Federal Court of Australia

Paule v Kambouris (No 3) [2025] FCA 648

ORDERS

THE COURT ORDERS THAT:

1.    The respective interim applications in these proceedings (NSD 403 of 2025 and NSD 404 of 2025) filed on 5 May 2025 pursuant to s 35A(5) of the Federal Court Act 1976 (Cth) and rule 2.02(3) of the Federal Court (Bankruptcy) Rules 2016 (Cth) seeking to review the orders of Judicial Registrar Birchall made on 5 May 2025, and also seeking extensions of time under s 41(6A) of the Bankruptcy Act 1966 (Cth) to comply with the Bankruptcy Notices (BN276550 and BN276549), be dismissed.

2.    The applicant pay the respondents’ costs of the respective applications to be agreed or assessed.

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

REASONS FOR JUDGMENT

STELLIOS J:

Introduction

1    In these proceedings, the applicant seeks to review the orders made by Judicial Registrar Birchall on 5 May 2025 dismissing an application in each proceeding made pursuant to s 41(6A) of the Bankruptcy Act 1966 (Cth) for an extension of time to comply with two Bankruptcy Notices. These review applications also seek extensions of time under s 41(6A) of the Act to comply with the Bankruptcy Notices.

2    The extensions under s 41(6A) are sought in circumstances where the applicant has appealed two judgments of the Supreme Court of New South Wales in Driver v Botanical Water Technologies Pty Ltd (No 2) [2024] NSWSC 1641 and Driver v Botanical Water Technologies Pty Ltd [2024] NSWSC 1409 (together, the Supreme Court Proceedings) which are the subject of the Bankruptcy Notices.

3    On 26 May 2025, I made orders granting extensions under s 41(6A) of the Act on an interim basis to permit sufficient time for the applicant to argue, and for the Supreme Court to determine, a belated application to stay the two judgment debts pending the appeal. I also adjourned the respective proceedings to a date after the determination of the Supreme Court stay application and provided the parties with the opportunity to file written submissions addressing the impact of the Supreme Court’s orders on these proceedings. My reasons for those orders were set out in Paule v Kambouris [2025] FCA 539.

4    The Supreme Court stay application has now been determined and the parties have filed further written submissions and affidavits pursuant to my orders on 26 May 2025. I have considered it appropriate to deal with these submissions and finalise my determination of the review applications without a further hearing.

5    For the reasons that follow, I do not consider that the applicant has discharged his burden of establishing that the circumstances warrant extensions pursuant to s 41(6A) of the Act. Accordingly, I dismiss the review applications in these proceedings. These reasons should be read together with my earlier reasons in Paule v Kambouris [2025] FCA 539.

background

6    The background to the review applications is set out in my earlier reasons. Since the making of my orders on 26 May 2025, the following has occurred.

7    The applicant’s application for a stay of the two judgment debts was heard and determined by Williams J of the Supreme Court on 30 May 2025. Her Honour made the following orders:

1.    Order that the final orders made by Justice Ball on 20 December 2024 in these proceedings be stayed until 5pm on the first day of the hearing in the New South Wales Court of Appeal of Appeal [sic] proceeding 476362 of 2025 conditional upon:

A.    the fifth defendant filing with this Court, a written undertaking to the Court and to the second and fourth plaintiffs that he will not deal with:

(i)    the property located at 63 Albany Road, Toorak, Victoria; or

(ii)    any other property owned by the fifth defendant and for which the fifth defendant holds the beneficial interest other than in the ordinary course of business,

for the period of the stay; and

B.    the fifth defendant granting to the second and fourth plaintiffs a charge in caveatable form over his property at 63 Albany Road, Toorak, Victoria securing the judgment debts arising from the orders made by this Court on 20 December 2024, subject to any contrary order of the Court of Appeal,

by 5pm on 3 June 2025.

