FEDERAL COURT OF AUSTRALIA

Victorian Legal Services Board v Kuksal (Sequestration Order) [2025] FCA 999

ORDERS

THE COURT ORDERS THAT:

1.    The estates of SHIVESH KUKSAL, LULU XU AND PETER ANSELL be sequestrated under the Bankruptcy Act 1966 (Cth).

2.    The applicant creditors’ costs and the costs of the supporting creditor, including reserved costs, be taxed and paid from the estates of the respondent debtors in accordance with the Bankruptcy Act 1966 (Cth).

3.    Pursuant to section 37AF(1) and section 37AG(1)(a) of the Federal Court of Australia Act 1976 (Cth), on the ground that it is necessary to prevent prejudice to the proper administration of justice, the following parts of the following documents filed in this proceeding are to be treated as confidential and not be published, disclosed or accessed except pursuant to an order of the Court for 15 years from the date of this Order:

(a)    paragraphs 55.1, 56.1 to 56.14, 144 and 147 of the affidavit of Thomas Flitner sworn 21 July 2025;

(b)    paragraph 3 (consisting of 11 paragraphs of material across pages 3 to 4) of the Respondents’ Notice of Intention to Adduce Tendency Evidence dated 23 July 2025.

4.    Pursuant to section 37AF(1) and section 37AG(1)(a) of the Federal Court of Australia Act 1976 (Cth), on the ground that it is necessary to prevent prejudice to the proper administration of justice:

(a)    the person referred to in paragraph 55.1 of the affidavit of Thomas Flitner sworn 21 July 2025 and filed in this proceeding be referred to in connection with this proceeding only by the pseudonym “Person 1”;

(b)    the person referred to in paragraph 56.7 of the affidavit of Thomas Flitner sworn 21 July 2025 and filed in this proceeding be referred to in connection with this proceeding only by the pseudonym “Person 2”;

(c)    publication of any information tending to reveal the identities of Person 1 or Person 2 be prohibited for a period of 15 years from the date of this Order.

5.    Pursuant to section 37AF(1) and section 37AG(1)(a) of the Federal Court of Australia Act 1976 (Cth), on the ground that it is necessary to prevent prejudice to the proper administration of justice, publication of any information, submission or document in this proceeding that refers to or records the allegations set out in paragraphs 56.1 to 56.14 of the affidavit of Thomas Flitner sworn 21 July 2025 and filed in this proceeding is prohibited for a period of 15 years from the date of this Order.

6.    This order is taken to be entered on the day that it is authenticated.

The Court notes that the date of the act of bankruptcy in respect of each of the respondents is 13 February 2025.

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

REASONS FOR JUDGMENT

DOWNES J:

SYNOPSIS

1    Relevant background to these proceedings is set out in 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 at [1]–[4] (Downes J), Victorian Legal Services Board v Kuksal (Interlocutory Matters) [2025] FCA 801 at [3]–[11] (Lee J), Victorian Legal Services Board v Kuksal (Recusal Application) [2025] FCA 828 (Downes J) and Victorian Legal Services Board v Kuksal (Adjournment of Creditor’s Petition) [2025] FCA 852 (Downes J).

2    By a creditor’s petition filed 28 February 2025, the Victorian Legal Services Board (Board) and others (the applicants) seek sequestration orders against the first respondent (Mr Kuksal), the second respondent (Ms Xu) and the third respondent (Mr Ansell).

3    The respondents each filed Notices of Appearance in this proceeding which were accepted for filing on 1 April 2025.

4    The material relied upon by the applicants was identified in a list provided by the applicants and which became “MFI-3” (other than items 4 and 5 on that list which were not relied upon by the applicants).

5    The applicants filed outlines of submissions on 25 July 2025, 4 August 2025 and 5 August 2025.

6    Each respondent filed a Notice Stating Grounds of Opposition to Creditor’s Petition on 22 July 2025 (Notice) which superseded earlier such notices which had been accepted for filing on 1 April 2025. By each current Notice, the following grounds of opposition are raised (in summary) (Grounds). It is convenient to adopt the numbering of the Grounds from Mr Kuksal’s Notice:

(1)    Ground 1: The Petition was not personally served on Mr Kuksal (this ground is only raised in Mr Kuksal’s Notice);

(2)    Ground 2: No act of bankruptcy has been committed;

(3)    Ground 3: No debt is owed to the Applicants because the relevant costs orders were obtained by fraud;

(4)    Ground 4: The respondents have genuine and arguable claims against the creditors for amounts that substantially exceed the judgment debt owed by the respondents to the applicants; and

(5)    Ground 5: Other sufficient causes exist for the Court to dismiss the creditor’s petition.

7    At the first case management hearing before me on 17 June 2025 and after unsolicited documents had been emailed to my chambers by the respondents, including a proposed interlocutory application, I stated to the respondents that:

So if you want to file something in the court, you’ve got to file it through the registry.

8    At that hearing, I also stated to the effect that the way things could be raised in this matter was by filing an affidavit, filing written submissions or making submissions in a hearing.

9    Despite request during the hearing of the creditor’s petition, the respondents did not provide a list of the affidavit material relied upon by them. This was so even though the preparation of such a list was the reason given for Mr Kuksal and Ms Xu being late on the second day of hearing. As proposed by counsel for the applicants and which course was not opposed by the respondents, I have treated all affidavits which were filed by the respondents as being the affidavit material on which the respondents rely to oppose the making of a sequestration order. I have also had regard to the affidavits which were tendered by the respondents, and which became exhibits.

10    Many of the affidavits relied upon by the respondents contain conclusory statements or submissions rather than statements of fact which were relevant to the Grounds, with the consequence that I attach little weight to this evidence. Further, much of the evidence contained in the voluminous annexures to the respondents’ affidavits in “electronic folders” (to the extent that the documents in these folders were able to be opened) is hearsay evidence, such as correspondence, newspaper articles or recordings of conversations. I have placed little weight on such evidence for that reason.

11    The respondents’ affidavits as filed or which became exhibits were as follows:

(1)    Affidavit of Mr Kuksal dated 31 March 2025 which stated that an affidavit of Mr Ansell prepared that day would “be lodged in the Proceeding on behalf of all three Respondents”;

(2)    Affidavit of Mr Ansell dated 31 March 2025. This affidavit referred to an electronic folder marked “PA-Annexure (31.03.25)” which, upon being downloaded, contained hundreds of pages of material which had been too large to upload to the electronic court file by the registry. This included a 267 page bundle of documents described in the footnotes in that affidavit as the “Relevant Email Exchanges”;

(3)    Affidavit of Ms Xu filed on 3 April 2025;

(4)    Affidavit of Mr Ansell filed on 3 April 2025;

(5)    Affidavit of Mr Ansell dated 17 April 2025;

(6)    Affidavit of Mr Ansell filed on 24 April 2025, which appears to be an amended version of the affidavit dated 17 April 2025 and which corrects the naming of an annexure;

(7)    Affidavit of Mr Kuksal filed on 15 May 2025;

(8)    Affidavit of Mr Kuksal filed on 20 May 2025;

(9)    Affidavit of Mr Thomas Flitner filed on 22 July 2025;

(10)    Affidavit of Mr Kuksal accepted for filing on 30 July 2025;

(11)    Affidavit of Mr Flitner dated 21 July 2025 (exhibit 8);

(12)    Affidavit of Mr Kuksal dated 29 July 2025 on the Supreme Court of Victoria form (marked “MFI-2”).

12    Ms Xu also provided a further affidavit of herself by email during her closing submissions, which was lodged for filing on 15 August 2025. That affidavit contains complaints about the manner in which the hearing of the creditor’s petition had been conducted and is stated to be relevant to the respondents’ application for my recusal.

13    The respondents also filed the following documents since 17 June 2025 which appeared to contain submissions:

(1)    A document entitled “Relevant Authorities on the Application of the Open Courts Principle and the Implied Freedom of Political Speech” filed on 8 July 2025;

(2)    A document entitled “Relevant Authorities on the Determination of Objections to Subpoenas” filed on 8 July 2025;

(3)    A copy of a paper entitled “Adequate, Sufficient and Excessive Reasons” with passages highlighted in purple filed on 22 July 2025;

(4)    A document entitled “Submissions on Suppression Orders and Going Behind the Judgment Debt” which was accepted for filing on 30 July 2025 (and which appears to supersede an earlier version which was lodged for filing on 25 July 2025);

(5)    A document entitled “Partial Outline of Submissions” which was accepted for filing on 30 July 2025;

(6)    A document entitled “Outline of Matters” filed on 12 August 2025.

14    Other submissions filed by the respondents were:

(1)    A document entitled “Outline of Issues” filed on 3 April 2025, and a document entitled “Amended Outline of Issues” filed on 8 April 2025;

(2)    Respondents’ Submissions filed on 14 May 2025 and 15 May 2025.

15    As to two Notices of a Constitutional Matter which were filed, the respondents did not refer to them during the hearing, and, in any event, no constitutional matter arises in this case.

16    During the hearing on 30 July 2025, Mr Kuksal and Mr Ansell were offered a further opportunity to file written submissions by 13 August 2025: see order 2 of the Order dated 30 July 2025. However, no further submissions in relation to the creditor’s petition were filed by 13 August 2025. This date was later extended to 25 August 2025; however, again, no further submissions were filed by any of the respondents. On 27 August 2025, Mr Kuksal sent an email to my chambers on behalf of the respondents seeking an extension until 5 September 2025 to file submissions (and also sought leave to file a further affidavit by 1 September 2025). I decline to grant these requests, as I am satisfied that the respondents have been given more than adequate opportunity to present their cases, I have no confidence (based on past experience) that the respondents will meet any new deadlines proposed by them, the grant of any further indulgences to the respondents would be unfair to the applicants and the supporting creditor, as well as contrary to the overarching purpose, and there is a need for bankruptcy proceedings to be heard and determined with expedition.

17    For the reasons that follow, I have determined that the orders sought by the applicants should be made. In particular, I have determined that the estates of the respondents should be sequestrated.

18    In anticipation of an application by respondents to stay the sequestration orders pending any appeal, I observe that the Federal Court does not have that power: see Ritson v Commissioner of Police (NSW) [2021] FCAFC 208 at [63]–[64] (Allsop CJ, Lee and Downes JJ).

PRELIMINARY MATTERS

The manner in which this proceeding was conducted

19    During the hearing of the creditor’s petition, I made a number of rulings and stated that I would provide reasons in the judgment. I have also determined that an application for leave to appeal from one of my rulings should be refused (being something which I deferred for consideration). Subject to below, my reasons appear in an Annexure to this judgement.

20    Before proceeding to consider the substantive issues, I consider it to be necessary to make some observations about the manner in which this proceeding was conducted by the respondents.

21    Ms Xu was capable of conducting cross-examination and presenting oral submissions on her own behalf. Although she said that she had difficulties with writing in the English language, Ms Xu’s emails to my chambers and other written material (including the affidavit of 15 August 2025) displayed no obvious deficiency in this regard. Mr Ansell is a mature gentleman and a solicitor of many years’ experience, and he is the person who witnessed many of the various affidavits filed in the proceeding by the respondents. Mr Kuksal appears to be well-read, and according to Mr Thomas Flitner (a lawyer), Mr Kuksal’s “knowledge of the law is extraordinary, and advanced game theory principles inform his litigation strategy”.

