Federal Court of Australia

James v Australia and New Zealand Banking Group Limited [2022] FCAFC 18

ORDERS

THE COURT ORDERS THAT:

Outcome of Appeal

1.    The appeal be allowed in part.

2.    Order 1 made on 7 July 2021 be set aside and in lieu thereof it be ordered that:

1.    The respondent (Mr James) file and serve by 19 November 2021:

a.     his further amended grounds notice stating grounds of opposition to further (the amended grounds) creditor’s petition dated 20 July 2021; and

b.     his affidavit dated 2 July 2021.

2.     The respondent have leave to file and serve in admissible form by 3 December 2021 (having regard to paragraph 86 of the primary judge’s reasons for judgment dated 7 July 2021) affidavits by:

a.    Matthew Mowad

b.     John Murray James

c.     Scott Jones

d.     Craig Stubbs

e.     Wen Bin Ding

f.     Tim Willis

(collectively, the new affidavits).

3.     The respondent pay the costs thrown away by reason of the amendments to the further amended grounds.

3.    Order 1 made on 12 July 2021 (that the estate of the appellant be sequestrated under the Bankruptcy Act 1966 (Cth)) be set aside.

4.    The appeal be dismissed with respect to ground 7 (dealing with the issue of legal professional privilege).

5.    The respondent pay the appellant’s costs of the appeal.

6.    The proceeding be remitted to the primary judge.

THE COURT DIRECTS THAT:

7.    The appellant provide a copy of these orders to the trustees in bankruptcy within two business days of their being stamped.

8.    The trustees in bankruptcy have leave to apply to the Court within 14 days if they seek a variation of these orders.

Timetabling orders for further conduct of Federal Court of Australia proceeding NSD873/2020

9.    The applicant (ANZ) file and serve any lay and expert evidence in reply in connection with the further amended grounds, the respondent’s affidavit dated 2 July 2021 and the new affidavits by 21 January 2022.

10.    The respondent (Mr James) file and serve any lay and expert evidence in reply in connection with the futher amended grounds by 11 February 2022.

11.    The matter be listed for a case management hearing on 25 November 2021 with a view to being set down for hearing with an estimate of 10 days.

12.     The parties have liberty to apply on two days’ notice.

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

REASONS FOR JUDGMENT

RARES AND BANKS-SMITH JJ:

1    On 7 July 2021, being the first day of the trial of the creditor’s petition brought by Australia and New Zealand Banking Group Limited (the bank) against David James (the debtor), the primary judge heard Mr James’s application to further expand his amended grounds of opposition to the petition, call additional witnesses (the amendment application) and adjourn the hearing for sufficient time for the bank to respond to the new evidence (on its estimate about four to six weeks and to allow the Supreme Court of New South Wales to hear and decide a seven-day trial listed for hearing in March 2022 brought by a company owned by his mother, Shelteo Pty Ltd (the adjournment application).

2    The parties had consented at an earlier stage to an order that the time at which the petition would lapse be extended under s 52(5) of the Bankruptcy Act 1966 (Cth) by 12 months to 11 August 2022.

3    During the course of the hearing before the primary judge the basis for the proposed adjournment was also put in the alternative: that is, the adjournment was sought in the alternative without regard to the Shelteo proceeding, but having regard only to the proposed amendments and the time to be afforded to the bank to respond to the new evidence prior to the hearing of the petition (the alternative submission).

4    With commendable efficiency, by 7pm on 7 July 2021 her Honour had provided the parties with her detailed reasons for refusing the debtor’s application. When adjournment applications are made at the commencement of a trial they often place a primary judge in a particularly difficult position, where decisions must be made quickly in order to avoid the unnecessary loss of court dates and resources invested by parties. This was such a case.

5    As a result of the refusal of the amendment application, the debtor abandoned his amended grounds.

6    On 12 July 2021, her Honour made a sequestration order against the debtor’s estate and, by consent, ordered each party to bear his or its own costs of the proceeding and vacated any previous orders for costs. The date of the act of bankruptcy was 3 July 2020.

7    Mr James appealed against her Honour’s refusal of the amendment and adjournment applications and the consequential sequestration order. At the conclusion of the hearing of the appeal, the Court informed the parties that it had decided to allow the appeal so as to permit the debtor to rely on the amended grounds and the new evidence of witnesses that Mr James had already served on the bank, and would make case management orders so that the matter could be made ready promptly for a further hearing. These are the reasons for those orders.

The privilege ground

8    At the outset of the appeal, the Court indicated to the parties that it had read the redacted parts of a document produced by the bank over which her Honour had upheld the bank’s claim for legal professional privilege. The debtor had challenged that ruling in his notice of appeal. The Court informed the parties that, having read the redacted parts of the document, we could see no basis on which to find any error in her Honour’s assessment that the document was privileged. The parties did not require the Court to give reasons on that point.

Background of relationship between parties

9    The primary judge set out a history of the many proceedings between the debtor and the bank dating back to 2013. The debtor was the principal of a large wine, soft drink and liquor enterprise. That involved numerous companies in a group engaged in businesses of wine production, wholesale distribution of wine, liquor and soft drinks and also of printing. The group had financial support from both the bank and Rabobank Australia Ltd. Certain companies in the group gave securities over their assets and undertakings to the bank (the ANZ companies) while others gave securities over their assets and undertakings to Rabobank (the Rabobank companies).

10    The debtor personally guaranteed a number of the debts of the ANZ companies in favour of the bank. Over the period between 10 May 2010 and 30 June 2012, the bank advanced loans in excess of $14 million to the ANZ companies. It is safe to infer that the debtor also gave personal guarantees to Rabobank in respect of the facilities and debts of the Rabobank companies.

11    By late 2012, the debtor suffered a stress-related illness and ceased having day-to-day involvement with his businesses. On 27 August 2013, he underwent treatment for a major depressive disorder.

12    By April 2013, a number of the ANZ companies were in default to the bank. On 12 April 2013, the bank retained PricewaterhouseCoopers (PwC) to undertake an independent business review of one of the ANZ companies, TLT Nominees Pty Ltd and its subsidiary, Newcastle Liquor Wholesalers Pty Ltd (NLW) which, when completed on 31 May 2013, became known as the Project Spirit Report. PwC had shown a draft of the Project Spirit Report to the debtor that did not include those parts of it that might highlight detriment to the bank’s position, and he had not disputed its then contents.

