who seeks an annulment of his or her bankruptcy "carries a heavy burden". It is incumbent on an applicant "to place before the Court all relevant material with respect to his or her financial affairs so that the Court may be properly informed and may make a judgment that is based on the actual circumstances of the applicant": Re Papps; Ex parte Tapp (1997) 78 FCR 524 at 531. (3) In determining whether or not a sequestration order "ought not to have been made" the Court is not confined to a consideration of whether the order should have been made on the facts known to the Court at the time at which it was made. The Court must take account of facts, known at the time at which the sequestration order was made and at which it determines an annulment application, even if those facts were not before the Court at the time at which the sequestration order was made: Boles v Official Trustee in Bankruptcy (2001) 183 ALR 239 at 243; Re Raymond; ex parte Raymond (1992) 36 FCR 424 at 426. (4) A sequestration order "ought not to have been made" if, on the facts known at the time of the annulment application, the Court would have been bound not to make the sequestration order: Re Frank; ex parte Piliszky (1987) 16 FCR 396. (5) The Court will be so satisfied if it is established that the debtor was not, at the time the sequestration order was made, indebted to the petitioning creditor: Re Deriu (1970) 16 FLR 420 at 422. (6) If the Court is so satisfied, it is not precluded from annulling the bankruptcy because the bankrupt had not sought to have the default judgment set aside or failed to oppose the creditor's petition or failed to seek a review of the sequestration order: Re Raymond; ex parte Raymond (1992) 36 FCR 424 at 426. (7) The power conferred on the Court by s 153B(1) is discretionary in nature. Even if persuaded that the sequestration order ought not to have been made, the Court can, in appropriate circumstances, decline to annul the bankruptcy: Boles v Official Trustee in Bankruptcy (2001) 183 ALR 239 at 243. (8) Considerations which may have a bearing on the exercise of discretion include unexplained delay in the making of the application, whether or not the applicant is solvent, whether or not the applicant has made full disclosure of his or her financial affairs and a failure by the bankrupt to oppose the creditor's petition and attend the hearing at which the sequestration order was made: Re Williams (1968) 13 FLR 10 at 24-5; Boles at 247; Re Papps; ex parte Tapp (1997) 78 FCR 524 at 531; Rigg v Baker [2006] FCAFC 179 at [79]; Cottrell v Wilcox [2002] FCA 1115 at [7]. Additional considerations are collected in D. A. Hassall, "Annulment of Bankruptcy and Review of Sequestration Orders" (1993) 67 ALJ 761 at 766. 42 Mrs Kessly seeks to establish that she was solvent as at the date of the sequestration. Section 52(2) of the Bankruptcy Act provides that if the Court is not satisfied with the proof of any of the matters set out in ss 52(1) and (1A), or that the debtor is able to pay his or her debts, or that for other sufficient cause a sequestration order ought not to be made, then it may dismiss the petition. 43 The importance of solvency as a consideration has frequently been emphasised. In Re Sarina; Ex parte Council of the Shire of Wollondilly [1980] FCA 175; 32 ALR 596, the Full Court (Bowen CJ, Sweeney and Lockhart JJ) dismissed an appeal from Deane J, saying at 377: The power conferred upon the court by s 52(2) is permissive, not mandatory, although it seems that the occasions on which the discretion not to dismiss the petition might be exercised would not be frequent. It may, in a proper case, require the refusal of a sequestration order, yet permit the adjournment of the petition rather than its dismissal. The variety of circumstances that may arise in particular cases renders plain the undesirability of seeking to define parameters of the exercise of the power. Counsel for the respondent submitted that, notwithstanding the ability of the appellant to pay his debts within the meaning of s 52(2), the court, in the exercise of its discretion, should make a sequestration order against the estate of the appellant. The essence of the argument was that as the appellant was able to pay the debt due to the respondent but was unwilling to pay it, the court should make a sequestration order as a mark of its disapproval of such conduct. In our opinion that would not be a proper exercise of discretion on the facts of this case. This case does not fall within the ambit of the discretion conferred by s 52(2). Nor does it call for the adoption of any course except dismissal of the petition. 44 In Culleton v Balwyn Nominees Pty Ltd [2017] FCAFC 8; 343 ALR 632 the Full Court (Allsop CJ, Dowsett and Besanko JJ) relevantly said: [43] Re Sarina demonstrates the centrality of the question of solvency to the jurisdiction of bankruptcy. Whilst one must recognise the permissive "may" in s 52(2), the circumstances where a sequestration order would be made if the debtor satisfied the Court of his or her solvency are difficult to imagine. Proof of solvency may not necessitate dismissal of the petition; an adjournment may be the appropriate course. [44] Whilst it is legitimate for a creditor to proceed in bankruptcy for the purpose of recovering a debt, that does not mean that bankruptcy should be viewed in its essential character as part of the process of execution of judgment debts. It is the changing of the status of an insolvent person: O'Mara Constructions Pty Ltd v Avery [2006] FCAFC 55; 151 FCR 196 at [53] (and the cases there discussed) and see also O'Farrell v Palicave Pty Ltd [2009] FCAFC 64; 176 FCR 134 at [24]. A sequestration order, as demonstrated by Re Sarina, will not be made against the estate of someone who refuses to pay a debt if that person can prove (the onus being on him or her) that he or she is solvent. [45] The centrality of the question of solvency or insolvency might, in a given case, be why an adjournment is not granted when solvency is asserted. If material before the Court gives rise to the inference that further time to prove solvency is unlikely to be of utility, there may be a risk of further prejudice to creditors generally if there is delay in making the order. On the other hand, if the evidence reveals the real possibility that there is further material that may prove the debtor is solvent, attention should generally be given to the question whether some time or opportunity should be afforded to the debtor. Whether it is afforded will depend upon all the circumstances. 45 The reasoning of the Court in Culleton was directed to the operation of s 52(2) of the Bankruptcy Act. In Shaw, which concerned an annulment application, the Full Court noted that proof of Mr Shaw's solvency in the annulment proceedings would not have mandated the annulment of his bankruptcy by the primary judge: [101]. Even if Mr Shaw could show that a sequestration order "ought not to have been made," including by reason of his solvency, it remained within the discretion of the primary judge to refuse to order that the bankruptcy be annulled, citing Boles v Official Trustee in Bankruptcy [2001] FCA 639; 183 ALR 239 at 243. However, the circumstance that a bankrupt was solvent at the time of the sequestration of his or her estate is likely to weigh heavily in the exercise of the discretion conferred by s 153B of the Bankruptcy Act, although it will not be determinative. In that regard, in Shaw the Full Court said at [110]: The policy considerations to which the Full Court referred in Re Sarina and Culleton apply equally in an annulment context. As the Court in Culleton observed, it is "difficult to imagine" a circumstance where a bankrupt who could demonstrate his or her solvency at the time of sequestration should nonetheless be denied relief on a subsequent annulment application. The respondents submit that this is such a case. 46 In Hardaker v Phair trading as Proctor Phair & Associates, in the matter of Hardaker [2002] FCA 1176 Jacobson J noted, in light of the decision in Re Sarina, that it would not be a proper exercise of discretion under s 52(2) to make a sequestration order where the evidence established that the debtor was able to pay the debt due but was unwilling to pay it. He accepted that on the basis of the evidence before him, the bankrupt would have been able to pay the debt, and that it was inconceivable that the court would, in the proper exercise of its discretion, have made a sequestration order if that evidence had been before it. He noted that the discretion to make an order under s 153B is not ordinarily exercised unless all of the provable debts have been paid in full. His Honour considered it a prudent exercise of his discretion to make an order for annulment on the basis that the bankrupt undertook to pay the debts owed to the creditors. 47 In Barnes v Lion Finance Pty Ltd [2015] FCA 951 at [22], Beach J helpfully summarised the position in relation to the exercise of the discretion under s 153B(1) (emphasis added): ...as to the phrase "ought not to have been made", the question is whether on the facts at the time, now known to have existed at the time, the court making the sequestration order would have been bound not to make the sequestration order. The test is not whether such a court might not have made the order or that it was likely that the court would not have made the order. The question is whether that court was bound not to make the order. Fourth, even if the condition is satisfied, nevertheless the Court may still refuse to exercise its discretion to annul. In the exercise of its discretion, the Court may consider: • whether the applicant is solvent at the time of the annulment application; • whether the applicant has made full disclosure of his financial affairs; • any failure by the applicant to attend the hearing concerning the making of the sequestration order or to oppose such an order, and the explanation for such conduct; • any failure by the applicant to put before the earlier court facts then known to the applicant and the explanation for that failure; • whether the applicant has delayed in making the annulment application and the time that has elapsed since the making of the sequestration order; • the preparedness of the applicant to pay the costs thrown away by reason of the annulment application and the trustee's costs and expenses of the bankruptcy to the extent that they have not otherwise been recovered from the bankrupt's estate; • the rights and interests of the creditors, including the applicant's preparedness to pay any outstanding debts as an alternative arrangement to the continuation of the bankruptcy; • the conduct of the applicant during the period of the bankruptcy, including the applicant's co-operation with the trustee and also whether there has been any conduct that may give rise to bankruptcy offences; • the steps taken by the trustee to investigate and realise the estate and whether there has been any impediment due to the conduct of the applicant or a third party; • whether it is fair or just to the applicant or the creditors to grant the annulment; • the public interest… 48 In granting an annulment application, the Court may do so on terms, including that the Trustee's costs and expenses to the date of the annulment be paid or secured, or that any outstanding debt be paid or secured: Barnes at [23].