22    The period of time between late February 2025 and the first day of hearing of the creditor’s petition on 28 July 2025 was approximately five months. During that period, the respondents each filed two Notices (one dated 31 March 2025 and one dated 22 July 2025), numerous affidavits, and multiple sets of submissions.

23    Although each of the respondents was self-represented, they also worked together to present their case in this matter and many documents were filed jointly by the respondents.

24    When the proceeding was allocated to my docket, I requested that the parties advise suitable dates for the hearing of the creditor’s petition, but the respondents did not respond with advice as to suitable dates, nor did they advise that they considered that the hearing would take a particular number of days. When I listed the creditor’s petition for a two day hearing, there was a six-week period between the date when the listing dates were allocated and the hearing dates of 28 and 29 July. My reasons for listing the hearing on those dates are contained in Kuksal (No 2).

25    During that six week period, the Court accommodated the hearing of the respondents’ interlocutory application before another judge (Lee J), and (apart from the relief which sought my recusal), that application was dismissed. The respondents were advised by Lee J in Kuksal (Interlocutory Matters) at [68] to get legal representation if they are serious about defending the sequestration proceedings. That judgment was also explicit as to what the respondents needed to do – I refer in particular to [41], [45], [70] and [75] of that decision which referred to affidavits needing to be filed by the respondents supporting any grounds of objection.

26    Also during that six-week period, two hearing days were allocated and spent on the respondents’ unsuccessful application for my recusal and the adjournment of the hearing of the creditor’s petition, being 1 July 2025 and 17 July 2025: see Kuksal (Recusal Application); Kuksal (Adjournment of Creditor’s Petition).

27    The respondents failed to meet deadlines imposed by my orders and were afforded extensions of time to comply, including on the final day of the hearing: see Orders dated 21 July 2025, 6 August 2025 and 15 August 2025. Instead of seeking to comply with my orders, the respondents sent lengthy emails to my chambers, despite being asked not to communicate with my chambers directly. A bundle of these emails, totalling 139 pages without attachments, was handed up by Ms Xu on the final day of the hearing, although no reference was made to any part of them.

28    As it transpired, the creditor’s petition was heard over four days, not two. Much of the hearing time was occupied by numerous oral applications by the respondents, and repeated requests for reasons. Most, but not all, of these applications were advanced by Mr Kuksal, with Mr Ansell and Ms Xu looking on and, on occasion, assisting him. At no time did Mr Ansell or Ms Xu submit that Mr Kuksal was not speaking for them when he made these applications on behalf of the respondents.

29    Throughout the hearing, Mr Kuksal interrupted or talked over me or counsel for the applicants, raised his voice (and even shouted on occasion), made loud interjections while seated at the bar table, and refused to sit down when requested to do so. His body language was aggressive and confrontational, and his behaviour was pugnacious. Court personnel and legal representatives for parties should not be subjected to this type of unacceptable conduct, the impact of which is not reflected in the transcript in any adequate way.

30    Mr Kuksal was removed from the court room on two occasions when he persisted in disrupting the proceedings. On the first occasion, he was sent a link by email so he could observe the proceedings (MFI-1) and on the second occasion, he was removed for approximately 15 minutes. This is not the first time that Mr Kuksal has been removed from a court room; I note that Gorton J did the same thing on 21 August 2024 according to the transcript provided by Ms Xu on the final day of the hearing.

31    In addition, two of the respondents (Mr Kuksal and Ms Xu) arrived late for the commencement of the hearing days (twice) which resulted in lost hearing time. Mr Kuksal was also late arriving back after the lunch break on the first day. On the second day, Mr Kuksal and Ms Xu were late in returning from the lunch break. On the third day of the hearing, immediately prior to the lunch adjournment, Mr Kuksal and Ms Xu made lengthy submissions about how they had been deprived of sufficient time in the proceedings. However, after the lunch adjournment, the respondents were again late in returning to court and the matter had to be called outside by the court officer. The lack of respect and courtesy shown to the Court, the applicants and their legal representatives mirrors similar conduct before Gorton J as referred to in the same transcript.

32    Overall, the respondents’ conduct appeared designed, at least initially, to halt or at least impede the hearing of the petition. For this reason, I deferred delivery of reasons for my rulings until delivery of this judgment.

33    When the Court accommodated a third consecutive day of hearing (after another matter I was supposed to hear on that date was reallocated to a different judge), the respondents then sought to create a narrative that they had been deprived of a fair hearing – including on the basis that they wished to call witnesses to give oral evidence, that they themselves wished to give oral evidence and to file further affidavits and that they should each be permitted to make oral submissions. Again, these complaints are similar to those made against Gorton J as to the manner in which his Honour conducted the proceedings in which the costs orders were made. Before me, Mr Kuksal sought to pepper the transcript with self-serving statements consistent with this narrative, no doubt with one eye on an appeal, and I observed him speak to Ms Xu at the bar table before she also made similar statements.

34    As the respondents had months to prepare and file affidavits and submissions in support of their grounds of opposition (and had done so), that the applicants are also entitled to a fair hearing and the overarching purpose, I permitted Ms Xu alone the opportunity to make oral submissions on a fourth hearing day. However, even then, Ms Xu wanted further hearing time beyond that day to make oral submissions. I declined this and, instead, I gave her leave to file any further written submissions which she wished to make; she asked for ten days to do so, which the Board did not oppose, and that request was granted.

35    During the fourth day, Mr Kuksal again persisted in seeking to interrupt the proceedings. He also alluded to further applications which the respondents wished to have heard that day, including yet another application for my recusal. As the hearing day had been allocated for the purposes of hearing Ms Xu’s oral submissions, I declined to hear these applications.

36    All of this leads me to observe that the respondents could have, but chose not to, devote their time, energy and resources to addressing the real issues in dispute in this case. Instead, they decided to take steps to delay, distract and focus on self-created procedural complaints. Such steps included the drafting of emails, submissions and affidavit material which focussed upon their complaints about the manner in which this proceeding was being conducted.

37    Regrettably, had the respondents spent their time preparing cogent affidavit material and submissions which were relevant to the Grounds, then the outcome of the creditor’s petition might have been different. This is something which the respondents were more than capable of doing, especially as one of them was legally qualified, and which they had ample opportunity to do. That they chose not to do so is their own fault entirely.

Suppression and non-publication orders

38    Prior to the hearing, I made orders on 21 July 2025 and 22 July 2025 suppressing certain documents on the court file. Order 2 of the orders dated 21 July 2025 provided that:

Subject to further order and pursuant to s 37AG(1)(a) of the Federal Court of Australia Act 1976 (Cth), on the ground that the order is necessary to prevent prejudice to the proper administration of justice, the affidavit of Thomas Christian Flitner dated 13 July 2025 be marked confidential on the Court file and not be published, disclosed or accessed except pursuant to an order of the Court.

39    Orders 1 and 2 of the orders dated 22 July 2025 provided that:

The respondents have leave to file an amended notice of objection, a statement of charge, an affidavit of Thomas Christian Flitner affirmed on 21 July 2025 and the affidavit of Shivesh Kuksal dated 17 July 2025.

Subject to further order and pursuant to s 37AG(1)(a) of the Federal Court of Australia Act 1976 (Cth), on the ground that the order is necessary to prevent prejudice to the proper administration of justice, the documents referred to in order 1 be marked confidential on the Court file and not be published, disclosed or accessed except pursuant to an order of the Court.

40    My reasons for making these orders are contained in Kuksal (Adjournment of Creditor’s Petition) especially at [9]–[16]. In particular, I refer to the order of Lee J in [12] of that decision concerning documents containing or referring to the “Flitner Allegations”.  The Flitner Allegations are referred by Meagher J in the related proceeding: Kuksal especially at [14]–[15]. Meagher J described the Flitner Allegations as, on their face, scandalous, embarrassing and reputationally damaging: [52]. I agree with this characterisation. Lee J also discussed the extraordinary and highly personal nature of the Flitner Allegations in Kuksal (Interlocutory Matters) at [32]. 

41    At the hearing of the creditor’s petition, the applicants applied for an order that the interim suppression orders be vacated and that a narrower form of orders be made. The respondents applied to set aside the suppression orders in their entirety.

42    After hearing oral submissions on the issue of suppression, I vacated the interim suppression orders and made an alternative form of interim orders. These were made because I was satisfied that narrower suppression orders were appropriate (taking into account the public interest in open justice) and that the orders would suffice to prevent the publication of the Flitner Allegations until further submissions were received from the parties. The interim suppression orders removed the suppression that had previously been placed on certain documents filed by the respondents such as the Notices. The orders also suppressed identified paragraphs of the affidavit material containing the Flitner Allegations, rather than the entire affidavits. The replacement orders also suppressed certain paragraphs of the respondents’ Notice to Adduce Tendency Evidence, which traversed the Flitner Allegations, and ordered that certain persons referred to in the Flitner Allegations be known only by the pseudonyms “Person 1” and “Person 2” in connection with the proceeding. The pseudonym order allowed the respondents to make submissions which named Person 1 and Person 2 but prevented the publication of those names.

43    On 29 July 2025, I ordered that the parties file and serve written submissions within 7 days on whether the interim suppression orders should continue or whether an alternative form of order should be made.

44    The applicants filed submissions on 5 August 2025. The respondents filed no submissions by 5 August 2025.

45    On 6 August 2025, Ms Xu sent an email which stated that the respondents needed time to consider and respond to the submissions of the applicants. Ms Xu’s email also stated that the filing schedule for submissions contained within the orders of 29 July 2025 was only emailed to the parties by the Court on 31 July 2025 and that the respondents had “no idea that the Court had made the orders”. The respondents requested an extension until 4.00 pm on 11 August 2025 to file submissions.

46    The respondents did not have “no idea” that the order of 29 July 2025 had been made, as it was made during the hearing on 29 July 2025 when all of the respondents were present. Furthermore, the 29 July 2025 orders did not provide for the respondents to have a right of reply to the submissions of the applicants, which is effectively what the respondents sought by their request for an extension. As the respondents had repeatedly raised concerns in correspondence and at the hearing about their need to have the suppression orders set aside urgently, I declined to grant the extension until 4.00 pm on 11 August 2025. However, I granted the respondents a short extension until 4.00 pm on 8 August 2025. No submissions were filed by the respondents on 8 August 2025. I also declined to grant a further extension until 5.00 pm on 11 August 2025 when this was requested by Ms Xu on 11 August 2025 for the same reasons. In any event, the respondents did not file written submissions on the interim suppression orders until 12 August 2025.

47    The primary focus of the respondents’ written submissions is not upon whether the interim suppression orders should remain, be set aside or replaced with a different order, and why that is. Rather, the submissions have been used as a vehicle to make allegations about my reasons for making the original suppression orders and to complain about the way in which the proceeding was conducted, and to (once again) suggest that I should recuse myself from the proceeding. However, as best I can understand the respondents’ submissions on the suppression orders, it is submitted that the interim suppression orders should be set aside and should not be replaced by any other order for the following reasons.

