Federal Court of Australia

Tredders Investments Pty Ltd as trustee for Warren Tredrea Trust v Channel 9 South Australia Pty Ltd (No 3) [2025] FCAFC 125

ORDERS

THE COURT ORDERS THAT:

1.    Order 1 of the orders made on 11 April 2025 be varied so as to provide:

“The appellants pay the respondent’s costs of the appeal (including the costs of the argument that there be a lump sum costs order), fixed in a lump sum in the amount of $149,000.”

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

REASONS FOR JUDGMENT

THE COURT:

Introduction

1    On 11 December 2024, the Full Court dismissed an appeal brought by Tredders Investments Pty Ltd as trustee for the Warren Tredrea Trust and by Warren Tredrea (Tredrea parties) against the orders of a judge of the Court: Tredders Investments Pty Ltd as trustee for Warren Tredrea Trust v Channel 9 South Australia Pty Ltd [2024] FCAFC 164. The respondent to that appeal was Channel 9 South Australia Pty Ltd (Channel 9). On 11 April 2025, the Full Court made an order that the Tredrea parties pay Channel 9’s costs of and incidental to that appeal, to be agreed or taxed: Tredders Investments Pty Ltd as trustee for Warren Tredrea Trust v Channel 9 South Australia Pty Ltd (No 2) [2025] FCAFC 50 (Costs Judgment).

2    On 4 June 2025, by email to the South Australian Registry of the Court, in accordance with the Court’s Costs Practice Note (GPN COSTS), Channel 9 informed the Court that the parties had been unable to reach agreement on costs, and requested that there be a lump sum assessment of the costs payable by the Tredrea parties. On 17 June 2025, at a case management hearing before a single judge, the second appellant, Mr Tredrea, appeared in person on behalf of the Tredrea parties. He indicated that he opposed a lump sum assessment of costs, on the basis that he had accepted an offer made by Channel 9 as to the quantum of costs and had fully discharged his liability to pay costs by presenting Channel 9 with a promissory note.

3    The parties subsequently filed affidavit evidence and written submissions in support of their respective positions. For the reasons that follow, we reject the arguments advanced by Mr Tredrea on behalf of the Tredrea parties. There should be a lump sum assessment of costs.

Factual background

4    Channel 9 relied on an affidavit of its solicitor, Jessie Miriam Murphy-Allen of Finlaysons Lawyers, sworn on 16 June 2025, and an affidavit of Christopher John Grisenti, a costs law specialist, sworn on 7 July 2025. The Tredrea parties relied on an affidavit of Mr Tredrea affirmed on 21 July 2025. There does not appear to be any real dispute as to the relevant primary facts, although the parties vigorously disagree about the legal significance of those facts.

5    The orders made by the Full Court on 11 April 2025 required the Tredrea parties to pay Channel 9’s costs of the appeal, to be agreed or taxed. By letter dated 24 April 2025, Ms Murphy-Allen wrote to Woodburn & Co Solicitors, the firm of solicitors who had acted for the Tredrea parties on the appeal, offering to agree the quantum of the costs at $126,000. The offer was expressed to be open until close of business on 8 May 2025. On 6 May 2025, Ms Murphy-Allen received a telephone call from a solicitor at Woodburn & Co, Simon Woodburn. He explained that the solicitor with carriage of the matter for the Tredrea parties, Polina Asmalovskaya, was on leave, and sought an extension of the time within which to comply with the offer of 24 April 2025. An exchange of emails followed on 7 and 8 May 2025, but the evidence before the Court does not establish that any agreement was ultimately concluded in relation to an extension of the time within which the offer was to remain open.

6    No direct response to the offer of 24 April 2025 was received by Channel 9 or its solicitors from Woodburn & Co. Rather, Mr Tredrea himself sent an envelope by registered post which was delivered to the office of Finlaysons Lawyers on 15 May 2025. The contents of the envelope included:

(a)    a letter from Mr Tredrea dated 8 May 2025 and addressed to “Jesse Murphy” (evidently intended for Ms Murphy-Allen);

(b)    an affidavit affirmed by Mr Tredrea on 12 May 2025;

(c)    a copy of Ms Murphy-Allen’s letter of 24 April 2025 featuring several handwritten annotations in blue and red pen, initialled by Mr Tredrea, and two attached typed pages headed “DEFAULT AND LIABILITY CLAUSE & NOTICE”, also featuring handwritten annotations initialled by Mr Tredrea;

(d)    a slip of paper signed by Mr Tredrea and dated 8 May 2025, bearing the heading “PROMISSORY NOTE PROMISSORY NOTE PROMISSORY NOTE DESTRUCTION, MUTILATION OR SURRENDER TO MAKER DISCHARGES LIABILITY HEREIN” and setting out that the amount of $140,000 was payable to Finlaysons Lawyers; and

(e)    a document entitled “Certificate of Mailing Number WT-01” with handwritten annotations initialled by Mr Tredrea, dated 12 May 2025 and signed by Bianca Tredrea.

