Federal Court of Australia

Mann v Low (Trustee), in the matter of Gorman [2026] FCA 42

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to r 1.40 and r 9.05 of the Federal Court Rules 2011 (Cth), Mr Alexander Philp be joined as a respondent to the proceeding effective from the date of this order.

2.    The parties are not entitled to any costs order against Mr Philp that relates to the period that precedes his joinder.

3.    Subject to orders 4 and 5, the decision of the trustee in bankruptcy to accept Mr Philp's proof of debt in the sum of $1,143,738 is affirmed insofar as it relates to the payments identified as accepted in schedule JL-23 to the affidavit of the trustee filed 4 July 2025.

4.    The decision of the trustee is varied in that the claim for $5000 identified as #63 in JL-23 (pp 499-501) is not accepted but is rejected.

5.    The review of the decision to accept the proof of debt insofar as it relates to payments identified in JL-23 (pp 499-501) as #17, #39, #40, #44, #45, #56, #61, #70 and #104 in the sum of $146,100 (kick-back payments) is adjourned pending further order.

6.    The applicant must serve a copy of these reasons and orders on Mr Philp within 14 days.

7.    Unless Mr Philp informs the parties that he does not wish to maintain his claim for the kick-back payments included in his proof of debt, he may file and serve any submissions relating to whether they are admissible to proof in the bankruptcy within 21 days of service under order 6.

8.    If Mr Philp files and serves any submissions, the parties may file and serve reply submissions limited to addressing the issue of admissibility of the kick-back payments, limited to 8 pages, within 14 days of service of Mr Philp's submissions.

9.    Liberty to apply in relation to orders 6, 7 and 8.

10.    Unless a party requests a hearing, the Court will review the trustee's decision insofar as the kick-back payments are concerned on the papers.

11.    Failing agreement, the parties may make submissions as to costs of the proceedings generally after the Court concludes its review as anticipated by order 10.

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

REASONS FOR JUDGMENT

BANKS-SMITH J:

1    The applicant, Ms Phanna Mann, applies for an order under s 104(2) of the Bankruptcy Act 1966 (Cth) to reverse or vary the decision of the respondent trustee in bankruptcy, Ms Jennifer Low, to admit a proof of debt of another creditor in the bankrupt estate of Ms Evelyn Gorman.

2    Ms Mann is a creditor of the bankrupt estate by way of a consent judgment entered in her favour against Ms Gorman, together with interests and costs. The principal proceeding was issued by Ms Mann in the District Court of Western Australia in March 2021. Ms Mann has lodged a proof of debt in the bankrupt estate, which has been admitted by the trustee in the sum of $377,215.

3    I consider that a creditor may bring an application under s 104 in relation to the admission of a proof of debt of another creditor, since in the event of any distribution from the estate, the admission of a debt that is not a true liability would prejudice the interests of other creditors: Re Magic Aust Pty Ltd (in liq) (1992) 7 ACSR 742 (by analogy with liquidation); and Re Taylor (a bankrupt), ex parte Dalgety & Co Ltd [1934] NZLR 117.

4    Ms Mann caused a bankruptcy notice to issue to Ms Gorman on 7 December 2023, and sought the issue of a creditor's petition on 30 January 2024.

5    However, Ms Gorman was made bankrupt on her own debtor's petition which was accepted by the Official Receiver on 20 February 2024, and the trustee was appointed on that date.

6    The proof the subject of this application was lodged by Mr Alexander Philp. Mr Philp lodged his proof of debt in relation to advances he made to Ms Gorman over a period of some four years (relevantly 20 February 2020 to 7 February 2024).

7    As there is currently no prospect of a dividend being paid, it would not be usual for the trustee to seek or formally adjudicate proofs of debt. However, Ms Mann requested the trustee to require Mr Philp to lodge a proof and requested that she adjudicate upon it, and that task was undertaken. The trustee admitted Mr Philp's proof in the sum of $1,143,738. Of that amount, $105,467 was paid direct by Mr Philp to the law firm Tudori Hager Grubb to pay Ms Gorman's legal fees due under a costs agreement. The balance of $1,038,271 was paid by Mr Philp to bank accounts in the name of Ms Gorman and her husband Chris Gorman, or at her direction to a Cambodian bank account.

8    Ms Gorman provided the statutory statement of affairs as required under the Bankruptcy Act in which she disclosed only Ms Mann and Mr Philp as creditors. She disclosed limited assets, being cash at bank of $367. She disclosed an expectation of a distribution from a deceased estate.