THE SEQUESTRATION ORDER 49 The sequestration order was made by Judge Street on 18 July 2019. On that day Mrs Kessly sought to adjourn the hearing. The circumstances of the adjournment application are recited by Judge Street in Benjamin & Khoury Solicitors v Kessly [2019] FCCA 1976. In short, the adjournment judgment states that following the adverse determination by Judge Baird of the application to set aside the second Bankruptcy Notice, procedural directions had been given and the hearing of the creditor's petition was set for 27 June 2019. Shortly before that date, on 12 June 2019, Vaikom Rajeev, a lawyer at Rudra Legal Corporation Pty Ltd, was appointed to act for Mrs Kessly and the hearing was adjourned until 18 July 2019. 50 When the matter was called on 18 July 2018, Mr Johnson of counsel appeared for Mrs Kessly and sought leave to withdraw, because a further solicitor, Mr Attapallil, had apparently been recently retained to represent her. Leave was granted for Mr Johnson to withdraw. Before he did so, he tendered a medical certificate from a medical practitioner who had examined Mrs Kessly and given the opinion that she was not fit to attend court. Mr Johnson also tendered a bank cheque from Westpac Bank dated 14 June 2019 for the amount of $347,000 and a customer receipt deposit from Westpac Bank to Mrs Kessly into a particular account number in that amount. After Mr Johnson withdrew, Mr Attapallil informed the court that he had only recently received instructions and requested an adjournment. 51 Judge Street refused the adjournment on the basis that he was not satisfied that the last minute appointment of a new legal representative was an adequate explanation for a failure to be ready for hearing, and there was no explanation as to why Mrs Kessly had failed to instruct new lawyers in a timely fashion. He indicated that the Court was prepared to grant an adjournment if BK was paid in full, but he was informed that Mrs Kessly was not willing to pay out BK. 52 In his sequestration judgment Judge Street was satisfied that there had been good service of the creditor's petition and that the debt reflected in the second Bankruptcy Notice was outstanding. He was satisfied that BK had established the matters required under s 52(1) of the Bankruptcy Act. He noted that there was no affidavit evidence before the Court to establish that Mrs Kessly was able to pay her debts as they fall due. In this regard, he observed that on the adjournment application a bank cheque had been provided to the Court that identified that an amount of $347,000 was paid into a Westpac Bank account of Mrs Kessly. He noted that it exceeded the judgment debt being sought to be recovered by BK, but found that in the absence of affidavit evidence to support the solvency of Mrs Kessly or to explain why there is sufficient cause that the sequestration order ought not to be made, he was not satisfied that Mrs Kessly was able to pay her debts or that there was otherwise sufficient cause for why a sequestration order ought not to be made.

6.1.1 The submissions 53 The debtor, in this case Mrs Kessly, has the onus of establishing solvency in the sense of being "able to pay her" debts within the meaning of s 52(2)(a) of the Bankruptcy Act. The test was stated by Barwick CJ in Sandell v Porter (1966) 115 CLR 666 at 670 as follows: Insolvency is expressed in s 95 as an inability to pay debts as they fall due out of the debtor's own money. But the debtor's own moneys are not limited to his cash resources immediately available. They extend to moneys which he can procure by realization by sale or by mortgage or pledge of his assets within a relatively short time - relative to the nature and amount of the debts and to the circumstances, including the nature of the business, of the debtor. The conclusion of insolvency ought to be clear from a consideration of the debtor's financial position in its entirety and generally speaking ought not to be drawn simply from evidence of a temporary lack of liquidity. It is the debtor's inability, utilizing such cash resources as he has or can command through the use of his assets, to meet his debts as they fall due which indicates insolvency. 54 Mrs Kessly seeks to establish that she was able to pay her debts as they fell due at the relevant time having regard to the balance of her bank accounts exceeding the debts owed to her creditors at the date of the sequestration order. She also relies on the net equity in her home and real estate investment properties (accounting for her indebtedness to the Westpac Bank secured by mortgages secured over some of her investment properties) exceeding the debts owed to her creditors at the date of the sequestration order. 55 BK does not dispute that Mrs Kessly has a surplus of assets over liabilities. It submits that this is not the end of the matter. It contends, citing Shaw at [95] - [100], that it must be demonstrated that she could have paid her debts as they fell due. Furthermore BK submits that, despite Mrs Kessly's bank statements reflecting the $347,000 cheque she handed up to the FCCA on the sequestration, the Court should not be confident that Mrs Kessly had sufficient cash assets in her bank accounts at the sequestration date because she has not disclosed to the Court the source of that money nor the full extent of borrowing leading up to the sequestration date. 56 In Shaw the bankrupt sought to establish that he was able to pay his debts as they fell due at the relevant time and that his bankruptcy should be annulled on that basis. In the primary judgment of Shaw v Yarranova Pty Ltd [2016] FCA 88, Pagone J accepted that Mr Shaw had owned assets at the time of the sequestration proceedings in excess of the judgment debts owed by him to the respondents. His Honour went on to say at [10]: …The availability of those assets are relevant to Mr Shaw's solvency as at the date of making of the sequestration order but it is not sufficient to establish solvency for Mr Shaw to say that he had assets that could be realised without having taken any steps to do so or without showing that he could do so within a relatively short time: Stankiewicz v Plata [2000] FCA 1185, [30]-[32]; Reaper v Baycorp Collections PDL (Australia) Pty Ltd [2014] FCA 13, [11]. Mr Shaw has not demonstrated that in May 2014, or if relevant, at any time thereafter, he was in a position to 'realise assets, sufficient to pay the debt, within a relatively short time': Stankiewicz, [30]… 57 Pagone J held that it would be necessary for the bankrupt to sell one or more of his properties in order to discharge his liabilities, which he was unable to do so in a "relatively short" or "reasonable" period of time and therefore he had failed to establish his solvency. The Full Court upheld this conclusion, accepting as an underlying premise of the primary judge's findings that all of the judgment debts owed by the bankrupt were immediately due and payable (at [100]), and that the bankrupt had not discharged the onus on him to demonstrate an ability to sell the assets. A lack of demonstrated ability to pay in a reasonable or relatively short period of time meant that he was not able to establish solvency.