7    Following receipt of these documents, Ms Murphy-Allen wrote to Mr Tredrea by letter dated 16 May 2025. In that letter, among other things, Ms Murphy-Allen:

(a)    asserted that the statements put forward in Mr Tredrea’s correspondence and enclosed documents were misconceived;

(b)    stated that the Costs Judgment created an obligation to pay Channel 9, not Finlaysons Lawyers, and that apparent references to a debt owed to Finlaysons Lawyers were erroneous;

(c)    pointed out that Channel 9’s offer to agree to quantify Mr Tredrea’s indebtedness in consequence of the Costs Judgment had “expired without communication of any acceptance on 8 May 2025” and that Mr Tredrea’s later, qualified, acceptance of the offer was ineffective;

(d)    stated that Channel 9 did not accept, and was not obliged to accept, receipt of the promissory note delivered to Finlaysons Lawyers on 15 May 2025, that it was effective to discharge the Tredrea parties’ obligation to pay costs, or that Channel 9 was obliged to present or return it to Mr Tredrea;

(e)    denied that any contractual agreement arose from the promissory note delivered to Finlaysons Lawyers on 15 May 2025 or Mr Tredrea’s correspondence; and

(f)    advised that Finlaysons Lawyers, on behalf of Channel 9, would now seek a lump sum assessment of costs in the Court.

8    We do not understand Mr Tredrea to place any reliance on the documents which were received by Ms Murphy-Allen on 15 May 2025. It is not necessary to detail their contents.

9    On 29 May 2025, Mr Tredrea sent another envelope, this time by registered post to Channel 9. That envelope was delivered to Channel 9 on 3 June 2025. Its contents included:

(a)    a letter from Mr Tredrea dated 8 May 2025 and addressed to the managing director of Channel 9, Sean O’Brien;

(b)    a copy of Ms Murphy-Allen’s letter of 24 April 2025 featuring several handwritten annotations in blue and red pen, initialled by Mr Tredrea, and two attached typed pages headed “DEFAULT AND LIABILITY CLAUSE & NOTICE”, also featuring handwritten annotations initialled by Mr Tredrea;

(c)    a slip of paper dated 8 May 2025 and signed by Mr Tredrea, bearing the heading “PROMISSORY NOTE PROMISSORY NOTE PROMISSORY NOTE DESTRUCTION, MUTILATION OR SURRENDER TO MAKER DISCHARGES LIABILITY HEREIN”, and setting out that the amount of $140,000 was payable to Channel 9 (Promissory Note);

(d)    an affidavit affirmed by Mr Tredrea on 26 May 2025; and

(e)    a document entitled “Certificate of Mailing Number WT-01”, dated 26 May 2025 and signed by Bianca Tredrea.

10    It does not matter for present purposes whether this envelope was sent on 26 May 2025, as the “Certificate of Mailing” suggests, or on 29 May 2025, as the registered post lodgement receipt annexed to Mr Tredrea’s affidavit affirmed on 21 July 2025 indicates. However, we find that it was sent on 29 May 2026.

11    Mr Tredrea relies on the documents contained in the envelope received by Channel 9 on 3 June 2025 to establish, first, that he accepted the offer contained in Ms Murphy-Allen’s letter of 24 April 2025 to agree the quantum of costs and, secondly, that his obligation to pay costs was discharged by the combination of his presentation of the Promissory Note to Channel 9 and the failure of Channel 9 to return the Promissory Note to him within 72 hours of its receipt.

12    The letter addressed to Mr O’Brien reads as follows:

Time Sensitive Document

Estoppel Conditions Apply Upon Default

Warren Tredrea (“we” or “us”)

Maker

[address]

Contact; [mobile number]

My Ref: WT000126052025

8 May 2025

Sean O’Brien

Managing Director

Channel 9 South Australia Pty Ltd (ACN 007 577 880),        and

Channel 9 South Australia Pty Ltd (ACN 007 577 880) (Collectively ‘You’ and ‘Your’)

[street and postal addresses]

Within the universal maxim of law ‘notice to agent is notice to principal and notice to principal is notice to agent’. All addressed parties Jointly and Severally as well as their Successors, Nominees and assigns.

Notice of Payment and Notice and Demand to Verify Claim

Re: Delivery of payment instrument promissory note numbered “PNWT260520251035”, as payment to discharge the liability to pay the debts against Channel 9 South Australia Pty Ltd (ACN 007 577 880) account on behalf of Warren Tredrea.

Dear Sean,

We deliver in “good faith’ payment by way of Promissory Note – Numbered “PNWT260520251035”, in satisfaction against the alleged outstanding balance of Channel 9 South Australia Pty Ltd (ACN 007 577 880) account disclosed above. The Promissory Note is tendered in good faith in order to satisfy the principle of “honour in, honour out” and “clean hands”.

Should there be any verifiable defect/s or deficiency/ies in the attached Promissory Note, please contact us in writing so we are afforded a remedy with which to rectify it.

In doing so, of course we expect that you would notify us of the specific defect/s or deficiency/ies within our delivered Promissory Note by way of your/testifier’s signed and sworn or affirmed affidavit with supporting evidence validating your/claimant’s claim.

If it is claimed and validated our delivered Promissory Note is insufficient-deficient or defective in discharging or otherwise satisfying the liability to pay the alleged debt, we direct you to return the Promissory Note to the maker (us) within three (3) days of the date of receiving it with your/complainant’s accompanying signed Notice of Dishonour and evidence supporting the claim to deficiency or defectiveness of the Promissory Note. It is our understanding a Promissory Note is as good as cash and must be treated as such.

Alternatively if the Promissory Note (“the note”), is not returned to us or presented to the maker (us) at the time, date and place stipulated on the Promissory Note, it shall be deemed by all parties in this matter that Channel 9 South Australia Pty Ltd (ACN 007 577 880) have accepted the note in full and final satisfaction or discharge of the maker’s liability to pay the alleged debt.