48    The respondents submit that there is no basis for maintaining suppression orders in the absence of an application supported by cogent evidence of imminent harm to an entity or a specific abuse of court process. However, the orders sought by the applicants are to prevent prejudice to the proper administration of justice, such that no evidence is required to be filed by the applicants.

49    The respondents also submit that the suppression orders are “contrary to the principle of open justice”. However, while a primary objective of the administration of justice is to safeguard the public interest in open justice, the principle of open justice is not free-standing nor absolute: John Fairfax Publications Pty Ltd v Ryde Local Court (2005) 62 NSWLR 512 at [29] (Spigelman CJ); John Fairfax Group Pty Ltd v Local Court of NSW (1991) 26 NSWLR 131, 140-1 (Kirby P). It may be abrogated where necessary to protect the administration of justice.

50    The respondents also submit that the suppression orders have a “wider and more oppressive scope than the original permanent orders”. However, the interim orders were narrower than the original suppression orders for the reasons explained above.

51    Finally, the respondents complain that the issue of the suppression orders is being determined on the papers and contend that it is contrary to ss 20A and 37AH of the Federal Court of Australia Act 1976 (Cth). However, the issue of whether the interim suppression orders should be made on a permanent basis could be dealt with adequately by written submissions without the time and expense of a further hearing: s 20A(2)(c)(ii) of the Federal Court Act. Further, the fact that the respondents do not consent to the determination of the matter on the papers is irrelevant: s 20A(2) of the Federal Court Act.

52    As to the applicants’ objection to the documents containing the Flitner Allegations, the documents containing the Flitner Allegations were deployed at the hearing on a provisional basis only, subject to the applicants’ objection.

53    In my view, the Flitner Allegations are not relevant and are otherwise scandalous and embarrassing, such that permitting documents, including any affidavit, to contain such allegations would constitute an abuse of process. The Flitner Allegations should never have been made in any document filed in this proceeding.

54    For this reason, paragraphs 55.1, 56.1 to 56.14, 144 and 147 of the affidavit of Mr Flitner sworn 21 July 2025 is inadmissible and should be struck out, and paragraph 3 of the Notice of Intention of Adduce Tendency Evidence should be struck out.

55    Having regard to my finding above, I consider that it would be prejudicial to the administration of justice if the Flitner Allegations as contained in these documents were able to be published by the respondents or non-parties, clothed with the protection that the law of defamation affords to fair and accurate reports of court proceedings and public documents. As the applicants submit, such prejudice would be exacerbated by the nature of the Flitner Allegations, being allegations that are sensational, highly personal and scandalous, and which have not been tested by cross-examination in open court.

56    For these reasons, I will extend the interim orders on a final basis pursuant to ss 37AF(1) and 37AG(1)(a) of the Federal Court Act on the grounds that they are necessary to prevent prejudice to the proper administration of justice.

57    Section 37AJ of the Federal Court Act requires that any non-publication order should operate for no longer than is reasonably necessary to achieve the purpose for which it was made. In the circumstances, where the purpose of the orders is to prevent the inspection and publication of information and documents held or received by the Court which have been ruled inadmissible and scandalous and ought never have been before the Court, it is appropriate that the orders remain in place for a period of 15 years.

RELEVANT LEGISLATION AND PRINCIPLES

58    Section 41(1) of the Bankruptcy Act 1966 (Cth) provides that an Official Receiver may issue a bankruptcy notice on the application of a creditor who has obtained against a debtor a final judgment or final order that is of the kind described in s 40(1)(g) and is for an amount of at least the statutory minimum.

59    Section 40(1)(g) of the Bankruptcy Act provides that a debtor commits an act of bankruptcy 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 …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…

60    Section 43(1) of the Bankruptcy Act relevantly provides that, subject to the Act, where a debtor has committed an act of bankruptcy and otherwise meets the territorial connection requirement, the Court may “on a petition presented by a creditor” make a sequestration order against the estate of the debtor.

61    Section 44(1) of the Bankruptcy Act sets out the conditions on which a creditor may present a petition, being (relevantly to the facts of this case):

(a)    there is owing by the debtor to the petitioning creditor a debt that amounts to the statutory minimum;

(b)    that debt is a liquidated sum due at law or in equity or partly at law and partly in equity and is payable either immediately or at a certain future time; and

(c)    the act of bankruptcy on which the petition is founded was committed within 6 months before the presentation of the petition.

62    Section 52 of the Bankruptcy Act relevantly provides:

52    Proceedings and order on creditor’s petition

(1)    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.

…

(2)    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 be made;

it may dismiss the petition.

SATISFACTION OF SECTION 52(1) BANKRUPTCY ACT

Matters stated in the creditor’s petition

63    The matters to be proved are those requirements listed in s 43(1) of the Bankruptcy Act, being, in summary:

(1)    the debtor has committed an act of bankruptcy;

(2)    at the time when the act of bankruptcy was committed, the debtor was, among other things, personally present or ordinarily resident in Australia, or had a dwelling house or place of business in Australia; and

(3)    the creditor has presented a petition in respect of that act of bankruptcy.

64    For the reasons which follow, all of these requirements have been established.

Act of bankruptcy

65    The Official Receiver, being the Australian Financial Security Authority (AFSA), issued three bankruptcy notices to each of the respondents (the bankruptcy notices) pursuant to s 41 of the Bankruptcy Act.

66    Each bankruptcy notice related to costs orders made against one or all of the respondents (and some were also made against other parties as well). The costs orders which underlie the bankruptcy notices were obtained in three proceedings in the Victorian Supreme Court, being proceeding S ECI 2022 03994, proceeding S ECI 2022 04028, and proceeding S ECI 2022 04527. These costs orders are dated 7 September 2023 (two of this date), 19 February 2024, 8 March 2024 and 5 December 2024 and were made by Gorton J.

67    The total amount of those orders exceeds the statutory minimum of $10,000 provided for in reg. 10A of the Bankruptcy Regulations 2021 (Cth). In these reasons, I will describe the amounts claimed in the bankruptcy notices which were served on each respondent as the judgment debts.

68    The respondents complain about the number of bankruptcy notices which were served on them. However, as Mr Jared Heath explained in his affidavit dated 25 July 2025 (and which evidence I accept), the applicants’ lawyers tried to obtain a single bankruptcy notice for each of the respondents. However, at the direction of the AFSA, they were ultimately required to obtain a total of nine bankruptcy notices, being three for each respondent.

69    Another complaint raised by the respondents is that the AFSA raised a query with the applicants’ lawyers in some (but not all) of its correspondence concerning whether the costs were payable jointly and severally. In two letters dated 19 September 2024 relating to the judgment in S ECI 2022 04028 and S ECI 2022 03994 (and which letters related to Mr Kuksal and Ms Xu respectively), clarification was sought as to whether “the first, second and fourth defendants are to pay the costs jointly and severally”. There is no evidence as to what, if any, clarification was provided by the applicants’ lawyers.

70    The relevance of the response by the applicants’ lawyers in response to the queries raised in these two letters is not apparent, and notwithstanding an oral application by the respondents during the hearing that I order the applicants’ solicitors to produce these responses, I declined to do so for this reason. As a matter of law, and irrespective of whether the relevant order stated that the costs were payable jointly and severally, they were so payable: see Law of Costs (Dal Pont, 5th ed., LexisNexis Australia 2021) at [11.2].

71    In any event, this type of query was not raised by the AFSA in relation to the applications for the bankruptcy notices with respect to Mr Ansell, and it was not raised in relation to the costs order made in proceeding S ECI 2022 04527.

72    Further, this query was not raised in relation to all applications for the issue of a bankruptcy notice. This means that, irrespective of the responses to those queries, it did not impact upon the issue of all nine bankruptcy notices.

73    For example, in the letter dated 4 November 2024 relating to bankruptcy notice number BN274226 with debtor name SHIVESH KUKSAL, it was stated that:

1. The judgment S ECI 2022 04028 dated 7 September 2023 amount $9,000 and S ECI 2022 04028 dated 8 March 2024 amount $18,978.50 are awarded to defendants. Accordingly, all those defendants must be listed in the BN. You may request a separate BN for these two judgments/amounts as the other below two judgments are awarded to only one party.

2. We can issue this BN but only for these two following judgments/amounts: S ECI 2022 04527 dated 7 September 2023 amount $5,189.96 and S ECI 2022 03994 dated 19 February 2023 amount $14,346.31.

74    As another example, in the letter dated 5 November 2024 relating to bankruptcy notice number BN274228 with debtor name LULU XU, it was stated that the:

Order S ECI 2022 04028 awards more than just one creditor. All creditors awarded must be included in the application.

75    Another complaint which was raised by Ms Xu was that the fact that the same amounts were sought from the respondents in relation to the same costs orders. Ms Xu also focussed on the reference to the word “jointly” in the bankruptcy notices. However, there is nothing in these complaints, and I was not directed to any evidence which indicated the consequences of these facts, or the relevance to any of the Grounds.

76    There were three bankruptcy notices served on Mr Kuksal (by reference to Mr Heath’s annexure markings in his affidavit of service affirmed 28 February 2025):

(1)    Bankruptcy notice “JRH-07” with the Board named as creditor and the associated costs order at pages 24–29 of the annexures;

(2)    Bankruptcy notice “JRH-09” with the applicants named as creditors and the associated costs order at pages 40–45 of the annexures;

(3)    Bankruptcy notice “JRH-12” with the Board named as creditor and the associated costs order at pages 69–70 of the annexures;

77    There were three bankruptcy notices served on Ms Xu (by reference to Mr Heath’s annexure markings in his affidavit of service affirmed 28 February 2025):

(1)    Bankruptcy notice “JRH-08” with the Board named as creditor and the associated costs order at pages 33–35 of the annexures;

(2)    Bankruptcy notice “JRH-10” with the applicants named as creditors and the associated costs order at pages 50–55 of the annexures;

(3)    Bankruptcy notice “JRH-13” with the Board named as creditor and the associated costs order at pages 74–75 of the annexures;

78    There were three bankruptcy notices served on Mr Ansell (by reference to Mr Heath’s annexure markings in his affidavit of service affirmed 28 February 2025):

(1)    Bankruptcy notice “JRH-06” with the Board named as creditor and the associated costs order at pages 18–20 of the annexures;

(2)    Bankruptcy notice “JRH-11” with the applicants named as creditors and the associated costs order at pages 60–65 of the annexures;

(3)    Bankruptcy notice “JRH-14” with the Board named as creditor and the associated costs order at pages 79–80 of the annexures.

79    Each of the bankruptcy notices was served by email on 23 January 2025 pursuant to reg. 102 of the Regulations. The affidavit of service of Mr Heath dated 28 February 2025 established that the bankruptcy notices and associated costs orders were sent to each of the respondents at email addresses which had been used by them to correspond with his firm. Thus, the documents were sent by a kind of electronic communication such that, in the ordinary course of events, the documents could be reasonably expected to be received by each of the respondents within the meaning of reg. 102(1)(d)(ii).

