Young v Hughes Trueman Pty Ltd

The PRIMARY JUDGE'S decision 6 The primary judge found that the evidence relied on by the Respondents was prima facie sufficient to prove their entitlement to a sequestration order against Mrs Young's estate. His Honour also noted that Mrs Young admitted that she had committed an act of bankruptcy when she failed in her application to set aside the bankruptcy notice and that she made no submission that there were any defects in the Respondents' evidence: Primary Judgment at [4]. 7 The primary judge then turned to consider Mrs Young's notice of opposition to the creditor's petition (Notice of Opposition) which included 11 grounds. At [6] his Honour summarised those grounds into three categories as follows: a) An assertion at [1]-[9] that the debtor intended within a further 14 days to seek special leave to appeal to the High Court of Australia from the decision of Garling J of 1 May 2014 ordering the judgment debt in the sum of $110,000 in Young v Hones (No.3) which, with accrued interest, amounted to the sum of $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 for success, the debt of $128,838.63 would be extinguished and the debtor would consequently be in a position to litigate a negligence claim against the creditors and others to judgment on the merits. b) At [10] there was an assertion of solvency in that the debtor was able to discharge all of her financial obligations as and when they fell due. c) At [11] there was an assertion that the bringing of the Creditors Petition was maintained for a purpose "other than the recovery of money or to secure legitimate protection for a body of creditors". 8 The primary judge set out the background facts and the events leading up to the hearing of the creditor's petition. Relevantly his Honour noted at [17]-[25] that: (1) the creditor's petition had first come before him for directions on 14 October 2016 at which time Mrs Young's solicitor informed the Court that Mrs Young intended to file a second application for special leave to appeal to the High Court of Australia (High Court) from the decision of the New South Wales Court of Appeal (Court of Appeal) in Young v Hones [2014] NSWCA 337 (Young v Hones Appeal) which had dismissed an appeal from the judgment in Young v Hones (No 2) (Second SLA). It was the second application for special leave because Mrs Young had previously applied for and been refused special leave to appeal from Young v Hones Appeal by the High Court: see Young v Hones [2015] HCASL 73; (2) consistent with that proposal Mrs Young filed an application in a case which sought an adjournment of the creditor's petition for 14 days to enable her to file the Second SLA and a further adjournment until the Second SLA had been determined by the High Court; (3) the creditor's petition, the application to file the Notice of Opposition and the application in a case were set down for hearing on 9 December 2016. The hearing on that day was not concluded and was adjourned to 3 March 2017. In the interim the Second SLA was refused by the High Court: see Young v Hones [2017] HCASL 27; and (4) at the resumed hearing Mrs Young's solicitor informed the primary judge that the High Court had dismissed the Second SLA and a further application for special leave to appeal from the decision of the Court of Appeal in Young v King [2016] NSWCA 282: see Young v King [2017] HCASL 28. He also informed the court that Mrs Young intended to bring further applications for special leave to appeal each of Young v Hones [2017] HCASL 27 and Young v King [2017] HCASL 28 on the basis that the High Court had breached the judicial obligation and duty to give adequate reasons in refusing special leave and to bring an application for special leave to appeal the decision in Hughes Trueman on the basis that there had been a breach of the judicial "duty to give reasons of a certain kind" in that decision. 9 Relying on the three foreshadowed special leave applications Mrs Young twice sought an adjournment of the hearing of the creditor's petition. Those applications were refused by the primary judge on the basis that the Respondents were entitled to have their petition finally determined and because, in his Honour's opinion, the foreshadowed further applications for special leave to appeal were manifestly hopeless: Primary Judgment at [26]. 10 The primary judge considered that the foreshadowed special leave applications in relation to Young v Hones [2017] HCASL 27 and Young v King [2017] HCASL 28 were wholly lacking in merit, doomed to failure, not based on genuine and arguable grounds and had no reasonable prospect of success. His Honour referred to the authorities that established that a special leave application in the High Court is not normal litigation between parties and that the High Court is not obliged to give reasons for either refusing or allowing special leave. His Honour found that the foreshadowed applications could not satisfy the basis for the reopening of a special leave application as stated by Kirby J in Re-Sinanovic's Application (2001) 180 ALR 448; [2001] HCA 40 (Re Sinanovic) at 451: Primary Judgment at [27]-[31]. 11 The primary judge also considered that the proposed special leave application in relation to Hughes Trueman was doomed to fail: Primary Judgment at [32]. 12 The primary judge turned to consider the remaining grounds of opposition. In relation to Mrs Young's assertion that she was solvent, the primary judge found that she had not led "realistic and probative evidence" which would establish that fact. His Honour noted that Mrs Young is the owner of a residential property at Forestville (Forestville Property) and that the evidence before the court of its value was deficient but, notwithstanding that, he was prepared for the purpose of the proceeding to assume that Mrs Young could sell the property for around $1.2m within a relatively short time: Primary Judgment at [41]-[45]. 13 The primary judge found that Mrs Young was heavily indebted to a number of creditors including: St George Bank for approximately $90,000 secured by way of a first registered mortgage over the Forestville Property; and her solicitor, Mr Muriniti, for approximately $3m secured by way of an unregistered mortgage and caveat over the Forestville Property. In relation to the latter debt Mrs Young asserted that Mr Muriniti was not pressing for payment of those fees: Primary Judgment at [46]-[48]. 14 The primary judge noted that Mr Muriniti had never stated that he was not pressing for payment of his fees although in a letter dated 10 October 2016 to the Respondents' solicitors, Mr Muriniti set out Mrs Young's offer, which was not accepted, to secure the judgment debt by way of an unregistered mortgage over her home with priority over the security held by him. That offer was conditional on the unregistered mortgage offered to the Respondents being unenforceable "until all proceedings against [the Respondents] have been exhausted". The primary judge concluded that the only evidence before the court was the mere assertion by Mrs Young that Mr Muriniti was not pressing for payment, unconfirmed by Mr Muriniti himself. His Honour found that in those circumstances there was no estoppel, waiver or anything precluding Mr Muriniti from enforcing the debt forthwith. The primary judge also found that, because of the principle explained in Hussain v CSR Building Products Ltd (2016) 112 ACSR 507; [2016] FCA 392 (Hussain) at [63], Mrs Young would not have been assisted in her argument that she was solvent even if Mr Muriniti had provided evidence that he was not pressing for payment of the $3m debt: Primary Judgment at [49]-[51]. 15 The primary judge then considered other debts owing by Mrs Young finding that, on her own admission or pursuant to judgments, she owed various creditors approximately $3.9m and that she 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 Bankruptcy Act 1966 (Cth) (Act): Primary Judgment at [52]-[57]. 16 The primary judge also found that the evidence established that Mrs Young had liabilities of at least some hundreds of thousands of dollars for legal costs arising out of various legal proceedings since 2003. His Honour observed that those costs had not yet been taxed or assessed but, at the option of the parties having the benefit of those costs orders would become debts payable in the reasonably immediate future which Mrs Young could not pay. The primary judge took those outstanding liabilities into account as a factor in the exercise of his discretion not to dismiss the creditor's petition but rather to make a sequestration order. 17 Finally, the primary judge considered the allegation that the creditor's petition was maintained for an improper purpose and found that there was no evidence to support that allegation. His Honour found that there was no evidence that the Respondents had presented the creditor's petition for any purpose other than the legitimate one of pursuing an appropriate remedy of recovery of monies owing to them: Primary Judgment at [60].

