Young v Hughes Trueman Pty Ltd

Federal Court of Australia|2017-06-01|Before: Markovic J

Paragraph 1 of the appellant's amended interlocutory process filed on 21 April 2017 be dismissed.
The appellant pay the first and second respondents' costs of paragraph 1 of the amended interlocutory process filed on 21 April 2017.
The proceeding be listed for a case management hearing at 9.30 am on 8 June 2017. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

MARKOVIC J: 1 On 23 March 2017 a sequestration order was made by a judge of the Federal Circuit Court of Australia (Federal Circuit Court) against the estate of the appellant, Margo Young: see Hughes Trueman Pty Ltd & Anor v Young [2017] FCCA 468 (Hughes v Young). Upon the making of that order Mrs Young immediately applied for a stay pursuant to s 52(3) of the Bankruptcy Act 1966 (Cth) (Act). That application was refused by the primary judge: see Hughes Trueman Pty Ltd & Anor v Young (No 2) [2017] FCCA 601. 2 Mrs Young has filed an appeal in this Court from the primary judge's decision in Hughes v Young. She now seeks an order pursuant to r 36.08 of the Federal Court Rules 2011 (Cth) (Rules) staying proceedings on the sequestration order made by the primary judge on 23 March 2017.

Background 3 Mrs Young's litigation history, which forms the backdrop to this application and which has led to her current situation, is lengthy and complicated. Its genesis is in a proceeding she commenced in the New South Wales Land and Environment Court (L&E Court) in 2003 against her former neighbours, Mr and Mrs King, in relation to excavation and building works carried out on Mr and Mrs King's property. That litigation was settled in 2004 by consent orders, including an order that Mr and Mrs King pay her costs of the litigation. However, Mrs Young became unhappy with the settlement and has since pursued litigation against Mr and Mrs King, her former solicitor and barrister and her expert witnesses, including the current respondents, Hughes Trueman Pty Limited (Hughes) and Mr Perrens, who gave expert engineering evidence for her. 4 The litigation that has followed has proceeded in numerous courts but Mrs Young has enjoyed no substantive success. It is not necessary for me to set out the detail of those subsequent proceedings in these reasons. It has been referred to in other judgments in this Court, the Supreme Court of New South Wales and the Federal Circuit Court: see for example Young v Hughes Trueman Pty Ltd & Anor [2016] FCA 1176 (Young [2016] FCA 1176) at [8]-[28]. However, as the primary judge observed at [10] of his reasons, at the heart of the litigation is an allegation that numerous parties, including Hughes and Mr Perrens, were involved in collusion and a conspiracy to effect the 2004 settlement of the L&E Court proceeding. 5 In relation to the application now before me, on 15 August 2015 Hughes and Mr Perrens served a bankruptcy notice on Mrs Young. The bankruptcy notice was based on a judgment debt of $110,000 plus interest for costs that Mrs Young was ordered to pay to Hughes and Mr Perrens upon dismissal of a proceeding commenced by her in the Supreme Court of New South Wales alleging negligence on the part of a number of defendants including Hughes and Mr Perrens: see Young v Hones (No 2) [2013] NSWSC 1429 (Young v Hones (No 2)) and, in relation to the costs order, Young v Hones (No 3) [2014] NSWSC 499 (Young v Hones (No 3)). 6 Mrs Young's appeal to the New South Wales Court of Appeal from Young v Hones (No 2) failed: see Young v Hones [2014] NSWCA 337 (Young v Hones (Appeal)). The High Court of Australia (High Court) has refused special leave to appeal from the decision in Young v Hones (Appeal) on two occasions. 7 Mrs Young's application to set aside the bankruptcy notice was dismissed, as was a subsequent application for an extension of time to appeal the decision refusing to set aside the bankruptcy notice: see Young [2016] FCA 1176. Mrs Young failed to comply with the bankruptcy notice by 1 May 2016, thus committing an act of bankruptcy. 8 The creditor's petition upon which the sequestration order was based was presented on 26 May 2016. Mrs Young filed a notice of opposition to the creditor's petition (Notice of Opposition). On 23 March 2017 the primary judge delivered judgment and made orders including, as I have already observed, a sequestration order against Mrs Young's estate. 9 On 1 May 2017 Mrs Young's application pursuant to s 33(1)(c) of the Act to extend the period under s 60(3) for the trustee in bankruptcy to make an election in relation to certain litigation was dismissed with costs: see Young v Hughes Trueman Pty Ltd [2017] FCA 470. The relevant litigation concerned Mrs Young's applications in the New South Wales Court of Appeal for leave to appeal two costs decisions made by Sheahan J in the L&E Court which were the subject of Young v King (No 8) [2015] NSWLEC 187 (Young v King (No 8)) and Young v King (No 9) [2016] NSWLEC 4 (Young v King (No 9)).