80    The respondents did not contend that they did not receive these emails, or the documents attached to them. Rather, Ms Xu submits that the respondents had not consented to service of the bankruptcy notices by email. However, such consent was formerly, but is no longer, required by reg. 102 for service by email: see, for example, CSM Lawyers Pty Ltd v Manzo, in the matter of Manzo [2023] FCA 236 at [33]–[35] and [40] (Downes J) which refers to the previous version of reg. 102.

81    The 21-day deadline to comply with or contest the bankruptcy notices was 13 February 2025.

82    The bankruptcy notices and associated costs orders were also sent by registered post to each of the respondents. According to the Australia Post tracking records, the envelopes to each of Mr Kuksal and Ms Xu were delivered on 4 February 2025 and the envelope to Mr Ansell was delivered on 6 February 2025.

83    By her submissions, Ms Xu complains that the covering letter which was provided with the documents which were served by post stated that she now had 21 days within which to comply with the bankruptcy notice, which was the same statement as appeared in the email which attached the bankruptcy notice, and that this was confusing. However, there is nothing in these complaints, and I was not directed to any evidence which indicated the consequences of these facts, or the relevance to any of the Grounds.

84    Mr Ansell deposes that the respondents lodged applications to set aside the bankruptcy notices on 25 and 26 February 2025, which were not accepted for filing by the registry.

85    However, regardless of the reasons why those applications were not accepted for filing, it is incontrovertible that those applications were not made within the time required, being by 13 February 2025.

86    Further, even if one treats the date of delivery of the bankruptcy notices by post as being the date of service of those notices, the outcome is no different because the applications have not been accepted for filing by the registry.

87    In Lamb v Sherman (2023) 298 FCR 79; [2023] FCAFC 85 (Rares, Rofe and Downes JJ), the Full Court had cause to consider when an application to set aside a bankruptcy notice is made.

88    In Lamb at [36], the Full Court stated:

An application can only be made to the Court to set aside a bankruptcy notice under s 41(6A) of the Bankruptcy Act by taking a step in the Court to enliven its jurisdiction. That occurs either by making the application orally before a judge or registrar with power to deal with it or by causing the document to be filed in accordance with r 2.01(1)(a) of the Federal Court (Bankruptcy) Rules. As a result of such a step, the Court becomes seized with jurisdiction to deal with the subject matter of the application.

89    At [54]–[56], the Full Court continued:

In order to make an application to the Court, its jurisdiction has to be invoked, which, ordinarily, occurs by the Registry or the Court accepting the filing of a document comprising an application to set aside a bankruptcy notice, as r 2.01(1)(a) of the Federal Court (Bankruptcy) Rules provides. It cannot be that it is sufficient for an application to be lodged to “make” it, because thereafter it may or may not be rejected for filing. The Federal Court Rules seek to create certainty and prevent injustice occurring by clearly prescribing when a document sent electronically will be taken to have been filed. It does so by stipulating that where the Court receives the document prior to 4:30pm on a business day, and, if accepted, it is deemed to have been filed on that day so that the Court’s jurisdiction then will be enlivened, but, in all other cases, the document is deemed to be filed on the next business day. That gives certainty to when the jurisdiction of the Court has been enlivened.

Of course, it is always possible, because this Court is a superior court of record, for a person to make an oral application for relief to a judge, including under s 41(6A), in cases where there is urgency and the judge is satisfied that it is appropriate and there is a sufficient basis to accept such an application. Where that occurs, the judge exercises the power of the Court to allow the proceeding to be commenced.

When Ms Lamb lodged her application under s 41(6A) of the Bankruptcy Act by electronic communication on 15 June 2022 at 4:37 pm, she did not at that time “make” an application to the Court to set aside the bankruptcy notice within the meaning of s 41(6A). That was because the Court had nothing before it by which it could have done anything to extend the time for compliance with the bankruptcy notice, since its jurisdiction had not yet been invoked either by the filing of that application under r 2.01(1)(a) of the Federal Court (Bankruptcy) Rules and in accordance with the Federal Court Rules, or by her making an oral application to a judge or registrar (if a registrar had power to do so) to permit her to “make” the application to the Court at that time. In the circumstances, she had only lodged her application electronically under r 2.21(1)(d), and, by itself, the lodgment could not have invoked the jurisdiction of the Court under s 41(6A). That is because, until the application was accepted by the Registry under r 2.25(1)(b)(ii), when the seal of the Court was affixed to it and a registrar inserted the notice of filing and hearing as its first page under r 2.24(1)(a), it was not filed or made under r 2.01(1)(a) of the Federal Court (Bankruptcy) Rules (or deemed by force of r 2.25(3) of the Federal Court Rules to have been filed), so that it could not be “made” to the Court within the meaning of s 41(6A).

(Emphasis added.)

90    Applying the reasoning in Lamb and even on the respondents’ best case, the applications lodged by the respondents for filing were not accepted by the registry. This has the consequence that the respondents’ applications to set aside the bankruptcy notices were not made within time.

91    In any event and as I have found, the bankruptcy notices were served on the respondents on 23 January 2025. The respondents had until 13 February 2025 to comply with their respective bankruptcy notices or apply to set them aside. As they failed to do these things, the respondents each committed an act of bankruptcy pursuant to s 40(1)(g) of the Bankruptcy Act.

Territorial connection

92    As to s 43(1)(b) of the Bankruptcy Act, there is no dispute that each of the respondents was ordinarily resident in Australia at the time of the acts of bankruptcy.

Presentation of petition in respect of the act of bankruptcy

93    The applicants have presented a petition in respect of each act of bankruptcy.

94    Sections 44(1)(a) and 44(1)(b) of the Bankruptcy Act relevantly require that there be owing by each respondent to the applicants, as petitioning creditors, a debt that amounts to the statutory minimum, which debt is a liquidated sum due at law and, subject to consideration of the Grounds, is payable immediately.

95    The debts required by ss 44(1)(a) and 44(1)(b) of the Bankruptcy Act are the judgment debts the subject of the bankruptcy notices and, as already observed, they exceed the statutory minimum.

96    As required by s 44(1)(c) of the Bankruptcy Act, the petition was filed on 28 February 2025, within six months of the acts of bankruptcy. The applicants are not secured creditors.

Service of the petition

97    Rule 4.05 of the Federal Court (Bankruptcy) Rules 2016 (Cth) provides:

4.05    Documents to be served

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.

98    As a creditor’s petition is, in effect, an application starting a proceeding, it is an originating application within the meaning of the Federal Court Rules 2011 (Cth): Manzo at [63]. As such, r 8.06 requires that a creditor’s petition be served personally. This construction is consistent with earlier decisions of this Court concerning previous rules: see, eg, De Robillard v Carver (2007) 159 FCR 38; [2007] FCAFC 73 at [79] (Buchanan J, with whom Moore and Conti JJ agreed).

99    While Mr Ansell and Ms Xu do not dispute that they were served personally, Mr Kuksal complains that he was not served personally. However, for the following reasons, it does not matter that Mr Kuksal was not served personally.

100    Rule 10.11 of the Federal Court Rules provides:

10.11    Deemed service of originating application

Unless an application has been made under rule 13.01, if a respondent files a notice of address for service, defence or affidavit, or appears before the Court in response to an originating application, the originating application is taken to have been served personally on the respondent:

(a)    on the date on which the first of those events occurred; or

(b)    if personal service on the respondent is proved on an earlier date––on the earlier date.

101    Rule 1.04 of the Federal Court (Bankruptcy) Rules effectively provides that the Federal Court Rules apply to proceedings under the Bankruptcy Act to the extent they are relevant and not inconsistent with the Federal Court (Bankruptcy) Rules. There is no inconsistency between any other rule in the Federal Court (Bankruptcy) Rules and r 10.11 of the Federal Court Rules: Culleton v Balwyn Nominees Pty Ltd (2017) 343 ALR 632; [2017] FCAFC 8 at [103] (Allsop CJ, Dowsett and Besanko JJ).

102    In this proceeding, Mr Kuksal lodged a Notice of Appearance and an affidavit on 31 March 2025.

103    As such, any issue concerning personal service upon Mr Kuksal was overcome by operation of r 10.11 of the Federal Court Rules because, by operation of that rule, the creditor’s petition was taken to have been served personally on Mr Kuksal on 31 March 2025.

104    For these reasons, the applicants complied with r 4.05 of the Federal Court (Bankruptcy) Rules and Ground 1 is rejected.

Formal matters to be established by applicants

105    Section 43 of the Bankruptcy Act confers jurisdiction on the Court to make sequestration orders. For the reasons stated above, I am satisfied that each of the respondents committed an act of bankruptcy on the date alleged in the creditor’s petition by failing to comply with the requirements of the bankruptcy notices on or before 13 February 2025.

106    For the reasons stated above, I am also satisfied that the creditor’s petition satisfies the requirements of s 44(1) of the Bankruptcy Act.

107    Furthermore, the creditor’s petition is verified by the affidavit of Mr Heath dated 28 February 2025 which is annexed to the petition. Mr Heath is a person who knows the relevant facts in accordance with s 47 of the Bankruptcy Act. This satisfies the requirements of s 52(1)(a) of the Bankruptcy Act.

108    For the reasons stated above, the creditor’s petition was served on each of the respondents, and this was established by the evidence. This satisfies the requirements of s 52(1)(b) of the Bankruptcy Act.

109    There is no dispute that the respondents have not paid the judgment debts, and this was established by the evidence of Mr Heath in his affidavit of 7 May 2025. It was also acknowledged by Ms Xu and Mr Ansell at the hearing on 29 July 2025. This satisfies the requirements of s 52(1)(c) of the Bankruptcy Act.

110    The applicants filed three affidavits of final search in satisfaction of s 52(1) of the Bankruptcy Act and r 4.06(3)(a)–(c) of the Federal Court (Bankruptcy) Rules). The applicants have also complied with rr 4.02, 4.04, 4.05 and 4.06(2) of the Federal Court (Bankruptcy) Rules.

111    It follows that the applicants have a prima facie right to a sequestration order.

WHETHER COURT OUGHT TO MAKE A SEQUESTRATION ORDER

112    The Court retains a discretion whether or not to make a sequestration order even when all of the jurisdictional requirements are established. This discretion is unfettered, and if the respondents seeks to satisfy the Court under s 52(2) of the Bankruptcy Act that there is some “other sufficient cause” to dismiss the creditor’s petition, they bear the onus of satisfying the Court of those matters: Bechara v Bates (2021) 286 FCR 166; [2021] FCAFC 34 at [27] (Allsop CJ, Markovic and Colvin JJ).

113    As observed by Burley J in Toyota Finance Australia Limited v Youssef Berro [2022] FCA 497 at [33]–[34]:

The petitioning creditor has a prima facie right to a sequestration order once proof of the matters required by s 52(1) has been satisfied: Cain v Whyte [1933] HCA 6; 48 CLR 639 at 646 and 648 (Rich J, Starke, Dixon, Evatt and McTiernan JJ agreeing); Rozenbes v Kronhill [1956] HCA 65; 95 CLR 407 at 414 (Dixon CJ, Webb and Fullagar JJ).

