FEDERAL COURT OF AUSTRALIA

Australia and New Zealand Banking Group Limited v James [2021] FCA 768

ORDERS

THE COURT ORDERS THAT:

1.    Prayers 1, 2 and 4 of relief in the Respondent’s Interim Application filed 2 July 2021 be dismissed.

2.    Leave is granted to the Respondent to file and rely upon the affidavit sworn by him on 2 July 2021 noting that objections may be taken in the ordinary course, including in respect of any of inability of the Applicant to meet the case put in that affidavit.

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

REASONS FOR JUDGMENT

CHEESEMAN J:

INTRODUCTION

1    These proceedings concern a creditor’s petition filed by the Australia and New Zealand Banking Group Ltd (ANZ) seeking the sequestration of the estate of Mr David Anthony James (the Respondent).

2    This judgment deals with an application by the Respondent to substantially expand his grounds of opposition to the creditor’s petition, to call additional witnesses and for a lengthy adjournment of the proceedings. The application was heard today on what should have been the second day of the hearing. It was opposed by ANZ. The hearing of the application at which both parties were represented by Senior Counsel concluded at 1:33 pm at which time I stood the matter down to 4:30 pm at which time I hoped to be able to deliver judgment and provide reasons. I am conscious that the application is of considerable significance for both the Respondent and ANZ and that it is important to deal with the application quickly so that the mere making of the application does not result in the loss of the hearing dates.

3    In the result I have decided to refuse leave to the Respondent to file and serve a Further Amended Notice of Grounds of Opposition in the form annexed to his Interim Application dated 2 July 2021, refuse to vacate the hearing of the matter which will now start on 8 July 2021 on what would otherwise have been day 3 of the hearing and refuse leave for the Respondent to file and serve the affidavits of the witnesses referred to in prayer 4 of the Interim Application.

4    My reasons follow.

INTERIM APPLICATION

5    By interim application filed on 2 July 2021, the Respondent seeks leave to file a Further Amended Notice of Grounds of Opposition, leave to file and rely upon further evidence and an adjournment of these proceedings until a date after the delivery of judgment in proceedings in the common law division of the New South Wales Supreme Court (Shelteo Pty Limited v Australia and New Zealand Banking Group Ltd) (Shelteo Proceedings). At the hearing of the Interim Application, Mr Condylis sought and was granted leave to appear for Shelteo Pty Ltd (Shelteo). The Respondent also sought production of certain documents, a matter with which I will deal separately.

6    These proceedings were listed for hearing to commence on 6 July 2021 for seven days. The Respondent’s application was foreshadowed during an urgent re-listing of these proceedings before me on 1 July 2021. That urgent relisting was on ANZ’s initiative following non-compliance with the timetable for the preparation of this matter for hearing. In June 2021, Senior Counsel previously retained by the Respondent became unavailable. As a result, the Respondent retained new Counsel, Senior and Junior. Upon receiving the Respondent’s outline of opening submissions, ANZ’s representatives apprehended, correctly as it turned out, that the Respondent was seeking to run a substantially new case and at that stage it also appeared that the Respondent was abandoning a central part of his case as it had been framed up until that time. This was the principal issue that ANZ sought to agitate at the hearing on 1 July 2021.

7    During that case management hearing, Senior Counsel for the Respondent foreshadowed the relief sought in the application before the Court and the parties agreed to a timetable with a view for the application being heard today. The proposed course necessitated the first day of the hearing being vacated. The application was filed in the late afternoon on Friday, 2 July 2021 and was not accepted for filing until Monday morning of this week. In support of his application, the Respondent relies upon the affidavit of his solicitor, Mr Allsop, sworn 2 July 2021 and the exhibit thereto, which comprised some 180 pages.

8    ANZ opposes the relief sought in the Interim Application in its entirety. The Applicant relies upon the affidavit of Mr Kucharski, solicitor, affirmed 6 July 2021 in support of its opposition.

BACKGROUND

9    These proceedings are but one of many proceedings between the Respondent and ANZ. A brief summary of some of the other litigation between the Respondent and ANZ assists in contextualising the present dispute in relation to amendment, adjournment and new evidence.

Business carried on by the Respondent

10    The Respondent carried on businesses of wine production, wholesale wine, liquor and soft drink distribution and also of printing through various corporate vehicles comprising the James group of companies (Companies). Those companies included, amongst others:

(1)    Sundara Pty Ltd which owned real property comprising a 1300-acre property at Baerami (Baerami Property). Sundara had entered into a sharefarming agreement dated 10 July 2002 with three other companies controlled by the Respondent, namely Wine National Pty Ltd, Liquor National Pty Ltd and James Estate Wine Pty Ltd. Pursuant to the sharefarming agreement, the Baerami Property operated as a commercial vineyard, with grape growing and harvesting operations, bulk wine storage and a “cellar door” business;

(2)    TLT Nominees Pty Ltd (TLT) which carried on an alcohol storage and distribution business trading under the names “BlueStar Beverage Distributors” and “Bluestar Wholesale Company” from premises at Units 15 and 16, Burroway Road, Homebush Bay (Homebush warehouse).

(3)    Newcastle Liquor Wholesalers Pty Ltd trading as Peter Doyle Cellars (NLW) which carried on a wholesale liquor distribution business from premises at 56 The Avenue, Maryville (Maryville premises). NLW was a wholly owned subsidiary of TLT; and

(4)    Print National Pty Ltd and Print National Australia Pty Ltd which carried on printing businesses, producing among other things print products associated with wine production and distribution. These two companies operated out of two premises, including at Level 1, 10 Denney Street, Broadmeadow (Broadmeadow premises). The Broadmeadow premises were leased by Print National Nominees Pty Ltd (Print Nominees).

Agreements between the Respondent and ANZ

11    On 10 May 2010, the following companies entered into a loan agreement with ANZ pursuant to which ANZ agreed to provide loan facilities to the companies:

(1)    TLT;

(2)    Print Nominees and Print National Australia Pty Ltd;

(3)    James Australia Group; and

(4)    Liquor National Wholesale,

(together, ANZ Borrowers).

12    As security for repayment of amounts owing by the ANZ Borrowers from time to time to ANZ, the ANZ Borrowers and other companies in the Group (ANZ Companies) granted certain security interests and real property mortgages to ANZ (Securities).

13    The Respondent entered into a number of written guarantees in favour of ANZ under which the Respondent personally guaranteed to ANZ the repayment of monies from time to time owing to ANZ by the ANZ Borrowers (ANZ Guarantees).

14    During the period from 10 May 2010 to 30 June 2012, ANZ advanced loans of funds repayable as debts, totally in excess of $14 million to, or at the direction of, the ANZ Borrowers.

Other relevant entities

15    ANZ’s evidence indicates that in addition to banking with ANZ, the Respondent banked with and provided security to Rabobank Australia Limited (Rabobank) in respect of loans to the following companies:

(1)    James Estate Wines Pty Limited ACN 061 569 444 (Receivers and Managers Appointed);

(2)    Killara 10 Pty Ltd ACN 085 902 174 (In Liquidation) (Receivers and Managers Appointed);

(3)    Liquor National Pty Ltd ACN 100 586 776 (In Liquidation) (Receivers and Managers Appointed);

(4)    Print National Pty Limited ACN 107 512 649 (In Liquidation) (Receivers and Managers Appointed);

(5)    Sundara Pty Ltd ACN 003 647 130 (In Liquidation) (Receivers and Managers Appointed);

(6)    Print National Australia Pty Ltd (formerly known as Print National Pty Ltd) ACN 107 512 649 (In Liquidation) (Receivers and Managers Appointed); and

(7)    Wine National Pty Ltd ACN 100 586 785 (In Liquidation) (Receivers and Managers Appointed),

(together, Rabobank Companies).

Change in the Respondent’s circumstances

16    In or by late 2012, the Respondent suffered a stress-related illness and he ceased to have any day-to-day involvement with the businesses. The Respondent’s accountant took over the day-to-day management of the businesses and the Respondent worked only limited hours, concentrating his efforts during those hours on attempting to obtain a refinance of ANZ and other facilities.

