Paule v Kambouris [2025] FCA 474

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

1. On the applicant giving the undertaking that he will not deal with:
   1. the Toorak Property (being a residential property located at 63 Albany Road, Toorak, Victoria); or
   2. any other property owned by the applicant and for which the applicant holds the beneficial interest, other than in the course of ordinary business,

during the course of these proceedings and, if the relief he seeks is granted in these proceedings, until 21 days after the determination of the Notice of Appeal filed on 19 March 2025 in the New South Wales Court of Appeal,

1. The applicant file an application for review of the orders of Judicial Registrar Birchall dated 5 May 2025 by 4pm on 8 May 2025 (the review application).
2. Pursuant to s 41(6A) of the Bankruptcy Act 1966 (Cth), the time for compliance with Bankruptcy Notice Number BN276550 issued on 3 March 2025, and served on 6 March 2025, be extended until 4pm on the date of the first hearing before a judge in the review application or until further order.
3. The applicant to file and serve any further evidence in chief to be relied on at the final hearing by 8 May 2025.
4. The respondent to file and serve any evidence to be relied on at the final hearing by 14 May 2025.
5. The applicant to file and serve any reply evidence to be relied on at the final hearing by 16 May 2025.
6. The matter be referred to the National Operations Registry for allocation to a Docket Judge, with the intention that the matter be listed for hearing at 10:15am on 19 May 2025, with an estimate of half a day.
7. Liberty to the parties to apply to the Duty Judge on 2 days' notice.
8. Costs reserved.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

1. This is an application brought before the Duty Judge on an urgent basis in two matters, Paule v Kambouris, and Paule v DJD Trading Pty Ltd. In each matter, the applicant seeks interim relief pursuant to s 41(6A) of the Bankruptcy Act 1966 (Cth) that the time for compliance with a bankruptcy notice - BN276549 and BN276550 issued on 28 February 2025 and 3 March 2025 respectively - and served on 6 March 2025, be extended until 4 pm on the date that this application is listed for hearing.
2. Read in support of the orders is in each matter is an affidavit of Matthew Richard Critchley, the solicitor for the applicant. The affidavit sets out that the bankruptcy notices were founded on a judgment entered against the applicant in the Supreme Court of New South Wales subsequent to a decision of Ball J on 20 December 2024. An appeal against that decision has been filed, within time, in the New South Wales Court of Appeal, and is listed for hearing on 20 June 2025. In the interim, the applicant sought an extension of time for compliance with the bankruptcy notices pursuant to s 41(6A)(a) of the Bankruptcy Act, and that matter was heard before Judicial Registrar Birchall of this Court on 29 April 2025. The Judicial Registrar refused the application to extend time, making an order to that effect, and giving reasons dated 5 May 2025.
3. As noted, the bankruptcy notices require compliance by today, and this application was brought before me as Duty Judge at 2.15 pm. Accordingly, a decision needs to be made urgently and does not afford me the time to give as considered a set of reasons as I would like.
4. The applicant raises a number of issues. One is that the respondent's position is protected by the provision of an undertaking, which undertaking is set out in [7] of Mr Critchley's affidavits. The undertaking is made to the Court that the applicant will not deal with his residential property located in Toorak, Victoria, or any other property owned by him for which he holds a beneficial interest other than in the ordinary course of business, and that undertaking, I am told, will be given until any hearing of the review sought against the orders of Judicial Registrar Birchall.
5. The applicant also points to prejudice, being the serious nature of an act of bankruptcy, and seeks an accelerated timetable to bring a review of the Judicial Registrar's orders before the Court in the next two weeks. Against that, the respondent has provided me with the decision of Dowsett J in Sockhill v Deputy Commissioner of Taxation (2000) 178 ALR 113; [2000] FCA 1208. In that matter, there was an application for extension of time for compliance with a bankruptcy notice, and in that matter, the Deputy Registrar made the orders in Chambers ex parte. The headnote, which reflects the reasons, as far as I can discern them in the short period of time I have had this decision, says that the Deputy Registrar ought not to have proceeded to grant interim relief in absence of express application by the applicant, and no proper grounds were demonstrated for proceeding ex parte. The respondent takes me to [10] of the decision, which sets out the fact that the power exercised by the Court pursuant to s 41(6A) of the Bankruptcy Act is a judicial power and should only be exercised upon the request of a party having an appropriate interest. Dowsett J goes on to say:

In any event, it is now clear, although there may previously have been some doubt, that the court has power to extend time for compliance even after expiry of the time specified in the bankruptcy notice: see Guss v Johnstone (2000) 71 ALR 598 at [58]. In those circumstances, there will rarely be any justification for making an interim order of the kind contemplated in this case. A registrar, if asked to make such an order, should keep in mind this possibility.

1. It seems to me that, while it is undoubtedly correct, as the respondent submits, that a successful application for review of the Judicial Registrar's decision would have the effect that the time for compliance could be extended even after the expiry of the bankruptcy notices today, it is not clear to me that the default position should be that the bankruptcy notices should expire and be revived at a later time. I note the decisions set out in [15] of the Judicial Registrar's reasons, although those decisions were given in the context of the prejudice to creditors.
2. The respondent also points to any extension of time having an effect on the relation-back date, to the extent that it would be delayed some two weeks plus any time that the Court would need to make a decision after a hearing in the next two weeks, and that the respondent might be prejudiced by that. The applicant counters that the undertaking protects the pool of assets. While there is no real evidence before me as to the amount of assets, I understand that from reading the reasons of Judicial Registrar Birchall that both the debts arising from the Supreme Court decision and the subject of the bankruptcy notices are substantial, as is the asset pool in contest.
3. I note the provisions of ss 120 and 121 of the Bankruptcy Act, which would protect the respondent against any transfers that were made prior to the relation-back period if the compliance date were extended. It seems to me that the fact of the bankruptcy notices expiring today, the imminent date for the appeal before the New South Wales Court of Appeal, the proposed rapid timetable for the hearing of the application for review, and the undertaking given by the applicant not to deal with his assets pending the review, the balance of convenience slightly favours the grant of an extension. Accordingly, I am largely prepared to make the orders in the proposed short minutes.

I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Needham.