13    Relevantly, the Project Spirit Report stated that:

    the trade debts of TLT and NLW as at 29 April 2013 totalled $9.1 million, excluding intra-company receivables, bad and doubtful debts and inter-company balances.

    the trade debtors’ total appeared to be supported by genuine customer invoices and delivery documentation.

    the value of inventory held at premises at Baerami included $4.2 million of bulk wine and that PwC had physically counted and confirmed the existence of about 65% of that inventory.

    the value of inventory at which premium wine was kept in a climate controlled warehouse at Denman, was $1.4 million and that PwC had counted about 96% of that wine to confirm its existence.

14    On 19 August 2013, the bank appointed receivers to the ANZ companies, who were partners in PwC. Shortly afterwards on 28 August 2013, Rabobank appointed receivers to the Rabobank companies. The Rabobank receivers entered into possession of the Baerami and Denman premises.

15    On 11 October 2013, the bank commenced proceedings against the debtor in the Supreme Court relying on its guarantees. On 16 May 2014 the bank obtained consent judgment in those proceedings in the amount of $13,928,818.66 (the consent judgment).

16    The ANZ and Rabobank receivers made competing claims against one another as to whether the bank or Rabobank held security over various assets and undertakings at several locations of the group’s assets.

17    On 6 November 2014, the bank, Rabobank, the ANZ companies, the Rabobank companies, the ANZ receivers and the Rabobank receivers entered into a deed of release by which the bank, the ANZ companies and the ANZ receivers gave up claims to stock held at Baerami at the date of the Rabobank receivers’ appointment and released Rabobank, the Rabobank companies and the Rabobank receivers in respect of those claims.

18    The ANZ receivers ultimately made distributions to the bank in partial discharge of the ANZ companies’ secured debts totalling $2,177,211.93. This reduced the debtor’s liability under the consent judgment to the sum claimed in the creditor’s petition, namely $11,751,606.73.

The debtor’s proposed amendments

19    In the trial of the creditor's petition, the debtor sought to challenge the petition on the ground that the Court should exercise its discretion to go behind the consent judgment to determine whether the debtor is indebted to the bank; and if it does so it would find that in truth and reality the debtor is not so indebted; so that, accordingly, there are circumstances that constitute ‘other sufficient cause’ within the meaning of s 52(2)(b) of the Bankruptcy Act as to why a sequestration order should not be made.

20    In the proposed amendments, the debtor wanted to contend that the ANZ receivers had unlawfully seized and taken control of plant and equipment that belonged to the Rabobank companies and were not part of the ANZ companies’ securities. He asserted that the ANZ receivers acted in breach of their duties under s 420A of the Corporations Act 2001 (Cth), first, in causing a shortfall in receipts of approximately $19,428,000 because they unlawfully sold and realised those assets at a gross undervalue without accounting to the Rabobank companies and, secondly, sold property, including trading stock of TLT and NLW valued at approximately $23.7 million, at a gross undervalue by receiving only $4.272 million for it.

21    The proposed amendments sought to add grounds 8(d), (e), (f) and 9(a)(iv) and 9A and amend ground 9(c) to raise the following new claims, namely that:

(a)    the ANZ receivers breached their duties under s 180 of the Corporations Act and at general law by failing to bring in and realise:

(i)    the trade debtors due to TLT and NLW identified in the Project Spirit Report (ground 8(d);

(ii)    the stock of TLT and NLW at the Baerami and Denman premises including by abandoning any claims to the stock at Baerami when they entered into the deed of release (ground 8(e)); and

(iii)    the stock of TLT and NLW at premises at Homebush (ground 8(f)).

(b)    the conduct of the ANZ receivers complained of in ground 8 (as amended above) had the consequence that the value of the $19.429 million in security given by the ANZ companies was not brought to account in reducing their indebtedness (amendments to grounds 9(a)(iv) and (c)). This new claim was in addition to the debtor’s previous claims that the Rabobank companies were deprived of the assets and equipment that they needed to operate and their value was reduced to nil so that they could not be used to reduce the ANZ companies’ debt and the debtor’s liability under his guarantees (existing ground 9(c)) and that, accordingly, it would be unconscionable for the bank now to seek to rely upon the consent judgment to bankrupt him.

22    The debtor argued that when he agreed to the consent judgment he was unaware of the facts that would have supported the defences in the proposed amendments. He contended that these would have demonstrated that he was not indebted to the bank on his guarantees at all or in the amount of the consent judgment. He contended that successive decisions of Stevenson J in the Supreme Court, and the Court of Appeal of the Supreme Court in James v Australia and New Zealand Banking Group Limited (2018) 97 NSWLR 663, and Ball J and the Court of Appeal in James v the Australia and New Zealand Banking Group Limited (2020) 380 ALR 566, had determined that he was unable to set aside the consent judgment.

23    He contended that the bank now sought to rely upon the consent judgment debt to bankrupt him, in circumstances where for it to do so would be unconscionable. That was because, he submitted, when he agreed to the consent judgment, he did not have access to all the documents necessary to determine the consequences of the acts and omissions of the ANZ receivers, so that the Court had not, and could not, establish from the evidence the true state of the accounts between the parties (ground 9A).

The primary judge’s reasons

24    It was common ground before her Honour, and she was prepared to assume for the purposes of the amendment and adjournment applications, that the new grounds were arguable. However, her Honour observed that the amendments would significantly enlarge the area of contest between the parties, were very serious in nature and had been brought at a very late stage of the proceeding.

25    Her Honour identified the evidence on which the bank relied in opposition to the amendments and fresh evidence that the debtor wished to tender. A solicitor acting for the bank, Przemek Kucharski, had deposed that it would take four to six weeks to meet the new evidence and that the bank may wish to call expert evidence from an experienced insolvency practitioner as to the conduct of the ANZ receivers which the new grounds impugned. Her Honour said (at [75]–[77]):

[75] The work to be conducted by ANZ in responding to the proposed further amended grounds is substantial. It may entail expert evidence. The procedural history of the present proceedings and the difficulty the Court has had in accommodating the hearing of this matter causes real concern in respect of the potential erosion of the time before the creditor’s petition lapses.

[76] I do not accept the Respondent’s submission that such irreparable prejudice to ANZ may be cured by a costs order. ANZ should not be vexed with an abandoned hearing, particularly when there is no prospect of ANZ recovering its wasted costs. I note in this regard that Mr Kucharski deposes to a litany of adverse costs orders against the Respondent in other proceedings which have not been paid.

