Federal Court of Australia

Victorian Legal Services Board v Kuksal (Adjournment of Creditor’s Petition) [2025] FCA 852

ORDERS

THE COURT ORDERS THAT:

1.    The application for an order in terms of prayer 2 of the respondents’ interlocutory application filed in this proceeding on 23 June 2025 is refused.

2.    Costs reserved.

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

REASONS FOR JUDGMENT

DOWNES J:

Synopsis

1    Mr Shivesh Kuksal, Mr Peter Ansell and Ms Lulu Xu are respondents in proceedings commenced in this Court by the Victorian Legal Services Board (Board) and others (the applicants).

2    The first of those proceedings, VID 222 of 2025, was commenced by the applicants following the filing of a creditor’s petition in February 2025 (bankruptcy proceeding). In the bankruptcy proceeding, there are nine supporting creditors who are represented by the first supporting creditor, Jobwatch, Inc.

3    The creditor’s petition is listed for hearing on 28 and 29 July 2025.

4    The second proceeding, VID 642 of 2025, is a collateral proceeding commenced by the Board which seeks (inter alia) injunctions restraining the respondents from engaging in certain conduct and other orders.

5    By prayer 1 of their interlocutory application dated 23 June 2025, the respondents applied for an order that I recuse myself from hearing the creditor’s petition and the collateral proceeding.

6    By prayer 2 of that application, the respondents seek an order that “any further hearings” in the bankruptcy proceeding be postponed until two weeks after the determination of the recusal application.

7    On 21 July 2025, I determined the recusal application: Victorian Legal Services Board v Kuksal (Recusal Application) [2025] FCA 828.

8    Earlier today, I made orders refusing the application for relief in terms of prayer 2 of the interlocutory application and reserving costs. These are my reasons for making those orders.

Background

9    The background to the filing of the creditor’s petition and the collateral proceeding has been set out in the following judgments, namely Victorian Legal Services Board v Kuksal [2025] FCA 558 at [4]–[8] (Meagher J), Victorian Legal Services Board v Kuksal (No 2) [2025] FCA 646 (Downes J), Victorian Legal Services Board v Kuksal (Interlocutory Matters) [2025] FCA 801 at [3]–[11] (Lee J) and Kuksal (Recusal Application).

10    The following facts deserve emphasis:

(1)    the creditor’s petition was accepted for filing on 28 February 2025;

(2)    the dates for hearing of the creditor’s petition were fixed at a case management hearing on 17 June 2025. The allocated hearing dates were nearly six weeks after 17 June 2025;

(3)    on 8 July 2025, Lee J delivered ex tempore reasons, which were later published, in which his Honour identified certain important matters: see Kuksal (Interlocutory Matters) at [41]–[47], [63], [75] and [79];

(4)    at the hearing on 17 July 2025, Mr Kuksal made submissions which indicated that the respondents’ material, including an amended notice of objection, would be filed and served either that day or the next day: see Kuksal (Recusal Application) at [82]–[87]. This material was said to be relevant to the relief sought in prayer 2 of the interlocutory application;

(5)    extensions were given to the respondents to file their material as referred to in Kuksal (Recusal Application) at [89].

11    On 9 July 2025, Lee J dismissed the respondents’ interlocutory application dated 23 June 2025 insofar as that application sought:

(1)    the relief sought in prayers 5 and 6 of the application;

(2)    the relief sought in Annexure A to that application (being all of the relief sought in the interlocutory application which was emailed on 17 June 2025).

12    Justice Lee also ordered that:

Absent prior leave by a judge of the Court, any further documents filed or otherwise relied on by the respondents in this proceeding are not to contain or refer to the Flitner Allegations, any part of them, or their substance.

Unless and until notices of opposition are filed in a form which properly identifies the grounds of opposition, the respondents are not to issue any notices to produce and are refused leave to issue any subpoenas.

13    Other important aspects of his Honour’s reasons at [63]–[67] are as follows:

The parties should now focus on the substantive issues between them. That is, whether or not the VLSB is entitled to sequestration orders and, more particularly, whether there is some reason why the sequestration orders ought not be made for grounds identified in a proper notice of opposition.

To the extent that there are contempt proceedings, they should also be commenced and conducted in such a way as complies with the requirements of the rules. In particular, r 42.11, which provides that an application for punishment of the alleged contempt must be made by a party by interlocutory application in the proceeding if it is a contempt committed in connexion with a proceeding before the Court. Further, pursuant to r 42.12, the application alleging the contempt must be accompanied by a statement of charge, in accordance with Form 137, which specifies the contempt with sufficient particularity so as to allow the person charged to answer the charge.

The Court should not entertain, let alone make directions about, a contempt application which is deficient in form.

