Federal Court of Australia

Ejueyitsi v Thomas [2026] FCAFC 123

ORDERS

THE COURT ORDERS THAT:

1.    Appeal dismissed.

2.    Subject to order 3, the appellant pay the respondents’ costs as agreed or assessed.

3.    If either party seeks a costs order that differs from that set out at order 2, then:

(a)    that party must, within 5 business days of these orders being made, file and serve submissions of no longer than 3 pages and any affidavit on which they seek to rely in support of the proposed costs order;

(b)    any party opposed to the costs order sought must within 5 business days of service of the above submissions, file and serve submissions of no longer than 3 pages in response, along with any affidavit on which they seek to rely.

4.    The Court will determine any question of costs on the papers.

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

REASONS FOR JUDGMENT

THE COURT:

introduction

1    This is an appeal from the decision of a Judge of this Court in Thomas v Ejueyitsi [2025] FCA 1167 (PJ) in which her Honour made orders sequestering the estate of the appellant, Mr Ejueyitsi. The proceedings before her Honour were a hearing de novo which followed from an earlier decision to the same effect which had been made by a Registrar of this Court.

2    The appellant challenges the decision of the primary judge and to that end was granted leave to rely upon a Further Amended Notice of Appeal dated 4 August 2026. For the reasons that we have explained below, the appeal will be dismissed.

background

3    The uncontroversial aspects of the background to the present appeal are set out in PJ [5]–[10], which we adopt. In short, the petitioning creditors’ claim arises from a costs order made by the District Court of New South Wales on 20 October 2022: Ejueyitsi v Thomas & Anor [2022] NSWDC 490. The history of those proceedings is summarised as follows.

4    Mr Ejueyitsi commenced proceedings in the Local Court of New South Wales against Ms Joy Thomas, an employee of the University of Western Sydney (UWS), in which he claimed the sum of $50,000 (later reduced to $20,000). The original statement of claim indicated that he had commenced actions for breach of contract and negligence. The last iteration of the pleading in the Local Court pleaded that Ms Thomas, a member of the academic staff at UWS, decided to reject his application for review of his grade in a course that he had taken in public health law. He was denied that review because he had failed to pay the full tuition fee. Mr Ejueyitsi argued that Ms Thomas did not disclose to him that the unit in which he was enrolled was not covered by HECS. He said that if that had been disclosed to him, he would not have enrolled at UWS, but would have enrolled elsewhere, where he could have relied on HECS.

5    Thus, he claimed that he lost an opportunity to gain the advantage of receiving a HECS place at another institution. He claimed that Ms Thomas should not have enrolled him.

6    Mr Barney Glover, the Vice Chancellor of UWS, was added as a defendant. The defendants together applied for summary dismissal or alternatively for the striking out of the statement of claim in the Local Court. The proceedings were struck out by the Magistrate, and Mr Ejueyitsi was ordered to pay the defendants’ costs. Mr Ejueyitsi appealed to the District Court. The District Court dismissed Mr Ejueyitsi’s appeal, and ordered costs on a lump sum basis in the amount of $13,000.

7    Mr Ejueyitsi then filed a summons in the NSW Court of Appeal, seeking judicial review of the decision to summarily dismiss the proceeding. That summons was dismissed by the NSW Court of Appeal with costs: Ejueyitsi v Western Sydney University [2023] NSWCA 126.

8    In July 2023, Mr Ejueyitsi applied for special leave to appeal the judgment and order of the Court of Appeal. On 12 October 2023, the High Court of Australia (Gordon and Steward JJ) refused Mr Ejueyitsi’s application for special leave: Ejueyitsi v Western Sydney University & Ors [2023] HCASL 143.

9    On 21 February, 21 March and 8 April 2024, the solicitors for the judgment creditors sent letters of demand to Mr Ejueyitsi for $13,000, being the debt owed under the lump sum costs order made by the District Court on 20 October 2022. Mr Ejueyitsi did not pay.

10    A Bankruptcy Notice was issued on 10 May 2024 for a debt in the amount of $13,000. A key contest in the decision on appeal before this Court was whether that Bankruptcy Notice was served on Mr Ejueyitsi on 14 June 2024. As will become clear below, the process server, Mr Murray Juchau, gave evidence that he did serve Mr Ejueyitsi on that date, whereas Mr Ejueyitsi and his friend, Ms Julie Aitken, gave evidence that they were having dinner together at the time service was said to have been effected.

11    By Creditor’s Petition dated 25 September 2024, the petitioning creditors applied for a sequestration order against the estate of Mr Ejueyitsi.

12    On 22 October 2024, the petitioning creditors arranged for the same process server, Mr Juchau, to personally serve Mr Ejueyitsi at his home address with the Creditors’ Petition. Mr Juchau made an affidavit of service to the effect that he had served the appellant at his home on that date.

13    The matter was then listed for hearing before a Registrar on 28 November 2024. Mr Ejueyitsi appeared and said that he had not received documents in relation to the proceeding. The Creditors’ Petition was then adjourned to 13 February 2025, and the documents were provided to the appellant in accordance with the direction of the Registrar.