Should Channel 9 South Australia Pty Ltd (ACN 007 577 880), via its employees or agents, not return the note to maker as stated above yet make any unsubstantiated claim as to their deficiency or defectiveness, or pursue collections against us or our estate subsequent to taking delivery of the Promissory Note, it shall be deemed by all parties to the not negotiable contract that Channel 9 South Australia Pty Ltd (ACN 007 577 880) – defaulter has committed a commercial default of the contract, thereby invoking the defaultee’s rights to recover their award for breach of contract, as so expressed within the “Default & Liability Clause & Notice” within the not negotiable Contract.

We bring to your attention we have the means with which to track and trace the unique CUSIP number of the Promissory Note and to identify the overseas purchaser of the Note.

We direct all proceeds of the securitization of our delivered Promissory Note to be applied to discharge the alleged debt to Channel 9 South Australia Pty Ltd (ACN 007 577 880) and any remaining proceeds surplus to discharging the aforesaid liabilities thereafter may be disbursed in favour of Channel 9 South Australia Pty Ltd (ACN 007 577 880) at its sole discretion.

Finally, thereafter we seek and direct Channel 9 South Australia Pty Ltd (ACN 007 577 880) to deliver to us written confirmation the current account balance as “zero” and the account “closed”.

Thank-you in anticipation of your honourable, timely, amicable and professional services in this matter.

Kind Regards

By [signature]

Administrator and Executor for estate “Warren Tredrea”. All rights reserved, none waived ever

(Emphasis and formatting in original.)

13    The annotated copy of Ms Murphy-Allen’s letter of 24 April 2025 bears a stamp, in red ink, in the top corner which reads “NOT NEGOTIABLE NON-TRANSFERABLE WITHOUT RECOURSE”. We will not attempt to describe the annotations exhaustively, but note that they include the words “Accepted as Indorsed” in red pen, initialled by Mr Tredrea in blue pen. Various other annotations appear in blue pen and are initialled by Mr Tredrea. At the point in Ms Murphy-Allen’s letter where the offer to agree costs in the amount of $126,000 is set out, there is a hand-drawn arrow pointing to the amount and an uninitialled annotation which reads “acknowledged sum payable”. Near the bottom right-hand corner of the letter, the following appears, handwritten in blue pen and accompanied by Mr Tredrea’s initials:

Acknowledged sum payable     $126,000

Plus Incidentals    $7000

Plus Interest    $7000

Acknowledged Total Sum Payable    $140,000

    Being a sum

    certain of

    One Hundred and Forty

    Thousand Dollars Exactly

14    It is not necessary to set out the terms of the text on the additional pages that Mr Tredrea annexed to Ms Murphy-Allen’s letter of 24 April 2025, entitled “DEFAULT AND LIABILITY CLAUSE & NOTICE”. Those two pages are written in a style, and using language, that is evidently designed to appear highly technical and legalistic. They are in reality incomprehensible and legally meaningless, but it is evident that they purport to constitute terms of a contract. The purported contract appears to identify eleven “parties”, including “FEDERAL COURT” and “ANOR”, as well as the Tredrea parties, Channel 9, Mr O’Brien, Ms Murphy-Allen and Ms Asmalovskaya (twice). It states that, should the contract subsequently be dishonoured by any of the listed “parties” then “any such default will invoke an immediate and irrevocable Default and Liability Clause to take effect including the schedule of payment being liable by the defaulting/dishonourable party/ies for a sum certain of FIVE HUNDRED AND SIXTY THOUSAND AUSTRALIAN DOLLARS EXACTLY which will become payable within seven days of such certified default”. It also makes reference to various sections of the Bills of Exchange Act 1909 (Cth). The purported contract is signed by Mr Tredrea.

15    The face of the Promissory Note reads as follows:

PROMISSORY NOTE PROMISSORY NOTE PROMISSORY NOTE

DESTRUCTION, MUTILATION OR SURRENDER TO MAKER DISCHARGES LIABILITY HEREIN

Tredrea, Warren Reg No 1978215C/18183    No. PNWT260520251035

Maker;    Date 26 May 2025

EIN 200 400 111

Pay To: Channel 9 South Australia Pty Ltd (ACN 007 577 880)     $140,000

The Sum of One Hundred and Forty Thousand Dollars Australian only

Redeemable at

South Australia

[address]

At 10:35 hours without; let, delay, hindrance or ado on

The fifth day of June, AD 2025    By [signature] Agent

    Tredrea, Warren Reg1978215C/18183

    Witness [signature]

Memo: Issued pursuant to P.L. 73-10

(Emphasis and formatting in original.)

16    The affidavit affirmed by Mr Tredrea on 26 May 2025 contains a preamble and introductory paragraphs that contain various elaborate but legally meaningless expressions, or obvious and unnecessary averments like “I am not dead”. Most of the remaining paragraphs of the affidavit are drafted in a confusing and pseudo-legalistic style, often using double or triple negatives to introduce what are really (wrong) legal arguments. They are exemplified by [16] of the affidavit, which states:

I have not seen or been presented with any material facts or evidence that shows to not accept payment by way of promissory note is not a commercial default and dishonour upon the defaulting party and does not automatically discharge all liability against the maker by reason a payment refused discharges all liability to pay a debt, and I believe sincerely that none exists.

17    It is not necessary to further describe the contents of Mr Tredrea’s affidavit of 26 May 2025. Sending the affidavit to Channel 9 had no legal consequence. To the extent that the Tredrea parties rely on arguments referred to in the affidavit, we shall address them below.

18    As has been mentioned, on 4 June 2025 Ms Murphy-Allen sought to invoke the lump sum costs process to determine the quantum of costs payable in accordance with the Costs Judgment.