I will, however, make directions allowing any contempt issues to be properly articulated (if they are pursued). It would be a matter for the docket judge in due course as to the case management of any such application, including whether, after it has been properly articulated and filed, compulsory process can be issued to obtain documents apparently relevant to the allegations in the statement of charge.

I will hear from the parties shortly as to an appropriate timetable in relation to these steps. Even if it is said the factual allegations which are apparently material to the contempt are also relevant to the opposition to the making of sequestration orders, the necessary steps to bring a properly constituted contempt application are distinct from the orderly and prompt progress of the Bankruptcy Proceedings to the final hearing.

(Emphasis in original.)

Consideration

14    During the hearing, Mr Kuksal referred to an affidavit of himself which he said he had provided to the registry, and which was relevant to the adjournment application. That affidavit stated on its face that it was an affidavit of Mr Flitner, but Mr Kuksal explained that this was an error. Because it was necessary to consider the affidavit for the adjournment application, I granted the respondents leave to file that affidavit on certain conditions. However, nothing in that affidavit supports an adjournment of the creditor’s petition.

15    Leave has been granted to file two affidavits of Mr Flitner, also on certain conditions, but these affidavits do not support an adjournment of the creditor’s petition either. The respondents have also filed new notices of objection pursuant to leave which was granted on conditions, and notices to produce have been issued. The respondents were also granted leave to file a statement of charge on certain conditions.

16    The issue of whether any of these materials should remain on the court file, or the conditions of leave should be varied, is a matter which can be addressed at the hearing of the creditor’s petition. The orders were made in the form that they were without hearing from the parties so as to enable the respondents to have the ability to file the documents which they wished to rely upon for their adjournment application, but still protecting the interests of the applicants which had not been heard on the issue of leave in relation to those documents.

17    Various documents were sent by Ms Xu to the Queensland registry by email on 17 July 2025 but none of these documents is relevant to the relief sought in prayer 2; rather these documents appear to be relevant to the conduct of the hearing of the creditor’s petition itself, and concern circumstances in which a court will go behind a judgment debt.

18    On 21 July 2025, the applicants filed submissions relating to the adjournment application. By order dated 21 July 2025, I gave the respondents the opportunity to file submissions in reply to those submissions by 10am today. No submissions were filed.

19    The relief sought in prayer 2 of their interlocutory application is that the hearing of the creditor’s petition be postponed until two weeks after the determination of the recusal application. If that relief was granted in the terms sought, it would mean that the hearing of the creditor’s petition would be deferred to 4 August 2025.

20    However, notwithstanding that their application only seeks (in effect) a short adjournment of one week, the respondents in fact seek that a number of matters be heard and determined separately and prior to the hearing of the creditor’s petition. Having regard to the nature of those matters, it would be very unlikely, if not impossible, for those matters to be heard and determined within that timeframe, which would mean that the hearing of the creditor’s petition would be delayed indefinitely.

21    For the following reasons, I am not satisfied that it is appropriate to determine any aspect of the proceeding separately, and it is not in the interests of justice to grant the adjournment.

22    First, by their submissions on 17 July 2025, the respondents seek a determination of their application for contempt prior to the hearing of the creditor’s petition. However, at present, there is no application for contempt which is on foot. The previous application which was brought as part of the interlocutory application before Lee J was dismissed. A fresh application is required to be filed as referred to in order 8 of Lee J. However, no such application has been filed.

23    Secondly, the respondents also seek a hearing and separate determination of their claim for economic loss, which I understand to be a reference to the relief sought in prayer 5 of Annexure A of their interlocutory application. However, like the contempt application, that application was also dismissed by Lee J, who observed at [25]:

Further, I am not satisfied that it is appropriate to determine any aspect of the proceeding separately, before the hearing of the application for sequestration orders listed on 28 and 29 July 2025, and accordingly, I do not propose to order a separate determination of any issue. Why separate determination of any issue would be consistent with the overarching purpose and the long recognised need for bankruptcy proceedings to be resolved with alacrity is wholly unclear to me.

24    Thirdly, the respondents referred to their proposed notices to produce, and submitted that the issue of whether they are entitled to documents pursuant to those notices needs to be determined before the hearing of the creditor’s petition. That issue can be addressed at the hearing if there is any dispute. In those circumstances, I will not adjourn the hearing of the creditor’s petition so as to determine disputes about documents which have not yet arisen and which may not arise.

25    Fourthly, the respondents submitted that the Court is a party to proceedings brought by them in connection with applications which they tried to file to set aside certain bankruptcy notices. This topic is addressed in the affidavits of Mr Ansell filed on 31 March 2025 and 17 April 2025, and concerns proceedings brought by the respondents in the Administrative Review Tribunal (ART) concerning the registry’s refusal to accept the applications and associated payment deferral applications. On that basis, the respondents submitted that the hearing of the creditor’s petition should be adjourned pending the outcome of the proceedings in the ART.