[77] In addition, during the hearing of the application, Senior Counsel for ANZ made submissions as to the quantum of the debt owed to ANZ, being some $11 million, and the bank’s entitlement to issue a creditor’s petition and take the steps it feels it can take to prosecute the matter to finality. It is a significant sum of money and the bank is properly within its rights to have a trustee appointed to investigate the Respondent’s affairs. The corollary of ANZ’s submissions is that there is a public interest in the finality of legal proceedings, particularly as it relates to the position of other creditors whose interests may be effected by a bankruptcy. Justice Bromwich’s observations in Coshott [v Prentice; In the matter of Coshott (No 2) [2016] FCA 1531] at [48] are pertinent in this respect. That is, although bankruptcy is a dire consequence of not paying debts arising from enforceable orders of the court, it is a vitally important ultimate remedy that helps to enhance the overall integrity of civil justice.

(emphasis added)

26    The primary judge’s reference in [75] to “real concern in respect of the potential erosion of the time before the creditor’s petition lapses” appears to be a reference to her later finding at [103], namely:

[103] These proceedings are time critical. The parties consented to an extension of the expiry of the creditor’s petition to 11 August 2022 shortly before these proceedings were due to be heard. During the case management hearing of this matter on 19 May 2021, I informed the parties of the limited availability of the Court to hear the application. If an adjournment were to be granted, it is highly unlikely that there would sufficient time to prepare, hear and determine the matter in light of the new evidence and new grounds sought to be pleaded by the Respondent prior to the expiration of the creditor’s petition. That is so even if the matter were to be allocated to a new judge in circumstances where the Court’s availability is necessarily limited.

(emphasis added)

27    Her Honour recorded (at [93]–[94]) that the debtor had made the adjournment application on two separate bases, namely that: first, if he were allowed to amend, the hearing of the petition listed to commence on 7 July 2021 could not continue because the bank would need further time to meet the new grounds and evidence; and secondly, the debtor sought an adjournment until after the date of the hearing of the Shelteo proceeding, listed to commence in the Supreme Court in March 2022, and possibly its determination. Her Honour addressed the nature of the Shelteo proceeding in some detail (at [95]–[97]). The primary judge also noted that the bank opposed any adjournment because of the substantial prejudice to it in the event that the petition could lapse on 11 August 2022 by force of s 52(4) and (5) of the Bankruptcy Act. Her Honour reasoned at ([100]–[102]):

[100] Having regard to the principles bearing on the exercise of the discretion to grant an adjournment and the overriding purpose in s 37M of the FCA Act, I do not accept that either of these matters, the prejudice to the Respondent, nor the prejudice to Shelteo arising from the determination of these proceedings, weighs in favour of granting an adjournment for the following reasons.

[101] The doing of justice between the parties is a paramount consideration in determining whether an adjournment ought to be granted: [Fair Work Ombudsman v] Kentwood Industries [Pty Ltd [2010] FCA 98] at [2] (McKerracher J) citing Aon Risk [Services Australia Limited v Australian National University (2009) 239 CLR 175] at [30]. An adjournment ought not be refused if it would result in serious injustice to the party requesting the adjournment. The adjournment should only be refused if that is the only way that justice can be done to the other party: Hutchings v ASIC [2017] FCA 858 at [25] (Allsop CJ).

[102] In this case, the proceedings were commenced on 11 August 2020 and have been affected by some delays caused by the Respondent’s conduct of the litigation (as referred to earlier in these reasons). The proceedings were docketed to Justice Markovic who was unavailable to hear the matter in July 2021. The proceedings were subsequently transferred to my docket, where at the insistence of the Respondent and over the initial objection of ANZ, the hearing was listed on 6 July 2021 to accommodate the availability of the Respondent’s Counsel. Agreeing to take the dates that were convenient to the Respondent’s then Counsel caused ANZ considerable inconvenience. Mr Kucharski has given evidence that the preparation of the proceedings for the allocated hearing date has come at significant expense and inconvenience to ANZ who were required to brief new Counsel. Mr Kucharski has also given extensive evidence of the substantial costs associated with work required to be carried out by ANZ if the relief sought by the Respondent was to be granted.

(emphasis added)

The bank’s submissions

28    The bank argued that her Honour was correct, for the reasons she gave, to refuse the amendment and adjournment applications. It contended that the primary judge’s decisions on both applications were discretionary judgments on matters of practice and procedure and that the debtor had not identified any error in the primary judge’s reasons that could warrant appellate intervention within the principles in House v The King (1936) 55 CLR 499 at 504–505. The bank submitted that her Honour had reasoned correctly that the debtor had not given any meaningful explanation about why he had made the amendment application only on the eve of the trial when, as she found (at [72]) he accepted, frankly, that the new grounds could have been pleaded, or raised in case management hearings earlier. It relied on the primary judge’s findings at ([71]), namely:

The real explanation appears to be that a new legal team now wishes to run a new case and there is no explanation for why it was not done earlier where similar issues had been repeatedly ventilated in other proceedings. I note in this regard again that the circumstances which have resulted in the Respondent retaining alternative Senior and Junior Counsel were not of the Respondent’s making.

29    The bank argued that her Honour had found that the debtor had caused delay by not accepting service of the petition and in not complying with the order that he serve his responsive evidence by 12 November 2021 (at [79]). The bank emphasised that there is a public policy imperative for the swift despatch of bankruptcy proceedings and that the primary judge was correct to regard that factor as significant. The bank contended that her Honour was mindful of, and correct to find that, given the size of the judgment debt and the debtor’s financial position, together with a litany of adverse costs orders against him in other proceedings that had not been paid, there was no prospect of ANZ recovering its wasted costs (at [74]–[76]).

30    The bank submitted that the debtor did not challenge the above findings in his grounds of appeal. It argued that, after her Honour refused the application, the debtor had abandoned his right to rely on the extant amended grounds of opposition for which his case had been prepared for the hearing. It noted that on 19 May 2021 the Court had fixed the hearing of the petition and the then amended grounds of opposition for 6–9 and 15 July 2021.

31    The bank acknowledged during oral argument of the appeal that during the course of the hearing before the primary judge, the debtor expressly raised the alternative submission: that is, instead of adjourning the hearing of the amended grounds (if her Honour were to allow the amendments and evidence to be filed) to await the hearing and determination of the Shelteo proceeding, the petition be adjourned only for a period to allow the bank to meet the amendments and further evidence. It was common ground in the hearing of the appeal that the debtor no longer sought an adjournment to await the hearing or outcome of the Shelteo proceeding.

