FEDERAL COURT OF AUSTRALIA

Bechara v Bates (No 3) [2023] FCA 1559

ORDERS

THE COURT ORDERS THAT:

1.    The appeal is dismissed.

2.    The appellant is to pay the respondent’s costs of the appeal, with such costs to be paid out of the appellant’s estate in accordance with the priority in s 109(1)(a) of the Bankruptcy Act 1966 (Cth).

3.    On or before 8 January 2024 the respondent is to file any application for payment of his costs to be assessed as a lump sum together with an affidavit in support, in accordance with paragraphs 4.10 to 4.12 of the Costs Practice Note (GPN-Costs), and submissions, not exceeding three pages in length.

4.    In the event that an application is filed by the respondent in accordance with Order 3 above:

(a)    the parties are to confer and on or before 15 January 2024 provide the Associate to Markovic J proposed consent orders as to costs; or

(b)    if the parties are unable to agree on the appropriate order as to costs, on or before 22 January 2024 the appellant is to file and serve any affidavit in response, in accordance with paragraphs 4.13 to 4.14 of the Costs Practice Note (GPN-Costs), and her submissions, not exceeding three pages in length.

5.    In the event that the parties are unable to agree on the appropriate order as to costs, unless a party requests an oral hearing, the question of costs will be dealt with on the papers.

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

REASONS FOR JUDGMENT

MARKOVIC J:

1    This is an appeal from orders made by the Federal Circuit and Family Court of Australia (Div 2) (previously and at the time the first orders the subject of appeal were made the Federal Circuit Court of Australia) on 5 August 2021, 15 October 2021 and 30 November 2021 including orders affirming a sequestration order made by a registrar against the estate of the appellant, Maria Bechara, on 5 July 2016, dismissing Ms Bechara’s application filed pursuant to s 104(2) of the Federal Circuit Court of Australia Act 1999 (Cth) (now repealed) (FCC Act) for review of the exercise of a power by a registrar and for the petitioning creditor’s, Mr Bates, costs in amounts fixed by the Federal Circuit Court to be paid from Ms Bechara’s estate in accordance with the Bankruptcy Act 1966 (Cth).

2    The reasons for making the orders now the subject of appeal are found in three decisions of the primary judge:

(1)    reasons published on 5 August 2021: see Bates v Bechara (No 2) [2021] FCCA 1809 (first judgment or PJ1);

(2)    reasons published on 15 October 2021: see Bates v Bechara (No 3) [2021] FedCFamC2G 155 (second judgment or PJ2); and

(3)    reasons published on 30 November 2021 in relation to costs: see Bates v Bechara (No 4) [2021] FedCFamC2G 304 (costs judgment).

HISTORY OF THE PROCEEDING

3    The troubled procedural history of this proceeding leading up to its remittal to the Federal Circuit Court can be found in the reasons of Allsop CJ in Bechara v Bates (No 2) [2020] FCA 659 and of a Full Court of this Court in Bechara v Bates (2021) 286 FCR 166 (Allsop CJ, Markovic and Colvin JJ) (Bechara (FCAFC)).

4    The relevant facts for the purpose of the appeal are set out below.

5    On 11 December 2015 bankruptcy notice no. BN 186864 claiming the sum of $127,936.91 arising from judgments of the Local Court of New South Wales and Supreme Court of New South Wales was issued by the Official Receiver on behalf of Mr Bates and served upon Ms Bechara.

6    On 30 December 2015 Ms Bechara applied to set aside the bankruptcy notice. That application was dismissed by a registrar on 5 April 2016 (5 April 2016 Order).

7    On 7 April 2016 Mr Bates presented a creditor’s petition which was amended on 17 May 2016 to reflect a new hearing date, in accordance with orders made by a registrar on 13 May 2016. The creditor’s petition stated:

1.    The respondent debtor owes the applicant creditor the amount of $127,936.91 for nonpayment of judgment sums ordered against the respondent debtor in finalised Local Court proceedings No 2014/00159095 and finalised Supreme Court proceedings No 2015/00115082, as per final judgment given by the General Division of the Local Court of NSW in Sydney on 20 March 2015 and 2 April 2015, and final judgment given by the Common Law Division of the Supreme Court of Sydney on 18 November 2015, plus the interest accrued since date of judgments.

2.    The applicant creditor does not hold security over the property of the respondent debtor.

3.    At the time when the act of bankruptcy was committed, the respondent debtor:

(a)    was ordinarily resident in Australia;

(b)    had a dwelling house or place of business in Australia;

(c)    was carrying on business in Australia either personally or by an agent or manager;

4.    The following act of bankruptcy was committed by the respondent debtor within 6 months before presentation of this petition:

The respondent debtor failed to comply on or before 5 April 2016 (being the extended date for compliance) with the requirements of a bankruptcy notice served on her on 16 December 2015 or to satisfy the Court that she had a counter-claim, set-off or cross demand equal to or more than the sum claimed in the bankruptcy notice, being a counter-claim, set-off or cross demand that she could not have set up in the action in which the judgment referred to in the bankruptcy notice was obtained.

5.    The applicant creditor provides the following information, to the extent it is known to the applicant creditor, for use by the Australian Financial Security Authority:

(a)    the registered business name of the respondent debtor is Bechara & Company

(b)    the business address of the respondent debtor is Suite 216, 303 Castlereagh Street, HAYMARKET NSW 2000.

8    On 5 July 2016 a registrar of the Federal Circuit Court made a sequestration order against the estate of Ms Bechara.

9    On 25 July 2016 the appellant filed an application pursuant to s 104(2) of the FCC Act seeking review of the decision of the registrar made on 5 July 2016. A summary of the proceedings which followed, including in this Court and the High Court of Australia, is set out in Bechara (FCAFC) at [38]-[72], [97]-[138]. It is not necessary to repeat that summary here.

10    The issues which arose before the Full Court of this Court in Bechara (FCAFC) included, relevantly: the nature of a de novo hearing by way of review of a sequestration order in bankruptcy made by a registrar; whether the creditor’s petition was stale; and, if so, the remedial consequences thereof.

11    On 16 March 2021 the Full Court in Bechara (FCAFC) found, among other things, that Ms Bechara’s creditor’s petition was not stale and that applications for review of an exercise of delegated power by a registrar should be reheard by a judge de novo as soon as reasonably practicable. The Full Court made the following orders:

1.    The orders of the Federal Circuit Court of Australia made on 8 December 2016 dismissing the Interim Application filed on 25 July 2016 and ordering costs; on 3 March 2017 dismissing the Application in a Case filed on 5 January 2017 and ordering costs; and on 17 May 2017 dismissing the Application in a Case filed on 2 May 2017 and ordering costs be quashed and set aside.

2.    The application for review, in the form of the Interim Application filed on 25 July 2016, of the order of Registrar Tesoriero made on 5 July 2016 that the estate of Maria Bechara be sequestrated under the Bankruptcy Act 1966 (Cth) and of the order concerning costs be remitted to the Federal Circuit Court of Australia for hearing according to law as a de novo hearing of the creditor’s petition filed on 7 April 2016, to be heard as soon as reasonably possible.

3.    The first respondent pay the applicant’s costs of the application, such costs, and all other outstanding orders for costs as between the parties in litigation in the Federal Circuit Court of Australia, the Federal Court of Australia and the High Court of Australia, not be enforced and no steps be taken to enforce such costs until after orders are made consequent upon the hearing of the creditor’s petition in the application for review.

12    Consequent on the making of those orders the creditor’s petition was remitted to the Federal Circuit Court.

THE PROCEEDING BEFORE THE FEDERAL CIRCUIT COURT

The first judgment (PJ1)

13    The primary judge identified the issues to be considered on the de novo hearing including:

(1)    the nature of a de novo hearing where a party seeks review by the Federal Circuit Court of the exercise of power by a registrar;

(2)    the scope and operation of the Federal Circuit Court (Bankruptcy) Rules 2016 (Cth) and in particular whether a debtor, having sought review of a decision pursuant to s 104(2) of the FCC Act, is nonetheless obliged to comply with the requirements of the Bankruptcy Rules as a person who intends to appear at the hearing of a petition and to file and serve a notice of appearance and a notice stating his or her grounds of opposition to the making of a sequestration order (each in prescribed form) together with an affidavit in support of the grounds of opposition;

(3)    the consequences of a failure to comply with the requirements referred to in (2) above;

(4)    upon consideration of the evidence, whether the court’s jurisdiction is attracted;

(5)    whether the court was satisfied of the matters of which proof is required by s 52(1) of the Bankruptcy Act;

(6)    whether Ms Bechara had satisfied the court that, for another reason, a sequestration order ought not be made;

(7)    whether Mr Bates had failed to comply with any of the requirements of the Bankruptcy Rules in the manner which was complained of, for the first time, in Ms Bechara’s closing address; and

(8)    in relation to any such failures found, whether the proceeding was invalidated and how s 52(2) and s 306 of the Bankruptcy Act operated in all of the circumstances.

14    The first judgment sets out the primary judge’s reasons in relation to each of the above issues, save as to the operation of s 52(2) and s 306 of the Bankruptcy Act (see [13(8)] above), in relation to which the primary judge adjourned the proceeding so as to afford the parties time to make further submissions.

15    By way of summary, the primary judge’s conclusions in the first judgment can be found at the following paragraphs:

(1)    the conduct of the de novo hearing: at PJ1 [164]-[165];

(2)    jurisdiction: at PJ1 [169], [172]-[269];

(3)    acceptance of an act of bankruptcy: at PJ1 [170]-[171];

(4)    proof of the matters required by s 52(1) of the Bankruptcy Act: at PJ1 [272]-[284];

(5)    dismissal of the petition pursuant to s 52(2) of the Bankruptcy Act: at PJ1 [285]-[291]; and

(6)    Ms Bechara’s objection based upon rr 4.04, 4.05 and 4.06 of the Bankruptcy Rules: at PJ1 [292]-[331].

16    At PJ1 [31]-[38] the primary judge set out the statutory framework for the sequestration of a debtor’s estate and then referred to the nature of a de novo hearing. As to the latter, the primary judge identified that the powers conferred upon registrars, as may be prescribed by the rules of the Federal Circuit Court, include powers to make a sequestration order, to make an order against the estate of a debtor and to dismiss a creditor’s petition. His Honour observed (at [38]) that “[e]ssential to the validity of delegation of judicial power to a Registrar of the Commonwealth is a guarantee that the exercise of such power remains subject to supervision by the court”.

17    His Honour observed that a de novo hearing is a rehearing of the creditor’s petition at which the creditor bears the onus of establishing the matters with which s 52(1) of the Bankruptcy Act is concerned and the bankrupt only bears the onus imposed by s 52(2) of the Bankruptcy Act. His Honour further observed that “[i]n that context, the Full Court [in Bechara (FCAFC)] said nothing to suggest that the de novo hearing was one in which the debtor was in any way relieved of compliance with the requirements of” r 2.04 and r 2.06 of the Bankruptcy Rules: at PJ1 [41].

18    At PJ1 [44]-[58] the primary judge turned to the procedural framework for creditors’ petitions. In particular, the primary judge noted that where a debtor intends to take part in the hearing of a creditor’s petition, he or she must file a notice of appearance in prescribed form in accordance with r 2.04 of the Bankruptcy Rules and that r 2.06 is engaged where, relevantly, a debtor intends to oppose a petition (see below).

19    Before the primary judge, the solicitor-advocate appearing for Ms Bechara, Mr Martin, submitted that for the purposes of a de novo hearing of a petition r 2.04 and r 2.06 of the Bankruptcy Rules were “utterly irrelevant” and did not apply. The primary judge did not agree with and ultimately rejected that submission. In doing so his Honour first stated the following propositions at PJ1 [60]:

… The principles considered below are important as informing the approach to be taken in the proper determination of the hearing of a creditor’s petition, including a de novo hearing. From the authorities considered, the following propositions may be stated:

(a)    rr 2.04 and 2.06 form an essential part of the procedural framework within which a Bankruptcy Court is to determine, promptly, a creditor’s petition;

(b)    upon presentation, a creditor must support a petition by an affidavit deposing to matters stated in it. Equally, when a debtor intends to appear at, and oppose, a petition, notice must be given of the grounds on which it is intended to do so. The symmetrical nature of the procedures to be adopted in the proper administration of bankruptcy is apparent. The essential purpose of the notice is to identify each of the matters which a debtor intends to rely upon in opposing the petition. Conversely, it is not the intention of the entitlement to appear at a petition, either at the hearing or on a de novo hearing, that the matters which a debtor intends to dispute only be exposed for the first time in cross-examination let alone in closing submissions;

(c)    the primary function of the creditor’s verifying affidavit is to impose a requirement for acceptance of the presentation of a petition that it be supported by some sworn evidence. Once a debtor intends to oppose the petition, depending on the grounds of opposition, the function of the verifying affidavit may be spent. While the court remains bound to discharge its duty to consider for itself whether or not it is satisfied of proof of the matters required by s 52(1), where notice of grounds of opposition identify the particular bases why a petition is to be challenged, those grounds further define what the Bankruptcy Court must consider;

(d)    notice of the grounds upon which it is intended to oppose a petition ought to be stated with particularity and supported by affidavit. That is so, irrespective of whether the intended grounds are directed to the matters in the petition, including jurisdiction, service, compliance with the Bankruptcy Rules, solvency or some other sufficient cause. Nonetheless, the court may be satisfied that an objection is ‘dilatory.’ Lack of clarity or ambiguity about the nature of a debtor’s intended grounds of opposition inform the approach to be taken at the hearing, including on a de novo hearing;

