FEDERAL COURT OF AUSTRALIA

Hoskin v Robert Balzola & Associates (Legal) Pty Ltd [2019] FCA 1353

ORDERS

THE COURT ORDERS THAT:

1.    An extension of time be granted, confined to proposed grounds 2, 3, 6 and 10 in the draft notice of appeal attached as an exhibit to the affidavit of Senad Dizdarevic sworn on 1 March 2019.

2.    A notice of appeal containing the grounds identified in order 1 be filed within 7 days.

3.    The appeal be dismissed.

4.    The applicant pay the respondent’s costs of and incidental to the application for an extension of time and of the appeal.

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

REASONS FOR JUDGMENT

BROMWICH J:

1    This is an application for an extension of time in which to bring an appeal against orders made by a judge of the Federal Circuit Court of Australia by which sequestration orders were made, and if granted, a substantive appeal against those orders.

2    The appeal was intended to be filed within time, but this was thwarted by several intervening events. The applicant attempted to file a notice of appeal on 11 October 2018, which was the final day of the 21 day time limit in r 36.03(a) of the Federal Court Rules 2011 (Cth). The next day however, the applicant received notification that the lodgement was rejected because it was filed in the Victorian registry rather than the New South Wales registry. There were then problems with paying the filing fee before the fee wrongly paid in Victoria was reimbursed. The notice of appeal was ultimately filed on 14 October 2018. It is a relevant consideration that the time limit in r 36.03(a) was not exceeded by a substantial margin, and has since been increased to 28 days with effect from 2 May 2019: item 16 in Sch 3 of the Federal Court Amendment (Court Administration and Other Measures) Rules 2019 (Cth). In my view, these events were sufficiently explained if the proposed grounds of appeal had merit, taken at an impressionistic level: MZABP v Minister for Immigration and Border Protection [2015] FCA 1391; 242 FCR 585 at [65]-[66].

3    For the reasons that follow, the extension of time should be granted in respect of some of the proposed grounds of appeal, but not others, but the appeal should ultimately be dismissed.

Overview

4    The applicant, Ms Julie Hoskin, is a former client of an incorporated law firm, Robert Balzola & Associates (Legal) Pty Limited. Mr Robert Balzola is the principal of Balzola & Associates. When Ms Hoskin failed to pay certain professional fees owing to Balzola & Associates, the costs were taxed by an assessor on 6 April 2018 and judgment entered in the Local Court of New South Wales on 19 April 2018. Ms Hoskin attempted to participate in that assessment process, but only did so out of time, such that her review application was dismissed.

5    On 24 April 2018, a bankruptcy notice was posted to Ms Hoskin. The debt was not paid and is not challenged in this proceeding.

6    On 23 May 2018, a creditor’s petition was filed in the Federal Circuit Court, and was served on Ms Hoskin on 28 May 2018.

7    On 21 June 2018, Ms Hoskin filed her first affidavit.

8    The creditor’s petition proceeding first came before a registrar on 25 June 2018, at which time procedural orders were made. On 19 July 2018, grounds of opposition were filed by Ms Hoskin as follows (verbatim):

1.    That I am not insolvent and Mr Balzola and his associate, Mr Hurley have always been cognizant of that fact throughout the legal matters pertaining to me.

Denial of Natural Justice and Denial of Procedural Fairness

CRIMES ACT 1900-SECT 192G-lntention to defraud by false or misleading statement

Criminal Code Act 1995-Sect 134.2 - Part (1),(a)and (b)-Obtaining Financial Advantage by Deception

2.     I have never accepted or admitted liability for the alleged debt that is the subject of these bankruptcy proceedings and this has been acknowledged by Cost Assessor, Mr Chris Wall.

Bankruptcy ACT 1966 - Part VI-Administration of Property-Division 1-Proof of Debts Section

83: Debt not to be considered proved until admitted.

3.     I am contesting the Cost Claim Judgement Orders of the NSW Supreme Courts on the basis that the costs claim can’t be properly determined or quantified until the falsified accounts and cost claims, as disclosed in the recent release of court findings against Mr Balzola by the NSW Law Society, are investigated and the quantum of the work claimed to have been conducted, is established.

Bankruptcy ACT 1966-Section 34A Standard of Proof.

Legal Profession Act 1987-Section127 (1)(b)-Professional Misconduct and unsatisfactory professional conduct.

CRIMES ACT 1900:

SECT 192E-Fraud-192E Fraud- Part (1)-(a) and (b) and Part (3)

SECT 192F-lntention to defraud by destroying or concealing accounting records

SECT 192G-lntention to defraud by false or misleading statement

Criminal Code Act 1995-Sect 134.2 - Part (1),(a)and (b)-Obtaining Financial Advantage by Deception

4.     I am submitting a cross claim against Mr Balzola seeking damages, costs and compensation for the matters that have come to light since the last hearing on the 25th of June, 2018 that confirm that there has been concealment of serious, prolonged and substantial dishonesty and wrongdoing in relation to Robert Balzola's handling of trust monies and his conduct while acting for me and for withholding information that prevented me from obtaining finance (on numerous occasions) to settle debts.

Bankruptcy ACT 1966-Section 34A Standard of Proof.

Denial of Natural Justice and Denial of Procedural Fairness

CRIMES ACT 1900:

SECT 192E-Fraud-192E Fraud- Part (1)-(a) and (b) and Part (3)

SECT 192F-lntention to defraud by destroying or concealing accounting records

SECT 192G-lntention to defraud by false or misleading statement

Criminal Code Act 1995-Sect 134.2 - Part (1),(a)and (b)-Obtaining Financial Advantage by Deception

5.     Throughout his dealings with me, Mr Balzola has, with both active and constructive knowledge of the serious and substantial findings against him by the NSW Law Society, engaged in conduct that amounts to deception, dishonesty and extortion for pecuniary gain and he has attempted to ruin me by creating and submitting a legal instrument to the courts based on evidence that he knew was unable to be quantified by me or substantiated, in order to bankrupt me and take my property and assets. He has deliberately acted to conceal the adverse findings that were brought against him in June, 2017, by the NSW Law Society while at the same time, attempting to force me into a court case where I couldn't possibly defend myself because Mr Balzola had prevented me from having access to accurate and reasonable information that I am entitled have in order for me to understand the basis and authenticity of his claim.

CRIMES ACT 1900:

SECT 192E-Fraud-192E Fraud- Part (1)-(a) and (b) and Part (3)

SECT 192F-lntention to defraud by destroying or concealing accounting records

SECT 192G-lntention to defraud by false or misleading statement

Criminal Code Act 1995-Sect 134.2 - Part (1),(a)and (b)-Obtaining Financial Advantage by Deception

Legal Profession Act 1987-Section127 (1)(b)-Professional Misconduct and unsatisfactory professional conduct.

