Paule v Kambouris [2025] FCA 539

The Respondent requires you to produce the following documents or things before the Court at 9:00am on 14 May 2025:

1. A copy of all contracts of guarantee or indemnity to which you are a party as the guarantor or party providing the indemnity.

2. A copy of statements of account (including loan statements of account or offset accounts) issued by any bank or other financial institution in respect of any loans or security agreements in respect of which you have given a guarantee or indemnity whether individually or jointly with any person or entity (including without limitation in any way whatsoever, the loan between NAB and TZP Pty Ltd (ACN 632 248 741), which you are guarantor of for the amount $1,760,000).

We note that we require only the most recent statement of account in respect of each relevant loan or security agreement.

1. A copy of statements (including any credit card statements and bank accounts) issued by any bank or other financial institution for all accounts in the name of Terry Paule, and whether held individually or jointly with any other person.

We note that we require only the most recent three statements in respect of each account.

1. Your individual tax returns and notices of assessment for the financial years ended on 30 June 2023 and 30 June 2024.

1. On 14 May 2024, a Registrar ordered that the Notice to Produce be adjourned to the hearing before me. When counsel for the respondent called on the Notice to Produce at the hearing, senior counsel for the applicant presented a bundle of documents which was said to be the product of searches made to that point in time. The applicant had no objection to an order for access to that material. Senior counsel for the applicant submitted that there were no documents responsive to category 1, but there were documents responsive to categories 2 to 4. Because the search was ongoing, the applicant could not say whether there would or would not be more documents, in particular documents responsive to category 1. The respondents did not tender any of the documents.

1. In each proceeding, the applicant read and relied on the following corresponding affidavits:

(1) Matthew Richard Critchley sworn on 5 May 2025;

(2) Ross Savas affirmed on 7 May 2025;

(3) Terry Paule affirmed on 8 May 2025;

(4) Matthew Richard Critchley sworn on 20 March 2025;

(5) Matthew Richard Critchley sworn on 17 April 2025;

(6) Terry Paule affirmed on 17 April 2025; and

(7) Mariam Anne Francis sworn on 16 May 2025.

1. The respondents read and relied on corresponding affidavits in their respective proceedings:

(1) Guy Samuel Lewis sworn on 15 May 2025;

(2) Andrew Joseph James Lacey sworn on 27 March 2025; and

(3) Andrew Joseph James Lacey sworn on 8 April 2025.

1. The respondents also tendered a document entitled "Letter of Valuation Advice - Kerbside Assessment" from Westlink Consulting dated 27 March 2025.
2. There were no objections to any of the affidavits and none of the deponents were required for cross‍‍examination. There was no objection to the tender of the valuation letter from Westlink Consulting.

1. The hearing of an application under s 35A(5) of the Federal Court Act is by way of de novo review: Bechara v Bates (2021) 286 FCR 166; [2021] FCAFC 34 at [17] (Allsop CJ, Markovic and Colvin JJ). As a Full Court said in Bechara, "[t]he review does not hinge, or focus, upon error in the decision of the registrar. It is a hearing de novo, in which the matter is considered afresh on the evidence and on the law at the time of the review, that is at the hearing de novo": at [17]. The Court "is to rehear the case and decide the facts for itself" and "exercise the discretion unfettered by the decision of the Registrar": West International Pty Ltd v Ultradrilling Pty Ltd (2008) 68 ACSR 108; [2008] FCA 1443 at [6] (Gordon J); see also Bechara at [21], quoting from the judgment of Emmett J in Totev v Sfar (2008) 167 FCR 193; [2008] FCAFC 35 at [13].

Where, before the expiration of the time fixed for compliance with a bankruptcy notice:

(a) proceedings to set aside a judgment or order in respect of which the bankruptcy notice was issued have been instituted by the debtor; or

(b) an application has been made to the Court to set aside the bankruptcy notice;

the Court may, subject to subsection (6C), extend the time for compliance with the bankruptcy notice.

1. Section 41(6C) provides that the Court shall not extend the time for compliance where it is of the opinion that relevant proceedings to set aside the judgment or order (a) have not been instituted bona fide or (b) are not being prosecuted with due diligence.
2. The last day for compliance with the Bankruptcy Notices was 27 March 2025, 21 days after service on 6 March 2025. The applicant instituted the appeal from the underlying judgment debt on 19 March 2025. Such an appeal is taken to be a proceeding "to set aside a judgment debt" within the meaning in s 41(6A)(a) of the Act: see Conway v Jackson (2001) 107 FCR 201; [2001] FCA 230 at [20] (Moore, Matthews and Mansfield JJ). Accordingly, the jurisdictional condition for the exercise of power under that section has been established, and the discretion is thereby enlivened.

