Paule v Kambouris, in the matter of Paule [2026] FCA 133

At the centre of [Mr Kambouris and DJD Trading]'s submission lies the proposition that the present proceedings are ill-suited for the application of the Part X regime having regard to the complexity of the inquiries that the controlling trustee must make to satisfy himself as to Mr Paule's state of affairs and the conduct of Mr Paule in representing his state of affairs.

1. Justice Burley described this submission as having force, by reason of three of the particular reasons advanced by Mr Kambouris and DJD Trading, considered at some length at [79]-[98], which I incorporate by reference rather than reproducing. A factor central to Burley J's findings was the degree of inconsistency in Mr Paule's evidence about his asset and liabilities position. In affidavits read in prior proceedings, especially in the Supreme Court of New South Wales, Mr Paule asserted that his asset position was to say the least rosy, and more than enough to meet the debts totalling almost $27 million owed to Mr Kambouris and DJD Trading, in order to obtain the interim relief that he was then seeking. However, his statement of affairs six months later depicted a relatively threadbare position, with a personal insolvency agreement offering up a mere $500,000 to all of his creditors.
2. That stark turnaround was attributed to debts listed in a table in his statement of affairs (reproduced below). In addition to these inconsistencies, his Honour also found that the complexity of Mr Paule's financial position was ill-suited to the Part X regime, the operation of which was summarised at [59]-[75].
3. The change in the position advanced by Mr Paule is most starkly presented by the following extract from Burley J's summary of the evidence before him, taking it at face value and prior to any process of evaluation, and noting that this summary has not been questioned and is supported by the evidence his Honour referred to that is also in evidence before me:

[24] On 8 May 2025, Mr Paule affirmed a further affidavit in which he said that he has over 35 years of experience in business as a financial advisor and is the co-founder and Chairman of Findex (Aust) Pty Ltd which he says is the fifth largest accounting and business advisory professional services firm in Australia by revenue. He says in [10] that set out in Schedule 1 of this affidavit "are the details of my current assets that I hold legally. They amount to a total of approximately $29,915,000 AUD ... I confirm that I have no current liabilities in my name."

[25] The schedule of assets identified in the affidavit lists:

(a) the property as valued (by one of the five valuations relied upon in Paule v Kambouris (No 1) at AUD $28,000,000;

(b) five luxury motor vehicles at a combined value of AUD $1,165,000; and

(c) furniture and household effects at a value of AUD $750,000.

...

[42] On 27 November 2025, Mr Paule completed a statement of affairs to the controlling trustee that relevantly states:

(1) that he has no interest in any land or buildings in Australia or overseas;

(2) that he does not own or have an interest in any vehicles;

(3) that he does not own or have any entitlement to any shares, options, rights, convertible notes or other securities; and

(4) that he does not own or have any other assets of value (other than general household furniture).

[43] The statement of affairs also provides a list of the following creditors:

1. Before me, Mr Paule advanced and admitted into evidence a proposed new statement of affairs, including a revised table of creditors, which I reproduce in the same format as adopted by Burley J at [43]:

1. Mr Paule was cross-examined before Burley J on his evidence and it is fair to say that this did not go well for him. His Honour made strong adverse credit findings against Mr Paule, for reasons that are compelling. Three particular conclusions reached by Burley J capture a key component of his Honour's reasoning:

[94] ... Mr Paule is a sophisticated businessman who has demonstrated that he is prepared to and does engage in sophistry in order to suit his own ends in relation to his debt position. I have referred to several examples above. The processes in Part X are intended to provide a simple and flexible process for debtors and creditors to come to an agreement without sequestration. Yet any person addressing Mr Paule's affairs is likely to be obliged to conduct detailed investigations to satisfy themselves as to the true position, perhaps despite whatever it is that Mr Paule tells them is the case.

[95] ... by the scheme of Part X, creditors are intended to be given full information as to the debtor's affairs. As much is evident by the requirement that the statement of affairs be filed with the Official Receiver and made available to any creditor who asks for it; see Bankruptcy Act s 188B. I am by no means satisfied that the statement of affairs prepared by Mr Paule provides such full information, or that any additional information provided by Mr Paule may be regarded as self-evidently reliable. Each of his statements will have to be scrutinised with care and independently verified.

