Federal Court of Australia

Sandhu v Owen [2025] FCA 566

ORDERS

THE COURT ORDERS THAT:

1.    The time for compliance with paragraph 3 of the orders made on 31 March 2025 (requiring Mr Owen to file and serve any further affidavits in response) is extended to 4.00 pm AWST on 16 May 2025.

2.    Any affidavit filed pursuant to paragraph 1 above may include evidence relevant to the question of any stay of the sequestration order made on 14 January 2025.

3.    The interlocutory application for a stay of the sequestration order made on 14 January 2025 is adjourned to 10.15 am AWST on 20 May 2025.

4.    Costs reserved.

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

REASONS FOR JUDGMENT

(edited from the transcript)

JACKSON J

1    Before the Court today on short notice is an application by the respondent, Mr Owen, to renew an interlocutory application for the stay of proceedings under the sequestration order which is the subject of this proceeding. Mr Owen initially made that interlocutory application at the time of applying for a review of the making of the sequestration order by a Registrar of this Court. He also sought an extension of time for the filing of a further affidavit in response, which he has been ordered to file before the hearing of the review application listed for Tuesday, 20 May 2025 (the review is proceeding as a hearing de novo prosecuted by the applicant).

2    The basis of Mr Owen's application for a stay of proceedings under the sequestration order is to be found in his affidavit affirmed on 7 May 2025. However, Mr Owen had indicated that his proposed further affidavit may include more material which he says is relevant to any ongoing stay application.

3    As has already been discussed with the parties, I propose to give Mr Owen an extension of time for the filing of the further affidavit to Friday 16 May 2025, with liberty to include in it material relevant to his application for a stay. I also propose to adjourn the application for a stay to be heard at the same time as the review application on 20 May 2025. I acknowledge that there may be matters contained in the responsive affidavit where the trustee and, conceivably, the applicant Mr Sandhu, may wish to put on evidence in response. If that is so, that will be case managed in an appropriate way at the review application hearing on 20 May 2025. It is conceivable that I will reserve my decision on the review application, meaning that there may be utility in a further stay. But those matters can be considered and dealt with appropriately at the review application hearing.

4    Mr Owen presses for an interim stay of proceedings under the sequestration order, to take effect today. He does so on two bases which he draws from his affidavit of 7 May 2025: first, a letter dated 17 April 2025 from his trustee in bankruptcy to a solicitor acting for another party in certain Wardens Court proceedings; and second, some screenshots of messages Mr Owen has exchanged with Telstra.

5    The relevance of the first of those matters, namely the letter of 17 April 2025, is that the trustee gave an undertaking to the Court on 2 April 2025 not to dispose of the assets of the bankrupt estate. Before that undertaking was given to the Court, the trustee had written to the Wardens Court on 19 February 2025 indicating that, under s 60 of the Bankruptcy Act 1966 (Cth), she abandoned three nominated proceedings which Mr Owen had been prosecuting in that court at the time of the sequestration order.

6    While the precise facts are not abundantly clear, it appears that at a subsequent Wardens Court hearing, the Warden indicated scepticism about the power of the trustee in bankruptcy to abandon proceedings of that kind, or at least some of the proceedings in front of him, and directed that a question about that be put to the trustee.

7    The question was put by a solicitor acting for another party in the proceedings, to which the trustee responded in the letter dated 17 April 2025:

As set out in the Orders, the Warden has requested a response to the following question:

'Has the position of the Trustee in Bankruptcy of Mr Owen in respect of the matters referred to in the letter from the Trustee in Bankruptcy of Mr Owen dated 19 February 2025, altered?'

My response is as follows:

•    As set out in my letter of 19 February 2025, I advised that that pursuant to section 60 of the Bankruptcy Act 1966 ('the Act'), I wish to abandon the above proceedings, in my capacity as Trustee of the Bankrupt Estate.

•    I note the Warden's subsequent comments that the abandonment provisions in the Act may not apply in these circumstances and have taken on board his comments.

•    Whilst the exploration licences, the subject of the objections, are not at this stage assets of the Bankrupt Estate, if the Bankrupt's application is successful, the exploration licences may then vest in the bankruptcy trustee pursuant to section 58 of the Act and be available to the creditors of the Bankrupt Estate.

•    At this stage of the bankruptcy, I am currently without funds and therefore will not appear at the hearing. However, I will abide by the Warden's decision.