Disagreement on approach to be applied under s 41(6A)

1. There is some disagreement as to the approach to be applied to an exercise of the discretion under s 41(6A). In Re Baker; ex parte Baker v Staples [1995] FCA 703, Kiefel J took the view that, in circumstances where an appeal against an underlying judgment has been instituted, the approach to s 41(6A) should reflect the approach taken to applications to adjourn creditors petitions. The approach in each context should recognise the "general desirability to permit the conclusion of investigation into liability". That view was informed by the "serious consequences which follow if a bankruptcy notice is not complied with" and the "change of status and ... quasi‍‍penal consequences" of a person being made bankrupt: Re Baker at [5] (Kiefel J); referring to Ahern v Deputy Commissioner of Taxation (1987) 76 ALR 137; [1987] FCA 504 at 148 (Full Court).
2. However, as Lehane J said in Byron v Southern Star Group Pty Ltd [1997] FCA 151; (1997) 73 FCR 264 at 269, it was evident that her Honour was not referred to the judgment of Sheppard J in Re Geard; ex parte Reid (1994) 217 ALR 191; [1994] FCA 45 which appeared to differentiate between, on the one hand, the consequences of non‑compliance with a bankruptcy notice and, on the other hand, the consequences of a sequestration order. In Re Geard, Sheppard J said that the act of bankruptcy (at [12]):

... will be available to the petitioning creditors or to any other creditor upon which to base a bankruptcy petition at any time in the period of six months after the act of bankruptcy has been committed. Otherwise the debtor's position will remain unaffected by what the Court does.

1. This approach found favour in subsequent decisions including in the judgment of Lehane J in Byron, where his Honour said the following (at 270):

In my view the considerations to which Sheppard J refers indicate that the principles to be applied where the question is whether a petition should be adjourned or dismissed are not necessarily those which should guide the exercise of the discretion to set aside, or extend time for compliance with, a bankruptcy notice. The commission of an act of bankruptcy is, undoubtedly, a serious matter; it is, however, of a different order of gravity from the change of status brought about by the making of a sequestration order ...

1. The approach adopted by Lehane J has important consequences for how the discretion is to be exercised, the factors to be taken into account and the relative weight to be attached to each factor. Two examples illustrate this point. First, an exercise of the discretion under s 41(6A) is to take "into account the interest of both the judgment creditor and other creditors of the judgment debtor in ensuring that, if ultimately a sequestration order is made, the relevant act of bankruptcy occurs earlier rather than later": Byron at 270. Secondly, "considerable weight" should be given to the fact that a stay of the underlying judgment debt has not been "obtained or sought": at 270. As Sheppard J said in Re Geard at [11], and quoted by Lehane J in Byron at 270, the means of the debtor and the appropriateness of ordering security for the debt are matters that would be considered by a court asked to stay the execution of an underlying judgment debt.
2. I recognise those implications of Re Geard and Byron and have approached the exercise of the discretion under s 41(6A) on that basis.

1. Despite the disagreement in the case law, the following matters about the exercise of the discretion are clear and were not disputed by the parties in these proceedings.
2. First, the onus is on the applicant, as the moving party, to satisfy the Court that the circumstances warrant the exercise of the discretion to extend time: see Callegher v Australian Securities and Investments Commission (2007) 218 FCR 81; [2007] FCA 482 at [46] (Lander J).
3. Secondly, the discretion has been described as being "unfettered" and "at large" (see Re Taylor; Ex parte Deputy Commissioner of Taxation (Cth) [1983] FCA 316; (1983) 74 FLR 377 at 379; Re Baker at [4] (Kiefel J); Byron at 270‍-‍271), and is to be exercised in the circumstances of each case: Sharpe v W H Bailey & Sons Pty Ltd (2014) 317 ALR 738; [2014] FCA 921 at [26] (Gleeson J).
4. Thirdly, as Feutrill J said in Owen v Sandhu [2024] FCA 198 at [71], "in the exercise of the discretion the Court will be guided by matters identified in authorities as relevant to the exercise of the discretion". I respectfully adopt the following statement of factors outlined by his Honour in Owen (at [71]):

(1) Whether proceedings to set aside the judgment or order have been instituted (including proceedings of that nature such as an appeal).

(2) Whether a stay of the judgment or order has been sought or obtained.

(3) That failure to comply with a bankruptcy notice is 'an act of bankruptcy that is a different order of gravity for the change of status brought about by the making of a sequestration order'.

(4) The interests of the judgment creditor and other creditors of the judgment debtor in ensuring that, if ultimately a sequestration order is made, the relevant act of bankruptcy occurs earlier rather than later.

(5) In the absence of a stay of the judgment or order, the extent to which there is evidence of the means of the debtor to satisfy the judgment debt and, in any event, whether it would be appropriate to order security for the debt as a condition of any extension of the time for compliance.

(6) While, in general, it is undesirable to undertake a provisional review to determine the correctness of the judgment or order, the merits may be relevant at least where it is apparent that prospects of success are either 'slight' or 'unusually strong'. In this regard, if an appeal has already been dismissed and the proceeding in question is an application for special leave to make a further appeal, that would be a relevant consideration reinforcing the Court's reluctance to extend time in the absence of a stay.