The proceeding in the Federal circuit Court 10 The Notice of Opposition on which the primary judge granted Mrs Young leave to rely raised the following grounds: 1. On 27 September 2013, Gar1ing J of the Supreme Court of New South Wales ("the Supreme Court") dismissed the Respondent's claim in that Court against Brian Keith Hones, Jason Hones, Ian Hemmings, Hughes Trueman Pty Ltd and Stephen John Perrens ("the Supreme Court Defendants"). The proceedings were dismissed following a hearing of a separate question on the basis that the advocate's immunity and witness's immunity provided a full answer to the Respondent's claim. The matter was not determined on the merits after a hearing of all the facts. 2. The debt the subject of the Applicant's Creditor's Petition ("the Creditor's Debt") is pursuant to an order for costs of Garling J of the Supreme Court on 1 May 2014 in proceedings 2010/41007 ("the Appellant's Costs Order"). 3. Orders for Costs ("the Costs Judgments") were also made in favour of the Supreme Court Defendants on 1 May 2014 after a hearing before Garling J. on costs. 4. The Respondent has been prepared to provide security (and has offered security) to each of the Supreme Court Defendants in respect of debts arising out of the Costs Judgments ("the Judgment Debts") 5. By reason of that security the Supreme Court Defendants are or would each be protected in respect of their entitlement to recover and their positon by reason of the Costs Orders. 6. The Debtor intends to seek special leave to appeal to the High Court to appeal the decision of Garling J of the Supreme Court of New South Wales on 27 September 2013 on which are grounded the Costs Orders ("the Special Leave Application"). The Special Leave Application is presently in the process of being prepared and it is expected that it will be filed and served within the next fourteen (14) days. 7. In the particular circumstances affecting the Special Leave Application the said application has strong prospects of success. 8. In the event that the Respondent is successful in the Special Leave Application and subsequent appeal: (a) The Creditors' Debt and the Costs Orders will be extinguished. (b) The Respondent would be expected to receive a Costs Order in her favour in respect of her appeal to the Court of Appeal of the Supreme Court of Appeal and the costs her application for special leave to the High Court dismissed on 6 May 2015. (c) She will be in a position to litigate to judgment on the merits of her negligence (and the Trade Practices Act 1974) claims against the Supreme Court Defendants. 9. If the Respondent is successful the claims she seeks to vindicate are many times larger in value than that the Costs Judgments are in value and therefore it would be unconscionable for the Costs Orders to defeat her claims. 10 Apart from the Costs Orders referred to in paragraph 3 above, the Respondent is able to discharge all of her financial obligations as and when they fall due. 11. Insofar as the Applicant refuses or has refused security as offered by the Debtor in the known material circumstances, the Debtor says that the Applicant is maintaining these proceedings for a purpose other than the recovery of money or to secure legitimate protection for a body of creditors. 11 The primary judge found that the evidence relied on by Hughes and Mr Perrens was prima facie sufficient to prove their entitlement to a sequestration order against Mrs Young's estate. The primary judge noted that Mrs Young's written submissions admitted that an act of bankruptcy had been committed by her when she failed in her application to set aside the bankruptcy notice and that no submission had been made that there were any defects in the evidence relied upon by Hughes and Mr Perrens. Rather, the primary judge observed, Mrs Young relied on her Notice of Opposition: Hughes v Young at [4]. 12 The primary judge summarised the grounds included in the Notice of Opposition into three categories as follows: (1) an assertion that Mrs Young intended within a further 14 days to seek special leave to appeal to the High Court from the decision in Young v Hones (No 3). That decision ordered the judgment debt in the sum of $110,000 which, with accrued interest, amounted to $128,838.63 and was the amount specified in the bankruptcy notice as due to the creditors. If the High Court were to grant special leave in the subsequent appeal, for which it was claimed there were strong prospects of success, the debt of $128,838.63 would be extinguished and Mrs Young would consequently be in a position to litigate a negligence claim against Hughes, Mr Perrens and others; (2) an assertion of solvency, in that Mrs Young was able to discharge all of her financial obligations as and when they fell due; and (3) an assertion that the bringing of the creditor's petition was maintained for a purpose "other than the recovery of money or to secure legitimate protection for a body of creditors". 13 The primary judge set out the background facts and then referred to the events leading to the hearing of the creditor's petition before him. Relevantly, he noted that when the proceeding first came before him for directions on 14 October 2016 Mr Newell, the solicitor-advocate for Mrs Young, informed the court that Mrs Young intended to file a second application for special leave to appeal to the High Court from the decision in Young v Hones (Appeal) (Second SLA). His Honour noted that it was the second application for special leave because Mrs Young had previously applied to the High Court for special leave to appeal that decision and that special leave application had been dismissed on 6 May 2015 in Young v Hones [2015] HCASL 73. In relation to the Second SLA his Honour said at [18]: The debtor's asserted justification for the proposed second application for special leave seeking to set aside the judgment of Garling J was that the High Court, in refusing the first special leave application on 6 May 2015, had found that the procedural course adopted which had led to the decision of Garling J meant that the case did not provide a suitable vehicle for the High Court to reconsider the test for legal advocates' immunity and witness immunity as stated in D'Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1. However, it was argued by the debtor that the High Court had subsequently in Attwells v Jackson Lalic Lawyers Pty Ltd (2016) 331 ALR 1 limited the scope of immunity in relation to settlement of legal proceedings, and it therefore should reconsider granting special leave to appeal from Young v Hones. I merely note at this point that the asserted justification for the second application for special leave completely ignored the principle of the finality of litigation. 14 The primary judge then observed that, consistent with the Second SLA, Mrs Young had filed an application in a case in the proceeding before him which sought adjournment of the creditor's petition for 14 days to enable Mrs Young to file the Second SLA and a further adjournment until the special leave application had been determined by the High Court. 15 Ultimately, the creditor's petition, the application to file the Notice of Opposition, which had been filed without leave, and the application in a case were set down for hearing on 9 December 2016. 16 The hearing commenced on 9 December 2016 but was not completed on that date and so it was adjourned to 3 March 2017. In the interim, on 1 March 2017, Mrs Young's Second SLA was refused: Young v Hones [2017] HCASL 27. 17 On 3 March 2017, at the resumed hearing, Mrs Young twice sought an adjournment of the hearing of the creditor's petition. The applications for an adjournment were made so that Mrs Young could file: (1) a further application for special leave to appeal from Young v Hones [2017] HCASL 27, in effect a third special leave application from the decision in Young v Hones (Appeal), and a further application for special leave to appeal from Young v King [2017] HCASL 28, by which the High Court had dismissed an application for special leave to appeal from the decision of the Court of Appeal of the Supreme Court of New South Wales in Young v King [2016] NSWCA 282. Before the primary judge Mrs Young contended that the basis for the further special leave applications was an allegation that "the High Court had breached the judicial obligation and duty to give adequate reasons and sufficient content for those reasons in refusing special leave" and that those High Court dispositions were "singularly devoid of proper reasons"; and (2) an application for special leave to appeal from Young [2016] FCA 1176, in which Mrs Young's application for an extension of time to appeal her unsuccessful application to set aside the bankruptcy notice had been dismissed. The basis of that application for special leave to appeal was said to be because Bromwich J had breached the judicial "duty to give reasons of a certain kind". It was submitted before the primary judge that this special leave application was to be in substitution for a show cause application pending in the High Court relating to that decision. 18 The primary judge refused both applications for an adjournment on the basis that the creditors were entitled to have their petition finally determined and because the foreshadowed further applications for special leave to appeal to the High Court were manifestly hopeless. The primary judge considered that it was in the interests of justice that the hearing of the creditor's petition not be adjourned. 19 The primary judge did not consider that there was any prospect that the High Court would grant special leave in relation to the foreshadowed special leave applications in connection with Young v Hones [2017] HCASL 27 and Young v King [2017] HCASL 28. His Honour said at [27]-[31]: 27 Insofar as the special leave applications foreshadowed in connection with Young v Hones [2017] HCASL 27 and Young v King [2017] HCASL 28 were concerned, I did not consider that there were any prospects that the High Court would grant special leave. Of course, it is a defining characteristic of a Court that it generally gives reasons for its decision: Wainohu v State of New South Wales (2011) 243 CLR 181 at 209 [44]. However, it is clear that a special leave application in the High Court is not normal litigation between parties. As McHugh J said in North Ganalanja Aboriginal Corporation v Queensland (1996) 185 CLR 595 at 643:- Refusal of special leave creates no precedent and is binding on no one. An application for special leave is merely an application to commence proceedings in the Court. Only when the Court grants leave does it commence to exercise its appellate jurisdiction. Until that time, there are no parties whose rights can be the subject of a binding determination. (citation omitted.) 28 Similarly, Kirby J said in Re Sinanovic's Application (2001) 180 ALR 448 (Re Sinanovic) at 450 [7(1)]:- A decision on a special leave application is not res judicata as between the parties, equivalent to a judgment that finally decides a legal dispute between them. The application is in the nature of an interlocutory proceeding by which a party seeks to engage the jurisdiction of this court. … At the stage of the special leave application, it has been said, the appellate jurisdiction of this court has not been engaged, it is simply a process by which a party seeks to persuade the court to enter upon that jurisdiction. (citations omitted.) 29 The nature of a special leave application is such that the High Court is not obliged to give reasons for either refusing or allowing special leave. The following was said of special leave applications in Smith Kline & French Laboratories (Aust) Ltd v Commonwealth (1991) 173 CLR 194 at 217-218 by Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ:- From time to time statements have been made which draw attention to the unusual character of an application for special leave to appeal. Such an application has special features which distinguish it from most other legal proceedings. It is a long-established procedure which enables an appellate court to control in some measure or filter the volume of work requiring its attention. Ordinarily, it results in a decision which is not accompanied by reasons, or particularly by detailed reasons … The procedure calls for a hearing, whether orally or on written materials, and a determination in the form of a curial order. (emphasis added and citation omitted.) 30 To similar effect, Deane and Gaudron JJ in Coulter v The Queen (1988) 164 CLR 350 at 359-360 stated as follows:- On the other hand, the application for leave or special leave to appeal commonly possesses a number of special features which set it apart from at least some other judicial proceedings. First, it involves the exercise of an extremely wide judicial discretion. Secondly, and notwithstanding that refusal of the application ordinarily involves the final determination of the particular litigation, that wide discretion can commonly be exercised without the provision of detailed or, sometimes, any reasons. (emphasis added.) 31 Accordingly, I consider that the foreshadowed special leave applications in relation to Young v Hones [2017] HCASL 27 and Young v King [2017] HCASL 28 are wholly lacking in merit and doomed to failure. They are not based on genuine and arguable grounds and have no reasonable prospects for success. They could not possibly satisfy the basis for the reopening of a special leave hearing or application which was stated by Kirby J in Re Sinanovic at 451 [7(4)] as follows: The only basis for ordering the reopening of a special leave hearing would, in my opinion, be where it is affirmatively shown that exceptional circumstances exist and new circumstances have arisen that require a reopening to prevent a serious miscarriage of justice because an error of fact or law has occurred in the earlier determination of the application, which error demands correction. (original emphasis) 20 The primary judge also considered that Mrs Young's proposed special leave application in relation to the judgment in Young [2016] FCA 1176 was "doomed to failure". The primary judge noted that the criticism made of that judgment was a breach of the "duty to give reasons of a certain kind". Observing that he was not sure what that criticism really meant, his Honour said that the judgment in Young [2016] FCA 1176 was "with respect, detailed and reasoned and [he] could not conceive of a successful argument that its content [was] inadequate or in some respect lacking". 21 The primary judge then considered the remaining grounds of opposition to the making of a sequestration order. 22 First, his Honour considered the ground of solvency. His Honour referred to s 52(2)(a) of the Act, noting that Mrs Young needed to satisfy the court that she was able to pay her debts; that, pursuant to s 5(1) of the Act, "debt" includes liability; and that the test for solvency was also set out in s 5 of the Act. His Honour observed that the onus of proving that she was able to pay her debts rested with Mrs Young and that it was necessary for the court to be presented with the fullest and best evidence of the financial position said to establish solvency. His Honour was of the opinion that Mrs Young had not led "realistic and probative evidence" which would establish that she was solvent: Hughes v Young at [35]-[41]. 23 The primary judge then set out the available evidence. Despite the state of the evidence, the primary judge was prepared, for the purposes of the proceeding, to assume that the debtor could sell her property at Calca Crescent, Forestville, Sydney (Forestville Property) for around $1.2 million "within a relatively short time": Hughes v Young at [45]. However, the primary judge also noted that Mrs Young was heavily indebted to a number of creditors and concluded that, either on her own admission or pursuant to judgments, Mrs Young owed debts to her various creditors in the amount of $3,986,335.53. His Honour found that Mrs Young had not discharged the onus of satisfying the court that she was able to pay her debts for the purposes of s 52(2)(a) of the Act: Hughes v Young at [56]-[57]. 24 The primary judge also found that the evidence established that Mrs Young had liabilities in the order of at least some hundreds of thousands of dollars for legal costs arising out of the various legal proceedings since 2003. His Honour noted that those costs had not yet been taxed or assessed but that, at the option of the parties which had the benefit of the costs orders, they would become debts payable in the reasonably immediate future or within a relatively short time which Mrs Young could not pay. His Honour took those outstanding liabilities into account as a factor in exercising his discretion not to dismiss the creditor's petition but rather to make a sequestration order: Hughes v Young at [58]-[59]. 25 Secondly, the primary judge considered the allegation that the creditor's petition was maintained for an improper purpose. His Honour found that there was "not a jot of evidence that the creditors have presented the Creditors Petition for any purpose other than the legitimate one of pursuing an appropriate remedy for the recovery of monies owed by the debtor to them" and that there was "no evidence at all that the creditors have presented the Creditors Petition for any illegitimate, collateral or improper purpose": Hughes v Young at [60].