6.     That the bankruptcy proceedings be struck out as these matters are still subject to investigation by the NSW Law Society. Very serious breaches have been exposed already even though only a partial finding has been released to date, the remainder will likely result in the turning of any decision that is made based on the claims Mr Balzola has made.

Bankruptcy ACT 1966-Section 34A Standard of Proof.

Denial of Natural Justice and Denial of Procedural Fairness

Legal Profession Act 1987-Section127 (1)(b)-Professional Misconduct and unsatisfactory

professional conduct.

CRIMES ACT 1900:

SECT 192E-Fraud-192E Fraud- Part (1)-(a) and (b) and Part (3)

SECT 192F-lntention to defraud by destroying or concealing accounting records

SECT 192G-lntention to defraud by false or misleading statement

Criminal Code Act 1995-Sect 134.2 - Part (1),(a)and (b)-Obtaining Financial Advantage by Deception

7.     I seek orders for Mr Balzola to produce at the hearing on 23rd July, 2018:

a.    the complete findings of the NSW Law Society in relation to the complaints that were lodged against him by myself and Mr Ernest White, and

b.    my original, freehold certificate of title and copy of my original birth certificate, and

c.    a statutory declaration to substantiate the purpose of his demand for me to provide him with my original, freehold certificate of title and the copy of my original birth certificate, and the details of what he has done with those documents since receiving them in 2015.

d.    A copy of all invoices pertaining to the original bill of account that was cancelled in order to replace it with the account that is the basis of these proceedings, and a copy of the last invoice that was paid in relation to that original account.

Mr Balzola is aware that denial of this information is preventing me from securing finance.    

Mr Balzola has consistently obstructed discovery and denied me access to statements and other relevant information that I'm entitled to have as a client.

Denial of Natural Justice and Denial of Procedural Fairness

Bankruptcy ACT 1966-Section 34A Standard of Proof.

CRIMES ACT 1900:

SECT 192E-Fraud-192E Fraud- Part (1)-(a) and (b) and Part (3)

SECT 192F-lntention to defraud by destroying or concealing accounting records

SECT 192G-lntention to defraud by false or misleading statement

Criminal Code Act 1995-Sect 134.2 - Part (1),(a)and (b)-Obtaining Financial Advantage by Deception

9    It may be observed that of the seven numbered paragraphs in Ms Hoskin’s grounds of opposition document, only the first five directly raise objections to the creditor’s petition being granted. Paragraph 6 seeks relief by way of having the bankruptcy proceeding struck out, which is a kind of global relief sought rather than any properly formulated ground of objection to the creditor’s petition; and paragraph 7 indicates certain documents that Ms Hoskin wanted Mr Balzola to produce at a procedural hearing on 23 July 2018, which is not any objection at all. Accordingly, this proceeding is properly conducted upon the basis of the five grounds of objection that were advanced before the primary judge.

10    On 23 July 2018, Ms Hoskin filed her first substantive affidavit. At the procedural hearing that took place that day, procedural orders were made, including referring the proceedings to Judge Emmett. That referral was short-lived and her Honour did not subsequently hear the matter. Instead, on 27 July 2018, the primary judge set aside the 23 July 2018 procedural orders and set the creditor’s petition down for hearing on 13 September 2018, with liberty to apply on two days’ notice. That liberty was never exercised.

11    Between 28 and 30 August 2018, there was an exchange of emails between Ms Hoskin and the associate to the primary judge as follows:

(1)    From Ms Hoskin to NSW Registrar Support on 28 August 2018 at 12.59 pm:

To the Registrar

NSW Federal Circuit Court, Sydney

Re File number: SYG1440/2018

I have been preparing submissions that are due to be lodged by the 31st of August, 2018, to the Federal Circuit Court for the above matter.

Due to the recent public release of allegations against Mr Balzola by the NSW Office of the Legal Services Commission, I rely heavily on Simon Ward, NSW Law Society Trust Account investigator, to give evidence in the court case. It is critical for him to be in attendance and to provide an affidavit to verify his findings in relation to Robert Balzola’s accounts.

I have been advised that Simon Ward is on leave until the 11th of September, 2018 and will be unavailable until after that date.

As a consequence, it is impossible for me to be able to properly define the direction of my case, serve a subpoena or any other relevant documents for Simon’s attendance in court or for him to be able to prepare his affidavit.

I apologise profusely for this unexpected inconvenience but request that a further extension of time be granted for submissions, subpoenas and affidavits to be lodged until Simon Ward returns from leave and can prepare and provide his affidavit.

Thank you,

Julie Hoskin

(2)    From Ms Hoskin to NSW Registrar Support on 30 August 2018 at 2.06 pm:

To the Registrar

NSW Federal Circuit Court, Sydney

RE: Matter number: SYG1440/2018

Please see the correspondence below-Request for further extension of time for submissions to be produced in relation to matter SYG1440/2018.

I rely on the evidence of Mr Simon Ward, Trust account investigator, NSW Office of the Legal Service Commission who has investigated the accounts of Mr Balzola. Mr Ward is on leave until the 11th of September, 2018.

Could you please advise me today whether or not my request for an extension has been granted by the appointed Judge, Justice Alexander Street?

Thank you for your attention to this matter.

Kind regards,

Julie Hoskin

(3)    From the associate to the primary judge to the parties on 30 August 2018 at 2.47 pm:

Dear parties,

The matter remains listed for hearing at 9:30am on 13 September 2018.

Kind Regards,

[Associate to primary judge]

(4)    From Ms Hoskin to the associate to the primary judge on 30 August 2018 at 3.22 pm:

Dear [Associate],

Thank you for contacting me.

I was unaware that Mr Ward had taken leave and couldn’t have predicted this situation. I did contact the NSW OLSC some time ago with relation to a subpoena for Mr Ward’s attendance at court.

As presented in my previous affidavit, there have been very serious complaints of mishandling of client's funds, falsifying accounts and receipts and misleading/lying to clients about his accounts and their financial status.

These are the concerns I have raised throughout my dealings with Mr Balzola, which resulted in a complaint to the NSW OLSC.

As Mr Balzola has repeatedly denied me copies of specific accounts and statements and the right to see the findings of the NSW OLSC, the only avenue I have to clarify and quantify the accounting and trust account issues, is to subpoena Mr Ward to give his evidence in court.

Unless time is granted to accommodate Mr Ward’s return from leave and to allow him to give evidence in this matter, I am utterly disadvantaged and can’t see how I can proceed.

I ask that my request for this extension to allow Mr Ward's attendance at court be reconsidered.

Thank you,

Julie Hoskin

(5)    From Ms Hoskin to the associate to the primary judge on 30 August 2018 at 4.51 pm:

Dear [associate]

Please see attached the settled account for matters concerning Robert Balzola as determined by the NSW Law Society.

As you can see, their investigations show an amount of $5,052.53 outstanding with the account of Robert Balzola.