9    It is clear from the evidence that Ms Mann and Ms Gorman are not on good terms.

10    Despite the (now) apparent lack of any likely dividend in the bankruptcy, Ms Mann pursued this application because she contended that the claim underlying Mr Philp's proof of debt is not genuine and she wishes to 'control' the bankruptcy by holding a majority voting power. In one letter to the trustee Ms Mann's solicitors said:

We have since your appointment made our client's position clear that she is highly suspicious of your appointment and the circumstances of your appointment. We therefore require you to exhibit the utmost good faith and objectivity and again request you to provide our client with as much information as possible, including supporting documentation. It is not [our] place to point out to you what steps could possibly be taken by our client but we wish to remind you that our client is a highly interested party and will do whatever is necessary to ensure that the bankrupt pays what is owing to her.

11    The tone of such correspondence is disconcerting. The trustee is a very experienced insolvency practitioner and an officer of the Court. Whilst it is open to a creditor to ask questions of a trustee, the correspondence sent by Ms Mann's solicitors both implicitly and expressly cast aspersions on the probity of her appointment and purported to use that as a basis to make demands about the conduct of her administration of the bankrupt estate. Quite apart from whether the solicitors had any proper basis for those aspersions, their demands failed to have regard to the limitations on a trustee who has only limited funding. This not an inquiry into the trustee's conduct but I observe that there was nothing in the trustee's communications with Ms Mann's solicitors that were before this Court that evidenced anything other than the trustee acting objectively, courteously and with proper regard to her professional obligations.

Nature of review and role of trustee

12    The nature of an application under s 104(2) is a hearing de novo: Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332 at 341. It follows that the Court may have regard to relevant and admissible material that is before it that was not before the trustee: Ex parte CMV Parts Distributors Pty Ltd (1989) 20 FCR 561 at 562-563.

13    The role of a trustee in such proceedings may vary. It is usual for the trustee to lay before the court the material that was before them in relation to the decision. Generally, it is up to contradictors to adduce all the evidence they say is relevant. For example, in circumstances where an applicant contends that a trustee has admitted a creditor's proof of debt in an amount that is too high and the creditor maintains that the trustee has admitted it in an amount that is too low, there are clearly two contradictors, and it is appropriate that a trustee play only a limited role. However, if the trustee is concerned that one party was not in a position to advance arguments or chose not to, it may be appropriate for the trustee to participate more than would ordinarily be required: see generally Wilson, in the matter of Wilson v Official Trustee in Bankruptcy [2000] FCA 1251 at [61]-[69] (Re Wilson).

14    It is well-established that the onus is on the party seeking review to satisfy the Court (relevantly) that the proof of debt should not be admitted or should be reduced: see cases collected by Hespe J in Pekar v Jess (Trustee) [2022] FCA 1367 at [37].

15    In this case, Ms Gorman did not appear in the proceedings, and that is not surprising. It is not usual for a bankrupt to appear or be represented in such proceedings: see obiter comments of Emmett J in Re Wilson at [91]-[92].

16    The proper role of the trustee was to ensure all relevant evidence was before the Court and for the trustee's counsel to assist the Court in the usual way by ensuring appropriate arguments were made. It was not for the trustee to actively defend her decision, nor to seek the issue of a subpoena to the bankrupt to give evidence. The trustee and her legal representatives properly understood the limited nature of the trustee's role in the proceeding.

17    I observe that Mr Philp was not joined in the proceeding but was given an opportunity to file a notice of appearance and be heard. No notice of appearance was filed. For reasons discussed below I have formally joined Mr Philp as a respondent to the action.

Principles – formation of an oral contract

18    As will become apparent, the application concerns a proof of debt based on a purported oral contract.

19    In contrast to the position with written contracts, in the case of an oral contract it is well-established that the subsequent conduct of the parties may be relied upon to establish the existence of the contract and the identification of its terms: Barrier Wharfs Ltd v W Scott Fell & Co Ltd (1908) 5 CLR 647 at 669; Allen v Carbone (1975) 132 CLR 528 at 532-533; Mears v Safecar Security Ltd [1983] QB 54 at 77; Carmichael v National Power plc [1999] UKHL 47; [1999] 1 WLR 2042 at 2048; Intelmail Explorenet Pty Ltd v Vardanian (No 2) [2009] FCA 1018 at [53]; Lym International Pty Ltd v Marcolongo [2011] NSWCA 303 at [141]-[143]; Fazio v Fazio [2012] WASCA 72 at [193]-[195]; and Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 6) [2015] FCA 825 at [722].

20    As expressed in Mears v Safecar by Stephenson LJ (with whom O'Connor LJ and Sir Stanley Rees agreed) at 77:

There is nothing in [the] authorities which prevents the court from looking at the way the parties acted for the purpose of ascertaining what that term was. Common sense suggests that their subsequent conduct is the best evidence of what they had agreed orally but not reduced to writing, though it is not evidence of what any written terms mean.