14    On 11 December 2024, the petitioning creditors sent a letter to Mr Ejueyitsi enclosing copies of the Bankruptcy Notice, a sealed copy of the judgment of the District Court issued on 30 April 2024, a sealed affidavit of service of the Bankruptcy Notice, the Creditors’ Petition, a sealed affidavit of service of Creditors’ Petition, an affidavit of Isabella He dated 13 November 2024, an affidavit of Cassandra Bush dated 13 November 2024, and a short bill of costs dated 11 December 2024. The application was heard and determined by a Registrar on 13 February 2025. On 26 March 2025, Mr Ejueyitsi filed a review application. That required de novo review under s 35A(5) of the Federal Court of Australia Act 1976 (Cth) of the decision to sequester the estate under s 43 of the Bankruptcy Act 1966 (Cth).

15    The matter was heard over a day on 12 September 2025. Mr Ejueyitsi, Ms Aitken, Mr Juchau and Mr David Halling (Mr Juchau’s boss) all gave evidence and were cross-examined. By order dated 22 September 2025, a sequestration order was made over the estate of Mr Ejueyitsi along with an order that the applicant creditors’ costs be taxed and paid from the bankrupt estate of Mr Ejueyitsi in accordance with the Bankruptcy Act.

the primary judge’s reASONS

16    Her Honour set out the legal framework, which is not relevantly in dispute (PJ [25]–[36]). We respectfully adopt her Honour’s outline of the legal framework, emphasising that:

(1)    The Court has power to make a sequestration order on satisfaction of the criteria set out in s 43(1) of the Bankruptcy Act.

(2)    The act of bankruptcy relevant to the present proceeding is that set out in s 40(1)(g) of the Bankruptcy Act. Such an act occurs where a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia, or by leave of the Court, elsewhere, a bankruptcy notice under the Bankruptcy Act and, where the debtor does not:

comply with the requirements of the notice or satisfy the Court that he or she has a counter-claim, set-off or cross-demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter-claim, set-off or cross-demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained.

(3)    Section 41(7) of the Bankruptcy Act provides that:

Where, before the expiration of the time fixed for compliance with a bankruptcy notice, the debtor has applied to the Court for an order setting aside the bankruptcy notice on the ground that the debtor has such a counter-claim, set-off or cross demand as is referred to in paragraph 40(1)(g) , and the Court has not, before the expiration of that time, determined whether it is satisfied that the debtor has such a counter-claim, set-off or cross demand, that time shall be deemed to have been extended, immediately before its expiration, until and including the day on which the Court determines whether it is so satisfied.

(4)    A failure by the debtor to comply with s 41(7) of the Bankruptcy Act is not a procedural irregularity capable of cure, but rather is fatal to jurisdiction: Van Eps v Child Support Registrar [2023] FCA 1068 at [31] per Collier J.

(5)    A judge who hears the review application must hear the petition afresh and must be satisfied as to the matters referred to in s 52 of the Bankruptcy Act; thus the judge must be satisfied with the proof of:

(a)    the matters stated in the petition;

(b)    the service of the petition; and

(c)    the fact that the debt or debts on which the petitioning creditor relies is or are still owing: Totev v Sfar [2008] FCAFC 35; 167 FCR 193 at [14] per Emmett J.

(6)    The onus is on the petitioning creditor to prosecute the petition. If the Court is satisfied of the matters in s 52(1), then the person whose estate has been sequestrated will be required to discharge their onus in proving the matters in s 52(2) of the Bankruptcy Act, whether that be with respect to solvency or there being any other sufficient cause: Bechara v Bates [2021] FCAFC 34; 286 FCR 166 at [27(d)] per Allsop CJ, Markovic and Colvin JJ.

(7)    It is fundamental to the law of bankruptcy that a sequestration order should not be made against the estate of a person who is solvent. Where a person is able, but unwilling, to pay their debts, the discretion to make a sequestration order will not usually be exercised to make a sequestration order: see Sarina v Council of the Shire of Wollondilly [1980] FCA 138; 48 FLR 372 at 375–376 per Bowen CJ, Sweeney and Lockhart JJ; Francis v Eggleston Mitchell Lawyers Pty Ltd [2014] FCAFC 18 at [50]– [51] per Rares, Flick and Bromberg JJ; Culleton v Balwyn Nominees Pty Ltd [2017] FCAFC 8; 343 ALR 632 at [40]–[44] per Allsop CJ, Dowsett and Besanko JJ; and Shaw v Yarranova Pty Ltd [2017] FCAFC 88; 252 FCR 267 at [105]–[109] per North, Perry and Charlesworth JJ.

17    Her Honour then identified and rejected the respondents’ contention that the Court has no jurisdiction to hear the matter because the time for filing an application to set aside the Bankruptcy Notice was not complied with. That contention was dismissed on the basis that the matter before her Honour was a hearing de novo flowing from the application for review of a decision of a Registrar: PJ [39]–[41]. That finding was not challenged on this appeal.

18    Her Honour identified the core issues of dispute as being:

(1)    the issue of service of the Bankruptcy Notice: PJ [48]–[84]; and

(2)    the issue of Mr Ejueyitsi’s ability to pay his debts: PJ [85]–[114].