the notice of appeal 26 By notice of appeal filed on 13 April 2017 Mrs Young appeals from the whole of the judgment in Hughes v Young. There are 11 grounds of appeal included in her notice of appeal as follows: 1. The learned primary judge erred in finding that there was no evidence that the Respondents were actuated by a collateral purpose or improper purpose in advancing the creditors petition. 2. Further or in the alternative, the Applicant asserts an entitlement to adduce further evidence pursuant to section 27 Federal Court Act 1975 as to the collateral purpose of the Respondents in seeking a sequestration order. 3. The primary judge erred in that he misapprehended the grounds of the Applicant's October 2016 application to the High Court for special leave in respect of the decision of Garling J. of 27 September 2013 and 1 May 2014. 4. In the premises, the learned primary judge further erred in assessing the prospects of a further prospective High Court application for special leave so far as concerns the judgment of Garling J. dated 27 September 2013 and 1 May 2014 ("the Garling Orders"). 5. Further, the learned primary judge's erred in holding that the Appellant's further proposed special leave application in respect of the Garling Orders is not genuine and arguable thereby denying the Appellant an adjournment to and prepare and conduct her High Court Special leave application and in proceeding to make a sequestration order against her. 6. The learned primary judge erred in that by reasons of the matters in (5) he thereby denied the Appellant natural justice. 7. The primary judge erred in making a sequestration order against the Appellant's estate in that the sequestration order was futile by reason that there could be no assets for rateable division among creditors in light of the undisputed fact of the quantum of the Appellant's solicitor's claim and the fact of a security held by that solicitor for that claim over the only significant asset of the Appellant. 8. The learned primary judge erred in making a sequestration order in that the only assets of the Appellant's estate likely to be available for creditors being choses in action against the petitioning creditor and others would be effectively destroyed by the sequestration order. 9. Further or alternative, the Applicant asserts an entitlement to adduce further evidence pursuant to section 27 Federal Court of Australia Act 1976 as to the futility of the sequestration order. 10. The learned primary judge erred in holding that: a. The Appellant's proposed appeal from the decision of Bromwich J is not genuine and arguable and thereby denying the Appellant an adjournment to prepare and conduct her High Court Special Leave application and in proceeding to make a sequestration order against her, and that; b. Bromwich J gave adequate reasons for his decision. 11. The circumstances of the learned primary judge's holding that the proposed appeal from the Bromwich J. decision was not genuine and arguable included (inter alia) the following: a. A reasonable apprehension of bias by prejudgment is shown by an implied acceptance by the learned primary judge of the apparent outcomes of a string of cases based on decisions by Sheahan J. in Young v King (No. 6) and Young v King (No. 9) and including the decisions of Judge Smith and Bromwich J. ("the Prior Decisions"). b. The learned primary judge erred in that he misapprehended the effect and implications of the decision of the Court of Appeal of 19 October 2016 in Young v King [2016] NSWCA 282 ("the CA Decision") which misapprehension was brought to bear upon His Honour's holding that the Appellant's proposed appeal from Bromwich J. was not genuine and arguable. c. The learned primary judge concluded that the CA Decision confirmed the apparent outcomes in the Prior Decisions. In fact, the CA decision indicated that the question of conspiracy had never been litigated before Sheahan J. as suggested in Young v King (No. 6) and the deference to the findings by Sheahan J in Young v King (No. 6) and Young v King (No. 9) (implicit in Smith decision and the Bromwich J decision) were misplaced. Further, the primary judge apprehended that the appeal in Young v King (No. 9) so far as concerns the Respondents had been dismissed when in fact it remains to be heard. The implications of the CA Decision were in fact that the appeal in relation to the dismissal of the Appellant's costs application Young v King (No. 9), which dismissal was on the basis of a wrongly asserted abuse of process, would in the circumstances be likely to succeed. d. Further, the dismissal in Young v King (no. 9) was plainly wrong in law in that the Appellant's application for costs could not amount to an abuse of law in the circumstances of the case. e. The matters in (b) support a reasonable apprehension of prejudgment on the part of the primary judge in that the learned primary judge interpreted the CA decision in accordance with the premises of the Prior Decisions and failing to apprehend that the CA Decision undermined those premises. 27 Mrs Young has filed an interlocutory application to amend her notice of appeal. That application has not yet been determined but the draft amended notice of appeal includes the following two additional proposed grounds of appeal: 12. The learned primary judge erred in deciding that the debts which are owed by the Appellant owing to the Appellant's sister (the Sister's Debt") and to the Appellant's solicitors, Leonardo Carlo Muriniti ("the lawyer's Debt"), were debts that were due and payable by the Appellant at the time of the sequestration order for the purposes of section 52(1) Bankruptcy Act 1966. 13. Further or in the alternative, the primary judge's discretion to dismiss or not dismiss the creditor's petition miscarried in that he failed to have regard to the particular actual circumstances of the Lawyer's Debt and the Sister's Debt.

Legal principles 28 Rule 36.08 of the Rules provides: Stay of execution or proceedings under judgment appealed from (1) An appeal does not: (a) operate as a stay of execution or a stay of any proceedings under the judgment subject to the appeal; or (b) invalidate any proceedings already taken. (2) However, an appellant or interested person may apply to the Court for an order to stay the execution of the proceeding until the appeal is heard and determined. (3) An application may be made under subrule (2) even though the court from which the appeal is brought has previously refused an application of a similar kind. 29 The principles applicable to the granting of a stay of a sequestration order are not in dispute. They were summarised in Nolten v Groeneveld Australia Pty Ltd [2011] FCA 1494 (Nolten) by Kenny J at [24] as follows: Rule 36.08 of the Rules confers a broad discretion to order a stay notwithstanding that an appeal shall not operate as a stay of execution or of proceedings under the judgment appealed from. In Powerflex Services Pty Ltd v Data Access Corporation (1996) 67 FCR 65, a Full Court of this Court held that the appropriate test for a stay under the equivalent of Rule 36.08 of the current Rules was that set down in Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685, namely, whether the applicant for a stay showed a reason or an appropriate case to warrant the exercise of discretion in his favour. More specifically, with respect to an application for a stay of a sequestration order, the question is whether there is an arguable point on the proposed appeal and whether the balance of convenience favours the granting of a stay: see Freeman at [3]-[4]; Coleman at 303; Beames v Rigby [2002] FCA 806 at [2]; Kellow v Dudzinski [2003] FCA 238 ("Dudzinski") at [8]; and Shirreff v Beck Legal Pty Ltd [2010] FCA 1407 at [67], (2010) 119 ALD 284 at 293-294 [67]. The test for a stay under s 52(3) of the Act is not materially different. 30 The relevant threshold of an "arguable point" is relatively low: Nolten at [29].

Evidence 31 Mrs Young relied on two affidavits sworn by her solicitor, Leonardo Carlo Muriniti, on 19 and 20 April 2017 respectively. The evidence given by Mr Muriniti was voluminous, incorporating transcripts of proceedings, affidavits that he, Mrs Young and others had sworn in various proceedings and submissions made in other proceedings. I informed Mr Newell, who appeared for Mrs Young, that the Court would only have regard to that part of the material to which it was taken. However, in broad summary, Mr Muriniti: sets out the circumstances in which he says Mrs Young proffered payment of the underlying judgment debt upon which the bankruptcy notice was based, referred to in more detail at [40] to [44] below; says that he believes that his total costs for the various matters in which he has acted for Mrs Young, approximately 23 matters, will exceed $3 million. He says that he has security from Mrs Young in the form of two mortgages noted on the title of her property and a security which arises from the terms of his costs agreements with Mrs Young, which "provide that [he has] a charge inter alia over all real estate which she owns or may own at any time"; describes the proceedings that were on foot at the time he swore his affidavit; and provides copies of two draft applications for special leave to appeal to the High Court which he says Mrs Young will file if the sequestration order is set aside.