See, e.g., Re Geard; Ex parte Reid [1994] FCA 45; (1994) 217 ALR 191 at 193-194 (Sheppard J); Byron v Southern Star Group Pty Ltd [1997] FCA 151; (1997) 73 FCR 264 at 270-271 (Lehane J); Kakavas v Paradise Enterprises Limited [2010] FCA 915 at [8] (Tracey J); Sharpe at [26]-[29] (Gleeson J).

1. In relation to factors (1) and (6), as indicated earlier in these reasons, an appeal has been filed and will be heard on 20 June 2025. The appeal will determine whether liability for the debts underlying the Bankruptcy Notices exists.
2. There is nothing in the evidence that satisfies me that the appeal is not genuine, has not been instituted in good faith, or has not been prosecuted with due diligence: see Re Baker at [5] (Kiefel J). There is no submission by the respondents that the case is not arguable: cf Re Baker at [4].
3. As for the merits of the appeal, given the proximity of these reasons to the hearing of the appeal, it is undesirable for me to express any view on the applicant's prospects. In any event, neither party sought to argue the merits.
4. The mere existence of an appeal, being a jurisdictional condition that enlivens the exercise of discretion, is insufficient to justify an order under s 41(6A), and I accept the respondents' submissions that factors (1) and (6) are neutral in this case.

1. An application to stay the judgment has been sought, but belatedly. If not from the time of the first return date of this application on 1 April 2025, at least from the date of the Judicial Registrar's reasons for judgment on 5 May 2025, the applicant was on notice that the seeking of a stay might be an important factor in the exercise of the discretion under s 41(6A). Yet, it was not until 15 May 2025 that the applicant's solicitors were instructed to file a Notice of Motion in the Supreme Court seeking a stay of Bell J's orders pending determination of the appeal.
2. The stay application was filed on the same day and listed for hearing in the Motions List on 23 May 2025. No explanation has been offered for the delay from either the date of Ball J's orders on 20 December 2024 or from the date of the Judicial Registrar's reasons. Senior counsel for the applicant submitted at the hearing that I should approach my task on this de novo review on the basis that the stay application is now on foot, and that the acknowledged delay is a matter to weigh in the balance of the discretionary calculus. It was further submitted that any error in not applying earlier for a stay has now been rectified and, in those circumstances, the applicant should not be punished for the forensic decision not to file it earlier.
3. The weight to be given to the existence of a stay application is not free from doubt. In Re Geard, in a context where the applicant had not sought to stay the underlying judgment debt, Sheppard J said that (at [11], emphasis added):

The debtor has not made any application for a stay of proceedings pending the outcome of the appeal. Why he has not done so is not clear to me but the judgment which has been recovered against him is a final judgment and execution upon it has not been stayed it would seem to me to require quite special circumstances before a court exercising jurisdiction in bankruptcy would, in effect, do what has not been done in the court in which the judgment has been obtained by extending the time for compliance with the bankruptcy notice when no application to stay the judgment has been made.

1. Having approved of that passage, Lehane J in Byron appeared to accept that, where a stay had not been "obtained or sought", an extension would only be made in "an exceptional case": at 272. In Warner v Frost [1999] FCA 830, Hely J considered that there was a difference between the approaches of Sheppard J in Re Geard and Lehane J in Byron: the former required special circumstances before an extension would be granted where no stay had been sought, whereas the latter considered "that while weight should be given to that matter it is not necessarily conclusive": Warner at [6]. Justice Hely considered that the approach of Lehane J as described should be preferred.
2. It is not necessary to resolve any differences between the judgments of Sheppard J and Lehane J. As indicated, the applicant has now sought a stay and, while it was sought belatedly, the statements in Re Geard and in Byron must be applied with some caution. In considering the stay application, the Supreme Court is likely to consider matters that are relevant to the discretion in s 41(6A) (eg, the means of the debtor and the appropriateness of ordering security for the debt). Accordingly, despite the belated application, the fact that those matters will be considered by the Supreme Court affects my exercise of the discretion under s 41(6A). The discretion cannot be exercised on a basis that effectively ignores the impending application.
3. Senior counsel for the applicant further submitted that there is no case that has found that a failure to obtain a stay has been determinative. He pointed to Coshott v Barry (2009) 113 ALD 358; [2009] FCA 1521 and O'Loughlin v Glenmont Investments Pty Ltd (2001) 191 ALR 336; [2001] FCA 925. Coshott is not entirely apposite to support the point being made. Although a stay had been sought and refused on jurisdictional grounds (at [41]), it would appear that a notice of motion had been filed seeking leave to file an amended appeal which included an order for a stay (at [42]).
4. Greater emphasis was placed on O'Loughlin which was described by counsel for the applicant as having "some factual similarities" to these proceedings. At the time the Court in that case was considering the application under s 41(6A), an application for special leave to appeal to the High Court was pending. Notwithstanding the absence of an application to stay the underlying judgment debt, the Court was satisfied that an extension under s 41(6A) should be granted in the circumstances until the special leave application had been determined. In the course of reaching that conclusion, Mansfield J said that "[t]he failure to have sought a stay of the [underlying] judgment, at least to date, in the circumstances is but one factor to weigh in the scales" (at [13]).
5. Counsel for the respondents took me to a passage from the judgment of Siopis J in Frigger v Kitay [2017] FCA 1278 which, on its face, appears to support the proposition that the absence of a stay application "is, in itself, a sufficient basis upon which to decline to extend time under s 41(6A)" (at [88]).
6. Because an application for a stay is now on foot, it is unnecessary to consider further the question of whether a failure to seek a stay can be determinative. However, it would seem to be contrary to statements of the preferred position, at least from Mansfield J in O'Loughlin and Hely J in Warner.
7. I will return below to how the impending stay application affects my conclusions.