32    The bank contended that the primary judge had only to consider the issue of any adjournment if she were persuaded to allow the amendments. It submitted that the primary judge made no error in refusing to grant the amendments. It argued that the proceeding was time critical and her Honour correctly characterised it as such. It contended that the discretionary factors applicable to the consideration of amendment application identified in Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175 were not affected by the circumstances that this was a bankruptcy proceeding or the reasoning in Ramsay Health Care Australia Pty Ltd v Compton (2017) 261 CLR 132. The bank argued that the debtor had had ample time to prepare and formulate his case. It submitted that, based on the reasons in Coshott v Prentice; In the matter of Coshott (No 2) [2016] FCA 1531, there is a particular public interest in having proceedings in bankruptcy progress efficiently. The bank contended that her Honour had not erred in applying what Bromwich J said in Coshott [2016] FCA 1531 at [48] even though that case was concerned with a bankruptcy notice and not an issue of going behind the judgment debt in the hearing of a creditor’s petition.

33    The bank accepted that in [103] of her reasons, the primary judge dealt with the original basis on which the debtor had sought an adjournment, namely that the hearing should be postponed until after the Shelteo proceeding was heard and determined. It contended that her Honour had sufficiently addressed the debtor’s arguments, including in [100]–[102] of her reasons, by rejecting his submission that he would suffer prejudice if he could not amend, with a consequent adjournment, so as to rely on additional grounds to go behind the consent judgment. The bank contended that, in context, there was no basis to find that her Honour had erred in the exercise of her discretion, particularly in light of her findings as to the lack of any, or any sufficient, explanation for the debtor’s late amendment application and the balancing of all of the factors that her Honour had taken into account.

Consideration

34    In Culleton v Balwyn Nominees Pty Ltd (2017) 343 ALR 632 at 643 [40] (and see also at 642[36], 646[52], [54]–[55]) Allsop CJ, Dowsett and Besanko JJ said:

In considering the question of an adjournment of the hearing of a creditor’s petition, it is fundamental to keep firmly in mind, at all times, the nature of the jurisdiction. Bankruptcy is not just a variety of inter partes litigation; it does not deal only with the private rights and obligations of the debtor and creditor; it is not a form of judgment execution. It is directed to the estate of a person who is insolvent. In that sense it has a public interest, through the general body of creditors and potential creditors of the debtor and prospective bankrupt, and through what is referred to as the change of status of the person who becomes a bankrupt. That status is changed because of the provisions of the Act which inhibit conduct and affect rights and obligations of the bankrupt, including making the bankrupt susceptible to criminal punishment for what would otherwise be innocent conduct.

(emphasis added)

35    Here, the proposed amendments sought to raise reasons why Mr James could challenge the basis of the consent judgment on newly available material, including the Project Spirit Report. If he could establish the new grounds, he may be able to demonstrate that the judgment debt on which the petition was founded was not truly owing. Third parties such as Mr James’s creditors may be prejudiced by the making of the sequestration order. His change of status is also a material consideration: cf Compton 261 CLR at 152 [70]–[71].

36    In Compton 261 CLR at 150–151 [66], Kiefel CJ, Keane and Nettle JJ held, that upon the evidence, there was a real question whether Mr Compton had failed to present his case on its merits in the proceeding that lead to the judgment debt. They said that it was no answer that he was bound by the conduct of his case at that trial because (261 CLR at 151 [67]):

the notion that a party is bound by the conduct of his or her case has never been a sufficient reason not to look behind a consent judgment or a default judgment. That is because a Bankruptcy Court is concerned, not to discipline litigants or to protect finality in the administration of justice as between parties to litigation, but to protect the interests of third parties who were not participants in the litigation which led to the judgment in question.

(emphasis added)

37    In Compton 261 CLR at 147–148 [54]–[55] the majority set out the principles as to when a bankruptcy court will consider going behind a judgment debt as follows:

[54] In point of principle, scrutiny by a Bankruptcy Court of the debt propounded by a judgment creditor seeking a sequestration order in no sense involves an attempt to impeach the judgment. A Bankruptcy Court is not concerned with whether the judgment should be set aside as upon an appeal, or even as a default judgment or a judgment obtained by fraud may be set aside; nor is a Bankruptcy Court concerned to deny the effect of the judgment as “res judicata” between the parties to it. A Bankruptcy Court is not concerned to prevent the judgment creditor from invoking the ordinary processes of execution available under the general law. Rather, a Bankruptcy Court is concerned with whether the debt on which it is based is truly a basis for the making of a sequestration order [(In Re Fraser; Ex parte Central Bank of London [1892] 2 QB 633 at 636–637)]. A Bankruptcy Court has a statutory duty to be “satisfied” as to the existence of the petitioning creditor’s debt; a creditor should not be able to make a person bankrupt on a debt which is not provable.

[55] The scrutiny required by s 52 as to whether there is, in truth and reality, a debt owing to the petitioning creditor serves to protect the interests of third parties, particularly other creditors of the debtor. It is of critical importance to appreciate that such persons were not parties to the proceedings that resulted in the judgment debt. It has long been recognised that their interest in being paid their debts in full should not be prejudiced by the making of a sequestration order in reliance on a judgment debt which does not reflect the true indebtedness of the debtor to the petitioning creditor [(Ex parte Kibble; In re Onslow (1875) LR 10 Ch App 373 at 376–377; Ex parte Lennox; In re Lennox (1885) 16 QBD 315 at 321–322, 329; In re FraserEx parte Central Bank of London [1892] 2 QB 633 at 636–637, 638; Corney v Brien (1951) 84 CLR 343 at 347-348; Wren v Mahony (1972) 126 CLR 212 at 221-222)]. In In re Fraser; Ex parte Central Bank of London, Lord Esher MR said ([1892] 2 QB 633 at 636-637):

“The decision is based upon the highest ground – viz, that in making a receiving order, the Court is not dealing simply between the petitioning creditor and the debtor, but it is interfering with the rights of his other creditors, who, if the order is made, will not be able to sue the debtor for their debts, and that the Court ought not to exercise this extraordinary power unless it is satisfied that there is a good debt due to the petitioning creditor. The existence of the judgment is no doubt prima facie evidence of a debt; but still the Court of Bankruptcy is entitled to inquire whether there really is a debt due to the petitioning creditor.”

    (emphasis added)

38    In House 55 CLR at 505, Dixon, Evatt and McTiernan JJ said:

If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so.