Is there an arguable point on the proposed appeal? 32 I have considered the grounds of appeal in the notice of appeal and the two proposed additional grounds included in the draft amended notice of appeal. Having done so, in my opinion, there is no arguable point on the proposed appeal. I have come to that view notwithstanding the relatively low threshold that applies. My reasons follow.

Grounds 1 and 2 33 By grounds 1 and 2 Mrs Young alleges that the primary judge erred in finding that there was no evidence that Hughes and Mr Perrens were actuated by a collateral or improper purpose in advancing the creditor's petition. Mrs Young submitted that there was in fact evidence of a collateral purpose and that the primary judge's failure to have regard to it was an error of law. That evidence, Mrs Young contended, included the considerable efforts by her to offer Hughes and Mr Perrens a security. Mrs Young further submitted that that evidence was significant in light of the uncontested position that the debts were such that there was no question of any recovery either for Hughes and Mr Perrens or any rateable distribution among the creditors if a sequestration order was made. 34 Further, Mrs Young submitted that a sum of money was offered to cover the debt claimed by Hughes and Mr Perrens immediately after the refusal to grant leave to appeal by the High Court. Mrs Young submitted that that tender was evident from material which is now before me; that it was refused at a time "when it was at [Hughes' and Mr Perrens'] insistence that [Mrs Young's] debts amounted to over $5,000,000"; that "[i]n these circumstances, [Hughes and Mr Perrens] sought a sequestration order in circumstances that it was contrary to their legitimate interests"; and that "[t]he only conclusion that can be drawn is that they sought to incapacitate [Mrs Young] from conducting her litigation". 35 In relation to the offer of security the primary judge referred to a letter dated 10 October 2016 from Mr Muriniti to Hughes and Mr Perrens' solicitors. By that letter Mr Muriniti conveyed an offer from Mrs Young to provide an unregistered mortgage to Hughes and Mr Perrens over the Forestville Property, with the mortgage to have priority over the unregistered mortgage held by Mr Muriniti which secured approximately $3 million in legal fees owing to Mr Muriniti. But as the primary judge observed at [49] of his decision Mrs Young's offer of security was conditional because the mortgage was unenforceable "until all proceedings against [Hughes and Mr Perrens] have been exhausted". 36 The evidence before the primary judge in relation to the alleged tender of the debt owing to Hughes and Mr Perrens comprised an affidavit affirmed by Mrs Young's sister, Eleanor Denise Schofield, on 16 December 2016 and evidence given in cross-examination by Mr Thornell, a solicitor from Kennedys, the solicitors for Hughes and Mr Perrens. In her affidavit Mrs Schofield gave the following evidence: 3. I have been informed by my sister of these proceedings and the fact that on the basis of a claim for $128,838.63 an attempt is being made to bankrupt my sister. 4. I do not wish my sister to be bankrupted and I have the means, if necessary, to pay the amount of $128,838.63 claimed by the Applicants in these proceedings should the court ultimately determine that but for the payment of $128,838.63 a Sequestration Order would be made against my sister. 5. The monies which I am offering to pay on behalf of my sister should the necessary preconditions occur, are my monies not my sister's money. 6. On 15 December 2016 I transferred an amount of $130,000.00 and deposited it into a bank account with the ANZ Bank which monies will be held in that account and will not be touched except for any interest earned on that amount which I will appropriate for my own use. … 10. I give an undertaking to this Honourable court that this money will be left in the account untouched and will be available to be called upon and will be paid in the event that my sister fails in both applications which she has presently filed in the High Court. These applications are: (a) An application for Special leave to appeal to the High Court being a second Application for Leave to Appeal to the High Court seeking to appeal from the decision of the NSW Court of Appeal delivered on 1 October 2014. A copy of which that application and the affidavit in support are annexed hereto and marked with the letters 'B" and "C". (b) The third application which my sister has filed with the High Court is an Application for an Order to Show Cause which was filed on 9 December 2016 together with an affidavit in support, copies of which are annexed hereto and marked with the letters "D" and "E". 11. In the event that my sister fails in both of these applications with the High Court I will immediately cause to be delivered to the firm of Kennedys lawyers for an (sic) on behalf of the Applicants the sum of $128,353.63. 37 Mr Thornell was cross-examined by Mr Newell. The following evidence was given in relation to the issue of the proffer of the monies claimed in the bankruptcy notice: MR NEWELL: You've heard some questions earlier between the bar and the bench about the question whether the contingencies in the affidavit of Denise Schofield of 16 December had been met. Do you recall those? MR THORNELL: I apologise. The contingencies? MR NEWELL: Contingencies. That if a certain thing happens, a certain sum will be paid to your client? MR THORNELL: Yes. MR NEWELL: You heard all that? MR THORNELL: Yes. MR NEWELL: Right. And so you knew that if those contingencies were met, they were met on Wednesday? MR THORNELL: No. MR NEWELL: Well, the contingency that the High Court - the special leave application was refused - that was met on Wednesday, wasn't it? MR THORNELL: That was one of, as I recall, and I don't have the affidavit of Ms Schofield in front of me, one of two conditions. The other related to your client's show cause application in the High Court. MR NEWELL: Is your client - have you taken instructions from your client as to whether your clients are prepared to accept the money, the subject of Denise Schofield's affidavit - HIS HONOUR: There has been no offer yet. There has been no offer to pay. You make a tender and then we will find out. MR NEWELL: Well, my question is still relevant, your Honour. There may be instructions about the matter already before the offer. HIS HONOUR: Well, I'm not allowing a question about it. He would have to get instructions. It might be in issue that if you did make a tender, would require a great deal of thought. A great deal of thought and advice from Mr Gray about whether it should be accepted. I'm not going to ask this man to postulate what, in a situation that hasn't arisen, what his client's instructions might or might not be. Now, can you move on to your next question. MR NEWELL: But he's not postulating. I'm asking a question of fact. All of those things may be necessary before a decision is made. The question is, has the decision been made. HIS HONOUR: I don't see it ... there is no tender. There is no tender in this case. There has been no tender to date, in a proper legal way, constituting a legal tender of the debtor by the petitioning creditor. When it is, Mr Gray will have some thinking to do but it has got nothing to do with your client's solvency or improper purpose. MR NEWELL: Until there's a refusal of the tender. HIS HONOUR: Maybe. MR NEWELL: Yes. HIS HONOUR: So when you make your tender, we will find out what the position is then, sir. 38 In addition, the following exchanges took place between the primary judge and Mr Newell in the course of the hearing: MR. NEWELL: … But the debtor has been put in a very difficult position because of that non-compliance and the need to consider the sudden materialisation of Hemmings as a supporting creditor and by the sudden announcement, yesterday, that it will be claimed that the monies of $130,000 deposited for the benefit of the judgment for the creditor suddenly don't accommodate - HIS HONOUR: Mr Gray doesn't want $128,000 in someone else's account, sir. He wants that money in his client's account. That's what this is about. MR NEWELL: But the arrangement is that the money will go into his client's account - HIS HONOUR: You've got five minutes. Can you conclude your application for adjournment within the next five minutes please, sir. MR NEWELL: The evidence is - and it's the necessary consequence - that the money will go to their account immediately - HIS HONOUR : At your - at your decision if you win a case. There were two conditions on - as I read it. Mr Gray will correct me. As I read the paragraph of that affidavit, it should be paid now, shouldn't it? Is it not the case that, in terms of subparagraphs (a) and (b) of the affidavit of Mrs Schofield, that both those conditions have come into operation. That is, both the applications referred to in (a) and (b) have failed, haven't they? MR NEWELL: I'm - HIS HONOUR: Have they failed or not? MR NEWELL: It appears to be ... So the question - HIS HONOUR: Have they failed? MR NEWELL: It appears so. HIS HONOUR: Well, will you pay the money to Mr Gray now? MR NEWELL: Will he accept it? HIS HONOUR: Well, that's what we will find out when you make a tender, sir. MR NEWELL: Yes. The plaintiff - sorry - the debtor will tender the money, it being Friday that the money can only be tendered on Monday but the debtor will give an undertaking to do that. HIS HONOUR: Well, I'm not going to - I'm not going to give a judgment immediately. I'm going to reserve my decision. So if you want to make a tender as, it would seem, you ought to or this lady ought to - MR NEWELL: Yes. HIS HONOUR: I mean the point of coming from the sister, I assume, was to say well, it's not coming from the debtor herself. It's coming from a third party. MR NEWELL: That's correct, your Honour. HIS HONOUR : And that should be comforting to Mr Gray. MR NEWELL: Yes. HIS HONOUR: Well, when the cheque - when a bank cheque - MR NEWELL: Well, then Mr Gray knows that the money is there for him. HIS HONOUR: When a bank cheque is in accordance with the undertaking proffered to Mr Gray's solicitor, we will find out what will happen and, no doubt, my associates will be informed of what has happened. But, as I read that paragraph, the money is, according to the undertaking of the court, payable to the petitioning creditor. That doesn't mean, of course, that the petitioning creditor will accept it but that remains to be seen. Anyway, that's really by the by. Have you finished your submissions