2.    Order that the stay in order 1 will take effect on and from 5pm on 3 June 2025 if the conditions set out in order 1 are complied with, and will not otherwise take effect.

3.    Order that costs of the fifth defendant's notice of motion filed 15 May 2025 are to follow the event of the appeal.

8    Her Honour gave reasons for those orders on 2 June 2025: Driver v Botanical Water Technologies Pty Ltd [2025] NSWSC 566. In part, Williams J made those orders on the basis that the property located at 63 Albany Road, Toorak, Victoria (Toorak Property) was unencumbered (at [19]) and that a caveatable interest on the Toorak Property was required to protect the respondents from the risk of prejudice arising from the applicant’s liabilities increasing during the period of the stay (at [21] and [23]) in the event that the applicant’s appeal was unsuccessful.

9    On 1 June 2025, a caveat (dealing number AZ216186Q) was lodged over the Toorak Property by “Appian Lawyers” on behalf of Anna Paule – understood in the evidence to be the wife of the applicant – on the ground of a claim of an “Implied, Resulting or Constructive Trust”. The caveat prohibited further dealings absolutely.

10    On 2 June 2025, the respondents in these proceedings (Second and Fourth Plaintiffs in the Supreme Court Proceedings) filed a Notice of Motion, which was listed before Williams J on the same day, seeking various orders including that her Honour’s orders of 30 May 2025 be varied to provide for a charge in caveatable form over the applicant’s Toorak Property valued at AUD14,000,000 or payment into the Court of that amount.

11    On 3 June 2025, the applicant in these proceedings (the Fifth Defendant in the Supreme Court Proceedings) emailed the respondents seeking their consent to an extension of the time for compliance with Orders 1 and 2 until the hearing of the respondents’ Notice of Motion. The respondents did not consent to those extensions.

12    The matter was again listed before Williams J on 3 June 2025. Her Honour did not grant the extension of time to comply with the orders of 30 May 2025. However, her Honour varied the orders of 30 May 2025 to include a requirement that Mr Paule procure the consent of Anna Paule to the lodgement of the charge by the respondents. The orders made on 3 June 2025 stated:

1.    Vary order 1B made on 30 May 2025 to read as follows:

The Fifth Defendant granting to the Second and Fourth Plaintiffs a charge in caveatable form over his property at 63 Albany Road Toorak, Victoria that is not stated to be subject to any rights or interests of any third party, securing the judgment debts arising from the orders made by this Court on 20 December 2024, subject to any contrary order of the Court of Appeal, together with written consent of Anna Paule to the lodgement by the Second and Fourth Plaintiffs of a caveat in respect of that charge granted by the Fifth Defendant.

2.    The Fifth Defendant's application made informally for the orders set out in MFl-1 on 3 June 2025 is dismissed.

3.    Reserve the costs of the parties appearance in Court this afternoon and on 2 June 2025

13    In the transcript of the hearing from 3 June 2025, Williams J noted that the applicant had known about the caveat in favour of Anna Paule since at least 1 June 2025 and possibly since before 30 May 2025.

14    The applicant did not comply with Order 1B of the orders of Williams J made on 30 May 2025 (as varied on 3 June 2025).

Evidence

15    The parties filed the following additional affidavits:

    The applicant relied on the affidavit of Matthew Richard Critchley sworn on 5 June 2025; and

    The respondents relied on the affidavit of Andrew Joseph James Lacey sworn on 6 June 2025.

16    There were no objections to either affidavit. Together, the affidavits annexed copies of the orders of Williams J and the transcripts of the Supreme Court hearings of 30 May 2025, and 2 and 3 June 2025 and related correspondence.

Disposition of applications before this court

17    In my reasons on 26 May 2025, I stated that if the stay application had not been made to the Supreme Court, I would have been inclined to the view that the applicant had not discharged his onus to satisfy me that an extension order under s 41(6A) should be made in each proceeding. I further stated that given that the other factors on the review applications are neutral or of minimal weight, I would have given considerable weight to the lack of a stay application.

