Federal Court of Australia

Maclean v Brylewski, in the matter of Maclean [2025] FCAFC 133

ORDERS

THE COURT ORDERS THAT:

1.    The appeal is allowed.

2.    The orders of the primary judge made on 2 September 2024 are set aside.

3.    The appellant's application for the annulment of her bankruptcy is remitted for rehearing in the original jurisdiction of the Court.

4.    On or before 4.00 pm AEDT on 9 October 2025 the appellant must file and serve an outline of written submissions as to the costs of the appeal and of the proceeding below, of no more than three pages in length.

5.    On or before 4.00 pm AEDT on 16 October 2025 the third respondent must file and serve an outline of written submissions as to the costs of the appeal and of the proceeding below, of no more than three pages in length.

6.    On or before 4.00 pm AEDT on 23 October 2025 the first and second respondents must file and serve an outline of written submissions as to the costs of the appeal and of the proceeding below, of no more than three pages in length.

7.    Any issues as to costs arising from those submissions will be determined on the papers.

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

REASONS FOR JUDGMENT

JACKSON AND MOORE JJ:

1    We have had the benefit of reading in draft the reasons for decision prepared by Stellios J. His Honour's careful exposition of the course of the proceeding below, and of the issues that arise on this appeal, allows us to move directly to what we consider to be the determinative point in the appeal.

A conflict of interest

2    Ground 2 of the amended notice of appeal contends that in the proceeding below, there was:

a denial of procedural fairness by reason of the Court:

a)    not adequately considering whether and how it should exercise its implied jurisdiction to ensure the due administration of justice and protect the integrity of the judicial process in circumstances where the Court considered that Mr Adamson was the principal debtor but was also acting as the sole advocate of Ms Maclean;

b)     failing to exercise the Court's powers to control its own processes to ensure these issues were dealt with by an adjournment and appropriate directions, or referral to pro bono independent legal assistance.

3    Mr Adamson was the legal representative of the appellant, Ms Maclean, in the Court below. The particulars to the ground refer to his claim to be owed a large sum in legal costs by her. The particulars say that the primary judge gave material weight to Mr Adamson's invoices.

4    Since this ground concerns the procedural fairness of the trial below, it is appropriate for the Court to determine it before the other grounds: Jorgensen v Fair Work Ombudsman [2019] FCAFC 113; (2019) 271 FCR 461 at [93] (Greenwood, Reeves and Wigney JJ); Gambaro v Mobycom Mobile Pty Ltd [2019] FCAFC 144; (2019) 271 FCR 530 at [49] (Greenwood, Reeves and Rangiah JJ).

5    The application prosecuted below by Ms Maclean was for the annulment of her bankruptcy. In that application, it was open to her to seek to prove that she was able to pay her debts out of her own money. If she had established that, it would have followed that the sequestration order ought not to have been made, so that the ground for the exercise of the discretion to annul the bankruptcy would have been established. Further, Ms Maclean's ability to pay those debts, if proven, would have weighed heavily in her favour as to the exercise of the discretion: see Kessly v Beadle as Trustee of the Bankrupt Estate of Evangelina Francisca Kessly [2020] FCA 607 at [41]-[48] (Burley J) and the cases set out there. The ability to pay debts for this purpose is assessed, not just by reference to immediately available cash resources, but to monies that can be procured 'by realization by sale or by mortgage or pledge of [the debtor's] assets within a relatively short time': Sandell v Porter (1966) 115 CLR 666 at 670 (Barwick CJ).

6    As Stellios J sets out, Ms Maclean's solicitor representing her in the annulment application claimed that she owed him a debt for his legal costs. That alleged debt was by far the largest claimed against her. It was in the order of $391,000 (by comparison, the petition debt was $59,952.31). Mr Adamson had issued all the invoices for his claimed legal costs some two weeks after Ms Maclean had been served with the bankruptcy petition. One day after he issued those invoices, he lodged a caveat over a property at Katoomba, New South Wales, of which Ms Maclean was a joint tenant. This was said to be based on an 'equitable lien' that secured the debt.

7    These claims on Mr Adamson's part were potentially material to the annulment application. On the figures outlined in the primary judgment (PJ) at [21]-[31], Ms Maclean said that the Katoomba property was valued at $650,000. It was mortgaged to a bank for up to $130,000, leaving equity of $520,000. So Ms Maclean's potential half interest in the Katoomba property may have been worth $260,000. There was some uncertainty as to whether she was claiming a half interest in the property: see PJ [26]. But that arose from things that were said in an affidavit sworn when she was self-represented; it is not at all clear what position she may have taken if properly advised.

8    Apart from Mr Adamson, the only substantial creditors of Ms Maclean were the Brylewskis, who were the petitioning creditors and are the first and second respondents in this appeal. As at the time of the annulment application, they were owed about $152,000 (it was about $78,000 at the time of the sequestration order). There were other small creditors owed about $4,000. So on the figures outlined by the primary judge, at the time of the annulment application Ms Maclean potentially had about $110,000 (or more) in net assets after payment of the debts owed to the bank and to the first and second respondents, if Mr Adamson's alleged debt were to be disregarded and if Ms Maclean had a half interest in the Katoomba property. This excludes other assets claimed by Ms Maclean, such as her claimed interest in the deceased estate of the late Mr Radecki.

9    It is true that by the time of the trial of the annulment application, the third respondent, Mr Bailey, also claimed costs, fees and disbursements of about $100,000, incurred or paid in his capacity as Ms Maclean's trustee in bankruptcy. But even allowing for that, the claimed debt owed to Mr Adamson, and its status as a debt allegedly secured over the Katoomba property, changed the complexion of the assessment of Ms Maclean's financial position, both as at the time of the sequestration order and as at the date of the annulment application. The outcome of the application could well have turned on it. That is demonstrated by the reliance which the primary judge placed on those debts as showing that Ms Maclean was not solvent: see PJ [47]-[49], [51].

10    As the primary judge acknowledged (PJ [30]), there was no evidence that the other half owner of the Katoomba property had granted any equitable lien to Mr Adamson. The caveat was also open to question, as it had been lodged one day after the invoices were issued, and so before they had fallen due and payable. The invoices themselves were issued just under two weeks after the bankruptcy petition was served on Ms Maclean, and they were not itemised. Submissions were made on behalf of the Brylewskis at the final hearing to the effect that there was a serious question for the Court about whether the debts claimed by Mr Adamson were payable.

11    In those circumstances, it was objectively apparent that for Mr Adamson to represent Ms Maclean on the annulment application was for him to act in circumstances of conflict of interest. The allegedly secured debt which it was in his personal interest to claim was open to question. That debt potentially made the difference between success and failure in the annulment application.

12    It is true that not all of the above details became apparent until Mr Adamson's invoices and costs agreement were produced at the final hearing. But as set out in Stellios J's judgment, even at the time of the first case management hearing, it appeared likely that any issue as to Ms Maclean's solvency would hinge on the secured debt Mr Adamson claimed was owed. And that was in circumstances where: one version of Ms Maclean's statement of affairs did not mention the alleged debt; Mr Adamson was resisting the production to the trustee in bankruptcy of documents to substantiate that debt; when asked about the relevance of the claim, Mr Adamson dismissed it on the misconceived basis that he was not going to prove in the bankrupt estate; Mr Adamson was contemplating that he might not adduce evidence so as to avoid his being cross-examined; and there was no reason to think that one joint tenant of the relevant property had granted any security.

The Court's power to restrain Mr Adamson from acting

13    In those circumstances, the Court below had the jurisdiction (in the sense of power) to restrain Mr Adamson from acting in the matter. That power is often said to arise from the inherent jurisdiction of superior courts to supervise the conduct of legal practitioners who are their officers, where that is necessary to ensure the due administration of justice: Ismail-Zai v Western Australia [2007] WASCA 150; (2007) 34 WAR 379 at [19] (Steytler P, Wheeler JA agreeing). Although nothing turns on it, in this Court that is better described as an implied power: see Farrell v Super Retail Group Limited (Cross-claim) [2024] FCA 1189 at [5]-[6] (Lee J); and see also State of Western Australia v Ward (1997) 76 FCR 492 at 498 (Hill, Branson and Sundberg JJ).

14    That implied or inherent power is often invoked in circumstances where a legal practitioner is acting in a capacity adverse to the interests of a former client, but where the danger of misuse of confidential information does not afford a basis for the restraint: see e.g. Dealer Support Services Pty Ltd v Motor Trades Association of Australia Ltd [2014] FCA 1065; (2014) 228 FCR 252 (Beach J). But there is no cause to restrict it to those circumstances. The Brylewskis appeared to submit that it was so restricted, but we do not accept that. Rather, it is a common instance of a broader principle that lawyers acting in proceedings should be impartial and independent, and that the Court can restrain a lawyer who is not impartial from acting: Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29; (2019) 269 CLR 333 at [18]-[19] (Kiefel CJ, Bell, Keane and Gordon JJ).

15    The New Zealand Court of Appeal articulated the principled basis for the power in Black v Taylor [1993] 3 NZLR 403. The terms in which it did so have proved influential in Australia: see e.g. Ward at 498; Kallinicos v Hunt [2005] NSWSC 1181; (2005) 64 NSWLR 561 at [44], [76]; Ismail-Zai at [30]-[31], [33]-[35]; Alvoen on behalf of the Wakaman People #5 v State of Queensland (No 3) [2021] FCA 785 at [44]-[45].

