Federal Court of Australia

Harris v Moses, in the matter of Harris [2025] FCA 886

ORDERS

THE COURT ORDERS THAT:

1.    The application is dismissed.

2.    The applicant is to pay the respondents’ costs of and incidental to the application to be assessed as a lump sum if not agreed.

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

REASONS FOR JUDGMENT

O’SULLIVAN J:

1    On 4 April 2025, the Court delivered judgment in action number NSD 943 of 2022: Bridging Capital Holdings Pty Ltd v Self Directed Super Funds Pty Ltd (Trial) [2025] FCA 314 in which judgment was entered for Bridging Capital and the second applicant (Mr Ari Ben Moses), in the sum of $1,717,761, plus interest and costs.

2    On 2 May 2025, the second respondent at trial (Mr Christopher Steven Harris) filed a notice of appeal against the judgment.

3    By an amended application, Mr Harris, who is the applicant on this application, seeks an order that a bankruptcy notice issued by Bridging Capital and Mr Moses on 6 May 2025, and which was served on him on 16 May 2025, be set aside pursuant to ss 30(1) and 41(6A)(a) and (b) of the Bankruptcy Act 1966 (Cth).

4    In the alternative, the applicant seeks an order pursuant to ss 41(6A)(a) and (b) of the Act that time for compliance with the bankruptcy notice be extended to a date to be fixed and not before the hearing and determination of the appeal by the applicant against the judgment upon which the bankruptcy notice relies.

Documents read

5    The applicant reads the affidavits of:

(a)    Joseph Philip De Ruvo sworn 4 June 2025;

(b)    Christopher Steven Harris sworn 24 June 2025; and

(c)    Daniel Robert Idema sworn 23 July 2025 (first Idema affidavit) and 24 July 2025 (second Idema affidavit).

6    The respondents read the affidavits of:

(a)    Ari Ben Moses sworn 3 July 2025 (Moses affidavit); and

(b)    Adam Cutri sworn 28 July 2025.

Background

7    The proceedings before the primary judge concerned a Share Sale Agreement in which Bridging Capital was to purchase the shares in two companies: Exelsuper Pty Ltd and Exelsuper Advice Pty Ltd.

8    The primary judge summarised the background to the dispute at judgment [2]-[6]. In short, Exelsuper was a trading company which carried on a financial planning business in Adelaide. Advice held the Australian Financial Services Licence under which Exelsuper was authorised to provide financial services and advice to clients as well as to invest clients’ money.

9    The shares in Exelsuper and Advice which were the subject of the Share Sale Agreement, were owned by SDSF and the applicant, respectively. The applicant is the sole director of Exelsuper and the sole director and shareholder of SDSF.

10    The shares were sold to Bridging Capital who was the first applicant at trial. The second respondent to this application, Mr Moses, is the sole shareholder and director of Bridging Capital. Mr Moses guaranteed Bridging Capital’s obligations under the Share Sale Agreement and was a party to it.

11    On 8 June 2021, Bridging Capital paid the first part of the purchase price - $2 million - following which approximately 45% of the total issued shares in both companies were transferred to Bridging Capital. At that time, Mr Moses and the applicant became joint directors of both companies pending the payment of the balance of the purchase price - approximately $7.36 million.

12    On 18 August 2021, Mr Moses wrote to the applicant in relation to a number of disputes that had arisen between the parties since the initial payment of $2 million had been made. In that letter Mr Moses said in part: Annexure ABM-1 to the Moses affidavit at pp 188-192

BCH is a 43% shareholder in Exelsuper Pty Ltd and Exelsuper Advice Pty Ltd. I, along with yourself, are the two directors of those companies.

Having received the initial payment at First Completion, you seem determined to exclude BCH and myself of involvement in the operational activities of Exelsuper. In doing so, you are breaching BCH’s rights in relation to a shareholding in Exelsuper.

13    It is not my role to decide whether that assertion was correct or not, however it indicates, albeit at a high level, that there were disputes arising between the applicant, SDSF and the respondents at this time. The primary judge found that after June 2021, disputes between the applicant, SDSF and the respondents arose: at [70].