Nevertheless, the Court retains a discretion to refuse such an order if the debtor is able to pay their debts (s 52(2)(a)) or for “other sufficient cause” (s 52(2)(b)). The onus is on the debtor, Mr Berro, to establish either or both of the preconditions. The circumstances which may constitute “other sufficient cause” are variable, and it is inappropriate to catalogue or circumscribe them: Clyne v Deputy Commissioner of Taxation [1985] FCA 4; 5 FCR 1 at 5 (Fisher, Morling and Wilcox JJ); Liang v LV Property Investments Pty Ltd [2015] FCA 1057 at [52] (Beach J).

(Emphasis omitted.)

114    At [37] of Toyota Finance, Burley J further stated that:

Even if “other sufficient cause” has been shown, that merely enlivens the court’s discretion to refuse to make a sequestration order. “The power in s 52(2) is permissive, not mandatory. Even if a debtor can bring himself or herself within s 52(2)(b), that does not entitle him or her to have a sequestration order refused”…

(Citations omitted.)

115    The Grounds will now be addressed.

Ground 1: personal service of the petition on Mr Kuksal

116    This has been addressed.

Ground 2: no act of bankruptcy was committed

117    The respondents assert that no act of bankruptcy was committed on two bases, namely:

(1)    by paragraph 2.1 of the Grounds, the bankruptcy notices are based on irregular and unenforceable cost orders and are premised on the erroneous assumption that the respondents are jointly and severally liable for the costs orders; and

(2)    by paragraph 2.2 of the Grounds, on the basis that the respondents applied to set aside the bankruptcy notices within 21 days of being served with them.

118    As to paragraph 2.1 of the Grounds:

(1)    the evidence did not establish that bankruptcy notices are based on “irregular and unenforceable costs orders”. In particular, the costs order made in S ECI 2022 03994 and which refers on its face to “ruling delivered 19 February 2024” and the date authenticated as being 19 February 2024 contains an obvious typographical error where it states “Date Made: 19 February 2023”. Such a slip does not render the costs order irregular or unenforceable;

(2)    the bankruptcy notices are not premised on the posited erroneous assumption, for the reasons explained above.

119    As to Ground 2.2, for the reasons explained above, the respondents did not make an application to set aside the bankruptcy notices within 21 days of being served with them.

Ground 3: no debt is owed to the applicants because the orders were obtained by fraud

120    This Ground states as follows:

No debt is owed to the Applicants because, besides the issues identified above, the Costs Orders were obtained by fraud arising from:

3.1. Justice Gorton’s awareness that he was disqualified from presiding over the proceedings [Gorton Proceedings] in which the Costs Orders were made, before His Honour had made the Costs Orders;

3.2. The Costs Orders were made unlawfully following hearings that violated the presuppositions of a fair trial; and

3.3. Justice Gorton unlawfully denied me the opportunity to seek protective costs orders before making the Costs Orders.

(Original emphasis omitted.)

121    There are well-established principles in relation to when a bankruptcy court can, or should, exercise its power to “go behind” a judgment in order to determine whether there is in fact a debt owing as claimed by the petitioning creditor. Where a question is raised as to whether a judgment or order establishes the amount truly owing to the petitioning creditor, there are two separate questions: first, whether there is a proper basis to exercise the discretion to go behind the judgment, and second, if there is, whether there is in truth and reality no debt: see Ramsay Health Care Australia Pty Ltd v Compton (2017) 261 CLR 132; [2017] HCA 28 at [16], [37]–[38], [65]–[71] (Kiefel CJ, Keane and Nettle JJ); see also Lowbeer v De Varda (2018) 264 FCR 228; [2018] FCAFC 115 at [53] (Reeves, Farrell and Colvin JJ).

122    The discretion may be exercised where the judgment or order which comprises the debt was reached with fraud, collusion or a miscarriage of justice: Corney v Brien (1951) 84 CLR 343 at 347 (Dixon, Williams, Webb and Kitto JJ). However, a bankruptcy court should go behind a judgment where sufficient reason is shown for questioning whether behind the judgment there is in truth and reality a debt due to the petitioning creditor: see Ramsay at [37]–[38] (Kiefel CJ, Keane and Nettle JJ). In Ramsay, Edelman J, in a separate concurring judgment, observed at [111] that:

… in the absence of some evidence of fraud, collusion, or miscarriage of justice, a court exercising bankruptcy jurisdiction will rarely have substantial reasons to investigate whether the debt which merged in the judgment was truly owed.

123    In Kitay, in the matter of Frigger (No 2) [2018] FCA 1032, a creditor’s petition was presented based on a failure to pay the assessed amount pursuant to a costs order made in proceedings where the assessment takes effect as a judgment. At [34]–[35], Colvin J stated:

The result is that the debt relied upon by the petitioning creditors has no antecedent aspect in the sense that arose in the cases to which I have referred. Rather, the claimed liability was brought into existence solely by the costs order. Then the quantum of the debt was established by the assessment made by the Registrar in taxing the bill presented to the court. Upon that assessment a judgment in the assessed amount was brought into existence by operation of O 66 r 57 of the Rules of the Supreme Court.

So, the petitioning creditors in this case do not rely upon the judgment of Master Sanderson to prove an underlying debt. They rely upon the making of the order and the assessment of the bill of costs presented pursuant to that order as the debt. Accordingly, care must be taken in simply assuming the existence of a broad jurisdiction to ‘go behind’ the decision of the court in which the costs order was made on the basis of the line of authorities considered in Ramsay Health Care. The question is whether a debt has been proved, not whether there should be some review of the exercise of the discretion to make the indemnity costs order or a reconsideration of the assessment undertaken on taxation of the bill of costs presented pursuant to that order.

(Emphasis added.)

124    In this case, each of the costs orders by Gorton J contained quantification of the amounts payable pursuant to the costs orders.

125    However, the voluminous evidence adduced by the respondents did not establish that the costs orders are the result of any alleged fraud by Gorton J, or that the costs orders or his Honour’s conduct was unlawful. That the respondents disagree with his Honour’s reasons for making the costs orders, or assert errors by his Honour including as to case management decisions in the proceedings in which the costs orders were made, does not rise to the heights of fraud, illegality or even miscarriage of justice. Further, if any of the costs orders was the subject of genuine challenge and there has been a “denial of due process” as claimed by the respondents, then one would have expected the respondents to take steps to appeal those orders, especially as those orders were made between September 2023 (so nearly two years ago) and December 2024.

126    For these reasons, the respondents did not establish any proper basis to exercise the discretion to go behind the judgment debts, and nor did they establish any proper basis to challenge whether there was “in truth and reality a debt due to the petitioning creditor”: Ramsay at [42], citing Wren v Mahony (1972) 126 CLR 212 at 224 (Barwick CJ, with whom Windeyer and Owen JJ agreed).

Ground 4: genuine and arguable claims against the applicants

127    The Notice states that “The Respondents have genuine and arguable claims against the creditors for amounts that substantially exceed the purported claims of the Applicants against the Respondents”.

128    The existence of a claim that has not yet been determined may provide a basis upon which a judgment debtor may demonstrate that there is “other sufficient cause” as to why a sequestration order ought not be made and the petition dismissed, but it will depend on the circumstances.

129    As observed by Lindgren J in Glew v Harrowell, in the matter of Glew (2003) 198 ALR 331; [2003] FCA 373 at [11] and [12]:

Plainly, in order to “satisfy” the court for the purposes of s 40(1)(g), the debtor is not required to prove, as on a final hearing, the asserted entitlement to recover from the creditor. Accordingly, evidence tendered on an application to set aside is to be tested for admissibility, not as if the proceeding were one in which the debtor’s claim was being finally determined, but by reference to the question whether the court should be satisfied that the debtor has a claim deserving to be finally determined.

Perhaps little more can usefully be said than that a debtor must satisfy the court that there is sufficient substance to the counter-claim, set-off or cross-demand asserted to make it one which the debtor should, in justice, be permitted to have heard and determined in the usual way, rather than be forced to comply with the bankruptcy notice by payment or to commit an act of bankruptcy.

130    This case was cited with approval in Fitzgerald v Fitzgerald [2021] FCAFC 225 at [8] (Logan J, Rangiah and Downes JJ agreeing).

131    In Ling v Enrobook Pty Ltd (1997) 74 FCR 19, the Full Court observed at 25–26 (Davies, Wilcox and Branson JJ):

A review of the authorities discloses that in certain circumstances, but not in all circumstances, the fact that the debtor has pending before a court a legitimate claim to funds sufficient to satisfy the petitioning creditor’s debt will amount to “other sufficient cause” not to make a sequestration order. The circumstance that the legitimate claim of the debtor is one against the judgment creditor is likely to be a significant circumstance for the purposes of s 52(2)(b).

…

The authorities also show that satisfaction that the debtor is well advanced with litigation likely to result in the debtor being in a position to pay his or her debts may well provide a basis for a finding that there is a “sufficient cause” for a sequestration order not to be made. But the authorities do not suggest that it is in the public interest to allow insolvent debtors to prosecute litigation generally. They only recognise that it is not in the public interest for a debtor to be forced into bankruptcy by reason of a state of insolvency likely to be of only short duration.

(Citations omitted; emphasis original.)

132    In this case, none of the claims which the respondents raise are the subject of any existing litigation, which casts significant doubt upon whether they are genuine as opposed to being raised for the purposes of avoiding a sequestration order being made. This is especially as some of the claims relate to events which happened years ago.

133    These claims by the respondents will be addressed in turn.

134    First, a “claim for defamation arising from the Applicants’ role in broadcasting spurious and inflammatory allegations against me through multiple media organisations”.

135    Reliance is placed on Kuksal v Victorian Legal Services Board [2024] VSC 732 at [56], in which Gorton J gave the following reasons for refusing to dismiss or strike out paragraph 1 of a summons:

The appointments to People Shop Pty Ltd have arguably had an effect on Mr Kuksal’s reputation and Mr Ansell’s reputation, and probably also Ms Xu’s, in particular because the television media filmed and broadcast Mr Rapke’s taking over of the affairs of People Shop Pty Ltd and did so in a way that arguably implied that People Shop Pty Ltd was being operated by dishonest or incompetent people. If the Board as regulator of the legal profession appointed persons to People Shop Pty Ltd for an improper purpose, then there is, at least arguably, a public interest, and a legitimate private interest held by Mr Kuksal, Mr Ansell and Ms Xu, in obtaining a declaration to that effect. For that reason, the application for the relief sought in paragraph 1 of the summons is not an abuse of process and will not be summarily dismissed or struck out.

(Footnotes omitted.)

136    Gorton J also stated in footnote 34: “As noted above in para 43, the defendants’ application for summary dismissal is limited to matters of form rather than merit. Beyond what I have held above, I therefore make no comment as to the prospects of success of the substance of paragraph 1”.