(e)    despite failure to give notice of grounds of opposition, the court does not dispense with proof of the matters required by the Act or rules. Further, until there has been a proper investigation of a bona fide issue, a Bankruptcy Court should not proceed to make a sequestration order where it is shown that the opposition to the petition “is based on genuine and arguable grounds”. In either situation, the court remains subject to a duty to examine the underlying facts together with the due observance of relevant provisions of the Act and rules. Opaque, ambiguous or dilatory grounds are in another category;

(f)    while a notice of the intended grounds of opposition triggers a requirement to prove ‘afresh’ the matters that are distinctly put in contest, it is not a purpose of the Bankruptcy Rules that a failure to comply with rr 2.04 or 2.06 entitles a creditor to relief without satisfying the court of the matters required by s 52(1);

(g)    irrespective of a debtor’s failure to appear, file notice of grounds, evidence or submissions, the court must be satisfied whether a sequestration order ought be made, including upon a de novo hearing of a petition. Upon failure to file any notice or affidavit complying with 2.06, in a particular case, a debtor may be disentitled at a hearing or a de novo hearing from leading evidence in support of a ground. Although a court may adjourn the hearing of a petition to allow a debtor to adduce evidence, there may be no utility in doing so if it is not shown that there is a bona fide ground of opposition to the grant of relief sought by the petition;

(h)    the extent of proof that is to be required of a creditor is informed by the grounds on which a debtor intends to oppose the petition and the manner in, and time at, which those grounds have been revealed by the debtor. Absent notice of the grounds upon which a debtor intends to oppose a petition, it is for the court to determine what it will require to be proved. The court “may require proof of such of the matters in the petition as the court thinks right”. It is within the ambit of its discretion not to require proof of matters “outside the notice” and, by extension, not to require strict proof of matters not in any notice. The court retains discretion to adjourn a hearing so as to allow an opportunity to address the want of proof, including of the matters required by s 52(1). It retains discretion to refuse to consider grounds of which no notice is given;

(i)    the approach to be taken by the court where a debtor has belatedly identified an intended ground of opposition, involves matters of practice and procedure;

(j)    the approach to such matters is necessarily constrained by the special need to determine a de novo hearing of the exercise of power by a Registrar to make a sequestration order as soon as possible. Parties should not approach a de novo hearing as only being an inter partes proceeding or assume that the court may not direct them to proceed without delay. Unless it is impracticable to do so, the public interest of avoiding delay is high.

These propositions are drawn from or informed by the following authorities. …

20    The primary judge next summarised the relevant authorities before concluding that r 2.04 and r 2.06 of the Bankruptcy Rules “remained equally important and applied to a de novo hearing of Mr Bates’ petition”: at PJ1 [61]-[86]. His Honour stated that the requirement to provide an affidavit in support of any ground of intended opposition to the petition operated as a safeguard against delay and reliance upon grounds that are “opaque, ambiguous, dilatory or lacking in bona fides”. Accordingly, his Honour found that non-compliance with those “imperative obligations” engaged a discretion in the court to afford Mr Bates an opportunity to adduce further evidence in proof of jurisdictional facts and of matters bearing upon a suggested failure to comply with rr 4.04, 4.05 and 4.06 of the Bankruptcy Rules: see PJ1 [87].

21    At PJ1 [90]-[105] his Honour set out the consequences for the proceeding of Ms Bechara’s non-compliance with r 2.04 and r 2.06 of the Bankruptcy Rules, by failing to file a notice of appearance, a notice stating her grounds of opposition to the petition or an affidavit in support of those grounds: at PJ1 [90]-[105].

22    At PJ1 [108]-[116] the primary judge addressed the standard of proof required to establish facts in the hearing and determination of a creditor’s petition. The primary judge addressed Mr Bates’ evidence. He considered Mr Bates to be an honest and credible witness, who did his best to answer the questions put to him in cross-examination. This was so despite the difficulties presented by, among other things, Ms Bechara’s failure to file any notice identifying with particularity the grounds on which she intended to oppose the petition, the complications arising from a virtual hearing conducted using Microsoft Teams software and the fallibility of human memory where there had been a lapse of time between the events under consideration and the date of hearing.

23    The primary judge made findings based on the evidence in relation to the following matters:

(1)    Ms Bechara’s retainers of Mr Bates. In summary Mr Bates, a barrister, had accepted briefs from Ms Bechara, a solicitor who conducted practice as a principal on her own account, in various matters but he ultimately declined to accept further briefs from her. Mr Bates was given repeated assurances by Ms Bechara that she would pay his outstanding fees and that the source of the payment would be an amount due to be paid to her by another solicitor, Magee. At about Easter 2014 Mr Bates discovered that the moneys which Ms Bechara had said would be the source of payment of his outstanding fees had been paid to Ms Bechara “some time ago”. Mr Bates said that his relationship with Ms Bechara ended because he had been promised payment, had waited a long time and eventually got nothing: at PJ1 [118]-[126];

(2)    on 27 May 2014 Mr Bates commenced a proceeding for recovery of his fees in the Local Court: at PJ1 [127]-[128];

(3)    the judgments obtained by Mr Bates against Ms Bechara on 1 March 2015, 3 April 2015 and 19 November 2015 for $87,628.38, $1,808.40 and $33,000 respectively, $127,936.91 including interest which had accrued on those sums: at PJ1 [129]-[134];

(4)    the bankruptcy notice and the proceedings instituted by Ms Bechara on 30 December 2015 in the Supreme Court and the Federal Circuit Court. The latter was an application to set aside the bankruptcy notice which was dismissed on 5 April 2016: at PJ1 [135]-[140];

(5)    Mr Bates’ creditor’s petition presented on 7 April 2016. Orders were made for substituted service of the creditor’s petition on Ms Bechara who then appeared, by a lawyer, on 8 June 2016. The hearing of the petition was adjourned to 5 July 2016 at which time a sequestration order was made by a registrar: at PJ1 [141]-[150]; and

(6)    Ms Bechara’s application made pursuant to s 104 of the FCC Act for a re-hearing which took place on 8 December 2016. Ms Bechara’s application sought an order that “[t]he orders made by Registrar Tesoriero be set aside” and an order that the creditor’s petition be dismissed “pursuant to s 52(2)(b) of the [Bankruptcy Act]”. The primary judge observed that Ms Bechara’s application did not rely on s 52(2)(a) of the Bankruptcy Act. Ms Bechara did not appear on 8 December 2016 and her application for review was dismissed. Those orders and subsequent orders made by the Federal Circuit Court (upon Ms Bechara seeking an order for reinstatement of her review application) were quashed by the orders made by the Full Court of this Court in Bechara (FCAFC) (see [11] above): at PJ1 [151]-[160].

24    The primary judge then turned to consider the creditor’s petition noting that his task was to consider it afresh. His Honour relevantly made a number of findings and considered the arguments put by Ms Bechara.

25    First, his Honour found that the conditions in s 44(1) of the Bankruptcy Act, upon which Mr Bates might present his petition, were satisfied: at PJ1 [166]-[168].

26    Secondly, the primary judge considered whether the matters required to be proved by s 43 of the Bankruptcy Act had been established. His Honour noted that Ms Bechara accepted that she had committed an act of bankruptcy by failing to comply with the bankruptcy notice and found that the act of bankruptcy was committed within six months before the presentation of the petition: at PJ1 [169]-[171].

27    The primary judge observed that Ms Bechara’s closing submissions required consideration of the proper construction of s 43 of the Bankruptcy Act and, in particular, the requirements of s 43(1)(b). Ms Bechara contended that, properly construed, jurisdiction was not engaged unless the requirement of each of subss 43(1)(b)(i), (ii) and (iii) were satisfied. That is, they were said to be cumulative, not alternative. The primary judge did not accept that submission, setting out his reasons why that was so: at PJ1 [176]-[182].

28    The primary judge found that Mr Bates had established the matters in subss 43(1)(a) and (b)(i)-(ii) to the requisite standard so as to engage jurisdiction. In doing so his Honour said (at PJ1 [192]) that “[n]either the text, context or purpose of the provision support a conclusion that there should be read into s 43(1)(b) a requirement that the court may only make a sequestration order where satisfied by direct proof of matters in that subsection”. The primary judge provided detailed reasons as to why he was satisfied, based on the evidence before him, that the alternative requirements of subss 43(1)(b)(i), (ii) and (iii) were established: at PJ1 [196]-[269]. His Honour was also satisfied that the creditor’s petition had been served on Ms Bechara and that the debt the subject of the petition remained outstanding: at PJ1 [270]-[271].

29    The primary judge turned to consider s 52(1) of the Bankruptcy Act finding that he was satisfied of the matters required by that subsection and accordingly a prima facie entitlement to a sequestration order was established: at PJ1 [272]-[276].

30    Ms Bechara opposed the making of a sequestration order on three bases: a challenge to the service of the bankruptcy notice which, the primary judge observed, was abandoned in opening; a failure to establish jurisdiction, which Ms Bechara failed to establish (see [27]-[28] above); and alleged non-compliance with rr 4.04, 4.05 and 4.06 of the Bankruptcy Rules, which the primary judge noted was first raised in closing address and was said to be Ms Bechara’s principal ground of opposition. The primary judge then addressed that ground of opposition.

31    The primary judge observed that it was appropriate to consider the question of compliance with rr 4.04, 4.05 and 4.06 of the Bankruptcy Rules for the purpose of engaging the discretion under s 52(2)(b) of the Bankruptcy Act, namely “whether Ms Bechara has discharged the onus of satisfying the Court that there has been, in fact, non-compliance with the rules to which she refers, whether that is a sufficient cause to dismiss the petition and whether the Court should exercise its residual discretion to do so”: at PJ1 [278].

32    At PJ1 [279] the primary judge stated that the onus placed on the petitioner by s 52(1) of the Bankruptcy Act does not require proof of compliance with the Bankruptcy Rules and that the requirement for proof of compliance with those rules is not located in s 52(1). After referring in general terms to the requirements of r 4.04 and r 4.05 of the Bankruptcy Rules, at PJ1 [284] the primary judge said:

However in light of the procedural history of the matter, including the confined basis on which Ms Bechara proceeded pursuant to par 52(2)(b) of the Act to seek the dismissal of the petition, I have concluded the prima facie entitlement to a sequestration order should not be disturbed unless persuaded by Ms Bechara that the matters relied upon for the purposes of par 52(2)(b) constitute a sufficient other cause in all of the circumstances of this case.

33    The primary judge observed that: it was a matter of choice as to how a debtor seeks to satisfy s 52(2) of the Bankruptcy Act; absent evidence, difficulty may ensue in doing so; and one basis on which s 52(2) confers power to dismiss a creditor’s petition is that the court is not satisfied with proof of the matters in s 52(1). The primary judge also observed that although subs 52(1) and (2) do not refer to the Bankruptcy Rules, non-compliance with those rules could constitute some other sufficient cause in the circumstances of a particular case: at PJ1 [285]-[287].

34    Insofar as Ms Bechara relied on non-compliance with rr 4.04, 4.05 and 4.06 of the Bankruptcy Rules as constituting “other sufficient cause” not to make a sequestration order for the purpose of s 52(2) of the Bankruptcy Act the primary judge said at PJ1 [292]-[293]:

292    In closing address, Mr Martin mounted his final challenge upon an alleged failure to comply with rr 4.04, 4.05 and 4.06 of the Bankruptcy Rules. First, he pointed up that the Date and Time of the Hearing (8 June 2016), had not been inserted in the copy of the amended petition as annexed to the affidavit of substituted service to which he referred. Secondly, he submitted that the rule 4 affidavits were non-compliant. Thirdly, he submitted that there was no evidence of a consent of the trustee having ever been served.

293    The complaints of non-compliance were said to be constituted by a failure to comply with:

(1)    r 4.04(1)(a), being a failure to serve with the petition, an affidavit stating the matters addressed by that rule;

(2)    r 4.04(3) (sic), being a failure to exhibit to an affidavit as required by r 4.04(1)(a), a copy of any order finally deciding the application to set aside the bankruptcy notice;

(3)    r 4.04(3), being a failure to serve on Ms Bechara, at least five days before the hearing date of the creditor’s petition, a copy of the affidavits required pursuant to r 4.04;

(4)    r 4.05, being a failure to serve on Ms Bechara, at least five days before the date fixed for the hearing of the creditor’s petition, an affidavit as required by that rule and any consent to act as trustee of the debtor’s estate filed under s 156A of the Act;

(5)    r 4.06(2), being a failure to file the further affidavit as required by that rule.

These rules have overlapping operation.

35    At PJ1 [301] the primary judge observed that the requirements of r 4.02 and r 4.04 of the Bankruptcy Rules were not engaged in a de novo hearing because a petitioner is not required to re-serve the documents referred to in those rules. The primary judge found that:

(1)    contrary to Ms Bechara’s submission, a copy of the amended creditor’s petition in which the Federal Circuit Court’s Registry had inserted the time, place and date for the hearing and which had been served on Ms Bechara was annexed to one of the affidavits: at PJ1 [315]-[316];

(2)    neither of the affidavits relied on by Mr Bates was a statement made in compliance with r 4.04(1)(a)(i), (ii) or (iii), although on the facts of the case neither r 4.04(1)(a)(i) nor r 4.04(2) of the Rules applied;

(3)    at the time of service of the amended creditor’s petition, there was no affidavit served on Ms Bechara stating, relevantly, whether an application had been made by her in relation to the bankruptcy notice, that Ms Bechara’s application to set aside the bankruptcy notice had been dismissed on 5 April 2016, and that therefore her application for an extension of time to comply with the notice and to set aside the notice had been finally decided, as required by r 4.04(1)(a)(ii), (iii) or r 4.04(3): at PJ1 [320]; and

(4)    while a copy of the order made on 5 April 2015 dismissing Ms Bechara’s application to set aside the bankruptcy notice had not been served with the amended creditor’s petition or before the hearing on 5 July 2016, it had been served on 13 May 2021 before the completion of the de novo hearing of the petition: at PJ1 [321].