19    On 6 June 2025, Ms Murphy-Allen, on behalf of Channel 9, wrote to Mr Tredrea, stating that:

(a)    no agreement had been reached in relation to payment of costs;

(b)    the statements put forward by Mr Tredrea were misconceived and the arguments that he was advancing were groundless;

(c)    Channel 9’s position remained as set out in Ms Murphy-Allen’s letter of 16 May 2025;

(d)    Channel 9 did not accept the Promissory Note and did not accept that:

(i)    there had been a resolution of the costs entitlement;

(ii)    the Promissory Note discharged the obligation to pay costs pursuant to the Costs Judgment;

(iii)    Channel 9 was obliged to present or return the Promissory Note; or

(iv)    any contractual arrangement arose from the Promissory Note or from Mr Tredrea’s correspondence.

20    On 9 June 2025, following further email correspondence between Ms Murphy-Allen, Mr Tredrea and the Court, Mr Tredrea sent an email to Ms Murphy-Allen in which he maintained that Channel 9 had “acted to retain possession of the Promissory Note for longer than 72 hours after receiving it, hence it accepted it in full and final satisfaction of the alleged debt”, and to which he attached a “Certificate of Protest ✖️ Default ✖️ Dishonour” signed by Bianca Tredrea and three witnesses.

The offer to agree costs in the amount of $126,000 was not accepted before it lapsed

21    The Tredrea parties submit that the issue of the payment of costs has been settled, as the Tredrea parties have delivered payment to Channel 9 in a form that is legally acceptable. Channel 9 disputes this on the basis that there was no acceptance of an offer that remained open, and on the basis that the documents provided by the Tredrea parties do not constitute payment and were not effective to discharge the costs liability of the Tredrea parties.

22    Mr Tredrea evidently intended, by providing to Channel 9 the annotated copy of Ms Murphy-Allen’s letter of 24 April 2025, to accept the offer contained in that letter, that the costs of the appeal be agreed in the amount of $126,000. However, the offer in Ms Murphy-Allen’s letter of 24 April 2025 was expressed to be open only until the close of business on 8 May 2025. The only sensible interpretation of Ms Murphy-Allen’s letter is that the offer expired at that time. Given that Mr Tredrea did not send the documents on which he relies to Channel 9 until 29 May 2025, his purported acceptance of the offer was only communicated well after it had lapsed.

23    A contractual offer cannot be accepted after the time for which the offer was expressed to be open has lapsed: see, eg, Brunswick Retail Investment Pty Ltd v Optima Funding Pty Ltd [2011] VSC 435 at [7]. It follows that Mr Tredrea’s attempted acceptance of the offer was not effective to create a contractually binding agreement in relation to the quantum of costs payable pursuant to the Costs Judgment. At best, it was a fresh offer made by Mr Tredrea to Channel 9, and that offer was not accepted by Channel 9.

The Promissory Note did not discharge the debt arising from the Costs Judgment

The arguments of the Tredrea parties

24    The Tredrea parties contend that, by providing the Promissory Note, they had made payment in full and final satisfaction of their obligation to pay Channel 9’s costs. It is appropriate to determine whether the provision of the Promissory Note was legally effective as a form of payment to reduce the Tredrea parties’ indebtedness to Channel 9. Our conclusion in relation to this issue should also forestall any further dispute as to whether the provision of a promissory note made by Mr Tredrea is a legally effective means by which the Tredrea parties may discharge their liability to pay Channel 9’s costs of the Tredrea parties’ appeal.

25    The essence of the argument on which the Tredrea parties rely is that a promissory note made by a debtor constitutes “a form of payment”, such that the provision of a promissory note made by Mr Tredrea was effective to discharge the costs debt owed by the Tredrea parties to Channel 9.

26    The Tredrea parties further argue that Mr Tredrea’s letter to Mr O’Brien dated 8 May 2025 had the effect of “affording [Channel 9] full disclosure and transparency regarding the terms and conditions attached to [the Tredrea parties’] offer of payment for the agreed costs”. They submit that Channel 9 accepted the form of payment, by way of promissory note, for the agreed costs. They submit that Channel 9 “retained possession of the Promissory Note for longer than 72 hours after receiving it, evidencing they accepted the terms and conditions expressed within the document titled ‘Notice of Payment and Notice and Demand to Verify Claim’ that had accompanied the delivery of the Promissory Note [ie, the letter to Mr O’Brien of 8 May 2025]”.

27    For the reasons that follow, these submissions must be rejected.

No acceptance by Channel 9 that the debt could be paid by providing a promissory note

28    In the absence of any actual agreement by Channel 9 to accept a promissory note made by Mr Tredrea, the provision of a promissory note made by him was not effective to constitute payment of the debt owed by the Tredrea parties to Channel 9, or to substitute a liability under such a promissory note for the existing debt. Channel 9 did not at any time agree to accept a promissory note as a means by which the Tredrea parties could lawfully discharge or reduce their debt. Nor did Channel 9 accept the further terms and conditions Mr Tredrea purported to attach to his attempted acceptance of the (lapsed) offer contained in Ms Murphy-Allen’s letter of 24 April 2025. The Tredrea parties could not artificially produce such an agreement by purporting unilaterally to impose an obligation on Channel 9 to take particular action within 72 hours of receipt of the Promissory Note and other documents.