the notice of appeal 18 In her second further amended notice of appeal Mrs Young raises the following grounds: 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 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. 8. The Applicant was denied procedural fairness in that the learned primary judge pre-empted or prevented a cross-examination of Michael Thornell on behalf of the Applicant which cross-examination was calculated to elicit evidence of the Respondent's collateral purpose in pressing an application for sequestration against the Applicant. 9. The learned primary judge erred in deciding that the debts which are owing to the appellant's sister and to the appellant's solicitors, Leonardo Carlo Muriniti, were debts that were due and payable by the appellant notwithstanding that the evidence before the court was that neither the appellant's sister nor the appellant's solicitors were pressing for payment. 10. 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 particulars actual circumstances of the lawyer's debt and the sister's debt.

Grounds 1, 2 and 8 19 It is convenient to consider these grounds together. 20 By ground 1 Mrs Young alleges that the primary judge erred in finding that there was no evidence that the Respondents were actuated by a collateral or improper purpose in advancing the creditor's petition and by ground 8 she alleges that she was denied procedural fairness because the primary judge either pre-empted or prevented a cross-examination of Michael Thornell, a solicitor in the employ of Kennedy's (the solicitors for the Respondents) which was calculated to elicit evidence of the Respondents' collateral purpose. 21 Ground 2 seeks an order that Mrs Young is entitled to adduce further evidence of the alleged collateral purpose. That order was also the subject of an interlocutory application filed by Mrs Young. The Respondents objected to the tender of the evidence which was in exhibits LCM-1 to LCM-18 to Mr Muriniti's affidavit sworn on 8 August 2017 (August Affidavit). I did not make a ruling on the interlocutory application as the parties agreed that the question of whether Mrs Young should be permitted to rely on the additional evidence should be determined as part of the appeal. 22 Mrs Young submitted that there was in fact evidence of a collateral purpose before the primary judge and that his failure to have regard to that evidence was an error of law. She contended that the evidence included her considerable efforts to offer the Respondents security and that those efforts, which were made to protect their expectation of recovery, did not elicit any cooperation. Mrs Young further contended that was significant in light of the uncontested position that her debts were such that there was no question of any recovery for the Respondents or for a rateable distribution among Mrs Young's creditors if a sequestration order was made. 23 Mrs Young also submitted that a sum of money was offered to the Respondents to cover their claimed debt immediately after the High Court's refusal of leave to appeal. It is in relation to that matter that Mrs Young seeks to adduce further evidence. Mrs Young contended that her tender was refused by the Respondents at a time when they insisted that her debts amounted to over $5m and that, in those circumstances, the Respondents dissembled in relation to the tender such that non-acceptance was contrary to their legitimate interests. 24 Mrs Young submitted that the only conclusion that could be drawn was that the Respondents sought to place her at risk of bankruptcy for undisclosed reasons unconnected to the potential recovery of money and that it is a small step to infer that they intended to turn her against her lawyers. That is, Mrs Young contended that the Respondents were moved by a collateral purpose namely that the sequestration order would incapacitate Mrs Young from conducting her litigation against the Respondents. 25 Mrs Young submitted that the further evidence that she seeks to adduce, which did not come into existence until after the hearing before the primary judge on 3 March 2017, emerged in circumstances where it appeared plain to her that the primary judge would act upon the correspondence provided to him at his request. Mrs Young said this is so because at the hearing the primary judge sought to be informed immediately by the parties of the outcome of the proposed tender but that it appears he did not consider it appropriate to incorporate the facts disclosed by the parties in post hearing correspondence in his judgment. 26 Mrs Young also submitted that the claim to adduce further evidence was supported by the fact that she attempted to adduce evidence of the Respondents' attitude to acceptance of the tender of money in the course of the hearing and was prevented from doing so. She contended that her solicitor advocate, Mr Newell, attempted to cross-examine Mr Thornell in relation to a suggestion in the Respondents' submissions that the monies deposited by Mrs Schofield did not conform to her promise to provide funds. Mrs Young submitted that cross-examination was calculated to explore collateral purpose generally but that she was cut off by the primary judge in a manner which amounted to a denial of procedural fairness and that she was not permitted to pursue questions which were calculated to explore whether the Respondents, by reason of their intentions in relation to the proposed tender, were moved by a collateral purpose. 27 Mrs Young submitted that the further evidence annexed to the August Affidavit showed a "studied prevarication inconsistent with any legitimate purpose for which a sequestration order might have been pursued" and that the evidence was of an "unacceptable and necessarily disingenuous delay in responding to the attempted tender of monies in discharge of the debt on which the bankruptcy notice was based". She further submitted that the Respondents clearly did not want to be paid or they would have accepted the tender of the monies and that, while they did not have an obligation to accept the tender, they obfuscated rather than frankly refusing it, suggesting that there was no commitment to a sequestration order for the benefit of the body of creditors. 