on the adjournment application? And: MR NEWELL: … Your Honour has heard evidence that, apart from those monies, there is $130,000 available to discharge the judgment, the foundation for the petitioning creditors' debt. HIS HONOUR: Well, that's going to be tendered on Monday. MR NEWELL: I say it will be. Is there a problem getting a bank cheque in that time? HIS HONOUR: Well, you have those - I mean, that has got to come from Mrs Schofield, hasn't it? Well anyway, your present instructions - MR NEWELL: Can I just - can I get some instruction - HIS HONOUR : - and I see them, Mr Newell, the thing is vigorously - MR NEWELL: I'm told she's in hospital. I don't know what that means about getting a bank cheque. Can I just get some instructions, your Honour? HIS HONOUR: Yes. The problem is you're not really getting instructions from the person who owns the money, as I gather it. MR NEWELL: No, but she - HIS HONOUR : But anyway, what are - MR NEWELL: She lives with the person when she's not in hospital. HIS HONOUR: Well, let's hear the best instructions Mr Muriniti thinks he has got. MR NEWELL: All right. So there's no problem with a bank cheque on Monday. HIS HONOUR: All right. So as you stand there, it's your belief as counsel that a proper legal tender will be made of the debt claimed in the petition is due. MR NEWELL: Yes. And specifically, by bank cheque. Right - HIS HONOUR : And then it will be for Mr Gray's client to decide what they want to do. They don't have to take it, as I understand the authorities. MR NEWELL: Your Honour has said that and I accept that. Yes. All right. Mr Gray, let's assume that that offer is made. It ought not to take you a very - your client a long time to consider its position on that, I wouldn't have thought. Meaning you will be able to tell the court, my associates, within at least three or four days whether it's to be accepted - MR GRAY: In terms of the petitioning creditors, that's right. Whether a substituting creditor steps up - HIS HONOUR: Well, that's of course - that's for them. MR GRAY: Well, your Honour, it refers to my clients - HIS HONOUR : I'm referring to the petitioning creditor only in this case. So you would let my associates know within two or three days and then that would be a different set of circumstances arises, potentially. All right. Well, we understand where you're coming from, Mr Newell. Thank you for that. 39 Mrs Schofield's evidence was that there was $130,000 deposited in a bank account which would be available to be called upon in the event that Mrs Young failed in the Second SLA and her application for an order to show cause in relation to the judgment in Young [2016] FCA 1176. That is, it was a conditional offer. While as at 3 March 2017 the Second SLA had been dismissed, the application for an order to show cause had not been resolved by the High Court. Mr Thornell's evidence referred to that fact. As between the Federal Circuit Court and Mrs Young the matter was left on the basis that, if the proffer was made, then his Honour could be notified of whether it was accepted. 40 After the hearing there was an exchange of correspondence between the solicitors for Mrs Young and the solicitors for Hughes and Mr Perrens. That exchange is relevant because Mrs Young has foreshadowed an application to rely on further evidence at the hearing of the appeal. The further evidence would, I understand, comprise the evidence relied on before me and would, it was submitted, include the "considerable efforts" to offer Hughes and Mr Perrens security and evidence of the offer of a sum of money "to cover the debt" claimed by Hughes and Mr Perrens". 41 The exchanges commenced on 6 March 2017: (1) at 9.53 am Mr Muriniti sent an email to Mr Thornell in which he said: Further to the hearing before his Honour Dowdy on Friday of last week we advise that we anticipate being in a position to have a bank cheque drawn in the amount of $130,000.00 today. Would you kindly advise us urgently as to whether the bank cheque in question is to be made payable to your firm or alternatively if it is to be made payable to your clients how is the cheque to be made out? We anticipate that before the end of today the writer will attend your office in person to hand deliver the bank cheque and obtain from you a receipt for same. Would you please advise as to whether you would be available in person to receive the bank cheque. Please let us have your reply as a matter of courtesy as soon as possible and in any event before 12 noon today. (2) L C Muriniti & Associates then sent a letter to Kennedys by email which was in substantially the same terms as the email above; (3) at 11.39 am Mr Thornell responded to Mr Muriniti's email, informing him that Kennedys would seek their clients' instructions and revert to Mr Muriniti in due course; (4) L C Muriniti & Associates then sent a further letter by email to Kennedys. That letter was in the following terms: Is it extremely surprising that given what fell from his Honour on Friday afternoon you do not have instructions yet. One would have reasonably assumed that you would have sought instructions immediately after court rose. We expect a satisfactory response by no later than 1.00pm today. If we do not receive a satisfactory response we will draw a bank cheque made payable to Kennedy's Trust Account and the writer will present himself at your office before the end of the day to present a bank cheque for $130,000.00 which we note will be an amount slightly greater than the amount claimed in the Creditors Petition. If our attempt at accord and satisfaction is frustrated or if our client's bank cheque is rejected the writer will prepare an affidavit setting out today's events annexing all relevant correspondence together with a copy of the bank cheque and we will make an approach to the Associate to his Honour Dowdy J for leave to file and serve that affidavit and in any event to inform his Honour that an attempt at accord and satisfaction was made and frustrated by your clients. (5) at 12.45 pm Mr Thornell sent an email to Mr Muriniti responding to the letter set out in the preceding paragraph, once again noting that Kennedys were seeking their clients' instructions, that that course was reasonable and could not "be equated with an attempt to frustrate the matter by our clients" and that without instructions they were not in a position to accept payment; (6) at 1.30 pm Mr Muriniti sent a further letter by email to Mr Thornell which included the following: We acknowledge receipt of your email sent at 12.45pm. Your response is, with all due respect, unsatisfactory. The Bankruptcy Notice which you served on our client states "payment of the debt can be made to Mr Michael Keith Thornell level 22/85 Castlereagh Street, Sydney". His Honour was very clear that he expected our client to make payment to your client today and that he be informed of any attempt made to make payment today. We are attempting to comply with his Honour's request. You were aware as of Friday afternoon last week that his Honour has an expectation of our client to make a bona fide effort to effect payment to your clients by way or accord and satisfaction. In the circumstances you have had part of Friday afternoon and all of today to obtain instructions and it is simply inconceivable that in the time available you have not obtained instructions about a simple matter of how monies are to be paid especially in circumstances where an amount of $130,000.00 is proposed to be proffered to your client. Most creditors would be jumping at the opportunity to be paid and your clients' conduct is simply counterintuitive. … Accordingly we place you on notice that 3.00pm this afternoon the writer will attend your office with two (2) bank cheques in the following amounts: $128,838 .63 and $1,161.37 both made payable to Kennedy's trust Account. The Bank Cheques will be presented by way of accordance and satisfaction and if they are rejected we will inform the court of the refusal and will provide the court by way of an affidavit with copies of all correspondence exchanged today. … We need instructions from you no later than 2.00pm today. … (original emphasis) (7) at 2.00 pm Mr Hartwell of Kennedys sent an email to Mr Muriniti which included: As His Honour pointed out on Friday, our client will require reasonable time to obtain advice and provide instructions. For example, it is also readily apparent from your most recent letter that it is not your client that is making payment and the underlying terms of any such payment is highly relevant. Our client also needs to consider various other questions. Given the long and unfortunate history of this and your client's various other proceedings, our client will not be pressured into accepting anything without proper consideration. As Michael has repeatedly pointed out today, absent instructions Kennedys is not in a position to accept payment from your client (or her sister). We will revert to you regarding your client's tender once we have instructions. (8) L C Muriniti & Associates sent a further letter by email to Kennedys which included: We respectfully submit that his Honour did not make the comments you are purport to attribute to him but in any event the time which has been available to you to obtain instructions has been reasonable given the short scope of what is required which is simply to get instructions about how cheques should be drawn. Our client will rely on your most recent email as evidence that an attempt at accord and satisfaction was made and was made bona fide by our client today and that that effort has encountered obstacles by your failure to provide instructions on how the bank cheques are to be drawn. … We note that on Friday your clients were represented by your firm and by counsel, at no stage did either your counsel or Mr Thornell raise any concerns in relation to the source of the funds or any of the other matters that it would appear you are now seeking to agitate in your email. The time to have raised these matters were surely at the time when your firm was served with our client's sisters affidavit but, notwithstanding the fact that you had that affidavit for several months no such concerns were raised. No such concerns were raised on Friday either. The proceedings are now closed except on the question of making any attempt at accord and satisfaction as was foreshadowed in court. That attempt is being made today and despite our best efforts is meeting with an unnatural resistance. The writer will attend your office this afternoon with two bank cheques; when the writer attends your office he will politely ask to see Mr Thornell so that he can personally deliver to Mr Thornell the bank cheques we have foreshadowed. If those cheques are refused what flows from that refusal will be a matter for the court. (original emphasis) (9) at some time after 3.00 pm Mr Muriniti attended the building in which Kennedys is located and met with Mr Thornell. Mr Muriniti had two bank cheques with him totalling $130,000. Mr Thornell informed Mr Muriniti that he did not have instructions to accept the cheques. 