39    While her Honour dealt with all of the issues, her determinative reasoning appears to be that in [75] and [103]. As senior counsel for the bank acknowledged in the hearing of the appeal, in [103] the primary judge appears to have focused only on the ground of the adjournment application that included awaiting the hearing or determination of the Shelteo proceeding and her Honour did not consider the debtor’s alternate position that, if she were to act on the basis of granting the amendments and allowing the bank four to six weeks in which to put on evidence to meet them, it would have been possible to hear and determine the newly amended grounds before 11 August 2022 when the petition, as extended, would lapse.

40    Her Honour’s focus on the need for efficient dispatch in bankruptcy proceedings appears to have been guided more by general considerations relevant to case management principles than the different nature of bankruptcy proceedings themselves. Her Honour referred to authorities calling for the need for expeditious treatment of bankruptcy matters, which dealt principally with applications to set aside bankruptcy notices or sequestration orders made under delegated authority by a Registrar, as opposed to applications of the present nature.

41    Although her Honour was the docket judge and may have had limited availability to hear the petition if any adjournment were granted, it was still necessary to consider the argument that, as the bank’s evidence showed, it could meet the amended grounds and further evidence within four to six weeks, leaving about a year in which to hear and determine the petition proceeding. The primary judge’s failure to consider a substantive, distinct ground for allowing the amendment and consequent adjournment amounted to a failure to take into account a relevant consideration so that her Honour’s exercise of discretion miscarried: House 55 CLR at 505. Accordingly, the Full Court had to consider the exercise of the discretion afresh.

42    It was not necessary for us to review the exercise of her Honour’s discretion and it may well be that, but for the failure to consider the debtor’s alternative ground (to allow the amendments and grant a short adjournment so that the bank could meet it) there would have been no occasion to interfere with the primary judge’s decision.

43    The issues of whether the amendments should have been allowed and, consequentially, an adjournment granted were intertwined. That was because the bank could not meet the new amended grounds without an adjournment of the hearing of the petition for at least four to six weeks. It would be artificial to consider either issue in isolation in those circumstances. Thus, it was necessary to have regard to all of the circumstances. These included:

    the overriding purpose in s 37M of the Federal Court of Australia Act 1976 (Cth) and the criteria it prescribes;

    whether to grant the amendments;

    the late raising of the new issues;

    the ability of the bank to meet them;

    the time before which the petition would lapse under s 52(4) and (5) if not determined, namely 11 August 2022;

    the impact on the Court’s resources (being the loss of the dates fixed for the hearing and the displacement for other litigants who could have had their matters heard then);

    the need for a later hearing of the petition before the primary judge or another judge;

    the nature of a creditor’s petition and the resulting change of the debtor’s status if he were made bankrupt;

    the broad discretion to adjourn bankruptcy proceedings under s 33(1)(a) of the Bankruptcy Act having regard to the context of each individual case (see Endresz v Australian Securities and Investments Commission (No 2) (2015) 228 FCR 334 at 345 [59] per Edmonds, Gordon and Beach JJ);

    the likelihood that the bank would not be able to recover the costs thrown away that would be occasioned by any adjournment; and

    the justice of the case.

44    Here, the substantive purpose of the amended grounds was to seek to go behind the consent judgment in order to make out a case that the debtor was not liable to the bank for any genuinely owed debt. As the Project Spirit Report suggested, the ANZ companies, and possibly the Rabobank companies, had very significant assets shortly before the ANZ receivers’ appointment that, prima facie, should have been more than adequate to discharge the debts of the ANZ companies to the bank.

45    There was a bona fide arguable ground already raised in the initial amended grounds of opposition to go behind the consent judgment. The new grounds sought to expand the reasons for going behind the consent judgment. As can be seen in the debtor’s conduct after the refusal of the amendment and adjournment applications, he, no doubt guided by his senior counsel, did not consider that, without the further amendments, those grounds could succeed. Importantly, the debtor’s explanation given for the failure to raise the new grounds earlier was that then counsel and the solicitor for the debtor had not thought of them previously.

46    As Keane CJ, Gilmour and Logan JJ said in Cement Australia Pty Limited v Australian Competition and Consumer Commission (2010) 187 FCR 261 at 275–276 [51]: “Aon [239 CLR 175] is not a one size fits all case”. The Court has to have regard to the justice of the case, as well as all of the circumstances relevant to case management in s 37M of the Federal Court Act.

47    Although the situation was finely balanced, the bona fide arguable nature of the proposed amendments and the relatively short adjournment that the bank required to meet the new case, in circumstances where there was still ample time for the petition to be heard and determined before it would lapse over one year later, persuaded us, in re-examining the discretion, to allow the amendments.

48    At the conclusion of the appeal, the Court invited the parties to consult about the orders necessary to give effect to the Court's decision.

Conclusion

49    On 19 November 2021, the Court made orders, among others, allowing the appeal in part, granting the debtor leave to make the amendments, and file and serve by 3 December 2021 in admissible form the affidavits by his proposed new witnesses (having regard to the primary judge’s previous concerns about the admissibility of the earlier form of those affidavits), ordering the debtor to pay the bank’s costs below thrown away by reason of his amendments and setting aside the sequestration order. The orders also provided case management orders for the bank to file and serve its lay and expert evidence by 21 January 2022 and the debtor his evidence in reply by 11 February 2022.

Associate:

Dated:    18 February 2022

REASONS FOR JUDGMENT

MURPHY J:

introduction

50    This appeal concerns whether the primary judge erred in the exercise of discretion in deciding to refuse an application by the appellant, David James, seeking: (a) leave to further amend his amended grounds of opposition to a creditor’s petition brought by the respondent, the Australia and New Zealand Banking Group Ltd (the bank) (the amendment application), to rely on an additional nine affidavits by six witnesses in support of the amended grounds (the new evidence application); and (b) to adjourn the hearing (the adjournment application). Mr James accepted that if the amendment was allowed the new grounds would significantly enlarge the area of contest, and the trial could not proceed on the hearing date listed. Mr James’ primary submission was that the amendment and new evidence applications be allowed and the hearing be adjourned for an indefinite time to await the outcome in another case, Shelteo Pty Limited v Australia and New Zealand Banking Group Ltd (the Shelteo proceeding), which was listed for hearing before the NSW Supreme Court in March 2022. As a secondary submission, Mr James sought that the amendment and new evidence applications be allowed and the hearing be adjourned for four to six weeks, which on the bank’s evidence was sufficient time for it to respond to the new evidence (the alternative submission).