19    The essential contest on the evidence before her Honour on the question of service was between Mr Ejueyitsi and Ms Aitken on the one hand, and Mr Juchau on the other. Ms Aitken, a friend of Mr Ejueyitsi, said that Mr Ejueyitsi was with her and a friend of hers at Darling Harbour at the time when Mr Juchau says he served the Bankruptcy Notice on Mr Ejueyitsi at his home in St Mary’s. That service is said to have been effected at 8.45pm. Ms Aitken gave evidence that she was with Mr Ejueyitsi from about 7.30pm to 11.30pm, when he dropped her home.

20    Her Honour considered the evidence as to the recollections in issue and concluded that Mr Juchau’s evidence was to be preferred. In reaching that conclusion, her Honour did not find that Ms Aitken was dishonest, merely that it was “probable” that she was mistaken as to the time or date on which she visited Darling Harbour with Mr Ejueyitsi: PJ [82].

21    As to the issue of Mr Ejueyitsi’s ability to pay his debts, her Honour analysed the evidence that had been produced in detail and identified a range of issues arising from the analysis of that evidence. Overall, her Honour noted that the enquiry under s 52(2)(a) of the Bankruptcy Act required that he prove his ability to pay his debts, rather than only the debt the subject of the petition. Her Honour concluded that Mr Ejueyitsi had not discharged his burden to show that he was solvent on a cash flow analysis: PJ [111].

22    It was these two core issues which formed the basis of the grounds of appeal. It is to those grounds that we now turn.

Ground one

23    Ground One alleges that her Honour fell into error in finding that:

(1)    the appellant had committed an act of bankruptcy;

(2)    the respondents had discharged the onus of establishing that the appellant was personally served with the Bankruptcy Notice on 14 June 2024: PJ [44];

(3)    the witness, Mr Juchau, personally served the appellant on 14 June 2024: PJ [50], [71]; and

(4)    the witness, Ms Aitken, was probably mistaken as to the time and date that she was with the appellant: PJ [50], [82].

24    It was not in dispute that the onus of proving personal service of the Bankruptcy Notice on the appellant lay with the respondents: PJ [85].

25    The findings that Mr Juchau had personally served the appellant on 14 June 2024 and that Ms Aitken was probably mistaken as to the time and date that she was with the appellant were interlinked. In submissions, the attack upon these findings was put on a variety of bases.

The rule in Browne v Dunn

26    The appellant argues that one reason that her Honour erred in preferring the evidence of Mr Juchau (and concluding that Ms Aitken was probably mistaken as to her evidence) was that the findings were not open to her Honour because of the rule in Browne v Dunn (1893) 6 R 67. The appellant argued that the finding that Ms Aitken was or might be mistaken as to the date that she had dinner with Mr Ejueyitsi was a matter that had to be put to her, and that failing to do so, meant that the finding was not open.

27    The rule in Browne v Dunn is often misunderstood.

28    It is a concept that was explained by the High Court in MWJ v R [2005] HCA 74; 222 ALR 436 at [38] per Gummow, Kirby and Callinan JJ, in the following way:

The rules is essentially that a party is obliged to give appropriate notice to the other party, and any of that person’s witnesses, of any imputation that the former intends to make against either of the latter about his or her conduct relevant to the case, or a party’s or a witness’ credit.

29    The Victorian Court of Appeal recently described the “touchstone” of the rule in Browne v Dunn as “the provision of a fair and adequate opportunity to respond to an adverse imputation”, noting that “…what is required in a given case to comply with the rule in Browne v Dunn is necessarily fact dependent”: Crow (a pseudonym) v The King [2026] VSCA 198 at [75]–[76] per Taylor, Orr and Kidd JJA.

30    The scope and operation of the rule was summarised in Transport Workers' Union of Australia v Qantas Airways Limited [2021] FCA 873; 308 IR 244 at [49], where Lee J set out the relevant principles, including by reference to Amcor Ltd v Barnes [2012] VSC 434 at [107] per Vickery J, as follows:

(a)        The rule in Browne v Dunn is a rule of fairness which requires a party or a witness to be put on notice that a statement made by the witness may be used against the party or witness or to be put on notice that an adverse inference may be drawn against the witness or an adverse comment made about the witness in order that the witness may respond to that issue and give an explanation: Browne v Dunn [1894] 6 R 67 Lord Herschell LC (at 70), Lord Halsbury (at 76-7); Bulstrode v Trimble  [1970] VR 840 at 849; Karidis v General Motors Holdens Pty Ltd [1971] SASR 422 at 425-6; Allied Pastoral Holdings Pty Ltd v FCT (1983) 44 ALR 607 at 623.

(b)        The significance of the rule is that it requires notice to be given of a proposed attack on a witness or on the witness’ evidence where that attack is not otherwise apparent to the witness. The rule does not require that there be put to the witness every point upon which his or her evidence might be used against him or her or against the party who calls the witness: Browne v Dunn, Lord Herschell LC (at 70).

(c)        Where, it is manifestly clear that the party or witness has had full notice beforehand that there is an intention to impeach the credibility of the story which he is telling, such as where notice has been so distinctly and unmistakably given, and the point upon which he is impeached, and is to be impeached, is so obvious, that it is not necessary to waste time in putting questions to him upon it, the rule may be dispensed with, where no unfairness will arise: Browne v Dunn:, Lord Herschell LC (at 71).

(d)        Notice of the relevant attack need not necessarily occur in cross-examination so long as it is otherwise clear that it will be made: Allied Pastoral Holdings Pty Ltd v FCT (1983) 44 ALR 607 per Hunt J (at 623).