42 On 7 March 2017: (1) at 10.29 am Mr Muriniti sent an email to, among others, the associate to the primary judge in which he wrote: I refer to the proceedings before his Honour on Friday of last week and the undertaking which my client gave to pay the sum of $130,000.00 to the judgment creditor. I spent most of yesterday trying to ascertain from Mr Michael Thornell of Kennedys solicitors how his client wanted the bank cheque made out and what arrangements could be made to deliver the bank cheque to him. Despite numerous emails and faxes I was not able to get a direction from Mr Thornell. Finally, I arranged for my client to draw the funds by bank cheque made payable to Kennedys Trust Account. I then drove into the city, I went to the building in which the offices of Kennedys are located but was not permitted by the security guard in the lobby of the building to go up to the offices of Kennedys but Mr Thornell came down to the lobby accompanied by another man who had the appearance of a law clerk and I assumed that he was accompanying Mr Thornell as a witness. I approached Mr Thornell and attempted to give to him two bank cheques totalling $130,000.00; both bank cheques were made payable to Kennedys Trust Account. The reason why there were two bank cheques instead of one is something that I am prepared to explain, should his Honour require an explanation. Further, if it will assist his Honour I am prepared to draft an affidavit and swear it to which I can annex the numerous correspondence detailing my efforts to pay the monies yesterday, which monies were not accepted. Should his Honour require such an affidavit, I should be obliged if you could advise me and I will attend to it immediately. I should also be grateful if you could acknowledge receipt of this email. (2) at 11.01 am Mr Muriniti sent a further email to, among others, the associate to the primary judge which attached copies of the bank cheques that he said he "attempted to give to Kennedys" and "which were not accepted"; (3) at 12.05 pm the associate to the primary judge sent an email to the parties seeking, by way of follow up, items that had been referred to at the hearing which were to be provided to the primary judge for completeness; and (4) at 12.18 pm Mr Thornell sent an email to, among others, the associate to the primary judge by which he provided a supplementary note prepared by counsel who appeared on behalf of Hughes and Mr Perrens. Mr Thornell also included the following in his email: We additionally refer to Mr Muriniti's email sent to his Honour's chambers at 10:29 AM today. We are in the process of seeking our clients' instructions with respect to the proffered payment. We do not hold instructions to either accept or reject the payment. That position was communicated to Mr Muriniti both prior to and at the time of his attendance at our offices yesterday afternoon. We expect to be in a position to advise the Debtor and his Honour as to whether our clients will accept that payment in the near future. 43 By letter dated 9 March 2017 Kennedys sought clarification from Mrs Young of a number of matters arising out of the proffer of $130,000 to their clients on 6 March 2017. Among other things, those inquiries concerned the source of the funds and, assuming that they were her sister's funds, the nature of any arrangement between Mrs Young and her sister in relation to those funds. 44 On 14 March 2017 L C Muriniti & Associates responded to Kennedys' letter of 9 March 2017. That letter included the following: You were in court on 9 December 2016. You have had the benefit of the affidavit of Eleanor Denise Schofield since on or about the 16 December 2016. As such, you have been aware that the monies referred to in that affidavit were the monies of Denise Schofield. You were aware from what passed in court on 9 December 2016 that the monies came from Ms Schofield on the basis that an argument would not then be raised that the payment to your clients might be a preference. As such they were not monies that were loaned to Mrs Young and thereby became impressed with the possibility of a later characterisation as a preference. Again, these questions do not arise in the known circumstances. If there were any doubt about that we note that no question was raised about the matter during the period from 9 December 2016 to 9 March 2017 in circumstances that your client or clients expected the proposal in the affidavit to be of crucial significance. On 3 March 2017 your clients did not seek to cross-examine either Ms Schofield or the debtor, Mrs Young in relation to the circumstances connected with the province and characterisation of the monies. Further your clients did not require either our client or Ms Scofield (sic) for cross-examination. Any pretended doubt about the matters now raised would have been dealt with by such crossexamination. You were also in court when his Honour commented on the payment of the monies by Monday, 6 March 2017 and the undertaking which was given by our client that the money would be paid on the 6 March 2017. You did not raise with his Honour the matters that you now purport to raise in your letter. The occasion to raise these matters was at that time at the latest. Without any waiver of our client's rights, we are instructed to advise that the monies which were proffered to you on the 6 March 2017 were a payment to your clients from Ms Schofields (sic). The monies were a payment by Ms Schofield with the intention that the payment would discharge the amount claimed in your clients' Bankruptcy Notice. The payment is made on the basis that it is not repayable to Ms Schofield but is a contingent payment with only one condition; i.e. that your client would be absolutely entitled to the money without any obligation to repay it to Ms Scofield (sic) unless our client, Mrs Young, were to succeed in the High Court and the lump sum cost order which was made by his Honour Garling J in favour of your clients is reversed. In which case as the basis for payment would cease to exist, Ms Schofields (sic) will be entitled to have the money refunded to her forthwith. If our client is unsuccessful in having the orders reversed, then your clients keep the money absolutely. The payment by Ms Scofield (sic) is not subject to any potential assertion of a preferential payment. It is not a loan to our client. The monies are paid to your clients with the intention that they discharge the debt, the foundation for the creditor's petition. The monies are paid to your clients in the expectation which follows as a matter of operation of law that monies paid in obedience to or consideration of a Court order which is later reversed shall be repaid by the judgment creditor. All of this is and has been self-evident. … Ms Scofield (sic) does not owe monies to anyone, she is completely debt free and there is no risk whatsoever of anyone making her bankrupt. So much is obvious from the affidavit and the circumstances that she is able to obtain $130,000 at short notice. It is equally obvious from your clients' decision to avoid cross-examination of Ms Schofield that your clients have been well aware of those matters. 45 While the associate to the primary judge received the emails referred to at [42] above by way of update, no further evidence was put before the court in relation to the purported proffer of the monies by Mrs Young. In his affidavit affirmed on 19 April 2017 Mr Muriniti deposes that: Because of what fell from his Honour and the fact that I informed his Honour's Associate of what occurred subsequently in terms of the efforts made to proffer payment and the non-acceptance of payment, I did not understand that I was required to do anything more than to inform his Honour's Associate of what had occurred. I did not understand that his Honour had an expectation that I would seek to relist the matter or that I would put on any further evidence other than to inform his Honour's Associate of what had occurred. 46 That evidence is at odds with the content of Mr Muriniti's letters referred to at [41(4)] and [41(6)] above in which he said that he would prepare an affidavit setting out the events and annexing all relevant correspondence relating to the proffer of the monies and that he would approach the court for leave to file and serve that affidavit. He did not do so. Further, in his first email to the primary judge's associate sent on 7 March 2017, Mr Muriniti offered to provide an affidavit. It was not a matter for the court to indicate whether it required such evidence. It is for those representing a party to determine how to best present their client's case. 47 There was no evidence before the primary judge of the "considerable efforts" by Mrs Young to offer Hughes and Mr Perrens security. Nor was there evidence of the offer of a sum of money to cover the debt claimed. As to the latter, the evidence that was before the primary judge amounted to no more than a conditional offer to make payment. This was followed by an exchange between the primary judge and Mr Newell to the effect that, if the proffer were made unconditionally, it would be a matter for Hughes and Mr Perrens to determine whether they would accept that offer. 48 Ground two of Mrs Young's notice of appeal contemplates an application for leave to adduce further evidence on the appeal. However, the proposed further evidence, insofar as it is made up of the material referred to above, does not establish that the payment was proffered and rejected, let alone that it was rejected because of an ulterior purpose as alleged. 49 In any event, even if it could be established that the monies were proffered and refused, the refusal of a tender by a creditor of payment of the amount owing after the presentation of a petition does not amount to "other sufficient cause" as to why a sequestration order ought not be made for the purposes of s 52(2)(b) of the Act: see International Alpaca Management Pty Ltd v Ensor [1999] FCA 72 (per Katz J) at [43]. Nor would it, of itself, be evidence of collateral or improper purpose.