1. In his affidavit sworn on 20 March 2025, the applicant's solicitor, Mr Critchley, deposed that he was informed by the applicant and believed that the applicant "holds assets more than sufficient in value to satisfy the judgment debt in the Bankruptcy Notice". Those assets were itemised in a schedule to the applicant's affidavit affirmed on 8 May 2025:

(1) A residential property with an estimated current value of $28,000,000;

(2) Various motor vehicles with an estimated value of $1,165,000; and

(3) Furniture and household effects with an estimated value of $750,000.

1. The total estimated value of the applicant's assets was $29,915,000.
2. No basis was provided for the estimated value of the motor vehicles or the furniture and household effects. To support the estimated value of the residential property, the applicant relied on the affidavit of Mr Savas, a licensed real estate agent who deposed that, on the basis of a "walk‍‍through" inspection and recent comparable property sales, the market price for the applicant's property was "circa $28,000,000".
3. The applicant also deposed that he has no current liabilities in his name.
4. In written submissions, the applicant further contended that the value of the property is "much greater than the combined value of the Bankruptcy Notices", the implication on the evidence being that the applicant was able to pay the claimed debts in the Bankruptcy Notices.
5. At the hearing, senior counsel appeared to narrow the submissions to the following propositions:

(1) the applicant is a man of some commercial substance, with a valuable unencumbered property;

(2) there is no evidence that he has any current liabilities other than the judgment debts; and

(3) there was no basis to find that the applicant is presently insolvent.

1. In relation to the value of his residential property, senior counsel's ultimate submission at the hearing appeared to be that I was not being asked to rule upon which value should be adopted. Instead, the significance of the evidence is that the applicant owns a substantial piece of real estate which he has undertaken to keep available.
2. It was accepted by the applicant that he had at least one contingent liability arising under a Guarantee and Indemnity executed on 2 November 2022. Under that Guarantee and Indemnity, the applicant agreed to guarantee a loan agreement between the National Australia Bank Limited (NAB) and TZP Pty Ltd (a corporation solely owned and controlled by the applicant). The amount that the applicant agreed to pay under the Guarantee and Indemnity is limited to $1,760,000.

1. The respondents did not challenge the unsupported valuations of the applicant's motor vehicles or his furniture and household effects. In relation to the value of the applicant's residential property, the respondents relied upon four appraisals from real estate agents ranging from $15,000,000 to $18,200,000. The bases for these assessments varied, but each of them was a curb‑side assessment rather than a walk‍‍through inspection.
2. The evidence showed that the respondents sought to arrange an onsite inspection and valuation. However, mutually agreeable arrangements could not be organised by the time of the hearing.

1. The respondents raised concerns about the possibility of contingent liabilities under guarantees for other companies associated with the applicant. The applicant had not produced any documents in response to category 1 of the Notice to Produce, but the applicant did not rule out that others might materialise with more search time. There was also evidence that NAB had enquired about a discrepancy between its records and the Australian Securities and Investments Commission's (ASIC) records in relation to the applicant's shareholding in a company called Longford Tower Pty Ltd (see below at [(3)]). The respondents submitted that it can be inferred that NAB has an interest in the applicant's financial position, which extends to the way in which companies associated with him are owned and listed on ASIC records.
2. At the end of the hearing, a copy of an ASIC personal search for the applicant was tendered by counsel for the respondents. That document recorded companies associated with the applicant. It was submitted that the applicant had shareholdings in nine companies other than TZP. Senior counsel for the applicant did not object to the document being tendered save as to relevance. The applicant did not hold the shares beneficially, apart from in the following three companies:

(1) Longford Tower Pty Ltd (discussed below at [83(3)]);

(2) Arkom Pty Ltd, being the new trustee of a family trust (discussed below at [83(1)]); and

(3) Paule Nominees Pty Ltd.