6.1.2 The evidence going to solvency 58 Mrs Kessly provided a Statement of Affairs to the Trustee dated 20 September 2019. The Trustee subsequently provided a Report to Creditors dated 18 October 2019. The Trustee has also provided a Report to the Court dated 11 December 2019, which she annexed to her affidavit in these proceedings. 59 The explanation provided in evidence by Mrs Kessly as to her financial position is threadbare. In her affidavit of 20 November 2019 she refers to her Statement of Affairs. In that, she lists co-owning with her husband four properties and being the sole owner of another. She refers to having five bank accounts with Westpac Bank, one a home loan account with her husband, two joint accounts with her husband and two in her own name. She annexes some bank statements as at the date of the sequestration order. She states that she withdrew $201,464 from one of her accounts on 20 September 2019 and provided $200,000 to her solicitor, Mr Bingham, to hold in his trust account to facilitate the making of the annulment application and to secure her disputed debt with BK and the costs of the administration of the Trustee. She also paid an outstanding debt to another law firm, Teneo Legal. She notes that she had not realised that she was not permitted to make this withdrawal following the making of the sequestration order and has since directed that Mr Bingham pay $156,000 to the Trustee's account. 60 Mrs Kessly refers to the Trustee's Report to Creditors and affirms that the creditors listed by the Trustee are correct. 61 In correspondence between the Trustee and Mr Bingham following the unauthorised payment to him by Mrs Kessly of $200,000, the Trustee permitted Mr Bingham to retain $20,000 in trust, to be applied against disbursements relating to the annulment of the bankruptcy, and another $24,000 in trust, being an allowance for $8,000 per month for three months for total living and medical expenses of Mrs Kessly. 62 The Trustee in her Report to Court relevantly presents the following information concerning Mrs Kessly's real estate interests: (a) She is the owner of 134 Sutherland Street in Mascot, New South Wales, valued at $680,000 which is unencumbered. (b) She is the joint owner with her husband of 50 Stephen Road in Botany, New South Wales, valued at $1,520,000. Westpac Bank holds a mortgage in this property in the amount of $1,412,981.38. Her 50% equity share in the property, accounting for the mortgage (and leaving aside the Writ (referred to above at [17]) on the property held by BK), is about $53,509.31. (c) She is the joint owner with her husband of 56 Gipps Street in Smithfield, New South Wales, which is valued at $665,000. No mortgage interest is recorded against the title, however in correspondence Westpac Bank claims that this property secures a mortgage of $1,411,316.40 together with the property located at 67 Carlisle Street in Shoalwater, Western Australia. (d) She is the joint owner with her husband of 67 Carlisle Street in Shoalwater, Western Australia, which is valued at $570,000. No mortgage interest is recorded against this title either, but as noted above, Westpac Bank claims that this property secures a mortgage of $1,411,316.40 together with the property located at 56 Gipps Street in Smithfield, New South Wales. The veracity of this mortgage is for investigation by the Trustee. However, assuming that the two properties are secured by the mortgage, she estimates Mrs Kessly's interest in the two properties is a total of -$88,158.20. (e) She is the joint owner with her husband of 67A Carlisle Street in Shoalwater, Western Australia, in respect of which there has not been any valuation. Mrs Kessly estimates its value to be $275,000. It was acquired in about 2004 for $203,000 and is vacant land. 63 I note that, peculiarly, the value of the mortgage said by Westpac Bank to be held over the 56 Gipps Street and 67 Carlisle Street properties is only about $1,600 less than the mortgage held over the 50 Stephen Road property. Leaving aside any controversy with respect to the 56 Gipps Street and 67 Carlisle Street properties, and noting that the Trustee has not undertaken a valuation of the 67A Carlisle Street property, it would appear from the Trustee's Report that in net terms, Mrs Kessly's real estate holdings may be valued at approximately $920,351.11. This has been calculated as per below: (a) + $680,000 (134 Sutherland Street property); (b) + $53,509.31 (50 Stephen Road property); (c) - $88,158.20 (56 Gipps Street and 67 Carlisle Street properties); (d) + $275,000 (67A Carlisle Street); = $920,351.11. 64 With respect to her cash assets, in her Statement of Affairs, Mrs Kessly claimed that she held four bank accounts with a cumulative balance of $352,077.42, plus a home loan account with a negative balance. Notably, $350,592.23 of her cash assets resided in one account (the 98 account) as at 20 September 2019, when the Statement of Affairs was signed. The Trustee's investigations have not found this amount. Rather, the Trustee reports cash at bank to be in the amount of $152,906.59, which includes the amount provided by Mr Bingham in response to the correspondence referred to above at [61]. The Trustee's Report to the Court states that she is unaware of the whereabouts of the remaining balance of $150,592.23 said to be in the 98 account by Mrs Kessly in her Statement of Affairs, but given the annulment application she has not investigated this further. 65 Mrs Kessly exhibits bank statements showing the balances of the five accounts as at the sequestration date. One is for a home loan account she holds with her husband, entitled "Rocket Investment Account", which is an offset account showing a balance of -$947,981.38 as at 15 July 2019 with a balance as at 11 November 2019 (the most recent) of -$1,395,550.67. Another is for an account entitled "Smithfield Flat", apparently held jointly with her husband, showing a balance of $774.62 as at the sequestration date and a balance of $252.24 at 15 October 2019. Another, also apparently a joint account, is for an account entitled "Smithfield House" that contained $716.12 on 2 July 2019, with substantial withdrawals in April 2019, and a nil balance as at 1 October 2019. Another, also in Mrs Kessly's name, shows bank account details from 10 May 2019 until 19 July 2019 with an opening nil amount and a closing nil amount with some substantial deposits and withdrawals during that period. Importantly, on 16 July 2018, $347,000 was deposited in this account (two days before Mrs Kessly handed up a cheque of the same amount to the FCCA), and on 19 July 2018 (the day after the sequestration order) $350,168.70 was withdrawn from the account, emptying it. A final statement, being for the 98 account mentioned above, is in Mrs Kessly's own name and shows a nil opening balance on 30 July 2019 and a balance of $5,779.61 on 30 September 2019. On 18 September 2019, $350,592.23 was deposited into this account. On 20 September 2019, a bank cheque for $200,000 was drawn from the account (presumably the money given to Mr Bingham to be held on trust). On 23 September 2019, following the submission of her Statement of Affairs on 20 September 2019, $147,500 was withdrawn from the account by way of bank cheque. Mrs Kessly's affidavit evidence does not address this withdrawal which occurred between the making of the Statement of Affairs and the Trustee's Report to Creditors. 66 In her Statement of Affairs, Mrs Kessly states that she is unemployed and does not receive government benefits. She discloses that she earns income from the rental of the properties that she and her husband own in the amount of about $105,300 per annum. The Trustee has not investigated this further. 67 The Trustee reports that as at 30 November 2019 she has incurred work in progress of $73,059.18 in costs in the administration of the bankrupt estate and disbursements in the amount of $1,324.02. She notes that her costs will increase having regard to the current annulment application. 68 The Trustee's Report to Court identifies the following creditors of the estate as at 11 December 2019, noting that she has not adjudicated any of the claims received: BK as a priority creditor in the amount of $11,100 as costs on the sequestration order and Orders made on 19 July 2018 by the FCCA; BK in the amount of $164,099.68 apparently being the amount in the 14 February 2018 judgment plus interest; and A further outstanding debt to Teneo Legal. An email from a partner of Teneo Legal to Mr Bingham on 17 October 2017 confirms that Mrs Kessly paid her debt to the firm and does not owe the firm any further amount, although the Trustee's Report include a $6,536.10 debt owed to Teneo Legal. 69 It is apparent, as the Trustee submits, that there will be sufficient assets in the bankrupt estate to meet all claims in full regardless of whether the claim made by BK is accepted as provable in the bankruptcy. It is also the case, as the Trustee submits, that absent Mrs Kessly procuring cash funds from a third party, it would be necessary for the Trustee to realise real property assets of Mrs Kessly in order to annul the bankruptcy under s 153A of the Bankruptcy Act.