17    On 27 August 2013, the Respondent was treated for a major depressive disorder.

Default and Recovery proceedings

18    By April 2013, a number of the ANZ Companies were in default under their finance facilities. On 12 April 2013, ANZ retained PriceWaterhouseCooper (PwC) to undertake an independent business review of TLT (and thereby its subsidiary NLW). PwC’s review was circulated in draft to, and approved by, the Respondent.

19    PwC’s final report dated 31 May 2013 (Project Spirit Report) (and the draft report which the Respondent had approved) stated that as at 3 May 2013, TLT held stock to the value of $4.2 million at the Homebush warehouse, with such stock having a realisable value of between $3.804 million (“high”) and $3.170 million (“low”).

20    The Project Spirit Report also stated that NLW had at the Maryville premises stock to the value of $699,000, with a realisable value of between $624,000 and $524,000.

21    As at 19 August 2013, the ANZ Borrowers had failed to repay to ANZ certain principal and interest owing under the loans. On 19 August 2013, ANZ appointed David Merryweather and Gregory Hall of PwC as joint and several receivers and managers of the ANZ Companies (ANZ Receivers). Mr Merryweather had primary carriage of the receivership. On 19 August 2013, ANZ appointed Mr Honey and Mr Fraser of McGrathNicol as administrators of the ANZ Borrowers.

22    ANZ relies on evidence in these proceedings as to the conduct of the ANZ Receivers immediately following their appointment to the following effect. I note that the Respondent disputes critical aspects of the narrative contained in ANZ’s evidence. The factual dispute between the parties based on the evidence exchanged in the proceedings has not yet been determined. Indeed, each has not yet had the opportunity to test the evidence of the other. The following broad outline is taken from the evidence that was read on the Interim Application but is untested.

23    The ANZ Receivers were at the Homebush warehouse from 19 August 2013 to 5 September 2013. On 19 August 2013, the receivers were provided with TLT’s inventory list from its accounting software, indicating that the inventory at that date was valued at $1.46 million. The receivers were informed that the total value of the stock stored at the Homebush warehouse was $4.2 million, but that TLT did not own all of the stock. The receivers were provided with a stocktake audit and confirmed the stock on inspection of the Homebush warehouse. The receivers were told that TLT owned stock worth $1.5 million, some of which was subject to retention of title clauses. The receivers were told that $1.4 million in stock was owned by a company associated with the Respondent, Wine Investment Services Pty Ltd (WIS), and that the remaining $1.3 million in stock was owned by a third party logistics company that operated from the Homebush warehouse. The receivers left the stock owned by third parties in the Homebush warehouse. The balance of the stock owned by TLT was sold by Grays (NSW) Pty Ltd (Grays). The Respondent disputes much of ANZ’s contentions in relation to the property at Homebush warehouse.

24    The ANZ Receivers were at the Maryville premises from 19 August 2013 to 23 August 2013. The receivers were provided with NLW’s inventory list from its accounting software, indicating that the inventory was valued at $800,000. This was physically checked and corroborated by the receivers. Stock to the value of $300,000 was subject to retention of title clauses and returned to the suppliers. Stock to the value of $100,000 was sold by the receivers direct to NLW’s customers. The balance of the stock owned by NLW was sold by Grays. Again, the Respondent disputes ANZ’s evidence in relation to the property at the Maryville premises.

25    The ANZ Receivers attended the Broadmeadow premises on 20 August 2013. They imaged two computers belonging to two NLW employees and left the premises. Nothing was removed from the Broadmeadow premises by the receivers. The Respondent contends otherwise.

26    On or about 28 August 2013, Rabobank appointed receivers to the Rabobank Companies (Rabobank Receivers). The Rabobank Receivers entered into possession of the Baerami and the Denman premises.

27    It appears to be common ground that Grays collected 1,000 pallets from the Homebush warehouse and the Maryville premises. On ANZ’s case, this included stock owned by WIS, stock the subject to retention of title clauses and stock owned by third parties. The Respondent disputes this. The WIS stock was not sold by Grays and became the subject of litigation. Grays issued a valuation on a forced liquidation basis, of the TLT stock at $709,865 and the NLW stock at $401,440. The receivers obtained another independent valuation of the stock in similar terms. Grays sold the TLT and NLW stock, and realised an amount in excess of these valuations.

28    On 11 September 2013, the administrators of the ANZ Companies issued a report to creditors stating that there was likely to be a significant shortfall to creditors. The Respondent denies seeing this report. His evidence on this issue was not accepted by Justice Ball in earlier proceedings in the Supreme Court of New South Wales heard in June 2019: Australia and New Zealand Banking Group Limited v James (No 3) [2019] NSWSC 832. The proceedings before Justice Ball concerned an application brought by the Respondent to set aside the debt giving rise to the creditor’s petition in these proceedings (Setting Aside Application). His Honour dismissed the application and made the following remarks in respect of the Respondent’s evidence in relation to his awareness of the findings in the creditor’s report:

[96]    Mr James denies in his affidavit evidence that he saw a copy of the Creditors Report [being the report of 11 September 2013 referred to Section B above]. However, I do not accept his denial. In my opinion, Mr James was not a satisfactory witness. Much of the evidence in his affidavits was obviously tailored to suit his case…Having denied emphatically in his affidavit evidence that he had seen a copy of the Creditors Report in connection with the hearing before Black J, he accepted in cross-examination that he may have, but he cannot remember one way or the other.

[97]    The likelihood is that Mr Allen at least showed the Creditors Report to Mr James. The report was tendered in relation to the question whether one of the companies controlled by Mr James was insolvent. It would have been natural for Mr Allen to obtain Mr James’s instructions on the report.

[98]    On 1 May 2014, Black J delivered judgment…Although Mr James denies doing so, it is likely that he read that judgment shortly after it was delivered. As I have said, he was an applicant and the judgment affected the fate of companies he controlled. It is to be expected that he would be keen to know what it said.

[99] The result is that the likelihood is that at the time consent judgment was entered Mr James was on notice from the Creditors Report and Black J’s judgment that there would be a shortfall in the amount that would be recovered by ANZ and that the Companies were insolvent.

29    On 11 October 2013, ANZ initiated recovery proceedings in the Supreme Court of New South Wales against the Respondent in reliance on the ANZ Guarantees (Guarantee Proceedings). On 16 May 2014, ANZ obtained a consent judgment in the Guarantee Proceedings against the Respondent, in the amount of $13,928,818.66.

30    A number of competing claims arose between the Rabobank Receivers and the ANZ Receivers. On 6 November 2014, ANZ, the ANZ Receivers, the ANZ Companies, Rabobank and the Rabobank Receivers entered into a Deed of Release. One of the amendments which the Respondent seeks to make in the present proceedings arises from this Deed.

31    Following the judgment, the ANZ Receivers made distributions totalling $2,177,211.93 which reduced the Respondent’s liability and this is reflected in the creditor’s petition which is in respect of an amount of $11,751,606.73.

LEGAL PRINCIPLES

Adjournments and amendment of process under Bankruptcy Act

32    The Court may exercise its discretion, as it thinks fit, to adjourn any proceedings before it generally: Bankruptcy Act 1966 (Cth), s 33(1)(a) or at any time, allow the amendment of a written notice, proceeding or notice under the act: Bankruptcy Act, 33(1)(b).

33    The Court’s discretion to adjourn proceedings is extremely broad and s 33(1)(a) permits the court at any time to adjourn any proceeding before it: Tarrant v Statewide Secured Investments Pty Ltd [2012] FCA 582; (2012) 128 ALD 290 at [27] (Katzmann J).

34    The power available under s 33(1)(b) may be exercised to allow an amendment of a creditor’s petition and a bankruptcy notice as well as a respondent debtor’s notice of grounds of opposition.

35    Although the parties have not made submissions in respect of the Court’s power to grant amendments under s 33(1)(b) and adjourn the proceedings under s 33(1)(a) of the Bankruptcy Act, a notice of grounds of opposition is clearly a notice under the Act and I am satisfied that such powers are available in this case.

36    The principles bearing upon exercise of the powers under s 33 of the Bankruptcy Act are consistent with those summarised below in respect of adjournments and leave to amend generally: Valladares as executor of the estate of Sabrina Karen Andreazza v De Angelis [2020] FCA 1865 at [31] (White J).