21    In this case, it is relevant to consider not only the conversations that were said to occur between Ms Gorman and Mr Philp in early 2020, when Mr Philp states that the agreement was made, but also the conduct by way of the requests and payments made subsequent to that time.

Summary of loans in issue

22    Ms Gorman resides in Australia but her country of origin is Cambodia. Her family continue to reside in Cambodia. She is married to Chris Gorman, who is Mr Philp's partner's son.

23    Mr Philp, an engineer, was called to give evidence by the trustee. He swore an affidavit and was cross examined. I introduce his evidence here, but detail it later in these reasons.

24    Mr Philp said he has a close relationship with Evelyn (who he refers to as Laila) and Chris, and regularly looked after their two children, who he referred to as his grandchildren. He had also met Ms Gorman's mother in person, but well before these events.

25    Mr Philp said that the loan payments commenced in early 2020, when Ms Gorman told him that her mother held land in Cambodia that she was going to give to Ms Gorman as her inheritance. At that time her mother was alive. Mr Philp said that during that conversation, and in subsequent conversations, Ms Gorman requested to borrow money from him for various reasons related to the land, including:

(a)    paying various authorities in Cambodia for the land to be transferred from Ms Gorman's mother's name to Ms Gorman's name;

(b)    paying for lawyers' fees in Cambodia;

(c)    paying for the land to be sold; and

(d)    paying for the sale proceeds to be transferred back to Australia.

26    Ms Gorman also told him during that conversation and subsequently that she would pay Mr Philp back from the proceeds of the sale of the land when the funds were repatriated to Australia.

27    I will refer to this first category of payments as the land payments.

28    Mr Philp gave evidence as to what he was told by Ms Gorman and this informed the reasons why he made the land payments. The evidence about conversations with Ms Gorman was admitted not as to the truth of what Ms Gorman said, but as evidence of what she told Mr Philp.

29    Similarly, there was a short letter in evidence from Ms Gorman to the trustee in which she addressed the nature of the payments from Mr Philp, in a manner consistent with what was said by Mr Philp. However, the letter was relevant and admissible only insofar as it provided context for the investigations undertaken by the trustee for the purpose of her adjudication. It was not received in this application as evidence of the truth of its contents.

30    A second category of payments (legal invoices) were made by Mr Philp to meet legal fees incurred by Ms Gorman in retaining Tudori Hager Grubb for the litigation involving Ms Mann. These 39 payments were in the sum of $105,467. Mr Philp's evidence was that he paid these invoices for Ms Gorman's benefit. He said that as Laila could not afford to pay the fees, he offered to do so on the same basis – that is, that she would pay him back when the land was sold and the funds were sent back to Australia. Again, Mr Philp provided a spreadsheet in support of this aspect of his proof of debt, setting out the date of each invoice and the amount paid.

The trustee's adjudication and evidence

31    The trustee gave evidence by affidavit of the manner in which she adjudicated the debt:

22    In summary, the steps taken by me and my staff to adjudicate Mr Philp's proof of debt were as follows:

(a)    using Mr Philp's schedule of payments, I created a schedule showing each alleged payment with the date and the description given by Mr Philp;

(b)    I then caused each payment in the schedule to be matched to supporting documentation to show that:

i    the payment was made by Mr Philp (as evidenced by his bank records); and

ii    the payment was received by, or for the benefit of, the Bankrupt (as evidenced by the Bankrupt's bank records).

(c)    I identified four categories of transactions, being:

i    transactions that had been paid from Mr Philp's bank account directly to the Bankrupt's bank account;

ii    transactions that Mr Philp provided evidence had been paid from his bank account directly to Cambodian bank accounts;

iii    transactions that Mr Philp had provided evidence of but there were no matching records in the Bankrupt's accounts; and

iv    transactions for which there was insufficient evidence and so they were rejected.

(d)    I obtained the Bankrupt's husband's bank statements directly from the National Australia Bank after issuing a section 77A notice under the Bankruptcy Act 1966 (Cth). After obtaining these statements, a further review was conducted to ascertain whether:

i    amounts had been sent by Mr Philp to the Bankrupt's husband and then paid to the Bankrupt; and

ii    there had been any repayments made to Mr Philp.

(e)    in relation to the legal fees paid, I caused each payment substantiated by Mr Philp to be matched to an invoice for legal fees incurred by the Bankrupt.

23    Due to confidentiality concerns, I caused the personal information from the documents provided to me to be redacted prior to providing them to Mr Jordaan [Ms Mann's solicitor].

24    Having undertaken the investigations referred to in the preceding paragraphs, I adjudicated Mr Philp's proof of debt in the sum of $1,038,271.29. The investigations undertaken by my firm have taken 68.3 hours to complete and included:

(a)    corresponding with Mr Philp with respect to his proof of debt;

(b)    issuing a section 77A notice to obtain bank records;

(c)    reviewing the accounts of the bankrupt and the evidence provided by Mr Philp;

(d)    creating excel spreadsheets identifying:

i    each payment claimed by Mr Philp;

ii    each payment made by reference to Mr Philp's bank records; and

iii    each payment received by reference to the Bankrupt's bank records.