36    In relation to r 4.05 of the Bankruptcy Rules, which provides that service of certain documents must be effected no later than five days before the date fixed for hearing of the petition, the primary judge:

(1)    was satisfied that there was compliance with r 4.05(a) and (b) and that service of the amended creditor’s petition which contained the verifying affidavit was effected more than five days before the sequestration order was made on 5 July 2016: at PJ1 [324];

(2)    found that r 4.05(c) had not been complied with because an affidavit which set out the matters required by r 4.04(1)(a)(ii) or (iii) had not been served with the amended creditor’s petition, or five days before the date fixed for the hearing of the petition and the order made on 5 April 2016 had not been attached to any such affidavit: at PJ1 [325]; and

(3)    found the submission that there had been a failure to comply with r 4.05(d) to be misconceived, noting that the obligation to do so is not engaged in circumstances where a consent had not been filed: at PJ1 [326].

37    In relation to r 4.06 of the Bankruptcy Rules, which concerns additional affidavits to be filed before the hearing of a creditor’s petition, the primary judge noted that compliance with r 4.06(3) and (4) was not contested and that r 4.06(5) was not relevant. However, his Honour found that no affidavit complying with r 4.06(2) had been filed. That rule required the creditor to file an affidavit stating that the documents to be served under r 4.05 had been served and when and how they were so served. His Honour noted that such non-compliance had occurred in the context of the matters addressed above (see [36] above): at PJ1 [329]-[331].

The second judgment (PJ2)

38    The second judgment addressed an issue raised for the first time by Ms Bechara in closing submissions, namely the operation of s 52(2) of the Bankruptcy Act insofar as any non-compliance with the Bankruptcy Rules may have been affected by the operation of s 306(1) of Bankruptcy Act.

39    The primary judge concluded that: no defect in any document or the proceeding within the meaning of s 306(1) of the Bankruptcy Act had been identified; any non-compliance which had occurred was an irregularity within the meaning of s 306(1) of the Bankruptcy Act; and the material substantive failures to file an affidavit stating that on 5 April 2016 Ms Bechara’s application to set aside and extend the time for compliance with the bankruptcy notice had been dismissed did result in non-compliance with rr 4.04, 4.05 and 4.06 of the Bankruptcy Rules: at PJ2 [15].

40    At PJ2 [16] the primary judge found that each procedural failure constituted an irregularity which was not of a substantive kind and consequently s 306(1) of the Bankruptcy Act operated automatically to save the petition from invalidity. His Honour continued:

… Section 306, however, may operate to invalidate a petition in the circumstances for which it provides including where the court declines to exercise discretion to remedy a formal defect or irregularity or by making orders that might avoid substantial injustice. Here, the first time objection was made to the making of the sequestration order grounded upon non-compliance with those rules was over five years after the petition was served. No evidence was filed in support of the objection. Upon the submissions made, I am not satisfied of any actual or substantial injustice being caused by the irregularities of which complaint is belatedly made. Had I been of the opinion that injustice of the requisite kind might be caused, orders would have been available to remedy it, however, no such orders are required. Had I been persuaded of prejudice, I would have declined to dismiss the petition on this basis as constituting some “other sufficient cause”: Stratton v Bowles (No 2), [2015] FCA 43, [27].

41    In relation to the operation of s 306(1) of the Bankruptcy Act the primary judge said at PJ2 [18] that:

(1)    section 306 has no application to defects which are not formal. Non-formal or substantive defects invalidate a proceeding and s 306 cannot save it;

(2)    formal defects or other irregularities may not, without more, invalidate a proceeding;

(3)    as to formal defects and irregularities, s 306(1) operates automatically to save a proceeding from invalidity unless the other requirements of that section, including discretionary powers, are engaged;

(4)    where s 306(1) may operate, it is not engaged unless an objection has been taken as to the validity of the proceeding on a ground which might invalidate the proceeding;

(5)    where objection is taken, the objector bears the onus of identifying the relevant injustice and of satisfying the court it should be regarded as being “substantial” in all the circumstances;

(6)    whether or not a formal defect or irregularity may invalidate a proceeding depends upon the court having formed an opinion that it has been satisfied by the objector of a potential for substantial injustice arising from such defect or irregularity in the proceeding;

(7)    invalidity may not result where the court is satisfied that the injustice can be remedied by an appropriate order, for example an adjournment; and

(8)    in such cases, the court reserves a discretionary power to conclude the proceeding is not invalidated where substantial injustice may be ameliorated by making orders to address the effect of the formal defect or invalidating event.

42    At PJ2 [19]-[20] the primary judge set out how s 306(1) of the Bankruptcy Act operated in light of other provisions of the FCC Act and the Bankruptcy Act noting that:

(1)    the power conferred by s 306(1) should be read in the context of s 30(1)(b) of the Bankruptcy Act which confers power on a bankruptcy court to make such orders as it considers necessary for the purposes of carrying out or giving effect to the Act;

(2)    section 57(2) of the FCC Act (which is replicated in s 189(2) of the Federal Circuit and Family Court of Australia Act 2021 (Cth)) provides that the court may, on such conditions as it thinks fit, make an order declaring that the proceeding is not invalid by reason of a defect that it considers to be formal or by reason of an irregularity; and

(3)    rule 1.04 of the Bankruptcy Rules (which is replicated in r 1.04 of the Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth)) informs the scope of the power conferred by s 306(1) of the Bankruptcy Act.

43    At PJ2 [31], after setting out the authorities which considered the application of s 306 of the Bankruptcy Act, his Honour stated:

To remove a proceeding from the automatic initial operation of s 306(1) which may save the proceeding from invalidity, a party (including a debtor) must raise an objection to the validity of a proceeding grounded upon the presence of a defect or irregularity and satisfy the court, either that the identified defect or irregularity is not formal but substantive, and that substantial injustice will be caused by the presence of that formal defect or irregularity. If there is no evidence or submission upon which the court can consider the question of substantial injustice, there is no basis for an opinion that injustice of that quality has been, or would be, sustained. Absent an opinion of the kind required by s 306(1), no occasion arises to make any order which might otherwise be required to remedy or ameliorate the substantial injustice being complained of. If the court is satisfied of the potential for substantial injustice, the power conferred by s 306(1) is engaged and the court is authorised to save a proceeding from invalidity by the making of orders that k [sic] to address the consequences of the formal defect or other irregularity. That is a fact intensive exercise involving the exercise of discretion in the particular case.

44    The primary judge noted that Ms Bechara alleged a number of failures to comply with the Bankruptcy Rules, many of which were factually inaccurate. His Honour found that Mr Bates had not complied with the Bankruptcy Rules in several respects, all of which turned upon the same substantive issue, that is the failure to adduce evidence in relation to Ms Bechara’s application to set aside and extend the time for compliance with the bankruptcy notice and to exhibit a copy of 5 April 2016 Order. His Honour summarised these failures at PJ2 [33] as follows:

1)    the petitioner’s affidavits did not contain a statement made in compliance with pars 4.04(1)(a)(ii) or (iii). To repeat the finding in Bates v Bechara (No 2) [2021] FCCA 1809, at [315], there was not accompanying the amended petition an affidavit stating whether: (i) a search of the Bankruptcy Courts had been undertaken and that no application in relation to the bankruptcy notice had been made (which was not relevant), or; (ii) an application had been made to either court for an order setting aside the bankruptcy notice and that such application had been finally determined; or, (iii) an application had been made to either court for an order extending the time for compliance with the bankruptcy notice, which application had been finally decided. As to this I noted each of those matters were known by the debtor;

2)    at the time of the hearing of the petition before the registrar, there was not attached to the petitioner’s affidavits in compliance with s 4.04(3), a copy of the order made on 5 April 2016 which finally decided each of the applications referred to in rr 4.04(1)(a)(ii) and (iii) respectively. However, a copy of that order was exhibited to an affidavit filed for this de novo hearing: [2021] FCCA 1809, at [319]-[321];

3)    r 4.05(c) had not been complied with as there had not been served (either with the amended petition, or five days before the date fixed for the hearing of the petition), an affidavit stating the matters required by rr 4.04(1)(a)(ii) or (iii) and again, the order made on 5 April 2016 had not been attached to any such affidavit as required by r 4.04(3): [2021] FCCA 1809, at [325];

4)    r 4.06(2) had not been complied with as no affidavit stating that the documents required to be served under r 4.05 had been served. Nor had such documents been exhibited to an affidavit: [2021] FCCA 1809, at [330].

45    The primary judge noted at PJ2 [49] that in cases of defect or irregularity the court must evaluate the significance and importance of the defect or irregularity in the circumstances of the case and concluded that the procedural omissions upon which Ms Bechara sought to rely were not substantive. Adopting the analysis of the Full Court of this Court in de Robillard v Carver (2007) 159 FCR 38, the primary judge concluded at PJ2 [50] that the complaints of non-compliance with the Bankruptcy Rules did not go to jurisdiction. That is, the procedural irregularities did not provide a basis to satisfy the primary judge that there was any, or any substantial, injustice which might invalidate the proceeding or be capable of being ameliorated by the making of an appropriate order under s 306(1) of the Bankruptcy Act.

46    The primary judge concluded that he was not satisfied that Ms Bechara had suffered any substantial injustice in the proceeding flowing from the failure to comply with the rules in question. Accordingly, his Honour found that it was unnecessary to identify whether any order would be necessary to remedy such injustice and that s 306(1) takes effect and saves the creditor’s petition from invalidity that would otherwise arise from the irregularities. As a separate matter, the primary judge did not accept that there had been any injustice in the proceeding arising from the want of compliance with the applicable rules in failing to inform Ms Bechara by affidavit that her application to extend the time for compliance with and dismiss the bankruptcy notice had been dismissed on 5 April 2016 or to exhibit a copy of the 5 April 2016 Order. His Honour found that a copy of the order was exhibited to an affidavit during the de novo hearing: at PJ2 [51]-[52].

47    The primary judge concluded that Mr Bates had discharged his onus of establishing proof of the matters under s 52(1) of the Bankruptcy Act and, having regard to s 52(2), his Honour was not satisfied by Ms Bechara of any sufficient reason why an order ought not to be made. Additionally, the primary judge observed that he could not ignore the substantial delay that had attended the proceeding and the corresponding prejudice caused to other creditors. The primary judge concluded that the court should affirm the registrar’s decision to make a sequestration order against Ms Bechara’s estate: at PJ2 [62]. At PJ2 [63]-[64] his Honour continued:

63    Had non-compliance with the relevant rules otherwise constituted some cause for dismissal of the petition, I would not have accepted such non-compliance to be a sufficient cause to do so in this case. Even then, I would not have exercised the discretion conferred by s 52(2) of the Act in favour of dismissal. Finally, despite the submission that it would be inutile to adjourn the petition to allow Mr Bates an opportunity to address the issues of noncompliance first raised in closing address, I would have adopted that course had I not concluded that the court should affirm the registrar’s exercise of power to make a sequestration order.

64    Had I been of the opinion that an objection grounded on non-compliance of the kind identified in this case had the potential to cause substantial prejudice, for the reasons above, I would have made orders pursuant to s 306(1) and/or rr 1.04(1) and 4.05 of the Bankruptcy Rules to relieve from the consequences of non-compliance with such rules.

GROUNDS OF APPEAL

48    Ms Bechara relies on a second amended notice of appeal (NOA) which comprises some 66 paragraphs and is, with respect, somewhat prolix comprising matters in the nature of submissions rather than identifying, with precision, how it is said that the primary judge erred. However, in summary Ms Bechara contends that:

(1)    the primary judge erred in finding that the Federal Circuit Court’s jurisdiction was invoked. This ground raises the proper construction of s 43(1)(b) of the Bankruptcy Act and, in particular, a contention that Re Mendonca; Ex parte Commissioner of Taxation (1969) 15 FLR 256 is plainly wrong and alleges that the findings made by the primary judge that Ms Bechara was personally present and ordinarily resident in Australia in April 2016, had a dwelling house in April 2016 and/or had a place of business in Australia, are wrong: at NOA [5]-[41];

(2)    the primary judge erred in his analysis of the evidence against rr 4.04, 4.05 and 4.06 of the Bankruptcy Rules and, insofar as the primary judge found there to be non-compliance with those rules, erred in finding that the non-compliance was not of such a nature as to cause substantial injustice to Ms Bechara within the meaning of s 306(1) of the Bankruptcy Act: at NOA [42]-[58]; and

(3)    the primary judge erred at PJ1 [3]-[107] in finding that Ms Bechara was required to comply with r 2.04 and r 2.06 of the Bankruptcy Rules on a review application and, although she concedes that “nothing seems to eventuate from that error”, Ms Bechara contends that “the fervour of the Court’s condemnation might be thought to have infected” the primary judge’s thinking on discretionary matters, including the wrongful exercise of s 306(1) of the Bankruptcy Act and the costs judgment: at NOA [64].