This amount is still subject to further investigations to determine the quantum of Mr Balzola’s work and conduct in these matters.

Mr Ward needs to be present to give evidence in the hearing for this matter.

I am able to provide $5,052.53 in trust to the courts if required until this matter is properly addressed.

Thank you,

Julie Hoskin

12    On 2 September 2018, Ms Hoskin filed three notices to produce and on 5 September 2018, she filed an application in a case. By those actions she would have given an impression of being reasonably able in representing herself, which may or may not have aligned with reality.

13    On 11 September, Balzola & Associates filed an interim application to have the notices to produce set aside at the 13 September 2019 hearing, which was ultimately successful.

14    On 13 September 2018, the hearing took place before the primary judge. His Honour adjourned the case for a week to give Ms Hoskin an opportunity to pay the debt if she was able. That did not happen. On 20 September 2018, his Honour made the sequestration order sought, giving a brief ex tempore judgment of three pages. His Honour said that none of the five objections directed to the creditor’s petition relied upon by Ms Hoskin were of substance. The orders were supplemented in a further order the next day.

15    The proposed notice of appeal, attached as an exhibit to the affidavit of Ms Hoskin’s solicitor sworn on 1 March 2019, advances 10 grounds. Ms Hoskin’s submissions conveniently group the grounds into four categories of alleged error, a pattern that is largely followed in addressing them below:

(1)    failure to give a fair hearing in seven identified respects: grounds 2-8;

(2)    error in making a finding of insolvency to justify making the sequestration order: ground 9;

(3)    failure to give adequate reasons: ground 1; and

(4)    error in failing to exercise the discretion to dismiss the creditor’s petition: ground 10.

Alleged failure to give a fair hearing (proposed grounds 2-8)

16    Ms Hoskin was a litigant in person before the primary judge, opposing Balzola & Associates’ creditor’s petition. She relies upon the principles of procedural fairness as explained by the Full Court in Shrestha v Migration Review Tribunal [2015] FCAFC 87; 229 FCR 301 at [37]-[49]. She asserts that the primary judge was obliged to give her a reasonable opportunity to present evidence and to make submissions and was required to exercise the powers of the Federal Circuit Court reasonably, noting that what is procedurally fair depends on the circumstances. She relies upon SZRUR v Minister for Immigration and Border Protection [2013] FCAFC 146; 216 FCR 445 at [37] for the proposition that special care must be taken when a litigant is unrepresented and appears in person. She further asserts that a failure to explain the Court’s procedures and to put her, as a self-represented litigant, in a position where she was able to make an effective choice about how to conduct her case was also a failure to accord procedural fairness, citing Mortimer J in SZRUR at [60]-[61]. It is enough that the evidence that might have been produced or submissions that might have been made could possibly have made a difference: Stead v State Government Insurance Commission [1986] HCA 54; 161 CLR 141 at 147 [16].

17    Balzola & Associates do not dispute the accuracy of the above statements of principle as far as they go, but maintain that none of them have been breached, pointing to Ms Hoskin’s ability to conduct the proceedings herself. Balzola & Associates caution against applying too readily the principles developed in the very different context of migration cases involving self-represented litigants who cannot speak English to someone like Ms Hoskin, who is patently far from that category. Balzola & Associates point to procedural orders made in the Federal Circuit Court on 25 June 2018 for the filing and serving of evidence, and on 23 July 2018 allowing more time to file and serve additional evidence, a point acknowledged by the primary judge at the 13 September 2018 hearing. Balzola & Associates also point to the fact that Ms Hoskin was given time to file written submissions and to make oral submissions at the hearing.

18    Balzola & Associates rely upon the established limitations on what a judge can properly do to assist a self-represented litigant, relying upon what was said on this topic in Hamod v State of New South Wales [2011] NSWCA 375 at [309]-[316], reproduced in full with approval by Robertson J in SZRUR, writing the main judgment, at [37]. The principles stated in Hamod, which is frequently cited in this Court, were helpfully summarised in the submissions for Balzola & Associates as follows (at [8(a)-(d)]):

The court’s duty is not solely to the unrepresented litigant. The obligation is to ensure a fair trial for all parties. For this reason, the duty is usually stated in terms that require that the impartial function of the judge is preserved

A trial judge has an obligation to take appropriate steps to ensure that the unrepresented litigant has sufficient information about the practice and procedure of the court

It is not the function of the court to give judicial advice to, or conduct the case on behalf of, the unrepresented litigant

The court should be astute to see that it does not extend its auxiliary role so as to confer upon a litigant in person a positive advantage over the represented opponent.

Proposed ground 2 – The primary judge failed to give the Appellant a fair hearing in that his Honour did not give the Appellant a proper opportunity to consider and, if she ultimately so desired, to respond to the affidavit of Robert Balzola sworn on 2 September 2018.

19    At the hearing, Ms Hoskin said that she had not seen Mr Balzola’s affidavit in reply to her evidence of 2 September 2018. It is a substantial affidavit of 23 pages with 149 paragraphs and 32 exhibits. The exhibits are a little under 200 pages once exhibit cover pages are excluded. The primary judge required Balzola & Associates to prove service of that affidavit, indicating that if that was not proven, the proceedings would be adjourned for a week. As it transpired, proof of service of the affidavit was established by the tender of an email sent to Ms Hoskin on 3 September 2018.

20    There is no challenge to the finding of the primary judge that Mr Balzola’s affidavit was served, noting again that it was a reply affidavit. The challenge therefore is not dealing with the circumstance of evidence that has emerged late without an opportunity to read and consider it, but rather evidence that has been served 10 days before a hearing and which Ms Hoskin has not read prior to the commencement of the hearing, for whatever reason. While Ms Hoskin was initially only allowed an adjournment of 15 minutes to read and formulate objections to the affidavit, the time taken by Balzola & Associates to locate the email to prove service resulted in adjournments of a further 40 minutes and a further 25 minutes. The primary judge then heard from Ms Hoskin as to the objections she had to Mr Balzola’s affidavit, not upholding any of them. The affidavit was then read.

21    Ms Hoskin’s asserts that receiving the affidavit into evidence was plainly unfair, and that the primary judge, in these circumstances, was obliged to invite her to seek an adjournment and consider the issue of service as being relevant to the question of costs. For this ground to have any substance, it had to require not just the opportunity to apply for an adjournment, but also the grant of the adjournment. Otherwise the complaint amounts to no more than the right to have an adjournment application made and refused, which is a barren exercise.

22    In response, Balzola & Associates submits that there is no requirement for a court to be satisfied that a party served with evidence has read it and that such an obligation would be, in effect, unworkable. Balzola & Associates rely upon Sali v SPC Ltd [1993] HCA 47; 67 ALJR 841 at 843-4 where the majority said:

In determining whether to grant an adjournment, the judge of a busy court is entitled to consider the effect of an adjournment on court resources, the competing claims by litigants in other cases awaiting hearing in the court as well as interests of other parties … What might be perceived as an injustice to a party when considered only in the context of an action between parties may not be so when considered in a context which includes the claims of other litigants and the public interest in achieving the most efficient use of court resources.