29    A creditor may agree to accept a security such as a bill of exchange or a promissory note as a means of conditional payment of a debt: see Currie v Misa (1875) LR 10 Ex 153 at 163-4 (Lush J), quoted in Wragge v Sims, Cooper & Co (Australia) Pty Ltd (1933) 50 CLR 483 at 491-2 (Dixon J). But, in the absence of a relevant legislative provision to the effect that a promissory note must be accepted as payment of a debt, it will only have that effect if the creditor has agreed that it should.

30    Assessed objectively, Channel 9 cannot sensibly be taken to have accepted that the terms of any of the documents sent by Mr Tredrea should be contractually binding upon it, or to have accepted that the Tredrea parties could discharge their existing debt by the provision of a promissory note made by Mr Tredrea. Indeed, Ms Murphy-Allen’s correspondence to Mr Tredrea made it clear that that was not the case.

31    In George v Cluning (1979) 28 ALR 57, Mason J (with whom Aicken J agreed) said (at 62-3):

… In my opinion the appellant, through his solicitors, by receiving the respondent’s personal cheque without objecting to it on the ground that it did not constitute legal tender, must be taken to have accepted the cheque as payment of the amount for which it was drawn. The practice of giving and accepting personal cheques in payment of debts and liabilities is now so widespread that there is a general expectation on the part of persons making payments that a personal cheque, given in payment of a debt or liability, will be accepted unless the payee objects before or at the time of receipt that the cheque does not constitute legal tender. To my mind the law was correctly stated in two Canadian decisions — Wexelman v Dale (1917) 35 DLR 557 and Laidlaw v Rehill (1943) 4 DLR 429 — where it was decided that a personal cheque, though not legal tender, was a sufficient payment if not objected to on that account.

32    In contrast, it can hardly be said that there is a general expectation that the presentation of a promissory note prepared by a debtor will be accepted as payment of a debt or liability unless the creditor objects, before or at the time of receipt, that it does not constitute legal tender. In any event, in this case, Ms Murphy-Allen, on behalf of Channel 9, promptly informed Mr Tredrea that Channel 9 did not accept the Promissory Note as legal tender, and she had already made clear, in her letter of 16 May 2025, that Channel 9 did not accept a very similar promissory note prepared by Mr Tredrea as a means of discharging the Tredrea parties’ obligation to pay Channel 9’s costs.

33    Insofar as the Tredrea parties rely on the fact that the documents received by Channel 9 on 3 June 2025 also included the affidavit of Mr Tredrea dated 26 May 2025 (described at [16]-[17] above) and the purported contract comprising the annotated copy of Ms Murphy-Allen’s letter of 24 April 2025 and the two pages annexed to it (described at [13]-[14] above), the receipt of those documents had no legal effect. Channel 9 did not agree to the additional contractual terms advanced by Mr Tredrea. The quasi-legalistic language that appears in those two documents does not achieve anything, apart from making the documents difficult to understand. The creation and use of documents of this kind is a waste of time, and is strongly to be discouraged.

Legislative provisions relied on by the Tredrea parties do not assist them

34    The submissions of the Tredrea parties invoke various provisions of Commonwealth legislation. As we understand their position, it is that those provisions, either alone or in combination, are said to have the effect that a promissory note can be relied upon to discharge a debt. However, consideration of the provisions demonstrates that that is not the case.

35    Section 89 of the Bills of Exchange Act defines what is meant by a “promissory note”, in the following terms:

Promissory note defined

(1)    A promissory note is an unconditional promise in writing made by one person to another, signed by the maker, engaging to pay, on demand or at a fixed or determinable future time, a sum certain in money, to or to the order of a specified person, or to bearer.

(2)    An instrument in the form of a note payable to maker’s order is not a note within the meaning of this section unless and until it is indorsed by the maker.

(3)    A note is not invalid by reason only that it contains also a pledge of collateral security with authority to sell or dispose thereof.

…

Although not expressly stated in s 89, a promissory note is a kind of security created by contract. Subject to the question of whether it was effective as a contract, it may be assumed for present purposes that the Promissory Note made by Mr Tredrea and received by Channel 9 on 3 June 2025 otherwise satisfied the definition in s 89.

36    Section 90 of the Bills of Exchange Act provides that a promissory note is inchoate and incomplete until delivery thereof to the payee or bearer.

37    Section 95 of the Bills of Exchange Act provides that the provisions of the Act relating to bills of exchange (except those identified in s 95(3)) apply, with the necessary modifications, to promissory notes. One such provision, s 32(1), provides:

Value and holder for value

(1)    Valuable consideration for a bill may be constituted by:

(a)    any consideration sufficient to support a simple contract: or

(b)    an antecedent debt or liability. Such a debt or liability is deemed valuable consideration whether the bill is payable on demand or at a future time.

38    Section 32 is concerned to identify what will constitute valuable consideration for the purpose of whether a promise contained in a bill of exchange or promissory note is capable of having effect as a contractual promise. In particular, s 32(1)(b) makes clear that an antecedent debt or liability is taken to constitute valuable consideration for a bill of exchange or promissory note.

39    Section 32 is not concerned with, and does not do away with, other requirements for the formation of a binding contract, such as offer and acceptance. There is nothing in the Bills of Exchange Act which provides that the making and delivery of a bill of exchange or promissory note operates to discharge or replace an antecedent liability where the creditor has not agreed to that. The Bills of Exchange Act does not provide that a person who has an antecedent debt or liability to another may unilaterally replace that antecedent debt or liability with a different liability on the particular terms stipulated in a bill of exchange or promissory note.

40    Section 93 of the Bills of Exchange Act provides:

Presentment of note for payment

(1)    Where a promissory note is in the body of it made payable at a particular place, it must be presented for payment at that place in order to render the maker liable. In any other case, presentment for payment is not necessary in order to render the maker liable.