(e)        The necessary notice may be effected in pleadings, in an opening or in the manner in which the case is conducted: Seymour v Australian Broadcasting Commission [1977] 19 NSWLR 219 at 224-5, 236; Jagelman v FCT (1995) 31 ATR 467 at 472-473; Raben Footwear Pty Ltd v Polygram Records Inc (1997) 145 ALR 1 at 15. To this list I would add notice given through witness statements or affidavits exchanged in advance of the trial.

(f) The rule has its foundation in the fair administration of justice: Browne v Dunn, Lord Halsbury (at 76-7).

31    As may be observed by the summary, the rule in Browne v Dunn is focused upon fairness with a particular emphasis upon adverse inferences or comments that may be drawn against a person by reason of the evidence that they have given.

32    When read fairly and as a whole, Ms Aitken was on notice that the ultimate submission would be that, contrary to her evidence, she did not have dinner with Mr Ejueyitsi on 14 June 2024. The cross-examiner was clear in the following exchange:

MS COHLEY:    Okay. So the reason why I showed you that document, Julie, is because you’ve just given evidence in your affidavit and here today in court that you were having dinner with Vincent on 14 June?---

MS AITKEN:         Yes.

MS COHLEY:    And I’m going to put to you that you didn’t have dinner with Vincent on 14 June because the document I’ve just taken you to says he was served by the process server?

MS AITKEN:     No. He was, honestly, with me in Darling Harbour having dinner.

MS COHLEY:    Okay?

MS AITKEN:     Yes. He met my girlfriend Jenny.

33    The proposition was squarely put to Ms Aitken that the submission that would be made was that she did not have dinner with Mr Ejueyitsi on 14 June 2024 because he was at that time elsewhere, being served with the Bankruptcy Notice. Ms Aitken responded and gave her reasons for her evidence to the contrary. Her Honour had the advantage of observing the entirety of the exchange.

34    The appellant argues that the “essential element” not put to the witness was the date. The appellant argued that the question that was put was “insufficiently precise for the lay witness…” and that had she been asked, she may have said “I recall it was that day because it was a Friday night. I had been to work before dinner”, or in some other way been able to give a firm reason for her recollection. We do not consider that the rule in Browne v Dunn goes so far as the appellant contends: it is not necessary to expose each and every way in which a party may invite a finder of fact to conclude that the evidence before them is not reliable: Amcor at [107(b)]. Moreover, the rule is focused in large part (although not exclusively) upon giving notice to a party that submissions would be made as to adverse credit findings against that party. In contrast, no such submission was made in relation to Ms Aitken.

35    In any event, the witness did have the opportunity to explain why she believed it to have been 14 June 2024: it was because “He [Mr Ejueyitsi] met my girlfriend Jenny” and she was returning to Thailand on 16 June 2024. Her Honour had the full benefit of observing and evaluating that evidence. There was no departure from the rule in Browne v Dunn.

36    The appellant relied on the comments of the NSW Court of Appeal in State of New South Wales v Hunt [2014] NSWCA 47; 86 NSWLR 226. The Court, citing a majority of the High Court in Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; 243 CLR 361 at [67] per Heydon, Crennan and Bell JJ, stated that two conditions needed to be satisfied before a finding could be made that a witness had fabricated their evidence: first, reasons must be given for concluding that the truth has been deliberately withheld; second, the witness (or party) must have been given an opportunity to answer the criticism. That case is far distant from the present. Her Honour in this case made no adverse credibility finding concerning Ms Aitken at all.

37    The appellant relied upon an exchange with the primary judge in the course of the hearing below, where the following was said:

HER HONOUR:     What do you say about the date? Ms Aitken’s evidence was, “I know it’s the 14th – I know it was the 14th, because my friend, Jenny,” - - -

MR BEAZLEY:     Yes.

HER HONOUR:     - - - “was returning to Thailand on the 16th , yes.

MR BEAZLEY:     On the 16th, yes.

HER HONOUR:     So it is at least conceivable that - - -

MR BEAZLEY:     It was not put to her, your Honour.

HER HONOUR:     - - - there’s confusion as to the date.

MR BEAZLEY:     It was not put to her.

HER HONOUR:     No, it wasn’t. But if I was analysing all of the evidence, it would be open to me to find that she was mistaken as to the date. I certainly would not be suggesting to you, at this stage, that I would be making an adverse credibility finding, but just – it’s some time since that date. There’s no written record, and it’s being done by reference to an event that was two days later.

38    Her Honour’s agreement that a particular proposition (that there was confusion as to the date) was not put to a witness in the absence of transcript is neither here nor there. The proposition that Ms Aitken did not have dinner with the appellant on 14 June 2026 was either put to the witness or it was not. In this case it was put squarely that Ms Aitken did not have dinner with the appellant on that date. In any event, in that exchange, her Honour identified clearly that it was not necessary to put the proposition to the witness in the precise terms advanced by the appellant’s solicitor, particularly in the absence of an adverse credibility finding. We agree with her Honour’s view in this respect.

39    Accordingly, to the extent that it was suggested that the rule in Browne v Dunn had been offended, we do not agree. Having regard to the overall way in which the case was run, and the specific exchange in the cross-examination of Ms Aitken to which we have adverted, the obligations of fairness required by the rule did not go so far as to require the kind of granular puttage for which the appellant contends. We are satisfied that there was no inconsistency with the rule in Browne v Dunn in the circumstances of this case.