51    The applications were necessarily intertwined. They were made one business day before the hearing of the proceeding was due to commence, on an estimate of five to seven days. On the assumption that the proposed new grounds of opposition were arguable, the primary judge dismissed the applications. Her Honour’s reasons for judgment (J) included that the proposed new grounds significantly enlarged the area of contest, were very serious in nature, and the applications were brought at a very late stage and would necessitate an adjournment in circumstances where the hearing date been fixed over the objection of the bank in order to accommodate Mr James’ counsel.

52    Further, in June 2021 the parties had consented to an order that the time at which the creditor’s petition would lapse be extended by 12 months, to 11 August 2022, and there was no statutory basis for the bank to apply to extend the operation of the creditor’s petition any further. The primary judge described the proceeding as “time critical” (at J[103]) and said that if an adjournment was to be granted it was highly unlikely that there would be sufficient time to hear and determine the matter in light of the new evidence and new grounds sought to be pleaded, prior to the creditor’s petition lapsing. Her Honour also said (at J[91]) that if the matter was adjourned for the shorter period of four to six weeks to allow the bank to put on evidence in response to the new evidence there would be insufficient time for her Honour to hear the proceeding and the matter would need to be docketed to a new judge. Her Honour considered that if the applications were allowed, a costs order would not cure the prejudice to the bank because there was unchallenged evidence of “a litany” of adverse costs orders against Mr James in related proceedings which he had not met.

53    Her Honour took into account well-established principles in relation to amending pleadings, including the effect of the delay in raising the proposed amendments, wasted costs, the public interest in the efficient conduct of legal proceedings, and case management considerations including the workload of the Court, and the interests of other litigants, citing Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; 239 CLR 175 at [111] (Gummow, Hayne, Crennan, Kiefel (as her Honour then was) and Bell JJ); and ss 37M, 37N and 37P of the Federal Court of Australia Act 1976 (Cth) (FCA). The primary judge considered that those principles also applied to amendments in bankruptcy proceedings, citing Coshott v Prentice, in the matter of Coshott (No 2) [2016] FCA 1531 at [49] (Bromwich J), which in turn was cited with approval in Gelonesi v G. Abignano (Investment) Pty Limited [2020] FCA 898 (at [67]) (Perry J), and noted the public interest in the expeditious determination of bankruptcy applications.

54    The judgment appealed from involved the exercise of discretion on matters of practice and procedure, and the appeal does not involve any question of high principle. An appeal from a discretionary judgment should not be allowed unless the Court is persuaded that the decision was made in error because the primary judge acted upon a wrong principle, allowed extraneous or irrelevant matters to guide or affect the decision, mistook the facts, or failed to take into account some material consideration: House v The King [1936] HCA 40; 55 CLR 499 at 505. As the plurality explained in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; 148 CLR 170 at 177, an appellate Court should exercise particular caution in reviewing decisions pertaining to practice and procedure. Their Honours approved the well-known passage of Jordan CJ in Re Will of F.B. Gilbert (dec.) (1946) 46 SR (NSW) 318 at 323 where his Honour said:

…there is a material difference between an exercise of discretion on a point of practice or procedure and an exercise of discretion which determines substantive rights. In the former class of case, if a tight rein were not kept upon interference with the orders of Judges of first instance, the result would be disastrous to the proper administration of justice. The disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant with a long purse or a litigious disposition could, at will, in effect transfer all exercises of discretion in interlocutory applications from a Judge in Chambers to a Court of Appeal.

55    I have had the benefit of reading the reasons of the majority. In the circumstances of the case and having regard to the requirement for a tight rein to be kept on appeals from discretionary judgments on matters of practice and procedure I am respectfully unable to agree with their decision to allow the appeal. In my view it is appropriate to dismiss the appeal.

Determination

56    I respectfully adopt the factual and procedural background to the applications for amendment and adjournment as summarised in the reasons of the majority, and also their summary of the primary judge’s reasons for decision.

57    The majority said (at [39]) that while the primary judge dealt with all of the issues, her determinative reasoning appeared to be that set out at J[75] and [103]. In those paragraphs her Honour said:

(a)    at J[75]-[76]:

The work to be conducted by ANZ in responding to the proposed further amended grounds is substantial. It may entail expert evidence. The procedural history of the present proceedings and the difficulty the Court has had in accommodating the hearing of this matter causes real concern in respect of the potential erosion of the time before the creditor’s petition lapses.

I do not accept the Respondent’s submission that such irreparable prejudice to ANZ may be cured by a costs order. ANZ should not be vexed with an abandoned hearing, particularly when there is no prospect of ANZ recovering its wasted costs. I note in this regard that Mr Kucharski deposes to a litany of adverse costs orders against the Respondent in other proceedings which have not been paid.

(b)    at J[103]:

These proceedings are time critical. The parties consented to an extension of the expiry of the creditor’s petition to 11 August 2022 shortly before these proceedings were due to be heard. During the case management hearing of this matter on 19 May 2021, I informed the parties of the limited availability of the Court to hear the application. If an adjournment were to be granted, it is highly unlikely that there would [be] sufficient time to prepare, hear and determine the matter in light of the new evidence and new grounds sought to be pleaded by the Respondent prior to the expiration of the creditor’s petition. That is so even if the matter were to be allocated to a new judge in circumstances where the Court’s availability is necessarily limited.

58    At [34]-[37] the majority cited with approval Culleton v Balwyn Nominees Pty Ltd [2017] FCAFC 8; 343 ALR 623 at [40] (and also at [36], [52], [54]-[55]) (Allsop CJ, Dowsett and Besanko JJ), and Ramsay Health Care Australia Pty Ltd v Compton [2017] HCA 28; 261 CLR 132 at [54]-[55], [66]-[67], [70]-[71] (Kiefel CJ, Keane and Nettle JJ). It can be accepted that the authorities provide that in considering the proposed amendment and consequential adjournment applications it was fundamental to keep in mind that a creditor’s petition for sequestration of assets is not just a variety of inter partes litigation. A creditor’s petition is directed to the estate of a person who is insolvent, and there is an important public interest in such an application, through the general body of creditors and potential creditors of the debtor, and through the change in status of the person who will become a bankrupt: Culleton at [40]. Pursuant to s 52 of the Bankruptcy Act 1966 (Cth), in determining a creditor’s petition the court must be satisfied that, in truth, the alleged debtor is indebted to the petitioning creditor as asserted: Compton at [55].