25    Based on my investigations, it appears that the Bankrupt does not own any property in Cambodia and so it is unlikely that there will be any return to creditors in the Estate, nor payment of my outstanding fees.

32    The trustee gave evidence for the purpose of the hearing including by way of a spreadsheet (JL-23) listing the 105 land payments, populated by notes setting out Mr Philp's description of the respective payments; identifying which of the land payments were accepted or rejected; and providing reasons (such as 'not substantiated') where particular payments were rejected by her as provable debts.

33    The trustee identified that some payments were made to joint accounts of Ms Gorman and Mr Gorman and sometimes to an account in the name of Mr Gorman. Some payments were made by Mr Philp direct to a Cambodian bank account in the name of Ly Mao. Some withdrawals from Mr Philp's account were said to be for the purpose of making a cash payment to Ms Gorman, but these were generally rejected by the trustee because of the lack of substantiating evidence. I am not concerned in this application with payments the trustee rejected as provable debts.

Why Ms Mann contends contract not established

34    Ms Mann filed an affidavit in support of her application which provided background information as to the circumstances of Ms Gorman's bankruptcy and relevantly annexed communications that had passed between her solicitors and the trustee. It also addressed the reasons for seeking an extension of time to bring her application, an extension which was consented to by the trustee and was previously granted.

35    Ms Mann did not contend that the respective payments were not made by Mr Philp. Counsel for Ms Mann submitted that the trustee's schedule JL-23 was in fact a sensible place to start as the record of the payments that were made and accepted by the trustee.

36    Apart from one payment of $5000, Ms Mann admits that Mr Philp made the payments in the sum of $1,138,738. The $5000 was a cash payment allegedly made by Mr Philp to Ms Gorman on 17 June 2022. Because it is a minor point in the scheme of the application, I can indicate now that, consistent with the rejection of certain other cash payments by the trustee, I would reject the proof insofar as it extends to the $5000 paid to Ms Gorman on 17 June 2022 because there is insufficient evidence that it falls within the terms of the agreement otherwise said to be in place between Mr Philp and Ms Gorman.

37    In relation to the balance $1,138,738, Ms Mann admitted that:

(a)    $611,520 was paid to Mr Gorman, of which $209,900 was paid to a joint account he held with Ms Gorman;

(b)    $48,305 was paid to Ms Gorman;

(c)    $373,446 was paid to Ly Mao, who Mr Philp understood to be Ms Gorman's stepbrother, located in Cambodia; and

(d)    $105,467 was paid to Tudori Hager Grubb.

38    As to all such payments, Ms Mann alleges there is no or insufficient evidence to establish a loan agreement between Ms Gorman and Mr Philp. She did not contend that the payments were by way of gift (and Mr Philp's evidence, including the content of his notes, and the fact that he took notes, is inconsistent with such a proposition).

39    Ms Mann's submission that the trustee ought not to have admitted Mr Philp's proof of debt is based on a number of contentions, some of which are inter-related.

40    First, Ms Mann submitted that the Court should find that the loans were made to Mr Gorman, not Ms Gorman, and that Mr Philp, upon Ms Gorman's bankruptcy, in effect invented a story that the payments were loans to Ms Gorman and is lying.

41    Second, Ms Mann submitted that there is no evidence that Ms Gorman agreed to repay any of the advances. She contends that it is not open to place weight on the course of conduct in circumstances where Mr Philp's conduct would be equally explicable on the basis that the loans were made to Mr Gorman.

42    Third, it is said that it is improbable that Mr Philp would have agreed to make payments on a promise from Ms Gorman to repay, in circumstances where Ms Gorman was unemployed; the alleged agreement was not in writing; no interest was chargeable; the payment were unsecured; payments were made to accounts in Cambodia; most payments were not made to Ms Gorman direct; Mr Philp had no evidence that corroborated the entitlement to the proceeds of land in Cambodia and relied on what he was told by Ms Gorman; Mr Philp knew that Ms Gorman was involved in litigation with Ms Mann, resulting in a consent judgment dated 20 September 2023 which Ms Gorman had not paid; and Mr Philp knew Ms Gorman was considering bankruptcy after that time.

43    A separate argument as to 'improbability' was relied upon by Ms Mann in relation to six payments ($113,000), which Ms Gorman told Mr Philp were for the purpose of 'bribing' or providing 'kickbacks' to officials in Cambodia to facilitate the steps necessary to sell the land and repatriate the funds to Australia. I will return separately to these payments.