28 Mrs Young's submissions raise three issues. The first concerns the effect of the offers of security made by Mrs Young to the Respondents and whether the rejection of those offers was evidence of a collateral purpose. In relation to the offer of security Mrs Young first referred to a letter dated 30 September 2016 (September Letter) from Mr Muriniti to Kennedys Law which included, among other things: We have been instructed by our client to offer your client security for the costs awarded to them by his Honour Garling J in the Supreme Court. The security which our client is prepared to offer is an unregistered second mortgage over her home which can be noted on her title by way of a caveat. This firm and its principal are prepared to postpone their security over your clients' property in preference to the mortgage offered to your clients such that your clients would have priority ahead of our security over our client's property. If your client's (sic) are prepared to accept this offer, our client will expect that all proceedings against her presently before the Federal Circuit court be discontinued. 29 However, the September Letter cannot be read in isolation. On 4 October 2016 Mr Muriniti sent an email to Mr Thornell referring to the offer made in the September Letter and stating: In relation to that offer and by way of clarification, the term of the unregistered mortgage which our client is offering would be until all proceedings presently on foot and any other proceedings which may be commenced against your client by our client have been exhausted. 30 On 10 October 2016 Mr Muriniti sent a further letter to Mr Thornell in which, among other things, he repeated the offer in the September Letter as modified by his subsequent letter stating: In the meantime however, we have been instructed by our client to offer your client security in relation to the costs order made in your client's favour by His Honour Garling J. That security is being offered by way of an unregistered mortgage over her home which mortgage will have priority over the security presently held by this firm over our client's property. This can be done by way of a postponement of our security in favour of our client. Naturally, the security is offered on the basis that no attempt will be made to enforce it until all proceedings against your client have been exhausted. 31 In considering the offer the primary judge noted that it was conditional and that "[i]n the context of the storm of litigation between the creditors and others" with Mrs Young, it was an offer that was unlikely to be and, in fact was not, accepted. That was so. The Respondents could not take any steps until Mrs Young had exhausted "all proceedings" against them. Those proceedings were not identified and presumably included both proceedings on foot and any that might be commenced in the future. The offer was rejected by the Respondents. That rejection was not evidence of a collateral purpose. It was no more than a decision not to accept what was, in effect, a meaningless offer of security that may be enforceable at some unspecified time in the future. 32 The second issue concerns the evidence of Mrs Schofield, Mrs Young's sister. In the course of the first day of the hearing before the primary judge, Mrs Young's solicitor sought leave to file an affidavit to be provided by Mrs Young's sister deposing to her financial capacity to pay the money owing to the Respondents immediately upon or very promptly after the dismissal of the Second SLA. As it was clear that the hearing would not finish on that day, the primary judge did not need to determine the issue of whether an adjournment should be granted to allow the filing of such an affidavit. At the conclusion of the day's hearing the primary judge stood the matter over to 3 March 2017; ordered Mrs Young to file and serve any affidavit within seven days which she was minded to rely on of her sister, Mrs Schofield; and directed that, within a further seven days, the parties confer and agree upon orders to be sent to the primary judge's chambers concerning whether the Respondents wished to put on any evidence in reply to Mrs Schofield's evidence and advising whether they wished to cross-examine Mrs Schofield at the adjourned hearing. 33 In the court below Mrs Young relied on an affidavit affirmed by Mrs Schofield on 16 December 2016 in which 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 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. … 6. On 15 December 2016 I transferred an amount of $130,000 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. … (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 … 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. 34 In oral submissions Mr Newell described Mrs Schofield's evidence as a "bona fide proposal which … is later disingenuously said not to be understood". Mrs Schofield's evidence is a statement that monies have been placed into an account and will become available if certain preconditions are met at some time in the future, namely, that Mrs Young fails in the proceedings she had commenced in the High Court. In my opinion, it does not amount to an offer capable of acceptance. 35 In support of the proposition that the proposal was "disingenuously misunderstood", Mrs Young relied on the following cross-examination by Mr Newell of Mr Thornell which took place on the second day of the hearing after Mrs Schofield's affidavit had been filed and served: Mr Newell: Is it true to say that the debtor was going to offer to meet what you would call all of the debtor's obligations with the affidavit of Denise - - - His Honour: I don't understand the question and I doubt whether the witness does. Can you put it again. You were asking him for his understanding of - - - Mr Newell: Okay. The statement - I will read it out: When the matter was before the court on 9 December 2016, the debtor indicated she was to serve an affidavit from her sister setting out an offer to meet the debtor's obligations. … Mr Newell: Is that correct? Mr Thornell As I - as I recall what occurred on the last occasion, that is correct. Mr Newell: Right. So when you say, does not - in the next sentence you say: It does nothing to address the full amount owed by the debtors to the creditors. What amount are you referring to? His Honour: Well, we don't even know - this is Mr Gray's document. Mr Newell: I thought he said he agreed with it. His Honour: Well, he may agree with it. Well, if Mr Gray is not objecting - - - Mr Gray: I'm ..... the way it is, because I am conscious of time and I want to get on with this - - - His Honour: So am I. Ask the question again. The witness can deal with it as best he can. Mr Newell: What is this full amount that you say that wasn't dealt with in her sister's affidavit? Mr Thornell: I would say costs orders that your client would be well aware that she owes to my clients over the course of the past, at least, five years of litigation that she has been involved in. Mr Newell: And you suggest that you understood- did you understand that that's what the amount to be paid into an account by her sister was to cover? Mr Thornell: I don't quite understand the question. Sorry. Can you repeat it. Mr Newell: You're saying