16    In Black v Taylor at 408, Richardson J (Cooke P agreeing) said:

The High Court has an inherent jurisdiction to control its own processes except as limited by statute. As an incident of that inherent jurisdiction it determines which persons should be permitted to appear before it as advocates. In determining what categories of person may appear it does so in accordance with established usage and with what is required in the public interest for the efficient and effective administration of justice (3(1) Halsbury's Laws of England (4th ed) para 396).

Another aspect of the inherent jurisdiction is the control of a particular proceeding in the Court. There the Court's concern is with the administration of justice in a particular case and in the generality of cases and with the associated basic need to preserve confidence in the judicial system. The right to a fair hearing in the Courts is an elementary but fundamental principle of British justice. It reflects the historical insistence of the common law that disputes be settled in a fair, open and even-handed way. It has been a mainspring of the development of administrative law over the past 40 years. Its fundamental importance has been emphasised in a number of recent decisions of this Court, including Minister of Foreign Affairs v Benipal [1984] 1 NZLR 758; EH Cochrane Ltd v Ministry of Transport [1987] 1 NZLR 146 and R v Hall [1987] 1 NZLR 616.

An associated consideration is the fundamental concern that justice should not only be done but should manifestly and undoubtedly be seen to be done (R v Sussex Justices, ex parte McCarthy [1924] 1 KB 256, 259 per Lord Hewart CJ; see also R v Racz [1961] NZLR 227 and R v Burney [1989] 1 NZLR 732).

The integrity of our system of justice depends on its meeting those standards. The assessment of the appearance of justice turns on how the conduct in question - here Mr Gazley's wish to be able to act as a counsel for the defendants against M A Taylor - would appear to those reasonable members of the community knowing of that background.

17    Richardson J distilled these concerns down to the proposition that the court has inherent jurisdiction to restrain a practitioner from acting 'where it is satisfied that the interests of justice so require': Black v Taylor at 409. While that has been supplemented by a more specific standard about to be described, it shows that no narrow view should be taken of the circumstances in which the jurisdiction is enlivened. It does not just arise when a lawyer 'changes sides' (as to which see D & J Constructions Pty Ltd v Head (1987) 9 NSWLR 118 at 123 (Bryson J); Australian Commercial Research and Development Limited v Hampson [1991] 1 Qd R 508 at 516 (Mackenzie J); Newman v Phillips Fox [1999] WASC 171; (1999) 21 WAR 309 at [45] (Steytler J)). A recent example of the wider application of the principle is provided by the decision in Michael Wilson & Partners, Ltd v Emmott [2025] FCA 1005 (Moore J).

18    The jurisdiction concerns independence. It 'arises from the court's concern that it should have the assistance of independent legal representation for the litigating parties': Oceanic Life Ltd v HIH Casualty & General Insurance Ltd [1999] NSWSC 292 at [48] (Austin J). The integrity of the judicial process is 'undermined if solicitors or counsel do not possess the objectivity and independence which their professional responsibilities and obligations to the Court require of them': Kooky Garments Ltd v Charlton [1994] 1 NZLR 587 at 590 (Thomas J). Thus in Grimwade v Meagher [1995] 1 VR 446 at 452, Mandie J held that the circumstances of that case:

would in my view cause a fair-minded observer to apprehend a real risk that the first defendant would be unable to appear in the said action and act with that objectivity and detachment which the court expects of counsel appearing before it and a real risk that the first defendant would be unable to properly distinguish or avoid a conflict between his personal interests and his duty to his clients in the said action. Alternatively, to adopt the test propounded by Mr. Jones, I consider that there is a real and sensible risk of a lack of objectivity by the first defendant which not only gives rise to an undue risk of unfairness or disadvantage to the plaintiff but gives rise to a substantial concern that a fair trial would not be had and hence gives rise to a concern for the integrity of the judicial process and the due administration of justice.

19    'The goal is not just to protect the interests of the individual litigant but even more importantly to protect public confidence in the administration of justice': Everingham v Ontario (1992) 88 DLR (4th) 755 at 762. In Black v Taylor at 412, Richardson J relied on that passage, and explained that:

The decision to disqualify is not dependent on any finding of culpable conduct on the lawyers' part. Disqualification is not imposed as a punishment for misconduct. Rather it is a protection for the parties and for the wider interests of justice. The legitimacy of judicial decisions depends in large part on the observance of the standards of procedural justice. Where the integrity of the judicial process is perceived to be at risk from the proposed or continuing representation by counsel on behalf of one party, disqualification is the obvious and in some cases the only effective remedy although considerations of delay, inconvenience and expense arising from a change in representation may be important in determining in particular cases whether the interests of justice truly demand disqualification.

20    Before turning to the specific standard that has come to be applied in such cases, it is worth mentioning three points relevant to this appeal which emerge from this discussion of the underpinnings of the implied or inherent power.

21    The first point is that the need to restrain a practitioner from acting in a position of conflict can arise even when the client has consented to the conflict: see Afkos Industries Pty Ltd v Pullinger Stewart (a firm) [2001] WASCA 372 at [34] (Murray, Anderson and Steytler JJ agreeing); and see Charisteas v Charisteas [2022] FedCFamC1A 160 at [53] (Alstergren CJ, McClelland DCJ and Aldridge J). That is because the public interest in the administration of justice is engaged, so the issue is not confined to the private interests of the parties. In Taylor v Attorney-General [1975] 2 NZLR 675 at 689 Woodhouse J said (albeit in a different context): 'Thus it is the due administration of justice - at the time and for the future - that is the concern and province of the Court: not the personal but extraneous problem that may face the individual litigant or witness or Judge in some particular case'.

22    The second point is that the principle fundamentally concerns the need for a trial that is fair, but also seen to be fair. Richardson J's observations in Black v Taylor in particular show that this arises from the same wellspring as the principles of natural justice or procedural fairness. So although the second ground of appeal frames the question in terms of those principles, that is adequate to invoke consideration of the jurisdiction under discussion here.

23    The third point is that the Court can exercise the power of its own motion. The jurisdiction under discussion is a species of the Court's inherent (or implied) power arising out of 'the authority of the judiciary to uphold, to protect and to fulfil the judicial function of administering justice according to law in a regular, orderly and effective manner': Master Jacob, 'The Inherent Jurisdiction of the Court' (1972) 23(1) Current Legal Problems 23-52, 28; and see also Black v Taylor at 418 (McKay J), 406 (Cooke P agreeing). The Court has a duty to ensure a fair trial. If it is necessary in order to fulfil that duty to ensure that the trial does not proceed with one party represented by a particular practitioner, then that is what the Court must do. It may well be necessary for the Court to move itself, in a case such as this one where one party to the litigation is represented by the practitioner who has the conflict, and the other parties do not have a sufficient interest in applying for that practitioner to be restrained from acting.

24    As to the specific standard to be applied, this was set out by Lee J (Besanko and Abraham JJ agreeing) in Porter v Dyer [2022] FCAFC 116 at [113]-[114] as requiring consideration of whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a practitioner be prevented from acting in the interests of the protection of the integrity of the judicial process and the appearance of justice. There has been some controversy as to whether the relevant standard is 'would conclude' or 'might conclude': cf. Mumbin v Northern Territory of Australia (No 1) [2020] FCA 475 at [39] (Griffiths J) (and the cases there cited); Dyer v Chrysanthou (No 2) (Injunction) [2021] FCA 641 at [136]-[142] (Thawley J). We have not had the benefit of submissions on this particular topic, and it is not necessary to enter into the controversy. Nothing turns on this distinction in the present case because, in our view, the circumstances meet the higher standard.

What the proper administration of justice required here

25    In this case, a reasonably informed member of the public would have concluded that the proper administration of justice required that Mr Adamson be prevented from acting for Ms Maclean on her annulment application. The observer would have considered that this was necessary to protect the integrity of the judicial process and to preserve the appearance of justice.

26    Ms Maclean was unlikely to receive a fair trial where the success of her annulment application may have turned on the validity of a debt claimed by the solicitor appearing on her behalf in the application and the validity of an associated security also claimed by him. It is obvious that he could not be seen to independently represent Ms Maclean's interests, when that may have required him to impugn the very debt which he claimed to be owed. He could not have been objective about that. Mr Adamson's attempt to deflect the concern when raised by the primary judge, by saying that he was not going to prove in the bankruptcy, was misconceived and suggested that he had not applied his mind to the problem properly.

27    We agree with Stellios J that it is not necessary to identify a specific step that the trial judge might have taken, whether before or during the final hearing. All that need be concluded is that his Honour had power to eliminate this risk to the fairness of the hearing, and with respect, he should have exercised that power.

28    As Stellios J's account of the proceeding below indicates, the primary judge was doing his best to keep the proceeding on track in the face of the chaotic way in which it was conducted by Mr Adamson, exacerbated by Ms Maclean's attempt to be heard personally. It is understandable that the primary judge considered that the best course was to proceed to trial and judgment. From the perspective of an appellate court with the benefit of submissions from independent counsel, we respectfully disagree. However, given our views about the centrality of the conflict to the resolution of the matter, we do not consider it necessary to canvass, as potential contributors to a lack of procedural fairness, the other difficulties encountered in the course of the proceeding below.