18    In my view, the case against the making of extension orders under s 41(6A) of the Act is now compelling given what has transpired in the Supreme Court. The applicant was given two opportunities to have the benefit of a stay of the judgment debts. The orders of Williams J on 30 May 2025 ordered a stay of the judgment debts on condition that the applicant grant a charge in caveatable form to the respondents. Upon discovery that Anna Paule had lodged a caveat over the Toorak Property, with the likely result that compliance by the applicant with the stay condition would be frustrated, the condition was amended on 3 June 2025 to offer a further pathway for compliance. That did not occur and, consequently, the stay did not come into operation.

19    In written submissions, the applicant faintly offered two factors that were said to weigh in favour of granting the extension applications: first, the proximity of the hearing of the appeal and, secondly, the undertaking that Mr Paule has given. I do not accept that these considerations warrant the granting of the extensions.

20    In relation to the proximity of the hearing date, I accept the respondents’ submissions that the appeal hearing is only close because the applicant has had the benefit of multiple interim extensions. The Bankruptcy Notices were served on 6 March 2025 and the Judicial Registrar dismissed the extension applications on 5 May 2025 – the dismissal of those applications giving rise to the review applications in these proceedings. I adjourned the proceedings and ordered further interim extensions for the very reason that a stay application had been filed belatedly in the Supreme Court on 5 May 2025. The stay application failed because of the steps taken to lodge a caveat over the Toorak Property and the applicant’s failure to provide the written consent of Anna Paule to the lodgement of a caveat by the respondents. In those circumstances, the applicant should not now have the further benefit of relying on the proximity of the appeal as a factor weighing in his favour.

21    I also agree with the respondents’ submissions that the value of the applicant’s undertaking is significantly diminished now that there is a caveat over the Toorak Property. The applicant acknowledged that the existence of the caveat bears upon the assessment of the undertaking, but did not further defend this position.

22    I agree with the thrust of the respondents’ submissions that the existence of the caveat adds further doubt to the sufficiency of evidence to support a finding that the applicant has the means to satisfy his debts. The submissions by the applicant before me when the review applications were heard were premised on the Toorak Property being unencumbered. The caveat over the Toorak Property likely diminishes the value of the applicant’s interest in that property, but to an uncertain extent, leaving the Court with no reliable indication of the extent and value of his assets that might be utilised to satisfy the judgment debts.

23    I add that the applicant’s submissions before me on the hearing of the review applications were advanced on the basis that the applicant had taken no steps to divest himself of his interest in the Toorak Property. The lodging of the caveat raises serious questions about whether the applicant has taken steps to dissipate his assets. No attempt has been made by the applicant to explain what has transpired. The respondents submitted that an obvious inference from the speed with which the caveat was lodged is that there was a pre-existing strategy for Anna Paule to refrain from asserting a proprietary interest in the Toorak property until it became apparent that the applicant would be required to grant a charge in favour of the respondents as a condition of obtaining a stay. While the circumstances do not place the applicant in a favourable light, particularly in the absence of an explanation of what has occurred, I am not prepared to draw the suggested inference on the evidence before me. It is conceivable that the applicant was unaware of the steps taken to lodge the caveat at the time of the hearing before me.

24    It is enough for the purposes of these proceedings to conclude that the lodging of the caveat over the Toorak Property considerably undermines the capacity of the undertaking to protect the respondents’ interests from the risk of prejudice.

25    Accordingly, I am not satisfied that the applicant has discharged his onus to establish that the circumstances warrant extensions under s 41(6A) of the Act. Accordingly, the review applications should be dismissed.

Costs

26    The parties agreed that, in the event that the review applications were dismissed, costs should be awarded on the ordinary basis. Accordingly, I make orders that the applicant pay the respondents’ costs of the review application in each proceeding, to be agreed or assessed.

Associate:

Dated:    19 June 2025