here there's a deficit, aren't you, of expectation in the amount that - what's her name -what's her last name? Mr Thornell: Ms Schofield. Mr Newell: Sorry? Mr Thornell: Ms Schofield. Mr Newell: Schofield. Denise Schofield swore that she had put into an account for the benefit of your client? Mr Thornell Yes. Mr Newell: Yes. And the deficit is you thought she was promising to put in an amount covering all kinds of other obligation other than the debt the foundation for this petition? Mr Thornell: Correct. Mr Newell: You understood that? Mr Thornell: That is how I understood it because these were debts that - in relation to the creditor's petition there are debts that are due and owing and will shortly be due and owing in relation to this matter. Mr Newell: How did she think she was able to calculate such a sum? Mr Thornell: She could have asked. Mr Newell: Sorry? Mr Thornell: She could have asked. Mr Newell: And when you receive the affidavit, did you read it? The affidavit of Ms Schofield? Mr Thornell: I did. Mr Newell: And did you then communicate to Mr Muriniti that the affidavit did not fulfil the understanding delivered to you in the court on 9 December? Mr Thornell: It wasn't an offer that was made to my clients. It was an undertaking to the court. 36 Mrs Young submitted that the evidence demonstrated that the Respondents were attempting to "change the goal posts" from what was agreed on the first day of the hearing and that they were looking for excuses not to deal with Mrs Schofield and the proposal in her affidavit. That is not established by the evidence that was before the primary judge. On 9 December 2016 the primary judge granted leave to Mrs Young to file an affidavit of her sister on which she intended to rely. Mr Thornell's evidence in cross-examination identified that Mrs Young was indebted to the Respondents over and above the judgment debt claimed in the bankruptcy notice. Accepting that Mr Newell foreshadowed on the first day of the hearing that Mrs Schofield would provide evidence of her "ability to pay the judgment" would not bind the Respondents in any way or oblige them to accept that evidence or what was proposed by it. Mrs Young simply put a proposal to the court to provide such evidence. 37 There is no evidence that the Respondents were "moving the goal posts" or that they "disingenuously" did not understand what the proposal would entail. The proposal was one put by Mrs Young relying on Mrs Schofield's evidence. It was then a matter for the Respondents to determine whether that proposal provided an acceptable basis for resolution of the proceeding. 38 The third issue concerns the evidence exhibited to the August Affidavit which is the subject of Mrs Young's application to adduce further evidence on appeal and ground 2. That application is opposed by the Respondents. The further evidence that Mrs Young seeks to adduce comprises correspondence variously between the solicitors for Mrs Young, the solicitors for the Respondents and the associate to the primary judge dated between 6 and 14 March 2017. That is, it is correspondence that passed between those parties after the second day of hearing before the primary judge but before judgment was given. The details of that correspondence are set out in Young FCA (No 2) at [41]-[44]. 39 In support of the application to adduce further evidence Mr Muriniti deposes at [6]-[7] of the August Affidavit that: 6. … The reason that the evidence in question was not adduced at the hearing on 3 March 2017 before the primary judge because it did not exist at the time. His Honour wished to be informed of certain developments concerning attempts to present payment of the monies which were the subject of the Creditors' .Petition to the Respondents and that the information so provided to his Honour would be information, which his Honour would have regard to in the deliberation of the matter. 7. An additional reason that the evidence was not adduced is that there had been an attempt to adduce evidence at the hearing which was rejected. At the hearing on 3 March 2017 there was an attempt by Mr Newell on behalf of the Applicant to cross-examine Mr Thornell who gave evidence on behalf of the Respondents. That cross-examination was intended to elicit evidence of the Respondents (sic) collateral purpose. … 40 It was submitted that Mr Muriniti understood, because of an exchange with the primary judge, that the primary judge had an expectation that, once the money which Mrs Schofield had put aside in accordance with the undertaking she gave to the Court was proffered to the Respondent's solicitors, he was to inform the primary judge's associate about what occurred. Mr Muriniti says he did in fact inform the primary judge's associate of what exactly had occurred and that he understood that the communications by the parties with the primary judge's associate as to tender and non-acceptance of monies was before the primary judge for the purposes of his judgment. Mr Muriniti also says that he offered to prepare an affidavit deposing to the events that had occurred but as he received no response to that offer he took no further steps to do so. 41 The relevant exchanges with the primary judge relied on by Mrs Young are: 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? Mr Newell: Yes, your Honour. 42 Mrs Young's application to lead fresh evidence is made pursuant to s 27 of the Federal Court of Australia Act 1976 (Cth) which relevantly provides that in an appeal the Court shall have regard to the evidence given in the proceedings out of which the appeal arose and has the power to draw inferences of fact and, in its discretion, receive further evidence. 43 I accept that the evidence which Mrs Young now seeks to adduce only came into existence after the conclusion of the hearing. However, that of itself is not a sufficient reason to allow Mrs Young to adduce the further evidence particularly having regard to the following factors: (1) that the primary judge observed that his associates would be informed of the result of any tender did not mean he would have regard to the correspondence that was provided by the solicitors for Mrs Young absent it being put into evidence. It was not a matter for the court to tell Mrs Young or those that advised her whether an affidavit was required; (2) Mrs Young was legally represented by experienced solicitors throughout the proceeding before the primary judge and it was a matter for those advising Mrs Young to determine how best to represent her interests. Indeed, in a letter dated 6 March 2017 from L C Muriniti & Associates to Kennedys Law, which is included in the correspondence the subject of the application, Mr Muriniti says, among other things: 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. (3) the evidence could have been adduced before the primary judge. It was open to Mrs Young to apply to reopen her case to lead further evidence. She did not. 44 Putting those matters to one side, in my opinion, the evidence that Mrs Young seeks to adduce does not have sufficient probative value that it would be likely to have produced a different result had it been presented at the trial: see Murdaca v Accounts Control Management Services Pty Ltd [2007] FCA 577 at [6]. Mrs Young seeks to rely on the proposed further evidence to establish a collateral purpose on the part of the Respondents in pursuing the creditor's petition. However the evidence does not rise to the level asserted by Mrs Young at [27] above. It does not establish any alleged illegitimate or collateral purpose nor prevarication on the part of the Respondents. 