LEGISLATIVE FRAMEWORK

49    Section 40(1)(g) of the Bankruptcy Act concerns “[a]cts of bankruptcy” and relevantly provides:

(1)    A debtor commits an act of bankruptcy in each of the following cases:

…

(g)    if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not:

(i)    where the notice was served in Australia—within the time fixed for compliance with the notice; or

(ii)    where the notice was served elsewhere—within the time specified by the order giving leave to effect the service;

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

…

50    Section 47 of the Bankruptcy Act sets out the requirements for a creditor’s petition. It provides:

(1)    A creditor’s petition must be verified by an affidavit of a person who knows the relevant facts.

(1A)    If the rules of court prescribe a form for the purposes of this subsection, the petition must be in the form prescribed.

(2)    Except with the leave of the Court, a creditor’s petition shall not be withdrawn after presentation.

51    Section 43(1) of the Bankruptcy Act, which is headed “Jurisdiction to make sequestration orders”, provides:

(1)    Subject to this Act, where:

(a)    a debtor has committed an act of bankruptcy; and

(b)    at the time when the act of bankruptcy was committed, the debtor:

(i)    was personally present or ordinarily resident in Australia;

(ii)    had a dwelling‑house or place of business in Australia;

(iii)    was carrying on business in Australia, either personally or by means of an agent or manager; or

(iv)    was a member of a firm or partnership carrying on business in Australia by means of a partner or partners or of an agent or manager;

the Court may, on a petition presented by a creditor, make a sequestration order against the estate of the debtor.

52    Section 52(1) of the Bankruptcy Act sets out the matters of which the Court requires proof before a sequestration order is made. It provides:

At the hearing of a creditor’s petition, the Court shall require proof of:

(a)    the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient);

(b)    service of the petition; and

(c)    the fact that the debt or debts on which the petitioning creditor relies is or are still owing;

and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor.

53    Section 52(2) of the Bankruptcy Act empowers the Court to dismiss a petition and provides:

If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor:

(a)    that he or she is able to pay his or her debts; or

(b)    that for other sufficient cause a sequestration order ought not to be made;

it may dismiss the petition.

54    Rule 1.03 of the Bankruptcy Rules provides that those Rules are made under the FCC Act.

55    Rule 1.04 of the Bankruptcy Rules concerns “[a]pplication of [the Bankruptcy Rules] and other Rules of the [Federal Circuit Court]” and provides that unless the Federal Circuit Court otherwise orders, the Bankruptcy Rules apply to a proceeding in the Federal Circuit Court to which the Bankruptcy Act applies.

56    Part 2 of the Bankruptcy Rules is titled “General”. Relevantly:

(1)    rule 2.04 provides that a person who intends to appear at the hearing of a petition must file a notice of appearance in accordance with the prescribed form; and

(2)    rule 2.06 concerns “[o]pposition to application, interim application or petition” and provides:

A person who intends to oppose an application (including an interim application) or a petition must, at least 3 days before the date fixed for the hearing of the application or petition or, with the leave of the Court, at the hearing:

(a)    file a notice of appearance in accordance with Form B4; and

(b)    file a notice in accordance with Form B5 stating the grounds of opposition; and

(c)    file an affidavit in support of the grounds of opposition; and

(d)    serve the notices and supporting affidavit on the applicant.

57    Part 4 of the Bankruptcy Rules concerns creditors’ petitions and applies to a creditor’s petition seeking a sequestration order against the estate of a debtor.

58    The requirements for a creditor’s petition and supporting affidavit are set out in r 4.02 of the Bankruptcy Rules which provides:

(1)    For subsection 47(1A) of the Bankruptcy Act, a creditor’s petition must be in accordance with Form B6.

(2)    The affidavit (the verifying affidavit) verifying the petition required by subsection 47(1) of the Bankruptcy Act must:

(a)    be included in the petition in accordance with Form B6; or

(b)    accompany the petition.

(3)    The petition must also be accompanied by any affidavits relating to the petition required by rule 4.04.

(4)    Unless the petition is faxed, or sent by electronic communication, to a Registry for filing, the petition must also be accompanied by sufficient copies of the petition for service and proof of service.

(5)    If the petition is accompanied by the verifying affidavit in accordance with paragraph (2)(b), a copy of the petition must be attached to the verifying affidavit.

59    Rule 4.04 of the Bankruptcy Rules concerns creditors’ petitions founded on a failure to comply with “bankruptcy notice etc.” and relevantly provides:

(1)    If a creditor’s petition is founded on an act of bankruptcy specified in paragraph 40(1)(g) of the Bankruptcy Act, the petition must also be accompanied by:

(a)    an affidavit stating:

(i)    that the records of the Court and the records of the Federal Court have been searched and no application in relation to the bankruptcy notice has been made; or

(ii)    that an application was made in the Court or in the Federal Court (as the case may be) for an order setting aside the relevant bankruptcy notice and the application has been finally decided; or

(iii)    that an application was made in the Court or in the Federal Court (as the case may be) for an order extending the time for compliance with the bankruptcy notice and the application has been finally decided; and

(b)    an affidavit of service of the relevant bankruptcy notice.

(2)    If an affidavit required by paragraph (1)(a) states the matters referred to in subparagraph (1)(a)(i), a copy of the search must be attached to the affidavit.

(3)    If an affidavit required by paragraph (1)(a) states that an application referred to in subparagraph (1)(a)(ii) or (iii) was made, a copy of the order finally deciding the application must be attached to the affidavit.

…

60    Rule 4.05 of the Bankruptcy Rules is titled “Documents to be served” and provides that:

Unless the Court otherwise orders, at least 5 days before the date fixed for the hearing of a creditor’s petition, the applicant creditor must serve on the respondent debtor:

(a)    the creditor’s petition; and

(b)    a copy of the affidavit, or affidavits, verifying the petition required by subsection 47(1) of the Bankruptcy Act; and

(c)    if applicable, a copy of the affidavits relating to the petition required by rule 4.04; and (d) a copy of any consent to act as trustee of the debtor’s estate filed under section 156A of the Bankruptcy Act.

61    Rule 4.06 of the Bankruptcy Rules is titled “Additional affidavits to be filed before hearing”. It relevantly provides:

(1)    Before the hearing of a creditor’s petition, the applicant creditor must comply with this rule.

(2)    The applicant creditor must file an affidavit that:

(a)    states that the documents required to be served under rule 4.05 have been served, and when and how they were served; and

(b)    has attached to it a copy of the documents that were served and proof of service in relation to the documents.

CONSIDERATION

62    I address each category of error alleged by Ms Bechara (summarised at [48] above) in turn below.

Jurisdiction

63    The first category of error alleged by Ms Bechara concerns the question of whether the Federal Circuit Court had jurisdiction to entertain the creditor’s petition presented by Mr Bates. Ms Bechara’s challenge to the primary judge’s reasons is two-fold: first, she contends that the primary judge erred in his construction of s 43(1)(b) of the Bankruptcy Act; and secondly, she contends that the primary judge erred in finding that Mr Bates had established each of the requirements of subss 43(1)(b)(i), (ii) and (iii) of the Bankruptcy Act.

The construction of s 43(1)(b) of the Bankruptcy Act

64    Ms Bechara submits that the primary judge fell into error because Mr Bates, as creditor, did not establish a prima facie entitlement to the making of a sequestration order on the bases relied upon in paragraph 3 of his creditor’s petition. This was because the Federal Circuit Court could not have been satisfied on the balance of probabilities that Ms Bechara:

(1)    was ordinarily resident in Australia; and

(2)    had a dwelling house in Australia; and

(3)    had a place of business in Australia; or

(4)    was carrying on business in Australia personally or by an agent or by an agent or manager,

when the act of bankruptcy occurred on 5 April 2016.

65    Ms Bechara contends that s 43(1)(b) of the Bankruptcy Act requires each aspect of paragraph 3 of the creditor’s petition to be proved and that the legislation makes it clear, by inserting the word “or” at various points, that paragraphs 3(a), (b) and (c) of the creditor’s petition are cumulative and not alternative. At the heart of this submission is Ms Bechara’s contention that the proper construction of s 43(1)(b) of the Bankruptcy Act requires subss 43(1)(b)(i) to (iii) to be read cumulatively and not alternatively. To that end, Ms Bechara submits that: the decision in Re Mendonca is not binding on this Court; this Court ought to reconsider the decision in Re Mendonca as it misreads the language in s 43(1)(b) of the Bankruptcy Act to arrive at an unnaturally narrow construction of what the legislation is intended to mean; and if the legislature had intended the requirements of s 43(1)(b) to be read alternatively then it would have used the word “or” at the end of each subsection. She submits that instead the legislature inserted the word “or” sparingly at the end of s 43(1)(b), between subs (iii) and subs (iv), “for a reason”, without further explanation.

66    The primary judge addressed the question of the proper construction of s 43(1)(b) of the Bankruptcy Act at [172]-[182] of the first judgment. As set out at [27] above, his Honour concluded that the requirements of the section were alternative and not cumulative. There was no error in his Honour’s interpretation of s 43(1)(b) of the Bankruptcy Act.

67    The starting point for the ascertainment of the meaning of a statutory provision is its text. At the same time regard should be had to the provision’s context and purpose: see SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362 at [14] (Kiefel CJ, Nettle and Gordon JJ), [37]-[38] (Gageler J). The plurality in SZTAL went on to observe that considerations of context and purpose “simply recognise that, understood in its statutory, historical or other context, some other meaning of a word may be suggested, and so too, if its ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected”.

68    As the primary judge recognised, s 43 of the Bankruptcy Act confers jurisdiction on the court to make a sequestration order. In Owners of the Ship Shin Kobe Maru v Empire Shipping Co Inc (1994) 181 CLR 404 at 421 the High Court said that “[i]t is quite inappropriate to read provisions conferring jurisdiction or granting powers to a court by making implications or imposing limitations which are not found in the express words”. But that is what Ms Bechara seeks to do by the construction of s 43(1)(b) of the Bankruptcy Act that she urges.

69    The primary judge concluded that the structure of s 43(1) does not support the construction contended for by Ms Bechara. His Honour noted that the section requires each of subs 41(1)(a) and (b) to be satisfied before jurisdiction is engaged and then observed that within s 43(1)(b) the use of the word “or” at the end of subs 41(1)(b)(iii) more naturally supports a conclusion that any one of subss 41(1)(b)(i), (ii), (iii) or (iv) will be sufficient for the purpose that a requirement in s 43(1)(b) will engage jurisdiction if s 43(1)(a) is also met. In support of that construction the primary judge referred to Re Mendonca and considered the statutory context.

70    Re Mendonca concerned an application for substituted service of a creditor’s petition on Mr Mendonca, a Portuguese national who was registered as an alien resident in Australia from February 1956 until December 1968. The Commissioner of Taxation had presented a creditor’s petition for a sequestration order against Mr Mendonca’s estate.

71    Mr Mendonca was assessed to pay a significant amount of increased tax which was notified to him by notices sent to his residential address. In each notice the date on which the tax was due and payable was said to be 30 December 1968. Early in December 1968 Mr Mendoca bought some items on hire purchase paying only a small deposit, borrowed $2,000 from a finance company and withdrew money from his bank, leaving his account in debit. On 13 December 1968 he departed his house located at Watson, Australian Capital Territory and on the following day he left Sydney with his family bound for Europe.

72    The petition presented by the Commissioner alleged that Mr Mendonca committed the following acts of bankruptcy: first, that he departed Australia on 14 December 1968 with the intent to defeat or delay his creditors; and secondly, that he departed from his dwelling house at Watson on or about 13 December 1968 with the intent to defeat or delay his creditors.

73    The Commissioner’s application for substituted service came before Gibbs J who identified two questions for consideration: whether there was owing to the Commissioner on the dates of the alleged acts of bankruptcy a debt sufficient to entitle the Commissioner to present the petition; and whether the creditor’s petition could be served on the debtor, Mr Mendonca, outside Australia. Only the second of these questions is relevant to this appeal. In relation to that question Gibbs J observed (at 260) that Mr Mendonca was not an Australian citizen and that it “may be assumed that he is not domiciled in Australia, since if he acquired an Australian domicile of choice, he [had] now probably lost it”. His Honour said that it was nonetheless clear that the Court had jurisdiction to make a sequestration order. In doing so his Honour first referred to s 7 of the Bankruptcy Act, pursuant to which the Act extends to debtors being persons who are not Australian citizens. His Honour then turned to s 43(1) of the Act and said (at 260-261):

It is not made a condition of jurisdiction that the debtor should be an Australian national or domiciled in Australia. The Court has jurisdiction if, at the time when the act of bankruptcy was committed, the debtor was connected with Australia in one of the ways mentioned in s. 43(1)(b). Quite clearly, the conditions of jurisdiction are satisfied in the present case. At the time when the acts of bankruptcy were committed, the debtor was personally present in Australia. That is enough, but in addition he had not ceased to be ordinarily resident in Australia or to have a dwelling house in Australia. Moreover, at the dates of the acts of bankruptcy, the debtor was carrying on business in Australia, within the somewhat wide understanding of those words that has come to be established law (see Theophile v. The Solicitor-General; In re Bird v. Inland Revenue Commissioners; Ex parte the Debtor).

(Footnotes omitted.) (Emphasis added.)