137    Paragraph 1 of the summons sought a determination that certain appointments were effected for an improper purpose and were nullities at law. In the section of the judgment in which [56] is found, Gorton J was addressing whether there was any prospect of that declaratory relief being obtained by the respondents. It was in that context that Gorton J referred to the “arguable” effect on their reputation with the consequence that the respondents had “at least arguably” a legitimate private interest in obtaining a declaration. In light of the footnote to [56] as set out above, the context in which the statement was made and the use of the word “arguably”, one could not describe it as a strong endorsement of a case that the reputations of the respondents had been affected adversely, or that they had a genuine claim for defamation against all of the applicants.

138    Nothing that Gorton J said in [56] indicated that all of the applicants had a role in any broadcasting by the television media, or that they played any role in “broadcasting spurious and inflammatory allegations” against the respondents “through multiple media organisations”. In particular, no mention is made of Mr Cooper, for example, and the media organisations are not identified.

139    Nor was any evidence adduced by the respondents which supported that all of them had such a claim against all of the applicants, that the quantum of such a claim would exceed the quantum of the judgment debt in relation to every applicant (and why that was), and to explain why no such claim had been commenced even though it appears that the relevant events occurred on 22 August 2022 (being the date referred to by Ms Xu in her oral submissions).

140    For these reasons, I am not satisfied that the each of the respondents has a genuine and arguable claim for defamation against the applicants which exceeds the quantum of the costs orders made in favour of the respective applicants.

141    The second claim is a “claim for the conversion of personal property unlawfully seized on 22 August 2022”.

142    Included in “PA Annexure (31.03.25)” is a spreadsheet which lists a number of items and states the price of each item, with a total of $168,319.51. However, there is no evidence which identifies which of the respondents owned which item, the basis upon which the price has been stated in the spreadsheet and which of the applicants is said to be liable for the claim of conversion, such that it could even be said to be arguable. As the events which are the subject of this claim occurred some three years ago, no claim has been brought in relation to it and these critical details appear to be absent from the evidence adduced by the respondents, I am not persuaded that it is a genuine claim.

143    The third claim is comprised of “Multiple tort law claims for malicious prosecution, collateral abuse of process, interference in business operations and commercial relations, trespass to property, causing the publication of injurious falsehoods, misfeasance in public office and interference in rights, including the right to fair and public hearings”.

144    This group of claims is stated in such general and conclusory terms as to be incomprehensible. The respondents did not identify by reference to the evidence which respondent has a claim against which applicant and in what amount, based on which cause of action based on which facts, such that it could even be said to be arguable, let alone genuine.

145    The final claim is a “claim for the economic loss and expenses incurred due to the Applicants’ commencement of the “misconceived” proceeding VID 642/2025”.

146    As to the proceeding being “misconceived”, reliance is placed on the observation by Lee J in Kuksal (Interlocutory Matters) at [27] and [29]. However, the application for final relief in proceeding VID 642 of 2025 has not yet been determined, Lee J made orders that certain parts of identified documents remain confidential for five years, and the interlocutory application by the respondents for a determination of their application “seeking compensation for economic loss” was dismissed by Lee J. These events detract from a conclusion that the posited claim is a genuine and arguable one.

147    In any event, the claim in VID 642 of 2025 is only brought by the Board, and not by the other applicants. This means that, at best for the respondents, they might have a viable claim against the Board alone for economic loss in relation to the specific aspects of the Board’s claim identified in the reasons of Lee J. However, this would be insufficient to lead to the result that the sequestration order should not be made on the application of the creditors other than the Board, whose judgment debt exceeds the statutory minimum.

148    In any event, the evidence did not establish that the respondents have a genuine and arguable claim for compensation which exceeds the quantum of the costs orders made against each of them and which are the subject of the bankruptcy notices.

Ground 5: other sufficient cause

149    There are three sub-grounds within this ground which form the basis for the contention that “[o]ther sufficient causes exist for the Court to dismiss the creditors’ petition”.

5.1    ART proceedings

150    This Ground is stated as follows:

The Applicants issued nine Bankruptcy Notices to the Respondents in connection with the Costs Orders (all of which arise from the Gorton Proceedings) to commence a single proceeding.

When the other Respondents and I sought to set aside the notices, we were advised by the Registry that we would need to make nine separate applications (at a cost of approximately $18,000).

Consequently, we sought and were promised a deferred payment of the fees.

Despite explicit written representations in this respect, after documented communication with the Applicants, the Registry reneged on its previous representations.

Thus, the Registry refused to seal the documents that had been lodged on time on the basis that it was refusing the application for the deferral of the fees that it had previously represented would be approved.

Furthermore, as we were advised about the decision to refuse the filing after the statutory deadline for the lodgment of the application to set aside the Bankruptcy Notices had expired, we were left with no option to pursue the application to set them aside, even if we agreed to pay the fees or pursued a different avenue to seek financial support.

The other Respondents and I have exercised our statutory right under Regulation 2.21 of the Federal Court and Federal Circuit and Family Court Regulations 2022 to challenge the unlawfulness of the Registry’s decision before the Administrative Review Tribunal, through the proceedings: 2025/2925, 2025/3357 and 2025/3358 [ART Proceedings]. The Federal Court is a respondent in the ART Proceedings.

It would be in contempt of our statutory rights and the norms of natural justice if the Court deprived us of this unfettered and beneficial entitlement, which is purposefully enshrined as a vital regulatory feature to guard against the sort of abuse of court process that we are experiencing in the Bankruptcy Proceeding.

(Original emphasis and footnotes omitted.)

151    However, for the reasons explained above, the applications to set aside the bankruptcy notices were not made within time (that is, by 13 February 2025). This is so irrespective of the outcome of the ART proceedings.

5.2    Bankruptcy proceedings are an abuse of process

152    Various sub-grounds rely upon the fundamental premise that the bankruptcy proceedings are an abuse of process.

153    For the following reasons, I am not persuaded that this ground has been established.

154    The first sub-ground states:

The Bankruptcy Proceeding has been commenced for the improper purpose of impeding the other Respondents and my efforts to pursue accountability measures and raise public awareness concerning the Applicants’ senior officials [Corrupt VLSB Officials] serious and systemic corrupt practices involving:

5.2.1. The commission of wide-scale financial fraud through the abuse of the First Applicant’s control of the Public Purpose Fund; and

5.2.2. The weaponisation of the First Applicant’s regulatory functions to oppress and vilify individuals [Targeted Individuals] who raise concerns about the Corrupt VLSB Officials’ misconduct and malicious abuse of authority.

(Emphasis original.)

155    Other than the assertions and speculation contained in the affidavit material and stated from the bar table, the evidence did not establish the facts asserted in this sub-ground (including the alleged state of mind of all applicants).

156    Further, bankruptcy does not affect the ability of someone to pursue “accountability measures and raise public awareness” of any matter of public interest apart from, at least potentially, bringing proceedings. For example, it is plain from the respondents’ evidence that Mr Kuksal has published information on a website and on YouTube to raise public awareness of certain matters, and it is not apparent how a sequestration order will impede such conduct.

157    The second sub-ground states:

The Bankruptcy Proceeding forms part of the retaliatory steps typically adopted by the First Applicant against Targeted Individuals to deprive them of the means necessary to hold the Corrupt VLSB Officials accountable. The other Respondents and I have obtained significant evidence demonstrating that the First Applicant has adopted similar procedures against other Targeted Individuals.

158    No evidence was identified by the respondents of the Board engaging in “similar procedures” to filing a creditor’s petition against “Targeted Individuals” (as defined), or that such “retaliatory steps” involving filing a creditor’s petition are “typically adopted” by the Board. Further, the respondents’ evidence relating to the Board’s conduct generally is given little weight as it contains hearsay assertions, unsubstantiated opinions and speculation, rather than direct and cogent evidence of facts which establish this sub-ground.

159    The third sub-ground states:

The Court’s grant of the orders sought by the Applicants will bring the administration of justice into disrepute by converting the Court’s processes into an instrument of oppression at the disposal of corrupt executive bodies seeking to silence those striving to hold them accountable.

160    I do not understand what this adds to the two sub-grounds above, and so I reject it for the same reasons.

5.3    Application for stay or appeal of costs orders

161    By the Notices dated 22 July 2024, it was stated that:

The other Respondents and I have initiated the process to seek a stay of and appeal the Costs Orders…

162    By submissions dated 25 July 2025 and the affidavit of Mr Heath dated 25 July 2025, the applicants identified that no appeal had been brought from the relevant costs orders, nor any application filed in the Supreme Court of Victoria to have the costs orders set aside or stayed. This is remarkable when on 25 February 2025, Mr Ansell and Mr Kuksal each wrote letters to, amongst others, the applicants’ lawyers (copied to Ms Xu) referring to the fact that they were “in the process of appealing the orders upon which the notices have been issued”. These letters form part of the Relevant Email Exchanges.

163    On 29 July 2025, being the second day of the hearing of the petition, Mr Kuksal filed an affidavit which stated in the third paragraph:

Now produced and shown to me, marked “SK – Annexures”, is an electronic folder containing documents relevant to the stay application for the costs orders made by Justice Gorton, filed in the Supreme Court of Victoria today, 29 July 2025.

(Emphasis original.)

164    The “documents relevant to the stay application” included an unsealed Summons in S ECI 2022 04028, and an email from the registry of the Supreme Court of Victoria stating (inter alia) that the document had been received but not yet accepted for filing. That Summons seeks a stay for period of one month amongst other orders. There is no mention in it of any appeal from those costs orders in this document. Further, any such stay would not affect the costs orders made in S ECI 2022 03994 and proceeding S ECI 2022 04527.

165    In any event, the unexplained delay in filing such a stay application and the lack of coherent basis for overturning each of the costs orders (if that is intended) means that I am not persuaded that other sufficient cause has been shown such that I should proceed to exercise my discretion to refuse to make a sequestration order.

CONCLUSION AND DISPOSITION

166    For these reasons, the estates of the respondents will be sequestrated with the date of bankruptcy noted as being 13 February 2025. Costs should follow the event and be treated as costs of the administration of the bankrupt estate, including in relation to the supporting creditor.

ANNEXURE – REASONS FOR RULINGS

Recusal applications

167    Notwithstanding that judgment was delivered one week earlier on 21 July 2025 in Kuksal (Recusal Application), the respondents commenced the hearing of the creditor’s petition by making an oral application for my recusal. This application was repeated a number of times throughout the hearing. On each occasion when an oral application for my recusal was made by the respondents, I declined to recuse myself.

168    When the first oral recusal application was made on 28 July 2025, I asked the respondents what had occurred in the last week to justify another application for my recusal. It became apparent not only through oral submissions but through written submissions filed by the respondents and entitled “Partial Outline of Submissions” that the respondents wished to repeat many of the same complaints which had been addressed in Kuksal (Recusal Application). For that reason, I rely on the same reasons as given in that judgment in relation to these complaints.

169    The written submissions filed by the respondents and which contain additional matters which are said to support my recusal are difficult to follow.

170    The thrust of the first complaint in the written submissions is that I caused certain documents to be suppressed. My reasons for suppressing those documents were explained in Kuksal (Adjournment of Creditor’s Petition) at [15]–[16]. In summary, it was necessary to cause those documents to be accepted for filing but then suppressed to enable proper consideration of the adjournment application. As there was insufficient time to hear from the applicants as to whether any of that material should be suppressed, I caused it to be suppressed on an interim basis but notifying my intention to be heard on the issue of whether or not those documents should remain on the file or the conditions of leave should be varied. There is no proper basis for a recusal based on these facts.