The concession made on behalf of the appellant

40    The appellant also argues that her Honour misunderstood a concession made by the solicitor representing Mr Ejueyitsi, i.e., Mr Beazley. To understand the issue, it is necessary to set out some brief background:

(1)    The process server, Mr Juchau, said that he had served Mr Ejueyitsi on two occasions: once on 14 June 2024, when he said that he served the Bankruptcy Notice, and then again on 22 October 2024, when he served the Creditors' Petition: PJ [53], [56].

(2)    For a substantial period prior to the hearing of this matter, Mr Ejueyitsi maintained that he was not served with the Creditors’ Petition at his home on 22 October: PJ [57]. He tendered evidence on which he relied to contend that he was not served on 22 October: PJ [64]. He had given “elaborate evidence” as to why he could not have been home on 22 October to be served by Mr Juchau at that time: PJ [72].

(3)    Mr Juchau’s evidence was that he had served the same person on both occasions: PJ [71]. It was therefore a matter of some significance whether Mr Juchau had served Mr Ejueyitsi on 22 October.

(4)    At the hearing, Mr Ejueyitsi’s solicitor was asked whether the issue of service of the documents on 22 October remained in issue, and was told that it did not:

HER HONOUR:    So in terms of whether or not other documents were referred – were served on your client, including the creditor’s petition, that’s not contested?

MR BEAZLEY:     No, because he appeared before the court. Obviously he received some documents.

(5)    Mr Juchau was not cross-examined to the effect that he had not served Mr Ejueyitsi with the documents on 22 October.

41    It was relevant to her Honour’s analysis that Mr Ejueyitsi had at first said that he was not served by Mr Juchau on 22 October, but later abandoned that position: PJ [64], [72].

42    It is said by the appellant that the concession by Mr Beazley should have been taken as limited only to the fact that the documents had later come into Mr Ejueyitsi’s possession such that it was no longer useful to contest that issue. It was said that it should not be taken as a concession that Mr Juchau had in fact served Mr Ejueyitsi on 22 October.

43    The appellant’s submission cannot be maintained. First, the terms of the concession are clear. The issue was put squarely by her Honour as being whether or not other “documents… were served on your client, including the creditor’s petition, that’s not contested?” That proposition was affirmed by Mr Beazley. The Creditors’ Petition was said to have been served on 22 October.

44    In any event, her Honour’s reasoning was well available even without the concession for two reasons:

(1)    Mr Juchau was not cross-examined on the basis that he did not effect service upon Mr Ejueyitsi on 22 October. Given that forensic choice, there was limited scope for Mr Ejueyitsi to contest this issue.

(2)    Given that Mr Ejueyitsi attended the first return of the Creditor’s Petition before the Registrar, it would have been difficult to maintain that service was not effected. There was some discussion orally in the context of this appeal about alternative ways that Mr Ejueyitsi could or would have obtained notice of the hearing, but there was no certainty in relation to the issue.

45    Given the focus put upon the issue in Mr Ejueyitsi’s evidence, and the subsequent decision not to press the issue of 22 October, it was open to her Honour to reason as she did, with or without the concession that was made. This pathway of reasoning discloses no error.

Other evidentiary issues

46    Next, it was said that having accepted that Ms Aitken was a truthful witness, and that the dinner took place, it was not then open to her Honour to conclude that the dinner did not take place on the evening of 14 June 2024. It was also put on the basis that her Honour engaged in impermissible conjecture in concluding that Ms Aitken was mistaken as to the date of her dinner with the Appellant. This submission has a number of difficulties:

(1)    First, her Honour carefully and holistically reviewed the evidence concerning the dinner, including some irregularities about it:

(a)    the lack of evidence as to payment for the dinner by Mr Ejueyitsi (PJ [77]), and the differences in evidence between Mr Ejueyitsi on the one hand (who said that dinner took place at a restaurant) and Ms Aitken on the other, who said that they simply walked around and had something to eat; and

(b)    the changing approach to the timing of the dinner. Ms Aitken deposed that, at about 8.15pm, she met Mr Ejueyitsi at Darling Harbour for dinner, while in cross-examination she said “he came later, like mid-afternoon” before saying that they had met after 7.30pm and that they were eating “about 8, 8.15”: PJ [79].

(2)    Her Honour observed that Ms Aitken was giving evidence from memory about a dinner about a year earlier. It appeared to her Honour that Ms Aitken had not been asked to recall what she was doing on 14 June 2024 until about a year later when she was asked to provide an affidavit. Mr Ejueyitsi did not rely on any evidence from Ms Aitken before the Registrar and did not refer to her in his own affidavits: PJ [82].

(3)    There was no contemporaneous note from Ms Aitken about the evidence that she gave: PJ [82].

47    Her Honour’s analysis proceeded on the basis of an orthodox weighing of competing evidence in a careful way, including by analysing the evidence of the process server and the circumstances around the production of that evidence.