Leave to amend

37    The well-established principles in relation to amending pleadings in Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 239 CLR 175 at 20 at 211-213 [93] - [98] and since reflected in ss 37M, 37N and 37P of the Federal Court of Australia Act 1976 (Cth) (FCA Act) should apply to any power to amend the effective pleadings in bankruptcy proceedings: Coshott v Prentice, in the matter of Coshott (No 2) [2016] FCA 1531 at [49] (Bromwich J). In Coshott, Justice Bromwich refused an application for leave to enlarge the grounds in support of an application to set aside a bankruptcy notice. There is no material difference, in my view, of the application of the principles summarised by his Honour in Coshott to these proceedings on the basis that an amendment is sought to be made to a notice of grounds of opposition in response to a creditor’s petition. His Honour made the following observations in relation to the application (at [48] – [50]):

48    The burden of authority as to enlarging grounds does not support any freestanding right or entitlement to litigate later advanced additional grounds in support of an application to set aside a bankruptcy notice, assuming a valid application was made within the time for compliance with that notice. Moreover, there is a public interest in ensuring that the enforcement of debts by way of bankruptcy notices does not become mired in the sort of litigation that often gave rise to a judgment debt in the first place. In part that is because bankruptcy notices are an important part of the means by which civil laws are enforced and the orders of courts are thereby given real substance and meaning. While bankruptcy is a dire consequence of not paying debts arising from enforceable orders of the court, it is a vitally important ultimate remedy that helps to enhance the overall integrity of civil justice.

49    Even if leave may be given to amend an otherwise valid application to set aside a bankruptcy notice and even if leave may be given to supplement the grounds in support of such an amendment such as by way of a further accompanying affidavit, that should be treated in the same manner as final pleadings, with such amendments and supplements not lightly countenanced. The now well-established principles in relation to amending pleadings in Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 239 CLR 175 at 211-213 [93]-[98] and since reflected in ss 37M, 37N and 37P of the Federal Court of Australia Act 1976 (Cth) should apply to any power to amend the effective pleadings constituted by the affidavit accompanying an application to set aside a bankruptcy notice. An application for leave to enlarge the grounds upon which a bankruptcy notice is sought to be set aside should be closely scrutinised. Leave, assuming there is power to grant it, should not be given to rely upon additional unmeritorious or otherwise questionable claims, especially if they have the effect of inordinately delaying determination of the application.

50    The focus in considering any permissible application to enlarge the grounds sought to be relied upon in an application to set aside a bankruptcy notice must at all times remain on the dictates of justice and not merely on individualistic ideas of what is fair in a given case, as mandated by Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Limited [2013] HCA 46; (2013) 250 CLR 303 at 323 [57]. At the same time, considerable weight should be given to the modern view of bankruptcy notices, namely that any alleged defects sought to be relied upon to set them aside should truly involve the debtor being misled as to what he or she must do in order to comply with the notice: see Adams v Lambert [2006] HCA 10; (2006) 228 CLR 409, discussed in some detail below. That is not to say that some defects in a bankruptcy notice cannot be so fundamental that it cannot survive even without such a capacity to mislead, but that is now a very narrow category that ordinarily should be apparent if so misleading or fundamental as to be identified at the outset. The reasoning in Adams v Lambert, both in relation to s 306(1) of the Bankruptcy Act and more generally, discourages unduly technical and pedantic objections to bankruptcy notices, and should discourage the exercise of any power by the Court to grant leave to run additional grounds of that nature.

38    These observations were cited with approval by Justice Perry in Gelonesi v G. Abignano (Investment) Pty Limited [2020] FCA 898 (at [67]) in which her Honour had before her an application to enlarge the grounds in support of an application to set aside a bankruptcy notice.

39    In Aon Risk, the High Court dismissed an application by ANU for leave to amend its pleadings on the basis that the amendments sought to be made introduced new and substantial claims which, if permitted, would result in the abandonment of the trial. The plurality emphasised that although the just resolution of real issues in the proceedings remained paramount, speed and efficiency, in the sense of minimum delay and expense, were essential to what a “just resolution” was understood to be: Aon Risk at [98]. In resolving the application against ANU, the plurality in Aon Risk stated:

111    An application for leave to amend a pleading should not be approached on the basis that a party is entitled to raise an arguable claim, subject to payment of costs by way of compensation. There is no such entitlement. All matters relevant to the exercise of the power to permit amendment should be weighed. The fact of substantial delay and wasted costs, the concerns of case management, will assume importance on an application for leave to amend. Statements in JL Holdings which suggest only a limited application for case management do not rest upon a principle which has been carefully worked out in a significant succession of cases (204). On the contrary, the statements are not consonant with this Court’s earlier recognition of the effects of delay, not only upon the parties to the proceedings in question, but upon the court and other litigants. Such statements should not be applied in the future.

112     A party has the right to bring proceedings. Parties have choices as to what claims are to be made and how they are to be framed. But limits will be placed upon their ability to effect changes to their pleadings, particularly if litigation is advanced. That is why, in seeking the just resolution of the dispute, reference is made to parties having a sufficient opportunity to identify the issues they seek to agitate.

40    Having regard to the matters raised by the High Court in Aon Risk, the Full Court of the Federal Court in Cement Australia Pty Ltd v Australian Competition and Consumer Commission [2010] FCAFC 101; (2010) 187 FCR 261 said (at [51]):

Aon Risk is not a one size fits all case. Whilst various factors are identified in the judgment as relevant to the exercise of discretion, the weight to be given to these factors, individually and in combination, and the outcome of that balancing process, may vary depending on the facts in the individual case. As the plurality in Aon Risk observed at [75], statements made in cases concerning amendment of pleadings are best understood by reference to the circumstances of those cases, even if they are stated in terms of general application.

41    The authorities are clear as to the factors relevant to the exercise of discretion articulated in Aon Risk to this Court: Cement Australia at [45]; Tamaya Resources Limited (in liq) v Deloitte Touche Tohmatsu (A Firm), in the matter of Tamaya Resources Limited (in liq) [2015] FCA 1098 at [127].

42    In Tamaya Resources, Justice Gleeson (at [127]) summarised the relevant matters the Court is to consider when determining whether leave to amend ought to be granted or refused. Those matters included:

(1)    The nature and importance of the amendment to the party applying for it;

(2)    The extent of the delay and the costs associated with the amendment;

(3)    The prejudice that might be assumed to follow from the amendment, and that which is shown;

(4)    The explanation for any delay in applying for that leave; and

(5)    The parties’ choices to date in the litigation and the consequences of those choices;

(6)    The detriment to other litigants in the Court; and

(7)    Potential loss of public confidence in the legal system which can arise where a court is seen to accede to applications made without adequate explanation or justification (citations omitted).

This summary of relevant matters given by Justice Gleeson was later approved by the Full Court on appeal: Tamaya Resources Limited (in liq) v Deloitte Touche Tohmatsu (A Firm) [2016] FCAFC 2; (2016) 332 ALR 199 at [125] (Gilmour, Perram and Beach JJ).

43    The Court’s discretion must be exercised judicially, having regard to all the relevant circumstances of the particular case.

Adjournment

44    The considerations relevant to whether a Court ought to exercise its discretion to grant an adjournment are similar to the matters a Court will have regard to for the purposes of an application to amend pleadings. Any application for an adjournment must be considered in the relevant statutory, factual and case management context: Aon Risk at [30] (French CJ) and [97] – [103] (Gummow, Hayne, Crennan, Kiefel and Bell JJ); see also Luck v Chief Executive Officer of Centrelink [2015] FCAFC 75 at [42] – [46] (Collier, Griffiths and Mortimer JJ).

45    The Court may make an order adjourning the proceedings if it considers doing so would be appropriate in the interests of justice: Federal Court Rules 2011 (Cth), r 1.32. The discretion to do so must be exercised in a way that best promotes the overarching purpose of civil practice and procedure provisions, namely the just resolution of disputes according to law and as quickly and inexpensively as possible: FCA Act, s 37M(3); Universal Music Publishing Pty Ltd v Palmer [2020] FCA 1472 at [6] (Katzmann J); Caratti v Commissioner of the Australian Federal Police [2015] FCA 1108 at [29] – [32] (Wigney J). Relevantly, the overarching purpose includes the following objectives, as set out in s 37M(3):

Without limiting the generality of subsection (1), the overarching purpose includes the following objectives:

(a) the just determination of all proceedings before the Court;

(b) the efficient use of the judicial and administrative resources available for the purposes of the Court;

(c) the efficient disposal of the Court’s overall caseload;

(d) the disposal of all proceedings in a timely manner;

(e) the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute.