44    Fourth, Ms Mann relied on the absence of evidence that Ms Gorman used the payments for the intended purposes.

45    Fifth, as the trustee did not call any of Ms Gorman, Mr Gorman or Ly Mao to give evidence, it was submitted that the Court should draw a Jones v Dunkel inference that their evidence would not have assisted the trustee.

The evidence of Mr Philp

46    In his affidavit Mr Philp deposed to the terms of the arrangement with Ms Gorman relating to the land payments (see [25]-[26] above). He also separately addressed 82 of the land payments. He attached his Commonwealth Bank account records of payment where applicable and provided a description, generally informed by his handwritten note on the receipt or the details apparently inserted on the bank website/app when making the transaction. At the time of swearing the affidavit Mr Philp understood that the land had been sold but the proceeds have not yet been transferred to Australia.

47    Mr Philp was cross examined.

48    I found Mr Philp to be a credible witness. He was candid (even when it was potentially contrary to his interests), measured and consistent. His evidence did not give the appearance of being rehearsed or contrived. On the contrary he listened to questions and responded, acknowledging deficiencies in his memory from time to time and his reliance on notes. With the benefit of hindsight he acknowledged that there now seemed to be a risk he might not receive re-payment of the advances he has made, but he explained in an unguarded manner the reason why he continued to advance funds throughout the period, and was consistent in his evidence to the effect that the advances were made to Laila because of the anticipated endgame – that is, he anticipated that funds would be repatriated from which he would be repaid. I reject the submission made by Ms Mann's counsel that Mr Philp was lying. On the contrary, I found him to be a truthful witness.

49    As foreshadowed, it is necessary to consider Mr Philp's evidence in further detail (I will refer to Ms Gorman and Mr Gorman from time to time as Laila and Chris respectively, to more accurately reflect Mr Philp's evidence).

Land payments

50    Mr Philp confirmed the matters at [25]-[26] above. He explained under cross examination that the payments to Ms Gorman were spread over four years but all with the objective of realising the land in due course, and bringing the funds into Australia for Ms Gorman. He believed and trusted Ms Gorman and had no reason to do otherwise. He had been involved in conducting business in Asia in the past. He understood that there were different 'modules' in terms of steps required to realise the land, and that it was necessary to keep making payments in order to ultimately realise the funds.

51    Initially Ms Gorman was unable to travel to Cambodia herself to arrange the sale of land due to travel restrictions from the COVID-19 pandemic. Ms Gorman has not returned to Cambodia at any time during the period of the payments, and the trustee is in possession of her passport.

52    The loan agreement between Mr Philp and Ms Gorman was not formally documented in writing but Mr Philp kept records of his advances. Although he did not recall the circumstances of each transfer, it was his practice to print a copy of the receipt when he transferred funds. In some cases he would write a note on the receipt. He kept a file of copies of the receipts and notes. In support of this aspect of his proof of debt Mr Philp provided the trustee with a spreadsheet containing details of some 105 separate payments.

53    Mr Philp's notes on his receipts in some instances referred to payments being made to Chris. In some instances, his notes referred to payments being made to Ly Mao. Mr Philp's evidence was that he made the notes at the time of each advance, and he was not challenged on that evidence.

54    Mr Philp explained in his affidavit that there were occasions when payments were made to Chris but they were made on the basis the money was provided for Laila, and Mr Philp understood that he would be paid back by Laila from the land proceeds. He was told by Laila and believed that Ly Mao is her stepbrother, and said that payments were made to him because he was located in Cambodia, where the funds were to be used.

55    Mr Philp was cross examined on this topic. He consistently stated that although some payments were made to Chris, they were made to Chris as a conduit for Laila because Laila did not have the facilities or the knowledge to handle the payments herself. He generally accounted in his receipts for payments being to Chris but he said that was his practice. He said he transferred the money to Chris for Laila, and it was Laila he had the conversations with. He said even when payments were made to a joint account he made those payments understanding that it was a payment to Laila. He denied that the payments were a loan to Chris. When taken to a few specific examples of payment receipts that referred to a payment to Chris, he consistently said that the loan was for Laila but was paid via Chris, who could arrange to get the funds to Cambodia on Laila's behalf. He said he categorised everything under Chris's umbrella 'because they were married'.

56    For example, Mr Philp was taken to a receipt for a payment of $45,000 made on 15 July 2020 which bore a handwritten note that it was a payment 'for use by Chris'. It was suggested by counsel that this established that the particular loan was to Chris. However, as Mr Philp observed, the note also included the words 'to help Laila's mum with sale of her land'. He maintained the money was provided by him for Laila, but via Chris. In the circumstances, the note does not undermine that explanation and is consistent with it.

57    Mr Philp was taken to another example where the notation stated 'Chris needed $2000USD for the lawyer to facilitate the transfer …'. Mr Philp said:

Counsel:    Now, that is, Chris is not merely the conduit there, is he? He's the one requesting the money?