48    The appellant argued that there was a “gap” in the cross-examination of Ms Aitken as to how she could be so sure that the dinner was on the 14 June 2024. It was said that in the absence of asking a few more questions to explore the issue more fully, the respondents did not discharge the onus of proof. We do not accept that analysis. The cross-examination of Ms Aitken took place before the learned primary judge. It was considered in the overall context of the evidence as a whole. It was put to Ms Aitken that she did not have dinner with the appellant on 14 June 2024. She had the opportunity to answer that proposition. The conclusion that Ms Aitken was honest but mistaken was plainly an available conclusion and one which her Honour was best placed to consider.

49    There were various other complaints about the fact finding by the primary judge as it concerned the question of service of the Bankruptcy Notice:

(1)    The primary judge was satisfied that Mr Juchau attended Mr Ejueyitsi’s home (noting that Mr Juchau had taken a photograph of the front door): PJ [82]. In concluding that Mr Ejueyitsi had been the person who answered the door to his home, it was (mildly) relevant that Mr Ejueyitsi gave no evidence that another person lived with him who could have answered the door instead of him: PJ [55]. It was argued before this Court that this reasoning was faulty and that it reversed the onus of proof, placing it erroneously upon Mr Ejueyitsi. That is not so. Her Honour’s analysis was no more than an orthodox example of inferential reasoning: having accepted Mr Juchau’s evidence of attendance at the home, and having accepted that a person answered the door, the categories of persons who could or would logically have been present at Mr Ejueyitsi’s home was a matter peculiarly within his knowledge. If there was another person present to have taken the documents, then it would be expected for him to say so. The reliance on the failure to do so was a permissible form of reasoning. However, we do not perceive that it was a significant part of her Honour’s analysis. It was said that the photograph of the front door does nothing to prove personal service upon the appellant. That is not so: it is probative of one of the steps of reasoning required to establish the respondents’ case: that the process server actually attended the address in question. While not dispositive, it is relevant.

(2)    It was asserted in submissions on behalf of the appellant that because her Honour may have had some difficulty in understanding the appellant’s speech, it may have impacted her Honour’s understanding of his oral evidence. No particulars of this issue are identified, and the transcript reveals her Honour taking significant care to ensure that the appellant was given ample opportunity to clarify his evidence. We can find no suggestion that Mr Ejueyitsi’s evidence was not understood by her Honour.

(3)    The appellant complains about an affidavit of the appellant’s doctor, Dr Azar, that was exhibited to the appellant’s affidavit. Dr Azar’s affidavit said that Mr Ejueyitsi was “unfit for work on 1/10/24 to 2/10/24 and 22/10/24 to 24/10/24…” It was submitted that because the doctor’s affidavit said that the appellant “generally attends the clinic within 5pm to 7pm”, the doctor would have had to have seen the appellant on 22 October 2024 in order to declare him unfit for work. This complaint goes nowhere. The doctor’s affidavit (attached to Mr Ejueyitsi’s affidavit) does not assert that Mr Ejueyitsi had attended his clinic on 22 October. Her Honour fairly summarised its content and drew inferences reasonably available from it.

(4)    It is said that the evidence of Ms Aitken and the appellant are plausible because they both gave some evidence that was consistent with each other in circumstances where they were not in Court for each other’s evidence. These were all matters that her Honour was in a position to evaluate with all of the advantages of a trial judge: Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; 117 FCR 424 at [28]–[29] per Allsop J; Aldi Foods Pty Ltd v Moroccanoil Israel Ltd [2018] FCAFC 93; 261 FCR 301 at [47] per Perram J, citing Warren v Coombes [1979] HCA 9; 142 CLR 531 at 551 per Gibbs ACJ, Jacobs and Murphy JJ. 

50    Overall, we do not accept that any error has been disclosed in her Honour’s approach to the fact finding as it relates to the conclusion that the act of bankruptcy occurred. It follows that Ground One must be dismissed.

Ground two

51    By Ground Two, the appellant asserts that the findings identified in Ground One were against the weight of the evidence. Given our analysis of the matters raised by the appellant in relation to Ground One, there is no additional issue raised for consideration by Ground Two. For the reasons that we have already explained, we do not accept that the findings in Ground One were against the weight of the evidence.

Ground three

52    Ground Three is set out as follows:

Her Honour erred in not finding the Appellant could pay his debts [89] in circumstances where the Bankruptcy Notice was for $13,000, the Appellant had almost $25,000 in cash in his bank account as at the date of the sequestration order (13.02.2025) and there were no other debts presently due and payable.

53    Under cover of this ground, the appellant argues that a de novo appeal of the kind that her Honour was considering required the establishment of solvency at the date that the hearing of the Creditors’ Petition before the Registrar, on 13 February 2025.

54    The appellant argues that the making of a sequestration order is a matter of last resort by which the Court seeks to ascertain the actual state of affairs at the time that the sequestration order is made: citing Rigg v Baker [2006] FCAFC 179; 155 FCR 531 at [69] per French J. The appellant argued that before the Registrar, the appellant showed that he had a bank account with a balance of $28,000 against a debt of $13,000, and that this should have been sufficient to dismiss the application.

55    The appellant accepts that the review by the primary judge was de novo. He argues nonetheless that the date of analysis of the appellant’s ability to pay his debts required for s 52(2) should be by reference to the date of the Registrar’s original order. This is said to be because if a Registrar makes a sequestration order, it can alter the nature of some of the assets and liabilities that did not exist prior to the making of the sequestration order. He submits by way of example that a bank might give an overdraft that is cancelled after such an order is made, but that the overdraft could have been available to assist in demonstrating solvency. The appellant argues that this changes the terrain and that in consequence the analysis in s 52(2) alters as well. This is said to lead to the conclusion that even on a de novo review, the primary judge should carry out their task by reference to the earlier point in time.