29    Contrary to submissions made on behalf of the Brylewskis, the standard thus imposed on the conduct of the hearing below is not unworkable. It merely represents the application of the standard stated in Porter v Dyer. The outcome of this appeal will impose no new rule on trial judges, which requires them to intervene whenever they detect that a practitioner appearing before them has a conflict of interest. It is unnecessary and undesirable to lay down any specific test as to when intervention in such circumstances is required. All that need be said is that on the principles summarised above, in the exceptional circumstances of this case, the proper administration of justice required that Mr Adamson not be permitted to keep acting, and in the absence of any application by a party, the Court needed to act of its own motion. Those exceptional circumstances included not only the centrality of the alleged debt to the assessment of Ms Maclean's solvency, but also the matters identified by the legal representative of the Brylewskis that raised at least a question as to the validity or quantum of the relevant debt, being matters that Mr Adamson could not sensibly address.

30    That is not to say that the impact of any restraint on the practical conduct of the proceeding is to be disregarded. What is required is an overall evaluation of what was in the interests of the administration of justice. In this case the undesirability of adjourning the final hearing (for a second time) causing the parties to incur additional costs, is an important factor in the evaluation: see Black v Taylor at 412 (Richardson J). But as the discussion above shows, the problem was objectively apparent as early as the first case management hearing. The submissions made on behalf of the Brylewskis at the final hearing only confirmed and highlighted it.

31    And even if the final hearing was the first time that the issue would have presented itself to the hypothetical observer, in our view the risk that the trial would be unfair was so critical that even at that point it should not have been permitted to proceed. A denial of fairness can compromise the proceeding as a whole, even if it occurs at a late stage.

32    The authorities emphasise that 'the inherent supervisory jurisdiction in this respect is an exceptional one and that it should be exercised with circumspection and caution' (Ismail-Zai at [35]). Nevertheless, in our respectful view it should have been exercised here.

The respondents' submissions

33    The third respondent, the trustee in bankruptcy, properly did not take a position on the second ground of appeal.

34    The Brylewskis' submissions in opposition to the ground rely on various instances (described by Stellios J) in which Ms Maclean was in court when Mr Adamson advanced certain matters, putatively on her behalf, without demur from her, or where the primary judge referred in her presence to the issues that have been canvassed above. For example, Mr Adamson repeatedly confirmed Ms Maclean's indebtedness to him, without demur from her, and described her as being 'happy' with his fees.

35    But it is no answer to a complaint that a solicitor was conflicted to say that the client did not take steps to interrupt his representation of her, or to terminate his retainer so that she could act on her own behalf. (As Stellios J explains, Ms Maclean did attempt that on one occasion, but for a different reason.) If the consent or waiver of the client is to be relied on, it must be established that the solicitor made full disclosure of the relevant interest. In Law Society of New South Wales v Harvey [1976] 2 NSWLR 154 at 170, Street CJ (delivering the judgment of the Court of Appeal) said:

It must be a conscientious disclosure of all material circumstances, and everything known to him relating to the proposed transaction which might influence the conduct of the client or anybody from whom he might seek advice. To disclose less than all that is material may positively mislead.

36    The matters on which the Brylewskis rely, taken separately or cumulatively, do not meet this exacting standard. That is so even when they are assessed in the context of what fell from the primary judge. Mr Adamson's misconceived attempt to deflect the concern, when the primary judge raised it, by saying that he was a secured creditor and would not prove in the bankruptcy, suggests that Ms Maclean was not receiving frank and correct advice.

37    In any event, this standard is generally applied in cases concerning private rights between solicitor and client. As has been explained, the public interest in the administration of justice means that it was not open to Ms Maclean to waive Mr Adamson's conflict, certainly not in the implicit way on which the Brylewskis rely.

38    There is a more straightforward problem with several of the arguments put by the Brylewskis: they rely on conduct, not of Ms Maclean but of Mr Adamson, the solicitor who had the conflict. For example, they submit (at para 40 of their written submissions) that '[o]bjectively, the Appellant consistently maintained, through her legal representative, that Mr Adamson's debts were payable but she was nonetheless solvent.' Since that legal representative was Mr Adamson himself, that putative statement of her position cannot be held against her. As counsel for Ms Maclean submitted on appeal, to hold Mr Adamson's forensic choices against her would be to perpetuate the injustice. The Brylewskis' submissions present this as a 'hard case' which Ms Maclean chose to run. The submission fails to grapple with the obvious problem that her 'choice' was likely to have been influenced by the solicitor who had a personal interest in maintaining that the costs debts were payable.

39    Another submission made on behalf of the Brylewskis can be accepted: that the 'bare fact that a legal representative is also a creditor (even a large creditor) in a debtor's estate in a bankruptcy context is insufficient to invoke the exceptional power of restraint' (at para 41). But the discussion above shows that the circumstances here involved much more than that bare fact. The submission goes on to say that this fact is all the less sufficient where the application is brought on appeal by the client itself rather than the opposing party. The discussion above shows that the jurisdiction is not limited in this way. Whether raised by the client or not, if the proper administration of justice required that a practitioner should have been prevented from acting, that can impeach the actual and perceived fairness of the trial, so as to require the judgment to be set aside on appeal.

40    The Brylewskis' submissions go so far as to complain that Ms Maclean does not explain why it was the Court rather than the appellant herself who had to take that action. But the reason is that the appellant was being represented in the Court by the very practitioner who had the conflict. The Brylewskis accuse Ms Maclean of now thinking that some 'better' legal representative could have been obtained below. Her submissions are, rather, that her actual legal representative should not have been permitted to proceed on her behalf in Court, in circumstances including an obvious conflict of interest.

41    The Brylewskis also rely on what they say was Ms Maclean's express decision not to criticise Mr Adamson in her submissions on appeal. But that is not a fair reading of the submissions. It is true that Ms Maclean's written submissions say (at para 23) that 'it is wholly unnecessary for the Court to consider the particular obligations of Mr Adamson, or to make any criticism in that respect'. But that is said in the context of the preceding paragraph, which correctly applied the standard of the fair-minded, reasonably informed member of the public. The point being made was simply that it was not necessary for the Court to determine that Mr Adamson had breached any legal, equitable or ethical obligations to Ms Maclean. That is correct: see [19] above. The question was, rather, an objective one of the public interest in the administration of justice.

42    Finally, counsel for the Brylewskis submitted that the appeal fails because the Court can be confident that any procedural unfairness did not deprive Ms Maclean of the possibility of a successful outcome. We doubt that, in order to conclude that the trial did not meet the requirements of fairness, it is necessary to establish that Ms Maclean's ongoing representation by Mr Adamson deprived her of the possibility of a successful outcome: cf. Stead v State Government Insurance Commission (1986) 161 CLR 141 at 147. In LPDT v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2024] HCA 12; (2024) 280 CLR 321 at [6], the High Court confirmed that the analogous concept of materiality does not apply to cases of jurisdictional error for apprehended bias, where the test and the consequences of failing to meet it are similar to the Porter v Dyer test applied here.

43    But there is no need to resolve the question for present purposes. Even if the requirement found in Stead does apply, the matters set out at the beginning of these reasons demonstrate that permitting the hearing to proceed with Mr Adamson representing Ms Maclean deprived her of the possibility of a successful outcome.

Conclusion on the appeal

44    For these reasons, we agree with Stellios J that ground 2 should be upheld and the appeal should be allowed. It is not necessary to determine the other grounds of appeal.

45    We also agree with Stellios J that it would not be appropriate for the Full Court to exercise the discretion as to whether to annul the bankruptcy for itself. The evidence that was adduced in the proceeding below was the outcome of forensic choices made by a solicitor in a position of conflict which has resulted in a hearing that was, or was seen to be, unfair. That evidence was necessarily supplemented only to a limited extent on appeal. It would not be appropriate for the Court to determine the matter on the basis of that evidence. The matter must be remitted to be determined afresh by a judge in the original jurisdiction assisted, it is to be hoped, by an independent legal practitioner acting for Ms Maclean.

An evidentiary ruling

46    At the hearing, the Court indicated that it would receive into evidence in the appeal the second affidavit Ms Maclean swore on 7 May 2025, subject to later determination of a relevance objection made by the Brylewskis. Since we have had no need to refer to the evidence in that affidavit in order to determine the issues arising in the appeal, we would uphold that objection.

Costs

47    On the face of things, as between Ms Maclean and the Brylewskis, costs in the appeal should follow the event. But given the unusual circumstances of the proceeding below, there may be room for argument as to those costs. Also, the trustee in bankruptcy may wish to take a particular position on costs. There will be directions for the parties to file written submissions as to the costs orders they seek with respect to the appeal and the proceeding below, with the question to be determined on the papers.

Pro bono Representation

48    Ms Maclean was represented on appeal by counsel and solicitors who were acting pro bono. We are grateful to them for providing this assistance.

Associate:

Dated:    30 September 2025

REASONS FOR JUDGMENT

STELLIOS J:

49    This is an appeal from the judgment and orders of the primary judge made on 2 September 2024 in Maclean v Brylewski, in the matter of Maclean [2024] FCA 1005 (Primary Judgment or PJ). Before the primary judge, the appellant sought an annulment pursuant to s 153B of the Bankruptcy Act 1966 (Cth) (annulment proceeding) of the sequestration order made against her estate by a Registrar of the Court on 6 February 2024 (bankruptcy proceeding).

50    The appellant now seeks to set aside the Primary Judgment and the primary judge's orders, and either have her bankruptcy annulled or the matter remitted to a single judge for determination. Ground 2 of the Amended Notice of Appeal alleges that the appellant was denied procedural fairness. For the reasons that follow, the appellant succeeds on Ground 2. Consequently, it is not necessary to consider the other grounds in the Amended Notice of Appeal.