Mr Philp:    No. Well, Laila has requested the money and then Chris – and then we discuss it with Chris. Then, in turn, it was passed through him to Cambodia, or back the other way.

Counsel:    But Chris is the one asking for the money from you?

Mr Philp:    No, Laila was the one asking for the money. Chris was just the conduit, because he has the technical nous to handle the process.

Counsel:    But you have written here - Chris needed the money. Chris needed X.

Mr Philp:    Well, it's just terminology. Chris was managing the money.

58    Mr Philp made similar and consistent references during his cross examination to Chris being a conduit to receive and manage payments for Laila. In re-examination he confirmed that it was Laila who asked for the loan, that Laila asked that money be paid into Chris's bank account and that Chris did not ask to borrow money personally from Mr Philp.

59    Mr Philp was also taken to a later receipt (2 October 2023) on which he had written that the payment was 'to Laila' (USD$400) and was asked whether he had done so to 'create a debt', because a few weeks later he attended a meeting with Laila, Chris and a lawyer 'to discuss bankruptcy'. Mr Philp said that he had heard bankruptcy being brought up by the lawyer as a possibility if 'things [the litigation] weren't going in the direction they wanted'. He was not particularly involved in the litigation. He denied that he wrote 'to Laila' for the purpose suggested. He reiterated that the loans were made to Laila with the intent of trying to help Laila with her inheritance in Cambodia. He said 'that's what started it all'.

60    I note that nine payments the subject of the proof of debt were made by Mr Philp after the 2 October 2023 payment (between 5 October 2023 and 7 February 2024). In his notes relating to those nine payments Mr Philp did not state that the payments were 'to Laila'. He continued to state briefly what the payment was for, for example, 'to pay lawyer his fee for organising funds transfer out of accounts'. Objectively, if on 2 October 2023 Mr Philp had been trying to 'create a debt' due by Laila when one did not exist, as asserted by counsel, it is surprising that Mr Philp did not include the words 'to Laila' in notes for the subsequent payments (some of which were for large amounts). The submission is objectively unsupported by the evidence of Mr Philp's conduct and is directly contradicted by Mr Philp. I reject Ms Mann's submission as to the purported purpose of the 2 October 2023 payment.

61    Mr Philp was also asked under cross examination about the payments to Ly Mao. He said he trusted Laila and took no step to verify Ly Mao's identity or communicate with him, a course which would have been impractical because he (Mr Philp) did not speak Cambodian. He said he had seen photos of the brother in wedding photos. He said that although payments were made to Ly Mao in Cambodia, they were made for Laila and it was the direct method by which to get the funds to Cambodia.

62    It was put to Mr Philp that he did not know whether there was any inheritance and that he did not verify that there was any inheritance. Mr Philp's response was that he had seen documents going backwards and forward that implied that there was an inheritance; that he was led to believe there was one; and that he had no reason to believe that there was no possibility of any inheritance.

63    Mr Philp was also asked about requests for top-up payments for the lawyers in Cambodia. He agreed that these payments caused him concern, but he did not consider the repeated requests unusual, having regard to his prior experience and the need to 'keep the lawyer on side'. Mr Philp still considered at the time that there was an opportunity for the funds to be repatriated because 'we had gone through the steps that had been outlined and followed them through'.

Legal fees

64    Ms Mann's submission in relation to the payment of legal fees was that Mr Gorman was one of the 'contacts' in the costs agreement (his telephone number was provided along with that of Ms Gorman) and that he stood to benefit from paying the legal fees. The submission appeared to be that the Court should draw an inference that Mr Philp made the payments of the invoices on behalf of Mr Gorman. Mr Gorman was not a party to the costs agreement. It was not explained how Mr Gorman stood to benefit from payment of legal fees for which he was not liable and which related to litigation to which he was not a party. I am not satisfied that there is evidence upon which any such inference could properly be drawn.

65    As I have noted, Mr Philp's evidence in relation to these payments was that Laila engaged lawyers to represent her in the District Court proceedings; as Laila could not afford to pay the legal fees, he offered to pay them on her behalf on the basis that she would pay him back when the land was sold and the funds sent back to Australia; and he proceeded to in fact pay the invoices over a period of time. This evidence was not impugned under cross examination.

Purported bribes or kick-backs

66    Mr Philp was asked questions about certain references in his notes to payments being for the purpose of 'bribes' or 'kick-backs' to local government or other government employees or officials in Cambodia for steps related to the land realisation or funds transfer. There were eight payments with such notes over the course of the period 11 May 2020 to 25 November 2022. The eight payments may be identified by reference to JL-23 as #17, #39, #40, #44, #45, #56, #61 and #70. In his evidence Mr Philp suggested a further payment (#104) fell within the same category. The sum of these nine payments is $146,100.