59    The majority said (at [39]) that it appeared that the primary judge focused only on Mr James’ contention that the amendment and new evidence applications should be allowed and an adjournment granted until after the hearing and determination of the Shelteo proceeding, which was listed for hearing in March 2022. In their view her Honour did not consider the alternative submission that an adjournment should be granted for the shorter period of four to six weeks to allow the bank time to put on its evidence in response to the new grounds and evidence, in which event it would be possible to hear and determine the case before the expiry of the creditor’s petition on 11 August 2022. The majority also said (at [40]) that the primary judge’s “focus on the need for efficient dispatch in bankruptcy proceedings appears to have been guided more by general considerations relevant to case management principles than the different nature of bankruptcy proceedings themselves”.

60    The majority concluded (at [41]) that the primary judge’s failure to consider the alternative submission was a failure to consider a substantive, distinct ground for allowing the amendment and consequent adjournment, which amounted to a failure to take into account a relevant consideration. They concluded that her Honour made a House v the King error in the exercise of discretion, and that it fell to the Full Court to consider the exercise of the discretion afresh. Their Honours decided (at [47]) that, although the situation was finally balanced, the bona fide arguable nature of the proposed amendments and the relatively short adjournment that was sought (on the alternative submission) meant that there was ample time for the creditor’s petition to be heard and determined before it would lapse on 11 August 2022. In re-exercising the discretion the majority decided to allow the amendment application and the adjournment application.

61    Respectfully, I take a different view.

62    First, in my view Mr James did not establish that the primary judge failed to consider his alternative submission that the Court should allow the amendment and new evidence applications and adjourn the hearing for four to six weeks, to allow the bank time to put on its evidence in response.

63    It can be accepted that the primary judge did not directly refer to that submission, but in my view that is explicable when it was not mentioned in the interim application as filed; nor was it mentioned in Mr James’ detailed written submissions. The alternative submission was raised once, in oral submissions, in my opinion as something of an afterthought, and described as a “fallback” submission. It was not mentioned again. The written submissions argued only for an adjournment until after the hearing and determination of the Shelteo proceeding, doing so on the basis that unless such an adjournment was allowed there was a risk that the bank and the bank’s receivers would contend in the Shelteo proceeding that it would be an abuse of process for Shelteo to propound matters which Mr James asserted or could have asserted in the hearing of the creditor’s petition.

64    The transcript of the hearing below shows that Mr James’ senior counsel said:

…Now, there are two possibilities in relation to an adjournment. The first one is your Honour would accede to the adjournment, allow Mr James to get his house in order, for the bank to respond to the affidavits, for the bank to respond to the new matters upon which we propose to rely in the grounds for opposition, and all of that could be done in a matter of weeks or a couple of months. That is one possibility.

The second possibility is a different one, and we accept it’s harder given the fact that the extension of time of the petition expires in August next year – is to adjourn this application until after the Shelteo case has been conducted. Now, that’s our principal submission, but our fallback submission is the first one I put to your Honour, which is if nothing else, in our submission, leave should be given to Mr James to file his amended pleadings, rely upon the evidence and for the bank to be given time to respond to that material in a matter of weeks, if not months.

(Emphasis added.)

65    The majority said (at [39]) that, in the appeal, senior counsel for the bank acknowledged in oral argument that at J[103] the primary judge appeared to have “focused only on the ground of the adjournment application that included awaiting the hearing or determination of the Shelteo proceeding and her Honour did not consider the debtor’s alternate position…” With respect, in my view that is not a fair summary of senior counsel’s submissions. Senior counsel for the bank accepted that her Honour did not expressly deal with the alternative submission at J[103], but he emphasised that her Honour did deal with it in her reasons for rejecting the amendment application. He contended that, insofar as an adjournment was sought for four to six weeks, that application was consequential upon Mr James’ having success in the amendment application, and given that the primary judge refused the amendment application, she did not need to further address the alternative submission.

66    On a fair reading of the primary judge’s reasons, I am not persuaded that her Honour failed to consider Mr James’ alternative submission. Essentially that is because:

(a)    in circumstances where the interim application made no mention of the alternative submission, it was not mentioned in Mr James’ written submissions, it was made once, at the end of oral argument as something of an afterthought; and it was given no emphasis, I would not infer that the absence of any direct reference to that submission shows that the primary judge missed it. The more appropriate inference is that the absence of a direct reference to the alternative submission reflects the unimportance Mr James gave to it;

(b)    Mr James advanced the alternative submission by reference to the amount of time necessary for the bank to respond to the new evidence which he proposed to file in support of the further amended grounds. At J[91] her Honour said:

Further, given ANZ’s estimate of the time required to investigate and respond to the new evidence sought to be relied upon by the Respondent (being between four to six weeks), there is insufficient time available to the Court to hear the proceedings and the matter will likely need to be docketed to a new judge for the purpose of case managing the proceedings to a hearing.

This paragraph makes it clear enough that her Honour was aware of Mr James’ alternative submission that the proceeding should be adjourned for a four to six week period, but she considered that even if that shorter adjournment was allowed that would create real difficulties for the expeditious determination of the proceeding. In my view no more needed to be said by her Honour;

(c)    it is plain from the passage of transcript set out above that the alternative submission for a four to six week adjournment was made on the basis that the amendment and new evidence applications would be allowed. If the primary judge granted the amendment and new evidence applications, an adjournment of at least four to six weeks was inevitable to allow the bank time to respond to the new material. Equally, as the bank contends, her Honour’s refusal to grant the amendment and new evidence applications rendered the alternative submission in respect of adjournment moot, and it was not necessary for her Honour to directly refer to that submission.

67    Secondly, I am not persuaded that in refusing the amendment, new evidence and adjournment applications the primary judge erred by being guided more by general considerations relevant to case management principles than by the different nature of bankruptcy proceedings themselves. On a fair reading of the reasons for judgment, her Honour understood the significance of the fact that the applications were made in the context of a creditor’s petition which gave rise to different considerations than other types of inter partes litigation. For example, at J[48] the primary judge cited Culleton at [40] and said that the “nature of the bankruptcy jurisdiction” was an “important matter” to be considered in the mix, because “[u]nlike other inter partes litigation, bankruptcy proceedings not only deal with the private rights and obligations as between a creditor and a debtor but also with the general body of creditors and potential creditors of the debtor and prospective bankrupt”.