171    The next complaint in the written submissions refers to “the ChatGPT produced profile of Justice Downes referred to above”. This would appear to be some form of submissions based on artificial intelligence. To the extent that these complaints are additional to the complaints already addressed in my previous judgments, these will now be addressed:

(1)    The first complaint is that I refused to authorise subpoenas or discovery requests by the respondents. However, these matters were dealt with at the hearing and my reasons for my rulings in relation to these matters are set out below.

(2)    The next complaint is that I refused to allow Mr Kuksal to make submissions about misconduct on behalf of the Board’s counsel. I did not regard these complaints as relevant or founded upon any evidence. This complaint does not support an application that I should recuse myself.

(3)    The next complaint is that I constructed a misleading narrative around procedural history and that I omitted material facts beneficial to Mr Kuksal’s position, and instead emphasised points prejudicial to him. This complaint is misconceived and so is rejected.

(4)    The next complaint is that I repeatedly scheduled hearings in ways that limited Mr Kuksal’s ability to prepare and respond effectively. This complaint is baseless when one has regard to the relevant chronology.

(5)    The next complaint is that I ignored constitutional notices which omission was strategic. I am not sure of the factual basis for this complaint or how it is “strategic”. This complaint is misconceived and so is rejected.

(6)    The next complaint is that I have shown inconsistency indicative of either arbitrary decision making or deliberate deception. This appears to be a rehash of earlier complaints surrounding my ongoing refusal to read unsolicited emails received by my chambers in circumstances where I have requested on multiple occasions that such emails not be sent. This complaint is baseless and is rejected.

172    The next section of the written submissions contains bizarre submissions concerning what are said to be my psychological and strategic motivations. These alleged motivations have no proper basis on the evidence.

173    There is then another peculiar section containing submissions about my psychological profile. This section is so ridiculous that it does not deserve a substantive response.

174    The final complaint in the written submissions concerns correspondence received from YouTube in which YouTube notified Mr Kuksal that it had blocked videos about me that he had uploaded to YouTube from audiences in Australia. It is unclear what or how the actions of YouTube could impact upon an application for recusal or why that event supports such a recusal. The videos were taken down at the request of the Australian government.

175    As to oral submissions made for the purposes of seeking my recusal, many related to case management decisions taken by me during the course of the hearing, being a hearing in which the respondents conducted themselves in the manner described above. However, such decisions were taken in the manner required by s 37M(3) of the Federal Court Act. My reasons for taking these decisions are contained elsewhere in this Annexure, or will be evident from the transcript.

176    Further, based on the respondents’ conduct generally, as I have described above, I formed the view that the repeated applications for my recusal were for the purpose of delaying or impeding the progress of the hearing. To that end, I considered that the applications were not genuine, and that the respondents were failing to comply with s 37N(1) of the Federal Court Act, and that it would be unfair and prejudicial to the applicants, and prejudicial to the administration of justice, if I continued to permit such applications to interrupt the progress of the hearing. For that reason, I refused to permit the respondents to continue to make submissions seeking my recusal at different times during the hearing.

177    For these reasons, nothing that I said or did in the course of the hearing provided any proper basis for a claim by the respondents that I had prejudged their case or have any predisposition against them. For the same reasons, none of the impugned conduct could be said to be capable of possibly causing a fair-minded lay observer to reasonably apprehend that I might not bring an impartial mind to the resolution of any question that might arise in this proceeding.

Refusal of application for an adjournment

178    Following my dismissal of the respondents’ first recusal application of 28 July 2025, Mr Kuksal sought an adjournment to appeal the decision “not to give us an open court hearing for the recusal of the matter”. Consistently with the overarching purpose and my perception that the respondents wished to impede the hearing of the creditor’s petition rather than pursue any genuine appeal which they wished to bring, I refused to grant the adjournment. Further, the complaint about not having an “open court hearing” related to the suppression of the material which should never have been filed in this Court, for the reasons explained above.

Notices to Produce

179    The respondents filed and served two Notices to Produce on the Board dated 22 July 2025 and 24 July 2025. The Notices to Produce were called upon at the hearing of the creditor’s petition on 28 July 2025.

180    The call was objected to by the applicants on three grounds. The first objection was on the basis that r 30.28(3) of the Federal Court Rules provides that the party served with a notice has 5 days to produce in accordance with the notice, and r 1.61 of the Federal Court Rules provides that the date for production and weekends are not counted. It was thus submitted by the applicants that they had not had 5 days to produce the documents in the Notices to Produce and were not in a position to do so. The second objection taken was that the Notices to Produce lacked relevance and the third was that the Notices to Produce were a fishing exercise.

181    With respect to the first objection, the respondents submitted that the Board was served with Notices to Produce in substantially the same form before the hearing on 8 July 2025 before Lee J and was on notice of the categories of documents sought from at least that time. However, Lee J refused to allow the respondents to call upon any Notice to Produce until the respondents filed a properly articulated notice of opposition to the creditor’s petition, such that the relevance between any documents sought and the grounds of opposition could be articulated. Awareness of the fact that further Notices to Produce might be served at some future time does not mean the Board was required to prepare to respond to any such notice within a shortened timeframe.

182    The respondents also submitted that I should disregard the non-compliance with rr 30.28(3) and 1.61, presumably pursuant to r 1.34 of the Federal Court Rules. However, there is no basis to dispense with the requirements of rr 30.28(3) and 1.61 of the Federal Court Rules in circumstances where the documents sought by the respondents are formulated in very broad terms, over periods of years and relating to a number of proceedings in different courts, such that they are wide-ranging and oppressive.

183    The respondents also made submissions about the relevance of the documents sought in the Notices to Produce. The gravamen of their submission was that the documents relate to the allegations about the Board having ex parte communication with Gorton J’s chambers prior to the costs orders that underpin the bankruptcy notices being made. This was said to relate to the validity of the costs orders and the issue of going behind the judgment debt.

184    However, the documents sought were not relevant to the Grounds. Because of the range of documents sought, I also considered that the respondents were engaged in a fishing expedition (including to gather documents for purposes outside of defending these proceedings) and were therefore seeking to abuse the processes of the Court.

185    For these reasons and as the Notices to Produce had not been served in the time required by the Federal Court Rules, I ruled that the applicants were not required to produce the documents pursuant to the Notices to Produce dated 22 July 2025 and 25 July 2025.

186    The respondents then pressed solely for the production of documents referred to in paragraph 1 of the respondents’ Notice to Produce filed on 22 July 2025, which was:

All correspondence and documents containing records of communication between the Victorian Legal Services Board [VLSB] (including any agents acting on its behalf) and Justice Peter James Gorton (including His Honour’s chambers) between 1 September 2021 and 21 July 2025, in which Mr Shivesh Kuksal was not included, regarding matters related to the issues that Mr Shivesh Kuksal, Ms Lulu Xu, Mr Peter Ansell and People Shop Pty Ltd [Kuksal Parties] have raised in the proceedings S ECI 2022 04808, S ECI 2022 03994 and S ECI 2022 04527 [Gorton Proceedings] since their inception.

(Emphasis omitted; footnotes removed.)

187    The applicants did not press their objection in relation to this call. The applicants first indicated that they did not have any documents to produce in response. However, after making further inquiries, the applicants shortly afterwards indicated that they had two documents to produce, which were then produced.

Refusal of further applications for an adjournment in relation to Notices to Produce on 29 July 2025

188    Following my ruling that I did not require the Board to produce the documents pursuant to the Notices to Produce, Mr Kuksal sought an adjournment to appeal that decision. I refused that application as I had formed the view that Mr Kuksal had adopted the strategy of seeking adjournments to appeal certain procedural decisions made during the hearing to create further delay in the hearing of the creditor’s petition, which would not facilitate the overarching purpose and the long-recognised need for bankruptcy proceedings to be resolved expeditiously.

189    Mr Kuksal sought a further adjournment after the applicants withdrew their objection to the call in relation to paragraph 1 of the Notice to Produce filed on 22 July 2025 and notified that no documents were produced in response. This was stated to be on the basis that the respondents felt “misled” as they believed documents would be produced in response, and they needed to confer in relation to their case and wanted to seek legal advice.

190    I refused that adjournment application. The respondents should have appreciated that documents may not have been produced in response to the Notices to Produce. The respondents had demonstrated some sophistication in being able to prepare documents and articulate legal arguments. Mr Ansell had practiced as a solicitor for many years. The fact that the respondents had not prepared their cases if no documents were produced was not a basis for an adjournment and for the creation of further delay in the hearing of the creditor’s petition. Furthermore, the submission that the respondents needed to confer was inconsistent with the fact that they were running separate cases, and in any event, the respondents would have time to confer over the lunch adjournment that day. In relation to the submission that the respondents wanted to obtain legal advice, they had months since the filing of the creditor’s petition in February 2025 to do so, and indeed were entreated by Lee J to obtain representation: Kuksal (Interlocutory Matters) at [68]. They had chosen not to do so.

191    After the lunch adjournment, Ms Xu again sought a further adjournment to obtain legal advice. I declined that adjournment for the same reasons.

Setting aside subpoena dated 23 July 2025

192    The respondents filed a subpoena on 23 July 2025 that sought two categories of documents from the Victorian Ombudsman, which was accepted for filing on 24 July 2025.

193    The first category of documents sought the following:

The report [Brouwer Report] published by the former Victorian Ombudsman, G.E. Brouwer, in 2009, concerning the own-motion investigation [Brouwer Investigation] he conducted into the office of the Legal Services Commissioner after receiving 95 complaints against it.

(Emphasis omitted.)

194    The respondents lodged an amended subpoena which removed the second category, but this lodgement was rejected by registry. Notwithstanding this, I did not understand the respondents to be pressing for the Victorian Ombudsman to produce the documents in the second category.

195    Counsel for the Ombudsman submitted that leave should not be granted to amend the subpoena and applied to set it aside. This was on the basis that, first, the subpoena was not validly issued because no leave was granted to issue it as required by order 4 of Lee J dated 9 July 2025 and, secondly, the document sought in the first category of the subpoena lacked a legitimate forensic purpose.

196    As to the first basis, some confusion arose because, although formal leave had not been granted, the subpoena had been stamped by the Court. The respondents submitted that, because of this, they had a legitimate expectation that leave had been granted to issue the subpoena and that they had planned the presentation of their case accordingly. In those circumstances, and as the subpoena had been stamped and issued by the Court, I was not persuaded to set aside the subpoena on the basis that there was no (apparent) grant of leave.

197    As to the second basis, the respondents submitted that the document sought in the first category had a legitimate forensic purpose because it related to Grounds 5.2 and 5.3 of the Notice. Those grounds provide that:

5.2 The Bankruptcy Proceeding has been commenced for the improper purpose of impeding the other Respondents and my efforts to pursue accountability measures and raise public awareness concerning the Applicants’ senior officials [Corrupt VLSB Officials] serious and systemic corrupt practices involving:

5.2.1. The commission of wide-scale financial fraud through the abuse of the First Applicant’s control of the Public Purpose Fund; and

5.2.2. The weaponisation of the First Applicant’s regulatory functions to oppress and vilify individuals [Targeted Individuals] who raise concerns about the Corrupt VLSB Officials’ misconduct and malicious abuse of authority.