67    In her written submissions, Ms Mann initially referred to the object of six identified payments being to bribe public officials and said that such bribes constituted a criminal offence that would have put Mr Philp on notice of the risk that any agreement to repay the amounts would be void or unenforceable. A footnote in the submissions referred to the Criminal Code of Cambodia Art 594 (which provides that it is an offence for a public official to receive a bribe). I do not know whether Mr Philp was provided with a copy of the written submissions prior to the hearing or was otherwise given notice of this particular submission.

68    In any event, Ms Mann's counsel opened her case by expressly denying that there was any need for the Court to find that, assuming there was a contract, it was void for illegality. Rather, counsel said that the references to bribes and kick-backs were relevant to 'Mr Philp's belief as to the genuineness of the inheritance', which belief, it was said, informed whether Mr Philp ever expected to be repaid, which in turn was said to be relevant to the probability of there ever being a loan agreement.

69    As to this proposition, Mr Philp denied that the requests for money which he was told were for bribes led to him doubting the prospect of there being an inheritance. To the contrary, he said that he understood that those payments were required to enhance the prospect of the land being realised and enhance the chance of the funds being repatriated.

70    There was no evidence that moneys advanced were in fact used for the purpose of bribing any third party. There was no evidence of any illegality. Ms Mann did not submit that the consideration for the impugned payments was illegal such that they were not provable in Ms Gorman's bankruptcy.

71    However, as the hearing progressed, it became apparent that Ms Mann was seeking to also rely on a different case, being that if there was an agreement, the payments were potentially illegal.

72    During the hearing counsel for Ms Mann referred to Article 518 ('bribery of judges') of the Kingdom of Cambodia Criminal Code (tendered pursuant to s 174(1)(b) of the Evidence Act 1995 (Cth)) and s 70.2 of the Criminal Code Act 1995 (Cth) ('bribery of foreign public officials'). Those provisions respectively provide that payments to a judge or a 'foreign public official' may, in certain circumstances, constitute commission of an offence.

73    During cross examination counsel asked Mr Philp whether he knew there would be problems enforcing the debt in Australia if the payments were for the purpose of bribes. Mr Philp denied any such knowledge.

74    Counsel's question assumed that there may be a problem with enforcement of the debt if the payment was for a bribe. An unenforceable debt, on its face, would not be provable in a bankruptcy.

75    I therefore asked counsel for Ms Mann during the hearing if he could point me to an authority that he relied upon in support of the proposition that a loan in such circumstances would be unenforceable, and he responded by stating that it would infringe the rule against enforcement of illegal contracts, would be contrary to public policy and that (in effect) equity would intervene to deny enforcement. Counsel was unable to reference an authority at the time, but through my chambers I subsequently invited the parties to provide any such authority. It was apparent to me that regardless of the manner in which Ms Mann's counsel might have initially purported to limit the relevance of the references to a bribe, the purpose for which the payments were purportedly provided is a matter of some importance in deciding whether, assuming a loan agreement was established, those particular debts were provable.

76    After the hearing Ms Mann's solicitors wrote to chambers relevantly referring to Fullerton Nominees Pty Ltd v Darmago [2000] WASCA 4 at [27] (Ipp J, Kennedy and Wallwork JJ agreeing). In that case it was held that regardless of whether the desired outcome is achieved, a contract will be held invalid on account of illegality if it has been entered into for the purpose of effecting a breach of the laws of a foreign country with which Australia is not at war (citing relevantly Foster v Driscoll [1929] 1KB 470 at 510; and Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd (1987) 75 ALR 353 at 459).

77    At the end of the hearing, I had also asked the parties to provide an agreed schedule of the payments that made up the amounts said to have been provided for a purpose described by Ms Gorman to Mr Philp as bribes. The parties did not agree the content of a schedule.

78    The trustee provided a schedule of seven payments, each described by Mr Philp in his notes by words that included 'bribe' or 'kickback'. It included the six payments referred to by Ms Mann, plus an additional payment.

79    On the other hand, Ms Mann in the schedule provided by her solicitors purported to increase the number of payments identifiable as bribes to 19 payments (including the seven identified by the trustee). Mr Philp was not asked about the additional payments in his cross examination.

80    None of the descriptions for the additional payments referred to by Ms Mann (that is, other than for payments #17, #39, #40, #44, #45, #56, #61, #70 and allowing for #104) used the word 'bribe' or 'kickback'. The descriptions given may well reflect payments intended to be used for legitimate purposes. Without some knowledge or evidence of the inheritance, land transfer and land registration system in Cambodia, it is not possible to properly draw an inference from the descriptions that the additional payments were for the purpose of what might be described as a bribe or kickback.