The achievement of the objectives comprising the overriding purpose together with the factors discussed by the High Court in Aon Risk should be considered in the context of an adjournment application. I note that the discretion to be exercised is broad and these considerations are not exhaustive: Caratti at [32].

46    When determining whether to grant or refuse an adjournment, the doing of justice between the parties is a paramount consideration. If an adjournment is necessary to allow a party that opportunity it ordinarily should not be refused unless it would result in irremediable prejudice or injustice to the other party and an order for costs would not be sufficient compensation to that party: Fair Work Ombudsman v Kentwood Industries Pty Ltd [2010] FCA 98 at [2] (McKerracher J). Relevantly, in Aon Risk it was held (at [30]):

It might be thought a truism that “case management principles” should not supplant the objective of doing justice between the parties according to law. Accepting that proposition, JL Holdings cannot be taken as authority for the view that waste of public resources and undue delay, with the concomitant strain and uncertainty imposed on litigants, should not be taken into account in the exercise of interlocutory discretions of the kind conferred by r 502. Also to be considered is the potential for loss of public confidence in the legal system which arises where a court is seen to accede to applications made without adequate explanation or justification, whether they be for adjournment, for amendments giving rise to adjournment, or for vacation of fixed trial dates resulting in the resetting of interlocutory processes.

47    Further, in considering the question of an adjournment, the Court is not required to limit itself to the competing interests of the parties. Rather, the Court may consider the effect of an adjournment on its resources and the competing claims of litigants in other cases as well as the interests of the 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: Garrett v Duncan [2015] FCA 255 at [33] (Beach J) citing Sali v SPC Ltd [1993] HCA 47; (1993) 116 ALR 625 at 629 (Brennan, Deane and McHugh JJ).

Conduct of bankruptcy proceedings

48    An important matter that is relevant to a consideration of the relief sought in the Interim Application is the nature of the bankruptcy jurisdiction. Unlike other inter partes litigation, bankruptcy proceedings not only deal with the private rights and obligations as between a creditor and a debtor but also with the general body of creditors and potential creditors of the debtor and prospective bankrupt: Culleton v Balwyn Nominees Pty Ltd [2017] FCAFC 8; (2017) 343 ALR 632 at [40] (Allsop CJ, Dowsett and Besanko JJ). In that sense there is a level of expedition that is required and a public policy that inheres in the prompt dispatch of creditor’s petitions. Further, the interests of creditors generally can be adversely affected by delays in the disposition of bankruptcy matters: Flint v Richard Busuttil & Co Pty Ltd [2013] FCAFC 131; (2013) 305 ALR 522 at [38] (Allsop CJ, Katzmann and Perry JJ).

49    The public interest in the expeditious determination of bankruptcy matters has been recognised in this Court and the High Court: see Luck v University of Southern Queensland [2016] FCAFC 167 (Collier, Jessup and Katzmann JJ) at [43]; Cirillo v Consolidated Press Property Pty Ltd (formerly known as Citicorp Australia Ltd) [2007] FCAFC 167; (2007) 245 ALR 374 at [51] (Ryan, Moore and Tamberlin JJ) citing Bryant v Commonwealth Bank of Australia [1996] HCA 3; (1996) 134 ALR 460. In Luck the Full Court refused an adjournment of an appeal on the basis that it would be inconsistent with such a public interest. Similar sentiments were expressed by the Full Court in Cirillo (at [51]) that the public interest in the determination of alleged insolvencies militated against grants of lengthy adjournments. Bryant involved an application for a stay of a sequestration order of the Federal Court (confirmed by the Full Court) pending an application for special leave to appeal to the High Court. That application was heard and determined by Justice Kirby. His Honour refused the stay and made the following remarks in respect of a stay of orders concerning bankrupt estates (at 464):

In the exercise of the jurisdiction to provide a stay, it has often been emphasised that cases involving a stay of the operation of the criminal law or of laws designed to protect the public (eg deregistration of a professional lawyer or medical practitioner) are in a class different from cases involving no more than the suspension of the operation of orders affecting two private litigants only. Different considerations also arise where affirmative orders are required to protect the applicant's interests, as distinct from a simple order postponing the operation of the orders challenged by the appellate process. In cataloguing, for this purpose, an order under the Act sequestrating the estate of a person found bankrupt, it is clear that the status of the bankrupt is affected. But so are, potentially, the interests of third parties. So too is the interest of the community. It would therefore be a mistake to approach the present application as if the only interests affected by its outcome were those of the applicant and the respondent. Also to be kept in mind are the interests of other creditors, particularly unsecured creditors, and of the community which has its own concerns in the due administration of the Act in respect of the estate of persons found to be bankrupt.

50    In the recent decision of Bechara v Bates [2021] FCAFC 34, the Full Court commented on the prejudicial effect of delays in the determination of applications for review of exercises of delegated powers by registrars on the administration of bankrupt estates. The Court stated (at [176]):

Applications for review of exercises of delegated power by registrars should be reheard by judges de novo as soon as reasonably practicable. This is especially so in bankruptcy, and even more so if it is a review of a sequestration order that changes the status of a debtor, enlivens powers of a trustee and brings about changes to property. Delay is not only prejudicial to the debtor or bankrupt, but also to the creditor and potentially to members of the public (emphasis in original).

51    Delays in conduct of bankruptcy proceedings generally may give rise to practical difficulties in respect of the debtor’s status and property. The Full Court in Totev v Sfar [2008] FCAFC 35; (2008) 167 FCR 193 at [17] made the following observations in relation to the importance of dealing with bankruptcy matters expeditiously so as to avoid such practical difficulties:

…Nevertheless, a sequestration order has an effect on the status of the debtor and on the property of the debtor and any delay in the hearing of an application for review might give rise to practical difficulties. Any practical difficulties could only be completely avoided by a review application being heard on the same day as a sequestration order is made by a registrar or by requiring that any review application must be filed on the day on which the sequestration order is made and by staying the sequestration order from the moment at which the review application is filed. Such considerations emphasise the great importance of bankruptcy matters being dealt with in a highly expeditious fashion. Courts exercising bankruptcy jurisdiction must be assiduous in avoiding delay in dealing with any question concerning the making of a sequestration order.

52    Conversely, the effect of bankruptcy proceedings on debtors should not be ignored. The Full Court remarked on the human reality of bankruptcy in Culleton at [55] as follows:

Further, the human reality of bankruptcy is never to be forgotten. Whilst the words of Deane J in Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71 at 82; 79 ALR 161 at 167 may not describe the appellant, they are words worthy of repetition and of being reminded of to illuminate the important consequences of a sequestration order:

It is true that the strictness of the above rules leaves open the possibility of abuse by unscrupulous debtors. That is, however, an unavoidable concomitant of the protection of ordinary people faced with the threat of being made bankrupt. Many, and possibly most, of the petitions in the bankruptcy lists of this country see the bankruptcy of honest, albeit unbusinesslike or naïve, people whose indebtedness springs from causes which evoke sympathy rather than indignation. For such people, bankruptcy does not represent a game to be played to the frustration of their creditors. It represents a pronouncement of failure and humiliation attended by the fear of unknown consequences and the susceptibility to criminal punishment for what would otherwise be innocent conduct (citations omitted).

CONSIDERATION

Leave to Amend

53    For the reasons which follow, leave to amend is refused.

Nature and importance of amendment

54    The Respondent by his proposed Further Amended Notice of Grounds of Oppositions seeks to rely upon a contention that ANZ did not take adequate steps to realise the debts to TLT and NLW. He acknowledges that such a contention does not fall within the existing ground 8(c) of the Amended Notice of Grounds of Opposition which states:

"sold the property (including trading stock) of [TLT Nominees Pty Limited [TLT]] and [Newcastle Liquor Wholesalers Pty Ltd [NLW]] which was the subject of the Security (valued at approximately $23.7m) at a gross undervalue (receiving only $4.272m) in dereliction and in breach of their duties under s 420A of the Corporations Act 2001 (Cth) and at law, causing a shortfall in receipts of approximately $19.428m"

55    The proposed further amended grounds seek to enlarge the grounds of opposition as follows:

8. In the course of the Receivers purportedly discharging their duties, the Receivers:

….