56    This submission fails for at least the following reasons:

(1)    The existence of a de novo review of a Registrar’s decision is a constitutional requirement for the exercise of the power by the Registrar: Bechara at [17] per Allsop CJ, Markovic and Colvin JJ. In the context of this specific statutory regime, the Full Court has made clear that that hearing de novo of a Registrar’s sequestration order is “a complete rehearing of the facts and the law as they exist when the judge reviews the order made by the registrar”: Totev at [10] per Emmett J, with whom Bennett J and Cowdroy J relevantly agreed on this point (emphasis added).

(2)    There is nothing in the text, context and purpose of s 52(2) of the Bankruptcy Act, or s 35A of the Federal Court Act, which suggests that the Court should look backwards to determine whether or not a creditor was previously able to pay one debt. Indeed, s 52(2) is couched in the present tense, requiring that the Court “…is not satisfied with the proof…” or “is satisfied by the debtor… that he or she is able to pay…”. These are all strong statutory indicators that the analysis is carried out at the time of the hearing of the creditor’s petition.

(3)    In any event, there is a residual discretion in 52 of the Bankruptcy Act as to whether a sequestration order should be made notwithstanding the requirements in s 52 have been satisfied. The question of the exercise of the primary judge’s discretion is considered later in these reasons.

57    The approach applied below by her Honour is consistent with authority. In Bechara, the Full Court considered whether a creditor’s petition had become stale through the operation of a review process. Their Honours said (at [152]):

Thus, even after two years from the presentation of the petition, the hearing of the creditor’s petition on the de novo review, re-enlivened for this purpose, could take place. There may seem some tension in saying that it is a hearing de novo of the creditor’s petition, but at the same time recognising the effect of the registrar’s order until set aside or annulled. That, however, is but a consequence of the nature of the review in its full statutory context. The availability of the review is an aspect of the delegated authority. It is not an appeal to detect error. One begins again. But the application once filed does not affect the order made by the registrar. If, on a hearing de novo, the entitlement for a sequestration order is made out, the protection of the supervision has been effected. There is no call to interfere with the effect of the earlier making of the order. If after full rehearing afresh, de novo, again the judge considers that a sequestration order is appropriate, he or she will not interfere with the registrar’s order, will dismiss the application for review and affirm the registrar’s order. We leave aside consideration of circumstances where on review some error was shown in the registrar’s order such that a view is taken that the order should not have been made then, but it is clear that the order should now be made. Section 104(3) would appear to be wide enough to encompass such a circumstance.

58    Their Honours there squarely addressed the potential for change between the presentation of the petition and the hearing of a de novo review. While the issue in that case focused upon s 52(4) and (5), we consider their Honours’ analysis consistent with our own, and inconsistent with the approach advanced by the appellant.

59    The appellant relied upon Pollock v Deputy Commissioner of Taxation [1994] FCA 93; 94 ATC 4148. That case concerned an application to annul a sequestration order made by a District Registrar in the absence of the applicant. The question of annulment was considered by reference to ss 37(1) and 153B of the Bankruptcy Act. Those provisions call specific attention to the circumstances in which the sequestration order was made, providing powers to the Court: “If the Court is satisfied that a sequestration order ought not to have been made… the Court may make an order annulling the bankruptcy.” The statutory framework at issue in that case does not assist the appellant’s construction in respect of s 52 of the Bankruptcy Act, which is directed to the position at the time that the order is being considered.

60    Accordingly, we consider that the primary judge was correct to proceed on the basis that she was required to consider whether the appellant was able to pay his debts (plural) at the time of the hearing before her.

61    We turn then to consider her Honour’s analysis of the appellant’s capacity to pay. Her Honour proceeded on the basis that what Mr Ejueyitsi was required to prove was not limited to proof that he was able to pay the singular debt that was the subject of the Bankruptcy Notice. The debtor is required to prove that he is in fact solvent on a cash flow basis by reference to all of his or her debts. This requires probative evidence to be led, which is then assessed by the Court on an inductive basis, and the Court must decide whether on the balance of probabilities the debtor is as a matter of fact able to pay his or her debts. Her Honour’s approach was explained at PJ [110] and was, with respect, correct.

62    The analysis which then followed carefully considered the evidence before the Court, applying a cash flow test for solvency: PJ [111], citing Do (Trustee), Andrew Superannuation Fund v Sijabat [2023] FCAFC 6; 295 FCR 584 at [148] per Markovic, Halley and Goodman JJ. Without being exhaustive, her Honour noted the following aspects of the evidence:

(1)    Mr Ejueyitsi did not lodge a statement of affairs with the trustee, despite repeated requests: PJ [92].

(2)    Mr Ejueyitsi was divorced and at the time of the hearing before her Honour had a 14-year-old child. The evidence did not reveal any information in relation to any liability he had to make child support payments or whether such payments were made: PJ [93].

(3)    Mr Ejueyitsi worked as a taxi driver and operated a company called Oris and Otis Pty Ltd. There was no company search for Oris and Otis Pty Ltd in evidence: PJ [93].