23    Balzola & Associates also point out that the grant or refusal of adjournments is discretionary, confining the grounds to an error of the kind identified in House v The King (1936) 55 CLR 499 at 504-5. Balzola & Associates submit that particular caution must be exercised by appellate courts when asked to intervene in matters of practice or procedure, citing Newton v Ellis [2012] NSWCA 106 at [17]; and Blazevski v Judges of the District Court of New South Wales (1992) 29 ALD 197 at 200.

24    The arguments advanced by Balzola & Associates are more compelling. There is no principled reason for an adjournment to be invited or granted simply because a self-represented litigant has not read evidence furnished well before a hearing, especially when no sufficiently compelling reason was provided to the primary judge for not having done so. I am satisfied that the issue raised at first blush was of sufficient moment to warrant the grant of an extension of time to bring this ground of appeal. However, upon closer examination as part of the substantive appeal process, I am not satisfied that there was any denial of procedural fairness in all the circumstances. Even if there was some theoretical denial of procedural fairness, I am not satisfied that this occasioned any practical injustice, so as to amount to any legal or jurisdictional error: see Re Minister for Immigration and Multicultural Affairs; Ex parte Lam [2003] HCA 6; 214 CLR 1 at [37], cited in Assistant Commissioner Condon v Pompano Pty Ltd [2013] HCA 7; 252 CLR 38 at [156] and Minister for Immigration and Border Protection v SZMTA [2019] HCA 3; 363 ALR 599 at [38]. This ground of appeal must therefore fail.

Proposed ground 3 – The primary judge failed to give the Appellant a fair hearing in that his Honour did not permit the Appellant to cross-examine Robert Balzola about an investigation by the New South Wales Law Society into his conduct with respect to his handling of funds paid into the Respondent’s trust account.

25    Ms Hoskin cross-examined Mr Balzola over some 17 pages of transcript. He was specifically asked if there had been amounts paid to him by Ms Hoskin that had not been brought to account, a proposition that he denied. On the second last page of that cross-examination, Ms Hoskin sought to ask questions about whether he contested adverse findings made by the Law Society of New South Wales. The primary judge said:

I reject that question. Ms Hoskin, you have had ample opportunity to advance questions that were relevant. The last question was seeking to frame propositions that are not relevant to this case and, on the face, are going beyond what is appropriate for you to ask. I will permit you to ask another minute’s questions that are relevant.

26    By this proposed ground of appeal, Ms Hoskin asserts that the primary judge’s comment that she was “seeking to frame propositions that are not relevant to this case”, following which no further questions were asked on that topic, was wrong because this was potentially an “other sufficient cause” for dismissing the creditor’s petition pursuant to s 52(2)(b) of the Bankruptcy Act 1966 (Cth). She submits that the cross-examination on the Law Society investigation was even more significant because she had been denied the opportunity to obtain evidence in support of her case from the Law Society directly, such that this cross-examination was the only avenue for obtaining evidence on that topic.

27    Balzola & Associates submit in response that whether Mr Balzola was under investigation or not by the Law Society was not relevant to a fact in issue, with the relevant question as to money paid being brought to account being allowed by the primary judge. His Honour found that the amounts received in relation to the matter that was the subject of the Local Court judgment had been brought to account. There is no proposed ground of appeal challenging that finding.

28    I am not satisfied that the primary judge erred in disallowing the question on the basis of it not being relevant. While the categories of what constitute an “other sufficient cause” are not closed, they must in some way go to the heart of the issues raised by the creditor’s petition. The leading High Court case on “other sufficient cause” is Cain v Whyte (1933) 48 CLR 639. The report reproduces verbatim the reasons of the primary judge in full and concludes with Rich J saying “I am content to agree with the judgment of the learned primary Judge and think that the appeal should be dismissed” and Starke, Dixon, Evatt and McTiernan JJ saying “agreed”. At 645-6, the primary judge in that case, sitting as a judge in bankruptcy for the District of Southern Queensland said on the topic of “other sufficient cause” as it appeared in the Bankruptcy Act 1924-1932 (Cth):

… I do not agree with the argument put forward … that the words “other sufficient cause” should be limited to the one case where the Court is satisfied that the petition is put forward solely for some collateral illegitimate end, and not for the purpose of securing the equal distribution of the available assets amongst the creditors. To my mind, the High Court of Australia did not intend to put a limit on the meaning of the words “other sufficient cause” in Dowling v. Colonial Mutual Life Assurance Society [(1915) 20 CLR 509], and I do not propose to be the first to say that such wide words as “other sufficient cause” are necessarily limited to meaning a cause in the nature of fraud or abuse of the provisions of the bankruptcy law. I can well conceive that “other sufficient cause” might arise in connection with any particular case. To my mind, it is the duty of the Bankruptcy Judge to examine in each case, if the question is raised, whether there is other sufficient cause than the fact that the debtor is able to pay his debts in full, for refusing to make an order.

I rule then that I am fully entitled to examine the contention put forward … on behalf of the debtor that there is, in the present case, other sufficient cause sufficient to justify the dismissal of this petition. I approach that question with the full appreciation that, prima facie, on proof of the matters mentioned in sec. 56 (2), the Court will proceed to make an order for sequestration, and that it is for the debtor to show some cause overriding the interest of the public in the stopping of unremunerative trading, and the rights of individual creditors who are unable to get their debts paid to them as they become due. Something has to be put before the Court to outweigh those considerations before it can be said that sufficient cause is shown against the making of a sequestration order. In the present case I do not think that any such cause has been shown.

29    This approach of looking to an alternative reason beyond making good the basis for a sequestration order accords with the types of cases in which “other sufficient cause” has been found, such as the likely success of a claim against a creditor falling short of undoing an act of bankruptcy, some other likely defect such as bias infecting the judgment debt, futility of bankruptcy, frustration of a pending appeal, or refusal of the petitioning creditor to accept payment. Something concrete must be established, or be sought to be established. Yet at the hearing before this Court, nothing concrete was pointed to. Rather, a more generalised attack on Mr Balzola’s character seemed to be intended. An examination of Ms Hoskin’s affidavit reveals that she took issue with the way in which Mr Balzola had conducted litigation upon her behalf, and how he had dealt more generally with funds advanced to him. The primary judge was entitled to form the view that cross-examination of Mr Balzola about an ongoing Law Society investigation about him was not going to produce anything falling within the proper ambit of “other sufficient cause”, and was therefore irrelevant.