(d)     failed to take reasonable steps to bring in and realise the debts due to TLT and NLW in dereliction and in breach of their duties under Corporations Act, s 180 and at law;

(e)     failed to bring in and sell the stock of TLT and NLW at Baerami and Denman, and in relation to the former site, in November 2014 entered into a compromise with the Rabobank Receivers and the Rabobank Companies pursuant to which they abandoned any claims to the stock of TLT and NLW at Baerami in dereliction and in breach of their duties under Corporations Act, s 180 and at law;

(f)     failed to cause all of the stock of TLT and NLW at the Homebush premises to be sold in dereliction and in breach of their duties under Corporations Act. s 180 and at law;

9. The Receivers’ conduct as set out in paragraph 8 above:

(a) had the consequence that:

….

(iv)     assets of the ANZ Companies were not used to reduce the debt due to ANZ

…

(c)    constituted conduct by or on behalf of ANZ that wilfully and recklessly sacrificed the value of the Security, as well as the unlawfully seized assets of the Rabobank Borrowers, such that the Respondent was entitled to be credited with the deficiency in the value of the security given by the ANZ Companies that security ($19.428m), as well as the deficiency in value of the realised assets of the Rabobank Borrowers, in reduction of his liability under the Respondent’s Guarantees, with the result that that liability stood at nil (given the deficiency in receipts exceeded the Respondent’s liability under the Respondent's Guarantees).

9A    Further it would be unconscionable for the ANZ now to seek to rely upon the judgment to bankrupt the applicant:

a.     in the premises set out in paragraphs 8 and 9 hereof;

b.     where the respondent does not have access to all of the documents necessary to determine the consequences of the acts and omissions of the ANZ Receivers: and/or

c.     the Court has not, and cannot, established [sic] on the evidence the true state of the account between the parties.

56    The Respondent seeks to rely on a conclusion reached in the Project Spirit Report that ANZ would recover either the full amount due to it or, on the worst case scenario, a shortfall of $1 million before realisation. The Respondent wishes to contend that the ANZ Receivers failed to realise the debts owed to TLT and NLW in dereliction of their duties. In his submissions, the Respondent relies on the authorities considered by Justice Croft in Webster Investments Pty Ltd v Anderson [2016] VSC 620; (2016) 52 VR 610 at [97]ff which generally support the proposition that a surety may be discharged if there has been a positive act by the creditor which was unfair to the surety, by for example, negligence, passive inactivity, undue advantage or fraud. The Respondent seeks to rely on what his Senior Counsel described as a more circuitous alternative route to the same result via ss 9, 180 and 1324 of the Corporations Act. The Respondent submits that if the amendments are permitted it is at least arguable that he would have a complete defence to the creditor’s petition.

57    The Respondent also raises a further proposed ground calling into question the conduct of the ANZ Receivers in entering into a deed for the release of any claims by ANZ in the stock held at Baerami. By that ground the Respondent contends that ANZ ought to have sought direction from a Court as to the appropriateness of the compromise in circumstances where there was a dispute as to the title of the goods stored at the Baerami and Denman locations. It is put as a want of care in getting in the property or in abandoning the primary debtor’s claim in respect of the property.

58    ANZ’s position is that the information the Respondent points to in the Project Spirit Report, which report it must be remembered dates from 31 May 2013, proved not to be accurate for the following reasons:

(1)    Shortly after the ANZ Receivers were appointed in August 2013, they sought access to the staff and premises of the Homebush warehouse, Maryville premises and Broadmeadow premises. The contemporaneous inventory records which were obtained around that time from employees, who generated them from the Micronet system, were inconsistent with the figures contained in the Project Spirit Report of May 2013;

(2)    the PwC staff immediately questioned the figures contained in the inventory reports as they understood until that time that the TLT inventory was worth $4.2 million in the Homebush warehouse;

(3)    the warehouse staff advised PwC that in fact the total stock stored in the Homebush warehouse was in the order of $4.2 million, but that TLT did not own all this stock;

(4)    all the stock contained in the Homebush warehouse fell into three categories:

(a)    stock owned by TLT, which had a book value of approximately $1.5 million;

(b)    stock owned by another company associated with the Respondent, namely WIS or by customers of WIS, which stock had a book value of $1.4 million; and

(c)    stock owned by third parties to whom another company operating from the Homebush premises was supplying logistics services, which stock had a book value of approximately $1.3 million;

(5)    the next day, the warehouse administrator of the Homebush warehouse emailed the ANZ Receivers a “stocktake audit” which confirmed the matters in (4) above, that is that the Homebush warehouse stock had a total book value of $4.2 million but fell into the three categories mentioned above;

(6)    similar issues of accuracy arose in taking inventory of the NLW stock at the Maryville premises. According to the contemporaneous inventory records obtained by the ANZ Receivers and checked by PwC, the Maryville premises held stock in the order of $0.8 million, of which $0.3 million was subject to retention of title clauses and ultimately returned and $0.1 million were sold to NLW customers; and

(7)    the ANZ Receivers faced difficulties in attempting to access the Broadmeadow premises on 20 August 2013. They imaged two hard drives before they were asked to leave the premises by the Respondent’s brother the following day.

59    The Respondent submits that the proposed amendments raise an arguable ground of opposition by reference to the principles set out in Ramsay Health Care Australia Pty Ltd v Compton (2017) 261 CLR 132 at [102] – [103] and [110] (Edelman J) (Ramsay v Compton) which provide that s 52 of the Bankruptcy Act encapsulated equity’s concern to prevent unconscionable conduct. The Respondent also submits that the proposed grounds raise arguable claims as they involve significant sums.

60    Even if I accept that the claims the Respondent seeks to raise by his proposed Further Amended Notice of Grounds of Opposition are arguable, which I am prepared to assume for the purpose of this application, the new grounds significantly enlarge the area of contest, they are very serious in nature and have been brought at a very late stage of the proceedings. The Respondent is not entitled to bring an amendment solely on the basis of an arguable claim on the premise that costs will cure any prejudice. Indeed, Senior Counsel for the Respondent did not press any submission to this effect. To the contrary, the Respondent quite properly and frankly acknowledged that the other factors that I must have regard to, in the main, weighed against the Respondent. In exercising my discretion I must also consider other factors including the effect of the delay in raising the proposed amendments, wasted costs, public interest in the efficient conduct of bankruptcy proceedings and case management considerations including the workload of the Court: Aon Risk at [111]; see also considerations set out in Tamaya Resources at [127].

Delay

61    Central to the Interim Application is that the Respondent belatedly claims that he wishes to have the opportunity to bring more evidence, particularly “general ledger information” provided by ANZ to PwC, which he contends will apparently shed light on the stock in the various warehouses.

62    Notwithstanding that there appears to be contemporaneous inventory records obtained by ANZ which are included in the Courtbook prepared for these proceedings (and have been in the evidence served in these proceedings and in earlier proceedings to which the Respondent was a party), the Respondent has had at least five years to pursue a claim for the production of a “general ledger”.

63    The procedural history of the litigation involving the Respondent and ANZ which predate the current proceedings is set out in the affidavit of Mr Kucharski of 2 February 2021 (Second Kucharski Affidavit). Mr Kucharski describes the proceedings in which allegations in the nature of those the Respondent now seeks to raise were first brought as follows:

40. On 17 February 2016, Mr James filed a Notice of Motion in the Supreme Court of New South Wales commencing proceeding number 2016/44772 (Derivative Leave Application), seeking (among other orders) leave to bring as derivative actions certain claims against ANZ and the ANZ Receivers on behalf of TLT Nominees and Newcastle Liquor Wholesalers and six other companies associated with Mr James, none of which are ANZ Companies or ANZ Borrowers, including some of the Rabobank Companies. The claims included allegations that the ANZ Receivers had trespassed on certain premises, had dealt with property over which they had not been appointed and had sold property at an undervalue.