(2)    Presentment for payment is necessary in order to render the indorser of a note liable.

(3)    When a note is in the body of it made payable at a particular place, presentment at that place is necessary in order to render an indorser liable; but when a place of payment is indicated by way of memorandum only, presentment at that place is sufficient to render the indorser liable, but a presentment to the maker elsewhere, if sufficient in other respects, shall also suffice.

41    The liability to which s 93 refers is the liability to pay created by a promissory note. The liability of the Tredrea parties to pay Channel 9’s costs arises from the Costs Judgment, not from the Promissory Note. The proposition that the Tredrea parties’ liability would be discharged if Channel 9 did not either reject the Promissory Note by returning it to Mr Tredrea or present the Promissory Note at the identified place and time must depend on an assumption that delivery of the Promissory Note to Channel 9 was legally effective to substitute the Tredrea parties’ liability under the Costs Judgment with a liability to make payment in accordance with the Promissory Note. That assumption is wrong. The provision of the Promissory Note did not discharge or replace the liability that arose by reason of the Costs Judgment.

42    The Tredrea parties also referred to the definition of “Banker” in s 4 of the Bills of Exchange Act, apparently with a view to rebutting a submission made by Channel 9 that Mr Tredrea, as the issuer of the Promissory Note, was not a reputable financial institution. The Tredrea parties assert that he “is an incorporated or unincorporated body of persons involved in the business of banking”. First, this does not reflect the terms of the definition of “Banker” in s 4 of the Bills of Exchange Act, which actually refers to a body of persons “who carry on the business of banking” (emphasis added). Secondly, Mr Tredrea is not a body of persons. Thirdly, on its proper construction, the definition is referring to persons who carry on a business of banking as a banker, not persons who participate in banking as a customer. Fourthly, whether a promissory note is accepted as payment does not depend only on whether it was issued by a reputable financial institution.

43    The Tredrea parties also submit that the Promissory Note was “drawn against and supported by Warren Tredrea’s Birth Certificate, the Birth Certificate being a security” and that “[t]he Birth Certificate is a reputable and substantial financial instrument and institution”. These submissions misapprehend the nature of a birth certificate and the meaning of a security, a financial instrument and a financial institution.

44    Nothing in the Bills of Exchange Act provides that a bill of exchange or promissory note, created and delivered unilaterally by a debtor, must be accepted as a form of payment, or is generally acceptable as if it were a payment made in Australian currency.

45    We deal briefly with the other provisions referred to by the Tredrea parties. Section 39 of the Banking Act 1959 (Cth) confers a broad power on the Governor-General to make regulations in relation to the matters set out in s 39(2). These include certain matters that are described by reference to “Australian currency” or “foreign currency”. Section 39(8) is a definition provision that applies only for the purposes of defining terms as they appear in s 39 of the Banking Act. It has no wider operation. It defines the expressions “Australian currency” so as to include “promissory notes”. The definition of “Australian currency” in s 39(8) does not operate as a general definition of what constitutes or is acceptable as “Australian currency” for any other purpose.

46    Section 8 of the Currency Act 1965 (Cth) establishes the dollar as the monetary unit of Australia. Section 9(1) provides that every promissory note (as well as other instruments and transactions) “shall, unless it is made, executed, entered into or done according to the currency of some country other than Australia, be made, executed, entered into or done according to the currency of Australia provided for by this Act”. Nothing in ss 8 or 9 has the effect that a promissory note is, or must be treated as, equivalent to cash for relevant purposes.

47    Although not referred to by the Tredrea parties, we note that ss 16 and 20 of the Currency Act provide for legal tender by way of Australian coins. Section 36 of the Reserve Bank Act 1959 (Cth) likewise provides that Australian notes (defined in s 5(1) to mean notes issued under various Commonwealth laws) are legal tender. There is no provision in Australian legislation that states that a promissory note is legal tender, or must be accepted as the equivalent of Australian notes and coins.

48    Other legislative provisions on which the Tredrea parties rely are Division 195.1 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth), ss 115.290, 152.40, 295.85, 775.190 and 974.130 of the Income Tax Assessment Act 1997 (Cth), ss 121AO, 121C, 128F and 159GP of the Income Tax Assessment Act 1936 (Cth), ss 8J and 17(2) of the Taxation Administration Act 1953 (Cth), reg 18(1) of the Taxation Administration Regulations 1976 (Cth), and s 131.7(4) of the Criminal Code 1995 (Cth). Most of these are interpretation sections that define terms for the purposes of particular legislation, only. Some are operative provisions in legislation relating to tax liabilities and the administration of Commonwealth tax legislation. Each of the provisions makes reference to promissory notes or bills of exchange or both (or, in the case of s 131.7(4) of the Criminal Code, negotiable instruments generally), but none of them provides any support whatsoever for the position of the Tredrea parties.

49    None of the provisions relied on by the Tredrea parties supports the proposition that a promissory note constitutes “payment in a form compliant with Federal Legislation”.

Authorities addressing similar arguments

50    The arguments on which the Tredrea parties rely are similar to arguments which have been advanced in other cases and which have been rejected.