1. It was submitted by the applicant that, while the arrangements were complicated, none of that information suggested that assets were not being disclosed. In particular, there was no evidence from which to infer that Paule Nominees Pty Ltd was carrying on business or had any liabilities. It was further submitted that the document was apparently obtained by the respondents on 14 May 2025, and the applicant had not been asked about the activities of those companies, particularly Paule Nominees Pty Ltd - the existence of which may not have been apparent in other evidence before the Court.

1. I have concerns about the state of the evidence in relation to the applicant's financial position. I take the applicant's point that he was not required for cross‍‍examination and, therefore, his evidence about his liabilities has not been challenged. I also take the point that, with more time, additional information might have been found in response to the Notice to Produce. However, the onus is on the applicant to satisfy the Court that an extension is warranted, and I have serious doubts as to whether the applicant has provided sufficient evidence to support a finding that he has the means to satisfy his debts.
2. In particular, there is a significant gap between the valuation provided by the applicant's single valuation and the curb‑side appraisals provided by the respondents. I accept that the walk‍‍through valuation is more reliable than the curb‑side appraisals. However, none of these assessments involved a formal valuation, and so the reliability of all assessments is somewhat diminished. While I acknowledge the substantial value of the residential property, given the significant disparity in the respective valuations when viewed alongside the magnitude of the claimed debts, I am not satisfied that this factor weighs in favour of the applicant to any significant extent. That is the case even if one were to accept that there are no other contingent liabilities that are yet to be discovered.
3. In any event, consideration of the applicant's financial means has been complicated by the belated application for a stay. The applicant's means and the appropriateness of an order to secure the debt are likely to be matters considered by the Supreme Court.

A different order of gravity for the change of status brought about by the making of a sequestration order

1. The weight of authority appears to be against the view of Kiefel J in Re Baker that the approach to s 41(6A) should reflect the approach taken to applications to adjourn creditors' petitions. As has been noted already, while the commission of an act of bankruptcy is a serious matter, it is "a different order of gravity from the change of status brought about by the making of a sequestration order": Byron at 270 (Lehane J).
2. Nonetheless, as the Full Court said in Conway at [19]:

The commission of an act of bankruptcy has serious consequences. Apart from the obvious consequence of exposure to the making of a sequestration order, an act of bankruptcy itself commonly constitutes an act of default under scrutiny instruments and so exposes the person who has committed the act of bankruptcy to the crystallisation and calling up of other debts. It is also an event which, at least anecdotally, causes those providing unsecured credit to the judgment debtor, such as trade creditors in the case of a business operated by the judgment debtor, to alter or withdraw the terms upon which credit is or continues to be provided. Section 41(6A) would appear to recognise the consequences of the commission of an act of bankruptcy, and to empower the Court in appropriate circumstances to protect a judgment debtor from those consequences.

These consequences must be established by evidence, not merely assumed.

1. In written submissions, the applicant contended that he would suffer prejudice if the extension were not granted. In oral submissions, the applicant argued that two types of adverse consequences or actual prejudice will arise if an extension is not granted, and an act of bankruptcy is subsequently committed:

(a) first, that he will suffer reputational damage; and

(b) secondly, that the terms of a personal guarantee will be enlivened.

1. Both submissions are premised on non‑compliance with the Bankruptcy Notices. There is some tension between these submissions and the applicant's submissions on insolvency. The applicant maintained, at least initially, that a finding should be made that the applicant is not insolvent. In closing, senior counsel for the applicant submitted that, if I were to decide against an extension, I should order a short extension to allow the applicant to consider whether to appeal my decision or pay the judgment debts. At the very least, on the postulated premise that the applicant is not insolvent, there would appear to be scope for the applicant to comply with the Bankruptcy Notices by making arrangements to the creditors' satisfaction for settlement of the debts.
2. In any event, for the following reasons, I do not give this factor much weight in the applicant's favour. First, as has already been noted, the weight of authority is against characterising the consequences of an act of bankruptcy as quasi‍‍penal. The observations by Kiefel J to that effect, in the context of s 41(6A) extension applications, have not found favour in subsequent decisions. Secondly, there is some merit in the respondents' contention that any reputational damage caused by the commission of an act of bankruptcy must be considered in light of the findings by Ball J at [128] and [180] of Botanical Water (No 1). Further, if the applicant were to be successful on appeal, vindication is likely to overshadow any reputational impact of an act of bankruptcy.
3. Thirdly, it is not obvious that there are any immediate adverse consequences that would arise from the Guarantee and Indemnity upon the commission of an act of bankruptcy. Senior counsel for the applicant took me to cll 8.3, 16, 18, and 27 of the Guarantee and Indemnity.
4. Clause 8.3 provides that:

If you're ever Insolvent, we may claim as a creditor in your Insolvency immediately for all the Money Owed By the Customer whether or not the Customer has failed to pay any amount. We may also claim as a creditor for any other Amount You Owe us.