41. The Derivative Leave Application was listed for a four-day hearing commencing 14 June 2016.

42. On 8 June 2016, Mr James made an application to vacate the hearing date set down for the Derivative Leave Application. Justice Hammerschlag did not vacate the hearing but made orders sought by Mr James requiring, inter alia, for ANZ and the ANZ Receivers to provide to a computer forensics expert of Mr James' choosing copies of certain electronic records (Electronic Records) and for Mr James to pay ANZ and the ANZ Receivers the costs of doing so.

….

44. I am informed by Mr Wil Honner, an employee of PwC who has daily carriage of Mr James's claims against PwC, and believe that access to the Electronic Records was provided to a computer forensics expert of Mr James' choosing on 9 and 10 June 2016.

45. Mr James did not serve any evidence derived from the Electronic Records in the context of the Derivative Leave Application. To the best of my knowledge, since then Mr James has not referred to or tendered into evidence any material from the Electronic Records in any proceeding involving ANZ and/or the ANZ Receivers.

64    It was during the course of these proceedings that ANZ filed an affidavit of Mr Merryweather of 3 June 2016 which exhibited valuations of the stock at the Homebush warehouse and the Maryville premises.

65    Mr Kucharski continues to describe the subsequent proceedings in which the Respondent sought to recast similar claims to those which were raised in the Derivative Leave Application proceedings. Relevantly, Mr Kucharski deposes in his affidavit as follows:

51. On 28 July 2016, Allsop Glover, acting for Mr James, provided a proposed Amended Commercial List Statement to Allens. The proposed Amended Commercial List Statement attempted to recast some of the claims that Mr James had sought to bring as derivative actions against ANZ and the ANZ Receivers into claims that Mr James wished to bring personally. The statement also included certain claims made by Aramax and Primax, which were listed as plaintiffs alongside Mr James.

52. On 17 October 2016, Mr James filed a Notice of Motion in the Derivative Leave Application proceeding seeking an order that he be granted leave to file and serve his proposed Amended Commercial List Summons and Amended Commercial List Statement (2016 Motion for Leave to Amend).

53. On 1 December 2016, ANZ and the ANZ Receivers filed a Notice of Motion seeking an order that Mr James' Commercial List Statement and Commercial List Summons be dismissed under rule 13.4(1) of the Uniform Civil Procedure Rules on the grounds that no reasonable cause of action was disclosed and the proceedings were an abuse of the process of the court (2016 Summary Dismissal Motion).

54. On 24 February 2017, the 2016 Motion for Leave to Amend and the 2016 Summary Dismissal Motion were heard before Justice Stevenson.

55. On 9 March 2017, Justice Stevenson dismissed the Motion for Leave to Amend (9 March 2017 Orders)…

56. On 17 March 2017, Justice Stevenson dismissed the proceeding insofar as it concerned the claims of Mr James (2017 Summary Dismissal Orders)...

66    The Respondent’s appeal from the orders made by Justice Stevenson was dismissed by the Court of Appeal on 15 March 2018. The Respondent pursued an application for special leave to appeal to the High Court of Australia from the judgment of the Court of Appeal. That special leave application was dismissed with costs on the basis that there were insufficient prospects that the appeal would succeed.

67    It is apparent from the procedural history of the disputes between the Respondent and ANZ that the Respondent has previously raised arguments based on similar allegations of fact as those which inform the proposed further amended grounds he now seeks to bring in these proceedings, in separate proceedings, in another jurisdiction. He has not been successful in those attempts. For present purposes, the fate of his pursuit in other proceedings of claims predicated on the same factual matrix is not to the point. The point is, that despite being aware of the critical facts and the factual allegations he wishes to make in respect of those facts for many years, he has not sought to ventilate those claims in these proceedings in a timely way. He has not provided any explanation for why that is so. I note in this regard that the Respondent’s solicitor has deposed to having not appreciated, through inadvertence, that the contentions the subject of the proposed amendments were not covered by the existing Notice of Grounds of Opposition. No explanation is offered for why the evidence served by the Respondent in these proceedings did not address, or did not address in a way that was admissible and specific, the matters which were believed to be within the existing pleading. I will return to this in the context of the new evidence aspect of the application.

68    Relevant to the assessment of whether leave ought to be granted to permit an amendment is the justification for any delay in bringing an application: Tamaya Resources at [127(2)] and [127(4)].

69    The Respondent’s solicitor’s explanation for the delay in raising the further amended grounds is set out in his affidavit of 2 July 2021:

4. I understood the Notice of Grounds of Opposition claimed relief because the amount recovered from the sale of assets of TLT and NLW was grossly inadequate and was inconsistent with the recoveries about which the PwC reported to the Applicant in May, 2013, which included recoveries of debtors and stock at Baerami and Denman. Having reviewed the draft Amended Grounds of Opposition. I accept that paragraph 8 (c) did not capture all the matters upon which the Respondent relies. This was inadvertent on my part. It was certainly not my intention to withhold any ground of opposition upon which I thought the Respondent could rely.

5. The further amendments were considered following the review of the Notice of Grounds of Opposition and the evidence following the retainer of Mr Miles Condon SC on 11 June 2021, after [senior counsel previously retained] was unable to continue to act…

70    The explanation for inadvertence is to be commended for its frankness but it only goes so far. There is no explanation of why the Respondent’s case has not been prepared, even at the evidentiary level, in a way in which these underlying factual matters may be resolved.

71    In contrast to the Court’s expectation in applications of this kind, the Respondent has not provided a meaningful explanation for his delay in raising the new issues contemplated by the application. The real explanation appears to be that a new legal team now wishes to run a new case and there is no explanation for why it was not done earlier where similar issues had been repeatedly ventilated in other proceedings. I note in this regard again that the circumstances which have resulted in the Respondent retaining alternative Senior and Junior Counsel were not of the Respondent’s making.

Prejudice

72    The Respondent frankly accepts that the further amended grounds he now wishes to rely upon could have been pleaded earlier, or otherwise, raised during case management hearings. He has not provided an explanation as to his failure to do so other than oversight in respect of the scope of the existing Notice of Grounds of Opposition. The Respondent submits that substantial injustice would arise if he were not permitted to rely upon the amendments, that a sequestration order would have profound consequences for him and that, in practical terms, prejudice to ANZ is confined to any lost costs. While I accept, as the Respondent submitted, that he is vehemently opposed to being made bankrupt and that the consequences of a sequestration order will be profound and significant, I do not accept that the impact on ANZ is confined as submitted.

73    It is well established that an application for leave to amend should not be approached on the basis that a party is entitled to raise a new claim, subject to the payment of costs by way of compensation: Aon Risk at [111]. Further, and in any event, ANZ has given evidence that it is highly unlikely that it will receive any compensation in relation to its wasted costs if the hearing is vacated.

74    The Respondent concedes that it would not be possible for ANZ to deal with a new case (and multiple new witnesses) in the hearing presently fixed. The concession is rightly made. The affidavit of Mr Kucharski affirmed 6 July 2021 (Third Kucharski Affidavit) sets out the substantial work that would be required to deal with the new grounds. In particular, Mr Kucharski deposes to the following work that will be required to be conducted in order to deal with the new grounds sought to be relied upon by the Respondent:

(1)    Obtaining evidence from former employees of PwC addressing matters including:

(a)    the Respondent’s evidence in relation to receivables;

(b)    the documents in relation to the debtors of TLT and NLW that the Respondent provided to PwC in May 2013; and

(c)    the discrepancies identified by PwC in August 2013 between the documents referred to above provided by the Respondent before the ANZ Receivers' appointment and information obtained from the books and records of TLT and NLW after appointment.

(2)    obtaining further evidence from Mr Merryweather or other relevant current or former employees deposing to:

(a)    the steps taken to ascertain from the employees and the books and records of TLT and NLW the identify of debtors and the basis, nature and quantum of each debt;

(b)    the steps taken to seek to recover each debt;

(c)    the debts that were and were not recovered; and

(d)    detailing his discussions with the Rabobank Receivers in relation to competing claims to the Baerami and Denman stock, including discussions referenced in correspondence annexed to the Merryweather 2016 affidavit.

(3)    obtaining relevant correspondence with debtors, as well as other documents relating to identified transactions – such as invoices, remittance advices and bank account statements. This process may have required the issuance of subpoenas to debtor entities.