14    Until 25 August 2021, the applicant and his wife, Georgina Ann Holland, were the registered proprietors of a property in South Australia. On that day, the applicant transferred his interest in the property to Ms Holland for no monetary consideration.

15    As a result of the parties falling into dispute, the second payment, representing the balance of the purchase price, was never paid.

16    Bridging Capital and Mr Moses commenced oppression proceedings on 14 October 2021. Those proceedings were resolved on the basis that SDSF and the applicant would buy back the shares in both companies at market value, such value to be determined by the Court. A referee was appointed to undertake a market valuation on two alternative bases. The primary judge adopted the referee’s report: Bridging Capital Holdings Pty Ltd v Self Directed Super Funds Pty Ltd [2021] FCA 1625; 396 ALR 415 which arrived at a fair market value for the shares of $282,239, or some 14% of what Bridging Capital had paid for them.

17    The shares were re-purchased, following which Bridging Capital and Mr Moses commenced the proceedings the subject of the judgment.

18    In the course of the primary judge’s reasons, the primary judge made adverse credibility findings against the applicant: at [30], with his Honour saying that he “… was left with no confidence in the honesty of the applicant’s evidence. It was established in evidence that he was dishonest in his presentation of key details about [Exelsuper and Advice] in the [Information Memorandum] that form the basis for future discussion between him and Mr Moses. He admitted as much in cross-examination”.

19    The primary judge made further findings against the applicant finding that the applicant had engaged in conduct that was deliberately deceptive: at [62].

20    In March 2025, the business of Exelsuper was sold. The applicant deposed to that fact in his affidavit at [15], [16] in the briefest of terms:

15.    In early March 2025, the Business of Exelsuper was sold to a third party. I work in the Business under the purchaser’s employ.

16.    My employment will cease in August 2025. Thereafter, I will look for ongoing work in the financial services industry, though not in competition with the Business.

21    The respondents made attempts to obtain information concerning the sale of the Exelsuper business (including the issue of two subpoenas). No information was forthcoming until the day of hearing when in answer to a notice to produce, the applicant produced the documents comprising a Business Sale Deed, First Deed of Variation to Business Sale Deed and a Further Deed of Variation to Business Sale Deed.

22    Those documents reveal that the purchase price for the business conducted by Exelsuper, being the provision of financial planning services including Exelsuper’s business assets, comprises a deposit of $100,000, a completion payment of $7,075,200 which was to be paid on 3 March 2025, and a final payment in an amount to be calculated in accordance with the provisions of the Business Sale Deed as varied by the First Deed of Variation and the Further Deed of Variation.

23    In the Further Deed of Variation, the name of the seller has been changed from Exelsuper to Lafayette Holland Investments Pty Ltd, which retains the same ACN number as Exelsuper.

24    As at early March 2025, SDSF was the trustee of the Harris Family Trust. No information is provided by the applicant about the Trust.

25    On 17 April 2025, the applicant, as the sole director of SDSF, resolved that SDSF be wound up. On 1 May 2025, SDSF was removed as trustee of the Trust and replaced by Safwina Pty Ltd, a company registered on 18 December 2024 and of which Ms Holland is the sole director, secretary, and shareholder.

26    At [24] and [25] of the applicant’s affidavit, the applicant deposes:

24.    The Bankruptcy Notice is founded on a judgment obtained against me in the amount of $1,717,761.

25.    I do not have the means to pay the judgment amount referred to in paragraph 24.

27    The applicant puts no evidence before the Court as to what happened to so much of the purchase price or has been paid to date for the business of Exelsuper or the applicant’s financial position (save for the bare statement referred to above).

28    On 23 June 2025, the respondents’ solicitors received an email from the Liquidator of SDSF in which the liquidator advised that he had received a draft management report for SDSF for the year ended 22 April 2025 which had been prepared by an external accountant. It recorded the only material asset of SDSF is a right of indemnity for Trust liabilities in the sum of $1,099,962.13. That amount is also shown as a corresponding liability for liability incurred by SDSF acting as trustee.

29    As to the Trust, in the same email, the only material assets of the Trust were recorded as “investment” in Excelsuper and Advice with a combined book value of $2,181,140.47. There is an issue about the accuracy of that figure.