30    The relevant fact in issue was whether or not all the money that had been paid by or on behalf of Ms Hoskin in relation to the matter for which judgment was obtained had been brought to account. Broader questions about a pending Law Society investigation have not been shown to be relevant to the point of establishing error on the part of the primary judge. I am therefore unable to see how cross-examination about the Law Society investigation or its outcome could have any bearing on a decision to dismiss a creditor’s petition, so as to amount to an “other sufficient cause” for dismissing the creditor’s petition.

31    The curtailing of the cross-examination of Mr Balzola was of sufficient moment to warrant an extension of time for this ground of appeal, but the ground has not been made out and must fail.

Proposed ground 4 – The primary judge failed to give the Appellant a fair hearing in that his Honour did not adequately explain to the Appellant, who appeared in person and unrepresented, prior to the commencement of her cross-examination of Robert Balzola, or at all, the matters on which she had the onus to persuade the court for it to conclude that it ought not to make a sequestration order, in particular by reference to “other sufficient cause” for the purposes of section 52(2)(b) of the Bankruptcy Act 1966 and by reference to the matters raised in the Appellant's grounds of opposition.

32    During the course of the discussion about service of Mr Balzola’s affidavit, the primary judge said this to Ms Hoskin (at transcript page 18):

And the real issues in the proceedings are did you commit an act of bankruptcy, and, on the face of evidence, you clearly did. The next issue is whether you’re solvent. On the face of the evidence before the court there’s nothing to suggest you’re solvent. The next proposition is: is there other sufficient cause not to make a sequestration order. It’s here that you’ve made very broad, very serious, on one view scandalous allegations of contraventions of legislation and breach of duty which, on the face of the evidence you put on, appear to have no proper basis.

33    Ms Hoskin submits that this did not go far enough. She submits that, as a litigant in person, it was “incumbent on the primary judge to inform her of the matters on which she bore the onus to persuade the Court” and that his Honour failed to explain the “principles for assessing what constitutes ‘other sufficient cause’ ”, citing Totev v Sfar [2006] FCA 470; 230 ALR 236 at 243-8 [37]-[45] and SZRUR.

34    In SZRUR, a migration decision in the Federal Circuit Court was overturned because the procedure for establishing fraud and the issues needed to be addressed were not explained to an appellant who did not speak English. This was found not to go far enough in the particular circumstances of that case, because the appellant did not understand that he needed to go beyond making submissions from the Bar table, and, in effect, needed to say much the same thing, but as evidence given in the witness box. Allsop CJ in SZRUR said at [53]:

The appellant was not put into the witness box. He was not told that to make out a case of fraud he had to deal with fundamentally important issues displayed in SZFDE [SZFDE v Minister For Immigration and Citizenship [2007] HCA 35; 232 CLR 189] and SZLIX [Minister for Immigration and Citizenship v SZLIX [2008] FCAFC 17; 245 ALR 501] including the possibility of obtaining the presence of any migration agent for evidence in the court. With respect, it was not appropriate to simply hear him from the bar table and dismiss his case. Dealing with litigants in person is difficult. SZLIX reveals the difficulty of the type of case that this litigant in person had. Procedural fairness required at least that this appellant be given the opportunity of going into the witness box to give evidence, with knowledge of the issues that he had to address, including the exploration of the role of the migration agent. He was not afforded that fairness.

35    Mortimer J said at [59] (emphasis added):

In this case, the appellant needed sufficient information about the evidence required to make out the very serious allegations of fraud he proposed. The appellant was not given sufficient information. He was not informed about the need for sworn evidence, nor was he informed, even in outline, about what kinds of issues he needed to address.

36    Further, Ms Hoskin complains, the primary judge rejected a proposition that the Law Society investigation could constitute “other sufficient cause”. When she asserted from the Bar table that the Law Society had found he had falsified accounts, the primary judge said that not only was there no evidence of that, but that such evidence would not fall within the proper scope of submissions relating to “other sufficient cause”.

37    Balzola & Associates submit that the primary judge went far enough in the passage quoted above and was not under any obligation to provide advice to Ms Hoskin as to what may constitute an “other sufficient cause” for the purposes of the Bankruptcy Act.

38    As the above passages in SZRUR show, the Full Court was not suggesting that the primary judge in that case had to provide any legal advice. Rather, the appellant in that case had to understand, in broad terms, that in order to rely upon fraud he needed to prove, not just state, what had happened to him. Viewed in that way, the requisite level of understanding was more in the nature of procedural information and the broad nature of what he had to establish. That is part and parcel of dealing with self-represented litigants in this Court, especially those from non-English speaking backgrounds.

39    I therefore agree with Balzola & Associates’ submission. The suggestion that a judge is obliged to give what amounts to legal advice goes well beyond the principles set out in Hamod. The reliance on SZRUR is misplaced, because that case did not go as far as Ms Hoskin asserts. In SZRUR, the appellant had said from the Bar table that he did not authorise his migration agent to sign any documents on his behalf. The failing on the part of the primary judge was not giving him procedural advice that he needed to go into the witness box and say the same thing in order to turn his assertions into evidence. That did not entail the giving of legal advice, but rather more generalised practice and procedure advice of the kind adverted to in Hamod. What was described in SZRUR broadly accords with what the primary judge did in this case, identifying as his Honour did, that Ms Hoskin had to either prove that she was solvent, or establish any other sufficient cause not to make a sequestration order. His Honour was not required to do more.

40    I consider that this proposed ground, on its face, lacks even first blush cogency. I therefore decline to extend the time in which to bring an appeal on this ground. Had I allowed the extension of time, the ground would have been dismissed.

Proposed ground 5 – The primary judge failed to give the Appellant a fair hearing in that, when reading her affidavits, he did so “subject to relevance” (at T24.37-T25.17); he did not identify which parts of the affidavits he considered irrelevant; and he did not invite the Appellant to make submissions as to the relevance of any such part of the affidavits.

41    When it came to Ms Hoskin’s affidavit evidence, the following exchange took place (emphasis added):

HIS HONOUR:    Yes. Now, Ms Hoskin, you have a number of affidavits that are on the court file. Do you want the court to accept into evidence all the affidavits that you’ve filed?

MS HOSKIN:    Yes, please.

HIS HONOUR:     Mr Hopkins, whilst I do have concerns that I’ve expressed in relation to some of the allegations that are advanced in the affidavits which, on their face, I didn’t lightly describe as being vexatious or scandalous, it does seem to me that the appropriate way to deal with the matter is to permit the affidavits to be read subject to relevance.

MR HOPKINS:     I’m content with that approach. If it could just be handed up for the purposes of the court – I have provided some written objections, but I won’t press on them, and I’m content for your Honour to treat the affidavits in the way that they are, but - - -

HIS HONOUR:     It seems to me the appropriate course is to permit each of the affidavits to be read subject to relevance. Some of the content of the affidavits are submission. Some of the content appears to be seeking to assert fact. It seems to me, in accordance with the court’s duty, to expeditiously determine this matter[, t]he appropriate course in the circumstances is to permit the affidavits to be read. So I will – I have identified the affidavits that are being read subject to relevance. The affidavit is the affidavit of 21 June 2018.