(4)    Mr Ejueyitsi deposed that he earns between $500 and $700 per week from driving a taxi. He produced no documentary evidence to support his income levels. No personal tax returns or tax returns of his company were put before the Court: PJ [94].

(5)    Mr Ejueyitsi asserted that he had no personal tax debt, and relied on a screenshot of an Activity Statement from the Australian Taxation Office (ATO) portal. Her Honour concluded that it did not shed light on his assertion as to having no personal tax liabilities. The trustee’s report identified a proof of debt lodged by the ATO in the amount of $12,873. The position around this debt could have been clarified by Mr Ejueyitsi calling further evidence and he elected not to do so: PJ [95].

(6)    Mr Ejueyitsi had an account with Bank of Queensland and placed a single statement of that account before the Court. It was for the period 19 September 2024 until 18 March 2025. Mr Ejueyitsi further said that he had a St George Bank account with $990 in it. In oral evidence, he said he had an account with the Commonwealth Bank of Australia (CBA). No statements from St George or CBA were put forward. Those accounts were not referred to in the trustee’s report to creditors: PJ [96].

(7)    In oral evidence, Mr Ejueyitsi said that he had a HECS liability, which he described as a “pressing liability”, but provided no other information about it: PJ [97]. There was reference to “non-pressing” liabilities such as electricity and water bills, but it is not clear how this distinction was drawn by Mr Ejueyitsi: PJ [98].

(8)    Mr Ejueyitsi lived in rented accommodation and said he paid $330 per week in rent. He produced no documentary evidence to support that assertion: PJ [99].

(9)    Mr Ejueyitsi was the sole registered proprietor of real property in NSW. It was purchased for $460,000 in March 2024, with Pepper Finance Corporation listed as holding a first mortgage over that property. The principal amount of the mortgage was $372,416. Mr Ejueyitsi proffered an internet printout from the Domain property website to show the estimated value of the property to be “Low $430K Mid $500K High $570K”. Her Honour noted a dearth of probative evidence as to the value of the net equity that Mr Ejueyitsi may have in that property: PJ [101].

(10)    Mr Ejueyitsi gave evidence that his mortgage repayments were $727.14 per fortnight but provided no account statement or other documentary evidence to show recurring payment of that amount: PJ [103]. The property was rented, and weekly rental payments of $969.00 were shown on the single account statement from Bank of Queensland that Mr Ejueyitsi provided: PJ [104].

(11)    Mr Ejueyitsi said that he owned a car worth $28,000, but could not point to any documentary evidence in support of that valuation: PJ [105].

63    Mr Ejueyitsi’s arguments both before the primary judge and on appeal focused on his ability to pay the debt the subject of the Bankruptcy Notice. As her Honour correctly observed, that is not the relevant question. Mr Ejueyitsi had the burden of providing probative evidence to prove that he is solvent on a cash flow basis by reference to all of his debts.

64    The appellant argues that there was no evidence of debts, and that there was evidence before her Honour to find that Mr Ejueyitsi was solvent. We do not accept that submission: Mr Ejueyitsi bore the burden of demonstrating his solvency. His paucity of evidence left the primary judge in a position where the evidence did not permit her to reach the level of satisfaction required: PJ [110].

65    The appellant submitted that there is “little doubt” that had the appellant provided evidence before the Registrar that he had funds on hand sufficient to pay the amount claimed in the Creditors’ Petition (being a debt of $13,000), then the petition would have been dismissed. It is also argued that if the appellant did not have evidence of a cash balance greater than the debt, (only) then would it have been necessary to establish his assets and liabilities and to prove to the Court that he could pay his debts as and when they fell due.

66    These arguments misconceive the operation of the statutory scheme. The appellant’s repeated focus on the ability to pay the singular debt fails to focus upon the actual enquiry required by s 52: the ability to pay debts (plural). We reject the assertion that the enquiry should have or would have been limited to the issue of the debt the subject of the Bankruptcy Notice, or that the enquiry as to the broader capacity to pay debts is only triggered after the court is satisfied that the primary debt the subject of the Bankruptcy Notice cannot be paid. There is no warrant for such a reading of the text of the statute. Her Honour’s approach was correct. No error is disclosed in Ground Three.

Ground four

67    Ground Four is as follows:

Her Honour erred in the exercise of the discretion of the kind referred to in House v the King (1936) 55 CLR 499 and as a consequence exercised her discretion to make a sequestration order.

68    Ground Four was not strongly pressed in oral argument. It appears to form part of the general attack upon her Honour’s conclusions that she was not persuaded that Mr Ejueyitsi had established his solvency. Her Honour recorded in her reasons (PJ [113]) that:

Mr Ejueyitsi does not contend that there is any other sufficient cause under s 52(2)(b) of the Bankruptcy Act to refuse to make a sequestration order.

69    There is no challenge by way of appeal to that finding. In any event, it is clear that her Honour correctly apprehended the task before her, and exercised her discretion within the bounds within which it was conferred. We are not able to detect any basis to suggest that the discretion miscarried.

70    It follows that Ground Four is not established.

Conclusion

71    For the reasons that we have explained above, none of the four grounds of appeal are established. It follows that the appeal will be dismissed.

Associate:

Dated:    8 September 2026