1. Except for the word "Insolvency", the various capitalised words and expressions are further defined. A person is defined to be "Insolvent" in various circumstances including where "they're a natural person who commits an act of bankruptcy within the meaning of the Bankruptcy Act 1966 (Cth)": cl 27, meaning of "Insolvent", para (h). "Money Owed by the Customer" is defined to mean "all money the Customer (either alone or together with another person) owes us, or may owe us in the future for any reason. This may include principal, amounts in the nature of principal, interest, costs, taxes and Economic Costs". "Amounts You Owe Us" is defined expansively to mean:

all money you owe us under this guarantee (which may be more than the Money Owed by the Customer). This includes:

(a) the Money Owed by the Customer;

(b) any money you owe us under the indemnity you provide us;

(c) any Costs you must pay;

(d) the interest on the Amount You Owe Us; and

(e) any amounts you must pay if you breach an obligation you owe is (other than an obligation to pay money) under this guarantee.

1. Senior counsel for the applicant submitted at the hearing that non‑compliance with the Bankruptcy Notices, and consequent commission of acts of bankruptcy, would constitute a breach of the Guarantee and Indemnity which could cause the bank to call in the loan that is being serviced. That broad submission was further refined in the course of argument.
2. In relation to cl 8.3, two submissions were made. First, given that the word "Insolvency" is undefined, the expression "in your Insolvency" might not be confined to lodging a proof of debt in a bankruptcy proceeding. It might include an immediate right to claim against the applicant because the definition of "Insolvent" includes the commission of an act of bankruptcy. Accordingly, the commission of acts of bankruptcy by non‑compliance with the Bankruptcy Notices might have immediate adverse consequences.
3. Secondly, even if the expression "in your Insolvency" was confined to lodging a proof of debt in a bankruptcy proceeding, and thereby not having immediate consequences upon non‑compliance with the Bankruptcy Notices, the second sentence in cl 8.3 confers an additional, unconfined and immediate right on NAB to make a claim for the amounts within the expression "Amount You Owe Us", which includes the money within the definition of "Money Owed By The Customer".
4. Counsel for the respondents pointed to the heading of cl 8, that is, "Nothing affects or cancels this guarantee". It was submitted that the clause is directed to the fact that insolvency does not otherwise affect the obligations under the Guarantee and Indemnity. Clause 8.3, it was argued, is a beneficial clause for NAB in the event that there is an insolvency. It is not, itself, a trigger for liability. It was submitted that the trigger for liability is in cl 3.2 of the Guarantee and Indemnity which provides: "If the Customer doesn't pay any Money Owed By The Customer on time, or on the terms we've agreed with the Customer, you agree to pay us the Money Owed By The Customer within 7 days when we ask".
5. In response to the applicant's arguments on the interpretation of cl 8.3, counsel for the respondents made two submissions. First, the expression "we may claim as a creditor in your Insolvency" is a reference to the opportunity to claim as a creditor in a bankruptcy proceeding under the Act once a trustee has been appointed. The clause ensures, for the avoidance of any doubt, that NAB may claim as a creditor immediately without having to claim first against the borrower and then against the applicant after waiting the period of seven days referred to in cl 3.2.
6. Secondly, the second sentence of cl 8.3 was conditioned by the first and operated to broaden the scope of the applicant's liability that could be claimed in the applicant's insolvency under the Act. It was argued that the wording of the second sentence ("claim as a creditor") aligns with the wording in the first sentence, rather than the language used elsewhere in the document, which is, "You must pay us money".
7. On these applications for extensions under s 41(6A), it is not necessary for me to reach a concluded view on the interpretation of cl 8.3. However, there is obvious merit in the respondents' interpretation, and I am not persuaded that the applicant's interpretation is correct. Consequently, I am not satisfied that cl 8.3 gives rise to an immediate adverse consequence for the applicant upon non‑compliance with the Bankruptcy Notices.
8. Clause 16 provides "You promise that: ... (e) you're not insolvent". Clause 18 then provides "You must tell us if anything happens which means you couldn't truthfully repeat all the promises you give us under this guarantee". Senior counsel for the applicant submitted that, upon non‑compliance with the Bankruptcy Notices and consequent commission of acts of bankruptcy, the applicant would fall within the meaning of "Insolvent" in para (h) of the definition in cl 27. Consequently, the applicant would be required to inform NAB of that circumstance which would then enliven NAB's rights under the Guarantee and Indemnity.
9. A difficulty with this submission is that, under cl 16(c), the applicant also promises that he does not "have a material dispute with anyone". Arguably, as counsel for the respondents submitted, those words are wide enough to include the claims made against the applicant before the Supreme Court and Ball J's judgment and orders. Again, it is not necessary for me to reach a concluded view on the correct interpretation of these clauses. However, I am not persuaded that any adverse consequence that arises from the notification obligation under cl 18 should be given any material weight.
10. For completeness, I return to the potential adverse consequences referred to by the Full Court in Conway: exposure to the crystallisation and calling up of other debts or the withdrawal of credit by unsecured creditors. There is no evidence before me of such adverse consequences.