6.1.3 Was Mrs Kessly solvent at the sequestration date? 70 Whilst the evidence does not provide an explanation of the various bank transfers in Mrs Kessly's accounts, referred to above at [64] and [65], it is quite apparent that as at the sequestration date, Mrs Kessly had a surplus of assets over liabilities. More particularly, it is apparent that she had sufficient cash available to pay her creditors and accordingly was in a position to pay her debts within a "relatively short time": Shaw at [99]. In this regard, the value of her real estate interests was apparently about $1,162,625.81 in excess of any security interests held by Westpac Bank, and apparently she had approximately $350,000 in cash resources available to her. I am satisfied that Mrs Kessly was solvent at the sequestration date.

6.1.4 Is Mrs Kessly solvent now? 71 Mrs Kessly's solvency position now is somewhat different than at the sequestration date. The Report to Court states that as of 22 October 2019, the four bank accounts identified by Mrs Kessly with positive balances in her Statement of Affairs held only $322.15 in total. The reason for this was that, as noted above at [65], following the submission of Mrs Kessly's Statement of Affairs, $147,500 was withdrawn from the 98 account by way of bank cheque on 23 September 2019. The Trustee held $156,000 on trust (the amount transferred to her by Mr Bingham referred to above), less $3,094.09 for the Trustee's receipts and payments, as at 9 December 2019. On the basis of those figures, the Report to Court estimates that Mrs Kessly's total cash, as at 11 December 2019, was $152,906.59. This amount may have decreased since then, assuming that the Trustee has paid out further monies to Mr Bingham for the ongoing living and medical expenses of Mrs Kessly. 72 That amount is unlikely to be exceeded by the totality of the bankrupt estate's debts as they now stand. BK lodged a proof of debt with the Trustee for $164,099.68 which is evidenced in her Report to Court. The basis on which this amount was calculated is not explained in the Report to Court; however, it presumably comprises at least the 14 February 2018 and 15 February 2018 judgment debts plus interest. The Report to Court also notes a priority claim in BK's favour in the amount of $11,100 arising from costs awarded to it by the FCCA on 18 May 2018 and 19 July 2018. It is unclear whether this amount is included within BK's proof of debt for $164,099.68. Teneo Legal also lodged a proof of debt for $6,536.10, although as noted above at [68], it is likely that Teneo Legal has settled this debt with Mrs Kessly. 73 In contrast to BK's proof of debt, Mrs Kessly claimed in her Statement of Affairs that she only owed BK $101,222.70. The basis on which the amount was calculated is also not explained in the Report to Court. 74 Another point of distinction as compared to Mrs Kessly's position at the sequestration date is the Trustee's costs. As at 30 November 2019, the Trustee had incurred (unapproved) costs and disbursements of approximately $75,000, and in the Report to Court she estimated that further remuneration would be required to be incurred to facilitate the annulment. She stated that the increase would depend upon the length of time she is involved in the proceedings. The Trustee filed written submissions and appeared, by her solicitor, at the two day hearing of the present application. I infer that she has incurred substantial further fees. 75 There is no doubt, having regard to her real estate assets, that Mrs Kessly's estate has a surplus over liabilities. However, its available cash assets, on the evidence now available, indicates to me that the estate does not have sufficient cash to pay the Trustee's fees and BK's debt (regardless of whether BK's proof of debt amount, or Mrs Kessly's Statement of Affairs amount, is factored in). It would appear those amounts could not be paid without selling her real property assets or further mortgaging those available assets. 76 In her Originating Application, Mrs Kessly proposes that her debt to BK be paid into Court to abide the outcome of her proposed Supreme Court proceedings (see below in section 7). However, she does not provide any evidence as to the source or sources of those funds. It appears her debts could only be paid by way of liquidating her real property assets or further mortgaging those assets, yet she puts on no evidence as to how she could do that in a reasonable or relatively short period of time to satisfy the definition of solvency.

6.2 The offer of security for the disputed BK debt 77 In a related point to the question of solvency, Mrs Kessly first submits that she tendered a bank cheque for $347,000, to prove her available funds, during her adjournment application on the day of the hearing of the creditor's petition. After the adjournment application was refused, during the hearing of the creditor's petition, she relied upon the cheque to establish her solvency and that it was available to secure the disputed debt. This is said to be a basis for annulment, citing Bleeze. 78 Mrs Kessly secondly submits that payment, or tender of payment of the debt of the petitioning creditor, in the present proceeding also provides a basis for annulment. She now offers to pay the amount of the alleged (but disputed) debt into Court in order to secure BK. She submits that this is tantamount to payment of the debt in full at the date of the annulment order and that this of itself is a basis upon which the sequestration order should be annulled. 79 In relation to the first argument, Judge Street concluded that in the absence of an affidavit going to her assets and liabilities there was no evidence that Mrs Kessly was able to pay her debts as they fell due. He was not incorrect to observe that the proffered cheque of $347,000 did not serve to remedy that deficiency (at [6]). 80 Bleeze is a reported outcome of a special leave application, where special leave was refused from a decision of the Supreme Court of South Australia in circumstances where a bankruptcy was annulled following tender of the amount owed to the judgment creditor personally. The facts of the present case are quite different. 81 In relation to the second argument, the payment into Court is said in written submissions to be offered "to abide the outcome of a challenge to the existence [of the debt]". I address this further at [119] - [122] below. However, for present purposes it suffices to note that the proposed payment into Court does not equate to a payment to BK.