45 For those reasons I reject Mrs Young's application to adduce the further evidence exhibited to the August Affidavit. 46 I turn then to consider ground 8. Mrs Young alleges that she was denied procedural fairness because the primary judge pre-empted or prevented a cross-examination of Mr Thornell which was calculated to elicit evidence of the Respondents' collateral purpose. The cross-examination in question, which followed the cross-examination set out at [35] above, relevantly included: Mr Newell: Well, the submissions that she indicated that she would do something? Mr Thornell: Yes. Mr Newell: And did you communicate she had not done, in your opinion or the opinion of your firm or client what she indicated she would do? His Honour: Well, why should he have to? Mr Newell: If it's - he would have - well, I don't want to say - - - His Honour: What has this got to do with any issue in the case? Mr Newell: It has to do with why the - it has to do with why the purpose in remaining silent and standing by and telling the debtor at the last minute that we're actually going to throw other matters at you as a condition of you having your adjournment. His Honour: You told me on the last occasion that the sister was going to do something. I haven't - it's recorded in the transcript. I'm not going to look it up but you said that the sister was going to put on an affidavit. Mr Newell: She did. His Honour: And she did. So, so what? Paragraph 10 speaks for itself. How does this assist me in the case? Cross-examining this witness about whether his understanding of what you said, and he probably has never looked at the transcript - how does this assist me in this case? Mr Newell: Can I leave it there for the moment and ask some other questions? His Honour: All right. Mr Newell: Okay. … Mr Newell: Now, Mr Thornell, ..... I understand from your questions that you' re very familiar with the text of Denise Schofield's affidavit? Mr Thornell: I don' t know- - - His Honour: What has that got to do with the matter. You're not - I will let you cross-examine on anything that is in issue in this case. That is - the client's solvency and improper purpose. Mr Newell: That's what I'm cross-examining on - - - His Honour: Improper purpose of the petitioning creditor. How does that go - the question go to that issue, or either of those issues? 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. Mr Newell: Those are my questions then, your Honour. 47 The primary judge made inquiries about the relevance of the questions being put to Mr Thornell in light of the matters in issue. At one stage, upon his Honour querying how a particular line of questioning would assist him, rather than respond and press the issue, Mrs Young's solicitor elected to "leave it there for the moment and ask some other questions". That exchange could not be characterised as the primary judge preventing the line of questioning from proceeding. 48 While the exchange between the primary judge and Mrs Young's solicitor may have been robust at times, it did not amount to either a pre-emption or a prevention of the cross-examination. There can be no suggestion that Mrs Young was denied procedural fairness. Mrs Young was given an opportunity to cross-examine Mr Thornell and, subject to establishing the relevance of the line of questioning and to any objections which were upheld, was able to complete that cross-examination.

Grounds 3, 4, 5 and 6 49 Grounds 3, 4, 5 and 6 concern the primary judge's consideration and treatment of submissions made by Mrs Young in relation to her various applications for special leave to appeal made or to be made to the High Court. 50 By ground 3 Mrs Young alleges that the primary judge erred in that he misapprehended the grounds of the Second SLA which is described in her second further amended notice of appeal as an application for special leave to the High Court in relation to the decisions of Garling J in the Supreme Court. That is, his Honour's decisions in Young v Hones (No 2) and Young v Hones Costs. 51 Ground 3 cannot succeed. The Second SLA was dismissed by the High Court on 1 March 2017 prior to the adjourned hearing of the creditor's petition on 3 March 2017. Thus by the time the adjourned hearing commenced, that special leave application could no longer form the basis of any opposition to the creditor's petition as was recognised at [23] of the Primary Judgment. There was no misapprehension on the part of the primary judge about the Second SLA. 52 Grounds 4, 5 and 6 concern Mrs Young's proposed further applications for special leave. By ground 4 Mrs Young alleges that the primary judge erred in assessing the prospects of a further prospective application for special leave to appeal the decisions in Young v Hones (No 2) and Young v Hones Costs. That further prospective application was, as described by the primary judge, a further application for special leave to appeal Young v Hones [2017] HCASL 27 "on the basis 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": Primary Judgment at [24]. 53 In grounds 5 and 6 Mrs Young alleges that the primary judge erred in holding that her further proposed special leave application was not genuine and arguable, thereby denying her an adjournment to prepare and conduct the proposed further special leave application, and in proceeding to make a sequestration order. She alleges that, as a result, the primary judge denied her natural justice. 