30    No application to stay the judgment has been made by the applicant.

Principles – set aside bankruptcy notice

31    The Court has a wide discretion to set aside a bankruptcy notice where it is satisfied the interests of justice require it to do so: Lentini v CSR Ltd (1991) 29 FCR 363, 372 (Neaves J) citing Re Taylor, Ex parte Deputy Commissioner of Taxation (1983) 74 FLR 377, 379.

Principles – extend time for compliance

32    In considering an application under s 41(6A) to extend the time for compliance with a bankruptcy notice, subject to s 41(6C), the Court has an unfettered discretion which is “at large” and to be exercised in the circumstances of each case: Sharpe v WH Bailey & Sons Pty Ltd [2014] FCA 921, (2014) 317 ALR 738 at [26] (Gleeson J) and the cases cited therein.

33    It is well-settled that the applicant bears the onus of persuading the Court to exercise its discretion.

34    In Owen v Sandhu [2024] FCA 198 at [71], Feutrill J set out the factors relevant to the exercise of the discretion under an application pursuant to s 41(6A) in the following terms:

71    Subject to s 41(6C), the discretion to extend time conferred by s 41(6A) of the Bankruptcy Act is not fettered and should be exercised based upon the facts and circumstances of the particular case: Sharpe v W H Bailey & Sons Pty Ltd [2014] FCA 921; (2014) 317 ALR 738 at [26] and the authorities there cited. Further, the power to extend time under s 41(6A)(b) does not depend on the existence of a valid application to set aside the bankruptcy notice of the kind that is necessary for there to be an automatic extension under s 41(7): Coshott v Prentice, in the matter of Coshott (No 2) [2016] FCA 1531 at [165]-[166] (Bromwich J). The discretion is ‘at large’: Re Taylor; Ex parte Deputy Commissioner of Taxation (1983) 74 FLR 377 at 379. Nonetheless, in the exercise of the discretion the Court will be guided by matters identified in authorities as relevant to the exercise of the discretion. Factors considered relevant include the following.

(1)    Whether proceedings to set aside the judgment or order have been instituted (including proceedings of that nature such as an appeal).

(2)    Whether a stay of the judgment or order has been sought or obtained.

(3)    That failure to comply with a bankruptcy notice is ‘an act of bankruptcy that is a different order of gravity for the change of status brought about by the making of a sequestration order’.

(4)    The interests of the judgment creditor and other creditors of the judgment debtor in ensuring that, if ultimately a sequestration order is made, the relevant act of bankruptcy occurs earlier rather than later.

(5)    In the absence of a stay of the judgment or order, the extent to which there is evidence of the means of the debtor to satisfy the judgment debt and, in any event, whether it would be appropriate to order security for the debt as a condition of any extension of the time for compliance.

(6)    While, in general, it is undesirable to undertake a provisional review to determine the correctness of the judgment or order, the merits may be relevant at least where it is apparent that prospects of success are either ‘slight’ or ‘unusually strong’. In this regard, if an appeal has already been dismissed and the proceeding in question is an application for special leave to make a further appeal, that would be a relevant consideration reinforcing the Court’s reluctance to extend time in the absence of a stay.

See, e.g., Re Geard; Ex parte Reid [1994] FCA 45; (1994) 217 ALR 191 at 193-194 (Sheppard J); Byron v Southern Star Group Pty Ltd [1997] FCA 151; (1997) 73 FCR 264 at 270-271 (Lehane J); Kakavas v Paradise Enterprises Limited [2010] FCA 915 at [8] (Tracey J); Sharpe at [26]-[29] (Gleeson J).

35    Feutrill J’s summary was adopted by Stellios J in Paule v Kambouris [25] FCA 539.

Parties’ submissions and consideration

36    The parties addressed both the application to set aside the bankruptcy notice, as well as the alternative application to extend the time for compliance with the notice.

Set aside the bankruptcy notice

37    The applicant has applied to set aside the bankruptcy notice. One of the circumstances in which the discretion may be exercised is where the Court is satisfied there is a dispute genuinely based on substantial grounds as to the correctness of the judgment upon which the bankruptcy notice is founded: Lentini at p 377.