6.3 Judgment liable to be set aside for breach of r 36.10(3) of the UCPR 82 Mrs Kessly contends that the 14 February 2018 judgment was procured in breach of r 36.10(3) of the UCPR because no affidavit of debt accompanied the making of the judgment and it accordingly should be set aside. 83 It will be recalled that the first Bankruptcy Notice was withdrawn by the consent of the parties on 19 January 2018. To the extent that there is any dispute about this matter, I find that the reason for the withdrawal was because the 1 July 2016 judgment incorrectly recorded as the a debt of $121,707.17 plus interest, which failed to take into account the amount of $40,500 already paid to BK by Mrs Kessly. That accords with the evidence of Mr Khoury, which I accept. It is also consistent with the documentation, including the application for an assessment of costs, the costs assessment itself, and the documents in the Supreme Court file set out below, which acknowledge that the amount claimed was the amount of the bills as assessed, less the amount already paid by Mrs Kessly. 84 Mr Bingham and Mr Bray give evidence that they inspected the Supreme Court file for proceedings No. 2016/00200224, which indicate that they found on the file four documents: (1) A Registration of Certificate of Determination, filed in the Costs Assessment Division of the Supreme Court on 1 July 2016, together with the two costs assessment certificates referred to above at [13]. The Registration records that the amount of the judgment/order is $121,701.17 and that the total amount to be enforced as at date of registration and filing was $81,201.17. (2) A Notice of Motion for Writ for the Levy of Property filed by BK on 22 March 2017, together with an affidavit in support sworn by Mr Khoury of the same date, seeking to execute judgment in the amount of $81,201.17 plus interest and costs. (3) A Writ for Levy of Property issued on 27 March 2017. (4) A Judgment/Order made on 1 July 2016 and entered on 14 February 2018 in the amount of $81,201.17. 85 It is the fourth document that Mrs Kessly seeks in this argument to impugn. 86 Rule 36.10 of the UCPR, as it was in force at the time of the Registration of the Certificate of Determination was made, stated (emphasis added): 36.10 Filing of costs assessors' certificates (1) A cost assessor's certificate: (a) may be filed in the proceedings to which it relates, or (b) may be filed in fresh proceedings, whether in the same court or another court. (2) A number of certificates may be filed together under subrule (1) if each of the certificates: (a) relates to the same costs assessment, and (b) requires the same person or persons to pay costs. (3) If some of the costs specified in the certificate or certificates have been paid, the certificate or certificates must be accompanied by an affidavit, sworn not earlier than 14 days before the certificate or certificates are filed, stating the amount of the costs that have been paid. Note: The certificate or certificates will, from the date of filing, be taken to be a judgment of the court under the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014) for: (a) If the certificate or certificate are not accompanied by an affidavit under subrule (3) - the total amount of costs specified in the certificate or certificates, or (b) If the certificate or certificates are accompanied by an affidavit under subrule (3) - the amount of costs that have not been paid. 87 As I have noted above at [13], the first costs assessment certificate states, in terms, that the costs Mrs Kessly is to pay is the sum of $79,468.67. That is the amount "specified" in the certificate. No amount of that sum had been paid by the date on which it was filed in the Supreme Court proceedings. Accordingly, no affidavit was required to be filed in accordance with r 36.10(3) of the UCPR. It seems to me that this is plain from the language of the rule. To the extent it is not, I note that Schmidt J arrived at the same conclusion in Brezniak v Habib [2014] NSWSC 1730 at [62] - [63]. 88 If the materials advanced by Mr Bingham and Mr Bray had been placed before the FCCA at the time of the sequestration order, I am not satisfied that they would have led to the conclusion that there existed substantial reasons for going behind the judgment: Corney at 358. Nor am I satisfied that the sequestration order ought not to have been made on the basis of this argument.

6.4 Entry of 14 February 2018 judgment without power and a denial of procedural fairness 89 This argument relies on a similar factual substratum to the previous ground. Mrs Kessly contends that the 14 February 2018 judgment was procured by a serious denial of procedural fairness, because it was not proper to replace the 1 July 2016 judgment with another judgment without the intervention of a judge of the Supreme Court and without due notice to Mrs Kessly. The substitution of the 14 February 2018 judgment was also said to have been done "against good faith" and "irregularly". She gives evidence that she was not served with a copy of the 14 February 2018 judgment or with any application on the part of Mr Khoury to substitute the 1 July 2016 judgment. 90 In my view the argument raised by Mrs Kessly does not warrant going behind the 14 February 2018 judgment. First, as I have noted, there is no dispute that the first judgment incorrectly recorded the amount owed by Mrs Kessly. I have found that the basis upon which the first Bankruptcy Notice was set aside was because it recorded the incorrect amount due to reciting, as a Bankruptcy Notice does, the judgment upon which it relied. The first Bankruptcy Notice was set aside by consent. There was, and could be, no dispute that the earlier judgment recorded the amount due in error. As I have noted, the contemporaneous documents record the correct amount. 91 Secondly, Mrs Kessly has not established that it was not within power for the 14 February 2018 judgment to be made ex parte and in chambers. Mr Khoury gives evidence, which I have accepted, that the parties agreed that the judgment for the correct amount would replace the 1 July 2016 judgment. This is what the 14 February 2018 judgment did. The judgment is signed by the Chief Clerk of the Supreme Court. There is (and can be) no suggestion that it is not an authentic document. Rule 36.17 of the UCPR provides that if there is a clerical mistake, or an error arising from an accidental slip or omission in a judgment or order, or in a certificate, the court, on application of any party or of its own motion, may, at any time, correct the mistake or error. Mrs Kessly has not established that this is not an appropriate power for such an order to be made. Furthermore, it is entirely possible that the slip rule was exercised by a Registrar of the Supreme Court under delegated legislation. 92 Thirdly, the complaint of denial of procedural fairness in any event would go nowhere, and lead to no substantial injustice to Mrs Kessly. There is no dispute that the 1 July 2016 judgment did erroneously record the amount of the debt, or that the 14 February 2018 judgment does record the amount found in the costs assessment and the review decision to be reasonable costs incurred and billed by BK. 93 For these reasons I do not consider that it is appropriate to go behind the judgment on the basis advanced. If the same materials had been placed before the FCCA at the time of the sequestration order, I am not satisfied that they would have led to the conclusion that the sequestration order ought not to have been made.