42    Ms Hoskin complains that the primary judge did not at any time identify the parts of the affidavits that were considered irrelevant or invite her to make submissions as to relevance. His Honour’s judgment does not suggest that any evidence was formally rejected. Ms Hoskin submits that it was impossible for her to understand which elements of her affidavits were accepted into evidence and could not know the evidentiary basis the Court was proceeding upon and could not make proper submissions, which she asserts was plainly unfair. The submissions that she might have made were not identified and the prejudice she relies upon was not shown.

43    The primary judge’s reasons on this topic were as follows (at [5]):

At the hearing of the proceedings on 13 September 2018, affidavit evidence was read by the respondent, purporting to dispute the existence of the underlying liability. As the respondent was unrepresented, the Court permitted the respondent to cross-examine the petitioning creditor in relation to the underlying debt, to see whether or not there was any proper basis upon which the Court should go behind the judgment. The respondent asserted that there had been payments made that had not been brought to account. No such payments were proved by the respondent.

44    Balzola & Associates rely upon the fact that admission of evidence subject to relevance is a common practice. Not only is that correct, but it has a clear statutory foundation in s 57 of the Evidence Act 1995 (Cth). In fact, the approach of the primary judge was the most beneficial one available for Ms Hoskin as a litigant in person, because evidence that might otherwise have been excluded by the strict application of the rules of evidence was admitted to the extent that it was evidence that assisted her with any fact in issue.

45    I again consider that this proposed ground, on its face, lacks even first blush cogency. I therefore decline to extend the time in which to bring an appeal on this ground. Had I allowed the extension of time, the ground would have been dismissed.

Proposed ground 6 – The primary judge failed to give the Appellant a fair hearing in that, his Honour stated to the Appellant (at T34.34-5) during her cross-examination of Robert Balzola, “You haven't stated any relevant question” without inviting submissions as to the relevance of the cross-examination or giving reasons for why he regarded as irrelevant the questions the Appellant had asked, and terminated the Appellant’s cross-examination.

46    During Ms Hoskin’s cross-examination of Mr Balzola, she asked a series of questions about the documents that had been given to the costs assessor. She then sought to ask a convoluted question, which the primary judge rejected. The exchange was as follows:

MS HOSKIN:    … If all that information wasn’t presented, and I acknowledge that haven’t – didn’t get what I needed to get into and even if I’ve misunderstood the process but given that they are your documents. They go to the amount of money that you have been paid by me and the instructions I’ve given you to pay other people including Marek Reardon, on numerous occasions when you’ve taken money out to pay him and, from what I can ascertain, it wasn’t paid to him. And yet I’m being taken to a cost assessment – I was taken to a cost assessment for money that I had already instructed you to pay.

HIS HONOUR:     I reject that question. Ms Hoskin, you have had ample opportunity to explore with the witness any relevant question. There is a massive difference between accounts and a bill of costs. It’s a bill of costs that is assessed. You haven’t asked any relevant question. I don’t propose to allow you to any further questions - - -

MS HOSKIN:     Your Honour - - -

HIS HONOUR:     - - - because it’s a waste of the court’s time and resources.

MS HOSKIN:     Your Honour, if I’ve attempted to make these payments and I have put money into the account - - -

HIS HONOUR:     Yes. I’ve actually just said I’m not proposing to allow you to make any further questions. Mr Hopkins, is there any question you wish to ask in re-examination?

47    The complaint made about this part of the hearing before the primary judge is that his Honour did not invite Ms Hoskin to make submissions as to the relevance of cross-examination or give reasons why the question sought to be asked were irrelevant, before terminating the cross-examination. Ms Hoskin describes her position as being hopeless because she had not received a proper explanation of the issues on which she bore an onus or the reasons why her questions were regarded as irrelevant.

48    Balzola & Associates submit that not only was Ms Hoskin given an extensive opportunity to cross-examine Mr Balzola, but the primary judge also assisted her by reframing questions for her, and asking questions of Mr Balzola in the nature of cross-examination, which included questions as to whether the payments made by her had been properly brought to account. Balzola & Associates submits that in the absence of any evidence that Mr Balzola had in some way failed to account for what Ms Hoskin had paid, the questions his Honour put to assist her was the highest her contention on this issue could have been put. Moreover, it is submitted, nothing in the proposed appeal seeks to dispute the finding that there had not been such a failure to account, or that his Honour failed to take into account any relevant evidence of such a failure to account, or that the conclusion reached was incorrect.

49    The termination of cross-examination in this way gives rise to a sufficient basis for granting the extension of time, but the error asserted has not been made out. A trial judge is not obliged to spell out, letter and verse, why evidence is not considered relevant. The ground must therefore fail.

Proposed ground 7 – The primary judge failed to give the Appellant a fair hearing in that, when it became apparent that the Appellant had not properly understood the legal meaning of solvency, his Honour did not advise the Appellant that she could apply for an adjournment to have the opportunity to put on proper evidence as to her solvency.

50    There are two problems with this ground. The first is the point identified in relation to proposed ground 4, namely that there was no obligation on the part of the primary judge to provide legal advice as to the meaning of insolvency. But even if that were not so, there is a more fundamental problem, being that at no time did Ms Hoskin indicate that she did not understand the meaning of solvency or insolvency. To the contrary. In her substantive affidavit affirmed on 19 July 2018, she commences by stating that she is not currently and has never been insolvent and that there was never cause for bankruptcy proceedings to be brought against her. She refers to a valuation of her property and takes issue with it being attributed with a lower value. That impression is reinforced by the grounds of objection signed on 19 July 2018, and reproduced at [8] above, including not just the assertion of not being insolvent, but supported by other objections.

51    Further, as Balzola & Associates points out, contrary to Ms Hoskin’s submissions, there is no evidence – I prefer to describe it as insufficient evidence – to support the assertion that she did not in fact understand the meaning of insolvency, despite using that word in her objections, in her affidavit and in her oral questions and submissions. The transcript of the proceedings before the primary judge tends to indicate that she did understand the concept and advanced arguments as to why she should be found to be solvent, and rather seemed to be challenging Mr Balzola’s understanding of what it meant (a question that was disallowed). In particular, at transcript page 23, Ms Hoskin takes issue with it being asserted that she was insolvent, disputing that there had been a mortgage against her property. She asserted that the mortgage had been discharged. This puts to rest the submission made by her in this Court that she considered that the value of assets were to be considered by reference to their gross value only, and appreciated that it was net value that mattered. While that is not a full account of solvency and insolvency, it is undoubtedly an important component.

52    Ms Hoskin’s real problem was not that she did not understand solvency and insolvency, but rather that she could not prove that she was solvent to the satisfaction of the primary judge.