26    This was a matter which was also ventilated before Lee J, as appears from [70]–[75] of his Honour’s reasons:

Consistently with my reasons above, I have asked that the respondents indicate to me a time by which they wish to file a notice stating grounds of opposition to the petition, being a Form B5 and an accompanying affidavit supporting the grounds in proper form, prior to the hearing on 28 and 29 July 2025. I also separately asked whether and when the respondents wished to file a statement of charge in proper form in relation to any contempt proceedings.

The first of these requests was met by me being apprised, for the first time, after 6:30pm, of nine applications which Mr Kuksal informs me had been drafted, and which were sought to be filed in order to set aside bankruptcy notices, but which were rejected by the Registry. It is said that this rejection was also improper, and I am told that that is the subject of an application which is listed for hearing in August 2025. I know nothing of the specifics of these alleged applications other than what Mr Kuksal mentioned during his submissions.

Doing the best I can, it appears that Administrative Review Tribunal (ART) proceedings have been commenced challenging the decision of the Registrar to reject these nine applications.

As I understand the position of the respondents, they say that it would be improper for the hearing of the applicant’s application for sequestration orders to occur prior to the unfiled applications being heard relating to the bankruptcy notices. This seems to be premised on the notion that ART proceedings would be successful in substituting the decision of the Registrar to reject the nine applications. I am unsure of the basis of these applications, but it seems to relate to fees not being paid to file the applications to set aside the bankruptcy notices. But no doubt there is some articulated reason as to why the bankruptcy notices ought to have been set aside. I enquired of Mr Kuksal as to why it was that any substantive matter relied upon in relation to the setting aside of the bankruptcy notices would not be able to be raised in the context of a notice stating the grounds of opposition to the petition and the accompanying material. This did not receive a direct response other than an assertion that it is open for the respondents to seek to allege that the bankruptcy notices ought to have been set aside, and that they are entitled to challenge whether or not an act of bankruptcy has occurred.

All of this is further example of the collateral procedural issues and confusion which infects this matter.

I am not the docket judge dealing with the Bankruptcy Proceeding. It is a matter for the respondents as to whether or not they wish to file proper material in advance of the currently listed hearing of the Petition or whether they would prefer simply to turn up and seek an adjournment relying upon the existence of unfiled “applications” in relation to the bankruptcy notices and any pending ART proceedings. Needless to say, the respondents should be on notice that, if the trial judge refuses that adjournment, which no doubt will be determined by reference to the overarching purpose and the need for bankruptcy proceedings to be resolved promptly, then these reasons indicate that the respondents were provided ample opportunity of filing a proper notice in opposition to the petition and an accompanying affidavit in advance of that hearing. No doubt, this will be a relevant consideration when it comes to the course that the trial judge may take. Ultimately, however, these are not matters for me.

(Emphasis in original.)

27    This issue is now also addressed is the current notices of objection, and can be raised by the respondents at the hearing of the creditor’s petition and in opposition to the making of any sequestration order.

28    Fifthly, the respondents submitted to the effect that the applicants had consented to the hearing of their interlocutory application prior to the hearing of the creditor’s petition, and so must be taken to accept that any applications which they now wish to bring should be so heard. In fact, the applicants consented to the hearing of the respondents’ interlocutory application in the form that it then was, and not any later applications by the respondents which might be brought by them seeking the same or similar relief.

29    Sixthly, the Australian Government Solicitor sent a letter dated 15 July 2025 to Mr Kuksal on behalf of the Commonwealth Attorney-General. That letter acknowledged receipt of the constitutional notice and stated that, “We will write to you again when a decision has been made on the question of intervention”. That response does not justify an adjournment of the creditor’s petition. The Commonwealth Attorney-General has had the notice since 3 July 2025 (according to the letter) and no decision has (apparently) been made to intervene.

30    Seventhly, the interests of creditors would be affected by any further delay in the hearing of the creditor’s petition, and public policy considerations require that it be heard as expeditiously as possible. As observed by Cheeseman J in Australia and New Zealand Banking Group Limited v James [2021] FCA 768 at [48]:

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

(Emphasis removed.)

31    Finally, the respondents have had more than ample time to prepare for the hearing since February 2025 when the creditor’s petition was filed, and since 17 June 2025 when the creditor’s petition was set down for hearing on 28 and 29 July 2025. It would be contrary to the overarching purpose for the hearing of the creditor’s petition to be delayed in these circumstances.

32    For these reasons, the hearing dates of the creditor’s petition will not be vacated.

Conclusion

33    The relief sought in prayer 2 of the respondents’ interlocutory application dated 23 June 2023 will be refused. The parties may make any submissions which they wish to make on the issue of costs at the hearing of the creditor’s petition on 28 and 29 July 2025.

Associate:

Dated:    23 July 2025

SCHEDULE OF PARTIES