51    In Australia and New Zealand Banking Group Ltd v Evans [2016] NSWSC 1742 (Evans), a debtor claimed to have discharged his debt to a bank by proffering promissory notes made by him. In dealing with this argument, Garling J first set out the definition of “promissory note” in s 89(1) of the Bills of Exchange Act, which is set out in full at [35] above, then said (at [47]):

The essence of this definition, and one which would be commonly understood outside of the statutory context, is that a promissory note is a written promise to pay a sum of money on demand or at a particular time. A promissory note may, in the hands of the holder, be of some value because it may be able to be negotiated by endorsement to a third party. However, that does not mean that the proffering of a promissory note is the equivalent of a payment in cash.

52    Like the Tredrea parties in the present case, the debtor in Evans had attempted to rely upon documents which he had served on the bank, by which he purported to put the bank on notice that, if it did not return the promissory notes within three days of receipt, he would “take that failure to act as [the bank’s] acceptance of the promissory notes and as sufficient consideration to satisfy and discharge his liabilities”. This is similar to the terms which the Tredrea parties sought to impose on Channel 9 by way of Mr Tredrea’s letter to Mr O’Brien dated 8 May 2025 (the terms of which are set out at [12] above). Justice Garling rejected this argument, on the ground that “[s]ilence or inaction on the part of a party cannot, where no consideration passes, transform a unilateral demand into a contract”: Evans at [53]. This conclusion applies equally in relation to the documents received by Channel 9 on 3 June 2025.

53    Maksacheff v Commonwealth Bank of Australia (No 2) [2016] NSWSC 1109 is another case in which a similar argument was rejected. In that case, Campbell J granted summary judgment against plaintiffs who had attempted to rely on the delivery of a promissory note to discharge a liability they owed to the bank. In relation to this argument, his Honour concluded (at [22]-[23]):

Moreover, it seems to me that the plaintiffs[’] delivery of the promissory note to the Bank could not of itself discharge any liability of them as borrowers under the mortgage and loan agreement. It is not shown that in accordance with its terms the mortgage could be discharged by tender of a promissory note, especially one as heavily conditioned as that which forms part of Exhibit 2. If anything, the promissory note created a new obligation to pay had the Bank presented the note on the date and at [the] time and place it specified. The Bank’s failure to present the note for payment discharged the plaintiffs from any liability on the note: ss 89 and 93 Bills of Exchange Act 1909 (Cth). It did not discharge the plaintiffs from their liability on the mortgage or loan agreement, the latter of which doubtless specified the required mode of payment to effect a discharge.

I am satisfied that the plaintiffs[’] claim has no prospects of success whatsoever and that the proceedings must be summarily dismissed.

54    In Maksacheff v Commonwealth Bank of Australia [2017] NSWCA 126, the plaintiffs sought leave to appeal against the decision of Campbell J. The New South Wales Court of Appeal addressed the relevant argument, which it referred to as the Repayment Argument, at [79]-[91]. It is apparent from the description of the promissory notes (at [81] and [83]) that they were in similar terms to the Promissory Note on which the Tredrea parties rely in this case. The Court of Appeal refused leave to appeal against the decision of Campbell J, for reasons including that the decision gave rise to no injustice.

55    In Collis v Bank of Queensland Ltd [2021] VSCA 17, the Victorian Court of Appeal considered another attempt by a debtor to discharge a debt using promissory notes created by himself and his wife. The Court of Appeal said (at [106]-[107]):

The judge held that the promissory notes created by the Applicant “were without legal effect” and did not discharge the debt owed to the First Respondent. The judge referred to various authorities which establish that home-made promissory notes that are not drawn on a reputable and substantial financial institution will not diminish the debtor’s liability to the lender.

In our opinion, the judge was correct for the reasons given. The First Respondent was not obliged to accept an unsecured promissory note from its debtor, the Applicant. It represented no more than a piece of paper devoid of legal content other than perhaps having some effect as an acknowledgment of debt. More relevantly, it had no effect on the underlying obligations. Precisely how the promissory note was considered to discharge the underlying obligations, absent acceptance, was not explained. It could not constitute a tender …

(Footnotes omitted.)

56    In the reasons for judgment of which the Court of Appeal approved, Bank of Queensland v GL & LA Collis Pty Ltd [2019] VCC 2062, the trial judge had summarised the established position as including the following (at [82]):

(a)    home-made promissory notes or bills of exchange which are not drawn on a reputable and substantial financial institution will most probably not excuse a debtor from paying a creditor;

(b)    proffering a home-made promissory note or bill of exchange is not equivalent to payment in cash;

(c)    it is nonsense to suggest that a debtor’s liability to repay a substantial debt to a creditor can be excused or discharged by giving the creditor a home-made promissory note or bill of exchange;

(d)    to be legally enforceable and relevant, the debtor should show, inter alia, that the promissory note or bill of exchange is a recognised and permissible form of payment under the finance documentation with the creditor; and

(e)    where a creditor, who receives from a debtor a purported promissory note or bill of exchange not drawn on a reputable financial institution and not shown to be a recognised form of payment under the finance documentation, is silent and takes no action regarding the documentation, such silence or inactivity cannot change a debtor’s unilateral demand into a contract.

(Footnote omitted.)

57    These conclusions apply equally in the present case.

58    In Douglas v Simons Builders Pty Ltd [2015] VSC 118, Derham AsJ considered whether the unilateral delivery of a promissory note for the amount of a deposit due under a contract of sale constituted payment of the deposit in accordance with the contract. Among other things, the plaintiff in that case argued that, by retaining possession of the promissory note, the defendant must be taken to have accepted it as payment. This argument is similar to one relied on by the Tredrea parties. It was rejected. Associate Justice Derham held (at [46]) that, in the absence of acceptance of the promissory note in satisfaction of the debt due, there was no suspension of the debt due and it was “as if there had never been a Promissory Note tendered”.