Grounds 3 to 6, 10 and 11 50 These grounds concern the primary judge's refusal to adjourn the hearing of the creditor's petition. Mrs Young alleges that the judge erred: because he misapprehended the grounds of her October 2016 application for special leave to appeal so far as concerns the judgments of Garling J in Young v Hones (No 2) and Young v Hones (No 3) and further erred in assessing the prospects of the third application for special leave to appeal to the High Court; in holding that her third proposed application for special leave to appeal in relation to the orders made by Garling J was not genuine and arguable, thereby denying her an adjournment to prepare and conduct her application for special leave to appeal and in so doing denying her natural justice; and in holding that Mrs Young's proposed appeal from the decision in Young [2016] FCA 1176 was not genuine and arguable, thereby denying her an adjournment to prepare and conduct her application for special leave to appeal to the High Court. 51 Mr Newell submitted on behalf of Mrs Young that the primary judge misapprehended the basis of Mrs Young's Second SLA because he concluded that it was based on a contention that the decision in Attwells v Jackson Lalic Lawyers Pty Ltd [2016] HCA 16; (2016) 331 ALR 1 (Attwells) had changed the law, which Mr Newell said was not the basis of the application that she made. Rather, Mr Newell submitted that Mrs Young's application for special leave was based on the fact that the law had not changed. Mr Newell submitted that Mrs Young alleges that the High Court "made mistakes" in dismissing the Second SLA because it did not consider the "error of law ground". That is, the High Court did not consider whether the decision of Garling J in Young v Hones (No 2) and the decision in Young v Hones (Appeal) were affected by error because on a proper reading D'Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1 "had nothing to say about matters resolved by consent". 52 I turn first to deal with those submissions. It is not the case that the primary judge misapprehended the basis of Mrs Young's Second SLA. At [18] of his decision the primary judge did no more than to refer to Mrs Young's asserted justification for the Second SLA (see [13] above). His Honour did not apprehend or misapprehend the basis for the Second SLA or the decision of the High Court in Attwells. He merely observed that Attwells was, to adopt the submission made on behalf of Hughes and Mr Perrens, the launching pad upon which the Second SLA was brought. In any event, by the second day of the hearing of the creditor's petition, the Second SLA had been dismissed. 53 Mrs Young applied for an adjournment to allow her to file a third application for special leave to appeal the judgment in Young v Hones (Appeal) and a second application for special leave to appeal the judgment in Young v King [2016] NSWCA 282. The stated basis for those applications for special leave to appeal was an allegation that the High Court had breached the "judicial obligation and duty to give adequate reasons and sufficient content for those reasons in refusing special leave". In oral submissions Mr Newell contended that he had proposed, in fairness to the court and the parties, that the adjournment only be long enough to allow Mrs Young to put forward the grounds for her special leave applications so that the court could then properly decide whether the arguments were genuine and arguable. 54 The primary judge considered the application for an adjournment at [27] to [31] of his reasons (see [19] above). In that context the primary judge did not need to consider the decision in Attwells. Rather, his Honour considered the authorities concerning the nature of special leave applications and observed, on the basis of those authorities, that a special leave application is such that the High Court is not obliged to give reasons for either refusing or allowing special leave. 55 Mr Newell submitted that the primary judge was in error in determining that the further applications for special leave had no prospects of success because of the High Court's decisions. That submission is a nonsense. The primary judge is bound by those decisions. His Honour correctly referred to and applied them in the exercise of his discretion as to whether to grant an adjournment in the circumstances that were put to him by Mrs Young. Further, contrary to Mr Newells' submission, the primary judge did have regard to the decision in Wainohu v State of New South Wales (2011) 243 CLR 181, but noted that special leave applications in the High Court are "not normal litigation between parties". 56 Mr Newell submitted that the primary judge erred in denying Mrs Young an adjournment so that she could prepare and conduct an application for special leave in the High Court in relation to the decision in Young [2016] FCA 1176. Mr Newell further submitted that the primary judge erred in finding that Bromwich J gave adequate reasons for his decision. He submitted that it was "simply wrong to hold as a matter of law that Bromwich J's decision could possibly contain adequate reasons". 57 The primary judge considered Mrs Young's application for an adjournment on that basis at [32], finding that any such special leave application was "also doomed to failure". His Honour found that Bromwich J's judgment was "detailed and reasoned" and that he could "not conceive of a successful argument that its content [was] inadequate or in some respect lacking". In my respectful opinion, it is difficult to discern any error in the primary judge's conclusion in that regard. Nor do I consider there to be error in the primary judge's refusal to grant an adjournment of the creditor's petition to allow Mrs Young to file and have determined an application for special leave that sought to appeal on the basis that the reasons in Young [2016] FCA 1176 were inadequate. 58 Ground 11 of Mrs Young's notice of appeal is difficult to understand. It appears to set out the circumstances in which the primary judge is said to have erred in the holding that the proposed appeal from the decision in Young [2016] FCA 1176 was not genuine and arguable. Mr Newell informed the Court that he was not in a position to argue subparagraph (b) but that he was in a position to argue subparagraph (c). He submitted that the primary judge assumed that the appeal in Young v King (No 9) had been dismissed at the date of his Honour's judgment, at which time it had not been dismissed and was a live claim. Mr Newell further submitted that there was an issue, first and foremost, that Mrs Young would expect arguably to recover substantial monies under that judgment; and, secondly, because there was active litigation in the Court of Appeal, it would militate against the suggestion made by the primary judge at [58] of his reasons that costs orders would be enforced in the immediate future because they could not be enforced unless the appeal was unsuccessful. 59 Mr Newell relies on [16] of the primary judge's decision in support of his submission that the primary judge misapprehended the status of the appeal in Young v King (No 9). There the primary judge refers to the fact that on 19 October 2016 the Court of Appeal delivered its judgment in Young v King [2016] NSWCA 282 and that Mrs Young "lost in every respect". The primary judge noted that the Court of Appeal had found that there was "not a skerrick of evidence" for the alleged conspiracy involving Mr and Mrs King, Mrs Young's former advisers and Warringah Shire Council and that there was no basis to interfere with or grant any relief with respect to the decisions of Sheahan J in Young v King (No 6) or Young v King (No 9). But, as Mr Newell conceded in argument, the judgment of the Court of Appeal in Young v King [2016] NSWCA 282 was concerned with an application for leave to appeal from two judgments of Sheahan J: that given in Young v King (No 6) and that given in Young v King (No 9) insofar as it concerned Mr and Mrs King. The primary judge, in describing the outcome of the Court of Appeal's judgment, does not say that the appeal from Young v King (No 9) was dismissed. There was no misapprehension on the part of the primary judge. 60 Mr Newell submitted that, in any event, the primary judge's reliance at [58] of his decision on Mrs Young's liability for legal costs arising out of the various legal proceedings, which if taxed or assessed would become debts payable in the reasonably immediate future, was misplaced. This was said to be so because, first, there had been no taxation or assessment of those costs and it was improbable that a taxation or assessment would proceed while an appeal was on foot; and, secondly, the primary judge had not taken into account the money that would come to Mrs Young if her appeal from the judgment in Young v King (No 9) was successful. But there is no stay of the costs orders that have been made in various parties' favour as a result of the unsuccessful litigation that Mrs Young has pursued over the past 14 years. As the primary judge observed, steps could be taken to tax or assess those costs at any time. Further, it does not follow from the mere existence of an appeal that those costs orders would be set aside. That would depend on the success of the appeal and the extent to which the appeal set aside any existing costs orders. Whether Mrs Young would be the recipient of funds would again depend on the success of her appeal.