74    It seems that little has been said by this Court about the construction of s 43(1)(b) of the Bankruptcy Act since Re Mendonca. There are no doubt reasons for that. First and foremost, because Gibbs J’s construction of s 43(1)(b) was, as the primary judge found to be the case, the proper construction of the section. That is, having regard to the text of s 43(1)(b) and the use of the word “or” between subs (1)(b)(iii) and subs (iv), the natural reading of the section is that the requirements in subs 43(1)(b) are alternate. Secondly, because given its plain meaning there has been no cause to consider, let alone reconsider, the construction of s 43(1)(b) of the Bankruptcy Act.

75    One case in which the construction of s 43(1)(b) was considered was Bhagat v Global Custodians Ltd [2002] FCA 926. In that case Mr Bhagat applied for a stay of a sequestration order. In considering whether an interim stay should be granted Tamberlin J (at [17]) noted that one matter which Mr Bhagat sought to raise was the construction of s 43 of the Bankruptcy Act. In particular Mr Bhagat made the same argument as made by Ms Bechara before the primary judge and which she seeks to reagitate before me. That is, he relied on the absence of the word “or” between subs 43(1)(b)(ii) and (iii) to submit that the requirements of the subsection are cumulative and not alternative. At [17] Tamberlin J disposed of that argument saying:

… There is no substance in this submission and it is quite clear, in my view, that the provisions of s 43(1)(b) are in the alternative throughout and are not cumulative in any respect: see Re Mendonca; Ex parte Commissioner of Taxation (1969) 15 FLR 256 at 260, per Gibbs J. Consequently, for example, it is not necessary to demonstrate that a person was personally present or ordinarily resident in Australia and had a dwelling house or place of business in Australia and was carrying on business in Australia.

(Emphasis in original.)

76    The same approach is evident in other decisions. For example, in Fuller JR, in the matter of Alford v Alford (2017) 252 FCR 168, after referring to s 43(1)(b) of the Bankruptcy Act and the allegations made in the creditor’s petition that at the time the act of bankruptcy was committed the debtor was ordinarily resident in Australia, had a dwelling house or place of business in Australia and was carrying on business in Australia either personally or by an agent or manager, Perry J said at [30]:

For the reasons set out below I find that, while one ground would have sufficed to found jurisdiction, I am satisfied that the Court has jurisdiction under each of the grounds on which the creditor’s petition relied to establish jurisdiction under s 43 of the Act.

77    In other words, her Honour implicitly accepted and applied the construction of s 43(1)(b) of the Bankruptcy Act held to apply in Re Mendonca and found by the primary judge. So too in Compton v Ramsay Healthcare Australia Pty Ltd (2017) 256 FCR 345 where, in considering s 188(1), which is in Div 2 of Pt X of the Bankruptcy Act and is in the same terms as s 43(1)(b) of the Bankruptcy Act, at [47] a Full Court of this Court (Siopis, Gleeson and Moshinsky JJ) said:

The four alternative jurisdictional connections referred to in s 188(1) mirror those contained in s 43(1) of the Bankruptcy Act, which confers jurisdiction to make a sequestration order. In the case of s 43(1), the jurisdictional nexus must exist at the time when the act of bankruptcy was committed. See also ss 55(2A), 57(2A), 244(6) and 247(2), which incorporate the same four alternative jurisdictional connections.

    (Emphasis added.)

78    Ms Bechara invites this Court not to follow Re Mendonca and to find that the decision, insofar as it considers the construction of s 43(1)(b) of the Bankruptcy Act, is wrong. I decline that invitation. Ms Bechara gives little explanation, and points to no authority, for her submission that the decision is wrong beyond the contention that the use of the word “or” sparingly at the end of s 43(1)(b) was for an unexplained reason. She imposes an unnatural reading on the text, which is not embraced in any other decision which I can identify which has considered the construction, either expressly or implicitly, of s 43(1)(b) or its analogues, and which has no regard to the context in which the section appears. Insofar as the construction of s 43(1)(b) of the Bankruptcy Act is concerned, I would reach the same conclusion as Gibbs J did in Re Mendonca.

79    The final matter to address in relation to the construction of s 43(1)(b) of the Bankruptcy Act is the submission made by Mr Martin, the solicitor-advocate who appeared for Ms Bechara, that Ms Bechara’s construction was supported by the fact that, in making his findings of fact, the primary judge addressed each of subss 43(1)(b)(i), (ii) and (iii) of the Bankruptcy Act. That submission is rejected. Ms Bechara raised two matters before the primary judge: first, she contended for a cumulative rather than alternative construction of s 43(1)(b); and secondly, she contended that Mr Bates had not in any event established as a matter of fact any of the requirements of s 43(1)(b) of the Bankruptcy Act.

80    His Honour first addressed the construction argument and considered whether Mr Bates had established any of the matters required by s 43(1)(b) of the Bankruptcy Act. In doing so, in what can only be described as a diligent and fulsome way, his Honour considered whether each of subss 43(1)(b)(i), (ii) and/or (iii) of the Bankruptcy Act was satisfied. True it is that, given his construction of s 43(1)(b) of the Bankruptcy Act, his Honour’s diligence was not essential. However, that a judge is thorough in his or her treatment of the claims and submissions made by a party in support of their position, as was the case with the primary judge, does not support an argument which may be put and which was otherwise rejected. In this case his Honour’s approach to the fact-finding task as to the satisfaction of the integers of s 43(1)(b) of the Bankruptcy Act does not lend any support to the construction contended for by Ms Bechara. The question of statutory construction requires, as set out above, consideration of the text, context and purpose of a provision.

Were the requirements of subs 43(1)(b)(i), (ii) or (iii) of the Bankruptcy Act met?

81    Ms Bechara submits that, even if the Court were to follow Re Mendonca, the evidence as to jurisdiction in this proceeding does not satisfy the threshold established in Re Mendonca because there is no evidence of Ms Bechara having been present in Australia at the relevant time. Ms Bechara invites the Court to analyse the reasoning at PJ1 [172]-[269] and contends that the primary judge fell into error in his Honour’s reasoning in respect of each of subs 43(1)(b)(i)-(iii).

Subsection 43(1)(b)(i) of the Bankruptcy Act – personally present or ordinarily resident

82    Ms Bechara submits that the primary judge fell into error in concluding at PJ1 [223]:

I am satisfied that in April 2016, Australia was Ms Bechara’s settled place of abode. Upon the totality of the evidence I am satisfied that Ms Bechara was personally present and ordinarily resident in Australia in April 2016.

83    Ms Bechara submits that Re Vassis; Ex parte Leung (1986) 9 FCR 518, while binding on the primary judge, is not binding on this Court and is “plainly wrong”. In oral submissions Mr Martin explained that was so because, despite the length of the period in which Mr Vassis was absent from Australia, he was found to be ordinarily resident in Australia. Mr Martin submits that in those circumstances the term “ordinarily resident” is given an “unnaturally wide” meaning. However, Mr Martin accepts that if Re Vassis is not said to be plainly wrong, then the finding of the primary judge (at PJ1 [233]) that Ms Bechara was “personally present, or at the least, ordinarily resident” in Australia at the time she committed the act of bankruptcy must stand.

84    Insofar as the primary judge found that s 43(1)(b)(i) of the Bankruptcy Act was satisfied, Ms Bechara submits there is a “gap in [Mr Bates’] direct knowledge” of whether she was personally present or ordinarily resident at the date of the act of bankruptcy, 5 April 2016, and, to the extent there was evidence before the primary judge as to her whereabouts, that evidence only went to her whereabouts in October 2015, 30 December 2015 and 8 February 2016 (at PJ1 [215], [217] and [221]). Ms Bechara submits that was some two to three months before the act of bankruptcy and that her whereabouts prior to 28 January 2016 were unknown.

85    Ms Bechara contends that the primary judge erred in his reliance on dates after the act of bankruptcy because s 43(1)(b) of the Bankruptcy Act uses the words “at the time when the act of bankruptcy was committed” and the dates relied upon by the primary judge, ranging from September 2016 to August 2018, significantly postdate the act of bankruptcy. Therefore they must be regarded as “so far away” from the act of bankruptcy that no reliance can properly be placed on them.

86    The fundamental problem, according to Ms Bechara, is that the primary judge did not have direct evidence of where she was in April 2016. The primary judge was in error to have relied upon either dates which were two to three months before the act of bankruptcy or dates which were at least five months after the act of bankruptcy to conclude that Ms Bechara was present and ordinarily resident in Australia in April 2016.

87    Ms Bechara contends that Re Mendonca and Re Vassis strain the reading of the Bankruptcy Act in “virtually any way possible so as to find a way to ensure that the debtors are captured by a sequestration ‘come what may’”.

88    The starting point to consider Ms Bechara’s submissions is the decision in Re Vassis.

89    In that case the petitioning creditor, who was a receiver appointed by an order of the Supreme Court of Victoria of certain property of the debtor, Mr Vassis, presented a creditor’s petition for just over $3 million. Mr Vassis defended the petition on several grounds including that at the time that the act of bankruptcy was claimed to have been committed he was not “ordinarily resident in Australia” as alleged in the petition.

90    Relevantly, Mr Vassis was a solicitor practising as “BW Vassis and Associates” in Melbourne from 1 February 1976. While in practice he received, on behalf of clients, sums of money either for investment, to be applied to specific purposes or to be paid to clients. He also received and held title deeds on behalf of clients. Mr Vassis invested substantial sums of money on behalf of clients in a company called Bemva Credits Corporation Pty Ltd of which he was a director until 1981. Bemva became insolvent and from early 1981 to January 1983 Mr Vassis, without authority, used client funds to make unsecured deposits with Bemva so that it could make repayments and interest payments due to other clients. Mr Vassis also forged mortgages over clients’ properties, in respect of which he held the title deeds on their behalf, to raise money for the same or associated purposes.

91    On 22 December 1982 Mr Vassis closed his office for the Christmas/New Year period. It was due to reopen on 25 January 1983. According to his evidence he expected that as at the date of its reopening “there would be even more people asking for money”. On 7 January 1983 a client’s complaint led to a visit by the Law Institute of Victoria to Mr Vassis who also learnt that a receiver was about to be appointed. On 8 January 1983 Mr Vassis left Australia. Approximately two years later Mr Vassis returned to Australia having lived in hiding in the intervening period in Greece. He pleaded guilty to an indictment of 50 counts and was sentenced to a term of imprisonment of eight years.

92    When the creditor’s petition came before the Court for hearing one of the questions for consideration was whether, in the circumstances of the case, the Court had jurisdiction pursuant to s 43 of the Bankruptcy Act. The creditor’s petition alleged that Mr Vassis was, at the time the act of bankruptcy was committed, “ordinarily resident in Australia”, relying on s 43(1)(b)(i) of the Bankruptcy Act. Mr Vassis submitted that although he was ordinarily resident in Australia immediately before his departure on 8 January 1983, by 28 December 1983 when the six-month period before the presentation of the petition commenced to run, he could only be properly described as ordinarily resident in Greece. In resolving the question of jurisdiction at 524-525 Burchett J said:

The question where a person is ordinarily resident is a question of fact: Levene v Commissioners of Inland Revenue [1928] AC 217. It is obviously not to be answered, in respect of any particular time, by asking where that person was then resident. Otherwise, the word “ordinarily” would have no meaning. But even the unqualified concept of residence is not tied to the accidents of a day; for, as Viscount Sumner said in Commissioners of Inland Revenue v Lysaght [1928] AC 234 at 245: “One thinks of a man’s settled and usual place of abode as his residence.” At the same time, his Lordship pointed out that “in many cases in ordinary speech one residence at a time is the underlying assumption and, though a man may be the occupier of two houses, he is thought of as only resident in the one he lives in at the time in question”. In s 43 of the Bankruptcy Act, the phrase is not “resident in Australia”, but “ordinarily resident in Australia”, and it expresses an alternative to “personally present ... in Australia”. In such a context, it must convey the former of the meanings which I have quoted from Viscount Sumner’s speech rather than the latter. If a man’s home is in Australia, a merely temporary absence will not prevent his being “ordinarily resident in Australia”. It is a question of fact and degree at what point a temporary absence might, if sufficiently prolonged, prevent its being proper to continue to regard him as ordinarily resident in Australia. In Akbarali v Brent London Borough Council [1983] 2 AC 309 at 344, Lord Scarman said: “For if there be proved a regular, habitual mode of life in a particular place, the continuity of which has persisted despite temporary absences, ordinary residence is established provided only it is adopted voluntarily and for a settled purpose.”

93    Justice Burchett then considered whether Mr Vassis was ordinarily resident in Australia at the time he committed the act of bankruptcy. In doing so his Honour noted that Mr Vassis flew from Australia to Greece via New Zealand and upon leaving New Zealand completed a departing passenger card noting his nationality or citizenship as Australian, the reason for his journey as a holiday and the state and country in which he next intended to live for 12 months or more as Victoria, Australia. Mr Vassis gave evidence and his Honour observed that in doing so he “did not resile from the implications of the card” and “did not deny that his settled place of abode had at all times continued to be in Victoria”. His Honour also noted that Mr Vassis “admitted that he had signed the departing passenger card in January 1983, and said: ‘I just felt that I would be away for a short time and come back to Australia to live’” and “I intended to come back to Australia and Victoria… I just did not know where I was going to live, but Victoria for sure”. The evidence before the Court was that Mr Vassis stayed in Greece whilst overseas but that he did not intend to stay permanently, he had lived in Australia virtually all his life, though he was born in Greece, and his wife and son, who at the time was still at school, remained in Victoria.