59    The Tredrea parties referred to five cases, identified at [11] of Mr Tredrea’s affidavit affirmed on 21 July 2025. Based on his brief description, these appear to be cases of which Mr Tredrea has somehow become aware, which were settled or discontinued or determined otherwise than on the basis that the arguments on which he relies were accepted as correct. They are not authorities that are capable of assisting the Tredrea parties.

Conclusions

60    All of the submissions relied on by the Tredrea parties are misconceived. The Promissory Note was not effective as a means of discharging or reducing the debt owed by the Tredrea parties to Channel 9. Channel 9 had not agreed to accept the Promissory Note as a form of payment and it could not otherwise operate as such.

Should a lump sum costs order be made?

Relevant rules and practice note and applicable principles

61    Rule 40.02(b) of the Federal Court Rules 2011 (Cth) provides that a party who is entitled to costs may apply to the Court for an order that costs be awarded in a lump sum, instead of, or in addition to, any taxed costs. The purpose of a rule such as r 40.02(b) is “to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation”: Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at 120 (Beach).

62    The Court’s Costs Practice Note (GPN COSTS) states that the Court’s preference is to make a lump sum costs order so as to finalise costs and avoid potentially expensive and lengthy taxation hearings, when it is practicable and appropriate to do so. A lump sum order may be appropriate “where a taxation would require the parties to consume additional time and incur additional expenditure prolonging already protracted litigation; and generally to avoid an ongoing, counter-productive dispute as to costs, in the interests of achieving finality”: Paciocco v Australia and New Zealand Banking Group Ltd (No 2) (2017) 253 FCR 403; [2017] FCAFC 146 at 407 [20].

63    The onus is on Channel 9 to demonstrate there is a logical, fair, and reasonable basis for the lump sum costs order that is sought: Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 7) [2018] FCA 1217 at [50]. The Court should avoid overestimating the recoverable costs. There is no obligation to apply a discount but there may be cases where that is appropriate: Beach at 124. In assessing lump sum costs, the Court must necessarily apply a broader brush than would be used on a taxation of costs.

A lump sum costs order is appropriate

64    The Tredrea parties do not dispute the facts on which Channel 9 relies in support of its submission that a lump sum costs order should be made. Nor have they disputed the evidence on which Channel 9 relies for its contention that the amount of costs should be fixed at $149,000. Their ground of opposition to the making of such an order is that there is no point, because the provision of the Promissory Note, coupled with Channel 9’s failure to return the Promissory Note to Mr Tredrea within 72 hours, discharged their liability to pay Channel 9’s costs. For the reasons already explained above, the position of the Tredrea parties is wrong.

65    It is desirable that these proceedings be brought to finality and that the parties not be put to the further expense associated with a taxation of costs. While it would be open to delegate the assessment of the amount of a lump sum costs order to a registrar, the evidence now before the Court enables us to fix an amount ourselves. That is the most efficient course in this case. We are satisfied that it is appropriate that the Full Court fix costs in a lump sum.

The amount of the lump sum

66    Channel 9 relies upon the affidavit of Mr Grisenti, an accredited costs law specialist, sworn on 7 July 2025. Mr Grisenti’s evidence is to the effect that, for reasons that he explains in his affidavit, he considers that a logical, fair and reasonable lump sum should be fixed in the amount of $149,210.70. This figure relates to Channel 9’s estimated costs of the appeal by the Tredrea parties, action SAD 49 of 2024, only. It does not include the costs of the separate appeal brought by Channel 9, action SAD 66 of 2024. The lump sum suggested by Mr Grisenti involves a significant discount compared with the actual costs incurred by Channel 9 as between solicitor and client.

67    The total of $149,210.70 includes an allowance of $15,000 in respect of legal costs (including counsel fees) incurred after Mr Grisenti’s engagement, including fees in connection with the preparation of written submissions, quantification of costs and consideration of documents filed by the Tredrea parties in connection with Channel 9’s request for a lump sum costs order. We accept that some allowance should be included for the costs involved in those additional steps.

68    The estimate of the costs recoverable by Channel 9’s strikes us as surprisingly high, bearing in mind that the appeal was listed for hearing (together with Channel 9’s appeal) with one day set aside, and even taking into account the number of appeal grounds relied upon by the Tredrea parties. Nevertheless, we note that we have not undertaken a detailed consideration of the work done (which would defeat the purpose of a lump sum costs assessment); that we take some comfort in the fact that Mr Grisenti is an independent costs law expert; that no challenge was made to his evidence or the basis for his assessment; and that the amount identified by him is commensurate with the sum that Mr Tredrea attempted to pay by way of promissory note (plus the additional costs of the further argument). On the basis of the undisputed evidence of Mr Grisenti, we would fix the amount of the costs payable by the Tredrea parties to Channel 9 at $149,000.

Conclusion

69    There has been no contractual agreement between the parties resolving the quantum of costs payable by the Tredrea parties. The offer made by Channel 9 was not accepted in the period for which it was open for acceptance. The provision of a promissory note made by Mr Tredrea was not effective to discharge the liability of the Tredrea parties to pay to Channel 9 the costs of the Tredrea parties’ appeal. We will order that there be a lump sum assessment of those costs.

70    In order to give effect to these conclusions, we will vary the order made on 11 April 2025 so as to require that the Tredrea parties pay Channel 9’s costs of the appeal (including the costs of the argument that there be a lump sum costs order), fixed in a lump sum in the amount of $149,000.

Associate:

Dated:    5 September 2025