53    As with proposed ground 4, I consider that this proposed ground, on its face, lacks even first blush cogency. I therefore decline to extend the time in which to bring an appeal on this ground. Had I allowed the extension of time, the ground would have been dismissed.

Proposed ground 8 – The primary judge failed to give the Appellant a fair hearing in that his Honour did not adequately explain to the Appellant, who appeared in person and unrepresented and who had contacted his Honour’s associate by email requesting further time to serve a subpoena on Simon Ward of the New South Wales Law Society, that she could apply for an adjournment for the purposes of serving a subpoena on Mr Ward.

54    This proposed ground turns on the issues referred to in Ms Hoskin’s email exchanges with the primary judge’s chambers, reproduced at [11] above. Ms Hoskin submits that this correspondence “plainly disclosed” an informal application for an adjournment of the hearing, which was refused without reasons. The first point to make is that a litigant who chooses to make an informal application cannot be heard to complain that there is only an informal response. The emails that Ms Hoskin sent are better understood as an inquiry than an application. Nothing more was required of his Honour.

55    Ms Hoskin next complains that the primary judge did not refer to this issue raised by her emails at the hearing, despite, it is said, being aware of the impairment to her case to which she had adverted in her emails. It is suggested that the “proper course” was to advise her of the option of making an application for an adjournment and justify the need for it in court, whether by submission alone, or supported by oral evidence. I reject those submissions out of hand. In the absence of Ms Hoskin raising the issue at the hearing, the primary judge was not required to provide that level of advice. There was no failing on the part of his Honour to put Ms Hoskin in a position to make an effective choice about how to conduct her case, and thus no relevant unfairness or miscarriage of justice as asserted by her.

56    Given the conclusions reached above, it is not necessary to determine the argument advanced by Balzola & Associates, pointing out that the Law Society investigator was not a compellable witness in any legal proceedings “to give evidence or produce documents in respect of any matter in which the person was involved in the course of the administration of this Law”: s 468, Legal Profession Uniform Law (NSW). However, any subpoena addressed to the investigator would almost certainly have been set aside upon the basis of that provision. There was no evidence of any attempt by Ms Hoskin to ascertain whether the investigator would have attended voluntarily, and little reason to think that he would in the absence of such evidence.

57    In any event, as Balzola & Associates point out, the investigator’s report was not relevant to the proceedings. Even if, hypothetically, Mr Balzola had been found guilty of some sort of disciplinary offence, such as in relation to his trust account, that would not have any material bearing on his entitlement to be paid for services provided to Ms Hoskin, and made the subject of a judgment debt.

58    As with proposed grounds 4, 5 and 7, this proposed ground, on its face, lacks even first blush cogency. I therefore decline to extend the time in which to bring an appeal on this ground. Had I allowed the extension of time, the ground would have been dismissed.

Error in making a finding of insolvency to justify making the sequestration order

Proposed ground 9 – The primary judge erred in finding that the Appellant was insolvent, as the Respondent was not required to prove, nor did it seek to prove, that the Appellant was insolvent, and the Appellant’s failure to prove solvency was not tantamount to proof of insolvency.

59    This proposed ground sits oddly with proposed ground 7, because Ms Hoskin here asserts that a finding of insolvency was unnecessary, yet for proposed ground 7 the asserted error was in not explaining the meaning of insolvency. Further, Ms Hoskin overtly submits that this ground, standing alone, would not vitiate the sequestration order, but rather that the finding should not stand in the way of the appeal being allowed. I therefore take this as being a precautionary proposed ground of appeal. Strictly speaking, this grounds is therefore unnecessary, especially as this finding would not stand in the way of the appeal succeeding if one of the other nine grounds was to succeed. However, as the point has been raised, it needs to be addressed.

60    I infer that by reason of Ms Hoskin’s affidavit, grounds of objection and oral submissions below, the primary judge understood her to be asserting that she was solvent. His Honour expressly said so at [2] of his reasons. Once that was raised, it needed to be addressed; or at the very least it was prudent to do so. If it was irrelevant as is now asserted, then the finding made by his Honour goes nowhere. If it was not irrelevant, then his Honour was bound to address it.

61    It does seem that the primary judge went further than was necessary and probably did not have sufficient evidence to conclude that Ms Hoskin was insolvent, as opposed to not being satisfied that she had established that she was solvent. I do not propose to explore this issue any further. This is an appeal, not a trial. By taking the additional step, his Honour was at least clearly not satisfied that Ms Hoskin had positively established that she was solvent. Given that Ms Hoskin in this Court does not say that she was asserting that she was solvent, as a barrier to the sequestration order being made, even that finding would not have been needed.

62    Even more fundamentally, there is nothing to suggest that the additional unnecessary step vitiated the orders made by the primary judge. Viewed in that way, this is proposed to be no more than an appeal against reasons. Appeals are against orders, not reasons, even if the basis for the appeal against orders lies in the reasons given.

63    I therefore decline to grant an extension of time to rely upon this proposed ground of appeal. Had I allowed the extension of time, the ground would have been dismissed.

Failure to give adequate reasons

Proposed ground 1 – The primary judge failed to give adequate reasons for making the sequestration order in that the reasons delivered state only general conclusions without exposing any path of reasoning from the issues in dispute, the evidence that the Appellant led and the conclusions reached.

64    Ms Hoskin submits that the reasons for judgment of the primary judge do not disclose a proper path of reasoning, being replete with conclusions rather explanations for those conclusions. This is said to be a situation akin to that considered by the Full Court in BZD17 v Minister for Immigration and Border Protection [2018] FCAFC 94; 263 FCR 292 at [25]. The primary judge in that case had rejected the grounds advanced by a judicial review applicant “at such a high level of generality that the basis for his conclusions is not exposed”. Ms Hoskin asserts that his Honour’s conclusions fail to engage with her grounds of opposition in any meaningful way and that no reference is made to the volumes of evidence put on by her. She complains that there is no explanation of his Honour’s understanding of “other sufficient cause” or why none of it amounted to a reason not to make a sequestration order. Thus, it is said, the reasons are inadequate and the appeal should be allowed on this basis alone.

65    In response, Balzola & Associates submits that Ms Hoskin has not identified any issue or contention advanced by her that was not sufficiently resolved by the primary judge’s reasons, let alone how anything omitted could possibly have made a difference. It is pointed out that while Ms Hoskin did file volumes of evidence, his Honour was not required to address that evidence in detail, let alone point by point. In part at least, this was because his Honour found that this included material that was scandalous and vexatious, and the relevant evidence was sparse.