The interests of the judgment creditor and other creditors

1. It is accepted in the cases that regard must be had to the consequences for creditors of delaying an act of bankruptcy by granting an extension for compliance with a bankruptcy notice. As the Full Court said in Conway (at [30]):

... the date of the commission of the act of bankruptcy is significant to determine the commencement of the bankruptcy if a sequestration order is made: s 115(1), and so to determining the property of the bankrupt which is divisible amongst the creditors of the bankrupt: s 116(1). It also has significance to the application of ss 118, 120, 121 and 122 of the Act. The delay in the commission of the act of bankruptcy, if ultimately the requirements of a bankruptcy notice are not complied with and a sequestration order is made, by an extension of time to comply with a bankruptcy notice may therefore have significant consequences to the creditors of the bankrupt. An extension of time to comply with the requirements of a bankruptcy notice does not, on the other hand, preclude any other judgment creditor from procuring the issue and service of a bankruptcy notice, or from presenting a petition for a sequestration order if some other act of bankruptcy has already been committed.

1. The applicant accepts, as he must, the centrality of the act of bankruptcy to the commencement of the bankruptcy and the relation-back periods in ss 120 and 122 of the Act. However, senior counsel for the applicant submitted that:
   • There has been no challenge to the applicant's evidence that he has no current liabilities other than the judgment debts.
   • There is no evidence that there has been any transaction or dealing which would be available for review or attack by a trustee in bankruptcy. There is no evidence: that the applicant has paid any creditors ahead of others in the relevant relation-back period (s 122); of any transfers for less than market value in the relevant relation-back period (s 120); or of any transfers where the main purpose is to defeat creditors (s 121). Because of the absence of such evidence, senior counsel for the applicant contended that I should not be satisfied that any transaction or attempted transaction has been identified the efficacy of which might be challenged if an act of bankruptcy occurs tomorrow as opposed to some time in the near future.
   • The applicant's residential property remained unencumbered leading up to and after the Supreme Court judgment.
   • The undertaking offered by the applicant negates the date of the act of bankruptcy and I should be satisfied that the pool of assets immediately available to creditors will be the same whether the act of bankruptcy occurs tomorrow or in the near future.
   • There has been no expression of an intention, or demonstration of a particular urgency, by the respondents to file creditors' petitions.
2. I will consider the two main issues of contention: that steps have been taken to dissipate assets and the sufficiency of the continued undertaking.

1. In written submissions, the respondents expressed concern that the applicant was taking steps to dissipate assets that would otherwise be available to his creditors. Three concerns were identified:

(1) The applicant and his brother were each 50% shareholders in Biocheese Pty Ltd, the fourth defendant in the Supreme Court Proceedings. On 28 May 2024, a form lodged with ASIC confirmed that the applicant and his brother each held 50% of the shares. However, on 21 February 2025, two documents were lodged with ASIC which purported to record that the respective shares had been transferred; first, to Biocheese itself, and then to another entity (Arkom Pty Ltd), with effective dates of 27 March 2017 and 2 December 2024. The respondents submitted that the obvious inference to be drawn was that the forms had been backdated. In oral submissions, counsel for the respondents contended that, while it could not be said positively that this was a transaction which would be caught by the relation-back periods, there were legitimate concerns about the sequencing of the transfers.

(2) One of the assets held by Biocheese Pty Ltd was the sole share in a UK company, Botanical Water Technologies IP Ltd. On 29 November 2024 (after delivery of Ball J's judgment), Biocheese transferred away that share.

(3) ASIC's records stated that the applicant and his brother were the legal, but not beneficial, owners of shares in Longford Tower Pty Ltd. On or about 28 March 2025, further forms were lodged which recorded that the applicant and his brother now held those shares beneficially. The applicant had deposed in an affidavit that the changes occurred after NAB had identified the discrepancy between what was recorded in its records and what was recorded in ASIC's records.

1. The respondents submitted that the applicant had demonstrated a repeated pattern of incorrect ASIC filings which had obfuscated his true shareholdings, and there was a real risk that the trustee would identify transactions which could otherwise be challenged as potentially voidable, but which fell outside the relevant relation-back period. It was further contended in oral submissions that the onus was on the applicant seeking an extension, and the legitimate questions raised about previous transactions should be a factor weighing heavily against the applicant.
2. In an affidavit, the applicant deposed that he had not attempted to dissipate or otherwise divest himself of assets to frustrate the judgment debts and would not do so. He provided the following explanations for the respondents' concerns:

(1) In relation to concerns (1) and (2), the changes to ASIC records were to reflect the position that the applicant and his brother held shares in Biocheese as co‍‍trustees of a family trust. The changes to the ASIC register on 21 February 2025 were said to be the result of a new trustee (Arkom Pty Ltd) being appointed. That the applicant held the Biocheese shares as co‍‍trustee was recognised in the judgments of Ball J at [73] and [140]. At the hearing, senior counsel for the applicant argued that, as trust property, the shares would not comprise available property in the bankrupt estate under s 116 of the Act. The changes in share details cannot then be taken to be a colourable dealing.