BACKGROUND

51    The appellant is the widow of the late Emil Radecki (the deceased). The first respondent is his niece.

52    Christopher Adamson was the solicitor who represented the appellant in a number of proceedings:

    A proceeding in the Supreme Court of New South Wales (NSW) commenced by the first and second respondents against the appellant (common law proceeding). The first and second respondents sought and obtained possession of a property in Canterbury, NSW (Canterbury property). The proceeding resulted in various judgments and orders against the appellant and in favour of the first and second respondents, including various judgments and orders by the NSW Court of Appeal.

    An ongoing proceeding in the Supreme Court of NSW by the appellant against the first and second respondents in relation to a will of the deceased (probate proceeding). The appellant seeks a declaration that the will in question is valid, a grant of probate in respect of it and/or an order under the Family Provision Act 1982 (NSW). The first and second respondents cross-claim seeking a declaration that the marriage of the deceased and the appellant was a nullity, that the will in question is invalid and that probate should be ordered in accordance with an earlier will.

    The annulment proceeding before the primary judge.

53    Mr Adamson did not represent the appellant in either the bankruptcy proceeding before the Registrar or this appeal. The appellant appeared in person before the Registrar when the sequestration order was made.

54    Liam Bailey, the third respondent in this proceeding, is the Trustee of the appellant's bankrupt estate.

55    David Raynor is a joint tenant with the appellant in a property located in Katoomba, NSW (Katoomba property).

Procedural and factual background prior to the Primary Judgment

56    The history of, and background to, the underlying bankruptcy proceeding and the common law and probate proceedings in the Supreme Court of NSW and the NSW Court of Appeal were set out by the primary judge at [6]-[32] of the Primary Judgment. In short:

    The appellant purportedly married the deceased on 9 March 2017. The validity of the marriage is the subject of dispute in the probate proceeding; however, it was not necessary to determine in the annulment proceeding, and the primary judge proceeded on the basis that the marriage was valid: PJ at [12].

    The first and second respondents entered into a deed with the deceased, dated 23 January 2013, under which they received a half-share in the Canterbury property. On 11 February 2023, the deceased transferred a half-share in the Canterbury property to the first and second respondents as joint tenants: PJ at [10].

    On 18 March 2020, the deceased made a new will, leaving the entirety of his property to the appellant (other than a bequest of $10,000.00 to a friend). The validity of this will is also the subject of dispute in the probate proceeding; however, it was not necessary to determine in the annulment proceeding and the primary judge proceeded on the basis that the will was valid: PJ at [14].

    At the time of the Primary Judgment, the appellant was subject to costs orders in relation to the common law proceeding, and appeals arising therefrom, totalling approximately $146,000.00: PJ at [19]-[22]. One of the costs orders by the NSW Court Appeal formed the basis of the bankruptcy notice, non-compliance with which was relied upon by the first and second respondents in the bankruptcy proceeding before the Registrar.

    The appellant holds a joint tenancy with Mr Raynor in the Katoomba property: PJ at [25].

Mr Adamson's role and interest

57    As indicated, Mr Adamson was the solicitor on the record for the appellant for the common law and probate proceedings, and was also the sole advocate and solicitor on the record for the appellant before the primary judge. He was also the appellant's largest creditor.

58    On 14 December 2023, Mr Adamson issued the appellant with four invoices for legal services totalling $391,000.00 (see PJ at [29]) consisting of:

    $130,000.00 for legal services payable in connection with the common law proceeding;

    $44,000.00 for legal services payable in connection with an appeal arising from the common law proceeding;

    $77,000.00 for legal services payable in connection with a second appeal arising from the common law proceeding; and

    $140,000.00 for legal services payable in connection with (in part) the probate proceeding.

59    Mr Adamson has registered a caveat over the Katoomba property which refers to an agreement creating an equitable lien for legal costs between Mr Adamson, the appellant and Mr Raynor. In a Statement of Affairs dated 20 February 2024, the appellant indicated that Mr Adamson has an equitable lien for his costs secured against the Katoomba property and that the amount of the secured debt owing to him is $391,000.00.

60    The evidence before the primary judge included a land title search in respect of the Katoomba property which showed that Mr Raynor and the appellant own the property as joint tenants. The title search also includes the caveat in the name of Mr Adamson.

NEW EVIDENCE ON THE APPEAL

61    On 26 May 2025, Dennis Olthof, a solicitor for the appellant, swore an affidavit in support of an application to rely upon:

    Annexure A to an affidavit sworn by the appellant on 21 October 2024, being an affidavit sworn by the appellant on 17 June 2024; and

    An email from Mr Adamson to the associate to the primary judge dated 17 June 2024.

62    The Olthof affidavit also referred to the transcripts of case management hearings held on 18 and 19 June 2024, and annexed the transcript of 18 June 2024. The transcript of 19 June 2024 was before the Court in the Appeal Book. At the hearing, counsel for the appellant sought to rely on those two transcripts. There was no objection to the reading of the Olthof affidavit or the tendering of the evidence sought to be relied on by the appellant and, accordingly, the appellant's affidavit of 17 June 2024, the email dated 17 June 2024 and the two transcripts are taken to have been admitted into evidence.

63    On 9 May 2025, the appellant filed an interlocutory application seeking leave to rely on a substantive affidavit sworn by the appellant on 7 May 2025 and its exhibit. That substantive affidavit broadly sought to adduce evidence relating to (a) the conduct of the proceeding and the alleged conflict of interest which is the subject of Ground 2 and (b) the financial position and solvency of the appellant. A second affidavit, sworn on 7 May 2025, was filed in support of the interlocutory application. There was no objection to the reading of the supportive application, but there was a relevance objection taken to the reading of the substantive affidavit. The substantive affidavit was read into evidence subject to the relevance objection.

64    There were two responsive affidavits. The first was sworn by Bharath Balasubramanian, a solicitor for the first and second respondents, on 26 May 2025. The second, by Roland Blackstone, a solicitor for the first and second respondents, sworn on 20 May 2025, was only to be read if leave were granted for the appellant to rely on her substantive affidavit sworn on 7 May 2025. There was no objection to either affidavit, and both were taken to have been read into evidence.

65    I have reached my conclusion on Ground 2 without reliance on the evidence in the appellant's substantive affidavit of 7 May 2025 or the responsive affidavits. Furthermore, I have decided to remit the matter for rehearing. Consequently, it is unnecessary to determine the relevance of the evidence in those affidavits.

GROUND 2

66    Ground 2 contends that the primary judge erred in denying the appellant procedural fairness. There are two alternative bases for this ground:

(1)    First, the primary judge failed to adequately consider whether and how the Court should exercise the implied jurisdiction to ensure due administration of justice and protect the integrity of the judicial process in circumstances where Mr Adamson was the principal creditor; and

(2)    Secondly, the primary judge failed to exercise the Court's powers to control its own processes to ensure issues were dealt with by an adjournment and appropriate directions, or referral to pro bono independent legal counsel.

67    While I agree that the appellant succeeds on Ground 2, my reasons differ from the bases advanced by the appellant. The appellant's arguments appeared to treat the primary judge as being under a duty to take particular steps in the proceeding; for example, a duty in the circumstances to make a pro bono referral in favour of the appellant or a duty to prevent Mr Adamson from acting for the appellant. It was argued that a failure to take those steps, whether separately or in combination, constituted a breach of procedural fairness and resulted in a miscarriage of justice.

68    However, that is a categorical approach which I do not take. Consistently with the authorities, my approach has been to consider whether the appellant was denied procedural fairness in the circumstances and whether that error of law resulted in a miscarriage of justice. My approach does not lead to any necessary conclusion that the primary judge was under any duty to take particular steps in the conduct of the proceeding.

The power to order a new trial

69    Section 28(1)(f) of the Federal Court of Australia Act 1976 (Cth) empowers the Court in its appellate jurisdiction to order a new trial. It relevantly provides:

(1)    Subject to any other Act, the Court may, in the exercise of its appellate jurisdiction:

…

(f)    grant a new trial in any case in which there has been a trial, either with or without a jury, on any ground upon which it is appropriate to grant a new trial.

70    Three propositions about the operation of s 28(1)(f) are central to my conclusions:

    First, it will be "appropriate" to grant a new trial under s 28(1)(f) where a legal error by the primary judge results in a miscarriage of justice: see Conway v The Queen [2002] HCA 2; (2002) 209 CLR 203 at [30] and [36] (Gaudron A-CJ, McHugh, Hayne and Callinan JJ); Nobarani v Mariconte [2018] HCA 36; (2018) 265 CLR 236 at [38]-[39] (Kiefel CJ, Gageler, Nettle, Gordon and Edelman JJ).

    Secondly, a denial of procedural fairness can constitute a legal error that results in a miscarriage of justice: Nobarani at [38].

    Thirdly, "[t]he denial of procedural fairness will cause a [miscarriage of justice] if it deprived the affected person of the possibility of a successful outcome": Nobarani at [39].

Denial of procedural fairness

71    The claim that there has been a denial of procedural fairness primarily arises from what occurred at case management hearings ahead of the hearing of the annulment application. Those concerns arise principally from three matters: a conflict of interest in relation to the claimed debt owed by the appellant to Mr Adamson; Mr Adamson's health issues and their impact on the proceeding; and the breakdown of the solicitor-client relationship between the appellant and Mr Adamson during the course of the proceeding. It will be necessary to extract parts of the transcripts for those hearings at some length.