54 Mrs Young submitted that the question of the relevance of a court's obligation to provide reasons was central to the proposed application and to her proposed appeal in relation to Young v Hones (No 2) on which the bankruptcy proceeding depended. She further submitted that the High Court, as a Chapter III court, was obliged to give proper reasons in respect of both final and important interlocutory decisions and that it did not do so in her case. Mrs Young contended that the disposition of a special leave application was plainly an extremely important interlocutory decision and that, in any event, the constitutional mandate to give reasons, properly understood, does not admit exceptions. Mrs Young submitted that the requirement to give reasons was an inescapable conclusion from the High Court's own jurisprudence leading to and including the decision in Wainohu v New South Wales (2011) 243 CLR 181 (Wainohu). 55 Mrs Young submitted that the primary judge, in concluding that the case was "manifestly hopeless", relied on decisions of the High Court which, properly understood, did not justify that conclusion because: (1) the decisions referred to by the primary judge predated the compelling line of authority which has grown out of the decision in Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51; (2) in the principal decision relied upon by the primary judge, Smith Kline v French Laboratories (Australia) Limited (1991) 173 CLR 194 (Smith Kline), the High Court did not undertake a considered justification for the practice according to which very cursory "reasons" are given in respect of special leave dispositions; it did not turn its mind to the constitutionality of decisions of Chapter III courts which are not supported by any or any adequate reasons; and (3) it is no answer that the High Court might have adverted in 1991 in Smith Kline to a practice which did not appear to reflect a mandate to provide detailed reasons. 56 Mrs Young contended that there was an obvious injustice to her because she was refused leave initially "despite a plain error by the Supreme Court concerning the advocate's immunity" and she was denied any hearing on the merits of her claim. She further contended that this injustice was compounded in that in the case of Attwells v Jackson Lalic Lawyers Pty Ltd (2016) 259 CLR 1 (Attwells) leave was given and the Atwells were successful despite the circumstances of that case not being materially different. 57 Mrs Young submitted that the discretion of the primary judge miscarried because he misapprehended the basis of the Second SLA on which her proposed further application for special leave depended. She further submitted that the Second SLA was based on the fact that "the High Court had in Attwells …subsequently limited the scope of immunity in relation to settlement of legal proceedings" and did not countenance any change in the law. She submitted that it was entirely incorrect to say that the Second SLA completely ignored the principle of finality. 58 Mrs Young applied for an adjournment to allow her to file the proposed further applications for special leave to appeal. The primary judge considered the application for an adjournment at [27]-[31] of his reasons. In doing so his Honour considered the authorities concerning the nature of special leave applications and observed at [29] of his reasons that the nature of a special leave application is such that the High Court is not obliged to give reasons for either allowing or refusing an application. 59 Mrs Young relies on the decision in Wainohu. At [44] French CJ and Kiefel J (as her Honour then was) recognised that it was a defining characteristic of a court that it generally gives reasons for its decisions. Their Honours also noted at [54] that "[t]he centrality, to the judicial function, of a public explanation of reasons for final decisions and important interlocutory rulings has long been recognised" and at [56], after further considering the issue, that: The duty does not apply to every interlocutory decision, however minor. Its content - that is, the content and detail of the reasons to be provided - will vary according to the nature of the jurisdiction which the court is exercising and the particular matter the subject of the decision. 60 The primary judge was clearly conscious of and referred to the principle in Wainohu at [44]: Primary Judgment at [27]. However, his Honour reached his conclusion that the proposed further application for special leave to appeal was "manifestly hopeless" and thus any adjournment should be refused because of the very nature of special leave applications as recognised in the authorities to which his Honour referred and which were binding upon him. Those authorities emphasise the following characteristics of special leave applications: (1) an application for special leave is an application to commence proceedings in the High Court. It is only when the High Court grants leave that it commences exercising its appellate jurisdiction. Until that time there are no parties whose rights can be the subject of a binding determination: North Ganalanja Aboriginal Corporation v Queensland (1996) 185 CLR 595 at 643 (per McHugh J); (2) 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 but is in the nature of an interlocutory proceeding by which a party seeks to engage the jurisdiction of the High Court: Re Sinanovic at 450 (per Kirby J); (3) special leave applications have special features distinguishing them from most other legal proceedings. The procedure enables an appellate court to control or filter the volume of work requiring its attention and ordinarily "results in a decision which is not accompanied by reasons, or particularly by detailed reasons": Smith Kline at 217-218; and (4) an application for special leave involves the exercise of an extremely wide judicial discretion. However, notwithstanding that refusal of such an 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": Coulter v The Queen (1988) 164 CLR 350 at 359 - 360 (Deane and Gaudron JJ). 61 Further, the propositions relied upon by the primary judge were more recently confirmed in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 at [112] where Kiefel and Keane JJ said: It should, however, be observed that statements made in the course of reasons for refusing an application for special leave create no precedent and are binding on no one. An application for special leave is merely an application to commence proceedings in the Court. Until the grant of special leave there are no proceedings inter partes before the Court (footnotes omitted) 62 The primary judge concluded at [31] that the proposed special leave application was "wholly lacking in merit and doomed to failure" and that it was "not based on genuine and arguable grounds and [had] no reasonable prospects for success". In light of the authorities referred to above that was the only conclusion the primary judge could reach. It could not be said that the primary judge fell into error in refusing the adjournment to enable Mrs Young to bring the proposed further special leave application. There was no denial of natural justice in that refusal.