(4)    expert evidence from an experienced insolvency practitioner as to:

(a)    whether the steps taken by the ANZ Receivers to seek to recover debts owing to TLT and NLW were reasonable and consistent with what a diligent and competent receiver would have done in the circumstances; and

(b)    whether the steps taken by the ANZ Receivers in relation to the Baerami and Denman stock, including entry into the Deed of Release, were reasonable and consistent with what a diligent and competent receiver would have done in the circumstances.

(5)    the preparation of evidence relating to any legal advice given to the ANZ Receivers by Allens (which work would include considering a waiver of legal professional privilege attaching to such advice) in relation to competing ownership claims over stock.

(6)    arranging for the issuance of subpoenas to Rabobank and the Rabobank Receivers seeking production of all documents recording information provided by or on behalf of the Respondent or any of the Rabobank Companies to Rabobank or the Rabobank Receivers at any time prior to 6 November 2014 (the date of the Deed of Release) in relation to the stock at Baerami or Denman, including its value and ownership and whether or not it would form part of any security interest granted in favour of Rabobank.

(7)    would likely have caused further investigations into these allegations to be made and more detailed affidavit evidence to have been prepared, including from Mr Merryweather and Mr Wil Honner.

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

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

77    In addition, during the hearing of the application, Senior Counsel for ANZ made submissions as to the quantum of the debt owed to ANZ, being some $11 million, and the bank’s entitlement to issue a creditor’s petition and take the steps it feels it can take to prosecute the matter to finality. It is a significant sum of money and the bank is properly within its rights to have a trustee appointed to investigate the Respondent’s affairs. The corollary of ANZ’s submissions is that there is a public interest in the finality of legal proceedings, particularly as it relates to the position of other creditors whose interests may be effected by a bankruptcy. Justice Bromwich’s observations in Coshott at [48] are pertinent in this respect. That is, although bankruptcy is a dire consequence of not paying debts arising from enforceable orders of the court, it is a vitally important ultimate remedy that helps to enhance the overall integrity of civil justice.

Conduct of litigation to date

78    ANZ opposes leave being granted to the Respondent to rely on the proposed Further Amended Notice of Opposition on the basis that the Interim Application was brought against a background of delay.

79    These proceedings were commenced by the filing of a creditor’s petition by ANZ on 11 August 2020. The Respondent did not accept the service of the creditor’s petition resulting in a delay exceeding three months and which gave rise to the need to obtain a substituted service order on 29 October 2020. The Respondent subsequently filed an amended Notice of Grounds of Opposition on 18 December 2020. At the time the Respondent was represented by Senior and Junior Counsel as well as by solicitors. Separately, in relation to the conduct of litigation generally, the Respondent was initially ordered to serve his responsive evidence by 12 March 2021 but did not so until 15 June 2021.

80    The delays arising from the Respondent’s conduct of the proceedings to date have occurred in circumstances where expiry of the creditor’s petition loomed over the parties. The parties were no doubt aware that a creditor’s petition lapses at the expiration of 12 months commencing on the presentation of the petition: Bankruptcy Act, s 52(4)(a).

Public interest

81    The public interest bears on the exercise of discretion in two distinct ways; first in the manner by which the Court’s resources are directed to the resolution of disputes between the parties generally and secondly, to the expeditious conduct of litigation in the context of bankruptcy proceedings specifically. I have already dealt with the former throughout these reasons in consideration of the other factors which bear on the exercise of my discretion but wish to say the following in relation to the latter matter in particular.

82    The authorities referred to in these reasons make clear that there is a public policy in the swift dispatch of bankruptcy proceedings and the due administration of the estates of persons found to be bankrupt: Flint at [38]; Bryant at 464. This is because the outcome of bankruptcy proceedings will impact not only private litigants prosecuting and defending claims but also of third party creditors. In this regard, any delay in the determination of bankruptcy proceedings is not only prejudicial to the debtor or bankrupt, but also to creditors and potentially members of the public: Bechara v Bates [2021] FCAFC 34 at [176]. The statutory time limit on the life of a creditor’s petition also highlights that creditors seeking to obtain a sequestration order must move quickly to bring such proceedings and respondent debtors must similarly move quickly to oppose those petitions (if they wish to do so). With these considerations in mind, Courts exercising bankruptcy jurisdiction must be assiduous in avoiding delay in dealing with any question concerning the making of a sequestration order: Totev at [17].

83    The various court proceedings involving the Respondent commenced with the consent judgment giving rise to the debt for which ANZ pursues the Respondent, which was entered in May 2014. Since that date, the Respondent has sought, amongst other things, to:

(1)    stay the consent judgment in proceedings which were heard and dismissed by Justice Ball in the NSW Supreme Court on 23 February 2016;

(2)    applied to set aside the consent judgment in the first instance on 19 September 2017 in proceedings before Justice Ball. Justice Ball heard the application to set aside the judgment over two days on 20 to 21 June 2019. His Honour dismissed the application on 5 July 2019; and

(3)    the Respondent sought to appeal the decision of Justice Ball referred to in (2) above. That appeal was dismissed by the Court of Appeal of New South Wales on 1 June 2020.

84    In the present proceedings, the Respondent seeks to set aside the creditor’s petition and argues that the Court is permitted by reason of s 52 of the Bankruptcy Act and the principles in Ramsay v Compton to go behind the consent judgment on the grounds set out in its Amended Notice of Grounds of Opposition, which is entirely his right to do so. However, in these circumstances, to permit an enlargement of the grounds on which the Respondent wishes to oppose the creditor’s petition such that the resolution of these proceedings are delayed is contrary to the public interest in the expeditious conduct of proceedings in this jurisdiction.

85    The Respondent has had ample time to bring the issues agitated by the proposed further amended grounds. Whilst I accept that refusing the amendment will mean that the Respondent will not be at liberty to take every point he now belatedly seeks to raise, in my view the Respondent will have a reasonable opportunity to bring his challenge to the creditor’s petition. The sentiments expressed by Justice Bromwich in Coshott at [48] are apposite in this regard.

Additional evidence

86    In seeking to establish his case, the Respondent also seeks leave to file and rely upon ten affidavits, being an affidavit from him of 2 July 2021 and others from six other deponents. Some of those affidavits were exhibited to an earlier affidavit filed by the Respondent in these proceedings (and sought to be relied upon at the final hearing of the matter). The Respondent submits that it was implicit in the exhibiting of these affidavits to his affidavit that he intended to rely upon them at the final hearing of the matter, however, the Respondent has failed to provide any explanation as to why those affidavits were not filed and served in a way which alerted ANZ to the fact that the deponents of those affidavits would be called to give evidence in the final proceedings. The affidavits appear on their face to have been prepared in other proceedings and in response to affidavits that were filed in those other proceedings. During oral argument I was taken to various parts of the affidavits. Many parts of the affidavits were likely inadmissible and expressed at a very high level of generality. In the main they are not supported by contemporaneous documents and indeed are directed in some instances to deposing to the contents of documents that are not to be put in evidence.

87    The affidavits are submitted to be important to establishing the Respondent’s case against the making of a sequestration order. The Respondent repeated his submissions in respect of the amendment in relation to the reasons that leave ought to be granted to permit him to file the additional evidence. In particular, the Respondent repeated his submissions as to the prejudice to him and that any prejudice to ANZ may be cured by compensation by way of a costs order.

88    ANZ objects to the Respondent’s reliance on the affidavits of the new witnesses. ANZ does not object to leave with respect to the Respondent’s affidavit of 2 July 2021. Mr Kucharski deposes to the following work which will be required to be conducted by ANZ in investigating and preparing responsive evidence to the affidavits now sought to be relied upon by the Respondent:

38. There is insufficient time available prior to the hearing of these proceedings, commencing on 7 July 2021, to investigate the matters raised in the New Affidavits and prepare responsive evidence (including affidavits). If Mr James were permitted to rely on the New Affidavits in the proceeding, the investigations I would consider undertaking and the evidence I would consider preparing would include (without limitation and by way of example only) the following:

(a) issuing a subpoena to Mawad & Younan seeking production of documents relevant to the matters raised in the New Affidavit of Mr Matthew Mowad dated 5 February 2019;

(b) issuing a subpoena to Ashfab IT Pty Ltd seeking production of documents relevant to the matters raised in the New Affidavit of Mr Scott Jones dated 21 March 2019;

(c) undertaking a review of all evidence (including affidavits and oral testimony) previously given by Mr Murray James (Mr James' brother and the deponent of two of the New Affidavits) in other proceedings, including Supreme Court of New South Wales proceeding 2013/313137;

(d) undertaking a review of all available contemporaneous PwC documents to identify material relevant to the allegations made in the New Affidavit;

(e) preparing responsive affidavits from:

(i) Mr Merryweather; and

(ii) Mr Honner, Ms Ang, Mr Mike Sim (a former employee of PwC who in 2013 held the role of Director) and Mr Nick Stuart-Harris (who is still employed by PwC and in 2013 held the role of Consultant) – Mr Murray James refers to alleged discussions with each of these individuals in his New Affidavits; and

(f) asking counsel to prepare objections to the New Affidavits.