[96] ... the effect of Mr Paule's recently described additional debts of AUD $371,519,139.07 being included in Mr Paule's statement of affairs indicates that the interests of the applicants will be swamped in a vote of creditors. The applicants have, in the course of the last month, moved from being the sole creditors to being two of 10 itemised creditors (the applicants assert that they now hold only 7% of Mr Paule's total stated indebtedness). Most of the eight other creditors, and the vast majority of the overall debt so asserted lies in the hands of people or companies closely affiliated with Mr Paule. I do not regard the timing or magnitude of the newly asserted debt to be adequately explained, with USD $93,000,000 million (about AUD $140,150,000) and over AUD $200,000,000 apparently arising in the days before the controlling trustee was appointed.

1. Burley J concluded at [97] that, when the features his Honour evaluated in some detail were considered in light of the time constraints imposed upon the controlling trustee (especially the ordinary requirement of convening a meeting of creditors within 30 days of appointment), they met the description of being special or unusual. Before me, Mr Paule pointed out that an extension of time to convene a meeting could be sought, but I consider this avails him little in circumstances in which any such extension of time would likely need to be very substantial. The Part X arrangement sought by Mr Paule will almost certainly have to depart from what is ordinarily the case before the process even begins.
2. I do not accept Mr Paule's assertion that Burley J was wrong to point to the Part X regime as intended to provide a simple and flexible process for debtors and creditors to come to an agreement without sequestration, as that was amply supported by the extrinsic material quoted by his Honour: see [63]-[65].
3. In the hearing before me, no attempt was made by Mr Paule to justify or even explain the statement of affairs before Burley J in contrast to his prior evidence. To the contrary, instead of reading his affidavit filed in support of the s 188(4) application, and being made available for cross-examination, Mr Paule only tendered a selection of documents. I readily infer that he did not give evidence because that would not have assisted him. This enables me to more readily infer that no satisfactory explanation for the inconsistencies was available.
4. The thrust of the case for the grant of leave advanced by Mr Paule relied upon the general scheme for personal insolvency agreements provided for by Part X. In particular, Mr Paule emphasised the opportunity that this gave to creditors to decide whether they would accept a compromise to receive only a portion of the money owed and avoid the potential risk of ending up empty handed. If the debts asserted by Mr Paule in his proposed new statement of affairs are admitted, Mr Kambouris and DJD Trading are only able to recover a very small proportion of the money they are owed. That is so, notwithstanding that Mr Paule's proposed contribution obtained from others towards the pool of funds to creditors has increased markedly from $500,000 to $5 million. That sum remains a small portion of the overall sums owed to creditors in his proposed statement of affairs, despite the proposed total debt decreasing from just over $371.5 million to just over $163.5 million, largely due to the exclusion of a debt owed to his estranged wife of $200 million which had been recorded on the statement of affairs before Burley J.
5. Mr Paule submits that refusing to exercise the discretion to grant leave has the effect of taking away from the body of creditors the ability to at least consider their position and make a commercial decision, including about the risk they face of ending up worse off without the acceptance of a personal insolvency agreement, and that this stands against the scheme of Part X. I am unable to accept that submission for the simple reason that it begs the question of the legitimacy of the asserted creditors beyond Mr Kambouris and DJD Trading, in circumstances where I consider that Burley J correctly concluded that Mr Giasoumi cannot safely proceed on the word of Mr Paule alone. In my view, the integrity of the Part X regime is in serious doubt with him as the debtor.
6. Once the questionable creditors advanced by Mr Paule, as identified below by reference to Mr Kambouris and DJD Trading's submissions, are either excluded from consideration, or at least given much less weight, the great bulk of the remaining debts are owed to Mr Kambouris and DJD Trading. If the interests of creditors are to be given primacy as Mr Paule contends, then that primacy should weigh most heavily in favour of Mr Kambouris and DJD Trading because every attempt by him to vitiate their debts, culminating in an unsuccessful application to the High Court for special leave to appeal, has failed. Those are the only debts that are unassailable.
7. Mr Paule also relied upon the history of the ownership of what had previously been advanced as his principal asset, being his home in Toorak in Melbourne. In short, the family home had been in his estranged wife's name until 2021, when it was transferred to his name. She now asserts that she had the beneficial ownership all along. However, prior to the proceeding before Burley J, Mr Paule had asserted sole ownership of that home, effectively denying any trust or beneficial ownership arrangement. It was only later that he reversed his position and is seemingly not now resisting her claim, entirely contrary to the earlier position advanced by him to secure the relief that he was seeking at that time, such as extensions of time and other delays. Far from this aspect advancing Mr Paule's case for the grant of leave sought, I consider that it achieves the opposite. It is notorious that denial of possession of the beneficial interest in a family home can be deployed in an endeavour to prevent such an asset from being available to meet the claims of creditors. Such issues are inherently complex and, in my view, generally ill-suited to the Part X regime, especially given the ordinary focus on simple and, to an extent, speedy resolution. That is especially acute when honesty and candour on the part of the debtor in relation to assets and liabilities has been proven to be absent, making it inherently difficult to know or readily ascertain where the truth lies.
8. I was well short of being satisfied that leave should be granted as sought by Mr Paule on the arguments he advanced. The submissions made by Mr Kambouris and DJD Trading do not need to be reproduced in any detail. It suffices to observe that they have reinforced the concerns expressed by Burley J, which I share. In particular, the troubling comparison made by them between a number of entries in the list of creditors in the statement of affairs that was before his Honour (reproduced at [43], and further reproduced above), and the replacement statement of affairs proposed by Mr Paule adds to, rather than detracts from, the strong sense of unease that I have developed from the s 188(4) application before me, as follows:

(a) The first creditor in each list is different, changing, without explanation, from Sooper Pty Ltd to Botanical Water Technologies Ltd (UK), for the same debt of USD$93 million, but with the date the debt was incurred changing, again without explanation, from November 2025 to 2023. A letter in evidence adduced by Mr Kambouris and DJD Trading dated 27 May 2025 from the Joint Administrators of Botanical Water Technologies to Mr Paule indicates that in the administrators' mind the asserted debt was not either well advanced or well developed. If there was more to it than that, Mr Paule has not chosen to adduce evidence to that effect.

(b) Biocheese Pty Ltd is listed as a creditor in both statement of affairs for the same debt of $2,055,388.18. However, the date the debt incurred has changed from October 2025 to 2021-2025. An ASIC Form 484 adduced into evidence by Mr Paule shows that his resignation as a director of that company was effective from 13 January 2026. Mr Paule's brother, Mr Spiro Paule, is now the sole director of Biocheese.

(c) Zervos Lawyers is listed as a creditor in both statements of affairs for the same debt of $25,448.79. They apparently act for Mr Paul's wife in her proceedings against him in the Supreme Court of Victoria. Mr Paule has not provided an explanation for this asserted debt.

(d) Mr Spiro Paule (who is, as outlined above, Mr Paule's brother) is listed as a creditor in both statement of affairs for a personal loan of $20,000.

(e) Philo Holding Company Ltd UK is listed as a creditor in both statements of affairs for the same debt of $75,605.97 but the date of the debt has changed from November 2025 to 2024. Mr Paule still appears to be the sole director and shareholder of that company.

(f) TZP Pty Ltd is listed as creditor in both statements of affairs for the same debt of $208,772. An ASIC Form 484 adduced into evidence by Mr Paule and signed by his brother, Mr Spiro Paule, on 9 February 2026 indicates that until last month, Mr Paule was the sole director of that company before he was replaced by his brother.

(g) Ms Vicky Pappas is listed as a creditor in both statements of affairs for a personal loan of $15,000. Ms Pappas deposed in the Supreme Court of New South Wales proceedings that her occupation was the Chief Executive Officer of My Co Pty Ltd (now Biocheese). In that affidavit, Ms Pappas described My Co Pty Ltd as the "family office investment vehicle for Terry Paule and Spiro Paule". The document audit logs in the 10 ASIC forms tendered by Mr Paule also indicate that Ms Pappas was an email recipient of the forms.