68    But the primary judge also recognised (at J[49]) that there is a public interest in the expeditious determination of bankruptcy applications, which her Honour considered pointed away from allowing the applications. Her Honour cited several authorities in that regard: Luck v University of Southern Queensland [2016] FCAFC 167 (Collier, Jessup and Katzmann JJ) at [43]; Cirillo v Consolidated Press Property Pty Ltd (formerly known as Citicorp Australia Ltd) [2007] FCAFC 167; 245 ALR 374 at [51] (Ryan, Moore and Tamberlin JJ); Bryant v Commonwealth Bank of Australia [1996] HCA 3; 134 ALR 460 at 464 (Kirby J); and Bechara v Bates [2021] FCAFC 34; 388 ALR 414 at [176] (Allsop CJ, Markovic and Colvin JJ). As the primary judge noted, in Cirillo at [51] the Full Court said that there is a public interest in the determination of alleged insolvencies which militates against a grant of a lengthy adjournment, and cited Bryant which concerned the analogous situation of an application for a stay of a sequestration order. In Bryant, at 464 Kirby J refused to grant a stay and explained that it would be a mistake to approach the application as if the only interests affected by its outcome were those of the parties, and that it was also necessary to keep in mind the interests of other creditors, particularly unsecured creditors, and also of the community. The primary judge also noted that in Bechara at [176], the Full Court commented on the prejudicial effect of delay in bankruptcy matters not only to the debtor or bankrupt, but also to creditors and potentially to members of the public.

69    I am not persuaded that the primary judge made a House v The King error in having regard to the principles in Aon Risk; in relying on ss 37M and 37N of the FCA; or in treating the public interest in expeditious determination of the creditor’s petition as being a relevant factor to be weighed in the balance. In my view the primary judge understood the different nature of bankruptcy proceedings and the different considerations that apply but, as senior counsel for Mr James acknowledged, her Honour was obliged to have regard to numerous factors, and in the main, those factors weighed against the applications: J[60].

70    Thirdly, even if (contrary in my view) the primary judge did err in the exercise of discretion, if required to exercise the discretion afresh I would reach the same conclusion.

71    It can be accepted that in respect of a creditor’s petition it is fundamental that the Court be satisfied that, in truth, the alleged debt is owed, and that the relevant considerations in a creditor’s petition for sequestration of assets are different from those in other types of inter partes litigation. But it does not follow that in such proceedings every application for an amendment, new evidence and adjournment must be allowed. If I was required to exercise the discretion afresh, I would refuse the applications because, in summary:

(a)    the applications were foreshadowed for the first time during an urgent case management hearing shortly before the scheduled hearing date. The case management hearing was not brought on by Mr James, it was brought on at the bank’s request when it apprehended (correctly as it turned out) that Mr James proposed to advance grounds of opposition which amounted to a substantially new case: J[6];

(b)    the applications were made very late, one business day before the commencement of a five to seven-day hearing that had been listed for some time. The parties had earlier been told that the primary judge had limited availability to hear the case on any other dates and it would require to be reallocated;

(c)    through the applications Mr James sought leave to run a substantially new case; to put on significant additional evidence, and to abandon a central part of his case as it had been framed up until that point: J[6]. In consequence he sought to adjourn the scheduled hearing because, as he accepted, it would not be possible for the bank to deal with the proposed new case and proposed new witnesses: J[74];

(d)    Mr James failed to provide a meaningful explanation for his delay in raising the new issues, and the real explanation appeared to be that his new senior counsel wished to run a new case: J[71]. The unjustified nature of the delay was exacerbated by the fact that Mr James had repeatedly ventilated similar issues to those raised in his proposed amendments in other proceedings against the bank and its receivers (J[67] and [71]) and he had ample earlier opportunities to raise the new grounds proposed to be agitated: J[85];

(e)    prior to Mr James making the applications, the proceeding had already been affected by delays caused by his conduct of the litigation: J[102]. The proceeding was delayed because he refused to accept service of the creditor’s petition: J[79]; and was then further affected by his failure to comply with orders to serve his evidence by 12 March 2021 and with further orders to serve his evidence by 28 May 2021. Mr James did not actually serve his evidence until 15 June 2021: J[89];

(f)    the hearing was listed to commence on the scheduled hearing date at Mr James’ insistence and over the bank’s objection, so as to accommodate the availability of Mr James’ counsel. Fixing the hearing on that date caused the bank considerable expense and inconvenience, as it had been required to brief new senior counsel: J[6] and J[102];

(g)    this was not a case where the Court’s indulgence was sought by an unrepresented and inexperienced litigant, unversed in Court rules and procedures. At all material times Mr James had retained experienced lawyers, including junior and senior counsel, and he had previously brought a number of proceedings against the bank and its receivers. His legal team had previously amended the grounds of opposition, and the amendment application was their third attempt at pleading those grounds: at J[79];

(h)    the applications were (and are) “time critical” because the creditor’s petition will lapse on 11 August 2022 and cannot be extended beyond that date: J[103]. Mr Kucharski’s unchallenged evidence, which should be accepted, is to the effect that Mr James is a determined litigant who, having been unsuccessful at first instance on five occasions in related litigation, either sought leave to appeal or appealed the decision including by seeking special leave to appeal to the High Court: J[66] and [98]. If Mr James is unsuccessful in opposing the creditor’s petition it seems likely he will appeal to the Full Court, and if again unsuccessful he may seek special leave to appeal to the High Court. In exercising the discretion afresh, the Court should have regard to the fact that an adjournment would give rise to a real risk that the proceeding and any appeals will not be heard and finally determined before the creditor’s petition lapses. Such an outcome is likely to irreparably prejudice the bank; and

(i)    in the event the applications are allowed, the bank will also be prejudiced through substantial further expense, in circumstances where there is no prospect of it recovering its wasted costs. The unchallenged evidence of Mr Kucharski is that there are a litany of adverse costs orders against Mr James in other proceedings which he has not paid: J[76].

72    Mr James is, of course, entitled to a reasonable opportunity to oppose the creditor’s petition. In my view the primary judge did not deny him that opportunity. With the assistance of experienced lawyers he put on his grounds of opposition to the creditor’s petition; and then put on amended grounds of opposition. Orders were then made for the delivery of evidence and the proceeding was fixed the hearing. After all the evidence was on, and one business day before the hearing, he sought leave to make substantial further amendments to the amended grounds of opposition, to put on substantial new evidence and to adjourn the hearing: J[85]. The primary judge did not refuse Mr James the chance to oppose the creditor’s petition and he continued to be able to oppose the petition on the basis of the amended grounds of opposition earlier served. As it eventuated, Mr James did not follow through with the opportunity that he had. Following the refusal of the applications Mr James withdrew his grounds of opposition to the creditor’s petition.

Associate:

Dated:    18 February 2022