5.3 The Bankruptcy Proceeding forms part of the retaliatory steps typically adopted by the First Applicant against Targeted Individuals to deprive them of the means necessary to hold the Corrupt VLSB Officials accountable. The other Respondents and I have obtained significant evidence demonstrating that the First Applicant has adopted similar procedures against other Targeted Individuals.

(Emphasis omitted.)

198    The submission made by Mr Kuksal on behalf of the respondents was that the Brouwer Report was relevant to the respondents’ case that the Board and the Legal Services Commissioner have not complied with the law and have denied them procedural fairness. They submit that the Report has the tendency to prove that this is a common occurrence, as it relates to ninety-five complaints that were made against the Legal Services Commissioner. They also submit that the relevant employees at the Board were the same at the time that the Brouwer Report was conducted.

199    For the subpoena to have a legitimate forensic purpose, it must have an apparent relevance to the issues in the proceedings: Wong v Sklavos (2014) 319 ALR 378; [2014] FCAFC 120 at [12] (Jackson, White and Gleeson JJ). Furthermore, the onus is on the respondents as the parties issuing the subpoena to demonstrate that the subpoena has a legitimate forensic purpose in relation to the issues in the proceedings: Wong at [12].

200    Although the respondents allege that the complaints which are the subject of the Brouwer Report are similar to those referred to in Grounds 5.2 and 5.3, this was not apparent from the evidence.

201    The publicly available summary of the contents of the Brouwer Report is contained in the annual report from the Victorian Ombudsman in 2009, which states that:

Over the past year I received 95 complaints about the Legal Services Commissioner, which replaced the former Legal Ombudsman in December 2005. There were recurring themes in the complaints which pointed to a systemic failure by the Legal Services Commissioner to adequately undertake its statutory role.

For example, complainants alleged that:

•    complaints were inadequately investigated or not investigated at all

•    there were significant delays – sometimes in excess of three years – in finalising complaints

•    documentation practices were poor and failed to provide complainants with information about the Legal Services Commissioner’s internal review process and external review mechanisms

•    investigations lacked procedural fairness.

…

My investigation identified a lack of understanding by staff of the Legal Services Commissioner’s statutory powers and a restricted skills-set to conduct investigations. The Legal Services Commissioner’s investigators showed limited knowledge of the basic techniques of investigative processes.

202    From this summary, it appears that the preponderance of the complaints addressed in the Brouwer Report was in relation to a lack of investigation of complaints made to the Legal Services Commissioner. This appears to be a wholly different set of conduct to that referred to in the relevant Grounds, which refer to the Board’s positive engagement in “fraud”, abuse of control of the Public Purpose Fund, weaponisation of regulatory functions and retaliation.

203    Furthermore, the 2009 annual report of the Ombudsman also states that steps had been taken to address the complaints investigated in the Brouwer Report:

I made 28 recommendations to the Legal Services Commissioner and am pleased to note that it has taken steps to address a number of problems identified in my own motion investigation.

204    It was therefore not apparent nor explained in any satisfactory way how the Brouwer Report, which seems to have been produced in around 2009, could be relevant to the purpose for which these proceedings were commenced by the applicants in 2025, or how it is in any way relevant to the conduct of the Board as described in the Grounds.

205    With respect to the argument that the respondents sought to rely on the Brouwer Report as tendency evidence, the respondents’ Notice of Intention to Adduce Tendency Evidence dated 23 July 2025 did not refer to the Brouwer Report.

206    For these reasons, I set aside the subpoena on the basis that it lacked a legitimate forensic purpose.

Contempt of court

207    On the second day of the hearing, the respondents pressed that their application for contempt be heard and determined prior to the determination of the creditor’s petition.

208    By order dated 9 July 2025, Lee J ordered that:

By 4.00pm on Tuesday, 29 July 2025, the respondents file and serve any application alleging a contempt in accordance with r 42.12 of the Federal Court Rules 2011 (Cth), including:

(a)    a statement of charge in accordance with Form 137, specifying the contempt with sufficient particularity to allow the person to answer the charge; and

(b)    the affidavits on which the person making the charge intends to rely to prove the charge.

209    This order was not complied with. On 25 July 2025, the respondents attempted to file an interlocutory application which included, as part of the relief sought, the following order:

The Court hear and determine the Respondents’ interlocutory application in the proceeding VID 222/2025 that the Applicants have committed a contempt of court before hearing the Applicants’ creditors’ petition.

210    The attached statement of charge made a number of allegations concerning the Board, identified the respondents as the applicants and listed the Board as well as Mr Anstee, Mr Heath and Corrs Chambers Westgarth as the respondents. That is, the parties identified in the statement of charge are not the same as the parties to this proceeding.

211    Having regard to the content of the statement of charge, it is apparent that it contained aspects of the Flitner Allegations and so fell within the scope of the following order of Lee J dated 9 July 2025:

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.

212    For the following reasons, the allegations concerning contempt of court as sought to be raised in the interlocutory application were not determined prior to the determination of the creditor’s petition:

(1)    leave of the court was not obtained prior to filing (or attempting to file) the statement of charge;

(2)    the interlocutory application did not comply with rule 42.12 of the Federal Court Rules;

(3)    there was no evidence that the application and associated statement of charge, and any supporting affidavits, were served on all of the respondents identified in the statement of charge by 29 July 2025 or at all.

213    In any event, the interlocutory application which contained as part of the relief an order that the applicants to this proceeding have committed a contempt of court (which conflicted with the parties identified in the statement of charge) was not accepted for filing and so was not filed by 29 July 2025. Even if it had been, I would not have entertained this application prior to the determination of the creditor’s petition having regard to the lack of any connection between the substance of the contempt allegations, the different parties involved and the need to determine the creditor’s petition expeditiously.

Refusal of leave to amend the Notice Stating Grounds of Opposition to Creditors’ Petition

214    During the course of cross-examining Mr Heath on the second day of hearing, Mr Kuksal applied for leave to amend the Notice to include an allegation that the bankruptcy notices issued by the AFSA had been issued because of a misleading communication by the applicants’ lawyers – that is, “obtained by fraud”. I refused the application. This was because the current version of the Notice was the second attempt by the respondents to articulate the Grounds, the respondents had enjoyed ample time and opportunity to identify the Grounds on which they wished to rely at the hearing, and it would have been both unfair and prejudicial to the applicants if the Notice had been further amended on the second day of hearing and in the course of cross-examination of one of the applicants’ solicitors. The allegation of fraud was also sought to be made without any proper foundation in the evidence.

215    On the third day of the hearing and during the course of cross-examining Mr Anstee, Mr Kuksal again applied for leave to amend the Notice. Leave was refused. This was because the current version of the Notice was the second attempt by the respondents to articulate the Grounds, they had enjoyed ample time and opportunity to identify the Grounds on which they wished to rely at the hearing, and it would have been both unfair and prejudicial to the applicants if the Notice had been further amended on the third day of hearing and in the course of cross-examination of Mr Anstee. This is especially as the proposed amendments included an allegation of perjury against Mr Anstee and was sought to be made without any proper foundation in the evidence.

Refusal of further applications for adjournment and leave to appeal

216    Mr Kuksal sought leave to appeal on the basis that I had not “let [the respondents] cross-examine Mr Anstee on his credibility” and that I had not let the respondents “amend the grounds both in respect of this and in respect of … the judicial review of AFSAs decision in issuing the bankruptcy notices based on the new evidence that was discovered yesterday”. As best I could understand his submissions, Mr Kuksal also sought an adjournment on the basis that he had only discovered on 25 July 2025 that the annual report states, as a matter of record, that Ms Duggan’s appointment had been revoked.

217    However, there was insufficient evidence that there had been any recent discovery of evidence by the respondents which warranted an adjournment of the creditor’s petition. This is especially as Mr Kuksal asked that I infer from watching a video of him and seeing his reactions that he had only discovered this new information. I was not prepared to draw such an inference in the absence of sworn evidence from the respondents as to when they had discovered this new information.

218    For these reasons, I refused the application for leave to appeal as I was not satisfied that the evidence established that there was newly discovered evidence of the kind described by Mr Kuksal. Further, my decision was not attended with sufficient doubt to warrant its reconsideration on appeal. Nor did Mr Kuksal demonstrate that substantial injustice would result if leave was refused.

Ruling on cross-examination

219    When cross-examining Mr Heath, Ms Xu asked a question to the effect of whether it was his client’s intention that each of the respondents should individually or cumulatively pay the amounts set out in the bankruptcy notices. I disallowed the question as any answer given by Mr Heath would have been irrelevant.

Oral evidence

220    On 30 July 2025, being the third day of the hearing, Mr Kuksal indicated that respondents wanted to call Mr Flitner to give oral evidence. Although he submitted that he gave the same indication on the first day of the hearing, I did not understand from Mr Kuksal’s submissions on the first day of the hearing that the respondents intended that Mr Flitner be called as a witness to give oral evidence in chief. On the third day, Mr Kuksal also indicated that he wanted to call Mr Ansell or Ms Xu to give oral evidence.

221    On 15 August 2025, being the fourth day of the hearing, Ms Xu indicated that she also wished to give oral evidence.

222    I did not allow the respondents to call any witness to give oral evidence for the following reasons.

223    After filing numerous affidavits as identified above, the respondents each filed their respective Notice which contained the Grounds on 22 July 2025.  By that document, it was stated that:

The other Respondents and I have filed multiple affidavits in support of the grounds stipulated above. We are in the process of finalising an additional affidavit on which we will additionally rely in support of the grounds mentioned above.

224    By this statement, the respondents recognised that they were required to file affidavit material to support the Grounds (being something which Lee J had also explained to them in his Honour’s reasons). They were therefore not prejudiced by being prevented from calling any person to give oral evidence, and they had ample opportunity to file affidavit material in support of the Grounds (and had done so).

225    Further, permitting oral evidence in chief would have unnecessarily prolonged the hearing, and it would have been unfair to the applicants who would not have had proper notice of the evidence intended to be adduced by the respondents.

Oral submissions and further refusal of leave to appeal

226    Considering the multiple sets of submissions filed by the respondents as well as the fact that Mr Kuksal and Mr Ansell were being given the opportunity to file further submissions, it was inconsistent with the overarching purpose and unnecessary to allow these respondents the opportunity to make oral submissions. This is especially as I had no confidence that Mr Kuksal would not seek to further prolong the hearing, and interfere with its progress, by making applications instead of oral submissions.

227    Mr Kuksal applied for leave to appeal my orders that he and Mr Ansell file written submissions instead of being permitted to make oral submissions. The application for leave to appeal is refused. My decision is not attended with sufficient doubt to warrant its reconsideration on appeal. Nor did Mr Kuksal demonstrate that substantial injustice would result if leave was refused.

Associate:

Dated:    27 August 2025

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