72    It is convenient at the outset to identify the various hearings in relation to the annulment application:

    Case management hearings were held on 5 April 2024 (First CMH); 3 June 2024 (Second CMH); and 18 June 2024 (Third CMH);

    The listing for final hearing on 19 June 2024 was adjourned following an application by Mr Adamson (adjourned hearing); and

    The final hearing was held on 24 June 2024.

Conflict of interest

73    At the First CMH, the Court heard that the appellant owed a debt to Mr Adamson. Richard Lyne, the solicitor for the Trustee, drew the primary judge's attention to the extract from the land title search for the Katoomba property showing the appellant's joint interest and the caveat in Mr Adamson's favour for his legal costs.

74    During that hearing, Mr Lyne identified a discrepancy between two versions of the appellant's Statement of Affairs. The first version, dated 20 February 2024, was emailed to the Court with a copy to the Trustee. The second version, dated 19 February 2024, had been annexed to an affidavit sworn by Mr Adamson on 12 March 2024 and filed on 14 March 2024. Mr Lyne explained that the first version referred to the equitable lien over the Katoomba property; the second did not.

75    Mr Lyne further explained that the Trustee had requested more than once for Mr Adamson to provide further information, including costs agreements and invoices, in relation to the equitable lien. Mr Lyne stated that the requested information had not been provided.

76    There was an exchange between the primary judge and Mr Adamson in relation to the requested information:

HIS HONOUR: But there - I mean, I'm told by the trustee there are outstanding requests for information, which is relevant to the trustee's decision as to what's done with the Supreme Court proceedings.

MR ADAMSON: Well, your Honour, in my affidavit, I supplied - I supplied just about every document that's in the probate proceedings in that affidavit, which I sent to the court in full, and I served it on the other side, your Honour. So what is the point of me doing that again?

HIS HONOUR: Well, I think your client is obliged to comply with - - -

MR ADAMSON: Well, your Honour, I - - -

HIS HONOUR: - - - reasonable requests from the trustee.

MR ADAMSON: Well, if your Honour wants, I will undertake to do it within the seven days. I've got it all on my computer; they can be switched over. But, your Honour, I have to stress that there has been some overstatements by the other side. This probate - - -

77    The primary judge then asked about the debt owed by the appellant to Mr Adamson and, in his response, Mr Adamson sought to explain the discrepancy between the two versions of the Statement of Affairs:

HIS HONOUR: Are you - do you claim to be a creditor of the bankrupt estate?

MR ADAMSON: No, I don't.

HIS HONOUR: You don't.

MR ADAMSON: Because I'm a secured - I'm a secured creditor, and unless - - -

HIS HONOUR: No, I asked you whether you claimed to be a creditor of the - not whether or not you claimed to be a secured creditor.

MR ADAMSON: Well, I'm not proving any estate.

HIS HONOUR: I've asked you - - -

MR ADAMSON: I'm a creditor to the state for the - I'm a creditor of Jacqueline Maclean in respect of my legal costs, which are secured. And I was about to explain that the reason that the first statement of claim differs was the form that they sent to - well, this trustee sends out or is in the Bankruptcy Act, doesn't have a column anywhere for secured creditors. So what happened was the debtor sent me a statement of affairs without that and which we've got on my file, and I said, "Well, you better disclose my secured debt," even though it didn't have a column or a place for that to be done. So then she did that, and all of this was - this was applied. My friend has had a copy of the full statement of affairs for some time, your Honour. And there's nothing being hidden; I'm - - -

HIS HONOUR: Sorry, your advice to her was what? She didn't need to disclose?

MR ADAMSON: Your Honour, when my client filled in the statement of affairs - I'm not sure whether I was even acting for her at that stage, but she sent that statement of affairs to me. I looked at it, and I noticed that my debt or my costs weren't even estimated or even mentioned in that statement of affairs. And I said to her, “Well, you - I can't see where else it can go, except in that particular place.” You will notice on the form, it doesn't have any column or provision for secured creditors. So I asked her to write in my - they're all in her handwriting - to write my details in the statement of affairs. And you know, I've given her accounts for 391,000. There's no attempt to hide it, I think.

78    The primary judge then questioned Mr Adamson about the prospect of being cross-examined:

HIS HONOUR: What if you are to be cross-examined at this hearing?

MR ADAMSON: I won't be filing any affidavit which is controversial. You will see that the only affidavit I've done annexes documents. I'm not alleging anything.

HIS HONOUR: All right. Well, you might want to give some consideration to what the situation may be if you're required for cross-examination and you're appearing for the bankrupt. That could cause some serious difficulties.

MR ADAMSON: At the moment, I think that there's a risk of me giving controversial evidence. I either won't read the evidence, or I will replace the affidavits. And I will look at that very carefully, but, your Honour, my client's - - -

79    Following the hearing, the primary judge ordered Mr Adamson to file and serve a complete and accurate copy of his affidavit in support of his application, inclusive of all annexures, and listed the matter for hearing on 19 June 2024.

80    In the Second CMH, held to consider whether the appellant should be given additional time to file her evidence, the debt owed by the appellant to Mr Adamson was raised again in the following exchange:

HIS HONOUR: Okay. Now, according to the evidence that you've filed, what are your client's debts at the moment?

MR ADAMSON: I will have to look at the - well, the only substantial debt is the one in the petition. There's only one substantial debt. That's her - - -

HIS HONOUR: Well, that's about 65,000, was it, from memory.

MR ADAMSON: Yes. Yes, it - yes, yes. Close to 65.

HIS HONOUR: And - well, I think the respondents in their evidence have pointed to other debts or - other debts as well. I might be wrong. I will - - -

…

MR ADAMSON: … and my own debt is there's a cost debt there of mine.

…

HIS HONOUR: You're a creditor for how much?

MR ADAMSON: 290-odd thousand, your Honour.

…

HIS HONOUR: Okay. Well, that - - -

MR ADAMSON: - - - if we succeed - - -

HIS HONOUR: - - - would suggest that your client is not solvent.

…

MR ADAMSON: Yes, but I'm not proving that debt in this bankruptcy. It's a - - -

HIS HONOUR: I'm sorry?

MR ADAMSON: - - - secured debt. I'm not proving that debt in this bankruptcy. It's a secured debt.

81    In addressing the value of the appellant's property, Mr Lyne stated that no documentation had been provided by the appellant to the Trustee in relation to the caveat on the Katoomba property.

82    There is no indication in the transcripts from the Second CMH, nor from the Third CMH or the adjourned hearing, that Mr Adamson had given further consideration to the prospect of being called for cross-examination.

83    At the final hearing, when attention turned to the Katoomba property in the course of considering the discretionary factors under s 153B of the Bankruptcy Act, the following exchange took place:

HIS HONOUR: Is the Katoomba property encumbered?

MR ADAMSON: Yes, to ME Bank.

HIS HONOUR: Right.

MR ADAMSON: For approximately 140 or 50 thousand.

HIS HONOUR: Right. Does the trustee's report, from recollection, say something about a caveat lodged in your name?

MR ADAMSON: Yes, your Honour.

HIS HONOUR: Yes. And what's that in aid of?

MR ADAMSON: That's for legal costs.

HIS HONOUR: And that's a debt of - owed by whom?

MR ADAMSON: Yes. That's in the statement of the applicant.

HIS HONOUR: The statement of affairs?

MR ADAMSON: Yes.

HIS HONOUR: And that's about $390,000 or thereabouts?

MR ADAMSON: Yes, your Honour, but that's - it's not all for those proceedings.

HIS HONOUR: And that's a debt - - -

MR ADAMSON: Yes. So a great deal of advices and so forth.

HIS HONOUR: Okay. That's a debt owed by the applicant to you; is that right?

MR ADAMSON: Yes, on secured debt. Equitable lien.

84    Mr Adamson then turned to consider the appellant's solvency and stated that the provable and unprovable debts amounted to $140,393.01. The primary judge then asked the question whether that amount excluded the debt owing to Mr Adamson, to which Mr Adamson replied that it did.

85    The Trustee's legal representative then called on a notice to produce issued to the appellant dated 12 June 2024 seeking documents including costs agreements with, and invoices from, Mr Adamson. Mr Adamson indicated that he had instructions to move to set aside the notice to produce and explained the basis for the application in the following way:

If these documents are produced, I'm not sure of the relevance of them. The only relevance that I can see is that I'm an unsecured [sic] creditor, which I'm not going to prove in the bankruptcy. These seem to be all going into my debt or the applicant's debt cost to me and the agreements and so forth. I'm not proving in this bankruptcy.

86    In answer to the notice to produce, Mr Adamson was able to locate and produce two costs agreements and the four invoices dated 14 December 2023. They were later tendered by the Trustee and accepted into evidence. No other documents were produced.

87    The produced invoices were later addressed by the first and second respondents' legal representative in the context of considering the discretionary factors under s 153B, including the question of solvency:

MR BALASUBRAMANIAN: … I will say this, your Honour, all of the tax invoices which are presented to underlie the caveat that has been placed, they're all dated 14 December 2023 on this document. So - - -

HIS HONOUR: Well, that's not all of them. There's others, apparently.