94    Having regard to the evidence before him Burchett J concluded (at 525) “that Mr Vassis was ordinarily resident in Australia, both at the time that he departed, and throughout the period until his return two years later in February 1985, or at least until the crucial date, 28 December 1983, which was barely a year from his departure”. His Honour also noted that there was no suggestion that during Mr Vassis’ absence he established any other ordinary residence at any place in Greece.

95    Ms Bechara submits that Re Vassis is plainly wrong. In doing so she cavils with Burchett J’s finding of fact that the debtor in that case, Mr Vassis, was found on the facts to be ordinarily resident in Australia at the relevant time. That is, Ms Bechara does not, it seems, challenge the principles identified by Burchett J at 524-525 (see [92] above). Rather, she contends that his Honour was plainly wrong in his finding, based on the facts before him, that, despite his two-year absence from Australia, Mr Vassis was ordinarily resident in Australia. But, this is not an appeal from the orders made in Re Vassis by which a challenge could be made to a finding of fact made in that case based on the principles set out therein.

96    Putting that to one side, insofar as Burchett J identified the test for determining the question of whether a person is ordinarily resident, his Honour had regard to the text of s 43(1)(b)(i) of the Bankruptcy Act, and to a number of authorities. His Honour considered that the question of whether a person is ordinarily resident is a question of fact, that the concept of residence is not tied to the accidents of a day and that one thinks of a person’s “usual place of abode as [his or her] residence”. Ms Bechara does not explain why, in her view, those principles are inapt, let alone wrong. There is no basis upon which I would reach such a conclusion.

97    Re Vassis has been followed on a number of occasions.

98    In Alford Perry J considered whether the debtor in that case was ordinarily resident in Australia for the purposes of s 43(1)(b)(i) of the Bankruptcy Act. At [31]-[34] her Honour summarised the relevant principles. In particular, at [31]-[32] her Honour said:

31    First, as the creditor submitted, the terms “resident” and “ordinarily resident” are not defined in the Act and have no special or technical meaning for the purposes of the Act. Rather they bear their ordinary meaning: Re Taylor; Ex parte Natwest Australia Bank Ltd (1992) 37 FCR 194 (Re Taylor) at 197 and 198 (Lockhart J). Thus Lockhart J in Re Taylor held that:

The concept of “ordinary residence” for the purposes of the Act, in my opinion, connotes a place where in the ordinary course of a person’s life he regularly or customarily lives. There must be some element of permanence, to be contrasted with a place where he stays only casually or intermittently. The expression “ordinarily resident in” connotes some habit of life, and is to be contrasted with temporary or occasional residence: see Levene v Commissioners of Inland Revenue (1928) AC 217 at 232 and Commissioners of Inland Revenue v Lysaght (1928) AC 234 at 245. As Lord Warrington said in Levene at 232: “‘Ordinarily resident’ means according to the way a man’s life is actually ordered.” The concept of ordinarily resident cannot be stated in definite terms; each case must be determined on its facts and after taking into account all relevant matters: see the Canadian case of Thomson v Minister of National Revenue [1946] SCR 209 per Estey J at 231.

32    Secondly, it follows that whether a debtor is ordinarily resident in Australia is a question of fact and degree based upon the totality of the evidence: Re Brauch; Ex parte Britannic Securities & Investments Ltd [1978] Ch 316 (Re Brauch) at 330 and 334 (Goff LJ (Orr LJ at 335 and Buckley LJ relevantly agreeing)); Re Vassis; Ex parte Leung (1986) 9 FCR 518 (Re Vassis) at 525 (Burchett J); Re Taylor at 197 and 198. The question of where a person is “ordinarily resident” is not therefore tied to “the accidents of a day” as otherwise, the word “ordinarily” would have no work to do: Re Vassis at 524. Rather, as Lockhart J explained in Re Taylor at 198, “[t]o say that a person is ordinarily resident in Australia must mean something more than that he is resident in Australia. The word ‘ordinarily’ connotes a comparison, a measure of degree.”

99    In Compton v Ramsay the Full Court considered the meaning of the words “ordinarily resident in Australia” for the purposes of s 188(1)(a) of the Bankruptcy Act which, as I have already observed is in relevantly the same terms as s 43(1)(b)(i) of the Bankruptcy Act. That section provides that a debtor who desires that his or her affairs be dealt with under Pt 10 of the Bankruptcy Act without his or her estate being sequestrated and is, among other things, “personally present or ordinarily resident in Australia” may sign an authority in accordance with the approved form naming and authorising a registered trustee, a solicitor or the official trustee to call a meeting of the debtor’s creditors and to take control of the debtor’s property.

100    At [65]-[67], after recording the parties’ respective submissions as to whether Mr Compton was ordinarily resident in Australia at the time he signed a controlling trustee authority, the Full Court said:

65    The words “ordinarily resident in Australia” in s 188(1)(a) of the Bankruptcy Act bear their ordinary meaning as described (in the context of s 43 of the Act) by Lockhart J in Re Taylor, drawing on cases including Levene, Commissioners of Inland Revenue v Lysaght [1928] AC 234 and Akbarali (referred to in the judgment as R v Barnet London Borough Council; Ex parte Shah). As discussed by Lockhart J (at 197), whether a debtor is ordinarily resident in Australia is a question of fact and degree. Both for the purposes of s 43 and for s 188, the question whether the debtor is ordinarily resident in Australia is to be determined at a particular time. The expression conveys a person’s settled and usual place of abode (see Re Vassis at 524-525 per Burchett J; Re Taylor at 197-198). A person may have two places of residence and may be resident (or ordinarily resident) in each at the same time (Re Taylor at 198). As Lockhart J said in Re Taylor at 198 (in the passage quoted by the primary judge set out above), the concept of “ordinary residence” for the purposes of the Act “connotes a place where in the ordinary course of a person’s life he regularly or customarily lives”.

66    In Re Vassis, Burchett J said (at 525) that if a person’s home is in Australia, a merely temporary absence will not prevent his or her being “ordinarily resident in Australia”. His Honour continued that it is a question of fact and degree at what point a temporary absence might, if sufficiently prolonged, prevent its being proper to continue to regard him or her as ordinarily resident in Australia. Burchett J quoted with approval the following statement of Lord Scarman in Akbarali (at 344): “For if there be proved a regular, habitual mode of life in a particular place, the continuity of which has persisted despite temporary absences, ordinary residence is established provided only it is adopted voluntarily and for a settled purpose.”

67    Although Re Taylor and Re Vassis arose in the context of s 43 of the Bankruptcy Act, the approach taken is equally applicable in relation to s 188. The jurisdictional connections set out in s 188 are expressed in substantially the same terms as s 43 and there is no reason to think a different meaning was intended.

101    The approach taken by Burchett J in Re Vassis (and in subsequent cases) to the interpretation of the meaning of “ordinarily resident” in Australia has not been shown to be wrong. The principles set out have been adopted on numerous occasions since and I too would also readily apply them.

102    Given that conclusion and based on the concession made by Mr Martin on behalf of Ms Bechara, it is not necessary for me to consider the factual findings made by the primary judge which led him to conclude that Ms Bechara was at the time of the act of bankruptcy ordinarily resident in Australia.

103    Even if that concession had not been made, I am satisfied that there was no error by the primary judge. This was a somewhat unusual case. Ms Bechara did not rely on any evidence to challenge the statement in the creditor’s petition that she was “personally present or ordinarily resident in Australia” at the relevant time. Instead, she put Mr Bates to proof of the proposition for which he contended in the creditor’s petition. In determining whether that fact was established his Honour carefully considered the available evidence about where Ms Bechara viewed herself as living and working at the relevant time. This included evidence given by Mr Bates in cross-examination. It is not necessary for me to repeat that evidence here.

104    Ms Bechara complains of a gap in the evidence between February 2016 and September 2016. However, his Honour had evidence available to him as to Ms Bechara’s whereabouts until February 2016 and thereafter from September 2016 from which he could draw an inference that in April 2016 Ms Bechara was either personally present or at the least ordinarily resident in Australia. Further, as his Honour observed there was no evidence that Ms Bechara had been temporarily absent from Australia at any time and indeed there was evidence that from at least 2016 Ms Bechara had dedicated herself to the care of her mother who lived in Hunters Hill, New South Wales.

105    Ms Bechara has failed to make out her grounds of appeal by which she contends for a “cumulative” construction of s 43(1)(b) contrary to Re Mendonca and that Re Vassis is wrong and ought not to be followed.

Subsections 43(1)(b)(ii) and (iii) of the Bankruptcy Act – dwelling house and carrying on business

106    Given the proper construction of s 43(1)(b) of the Bankruptcy Act, that Ms Bechara has not succeeded in her challenge to Re Vassis and the concession made by Mr Martin recorded at [83] above, and that I am, in any event, satisfied that Ms Bechara has not established that the primary judge erred in finding that she was either personally present or ordinarily resident in Australia at the time she committed the act of bankruptcy, it is not necessary for me to consider whether the primary judge erred in finding that Mr Bates had also established the matters in subs 43(1)(b)(ii) and (iii) of the Bankruptcy Act, namely that she had a dwelling house or place of business in Australia and that she carried on business in Australia (at NOA [20]-[33], [36] and [39]).

Rules 4.04, 4.05 and 4.06 of the Bankruptcy Rules

107    The second category of error contended by Ms Bechara concerns Mr Bates’ non-compliance with aspects of the Bankruptcy Rules and the primary judge’s findings about the effect of that non-compliance.

108    The first basis upon which Ms Bechara contends the primary judge erred is in his Honour’s analysis of the evidence against the Bankruptcy Rules. Ms Bechara submits that: it was incumbent upon the registrar to approach the creditor’s petition by considering rr 4.04, 4.05 and 4.06 of the Bankruptcy Rules; the registrar should have commenced his enquiry with r 4.04 because the creditor’s petition was founded upon a failure to comply with a bankruptcy notice; no search of the type mandated by r 4.04(2) was in evidence; and at this point the Federal Circuit Court would have been justified to “stop the appellant’s review application and dismiss the [c]reditor’s [p]etition”.

109    That submission can be disposed of immediately. The primary judge found (at PJ1 [316]), based on the facts before him, that r 4.04(1)(a)(i) of the Bankruptcy Rules did not apply because Ms Bechara had made an application to set aside the bankruptcy notice. His Honour then correctly found that it followed that r 4.04(2) of the Bankruptcy Rules was not engaged because that rule (see [59] above) only applies where an affidavit required by r 4.04(1)(a) states the matters referred to in r 4.04(1)(a)(i). There was no error in the primary judge’s finding. Accordingly, insofar as Ms Bechara relies on non-compliance with r 4.04(2) as an aspect of her grounds of appeal (at NOA [42]), she cannot succeed.

110    Next, Ms Bechara submits that there were two other errors in the creditor’s petition which she contends the registrar missed. She says that had those matters been brought to the registrar’s attention, “undoubtedly” no sequestration order would have been made on 5 July 2016 and that, more fundamentally, these errors were not corrected in the evidence relied on by Mr Bates on 11 June 2021. The two errors identified by Ms Bechara were that: no search of the type mandated by r 4.04(1)(a) of the Bankruptcy Rules was served; and there is no evidence that a copy of 5 April 2016 Order was attached to the documents served with the creditor’s petition, as mandated by r 4.04(3), and served. Ms Bechara submits that these omissions cannot be cured by the adducing of any further evidence by the creditor at the hearing de novo. She does not explain why that is so.

111    Ms Bechara submits that the non-compliance with rr 4.04, 4.05 and 4.06 of the Bankruptcy Rules is a procedural error which causes her substantial injustice and that s 306(1) of the Bankruptcy Act was misapplied by the primary judge. She submits that s 306 is mainly directed at bankruptcy notices referring to Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71. Ms Bechara contends that the main document that misled her is that when the creditor’s petition was adjourned on 17 May 2016 no copy of the order giving notice to the debtor was attached to the notification that Mr Bates was obliged to give to her.

112    Ms Bechara submits that at the time of the hearing of the creditor’s petition on 5 July 2016 Mr Bates’ affidavits did not attach a copy of the 5 April 2016 Order which finally decided each of the applications referred to in r 4.04(1)(a)(ii) and r 4.04(1)(a)(iii) and was required by r 4.04(3) of the Bankruptcy Rules. Ms Bechara contends that the substantial injustice worked upon her by the omission in 2016 cannot be cured by patching up the evidence at the de novo hearing because the injustice has already occurred by the making of the sequestration order in 2016 and the only remedy for that injustice is to quash the sequestration order.

113    As to r 4.05 of the Bankruptcy Rules, Ms Bechara submits that the primary judge was in error to affirm the sequestration order based upon apparent compliance with the requirement of that rule over five years after the sequestration order was made. She contends that it is obviously a substantial injustice to her to have been made bankrupt and to have remained in that position for over five years, which condition persists today. She submits that it is an error to hold that the doing of an act in 2021, that would have invalidated the making of a sequestration order in 2016, somehow cures that problem. She submits that if it were the case that r 4.04(3) of the Bankruptcy Rules had been complied with, non-compliance with rr 4.04, 4.05 and 4.06 might be excused under s 306(1) of the Bankruptcy Act. However, she says that non-compliance at the time of the making of the sequestration order in 2016 is so prejudicial to her that the affirmation of a sequestration order in 2021 by “patching up” this evidence more than five years late is too significant a matter for this Court to overlook.