6.5 Judgment a nullity because of failure to provide bill 94 Mrs Kessly submits that she did not receive a bill of costs relevant to the costs assessment in accordance with the requirements of s 352(4) of the Legal Profession Act, which, she submits, provides that the bill of costs should have been provided at least 30 days prior to applying for a costs assessment. Her submission is that the failure to wait until 30 days had passed following the service of the bill of costs means that the costs assessment was a nullity. It follows, she submits, that all other actions based on the costs assessment were invalid. 95 Section 352(1) of the Legal Profession Act provides that a law practice that has given a bill may apply to the Manager of Costs Assessment for an assessment of the whole or any part of the legal costs to which the bill relates. Subsection (3) provides that any application for a costs assessment may be made even if the legal costs have been wholly or partly paid. Subsection 352(4) provides: (4) An application may not be made under this section unless at least 30 days have passed since: (a) the bill was given or the request for payment was made, or (b) the costs were paid if neither a bill was given nor a request was made, or (c) an application has been made under this Division by another person in respect of the legal costs. 96 BK submits that there can be no dispute that the bills rendered were given, and payment requested well in advance of the 30 days required by s 352(4). It submits that the document relied upon by Mrs Kessly for the purpose of this argument is not a bill of costs, but an itemised list of the costs in the bills previously rendered, being part of a draft application for an assessment of costs served under cover of the 26 October 2015 letter. Accordingly, no nullity argument arises. BK submits that it is the dates the bills were originally served that are relevant for s 352(4)(a), which were sufficiently in advance of filing the costs assessment application and the review application for the purposes of s 352(4). I agree. 97 Mr Khoury gives evidence he sent the 26 October 2015 letter to Mrs Kessly by express post enclosing "Supreme Court Form 2: Application by Legal Practice for Assessment of Costs", an application that was then filed in the Supreme Court on 19 November 2015 (both referred to as the assessment application). The assessment application provides a detailed narrative of the conduct of the Court of Appeal proceedings to which the disputed costs related. It recites that the costs which are the subject of the assessment application were included in BK's practice's bills of costs, and are the same costs which are enclosed in the assessment application together with the Costs Agreement and Costs Disclosure Agreement between the parties. The assessment application states that the costs the subject of the assessment application "were included in the bills of costs as particularised in the following table", which then lists 6 invoices, dated from 30 June 2015 until 13 October 2015. The table records the amount of each invoice and the amount that remains unpaid for each invoice. It records that the invoice amounts in each case represented a percentage reduction (ranging from 12% to 17.5%) of actual costs. It recites that "the bill of costs was given at least 30 days prior to the making of this application". The assessment application also explains how costs disclosure obligations were met, in respect of each invoice. 98 On 9 June 2016 the costs assessment was completed and the Costs Assessor, Angus Broad, delivered reasons. From those it is plain that the assessment was based on the costs in the six invoices nominated by BK. In his reasons, Mr Broad records that upon receipt of the application he wrote to Mrs Kessly seeking her submissions and other material and she provided "detailed objections", to which he referred. In those circumstances, there can be no dispute that Mrs Kessly was aware of the assessment. 99 It is apparent from the content of the assessment application and the reasons of Mr Broad that the itemised list is not a bill itself within s 352(4) of the Legal Profession Act. It is part of an application for an assessment of bills that had been rendered in the period from 30 June 2015 until 13 October 2015. The assessment application was lodged on 19 November 2015, which is over 30 days from the date of the last bill. 100 I reject the submission made by Mrs Kessly that the itemised list was a "bill" within s 352(4). Having regard to the contents of the filed assessment application and the reasons of Mr Broad, I am satisfied that the costs to which the assessment application relates are those set out in the bills rendered in the period from 30 June 2015 to 13 October 2015. Mrs Kessly has adduced no evidence to suggest otherwise. Mrs Kessly does not advance any argument to the effect that the bills rendered from 30 June 2015 to 13 October 2015 were not rendered or provided to her. She asserts in her evidence that the draft assessment application amounted to a new bill of costs that she had never received before from BK. However, she provides no basis for this contention. As I have already noted, the itemised list within the draft and filed assessment applications was for the same costs in the bills previously rendered. It is not a bill, but a list tallying the costs owed to BK for the purposes of the assessment application. As BK rightly submits, and contrary to the submission of Mrs Kessly, the comments by McDougall J in Patakas v Bevan [2016] NSWSC 1618 at [132] - [141] are of little utility to Mrs Kessly in the present matter. In that case, it was not clear whether the assessment application referred to costs claimed in originally served bills, or in differing bills attached to the assessment application. In the present case it is clear that the assessment application and costs assessment itself refer to the same costs as the bills originally rendered. 101 The consequence of these findings is that Mrs Kessly's argument that the itemised list within the draft assessment application is a bill of costs that was not served within the time prescribed in s 352(4) does not provide a basis upon which I consider it necessary to go behind the 14 February 2018 judgment. If the materials advanced had been placed before the FCCA at the time of the sequestration order, I am not satisfied that they would have led to the conclusion that the sequestration order ought not to have been made.

6.6 Denial of procedural fairness: the white binder 102 Mrs Kessly's next argument is based on an alleged denial of procedural fairness. Mrs Kessly submits that she only received the documents relevant to the costs assessment on 16 July 2016, after it was completed, and shortly before the time for lodging an application for a review of the assessment. Although the application for review entitled her to a complete merits review of the costs assessment, she submits that there was not sufficient time for her new legal advisors to prepare the application for a review of the assessment. That led to a chain of events. First, the Review Panel decided to uphold the costs assessment, when it should not have done so. Secondly, the decision of Judge Taylor in the District Court refused leave to appeal from the decision on the basis of a case that had not been properly formulated. Accordingly, if the failure to serve the documents within time did not result in the costs assessment being a nullity (see section 6.4 above), there was nevertheless a failure to afford Mrs Kessly procedural fairness. 103 Mrs Kessly gives evidence that she did not receive a file of documents (referred to in her evidence as a "white binder"), which included the assessment application and accompanying documents, until 16 July 2016, more than one month after Mr Broad's reasons were given. She states that she had never seen the itemised list, which she refers to as the "new bill", until that date. In her evidence in reply to Mr Khoury, she states that the white binder was anonymously delivered to her home. She says that she did not complain to BK at the time about the lack of service of the white binder because the costs assessment had already been made. She says that on 11 July 2016 she retained Boyd House & Partners to act on her behalf in her dispute about unpaid costs to BK and that she provided the white binder to them no earlier than 19 July 2016. She says that "at that time [Boyd House & Partners] knew that I did not have the itemised bill of costs and the application for costs assessment from [BK]". The observation made by Mr Broad in his reasons is that he had sought submissions from Mrs Kessly in relation to his assessment and received "detailed objections". That tends to suggest that, regardless of what she received directly from BK, at some point Mrs Kessly was made aware of not only the fact of the assessment, but also was a in a position to respond to it in detail. Further, on 29 October 2015 BK wrote to Mrs Kessly again, noting her "recent correspondence" and her request to "arrange for a costs assessment to evaluate the legal costs and expenses contained in the Application as served on you". This suggests Mrs Kessly had corresponded with BK shortly after receiving the 26 October 2015 letter. 104 More relevantly, the evidence includes a chain of correspondence in which, on 28 April 2016, BK informed Mr Broad that the assessment application was served on Mrs Kessly on 26 October 2015 by express post and was emailed to her on the same day. By this, BK meant the draft assessment application, as it was not filed until 19 November 2016. Mrs Kessly responded to BK and Mr Broad in a letter advising that the claim for costs in the express post mail of 26 October 2015 did not contain details of the claim, only a cover letter. She says that she is "unable to respond, as I have no idea what is being claimed". On 9 May 2016 BK responded to Mrs Kessly and Mr Broad, denying that the documents had not been received and enclosing an express post confirmation showing the reference number and the weight of the envelope being 3 kilograms. 105 It is unnecessary to traverse the evidence on this subject in further detail. It has been done extensively by Judge Taylor in the District Court judgment at [24] - [38]. A submission to similar effect was made on behalf of Mrs Kessly in the District Court proceedings. His Honour found that Mrs Kessly provided submissions to Mr Broad in response to the assessment application and that those submissions made no reference to Mrs Kessly having no access to the assessment application and gave no explanation as to how she was able to respond to the application without having it. Having regard to the evidence of the express post envelope, and its weight, and the evidence of Mr Khoury, Judge Taylor found that it was "plain" that the application was served in October 2015 in accordance with the requirements of service. 106 Nothing in the cross-examination of Mr Khoury (which traversed this subject), or the evidence advanced by Mrs Kessly in the present application, causes me to consider that the findings made by Judge Taylor should be revisited. On the basis of the material before me, I respectfully agree with his conclusions. Furthermore, as his Honour found, the review of the costs assessment followed upon the events which I have summarised above. He said at [36]: As this appeal is against the Review Panel's decision, the circumstance that Ms Kessly received the application and "the documents relied upon by [the solicitors] on its application" before submitting her appeal means that she has not then been deprived of any relevant documents and has had a fair opportunity before the Review Panel to challenge any part of the bill. She had legal representation, yet her grounds on the review (like her submissions in the assessment, and in part also like her grounds on this appeal) did not identify this procedural unfairness of being deprived of the bill or the application. 107 Having regard to these matters, Judge Taylor found that no practical injustice had been shown, as Mrs Kessly had lost no opportunity to present her case to the Review Panel. 108 Furthermore, in his reasons at [37], Judge Taylor observes that even in the application before him, Mrs Kessly did not identify any aspect of the BK costs that she challenged. Rather, her complaint tended to concern the manner of BK's running the Court of Appeal proceedings, rather than any particular expense. 109 Having regard to these matters, in my view the submission advanced by Mrs Kessly does not provide a basis upon which I consider it suitable to go behind the 14 February 2018 judgment. If the materials advanced had been placed before the FCCA at the time of the sequestration order, I am not satisfied that they would have led to the conclusion that the sequestration order ought not to have been made.