MR BALASUBRAMANIAN: Yes. I will say this, your Honour. The invoices do start - if I could just take your Honour through to that bundle. The invoices are invoice number JM1, invoice number JM2, invoice number JM3, and invoice number JM4. And then when one goes through them in order, your Honour, JM1 relates to Supreme Court proceedings commenced in 2021. JM2 relates to the application for - - -

HIS HONOUR: Which are those? That's 464. Is that the probate or common law?

MR BALASUBRAMANIAN: That would be the common law proceedings, your Honour.

HIS HONOUR: Right.

MR BALASUBRAMANIAN: Proceedings 2022/259474 relate to an application for leave to appeal. Again, that's invoice JM2 rendered 14 December 2023. The next one is the next Court of Appeal judgment, your Honour, 2022/383662, invoice JM3. And then when one turns the page, your Honour, we get to an invoice that's referring to the two proceedings relating to probate, and that's invoice JM4, again, 14 December 2023.

HIS HONOUR: Yes. Sorry, what is your submission?

MR BALASUBRAMANIAN: Well, I raise that by way of this, your Honour: so these invoices are all dated 14 December. They are after the creditors petition was served on the bankrupt, and they are one day before the caveat is placed on the property. There may be things that need to be undertaken by the trustee. It's ultimately going to be a matter for them, but one would question the validity of the caveat in circumstances where, under the Legal Profession Uniform Law the time for payment of an invoice has to be at least 28 days. Now, the caveat has been placed one day after these invoices are rendered.

…

HIS HONOUR: - - - I mean, the caveat could support a security interest in respect of fees yet to be rendered, could it not?

MR BALASUBRAMANIAN: There are a number of authorities out of the Supreme Court in New South Wales which deal with this. I don't need to go into it for present purposes, but there are a number of potential issues with the disclosures and the enforceability of this document, that is, the costs agreement.

HIS HONOUR: Yes. Well, sorry, what's your submission?

MR BALASUBRAMANIAN: The submission is - - -

HIS HONOUR: That these debts aren't payable or - - -

MR BALASUBRAMANIAN: There is a serious question for this court about whether those debts are payable, but - - -

HIS HONOUR: That seems to be contrary to your principal position which is the applicant is said to be insolvent.

MR BALASUBRAMANIAN: Well, I appreciate that, your Honour, but even having regard to whether these are payable or not, there's still no evidence that the applicant can pay her other debts as and when they fall due. …

88    Accordingly, upon production during the hearing of the invoices to the Court and their admission into evidence, a question was raised by the first and second respondents - not Mr Adamson - about their validity.

Mr Adamson's health

89    From the outset, Mr Adamson had noted to the Court that he had been suffering from various health conditions. At the First CMH, he reported that he had difficulty hearing because he had been suffering from ear infections. In response to concerns expressed by the primary judge about Mr Adamson's preparation for the First CMH, Mr Adamson replied that his preparation had been hampered by the urgency of the matter; serious health problems that he had experienced in January and February 2024 and which were still lingering; and the pain medication that he was taking. He also indicated that he was suffering pain from arthritis. The following exchange occurred:

HIS HONOUR: Well, perhaps you shouldn't be here if you're that unwell.

MR ADAMSON: Well, your Honour, I am. Okay. I wouldn't be here if I didn't think that I could represent my client properly …

90    In the Second CMH, Mr Adamson again raised his health concerns in response to the primary judge's admonition that the case preparation had been lacking.

91    At the commencement of the adjourned hearing on 19 June 2024, Mr Adamson stated that he was not fit to represent the appellant because of his health conditions. He reported that his chronic pain had caused sleep deprivation, and his strong pain medication had affected his ability to think. The demands of preparing the court book had consumed his time and he had not adequately prepared for the hearing. He stated that, in his condition, he did not believe that he would be able to properly represent the appellant and, without an adjournment, his client would be denied a fair trial. The primary judge adjourned the hearing.

92    At the final hearing on 24 June 2024, Mr Adamson represented the appellant without mention of any health concerns.

The solicitor-client relationship between the appellant and Mr Adamson

93    From the outset of the annulment application, the primary judge expressed concerns about Mr Adamson's preparation for the proceeding. In the First CMH, his Honour was concerned that the affidavit relied upon was incomplete and "wholly inadequate", and further described Mr Adamson's preparation for the application to be "dreadfully lacking". In the Second CMH, the primary judge expressed concern that the evidence had not been properly prepared; that Mr Adamson had failed to comply with the orders made on 5 April 2024 to file a complete affidavit; and that Mr Adamson was seeking legal advice from the Court about how to run his case.

94    There was then the following exchange between the primary judge and Mr Adamson:

MR ADAMSON: … Are you sure your Honour can deal with this case in an unbiased and fair way?

…

HIS HONOUR: But let me make something clear; I want to give your client every opportunity to fairly and properly present a case. I'm going to hear all the evidence, and I'm going to decide it according to law. What I'm concerned about, is that evidence has not been filed in a timely way, and I'm worried that her case is not being presented as it should be. That's my concern.

95    At the Second CMH, Mr Adamson also alluded to the appellant swearing an affidavit without his involvement. He indicated to the Court that he would not be relying on that affidavit.

96    On 17 June 2024, two days before the hearing listed for 19 June 2024, Mr Adamson emailed the chambers of the primary judge indicating that his client intended to make an application personally in relation to the hearing. The matter was listed for the Third CMH on 18 June 2024 and Mr Adamson was directed to appear at that hearing.

97    On the morning of the Third CMH, the appellant personally emailed the chambers of the primary judge attaching submissions written by the appellant dated 13 June 2024 and an affidavit sworn by the appellant on 17 June 2024. The submissions and affidavit (amongst other things) accused Mr Adamson of refusing to accept instructions to employ a barrister and to read an affidavit of the appellant sworn on 1 May 2024. They also indicated that Mr Adamson had formed a view that the appellant lacked confidence in his representation and, consequently, he would seek to withdraw from the proceeding. Further, the appellant complained about Mr Adamson's representation of the appellant in this and earlier proceedings, and his repeated threats to withdraw his services. She also sought a referral for legal assistance if the Court gave Mr Adamson leave to withdraw and an adjournment to obtain a more realistic value of the Canterbury property.

98    At the Third CMH:

(1)    The appellant personally sought to adjourn the hearing date; Mr Adamson, as her solicitor on the record, refused to formally make that application or rely on the affidavit sworn on 17 June 2024 or the submissions which accompanied it;

(2)    Mr Adamson sought to withdraw from the proceeding, however, no notice of intention to cease to act had been filed; and

(3)    In light of no application having been made, the primary judge did not make a ruling on whether to terminate Mr Adamson's retainer, but indicated that it could be dealt with at the hearing the following day.

99    During the course of the Third CMH, the primary judge and Mr Adamson had the following exchange:

MR ADAMSON: Well, that's the application. I'm not able to appear for Jacqueline this morning. I'm appearing because you requested I appear. The reason I'm - the application is that, at least during this - this application made directly by the applicant, I seek leave not to act, to withdraw. And thereafter, we will see what happens. I'm - I'm prepared to do the hearing. I've got difficulties with the hard copy of the court book, but I do have the electronic form now done. It was an enormous job. It wasn't reasonably possible for me to do it less than three - two or three days. Anyway, that's my application. Just to make it very clear, that I believe I have a professional - I cannot assist Ms - the applicant, for reasons under the Civil Procedure Act, and various other - - -

HIS HONOUR: All right. So - - -

MR ADAMSON: - - - ethical reasons.

…

HIS HONOUR: … Now, Mr Adamson, as I understand it, you are - what you're telling me is that you continue to act for the applicant. But you seek leave to have her make an application today that you're unwilling to make yourself, but that you intend to proceed to appear for her at the hearing tomorrow.

…

HIS HONOUR: Is that correct?

MR ADAMSON: If the - well, if the applicant wants me to appear, and your Honour wants me to appear and proceed, I'm prepared to do so. But I do need to say that, whilst I'm the solicitor on the record, I would seek leave not to appear for the applicant during her application. Once that's finished, I'm prepared - if Ms - the applicant wants me to appear for her further, I'm sure that your Honour would require me to appear, would not give me leave to terminate. I'm prepared to do the hearing.

HIS HONOUR: Yes. Okay. So the application that you understand she wants to make is an application to adjourn the hearing; is that right?

MR ADAMSON: I believe so.

…

HIS HONOUR: And you're not prepared to make that application on her instructions. Is that right?

MR ADAMSON: No. No. No. It's - yes. That's correct. And I can't disclose all those instructions, because they're confidential. And there has been an application which she sent me this morning to file. I've not filed it, but I've sent it to your associate and to the other representatives. And Ms - the applicant is on the phone - telephone, your Honour, I believe.

HIS HONOUR: Do you have an affidavit you rely on, in support of this application?

MR ADAMSON: I don't have any affidavit in support of it - - -

HIS HONOUR: Okay.

MR ADAMSON: - - - because I'm not prepared to make it.

HIS HONOUR: No. In relation to your application to effectively be excused from - - -

MR ADAMSON: Off the record as solicitor.

HIS HONOUR: Yes. Off the record, for the purpose of this application.

MR ADAMSON: That's correct. And I believe that's possible when a client insists, hasn't terminated my retainer, insists upon the application. I think the only fair thing that I can do to assist her is to arrange for this, mention for her to make the application. She has also sent submissions which I've passed on.

HIS HONOUR: Yes. Well, as I understand it, you're asking me to permit her, notwithstanding that she's represented by you, to make submissions in support of an adjournment application in respect of tomorrow's hearing.