(2) In relation to concern (3), the relevant shares were originally recorded as not being beneficially held. The changes to ASIC's records in the document lodged on 31 March 2025 resulted in the shares being beneficially held by the applicant. Senior counsel for the applicant argued that the changes had the consequence of bringing those shares within the applicant's estate. It was submitted that I would not be satisfied that there has been an attempt to hide assets.

1. The explanations provided by the applicant are not implausible and, accordingly, I am not satisfied that the changes in the applicant's share‍‍holdings demonstrate that the applicant has taken steps to dissipate his assets.
2. In oral submissions, counsel for the respondents further contended that the applicant was seeking to reverse the onus of proof by arguing that the respondents have not identified any particular transactions that might be potentially voidable. It would be a matter for the trustee, if one is appointed, to identify any such transactions. It was argued that, consequently, the authorities have considered this as a factor in a general sense that weighs in favour of the judgment creditors.
3. I am mindful that the onus rests on the applicant and that, in a general sense, it is in the interests of potential creditors that an act of bankruptcy occur sooner rather than later. However, in the absence of any challenge to the applicant's evidence that he has no current liabilities (other than the judgment debts) and having reached the view that the matters identified by the respondents do not demonstrate that the applicant has taken steps to dissipate his assets, only modest weight can be placed in the respondents' favour under this factor.

1. Counsel for the respondents also submitted that the continuing undertaking was insufficient. Because it was given in his personal capacity, it would not address liabilities under loan guarantees provided to companies associated with the applicant. Furthermore, there had been no offer to pay money into court or to provide any security. Thus, while the undertaking preserved the applicant's assets, the respondents have not been provided with a positive interest to secure payment of the debts.
2. Senior counsel for the applicant responded that the respondents' rights under the judgment are that of unsecured, not secured, creditors. The undertaking offered by the applicant preserves the position of all unsecured creditors who might claim in any future bankrupt estate.
3. I accept that the undertaking would be incapable of preventing associated companies for which the applicant provides guarantees from accumulating liabilities for which the applicant might become responsible. However, there is evidence of only one loan guarantee, and the potential liability has been identified and considered. I accept that the personal guarantee will substantially mitigate the risk of a short‍‍term extension under s 41(6A).

1. Not without some hesitation, given the state of the evidence before me, on balance I accept that the prejudice to creditors is not likely to be significant. The applicant's evidence that he has no current creditors has not been challenged; there is no clear evidence of contingent liabilities other than under the Guarantee and Indemnity; there is no clear evidence of transactions that would be caught by the relation-back provisions of the Act if a short extension were to be granted; there is no evidence that the applicant has sought to divest himself of his interest in his residential property; and the applicant is prepared to give an ongoing undertaking in relation to his property. In relation to potential detriment to creditors, there are some parallels between the circumstances in this case and those in O'Loughlin at [13]-[14] (Mansfield J).

1. The expedited nature of the proceeding has not been ideal for the establishment of a factual foundation for the review applications. There was a compressed time for searches to be made in response to the Notice to Produce and insufficient time for mutually agreeable arrangements to be made for a walk‍‍through valuation by the respondents of the residential property. The belated seeking of a stay of the Supreme Court judgment debts has complicated consideration of the various factors and the relative weight to be given to them. Some matters that might have been relevant to the discretion under s 41(6A) are likely to be considered by the Supreme Court in deciding the stay application. This left the factual foundation for the review applications in a diminished state. In particular, there was not a solid basis upon which to infer, with any confidence, the value of the applicant's primary asset, his residential property, or his capacity to satisfy the claimed debts in the Bankruptcy Notices.
2. If the application for a stay had not been made, I would have been inclined to the view that the applicant had not discharged his onus to satisfy me that an extension order under s 41(6A) should be made in each proceeding. Given that the other factors on the review applications are neutral or of minimal weight, I would have given considerable weight to the lack of a stay application. However, that application has now been filed and is likely to be determined by the Supreme Court within a relatively short period (given that the appeal will be heard on 20 June 2025, less than a month away). The outcome of that application will have significance for the determination of the review applications.
3. Accordingly, I have decided to adjourn the review applications until the Supreme Court has determined the stay application. Once it is determined, the parties will have an opportunity to file short written submissions on the impact on the review applications of the Supreme Court's determination of the stay application. I will order extensions of time under s 41(6A) to give effect to that position and there will be liberty to apply on short notice.
4. The Court's orders will be made on the condition that the applicant give a continuing undertaking in the terms ordered by Needham J.
5. Once the Supreme Court stay application has been determined, the parties will be given the opportunity to be heard on the question of costs.

I certify that the preceding ninety-seven (97) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Stellios.