8    Mr Owen submits that the first bullet point in that response reiterates the trustee's abandonment of the proceedings, and so is a breach of the undertaking not to dispose of assets that was given to this Court on 2 April 2025.

9    However, having read the letter as whole, and while it is appropriate to leave the question open, I will say at present that I am not persuaded that it is established that the trustee, in sending the letter of 17 April 2025, has breached the undertaking to the Court. That is a serious allegation which would need to be made out on distinct evidence. While I understand why Mr Owen may read that first bullet point that way, it can also be read simply as a factual reference to the content of the letter of 19 February 2025.

10    Importantly, the second bullet point indicates that the trustee notes the Warden's comments that the abandonment provisions in the Bankruptcy Act may not apply in these circumstances, and says that the trustee has taken on board the Warden's comments. While that could have been expressed with greater clarity, it nevertheless appears to indicate assent to the proposition which I am told the Warden had expressed, which is that the trustee's purported abandonment of the proceedings may not be effective.

11    I also note that the third bullet point (which, again, could be expressed more clearly and categorically) is capable of being read as a statement by the trustee in bankruptcy that if the Wardens Court proceedings result in the identification or recovery of an asset of the bankrupt estate, the trustee may be willing to accept that asset and, if possible, to realise it for the benefit of creditors.

12    So reading the letter as a whole, it has not been established, for the purposes of what must necessarily be a preliminary conclusion based on incomplete evidence, that the letter constitutes a breach of the trustee's undertaking to this Court not to dispose of assets.

13    Turning to the screenshots of messages with Telstra, in broad terms it appears that Mr Owen's Telstra service was blocked, and he made efforts to communicating with Telstra customer service to have the service reinstated, and find out why it had been blocked. There are two potentially relevant messages from Telstra in evidence. The first says:

Upon reviewing your account, I see that you raised a request regarding a bankruptcy issue. For safety reasons, your service was suspended. However, I can confirm that your service has now been resumed and is currently showing as active.

14    The second is a message from Telstra customer service saying:

After fixing the issue, will be working Bankrupt display on the account.

And service resumed and it should be working.

15    There are also several screenshotted messages in evidence, many of which appear to be automatically generated, indicating that the email address registered in respect of the account is an email address with a name commencing with the letters 'PE' and ending '@teamtelstra.com', which Mr Owen says is not his email address.

16    Mr Owen alleges that the reference to the 'bankruptcy issue', the blocking of the account, and the apparent change in the email address, means that these things could only have been done by his trustee in bankruptcy, because they are the only party who has had access to his Telstra account.

17    But in truth, the messages from Telstra are entirely ambiguous. I am not persuaded that the evidence is sufficient to establish the serious allegation Mr Owen seems to make, that the trustee in bankruptcy would effectively appropriate the account for the purpose of blocking it. That is especially so when, as Mr Owen points out, it is a prepaid account, and there is simply no prejudice to anybody for him to maintain the account. Indeed, one would think it would be helpful to everybody involved if the account is maintained.

18    Again, that is a preliminary view, necessarily reached on the basis of incomplete evidence. Mr Owen intends to put on further evidence surrounding the alleged intentions of the trustee in bankruptcy, and the applicant, in his affidavit to be provided next week. However, as has been said, the messages are ambiguous, and I do not presently draw the serious conclusion that Mr Owen urges me to draw.

19    In addition, Mr Owen has confirmed that his telephone service is presently working, and so it would appear that there is no immediate need to ensure that it is not blocked again, especially in view of the relatively short time until the hearing of the review application and any further hearing of Mr Owen's application for a stay.

20    I note for completeness that Mr Owen also showed the Court some screenshots from his iPhone which he alleged indicated that the location of his address shown with Telstra had been changed, and that somebody was tracking his telephone. As Mr Owen himself said, he did not have time to provide proper evidence of those things. On the basis of what the Court has seen, it is simply impossible to reach any conclusion as to why his iPhone was showing those things, and I cannot take it further today.

21    For those reasons, I do not propose to issue any stay of proceedings under the sequestration order today but, as I have said, there will be liberty for Mr Owen to renew an application for that stay at the hearing on 20 May 2025, on the basis of the affidavit evidence that he proposes to file next week.

Associate:

Dated:    30 May 2025