66    In Symons v White (Sydney Catholic Schools) [2018] FCA 949, I said the following about the requirement for reasons, as it happened in the context of a successful appeal from the same primary judge (at [15]-[18]):

The High Court in DL v The Queen [2018] HCA 26 [356 ALR 197] at [32] restated the principles in relation to what is required to constitute adequate reasons in any proceeding, civil or criminal, in which a judicial officer is the tribunal of fact and law (footnotes omitted):

The content and detail of reasons “will vary according to the nature of the jurisdiction which the court is exercising and the particular matter the subject of the decision”. In the absence of an express statutory provision, “a judge returning a verdict following a trial without a jury is obliged to give reasons sufficient to identify the principles of law applied by the judge and the main factual findings on which the judge relied”. One reason for this obligation is the need for adequate reasons in order for an appellate court to discharge its statutory duty on an appeal from the decision and, correspondingly, for the parties to understand the basis for the decision for purposes including the exercise of any rights to appeal.

Since reserving judgment in this case last week, the Full Court, in considering and allowing another appeal from the same primary judge as in this case but in a judicial review context, emphasised the importance for proper reasons, and not just conclusions, to be provided: see BZD17 v Minister for Immigration and Border Protection [2018] FCAFC 94 [263 FCR 292] at [25]-[26].

Many simple or straightforward cases, or cases obviously devoid of any merit, may well lend themselves to an ex tempore or oral judgment. When used appropriately, as it is by many judges of this Court and of the Federal Circuit Court, that is likely to significantly lessen the burden on a primary judge in performing his or her judicial function, and undoubtedly helps to contain a burgeoning judicial workload and avoid unnecessary costs being incurred. However, the use of ex tempore judgments does not absolve a judge of the responsibility of giving proper reasons: BZD17 at [26].

When ex tempore judgments are used inadequately or inappropriately, the quality of justice delivered may fall below acceptable standards, perceived efficiency may be illusory, the burden of performing the primary judicial function properly may shift to an appeal court, costs may be greatly increased (especially due to an appeal) and the final resolution of a dispute may be delayed, rather than accelerated. In those circumstances, litigants suffer (especially successful litigants if the original decision does not survive an appeal and a costs order is made). In the event of remittal to another judge, which is often necessary, if not inevitable, when determinative or otherwise indispensable adverse credit findings are made that cannot be replicated on appeal, the additional burden then falls on the judicial colleagues of the primary judge.

67    In this case, while the reasons are sparse and perhaps short of ideal, I consider that they were adequate for the task at hand. The making of a sequestration order is not an especially complex exercise in most cases, requiring only the satisfaction of the matters stated in the petition, service of the petition and the fact that the debt or debts relied upon were still owing: s 52, Bankruptcy Act. His Honour’s reasons at [1] make it clear that each of those things were established, as was the antecedent act of bankruptcy, addressed at [10]. The balance of his Honour’s reasons address Ms Hoskin’s five grounds of objection. The reasons for each do have a conclusory flavour, but adequately address the shortcoming in the proof of each objection. The additional matters that Ms Hoskin raised, while doubtless important to her, did not advance any cogent reason why the sequestration order should not be made.

68    The complaint about reasons was of insufficient prima facie substance to warrant the extension of time sought. Had I allowed the extension of time, the ground would have been dismissed.

Error in failing to exercise the discretion to dismiss the creditor’s petition

Proposed ground 10 – The primary judge erred in failing to exercise his discretion to dismiss the proceeding on the basis that the debt on which the Respondent relied for its creditor’s petition was closely connected with the handling of funds paid into the Respondent’s law practice trust account, which was the subject of an investigation by the New South Wales Law Society, and that there was a public interest in not allowing a law practice to obtain a sequestration order against its former client in those circumstances.

69    Ms Hoskin submits that the primary judge erred in not exercising his discretion to dismiss the proceeding, on the basis that her attempt to impugn the calculation of the amounts paid should have prevailed. The creditor’s petition was based on a judgment of the Local Court of New South Wales, which in turn was based on the certificate of a costs assessor that treated the amount paid by Ms Hoskin to Balzola & Associates as being the sum of $23,000. Particular reliance is placed on her denial that, properly assessed, she was indebted at all, asserting that she had paid at least $143,000 to Balzola & Associates. While it is acknowledged that evidence to this effect was deemed insufficient to go behind the judgment, it is asserted that this amounted to “other sufficient cause” not to make a sequestration order, pointing to the breadth of the discretion in s 52(2)(b) of the Bankruptcy Act. She relies on the evidence she adduced disclosing that the Law Society was investigating the Balzola & Associates’ trust account, and that Balzola & Associates was uniquely placed to account to her for sums paid into its trust account. She asserts that it is “not surprising” that she was unable to engage meaningfully in the assessment process. She points out that when challenged in cross-examination about the amounts paid into trust, Mr Balzola repeatedly stated that he relied on the assessment and made no attempt to articulate the basis for the $23,000 allowed by the assessor, which is said, in turn to be “bereft of any explanation of, or reference to evidence in support of, that allowance”.

70    Ms Hoskin submits that deficiencies in a trust account are capable of amounting to professional misconduct, that solicitors owe their clients obligations to account for money held on trust, as well as a range of other equitable, common law and ethical obligations and that the Law Society had seen sufficient cause to investigate Balzola & Associates’ trust account. She submits that in those circumstances, Balzola & Associates should not have been “permitted to pursue [her] into bankruptcy”. That is said to be because solicitors are officers of the Court and subject to regulatory and professional oversight, it is “anathema that a solicitor could pre-empt the conclusion of an investigation into the treatment of money received by him on trust for a client by pursuing prima facie rights against that client to recover asserted debts, and to do so into bankruptcy”. It is therefore submitted that the sequestration order should not have been made in the exercise of discretion.

71    Balzola & Associates’ response is succinct:

(1)    as conceded, there was no evidential basis for the primary judge to go behind the judgment debt;

(2)    the proposition then amounts to the question of whether there is a public policy in support of denying a solicitor recourse to legal avenues available to a creditor on the basis of an investigation by the Law Society, a proposition not supported by any authority advanced; and

(3)    Ms Hoskin therefore had to establish error in the primary judge’s conclusion at [11] that his Honour was not satisfied that any other sufficient cause not to make the sequestration order had been made out, a burden that had not been discharged.

72    I accept at least the last of Balzola & Associates’ submissions above, principally because Ms Hoskin’s submissions do not rise higher than suggesting that the primary judge could have formed a different view. No error has been demonstrated in the conclusion reached. That is not to say that there could never be a case where a pending Law Society investigation would not be shown to amount to an “other sufficient cause” to decline to make a sequestration order. Such a conclusion is evidence, fact and context specific and was not made out in this case, assuming it was clearly advanced in that way, which is at least doubtful.

73    I am prepared to grant the extension of time sought because this ground was only found lacking when considered in detail. However, the ground must fail.

Conclusion

74    An extension of time is granted in respect of proposed grounds 2, 3, 6 and 10. However each of those grounds has not been made out. The appeal must therefore be dismissed with costs.

Associate:

Dated:    23 August 2019