MR ADAMSON: Yes. And the only way - yes.

…

HIS HONOUR: Well I must say, I'm not disposed to accede to that application. It seems to me that you are her solicitor. You remain on the record. One of the important aspects of that is that you have professional obligations, not only to her but to the court, amongst other things. That provides important means by which the court can be assured that allegations aren't being made without a proper basis, particularly allegations of fraud made against third parties. As I apprehend it, what your client is proposing to do is to make an application for an adjournment, so that she can pursue allegations of that nature. I mean, I infer that you're not prepared to be a party to that. And in those circumstances, I think it would be altogether inappropriate to permit your client, while you remain on a record, to make such an application. …

…

HIS HONOUR: … In those circumstances, I don't propose to give your client leave to make an adjournment application on her own behalf. Any adjournment application to be made in respect of tomorrow's hearing can be made by the applicant's solicitor on the record, and that's you, Mr Adamson.

MR ADAMSON: Well I won't be making an application.

…

MR ADAMSON: And I do - I would prefer not to be - just on the record, but your Honour has made it clear in the last email that I'm not going to get any leave to withdraw. I'm left in a very invidious situation.

…

MR ADAMSON: I do - I apply to withdraw. I mean, I've done the work. It hasn't been reasonably possible for me to do it on time. … As you said before, these sort of things said before, in front of a client - excuse me, your Honour. In front of a client - destroy the trust and confidence between a client and her solicitor. And that's what's happened here, largely. So, your Honour, I've done the - I'm prepared to forward the electronic court books, I'm prepared to assist in any way to help the court to have a hearing, but obviously the way that the defendant - the applicant, has acted, has shown a lack of confidence in me.

…

HIS HONOUR: Mr Adamson, the - you referred to the requirements of the rules. I don't know what rules you were referring to, but the rules in this court are found in 4.05 if we're talking about termination of retainer by a lawyer, and 4.04 if we're talking about termination of retainer by a party. Now, are you purporting to terminate your retainer of your client?

MR ADAMSON: I think the evidence shows that my client has effectively terminated my retainer by insisting upon this, and embarrassing me further, and by showing a lack of confidence. So the basis of my termination would be simply that the client has refused to formally terminate my retainer, but it's quite obvious that she has no confidence in me, and that she's prepared to make allegations and things, which I'm not prepared to accept instructions in relation to. And in respect of all of those circumstances, I think effectively, the relationship of solicitor and client has ended. There's no further confidence, no further trust. So it's not a matter of me withdrawing. It's a matter of - the reality is that this applicant doesn't want me to act for her.

…

HIS HONOUR: No. Okay. Well that time can be modified, if I thought it was appropriate to do that. But all I want to know is whether you're terminating your client's retainer, or whether it has been terminated by you up until now.

MR ADAMSON: I - my application will be that it has been terminated by my client in - up to very recently, last couple of days.

HIS HONOUR: Well the difficulty I've got with that is that you've told me a little while ago that you were proposing to appear at the hearing tomorrow. So that doesn't seem to be consistent - - -

MR ADAMSON: Well - - -

HIS HONOUR: - - - with your retainer having been terminated.

MR ADAMSON: Well your Honour, if your Honour doesn't - I thought the situation at the moment was that I needed to leave. And this notice of so forth that you're talking about, all of these things come in the context of me having worked for the last 20 hours nearly straight, trying to get this court book done. And your Honour, look, these sort of things, they have to be thought about. You just can't - it's - I know that I'm only a solicitor and not a barrister, but I'm a human being, and I've still got a life to lead. These sort of things need consideration. I'm not prepared to make - to give you something right now - - -

HIS HONOUR: You don't have to.

MR ADAMSON: - - - an answer right now.

HIS HONOUR: You don't have to. You can - - -

MR ADAMSON: I would like a little time to think about it.

HIS HONOUR: You can do it tomorrow.

MR ADAMSON: All right.

HIS HONOUR: All right. So - but as matters stand, the hearing that has been fixed for tomorrow will proceed, subject to any further application that's made.

100    No application was made at the adjourned hearing on 19 June 2024 to terminate the retainer between Mr Adamson and the appellant. Instead, the 19 June 2024 hearing was adjourned until 24 June 2024 because Mr Adamson considered himself incapable of properly representing the appellant on that day.

SUBMISSIONS

Appellant's submissions

101    Relying on Porter v Dyer [2022] FCAFC 116, the appellant submitted that there was a denial of procedural fairness because, given the conflict of interest, the primary judge should have exercised the Court's inherent jurisdiction to prevent Mr Adamson from acting for the appellant or to order that independent legal advice and a waiver or consent be obtained from the appellant before Mr Adamson was permitted to continue to act.

102    The appellant further submitted that the conflict of interest was compounded by the following matters:

(1)    The appellant was denied an adjournment by the Registrar when hearing the creditor's petition;

(2)    The forensic course taken by Mr Adamson which placed the appellant in a position of disadvantage;

(3)    The refusal by the primary judge to grant an adjournment sought personally by the appellant at the Third CMH;

(4)    The comments by the primary judge that were critical of Mr Adamson, which may reasonably be inferred to have influenced the appellant's desire to obtain independent legal counsel on the application; and

(5)    The reasoning of the primary judge for the conclusion that the appellant was unable to pay her debts. That reasoning included that:

(a)    The amount of Mr Adamson's invoices constituted the majority of the value of the Canterbury property;

(b)    The appellant's interest in the Katoomba property should be ignored because it would not discharge her debts "once allowance is made for her legal costs"; and

(c)    The dent of $300,000.00 in legal costs could come out of the deceased's estate in the probate proceedings.

First and second respondents' submissions

103    Addressing Ground 2, the first and second respondents submitted that the Court's inherent jurisdiction to restrain a solicitor from acting was not enlivened. A fair-minded, reasonably informed member of the public in any of the hearings before the primary judge would not have concluded that the proper administration of justice required that Mr Adamson be prevented from acting.

104    That was particularly because the appellant had instructed Mr Adamson to act despite hearing the primary's judge's concerns and the repeated confirmation by Mr Adamson of the claimed debt to him by the appellant. In particular, at the appeal hearing, counsel for the first and second respondents pointed to the fact that Mr Adamson had said to the primary judge at the Second CMH, in the presence of the appellant, that "[m]y client is completely happy with that amount". The first and second respondents submitted that that must be taken to be a waiver of the conflict.

105    They also submitted that the bare fact that a legal representative is also a creditor in a debtor's estate in a bankruptcy context is insufficient to enliven the Court's power. It was no answer to the application of the requisite objective standard that the appellant was not subjectively aware of the conflict. Furthermore, the fact that the appellant may now think that better legal representation could have been provided pro bono is not a reason why it was incumbent on the Court to restrain Mr Adamson. Whatever criticism can be made of Mr Adamson, it did not constitute a denial of procedural fairness.

106    As for the appellant's evidence that Mr Adamson denied her the opportunity to seek advice from counsel, the first and second respondents argued that, when the appellant's affidavit of 17 June 2024 is read as a whole, such a complaint must be limited to Mr Adamson's refusal to advance allegations of fraud.

107    Additionally, the first and second respondents submitted that nothing about Mr Adamson's health concerns, or the way they were raised and handled, imperilled the due administration of justice. Furthermore, even if there had been a denial of procedural fairness, the appellant had not discharged her onus on solvency.

CONSIDERATION

108    Whether there has been a miscarriage of justice warranting success on Ground 2 is a question that requires consideration of both "process" and "outcome": see Nudd v The Queen [2006] HCA 9 at [3] and [5]-[6] (Gleeson CJ), [24] (Gummow and Hayne JJ), [100] (Kirby J), [158] (Callinan and Heydon JJ). In this case, the first aspect requires consideration of whether there has been a denial of procedural fairness during the course of the proceeding; the second requires consideration of the lost opportunity for a successful outcome. While the finality of litigation is central to the efficient administration of justice, there will be circumstances where a breach of procedural fairness requires the intervention of an appeal court to avoid the trial miscarrying: see Mawhinney v Australian Securities and Investments Commission [2022] FCAFC 159; (2022) 294 FCR 375 at [118] (Jagot, O'Bryan and Cheeseman JJ).

Denial of procedural fairness

109    As foreshadowed, my conclusion that there has been a denial of procedural fairness turns on three matters: the conflict of interest in relation to the caveat on the Katoomba property; the impact of Mr Adamson's health on his preparation throughout the proceeding; and the breakdown of the solicitor-client relationship.

110    My primary concern is that the appellant was represented by Mr Adamson in circumstances where he had placed himself in a position of incurable conflict. The first and second respondents were correct to submit that, prima facie, there is nothing objectionable about solicitors representing their clients in circumstances where client fees are outstanding. That is the case even in bankruptcy proceedings where the solicitor's recovery of outstanding fees might be from the client's estate.

111    However, the appellant's position was materially different. Mr Adamson had registered a caveat on the title of the Katoomba property in relation to his claimed legal costs in the amount of $391,000.00. Not only did that constitute the largest single debt claimed against the appellant, but it is clear from the outset that Mr Adamson had not understood the relevance of his claimed debt to the annulment application.