38    This was a complex commercial matter and it is neither appropriate nor possible to express a view as to the prospects of success of the appeal.

39    There is the potential for significant prejudice to Bridging Capital and Mr Moses should the bankruptcy notice be set aside because of the effluxion of time since real property was transferred from the applicant to Ms Holland.

40    If the bankruptcy notice is not set aside and time for compliance is not extended, it remains open to adjourn any hearing of the creditor’s petition pending the appeal. Whether that occurs is a matter for the Court seized with that question, should it in fact arise.

41    In all the circumstances, I am not satisfied that it is in the interests of justice to exercise the discretion to set aside the bankruptcy notice.

The relevant factors – extend time

42    The first factor identified in Owen, which concerns an application to extend the time for compliance with a bankruptcy notice, is whether proceedings to set aside the judgment or order (which includes an appeal) have been instituted.

43    The applicant filed a notice of appeal against the judgment on 2 May 2025. There is no appeal by SDSF. There is no issue between the parties that the first factor has been satisfied.

44    The sixth factor is related to the first factor in the sense that it concerns whether it is apparent that the prospects of success, in this case on the appeal, are slight or unusually strong. As I have noted above, this is a complex commercial matter and it is neither appropriate nor possible to express a view on an application such as this as to the prospects of success of the appeal.

45    The second factor concerns whether the applicant has applied for an order that enforcement of the judgment and consequent orders be stayed.

46    There is no issue that the applicant has not applied for a stay. There is no explanation provided by the applicant as to why no application has been made.

47    In Paule, at [37]-[45] Stellios J considered a number of authorities in relation to the application for a stay, in circumstances where in that matter, an application for a stay had been made, albeit belatedly.

48    In Re Geard; ex parte Reid [1994] FCA 25; (1994) 217 ALR 191, 193 Sheppard J observed that:

The debtor has not made any application for a stay of proceedings pending the outcome of the appeal. Why he has not done so is not clear to me but the judgment which has been recovered against him is a final judgment and execution upon it has not been stayed. It would seem to me to require quite special circumstances before a court exercising jurisdiction in bankruptcy would, in effect, do what has not been done in the court in which the judgment has been obtained by extending the time for compliance with the bankruptcy notice when no application to stay the judgment has been made. If one were to contemplate taking of such a course, one would usually require evidence of the means of the debtor and would wish to consider whether or not it were appropriate to order that security for the amount of the judgment should be provided. Those are matters which a court exercising jurisdiction to stay the execution of a judgment would wish to consider.

49    The observations of Sheppard J that “quite special circumstances” would be required before a court exercising jurisdiction in bankruptcy would extend the time for compliance with a bankruptcy notice in circumstances where no application for a stay had been made, has not been universally followed. The position is that the weight to be given to a failure to apply for a stay will vary in all the circumstances: see Warner v Frost [1999] FCA 830 at [6]-[7] (Hely J); Byron v Southern Star Group Pty Limited [1997] FCA 151; (1997) 73 FCR 264, 270 (Lehane J); O’Loughlin v Glenmont Investments Pty Ltd [2001] FCA 925 , (2001) 191 ALR 336 at [13] (Mansfield J).

50    In the circumstances of this matter, I consider the failure to apply for a stay of the judgment to carry significant weight. That is because, as Sheppard J observed in Re Geard, when considering an application for a stay, a court would usually require evidence of the means of the debtor and would wish to consider the prospect of ordering security for the amount of the judgment. The failure by the applicant to adduce any evidence as to his personal financial circumstances, nor as to what has become of the deposit and first payment for the purchase of Exelsuper’s business, is significant.

51    Further, given the existence of the Trust, SDSF’s former role as trustee, and its shareholding in Exelsuper gives rise to many unanswered questions.

52    In a situation such as this, where there has been a sale of a business for a significant sum of money, and there are various shareholdings and a Trust in place, I consider it incumbent upon the applicant to provide comprehensive evidence as to his financial position and given SDSF was the first respondent at trial, its financial position and the circumstances leading up to the applicant resolving that it be wound up.