Grounds 7 to 9 61 These grounds allege that the making of the sequestration order was futile because there could be no assets available for division among creditors in light of Mrs Young's solicitor's costs and the fact that security was held by her solicitor over her only significant asset, the Forestville Property. In support of these grounds Mrs Young submitted that the costs of the bankruptcy would exceed any return to creditors while destroying the very significant assets that the estate has in the form of choses in action. Mrs Young further submitted that it was entirely unrealistic to contemplate that those important actions would be pursued by the trustee. There is no evidence to support these grounds and, as submitted by Hughes and Mr Perrens, none was put below.

Proposed grounds 12 and 13 62 By these grounds Mrs Young alleges that the primary judge erred in determining that the debts she owed to her sister and her solicitor, Mr Muriniti, were debts that were due and payable by her for the purposes of s 52(1) of the Act and that the primary judge's discretion to dismiss the creditor's petition miscarried in that he failed to have regard to the particular actual circumstances of those debts. 63 In support of those grounds Mrs Young submitted that the primary judge's discretion under s 52 of the Act miscarried because he concluded that by reason of the amounts owed to Mr Muriniti and her sister she could not pay her debts. Mrs Young contended that the primary judge drew this conclusion from the fact that Mr Muruniti did not depose that he was not pressing for payment. She contended that the primary judge's fact finding miscarried because Mrs Young's evidence as to that matter was unchallenged. She further contended that the objective facts, which she alleged were not considered, spoke of circumstances that compelled the inference that those debts were not due and payable within the meaning of the statutory test because they spoke of a common sense and easily recognised arrangement acceded to over many years according to which the fees would be deferred to enable Mrs Young to obtain justice. 64 Mrs Young submitted that, in relying on the decision of Edelman J in Hussain v CSR Building Products Ltd (2016) 246 FCR 62 (Hussain) at [63], the primary judge applied the wrong test of when a debt is due and payable. Mrs Young further submitted that it was apparent from the judgment in Hussain that the question of when a debt is due and payable is far from settled and that the correct line of authority underscores that the objective facts need to be considered on the basis that whether a debt is due and payable does not turn upon "a question of law to be decided by the application of a rigid rule", relying on Re New World Alliance Pty Ltd (Receiver and Manager Appointed); Sycotex Pty Ltd v Baseler (No 2) (1994) 51 FCR 425. 65 There was no evidence before the primary judge that the debts owing to Mr Muriniti and Mrs Young's sister were not due and payable. The primary judge referred to the available evidence. He noted that Mr Muriniti did not give evidence that he was not pressing for payment of his $3 million debt for legal costs and that the only evidence before the court was the mere assertion by Mrs Young that Mr Muriniti was not pressing for that debt. In those circumstances his Honour noted that there was no estoppel, waiver or preclusion from Mr Muriniti enforcing the debt forthwith. In relation to the debt owing to her sister Mrs Young again said that her sister was not pressing her for payment. But Mrs Young's sister, Mrs Schofield, who had sworn an affidavit in the proceeding, had not herself said that she was not pressing for repayment or given any evidence concerning her attitude as to the payment of the debt. 66 In the context of the question before him, that is, whether Mrs Young was solvent, the primary judge referred to the judgment in Hussain where Edelman J said at [63]: There is considerable authority that supports the conclusion that an assessment of when debts are due and payable is based upon when those debts are legally due. In Lee Kong v Pilkington (Australia) Ltd (1997) 25 ACSR 103 at 112, in the Full Court of the Supreme Court of Western Australia, Owen J said that whether or not a 'debt' is 'due' is to be determined with reference to the legally binding agreement between the parties and not with regard to any reluctance by creditors to enforce legal rights. In other words, it does not matter even if it is unlikely that a creditor will enforce its debt because the statutory test is whether the debt is due and payable. See also Re Toowong Trading Pty Ltd (in liq) [1989] 1 Qd R 207 at 211 (Ryan J); Standard Chartered Bank of Australia Ltd v Antico (Nos 1 & 2) (1995) 38 NSWLR 290 at 331; 131 ALR 1 at 73-4 (Hodgson J); Southern Cross Interiors Pty Ltd (in liq) v Deputy Commissioner of Taxation (2001) 53 NSWLR 213; 188 ALR 114; 39 ACSR 305; [2001] NSWSC 621 at [54] (Palmer J). (original emphasis) 67 Mrs Young relies on [64]-[65] of Hussain to support her argument that the authorities in this area are far from settled and that, in any event, the primary judge ought to have considered the "objective facts". At [64]-[65] Edelman J said: 64 On the other hand, in Manpac Industries Pty Ltd v Ceccattini (2002) 20 ACLC 1304; [2002] NSWSC 330 at [40]-[41] Young CJ in Equity repeated his earlier remarks in Hamilton v BHP Steel (JLA) Ltd (1995) 13 ACLC 1548 as follows: [40] … when one is applying the cash flow test, it is relevant to take into consideration the relationships between creditor and debtor, any agreement and the course of conduct. In Hamilton I indicated that that course of conduct may mean that despite what is written on the invoices etc as to time for payment, industry practice or dealings between the parties demonstrate that everyone accepts that debtors will often not pay creditors within normal trading terms. In business circumstances sometimes it is quite necessary in an industry which is experiencing recession because otherwise creditors may not be able to sell their product at all. Even though they would prefer people to stick to their 30-day terms it is better to have recalcitrant debtors than sell no product at all. [41] What I said in Hamilton seems to have been developed into a much stronger statement by counsel in Emwest Products Pty Ltd v Olifent (1996) 22 ACSR 202 at 209-210; 14 ACLC 1826 at 1832-3 and in Southern Cross at [46]-[49]. However, if what is said in Hamilton is properly examined, it will be seen that the proposition expounded is not only quite in accordance with authority, but is also good commercial and legal commonsense. 65 I doubt whether Young CJ in Equity intended by these remarks to suggest that the test for insolvency permits debts to be disregarded if they are legally due for payment. Instead, the point that his Honour was making was that a course of conduct between the parties might reveal an implied waiver of the obligation to pay the debt when it falls due. That waiver can be revoked if it has not been relied upon but otherwise it operates as a doctrine "introduced by the law to prevent a man in certain circumstances from taking up two inconsistent positions ... It looks, however, chiefly to the conduct and position of the person who is said to have waived, in order to see whether he has 'approbated' so as to prevent him from 'reprobating'": Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Limited (2013) 250 CLR 303; 303 ALR 199; 50 Fam LR 353; [2013] HCA 46 at [31] (the Court) quoting Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305 at 326 (the Court). 68 There was no apparent misapplication of the test by the primary judge. His Honour found on the facts before him that in the case of the debt owing to Mr Muriniti there was no estoppel, waiver or preclusion from enforcement of that debt. Further, there was simply no evidence that the debt owing by Mrs Young to Mrs Schofield was not due and payable.

the balance of convenience 69 Despite my conclusion that there is no arguable point on the appeal, I have also considered the balance of convenience. 70 Mrs Young submitted that there could be no prejudice to Hughes and Mr Perrens or other creditors if a stay of proceedings under the sequestration order pending the hearing of her appeal was granted. This was said to be so because of her financial circumstances. She submitted that on the other hand there was potential for her to suffer "draconian circumstances" if the proceedings, which I understand to refer to proceedings under the sequestration order, were allowed to continue in the interim. Mrs Young further submitted that her trustee in bankruptcy may be called upon to sell her home, which would be of enormous consequence to her generally and have the potential to defeat her claims, which depended in large part upon her standing to sue and the preservation of the evidence going to the issues of drainage and the "manipulation of drainage circumstances" on her land. 71 Mrs Young also submitted that there was a risk that a District Court proceeding, which was commenced in 2007 to "protect time", would be abandoned by a request for an election under s 60(2) of the Act by either Mr and Mrs King or the Council. Mrs Young contended that those proceedings are critical to the possibility of her obtaining justice in due course. She contended that it was material that her claims based on fraud were not extinguished by the bankruptcy so that the preservation of evidence does not become irrelevant by reason of the sequestration order. 72 The position in which Mrs Young finds herself is unfortunate. But the balance of convenience does not in any event favour her. Hughes and Mr Perrens have been creditors for some time. They are not the only creditors. There is an element of public interest to be considered which militates against a stay. 73 Mrs Young's desire to pursue her litigation does not tip the balance in her favour. She has pursued her litigation since 2004 without success. The trustee can make an election to continue to pursue those proceedings: s 60(2) of the Act. Presumably Mrs Young's trustee would consider whether any of the proceedings currently on foot should be pursued for the benefit of the estate. There was no evidence of any communication with the trustee in that regard. 74 Mrs Young's submission that a sale of her house would mean that the evidence the subject of her claim would not be preserved is unsustainable in circumstances where she has been engaged in proceedings for 14 years and in that time has had ample time to attend to the preparation of any evidence. 75 The potential sale of Mrs Young's only significant asset is the one issue of concern. There is no evidence that the sale is imminent, when it might take place and whether it will occur prior to determination of the appeal. But, in any event, the possible sale of Mrs Young's house is not sufficient to shift the balance of convenience.

conclusion 76 In light of the matters set out above Mrs Young's application for a stay should be dismissed with costs. The proceeding should be listed for a case management hearing for the allocation of a date for the hearing of the appeal. I will make orders accordingly. I certify that the preceding seventy-six (76) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Markovic.

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