114    The primary judge’s findings in relation to non-compliance by Mr Bates with rr 4.04, 4.05 and 4.06 of the Bankruptcy Rules on 8 June 2016, at the time of the hearing before the registrar, are set out at [35]-[37] above. In summary his Honour found that Mr Bates had failed to comply with rr 4.04(1)(a)(ii) or (iii), 4.04(3), 4.05(c) and 4.06(2) of the Bankruptcy Rules. His Honour also observed that there was a material overlap between the rules with which there had been non-compliance in that they each concerned the failure to depose to matters related to the 5 April 2016 Order concerning the dismissal of Ms Bechara’s application to set aside the bankruptcy notice.

115    There is no challenge to those findings of the primary judge. Ms Bechara withdrew her grounds of appeal challenging the primary judge’s finding that the date of the adjourned hearing of the creditor’s petition had been inserted into the amended creditor’s petition and the amended creditor’s petition bearing the date and time of the adjourned hearing was served on Ms Bechara.

116    The primary judge also found (at PJ1 [321]) that before the completion of the de novo hearing, Mr Bates had put into evidence and served on Ms Bechara, by his affidavit made on 13 May 2021, a copy of the 5 April 2016 Order.

117    Ms Bechara’s grounds of appeal concern the way in which the primary judge treated the non-compliance by Mr Bates with those rules. The primary judge found (at PJ2 [43]) that the failures to comply with the identified rules were “irregularities arising in the proceeding” i.e., procedural irregularities. His Honour found (at PJ2 [48]), having regard to the purpose of the rules under consideration, that compliance with them was not made essential in all cases such that a failure to comply with them would necessarily invalidate the proceeding. At PJ2 [51] the primary judge said:

To adapt the reasoning in Kleinwort Benson, a formal defect or irregularity automatically attracts the operation of s 306(1) unless the court is of the opinion that substantial injustice has been caused by the defect or irregularity and that injustice cannot be remedied by an order of the court. Absent evidence or any submission identifying any actual injustice, there is no basis upon which an opinion could be formed to deny the operation of s 306(1). Despite the several opportunities afforded to her to do so, Ms Bechara made a forensic choice not to file any evidence. A consequence of that decision is that she has denied herself an opportunity to provide evidence of injustice. Viewed objectively, the procedural history, including the stated entitlement to keep her ‘powder dry’ supports an available inference that from at least March 2021, Ms Bechara intended to advance as a ground for opposing the petition that there had been non-compliance with the rules. I am fortified in that conclusion by Mr Martin’s opening statement that he had nothing further to say in relation to the rules “at that time”. In those circumstances, not having filed a notice of intended grounds of opposition, or affidavit in support, or any opening submission identifying the third and ‘principal’ ground of opposition (or to have addressed the issue in any way, including during cross examination, until closing address), I was not satisfied by the debtor of any substantial injustice in this case flowing from the failure to comply with the subject rules. For that reason, there is no foundation for an opinion that the failure to comply with those rules has caused any, or any substantial, injustice to Ms Bechara. Accordingly, it is unnecessary to identify whether any order would be necessary to remedy such injustice. Upon that reasoning, s 306(1) takes effect and saves the petition from invalidity which could otherwise arise from those procedural irregularities.

118    Further, as set out at [46] above, the primary judge did not accept that there had been any injustice occasioned by non-compliance with the rules because of the failure to inform Ms Bechara by affidavit that her application to dismiss the bankruptcy notice had been dismissed on 5 April 2016 or to exhibit a copy of the 5 April 2016 Order. The primary judge went on to observe that in any event a copy of the order was exhibited to an affidavit during the de novo hearing.

119    Before turning to s 306(1) of the Bankruptcy Act it is necessary to address Ms Bechara’s submission that the irregularities cannot be cured by the adducing of any further evidence by the creditor at the de novo hearing. The nature of delegated judicial power and a de novo review was considered in Robson v Body Corporate for Sanderling at Kings Beach CTS 2942 (2021) 286 FCR 494. At [63] Colvin J (with whom Allsop CJ, Markovic, Derrington and Anastasiou JJ agreed on this issue) said:

Further, the de novo review is not to be seen as directed to a consideration of the correctness of the delegate's decision or redressing error by the delegate. On review, the Court hears the case again unaffected by what has gone before. However, the Court does not act as if there is a new appellate proceeding. The review task it undertakes is a determination again of an application that has already been listed for hearing and proceeds in the same manner that would be the case if the power had not been delegated. In consequence, on review, the Court can entertain new arguments, receive new evidence or adjourn the proceeding but only to the extent, and in the circumstances where, it would do so in a matter that had already been set down for determination. Further, the applicant on review is the applicant on the application irrespective of whether the applicant was successful before the delegate. The same onus arises as if the application was being heard for the first time. This has particular significance for the review of a sequestration order. The review is initiated by the debtor (now bankrupt by the order to be reviewed), but proceeds as an application by the creditor on its petition.

    (Emphasis added.)

120    There is no basis on which to suggest that on a hearing de novo, consequent on a review of delegated power, a judge cannot receive further evidence including evidence that may be tendered in order to meet an argument that there has been a failure to comply with prescribed rules of court or a formal defect or irregularity.

121    Section 306(1) of the Bankruptcy Act provides:

Proceedings under this Act are not invalidated by a formal defect or an irregularity, unless the court before which the objection on that ground is made is of opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by an order of that court.

122    In Kleinwort Benson a majority of the High Court (Mason CJ, Wilson, Brennan and Gaudron JJ) held at 80, in the context of considering a bankruptcy notice, that a defect will be substantive rather than formal if it “is objectively capable of misleading the debtor as to what is necessary for compliance with the notice”. At 81 their Honours said:

Section 306(1) operates automatically unless “the court ... is of opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by an order of that court”. In the present case no evidence was presented and no claim was made of actual injustice. There was thus no basis upon which an opinion could be formed to deny the operation of s. 306(1).

123    In Adams v Lambert (2006) 228 CLR 409, again in the context of a bankruptcy notice, the High Court (Gleeson CJ, Gummow, Kirby, Hayne, Callinan, Heydon and Crennan JJ) considered the construction of s 306(1) of the Bankruptcy Act. At [26]-[29] the Court relevantly said:

26    The question of construction raised by the words “a formal defect or an irregularity” is one to be decided by reading s 306 in the context of the whole Act, informed by the general purpose of the legislation, and the particular purpose of the provisions relating to bankruptcy notices. It is similar to the question that, in former times, would be explained by asking whether a statutory requirement was mandatory or directory. In Project Blue Sky Inc v Australian Broadcasting Authority it was said: “A better test ... is to ask whether it was a purpose of the legislation that an act done in breach of [a] provision should be invalid ... In determining the question of purpose, regard must be had to ‘the language of the relevant provision and the scope and object of the whole statute’”.

27    If, as in the present case, what is in question is an error in the form of a misdescription of a statutory provision, then a consideration of the general purpose of the Act, and the particular purpose of the legislative scheme relating to bankruptcy notices, leads readily to a conclusion that if the error could reasonably mislead a debtor as to what is necessary to comply with the notice it is not merely a formal defect or irregularity. Any error is capable of misleading somebody about something. ... What this Court regarded as relevant to s 306, however, was misleading a debtor about what is necessary to comply with the notice. That kind of misleading, the Court said, takes an error outside the concept of a formal defect or irregularity. However, that is not the full extent of the exclusion.

28    The other exclusionary aspect of the expression “a formal defect or an irregularity” in s 306 was said to consist in a failure to meet a requirement made essential by the Act. Here again, the word “essential”, in its application in a particular case, involves a conclusion. If a requirement is made essential by the Act, then a failure to meet that requirement is not a formal defect or an irregularity within the meaning of s 306. Whether a requirement is made essential is to be decided by a process of statutory construction undertaken in the manner described above. The majority in Lewis regarded the error in that case as involving a failure to meet a requirement made essential by the Act.

29    To describe an error or a deficiency in a bankruptcy notice as involving a failure to meet a requirement made essential by the Act is to state a conclusion reached after a consideration of the legislative purpose and an evaluation of the significance or importance of the error or deficiency in the circumstances of the case. That question is not answered by observing that there has been a failure to meet a requirement. In this respect, the majority in Lewis placed undue emphasis on the imperative terms of the Act and Regulations. If there were no failure to meet a requirement, there would be no defect or irregularity. Furthermore, as noted earlier, the fact that the requirement is expressed by the use of the term “must” is not conclusive. How otherwise might a requirement as to form be expressed?

    (Footnotes omitted.)

124    In her written submissions the only challenge made to the primary judge’s finding that the defects he identified were procedural irregularities were, as recorded at [111] above, that the main document that misled her was the omission of a copy of the order giving notice to the debtor when the creditor’s petition was adjourned on 17 May 2016 from the notification that Mr Bates was obliged to give to her. That submission is confused. The primary judge found (at PJ1 [303]-[317]) that:

(1)    the creditor’s petition was listed before a registrar in the Federal Circuit Court on 13 May 2016 at which time orders were made including an order relisting the creditor’s petition at 2.00 pm on 8 June 2016, a direction that Mr Bates lodge an amended petition with the “Registry to amend the hearing date required by order 1” and orders for substituted service on Ms Bechara by four different methods;

(2)    the amended petition was lodged electronically with the Federal Circuit Court on 17 May 2016;

(3)    by an affidavit made on 7 June 2016, a clerk in the employ of Mr Bates’ solicitors deposed to effecting substituted service on Ms Bechara on 18 May 2016. The copy of the amended creditor’s petition annexed to the clerk’s affidavit had been completed with the time, date and place of the hearing of the petition; and

(4)    the amended creditor’s petition, completed by the Federal Circuit Court’s Registry with the time and date of the hearing, was served on Ms Bechara.

125    Two matters are evident from the above summary of the primary judge’s findings: first, the creditor’s petition was not adjourned on 17 May 2016. It was before the court on 13 May 2016 at which time it was adjourned to 8 June 2016; and secondly, the copy of the amended creditor’s petition served on Ms Bechara bore the date and time of the adjourned hearing. There was no omission of a copy of any order giving notice to Ms Bechara that Mr Bates was allegedly obliged to give her. In any event, the submission was overtaken by events given that Ms Bechara withdrew her grounds of appeal challenging the primary judge’s findings that the date of the adjourned hearing of the creditor’s petition had been inserted into the amended creditor’s petition and the amended creditor’s petition bearing the date and time of the adjourned hearing was served on Ms Bechara (see [115] above).

126    There are two remaining challenges to the primary judge’s findings in relation to the application of s 306(1) of the Bankruptcy Act. First, in her oral submissions Ms Bechara contends, contrary to the findings at PJ2 [47] and [49], that the non-compliance with the rules identified by the primary judge was substantive. Secondly, Ms Bechara challenges the primary judge’s finding that there was no substantial injustice caused by the procedural irregularities as found.

127    At PJ2 [47] the primary judge observed that having regard to the “restraints imposed by s 52(1) of the [Bankruptcy] Act” on the discretionary power to make a sequestration order and the approach to be taken to the construction of a provision that confers power on a court, he could not see why “a purpose of the [Bankruptcy] Act or Bankruptcy Rules is that the act of proceeding upon the hearing of a creditor’s petition where rr 4.04, 4.05 and 4.06 have not been complied with should necessarily invalidate a petition in all cases”. His Honour explained why that was so at PJ2 [48].

128    At PJ2 [49] the primary judge held that the procedural omissions upon which Ms Bechara relies are not substantive. His Honour went on to explain (at PJ2 [50]) that the non-compliance with the Bankruptcy Rules did not go to jurisdiction and did not provide any basis for a conclusion that Ms Bechara had satisfied the court of any, or any substantial, injustice that might invalidate the proceeding or be capable of being ameliorated by making an order under s 306(1) of the Bankruptcy Act.

129    His Honour reached those conclusions applying the analysis in de Robillard. In that case, among other things, the appellant, Mr de Robillard, challenged the sequestration order made against his estate on the basis of non-compliance with rr 4.02(3), 4.04(1) and 4.05 of the Bankruptcy Rules because, as described by Buchanan J at [90] (with whom Moore and Conti JJ agreed), there was no affidavit of service of the bankruptcy notice accompanying the creditor’s petition when presented, and there was no affidavit of service of the bankruptcy notice served five days before the day fixed for hearing. At [92] Buchanan J, after noting that the appellant’s contentions appeared to be factually correct, held that they did not go to the Court’s jurisdiction and did not provide any basis upon which to decide the appeal in the appellant’s favour. At [93]-[94] his Honour explained:

93    As the primary judge pointed out, the jurisdiction of the Court to make the sequestration order is granted by s 43 of the Bankruptcy Act. The Court must be satisfied that an act of bankruptcy has been committed in order to make an order of sequestration. Furthermore, s 52 of the Bankruptcy Act requires proof of certain matters “at the hearing of a creditor’s petition”, including that ‘the debt or debts on which the petitioning creditor relies is or are still owing’.

94    When the matter came before the primary judge proof of the matters required by s 52 of the Act was an evidentiary issue. The jurisdiction of the Court is not fixed in time in the way suggested, nor is it to be measured simply by the adequacy of one party’s initial documents (see Daly v Watson (1994) 50 FCR 544 at 552-3; Bryant v Commonwealth Bank of Australia (unreported, Federal Court of Australia, Beaumont, Whitlam, Moore JJ, NG223/1995, 24 November 1995) at 12-13. As was said in MacDonald 107 FCR 72 at [31] in relation to a similar argument:

A sequestration order can still be made, at the discretion of the Court, if the necessary evidence is before the Court at that stage even though no affidavit verifying the petition was filed with it.