6.7 Costs liable to be set aside pursuant to r 36.15 of the UCPR 110 In her submissions, Mrs Kessly at various points makes reference to her desire to advance further challenges to the 14 February 2018 judgment and the BK fees that underlie it. In her reply submissions she contends that she has a right to apply to the Supreme Court in its inherent jurisdiction to set aside the 14 February 2018 judgment founding the creditor's petition and costs assessment certificates supporting the entry of that judgment as well as the initial 1 July 2016 judgment (proposed Supreme Court proceeding). The means by which she proposes to commence such a proceeding is considered below at [119] to [122]. The basis for the proposed Supreme Court proceeding is said to be that it may be implied that BK was involved in fraudulent conduct, first by billing legal costs for work which was either not performed or was outside the terms of the retainer, and secondly conducting a costs assessment against an unrepresented respondent who is its former client in circumstances where the white binder had not been served. She submits that what she terms the "newly-discovered information" (apparently being the various bases now advanced by her current legal team as to why the Court would go behind the 14 February 2018 judgment, which I have rejected above) would on the balance of probabilities have affected the entry of the 14 February 2018 judgment. Mrs Kessly also submits that the 14 February 2018 judgment would be set aside by the Supreme Court, and that the Supreme Court "will be invited to injunct [BK] from applying to enter a new judgment, will be asked to set aside the certificate of determination and [asked] to determine whether there is any liability to [BK] for costs under its inherent jurisdiction over the billing of legal costs", citing Patakas. 111 I should say at this point that Mrs Kessly has not provided a proper basis upon which it may be inferred that BK was involved in what she terms in her written submissions "fraudulent conduct". The evidence does no more than assert the contention of the billing for work not done or out of the scope of the retainer, as if it were a fact. Having regard to the fact that the costs assessment and review processes were undertaken, it is not lightly to be inferred that BK was engaged in fraud. Furthermore, for the reasons given above I have concluded that the allegations regarding the service of the white binder do not provide a basis upon which the Court would go behind the 14 February 2018 judgment. The same applies to the other arguments considered in section 6.

6.8 Service of the creditor's petition 112 Mrs Kessly submits that the creditor's petition was served on 10 May 2019 by substituted service 3 months after it was filed, when it could have been provided to Mrs Kessly at her known email address. She submits that BK should have enquired with her by email as to whether she would accept service by email or whether she would nominate a location where BK could physically serve the documents upon her or a solicitor. The application for substituted service involved a "charade" designed to ensure that Mrs Kessly did not have adequate time to respond to the petition. This strategy, Mrs Kessly submits, succeeded, because she required an adjournment of the hearing of the creditor's petition which was rejected by Judge Street. These matters are said to be "relevant" to the annulment. 113 In my view little weight is to be given to these matters in the context of the present application. Rule 4.05 of the Federal Court (Bankruptcy) Rules 2016 (Cth) requires service of a creditor's petition upon a respondent debtor at least 5 days before the date of the hearing of the creditor's petition. Evidence was adduced before a Registrar of the Court as to unsuccessful attempts to server Mrs Kessly with the petition. Substituted service was effected. Furthermore, if one thing is apparent from the evidence and submissions in these proceedings, it is that Mrs Kessly is prepared to take procedural points available to her. An example may be seen in her 30 May 2019 affidavit, sworn in support of her first application to adjourn the creditor's petition. There she states that (emphasis added) "[f]ailure to serve documents to me personally has been a repeated continuing issue". There she objects to the service by BK of documents by email. There is no evidence to support the submission that the application for substituted service was a charade. The allegation to that effect ought not to have been made. Further, as the adjournment decision of Judge Street makes clear, it was not the timing of the service of the creditor's petition that occasioned the request for the adjournment, but the untimely and unexplained decision on the part of Mrs Kessly to appoint new legal advisors. It is worth noting that Mrs Kessly had already been granted an adjournment on 12 June 2019.

7. SHOULD THE BANKRUPTCY BE ANNULLED, AND IF SO, ON WHAT TERMS? 114 Mrs Kessly submits that several matters favour the exercise of the discretion to annul her bankruptcy. In substance they are: (a) the sequestration order was obtained on the basis of judgments that were irregular and there is a good reason to go behind them; (b) she is offering to secure the payment of the disputed debt owing to BK; (c) the four months' delay in filing the annulment application has been adequately explained; (d) she was solvent at the time of the sequestration order; (e) she is now solvent; (f) she has no unpaid unsecured creditors; and (g) she has made a suitable proposal to pay the Trustee for her remuneration and expenses. 115 Contrary to (a), I am not satisfied that the sequestration order was obtained on the basis of judgments that were irregular or that there is a reason to go behind them. For the reasons contained in section 6 above, in my view the foundation for that submission has not been established. Nor am I satisfied on the basis for the material before me that Mrs Kessly has established a proper basis upon which it may be said that the debt is contestable. Despite challenging the BK fees on numerous occasions since 2016 she has been unable to dislodge them. In this application she has tried and failed yet again. She has not established that the 14 February 2018 and 15 February 2018 judgment debts are not now due and payable, or that there a reason for the Court to go behind the 14 February 2018 judgment. 116 With respect to (c), Mrs Kessly explains the four month delay in bringing the annulment application by reference to her poor health, the time that it took for her to locate her current legal advisors, and the time that they took to conduct investigations. Mr Bingham further explains that he was constrained by the complexity of Mrs Kessly's financial arrangements, her poor grasp of English, her health, and practical difficulties in obtaining relevant documentation (as outlined above at [30]). Some of these reasons explain the delay, and may be given weight, although it may be noted that the only substantive point in favour of annulment is that Mrs Kessly was solvent at the time of the sequestration order, a matter that could have been addressed at the outset. Nevertheless, the delay was relatively short and it does not weigh heavily against the making of an annulment order. 117 In relation to solvency ((d) and (e)), I am satisfied, on the basis of the material now presented to the Court, that Mrs Kessly was solvent at the sequestration date and for that reason the sequestration order ought not to have been made. However, it is not apparent that she (or her estate) is now able to pay her debts as and when they fall due in a timely fashion. In this regard, as the Trustee submits, there are insufficient funds available in the bankrupt estate by way of cash assets to pay all of the creditors of the estate in full unless Mrs Kessly procures funds from a third party. It will otherwise be necessary for one or more of the real estate assets of the estate to be realised in order to do so, which will no doubt take some time. Mrs Kessly puts on no evidence to counter this proposition. 