Ground 7 63 By ground 7 Mrs Young alleges that the primary judge erred first, in holding that her proposed appeal from the decision in Hughes Trueman was not genuine and arguable, by denying her an adjournment to prepare and conduct her application for special leave to appeal to the High Court and in proceeding to make a sequestration order against her; and secondly in holding that Bromwich J gave adequate reasons. Hughes Trueman concerned an application for an extension of time to appeal from orders made by a judge of the FCCA dismissing an application to set aside the bankruptcy notice issued to Mrs Young. 64 Mrs Young submitted that her proposed application for special leave to appeal the judgment in Hughes Trueman was plainly genuine and arguable because "it must be beyond rational dispute that Bromwich J. did not provide any or any adequate reasons". Mrs Young submitted that Bromwich J "showered trenchant criticism" upon her case of conspiracy and upon her lawyers, "without condescending to deliver reasons based on the evidence and submissions before him". She further submitted that the judgment does not suggest that evidence was not tendered which is the only way that a finding of a failure to advert to the evidence could, as a matter of common sense, be justified. 65 Mrs Young contended that the special leave application, which was to be instead of a show cause application filed in the High Court by mistake, was of critical significance to her because, had the decision in Hughes Trueman been set aside, there was no question of a sequestration proceeding. 66 In oral submissions Mr Newell submitted that Bromwich J dismissed the application on the basis that it was futile because his Honour formed the view that the conspiracy allegation made by Mrs Young was not arguable. He further submitted that the judgment was of concern because of the way it is expressed including by not substantiating the conclusion that there was no evidence to support the conspiracy allegation. He contended, by reference to the decision in Hughes Trueman, that there was evidence before the Court and a framework for analysis of that evidence and, on that foundation, his Honour did not provide adequate reasons as those matters enabled him to do. That is, it was submitted that Bromwich J failed to deal with the elements of the alleged conspiracy and "skipped" to the ultimate question in concluding that there was no evidence of conspiracy. Mr Newell further submitted that it was not enough to say there was no evidence but that there must be a reason as to why the evidence can be said to lack a particular probative character. On that basis Mr Newell submitted that the reasons given in Hughes Trueman did not conform to the requirement at common law to provide proper reasons. 67 Mrs Young contended that the proposed application for special leave to appeal was a "very … arguable appeal" and that the primary judge was in error and acted on a wrong principle in concluding that such an appeal was hopeless and, on the basis of that wrong principle, exercising his discretion not to allow an adjournment. 68 The primary judge concluded that any special leave application in relation to the decision in Hughes Trueman on the basis of breach of a "duty to give reasons of a certain kind" was doomed to failure: Primary Judgment at [32]. There is no error on the part of the primary judge in refusing to adjourn the hearing of the creditor's petition because of the proposed application for special leave to appeal the decision in Hughes Trueman. The existence of a merely arguable basis for a special leave application would not necessarily result in an adjournment of the proceeding by the primary judge. Further, as the primary judge found, the judgment in Hughes Trueman was reasoned and detailed and a review of that judgment demonstrates that it contained adequate reasons. I do not accept Mrs Young's submission that there was a failure to substantiate the conclusions set out therein.

Grounds 9 and 10 69 By ground 9 Mrs Young alleges that the primary judge erred in deciding that the debts owing to her sister, Mrs Schofield, and her solicitor, Mr Muriniti, were debts that were due and payable by her notwithstanding that the evidence before the court was that neither Ms Schofield nor Mr Muriniti was pressing for payment. By ground 10 Mrs Young alleges further, or in the alternative, that the primary judge's discretion to dismiss or not dismiss the creditor's petition miscarried because he failed to have regard to the particular actual circumstances of Mrs Schofield's and Mr Muriniti's debts. 70 Mrs Young submitted that the primary judge erred in finding that she could not pay her debts as and when they fell due. Mrs Young contended that the primary judge's discretion under s 52 of the Act miscarried because he concluded, erroneously, that by reason of the amounts owed to Mrs Schofield and Mr Muriniti, she could not pay her debts. She further contended that the primary judge drew that conclusion from the fact that Mr Muriniti did not specifically depose to the bare assertion that he was not pressing for payment. Mrs Young submitted that the primary judge's fact finding miscarried because her evidence that Mr Muriniti was not pressing for payment was unchallenged by the Respondents; she was not cross-examined; there was no request to produce documents; and Mr Muriniti was not cross-examined. Mrs Young further submitted that the objective facts compelled the inference that those debts were not "due and payable" within the meaning of the statutory test. She said that the "circumstances spoke of a common sense and easily recognised mutual arrangement (acceded to over many years) according to which the (sic) Mr. Muriniti's fees would be deferred specifically to enable [her] to obtain justice against … the Respondents". 71 Mrs Young submitted that the primary judge applied the wrong test. She said that the correct line of authority underscores that whether a debt is due and payable is not "a question of law to be decided by the application of a rigid rule", citing Re New World Alliance Pty Ltd; Sycotex Pty Ltd v Baseler (1994) 122 ALR 531; [1994] 51 FCR 425 (Re New World Alliance) at 434. Mrs Young submitted that, even if the question of whether an asserted debt was "due and payable" did turn upon a rigid rule, Mr Muriniti, having prepared her affidavit, could not assert a different position than that which he had effectively and knowingly announced through her affidavit and through which he had made serious representations to the court and to her. 72 Mrs Young bore the onus of proving her solvency. She did not discharge that onus including insofar as that question turned on the assertion that Mrs Schofield and Mr Muriniti were not going to enforce payment of their respective debts. 73 Before the primary judge Mrs Young relied on her affidavit sworn on 11 October 2016 in which she said, among other things, that: 22. Apart from the three parties in favour of whom His Honour Garling J made lump sum costs orders, I am only indebted to my solicitors to whom I owe costs estimated at $3,000.000.00, to my sister whom I owe approximately $300,000.00 and to my bank which holds a registered first mortgage over my property for the principle amount of approximately $90,000.00. 23. Apart from my bank, who is the first mortgagee over my property, the other person holding security by way of an unregistered mortgage and caveatable interests over my property, is my solicitor Leonardo Carlo Muriniti. My solicitor has offered to postpone his priority in relation to his unregistered second mortgage and caveatable interests in favour of the Applicant. The effect of this offer would place the Applicant in a far better position than if a sequestration order were to be made against me. 24. ... 