130    Ms Bechara did not develop any argument as to why the non-compliances with the Bankruptcy Rules as found by the primary judge were “substantive” and would invalidate a creditor’s petition. Putting that failure to one side, there is no error in the primary judge’s approach or his Honour’s conclusion. As Buchanan J explained in de Robillard the Court’s jurisdiction to make a sequestration order is found in s 43 of the Bankruptcy Act and, if it is satisfied of its jurisdiction, the Court must then concern itself with proof of the matters in s 52(1) of the Bankruptcy Act before proceeding. Rules 4.04, 4.05 and 4.06 of the Bankruptcy Rules are not concerned with matters of which the Court must be satisfied under s 52(1) of the Bankruptcy Act. The rules with which there was non-compliance as found by the primary judge (and not disputed by Ms Bechara) concerned a failure on the part of Mr Bates to depose to matters related to the 5 April 2016 Order.

131    The primary judge considered the matters prescribed by s 52(1) of the Bankruptcy Act and was satisfied of proof of each of those matters, noting that there was no reference in s 52(1) to the Bankruptcy Rules: at PJ1 [272]-[276]. The primary judge then had a discretion to make a sequestration order and could do so notwithstanding non-compliance with those aspects of the Bankruptcy Rules which his Honour had identified.

132    The final question to address in relation to this aspect of Ms Bechara’s appeal is whether the primary judge erred in finding that there was no substantial injustice caused by the procedural irregularities as found. This challenge concerns the primary judge’s application of s 306(1) of the Bankruptcy Act. That is, having found that the non-compliances with rr 4.04, 4.05 and 4.06 of the Bankruptcy Rules were procedural irregularities not of a substantive kind, the primary judge held that s 306(1) of the Bankruptcy Act operated automatically to save the creditor’s petition from invalidity: at PJ2 [16]. At PJ2 [51]-[54] the primary judge found that he was not satisfied of any injustice flowing from the failure to comply with the Bankruptcy Rules as found and thus it would be unnecessary to remedy any such injustice. In making that finding the primary judge noted that Ms Bechara had made a forensic decision not to file any evidence for the purposes of the de novo hearing which meant that she had “denied herself an opportunity to provide evidence of injustice”.

133    The primary judge found that the non-compliances had no potential to mislead and that there could be no possible prejudice to Ms Bechara who had been represented at and knew of the dismissal of her application to set aside the bankruptcy notice. There is no error alleged in those findings.

134    Before me Ms Bechara pointed to no evidence of any injustice suffered by reason of the non-compliance with rr 4.04, 4.05 and 4.06 of the Bankruptcy Rules. Rather, Ms Bechara submits that the substantial injustice she suffered was that the sequestration order has been in place since 2016. Ms Bechara seems to contend that the non-compliance at the time of making the sequestration order in 2016 is so prejudicial to her that the affirmation of a sequestration order in “in 2021, by ‘patching up’ this evidence more than 5 years late, is too significant to have overlooked and leave remedied”. I have addressed the nature of a de novo hearing and the primary judge’s ability to receive further evidence at [119]-[120] above.

135    Insofar as Ms Bechara’s submissions seem to suggest that the sequestration order would never have been made by the registrar in 2016 had the non-compliances with the Bankruptcy Rules been identified at that time, I note the following matters.

136    First, it is impossible to speculate what might have occurred had either the court or Ms Bechara raised the non-compliances at the time. The registrar may have adjourned the proceeding to allow Mr Bates to file further evidence and to comply with the relevant rules or may have excused compliance with some or all of the rules in question pursuant to r 1.06 of the Federal Circuit Court Rules 2001 (Cth).

137    Secondly, in any event, given the nature of a review of a registrar’s decision and the role of a de novo hearing, it matters not what occurred before the registrar. Despite an order having been made by a registrar pursuant to a delegated power, the review proceeds as a hearing de novo in which the matter is considered afresh “on the evidence and law at the time of the review, that is at the time of the hearing de novo”: see Bechara (FCAFC) at [17]. Thus, while the registrar’s order subsists subject to the review, the Court hearing the review hears the matter afresh. It is for that reason that there is an imperative to carry out the review in a timely fashion.

138    The facts of this case are regrettable given that some significant time passed for the reasons explained in Bechara (FCAFC) until Ms Bechara in fact had her de novo hearing before the primary judge. But that does not make the existence of the sequestration order pending the review a matter which has caused Ms Bechara “substantial injustice”.

139    Thirdly, the substantial injustice must be caused by the defect or irregularity. In circumstances where the irregularities centred around notification of dismissal of Ms Bechara’s application to set aside the Bankruptcy Notice, a matter of which she was aware, it is, as the primary judge found to be the case, not possible to conclude that the irregularities in question could cause Ms Bechara “substantial injustice”.

140    Finally, as to the question of substantial injustice, Ms Bechara submits that at the time of the de novo hearing the Federal Circuit Court was prohibited from confirming or making a sequestration order in relation to the first two judgments on which the bankruptcy notice was based because of the operation of s 41(3)(c)(i) of the Bankruptcy Act. This is because those judgments are dated 20 March 2015 and 2 April 2015 and are therefore more than six years old. This submission is misconceived and misunderstands the operation of s 41(3)(c)(i), the nature of a hearing de novo and its effect on the orders made by a registrar.

141    Section 41 concerns the issue of a bankruptcy notice and relevantly provides that a bankruptcy notice shall not be issued in relation to a debtor in respect of a judgment or order for payment of money if a period of more than six years has elapsed since the judgment was given or the order was made. There was no dispute that at the time the bankruptcy notice was issued, the judgments upon which it was based were less than six years old.

142    In Bechara (FCAFC) at [7] the Full Court said:

If an order is made by a registrar in the exercise of delegated judicial power and there is a review that results in a different conclusion by a judge to that reached by the registrar then an order is required to bring the operation of the existing order to an end. The Court, on review, does not determine that the earlier order was made without authority. Rather, by way of oversight, it makes a new order to replace the registrar’s order and does so in the exercise of the power of review which is a condition of the delegation. The fact that the nature of the review conducted by the Court is a de novo review does not mean that the review proceeds as if no order had been made by the registrar or that the Court, if persuaded to make a different decision, makes orders as if there had been no order by the registrar.

(Emphasis added.)

143    That is, at the time of the de novo hearing the order of the registrar remains in effect subject to a review and, if there is a review, until such time as an order is made to bring the existing order to an end. There can be no suggestion that, upon the sequestration order being affirmed, Ms Bechara should “only have gone bankrupt regarding” the third judgment the subject of the bankruptcy notice.

144    The grounds of appeal concerning rr 4.04, 4.05 and 4.06 of the Bankruptcy Rules, at [42]-[58] of the NOA, are not made out.

Rules 2.04 and 2.06 of the Bankruptcy Rules

145    The final category of challenge to the primary judge’s orders concerns the primary judge’s finding that r 2.04 and r 2.06 of the Bankruptcy Rules apply on a review application. Those rules, set out at [56] above, concern the filing of a notice of appearance and notice of grounds of opposition by a person intending to oppose, relevantly, a creditor’s petition.

146    Ms Bechara submits that there is no obligation upon the debtor to comply with r 2.04 and r 2.06 of the Bankruptcy Rules at a review application and that the primary judge erred at PJ1 [3]-[107]. However, she also submits that nothing seems to eventuate from the error “except that the fervour of the court’s condemnation might be thought to have infected the court’s thinking on discretionary matters, such as the wrongful exercise of s 306(1) and regarding the costs judgment”.

147    In oral submissions Mr Martin confirmed, when pressed, that Ms Bechara does not allege bias on the part of the primary judge. Rather, she contends that his Honour was “emphatic” in his rulings against her when it came to considering discretionary matters. Mr Martin also submits that Ms Bechara did put the court on notice of the third basis on which she opposed the making of a sequestration order, the failure to comply with aspects of the Bankruptcy Rules. In support of that submission Mr Martin provided copies of his written submissions dated 8 and 11 June 2021 to the Court. Rather than providing a basis for the submission that Mr Bates was on notice of her ground of opposition those submissions, which bear the dates of the second and third days of hearing before the primary judge, bear out the primary judge’s expressed concern that the ground was raised at the last minute in closing submissions.

148    Ms Bechara’s interim application dated 25 July 2016 sought dismissal of the creditor’s petition pursuant to s 52(2)(b) of the Bankruptcy Act without any particularisation. The primary judge observed that of the three bases which Ms Bechara contended constituted “other sufficient reasons” not to make a sequestration order: the first, concerning service of the bankruptcy notice and creditor’s petition was abandoned; the second, concerning jurisdiction was put in issue during cross-examination of Mr Bates but was otherwise raised without notice; and the third, the alleged failure to comply with aspects of the Bankruptcy Rules, was raised in closing address: at PJ1 [10].

149    The primary judge then made some further “preliminary observations” in relation to the conduct of the review hearing. At PJ1 [15] his Honour said that save for the protracted procedural history of the proceeding he would have otherwise refused to consider the three bases advanced by Ms Bechara in seeking to oppose the making of a sequestration order. That is, despite the failure to comply with the procedures in the Bankruptcy Rules to notify grounds of opposition prior to a hearing, the primary judge considered the bases upon which Ms Bechara opposed the making of a sequestration order for the purposes of s 52(2) of the Bankruptcy Act.

150    At PJ1 [30]-[107] the primary judge considered Ms Bechara’s submissions that she was not obliged to comply with r 2.04 and r 2.06 of the Bankruptcy Rules and concluded that he could not accept those submissions. While Ms Bechara disagrees with this conclusion, she does not say how his Honour erred and, in effect, submits that even if his Honour did err, nothing eventuates from that error. Having regard to his Honour’s reasoning I am not satisfied that there was any error in the conclusion that on a hearing de novo r 2.04 and r 2.06 of the Bankruptcy Rules apply equally as they did at the initial hearing before the registrar. Of course a party may seek to be excused from compliance with those rules and any others that may apply. But there is nothing in the text of the Bankruptcy Act or the Bankruptcy Rules to suggest those rules do not apply equally. Given the nature of a hearing de novo, where the court hears the matter afresh based on the law and evidence as they stand at the time of that hearing, it follows that there ought to be compliance with the rules by all parties and, in any event, there is no place in the proper and efficient administration of justice for a party to raise arguments without proper notice.

151    There is also nothing to suggest that the primary judge’s “condemnation” for non-compliance with r 2.04 and r 2.06 of the Bankruptcy Rules infected his Honour’s exercise of discretion. Ms Bechara does not allege bias on the part of the primary judge but another specie of “infection” of his Honour’s consideration. I do not understand the basis for the criticism or how it is said his Honour erred in the exercise of his discretion. Certainly, his Honour returned to Ms Bechara’s failure to put Mr Bates and the court on notice of her grounds of opposition until late in the piece at a number of points in his Honour’s reasons. It seems that Ms Bechara’s conduct of her opposition to the making of a sequestration order extended the time required for hearing and led to several adjournments. All this the primary judge found to be contrary to the requirement to conduct the review as efficiently and expeditiously as possible. His Honour also referred to at least one authority where a debtor did not put the creditor on notice of a ground of opposition, raising it only in his closing submissions and the Court refused to permit that ground to be argued: at PJ2 [22] and [40] referring to Carver v de Robillard [2006] FCA 1041 at [44]-[45] (Lindgren J). But his Honour did not take that course. His Honour addressed each of Ms Bechara’s grounds of opposition, despite the time at which they were raised.

152    I am not satisfied that the primary judge’s finding that a debtor is required to comply with r 2.04 and r 2.06 of the Bankruptcy Rules for the purpose of a hearing de novo was in error. Nor am I satisfied that Ms Bechara has established that “the fervour of the court’s condemnation might be thought to have infected the court’s thinking on discretionary matters, such as the wrongful exercise of s 306(1) [of the Bankruptcy Act] and regarding the costs judgment”. I am not satisfied that the primary judge either condemned the conduct with any fervour as alleged or at all. His Honour disapproved of the conduct in terms that were firm, as he was entitled to do.

153    Finally, to the extent that Ms Bechara alleges that any such conduct infected the costs judgment I note that there is no ground of appeal otherwise levelled at that judgment and Ms Bechara accepts that, if she is unsuccessful in her appeal, it should stand. Similarly, Mr Bates agreed that if Ms Bechara is successful in her appeal the orders made for payment of his costs would be set aside.

154    Ms Bechara has failed to make out [59]-[64] of the NOA.

CONCLUSION

155    Ms Bechara has not made out any of her grounds of appeal. The NOA should be dismissed.

156    The parties agreed that costs would follow the event. Accordingly, Ms Bechara should pay Mr Bates’ costs of the appeal. Those costs should be paid out of Ms Bechara’s bankrupt estate with the same priority accorded by s 109(1) of the Bankruptcy Act.

157    Mr Bates informed the Court that, in the event he was successful, he would seek payment of his costs in a lump sum. I will make orders to permit Mr Bates to make any such application within a fixed period of time. If the parties can agree that costs should be quantified in a lump sum and on the quantum of the lump sum they can submit proposed orders to me to be made in Chambers. If the parties cannot agree on either or both of those matters, Ms Bechara is to file and serve any evidence and short submissions in reply. Unless a party requests an oral hearing, I will determine the questions of whether costs should be quantified in a lump sum and, if they should, quantification of those costs on the papers.

158    I will make orders accordingly.

Associate:

Dated:    11 December 2023