118 A substantial reason for being in this position is because Mrs Kessly refused to use the available cash assets at her disposal to pay the judgment debts at the time the sequestration order was made. Had she done so, it would have been a matter for her (properly advised) whether she wished to conduct appropriate litigation concerning the BK judgment debts. However, by electing not to do so, her estate incurred substantial additional costs, including the costs of the Trustee, which would not otherwise have been due. 119 In relation to (b), (f) and (g), Mrs Kessly continues to resist paying any money to BK. She provides an elaborate scheme in the Schedule annexed to her Originating Application whereby she proposes that funds be paid into Court to secure what she characterises as the disputed debt to BK so that she may commence the proposed Supreme Court proceeding. It requires that before the annulment takes effect: (1) The Trustee file and serve on Mrs Kessly and unsecured creditors an affidavit certifying first, the amount payable to the unsecured creditors of the estate for her provable debts, to the Trustee's satisfaction under s 82 of the Bankruptcy Act, and secondly, the Trustee's remuneration and expenses of her administration of the estate; (2) Mrs Kessly pay the Trustee's costs of the annulment application, taxed upon an indemnity basis, as a provable debt of her bankrupt estate; (3) The Trustee pay into this Court from the property of the bankrupt estate the amount proved in respect of point 1 (defined as a litigants' fund) within 21 days of the service of the affidavit; (4) The Trustee be authorised to pay out of the litigants' fund all the proved debts except that due to BK within 21 days of the affidavit; (5) Mrs Kessly commence a proceeding in the Supreme Court within 60 days of the making of the annulment order, seeking orders: setting aside the 1 July 2016, 14 February 2018 and 15 February 2018 judgments; that the hearing be expedited; and an order that Mrs Kessly's "admitted debt" to BK and held in the litigants' fund be paid into the Supreme Court together with interest to secure that amount; (6) Following the payments in points 3 and 4, the a Registrar of this Court and the Trustee be authorised to pay the remaining amount in the litigant's fund to either the Supreme Court, or BK in circumstances where Mrs Kessly does not commence proceedings in the Supreme Court in accordance with point 4 or she does and those proceedings are dismissed; (7) Mrs Kessly's costs of the annulment application, taxed on an indemnity basis, become payable by Mrs Kessly as a post-sequestration debt of her estate from her property after the annulment of her bankruptcy. 120 Mrs Kessly submits that she refuses to pay the "hotly-disputed" debt of BK because it is "plainly obvious that, if that debt is paid and subsequently the judgment for that debt is set aside in the Supreme Court, Mr Khoury will simply wind-up the petitioning creditor, [BK], which is a $3.00 company, and continue trading through one of its sister 'Phoenix' companies". The arrangements set out in her proposed orders are put on the basis, she contends, that BK would be wound up as soon as the debt is paid to it, and the proposed Supreme Court proceedings would be frustrated. 121 Having regard to the view that I have taken of the arguments thus far advanced as to the validity of the judgments upon which the second Bankruptcy Notice are based, it seems to me that the balance lies in the opposite direction. Mrs Kessly has advanced no good basis why she should be entitled to refrain from paying BK on the basis that she should be secured against the perhaps remote prospect that, if she succeeds in the proposed Supreme Court proceeding, BK might be wound up. In this regard, I note that leaving aside the fact that BK is a company with $3.00 worth of share capital, there is no basis in evidence to indicate that it would take such a course. 122 It will be seen that Mrs Kessly wants to have her cake and eat it too. She wishes to continue disputing the BK costs, and have the bankruptcy annulled. The proposed course outlined in the Schedule to her Originating Application would have the effect of not only permitting yet a further challenge to the validity of the 14 February 2018 and 15 February 2018 judgments, but would require such a challenge to be commenced in the Supreme Court. In my view it would be contrary to public policy for the Court to sanction, let alone require in the form of conditions to the grant of orders, such a course. Nor is it in the public interest to keep BK from being paid the debt on the basis of yet further proposed litigation. The Trustee also makes cogent submissions to the effect that the orders so proposed are otherwise inappropriate and not within power. It is not necessary to address those points because in my view the approach proposed is not apt. 123 If the Trustee were to proceed to administer the estate in the normal course it is apparent that upon completion, the bankruptcy would be annulled by operation of s 153A of the Bankruptcy Act. There is a benefit to the public in that approach because it would see the creditors paid and Mrs Kessly restored to her estate. In terms of exercising the discretion under s 153B(1), Mrs Kessly's conduct has not been exemplary. There are questions unanswered about the whereabouts of the balance of the $347,000 cheque that she tendered to the FCCA on the sequestration date. She paid money from her estate after the sequestration date. She was legally represented at the time of the sequestration order (and on previous occasions) but did not raise many of the arguments now put. She has not established that she is now solvent. However, balanced against these matters, and in favour of annulment, is the fact that Mrs Kessly was not insolvent at the time the sequestration order was made, and it ought not to have been made. The authorities to which I have referred indicate that this is a significant factor in favour of annulment. However, if it is annulled on the terms proposed by Mrs Kessly, it is apparent that the creditors, and most particularly BK, will not be paid at any time in the near future. That is not in the public interest nor, in my view, in the interests of commercial morality. As I have noted in section 3 of these reasons, the authorities indicate that if an annulment is to be made under s 153B(1) it is appropriate that first all creditors be paid. 124 Having regard to all of these matters, in my view an annulment should be ordered in the event that the rights of the creditors and the Trustee are protected. This can be achieved by the imposition of conditions as part of an order to be made under s 153B(1), which is set out below. If those conditions are not met, the application will not be granted. Their purpose is to give Mrs Kessly an opportunity to pay her creditors and the Trustee by raising such funds as she is able within a reasonable time (as Beach J noted in Barnes at [65], it is not to the point that the imposition of the conditions has the effect of moving closer to a s 153A type of annulment). If Mrs Kessly does not do so, I do not consider that it is an appropriate exercise of discretion to annul the bankruptcy. 125 Accordingly, I propose to exercise my discretion to make the order for annulment in the following terms: (1) Upon the respondent filing with the Court, by no later than 30 days from the date of this order, an affidavit certifying that the following events have taken place: (a) the petitioning creditor's debt in the amount of $84,870.22 plus interest calculated from 1 July 2016 has been paid; (b) the intervener's costs of the creditor's petition in the amount of $ have been paid; (c) the applicant's other debts known to the respondent as at the date of this order have been paid or compromised; and (d) the respondent has been paid her reasonable remuneration and expenses incurred in her capacity as trustee of the applicant's estate, including the costs of these proceedings on an indemnity basis as ordered in 3 below; the bankruptcy of the applicant is annulled pursuant to s 153B(1) of the Bankruptcy Act 1966 (Cth). (2) The respondent shall provide to the applicant such reasonable assistance as she considers necessary to facilitate the events in order 1 being effected. (3) The applicant pay the respondent's costs of these proceedings on an indemnity basis. (4) The applicant pay the intervener's costs of these proceedings on an ordinary basis. 126 Before making such orders it is appropriate that the parties, and in particular the Trustee, has an opportunity to address me on their form. Accordingly, the orders that I make now will be that: (1) The respondent file and serve any submission (of no more than 4 pages) going to the form of orders proposed in the judgment delivered on 8 May 2020 within 7 days; (2) The applicant and intervener file any submission in answer (of no more than 4 pages each) within 7 days thereafter; and (3) The respondent file and serve any submission in reply (of no more than 2 pages) within 7 days thereafter. 127 Unless any party persuasively argues in their written submissions that a further oral hearing is appropriate, I will then finalise the form of orders on the papers. I certify that the preceding one hundred and twenty-seven (127) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Burley.