25. My solicitor is not pressing me for payment of his fees, my sister is not pressing me for repayment of monies which she has loaned to me, I am able to make my mortgage repayments to my bank as and when they fall due and I do not have any other debts other than for living expenses which I am able to pay as and when they fall due. 74 In her affidavit affirmed on 16 December 2016 Mrs Schofield is silent on the issue of whether she is pressing for payment of the amount owing by Mrs Young. Similarly Mr Muriniti, who gave evidence before the primary judge by way of an affidavit affirmed on 11 October 2016, says nothing on the topic of whether he is pressing for payment of the amount owing by Mrs Young to him. The evidence rises no higher than an assertion by Mrs Young that Mrs Schofield and Mr Muriniti were not pressing for payment of the debts owed to them. There is no evidence given about the terms on which Mrs Schofield and Mr Muriniti were not pressing for payment; the period for which they would not press for payment; and what would happen and whether they would continue to forego the immediate payment of the liabilities owed to them upon the sale of Mrs Young's only disclosed asset, the Forestville Property. There was no obligation on the Respondents to cross-examine Mrs Schofield or Mr Muriniti or to seek the production of documents as alleged. 75 Even accepting Mrs Young's evidence at its highest, namely that Mrs Schofield and Mr Muriniti were not pressing for payment of the amounts of the debts owing to them, those debts were still due and payable. This was recognised by the primary judge at [51] of his reasons. There his Honour referred to the decision in Hussain at [63] where Edelman J said: 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. (citations omitted) 76 Contrary to Mrs Young's submission, the wrong test was not applied by the primary judge in relation to the debt owing to Mr Muriniti. In support of her submission, Mrs Young relies on Re New World Alliance at 434 where Gummow J said: There is some dispute in the authorities as to whether a debt falls due when it is legally required for payment or whether the court can take into account normal or likely indulgences granted to the company by its creditors … Any conflict between the authorities may be more illusory than real and factual rather than legal. I would not consider such an issue to be a question of law to be decided by the application of a rigid rule. Rather, the statute appears to focus attention upon what it is reasonable to expect in a given set of circumstances, such a consideration necessarily being made by someone operating in a practical business environment. Attention is focused at whether a person would expect that at some point the company would be unable to meet a liability. Such a question is necessarily a factual one to be decided in light of all the circumstances of the case. At one end of the spectrum a company may be operating in an industry where a code of practice of paying 60 days after invoicing has arisen, despite stated terms of 30 days. If the company has a large number of creditors, it may be reasonable to expect that all of them would not suddenly insist on being paid in 30 days. At the other end of the spectrum would be a case where a single creditor had granted an indulgence on one occasion. It may well not be reasonable to expect a repetition of that event. (citations omitted) 77 Similarly, in Hussain at [64] Edelman J recognised that there may be cases where there is an implied waiver to pay a debt when it falls due based on the facts of a particular case. At [64] his Honour 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. 78 There was no evidence before the primary judge of a course of conduct or, as Mrs Young submitted, a mutual arrangement between her and Mr Muriniti by which Mr Muriniti's fees would be deferred to enable her to "obtain justice" against the Respondents, among others. The primary judge correctly concluded that there was no estoppel, waiver or preclusion from Mr Muriniti enforcing his debt. 79 As the Respondents submitted, Mrs Young also needed to satisfy the primary judge that, putting to one side the debts owing to Mrs Schofield and Mr Muriniti, she would be able to meet her liabilities to the other parties to whom she was indebted. There was no evidence before the primary judge of her ability to do so. Further, in her Notice of Opposition Mrs Young expressly pleaded at [10] that "[a]part from the Costs Orders referred to in paragraph 3 above, [she] is able to discharge all of her financial obligations as and when they fall due". The "Costs Orders referred to in paragraph 3" were the orders which were the subject of Young v Hones Costs. That is, Mrs Young effectively admitted that she could not pay those debts. 80 Although not expressly referred to in any of her grounds of appeal, Mrs Young also made submissions in relation to [58] of the Primary Judgment (summarised at [16] above). She submitted that the primary judge's discretion miscarried in concluding that she could not pay her debts in the future and that any suggestion that she would not be able to pay debts in the future must be arrived at by consideration of the monies that she would have coming in. 81 Although costs orders were made against her in Young v King (No 8) [2015] NSW LEC 187 (Young v King (No 8)) and Young v King (No 9) [2016] NSW LEC 4 (Young v King (No 9)) Mrs Young submitted that the fact both cases were on appeal, militated against any suggestion that these cost orders "would become debts … payable in the reasonably immediate future or within a relatively short time" that she could not pay, as was found in the Primary Judgment at [58]. She contended that the construction of the "near future" needed to accommodate the fact that recovery could not, in practice, occur until she had had an opportunity to have her applications for leave to appeal from the orders heard. That appeal was expected to lead to her litigating on the merits of the substantial costs claim which was otherwise dismissed in Young v King (No 8) and Young v King (No 9). Mrs Young contended that she would have been entitled to a stay of the judgments in Young v King (No 8) and Young v King (No 9) pending her appeal if the costs ordered in those judgments were assessed and/or there was an attempt to enforce. 82 As noted above and conceded by Mrs Young in oral submissions, these submissions do not support a ground of appeal. Nevertheless I will address them briefly. The matters raised by Mrs Young are purely speculative. There is no evidence, and there did not appear to be any before the primary judge, to suggest that Mrs Young's appeals would enjoy the success alleged or that she would have the benefit of a stay if a beneficiary of one of the costs orders made in Young v King (No 8) or Young v King (No 9) attempted to enforce that order. As the primary judge pointed out at [58] of his reasons, the term "debt" is defined in s 5(1) of the Act to include "liability". The costs orders that were made were a liability and thus there was no error on the part of the primary judge in considering them as he did for the purposes of s 52(2)(a) of the Act.

conclusion 83 I will make orders dismissing the appeal and that Mrs Young pay the Respondents' costs of the appeal. I certify that the preceding eighty-three (83) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Markovic.