53    The next factor for consideration is that a failure to comply with a bankruptcy notice is of a different order of gravity compared to the change in status upon the making of a sequestration order.

54    The applicant submits that notwithstanding that difference in status, he will be prejudiced should the Court either not set aside the bankruptcy notice or extend the time for compliance with the notice since compliance is an act of bankruptcy within the meaning of s 40(1)(g) of the Act.

55    The applicant submits prejudice will arise at three levels. First, it is likely to prevent him from earning an income in the industry in which he has operated for most of his adult life, whether because of the potential suspension or cancellation of the AFSL or Tax Agent registration possessed by him or his associated entities. Further, it will serve to diminish the prospects of him obtaining work as an employee or authorised representative of third party Australian Financial Services Licensee.

56    I accept there is a potential for suspension or cancellation of the applicant’s or his related entities’ AFSL or Tax Agent registration. I also accept that it may diminish the prospects of the applicant obtaining work whether as an employee or as an authorised representative of an Australian Financial Services Licensee. The weight to be given to that potential prejudice is another matter.

57    Second, irrespective of the result of the appeal, the commission of an act of bankruptcy remains available to a third party. That may be so, but there is nothing unique about that circumstance. I do not consider that matter to carry any significant weight.

58    Third, if the non-compliance with a bankruptcy notice proceeds to the making of a sequestration order, whether the appeal proceeds will depend on the decision of the trustee in bankruptcy: s 60(2) of the Act.

59    The respondents filed a creditor’s petition on 24 June 2025. Whether the matter proceeds to the making of a sequestration order in the circumstances is a matter which can be addressed at the hearing of any creditor’s petition.

60    The applicant also submits that prejudice also arises in the form of reputational damage. In circumstances where there have been adverse credibility findings which are not challenged on appeal, I do not consider any prejudice of this nature arises.

61    The fourth factor concerns the interests of the judgment creditor and other creditors of the judgment debtor in ensuring that if ultimately a sequestration order is made, the relevant act of bankruptcy occurs earlier rather than later. I accept that is a significant consideration in the circumstances of this matter, particularly where the applicant had provided no information about his financial circumstances.

62    Further, I also consider it significant that if the bankruptcy notice is set aside, there is the prospect that a trustee in bankruptcy would be precluded from seeking to have the transfer of real property on 25 August 2021 declared void pursuant to s 120 of the Act.

63    The fifth factor is the extent to which there is evidence of the means of the applicant to satisfy the judgment debt in the absence of a stay or whether it would be appropriate to order security for the debt as a condition of an extension of time for compliance with the bankruptcy notice.

64    No offer of security was made by the applicant and as I have noted, the applicant puts no evidence before the Court as to his financial circumstances to support his assertion that he is unable to pay the judgment debt.

65    I have dealt with the sixth factor above.

66    Although I have considered the six factors identified in Owen, the process of considering whether or not to exercise the discretion is not a mechanical exercise. The six factors are all relevant considerations but only part of the overall consideration required in determining whether to exercise the discretion or not.

67    In the circumstances of this matter, amongst other things, the absence of an application to stay enforcement of the judgment, the absence of evidence from the applicant as to his financial circumstances, the absence of any evidence of the circumstances leading to the resolution that SDSF be wound up, the absence of any evidence as to what has become of the money paid thus far for the purchase of Exelsuper’s business and the status of non-compliance with a bankruptcy notice, as opposed to that which accompanies a sequestration order, are all matters of significant weight in favour of exercising the discretion against extending the time for compliance with the bankruptcy notice.

68    I take into account the potential prejudice identified by the applicant but do not consider it outweighs the matters in favour of dismissing the application.

Conclusion

69    Having considered the entirety of the circumstances of the matter, I am not persuaded that the discretion to set aside the bankruptcy notice or extend time for compliance with it should be exercised.

70    It is for these reasons that the application be dismissed and there will be orders accordingly.

71    There is no reason why the applicant should not pay the respondents’ costs of and incidental to the application to be assessed as a lump sum if not agreed.

Associate:

Dated:    1 August 2025