39. Given the number of witnesses and topics which are the subject of the New Affidavits, I estimate that the task of responding to the material will take between four and six weeks.

89    The Respondent was initially ordered on 11 February 2021 to serve responsive evidence by no later than 12 March 2021. The Respondent defaulted in doing so and was subsequently ordered on 26 April 2021 to serve responsive evidence by 28 May 2021. The Respondent again defaulted in doing so and finally served responsive evidence on 15 June 2021.

90    I am not satisfied that in exhibiting the affidavits of the deponents, whose evidence he now seeks to rely upon, the Respondent has given any real indication to ANZ of his intended reliance on those affidavits. The proceedings have been on foot since 11 August 2020 and the evidence of the witnesses whose affidavits the Respondent seeks to read appear to have been relied upon in earlier proceedings. The Respondent’s lack of explanation for preparing his evidence in this way is particularly unsatisfactory in circumstances where at the time of filing his evidence he was represented by both Senior and Junior counsel in these proceedings as well as the solicitors who have represented him in other proceedings, in other jurisdictions, in respect of disputes with ANZ arising from similar matters.

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

92    Finally, in respect of the issue of filing additional evidence at such a late stage in the proceedings, litigation should generally be conducted swiftly, economically and consistently with the overriding purpose of the efficient use of the judicial and administrative resources available to the Court: FCA Act, s 37M(3). This is particularly so in the context of bankruptcy proceedings: see the authorities cited at paragraphs 48 to 51 above. In considering matters such as leave to file additional evidence, it is open to the Court to consider not only the competing interests of the parties but also the impact of any consequential delays and adjournments in the context of the claims of other litigants and the public interest in achieving the most efficient use of the Court’s resources: Garrett v Duncan [2015] FCA 255 at [33]. I am not satisfied that permitting the Respondent to rely upon the additional evidence he seeks to rely upon, save for his affidavit of 2 July 2021, is consistent with the achievement of the overriding purpose of this Court.

Adjournment

93    In addition to seeking an adjournment to allow ANZ to meet the Respondent’s new grounds of opposition, the Respondent seeks the adjournment on the basis that the hearing of these proceedings should await the delivery of judgment in the Shelteo Proceedings, which are listed in the common law division of the NSW Supreme Court for hearing in March 2022 on a 7 day estimate. The Respondent contends that there is a risk that ANZ and their receivers will contend that it would be an abuse of process, in the Shelteo Proceedings, for Shelteo to propound matters which the Respondent asserts in the present application.

94    The Respondent seeks an adjournment largely on two bases. First, he accepts that if the amendments he seeks to rely upon were granted, the hearing of the proceedings as listed on 7 July 2021 and due to continue tomorrow can not proceed. He relies largely on the same submissions as to prejudice made in respect of the amendment application in support of an adjournment. Secondly, the Respondent contends that an adjournment of the proceedings is required to a date after the hearing of the Shelteo Proceedings (which are listed for hearing in March 2022). Unsurprisingly, there is no indication of when a judgment may be delivered in those proceedings.

95    The Shelteo Proceedings concern a claim made by a company Shelteo against ANZ and the ANZ Receivers. Those proceedings were commenced in the NSW Supreme Court. The genesis of that claim was the judgment of Justice Jagot in James v Liquor National Pty Ltd (in liquidation)(No 2) [2017] FCA 1154 that a special-purpose liquidator should be appointed to the Rabobank Companies to examine the conduct of ANZ and the ANZ Receivers.

96    Shelteo alleges that it is the assignee of certain claims the Rabobank Companies have against ANZ and the ANZ Receivers. In summary form it also alleges that the ANZ Receivers, as agents for the ANZ:

(a)    unlawfully seized and converted the stock of certain of the Rabobank Companies, causing them loss;

(b)    committed acts of trespass at the Homebush and Maryville warehouses, and at the head office of the corporate group at Broadmeadow; and

(c)    removed or damaged computer equipment owned by the Respondent and the Rabobank Companies, thereby causing the companies to cease to operate and causing them to suffer loss (pleaded to exceed $55 million).

97    For the purpose of the present application, the Respondent submits significance attaches to those proceedings as:

(a)    Shelteo's sole officer is the Respondent's mother;

(b)    the Respondent’s solicitors are also retained by Shelteo; and

(c)    Shelteo's claims mirror those set out in paragraphs 8(a) and (b), 9(a) and 9(c)

of the Amended Notice of Grounds of Opposition.

The Respondent argues that in the premises there is a risk the ANZ may argue in those proceedings it would be an abuse of process for Shelteo to propound matters which he could have asserted in the present application. Mr Condylis appeared and purported on a “without admissions” basis to support the Respondent’s submissions on this point.

98    ANZ opposes the adjournment on the basis that there is substantial prejudice to it in the expiry of the creditor’s petition if the proceedings were to be adjourned. Mr Kucharski deposes to the following matters in his affidavit of 6 July 2021 in relation to the effect of an adjournment of these proceedings to a date following the Shelteo Proceedings:

31. On 25 June 2021, an order was made in this proceeding pursuant to section 52(5) of the Bankruptcy Act 1966 (Cth) extending the operation of the Creditor’s Petition. By this order the Creditor’s Petition will lapse on 12 August 2022. By reason of the operation of the Bankruptcy Act 1966 (Cth), ANZ will have no further ability to extend the operation of the Creditor’s Petition.

32. I anticipate that following the conclusion of the hearing in this proceeding, judgment will be reserved and it will take a period time for the judgment to be handed down. I also anticipate that if Mr James is unsuccessful, he will initiate an appeal. I have formed this view having regard to the history of related proceedings set out in my first affidavit, which refers to five occasions on which, having been unsuccessful at first instance, Mr James has either sought leave to appeal or appealed from decisions. In addition to the instances mentioned in my first affidavit, Mr James initially appealed from the decisions of Justice Jagot concerning ANZ's Bankruptcy Notice, but subsequently discontinued that appeal.

33. In these circumstances, and having regard to my litigation experience including with appeals (to which I refer at [3] above), I am concerned that, even when the extension of the Creditor's Petition to 12 August 2022 is taken into account, there is a serious risk that the petition will expire before final determination of the matter unless any appeal process to the Full Federal Court and High Court is conducted without delay and on an expedited basis.

34. If this proceeding is adjourned pending determination of the Shelteo Proceeding, and noting that Shelteo may itself appeal from any unsuccessful outcome, I am of the view that ANZ will be in very real danger of running out of time and the Creditor's Petition will likely expire before final determination (including on appeal) of this proceeding.

99    It also warrants mention that the matter of the Shelteo Proceedings were raised before Justice Markovic in a case management hearing on 26 April 2021. Counsel for the Respondent appearing on that occasion did not raise any concerns as to the prejudice to Shelteo during that hearing.

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

101    The doing of justice between the parties is a paramount consideration in determining whether an adjournment ought to be granted: Kentwood Industries at [2] (McKerracher J) citing Aon Risk at [30]. An adjournment ought not be refused if it would result in serious injustice to the party requesting the adjournment. The adjournment should only be refused if that is the only way that justice can be done to the other party: Hutchings v ASIC [2017] FCA 858 at [25] (Allsop CJ).

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

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

104    For these reasons, having considered the factors set out above in the context of the particular circumstances of the case I decline to exercise the discretion to grant the relief sought by the Respondent.

Associate:

Dated:    7 July 2021