1. The date of the purported debts to Botanical Water Technologies, Biocheese and Philo have all changed from some time in 2025 to an earlier date or even year without explanation from Mr Paule. Such changes are significant as Mr Paule had previously deposed in an affidavit affirmed 8 May 2025, read before Stellios J in this Court and Williams J in the Supreme Court of New South Wales, that he had no current liabilities in his name. As outlined above, many of the listed creditors are also affiliated or associated with Mr Paule in a personal or business capacity.
2. The combined debts owed to Mr Kambouris and DJD Trading are just shy of $27 million. If the debt to Botanical Water Technologies is excluded from consideration (noting the evidence regarding the legitimacy of that debt considered above), the debts apparently owed to other creditors total around $2 million, all of which is owed to creditors in some way related to or associated with Mr Paule. This reinforces the observation above, to the effect that the only debts that are beyond doubt are those owed to Mr Kambouris and DJD Trading, and are the bulk of the asserted debts apart from Botanical Water Technologies. Contrary to Mr Paule's case, the proposed statement of affairs before me has not been shown to be likely to lessen the investigation and examination required to be conducted by an incoming controlling trustee, let alone clearly so. It is readily apparent from the outset that the task before Mr Giasoumi would very likely be far more difficult and substantial than what is generally contemplated under a Part X process, even if that must occur from time to time. That is worsened by the absence of candour and honesty on the part of Mr Paule, already discussed above.
3. It is noteworthy that there has been no appeal from Burley J's judgment and none is likely. Any such appeal would in my estimation be highly unlikely to succeed, especially now. Mr Paule seeks to have me subordinate his Honour's decision to general arguments and assertions about the legislative scheme in Part X, and to the contention that to refuse leave would entail this Court blocking or standing in the way of creditors being able to make commercial decisions about what they contend is owed to them and the risk of not taking what is on offer by Mr Paule's proposed personal insolvency agreement. It is once again noteworthy in this context that the debts owed to Mr Kambouris and DJD Trading are fixed and certain, with Mr Paule's challenges to them having failed through the New South Wales Supreme Court and Court of Appeal, and the High Court refusing special leave to appeal. All of the remaining debts now asserted by Mr Paule are clouded with, at best, doubt and uncertainty. It follows that at present the dominant creditor concerns deserving of weighty consideration are those of Mr Kambouris and DJD Trading. Thus, a central plank for Mr Paule seeking a grant of leave under s 188(4) was exposed as being weak and not compelling.
4. Central aspects of Burley J's reasons for finding that special circumstances were established to warrant ordering that Mr Paule's property be released from the control of Mr Giasoumi were the complexity of Mr Paule's financial affairs, and the serious adverse credit findings made against Mr Paule, especially in relation to his evidence and representations about his assets and liabilities. That latter aspect in particular is most starkly demonstrated by the paragraphs reproduced above addressing the evidence as to Mr Paule's asserted assets and liabilities in his 8 May 2025 affidavit compared to his 27 November 2025 statement of affairs. It would have been no answer for Mr Paul to attempt in his submissions to draw possible distinctions between legal and beneficial interests, given that such distinctions were not the subject of any evidence from Mr Paule before me. In any event, Mr Paule did not make such an attempt.
5. The strong impression that I have gleaned from the above evidence and the other material before me is that Mr Paule is likely to be quite prepared to engage in misleading and even outright dishonest behaviour if he perceives that to be a way of advancing his interests. This could extend to his statements, his actions, the contents of the documents he signs and the facts and circumstances that he deposes to. Mr Giasoumi would be required to assess and determine whether any information that Mr Paule provided to him was truthful, candid and complete, and to exclude the reasonable possibility that it was false or misleading, in order to discharge the statutory duties imposed upon him as a controlling trustee. This unavoidable situation is intolerable and entirely inimical to the proper operation of Part X.
6. In all the circumstances, a proper basis for leave to allow Mr Paule to deploy again the Part X regime was not made out.
7. For the reasons above, I dismissed the application with costs.
8. As the timeline set out in Kambouris v Paule makes apparent, at both the bankruptcy notice stage and at the creditor's petition proceedings stage, Mr Paule has sought to prevent progress being made, both indirectly by his unsuccessful challenges to the debts upon which they were based, antecedent delays to the time for compliance with the bankruptcy notices, and by extensions of time and adjournments. The time has come for that process of delay to come to an end. This unsuccessful s 188(4) application was not a close-run thing, but rather was substantially unmeritorious. Unless the Registrar decides otherwise, there should be no further adjournment, delay or stay of the creditor's petition proceedings, now set for hearing at 11.00 am on 24 February 2026.

I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Bromwich.