112    At the First CMH, his position was that he was a secured creditor and would not be proving his debt in the bankruptcy. He also took that position at the final hearing when seeking to have the notice to produce set aside on the ground that those documents would not be relevant. While the primary judge urged Mr Adamson at the First CMH to consider his position in the event that he might be called for cross-examination, that question was not further addressed with the Court. It can be inferred that Mr Adamson failed to consider that position because he misunderstood the relevance of his claimed debt to the issues to be considered in the proceeding.

113    Against that background, I do not consider that Mr Adamson's statement at the Second CMH, in the presence of the appellant, that his client was happy with the amounts that were charged, is capable of displacing or waiving the conflict that arose or can be taken as the appellant's endorsement of Mr Adamson's forensic choices. As counsel for the appellant submitted at the appeal hearing in reply, the standard expected of a solicitor in this respect is a stringent one: see Law Society of New South Wales v Harvey [1976] 2 NSWLR 154 at 170 (Street CJ delivering the judgment of the Court). If Mr Adamson had not appreciated the relevance of his debt to the annulment application, it can be inferred that he had not explained the nature of that conflict to the appellant.

114    The appellant was thereby denied the opportunity to scrutinise the validity of the debt owed to Mr Adamson. Had Mr Adamson (a) appreciated the relevance of his claimed debt to the issues to be determined; and (b) caused the appellant to produce the invoices to the Trustee when repeatedly requested to do so, the question of validity might have been squarely raised ahead of the final hearing. The Court would then have been in a position to consider whether additional steps were required to provide the appellant with an opportunity to scrutinise the validity of the debts. In those circumstances, it would have been impossible for Mr Adamson to continue to represent the appellant.

115    However, my conclusion that the appellant was denied procedural fairness does not rest alone on that conflict of interest. The events leading to the final hearing were chaotic, obscuring the conflict and compounding its effect on the proceeding.

116    Mr Adamson's preparation throughout the proceeding was affected by his ill health which caused him difficulty in complying with the Court's orders and preparing the evidence. The transcripts recorded shortcomings in his preparation of affidavits supporting the appellant's annulment application and interlocutory applications; in gathering evidence about the value of the properties and the appellant's financial position; and in complying with the Court's orders for the filing of documents. These shortcomings brought him into conflict with the primary judge and, at least on Mr Adamson's statement from the bar table, contributed to a breakdown of the trust between Mr Adamson and the appellant. The culmination of these events produced an application for adjournment on the morning originally listed for the hearing.

117    Furthermore, it is evident particularly from the Third CMH that the solicitor-client relationship between Mr Adamson and the appellant had broken down. The appellant had tried to communicate directly with the Court, expressing dissatisfaction with Mr Adamson, including his decision not to brief counsel. The reasons for that dissatisfaction are not entirely clear. However, contrary to the submissions of the first and second respondents, I do not consider that it can be confidently concluded that the appellant's concerns were limited to Mr Adamson's refusal to make allegations of fraud. The appellant referred to being denied access to the court book and being asked to be cross-examined on evidence that she had not seen nor given consent to be tendered.

118    Additionally, Mr Adamson sought leave to be excused from representing the appellant, at least for the purposes of the adjournment application, but also from the entire proceeding, on the basis that the client had lost trust and confidence in him. He was then given the opportunity to make that application on the day originally scheduled for the hearing, but that matter was overtaken by his application for an adjournment on account of his health. The opportunity was then lost to consider whether an adjournment should be ordered for the appellant to secure other representation. I reject the first and second respondents' submission that an objective observer would conclude that the disagreements between solicitor and client were amicably resolved by the time the final hearing proceeded on 24 June 2024.

119    In conclusion, I consider that Mr Adamson was "materially compromised" (cf. Davey v Silverstein [2020] VSCA 233 at [118] (Kyrou, Kaye and McLeish JJA)) and, when viewed in the context of how the whole proceeding unfolded, the appellant was denied a fair opportunity to present her case.

120    While Mr Adamson's conflict of interest might have been capable of enlivening the Court's inherent jurisdiction to restrain him from acting for the appellant (see Porter at [107]-[118] (Besanko, Lee and Abraham JJ); Farrell v Super Retail Group Limited (Cross-claim) [2024] FCA 1189 at [42]-[45] (Lee J)), and a failure to do so might thereby result in the trial miscarrying (see Ismail-Zai v Western Australia [2007] WASCA 150; (2007) 34 WAR 379 at [41] (Steytler P)), the opportunity to exercise that jurisdiction did not arise until after the conflict of interest was realised - i.e., at the time the costs agreements and the invoices were produced toward the end of the final hearing. By that stage, it was too late for the conflict to be cured by restraining Mr Adamson from acting.

121    I do not rest my conclusion on the primary judge's failure to give the appellant an adjournment when she sought to make one personally in the Third CMH: see Alam v QBE Insurance (Australia) Ltd [2018] FCA 1560 at [64] (Lee J). That application was properly refused in circumstances where she was represented.

122    Although I do not consider that the primary judge erred by failing to restrain Mr Adamson or by failing to grant the appellant an adjournment, I nonetheless conclude that the appellant was denied procedural fairness.

The trial miscarried

123    I consider that the trial miscarried as a result of the denial of procedural fairness.

124    The application of s 153B(1) of the Bankruptcy Act requires the Court to address two questions (Re Williams (1968) 13 FLR 10; [1969] ALR 179 at 184 (Gibbs J); see also Phillips v Carrafa, in the matter of Phillips (Bankrupt) [2025] FCA 870 at [60] (Hill J)):

    First, whether the sequestration order "ought not to have been made". That will be the case if, on the facts known at the time of the annulment application, the Court would have been bound not to make the sequestration order: Bulic v Commonwealth Bank of Australia Limited [2007] FCA 307 at [12] (Tracey J), approved by a Full Court in Francis v Eggleston Mitchell Lawyers Pty Ltd [2014] FCAFC 18 at [16] (Rares, Flick and Bromberg JJ).

    Secondly, if so, whether, in the exercise of the Court's discretion, the bankruptcy should be annulled.

125    The appellant's solvency is relevant at both stages of the enquiry. The appellant's solvency at the time the sequestration order was made was relevant to the question of whether the order "ought not to have been made" by the Registrar. Solvency at the time of the final hearing of the annulment application would have been relevant to the Court's discretion not to annul the bankruptcy: Bulic at [12]; Francis at [16].

126    Because of the combination of circumstances I have outlined, I consider that the appellant was denied the opportunity to challenge the validity of the debt owed to Mr Adamson - that debt constituting the single largest debt owed by the appellant. The true character of the conflict was obscured until toward the end of the final hearing when the costs agreements and invoices were produced for the first time. Furthermore, the appellant has been burdened by Mr Adamson's forensic choices that were infected by a patent misunderstanding of the relevance of his claimed debt to the annulment application and his failure to appreciate his conflict of interest.

127    Turning to the primary judge's conclusions, his Honour did not consider the appellant's solvency as a matter going to the first question of whether the sequestration order "ought not to have been made". That was a consequence of Mr Adamson's forensic decision to seek annulment on the sole basis that the creditor's petition constituted an abuse of process. It was a forensic choice that resulted in the insulation of his debt from scrutiny until raised toward the end of the final hearing.

128    In relation to the second question of discretion, the primary judge considered that the appellant's financial circumstances weighed against the making of any annulment order because it was clear that she was unable to pay her debts. His Honour made two relevant points (PJ at [48]-[49]):

First, the legal costs incurred by Ms Maclean recorded in the invoices referred to in paragraph [29] above (which do not include any amount owing to Mrs and Mr Brylewski) are for a total amount that is equal to around 75% of the market value of the Canterbury property.

Secondly, in assessing Ms Maclean's financial circumstances, I have ignored her interest in the Katoomba property. Even if she is entitled to a half-share of that property (which she denies), that improves her overall financial circumstances by around $260,000 (after allowing for the mortgage to MEB of $130,000). That would still not lead me to conclude that she is able to pay her debts once allowance is made for her legal costs.

The invoices referred to at paragraph [29] of the Primary Judgment were Mr Adamson's four invoices to the appellant.

129    While Mr Adamson had presented a position of solvency on a basis that excluded the debt that was owed to him, the primary judge took that debt into account in reaching his conclusions. In my view, if not for the conflict of interest, and the lost opportunity to contest the validity of the claimed debt owed to Mr Adamson, the primary judge's conclusions would not have been so clear cut.

130    When the matters are viewed together, I consider that the denial of procedural fairness was "material" in the sense of depriving the appellant of the possibility of a successful outcome: Nobarani at [38]. It could not be said that "a properly conducted trial could not possibly have produced a different result": Nobarani at [38], quoting Stead v State Government Insurance Commission (1986) 161 CLR 141 at 147.

131    As Kiefel CJ, Gageler, Nettle, Gordon and Edelman JJ said in Nobarani (at [44]):

Each of these matters, by itself, may not have constituted a material denial of procedural fairness amounting to a substantial wrong or miscarriage. But all of the matters, in combination … were manifestations of the material denial of procedural fairness to the appellant.

I consider that these observations apply with equal force to the matters in this appeal.

DISPOSITION

132    I do not consider that this Court, on appeal, should rehear the annulment application. It follows from what I have concluded that the appellant should not be bound by the forensic decisions that were made for the annulment application and should be provided with a fresh opportunity to present her case. I therefore would remit the matter for rehearing.

133    The appeal succeeds on Ground 2. I agree with the joint judgment of Jackson and Moore JJ that directions should be made for the parties to file written submissions as to appropriate costs orders.

Associate:

Dated:    30 September 2025