The need to join Mr Philp and defer part of the review determination

81    All of this leaves the Court in a difficult position.

82    I will shortly turn to explain why I am satisfied that there was an agreement between Ms Gorman and Ms Philp, the terms of which were in effect that upon request, Mr Philp would advance moneys as required from time to time to time to Ms Gorman and that such funds would be repaid only when Ms Gorman received the anticipated funds from Cambodia and would be paid from those funds. Because I am satisfied that the agreement was made, I affirm the decision of the trustee insofar as the adjudication accepted the proof of debt in the sum of $992,638. That sum is derived by subtracting from the original amount admitted the sum of $5,000 which I reject (see [36] above) and the sum of $146,100 (see [66] above).

83    It is apparent that I have concerns as to whether payments that Mr Philp apparently assumed were for the purpose of bribes or kickbacks potentially to foreign public officials can be admitted to proof in a bankruptcy. It is also apparent that Mr Philp has an interest in whether the proof is rejected in part (relevantly to the extent of $146,100) and he should be joined as a respondent in this proceeding.

84    As far as I am aware, the first time either Article 518 of the Kingdom of Cambodia Criminal Code or s 70.2 of the Criminal Code Act 1995 (Cth) were referred to was during the hearing. I do not know if Mr Philp was provided with a copy of Fullerton Nominees (or any other authorities). I do not know if he was otherwise on notice of the nature of the submission as to illegality or unenforceability at the time that he indicated he did not wish to be heard at the hearing. In any event, in light of his interest he should be joined (and on the basis that he is not liable for any costs incurred by the parties to the date of joinder). As a matter of procedural fairness he must have the opportunity to be heard on this issue if he so wishes. As I have determined that the balance of his proof should be admitted (leaving aside the $5,000 cash component), I do not consider any procedural fairness issue arises in relation to his non-joinder at the time of the hearing.

85    It might be that Mr Philp on reading these reasons decides not to pursue the amount of $146,100 currently included in his proof of debt. However, it is a matter that he is entitled to consider and on which he should be heard (if he wishes) before I reach a conclusion on the admission of that part of the proof.

Analysis – why I am satisfied there was a contract between Mr Philp and Ms Gorman

86    I now turn to explain why I am not satisfied that the applicant has met her onus in this application.

87    In my view, there is credible evidence from which I conclude that an oral contract was formed between Mr Philp and Ms Gorman. I take into account the direct evidence given by Mr Philp of his initial conversations with Ms Gorman and the evidence of subsequent conduct, supported by documentation and bank records, including subsequent conversations in which Ms Gorman requested further payments, the reasons for the requested payment given by Ms Gorman to Mr Philp and their prima facie connection with the land issue in Cambodia, and the subsequent advances made by Mr Philp.

88    Mr Philp deposed to the terms upon which he made the land payments to Ms Gorman and his evidence was consistent under cross examination. His evidence established that there was an agreement formed in February 2020 to the effect that upon request, he would lend money to the benefit of Ms Gorman on terms that it would be repaid once funds from the realised land sale were repatriated to Australia. Each subsequent request was considered by Mr Philp and advances were made by him on the same condition as to repayment.

89    Despite Ms Mann's submissions, the agreement is established despite the lack of direct or admissible evidence from Ms Gorman. It is established by Mr Philp's uncontested and credible evidence. The purpose of the loan was to assist Ms Gorman in realising the land and repatriating the proceeds, a process that objectively might take time and, as Mr Philp knew, would involve different steps. His conduct in continuing to make payments without requiring reduction of the debt is consistent with the agreement. His notes are consistent with the agreement. The fact that he even took notes is consistent with the agreement. The fact that he received repeated requests for advances and for the purpose set out in his notes is consistent with the agreement. All of these factors point unequivocally to a contract in the terms alleged by Mr Philp. The parties' conduct, viewed objectively, reveals an agreement on those terms.

90    This was a family arrangement. It is unsurprising that the loan was not documented in the manner that a loan agreement might otherwise be recorded between independent third parties. It is unsurprising that no particular advance was documented in circumstances where there was not one drawdown of a known sum identified at inception, but rather a series of requests and advances over time. It is unsurprising that Mr Philp wanted to help Laila and perhaps was less objective than others may have been about the purpose of the payments, whether it was appropriate in all the circumstances to make them (including the fact that processes were being undertaken in Cambodia), and the risk that the debt might not be repaid.

91    However, none of that undermines the evidence that Mr Philp made the advances and on the condition that he would be repaid from an identified source in due course. It is not to the point whether Ms Gorman did or did not use the funds for the purpose for which he understood they were required – she remained liable to him to repay the borrowed sums.

92    There is insufficient evidence to draw any competing inference that the loans were made to Mr Gorman. Mr Philp denied Mr Gorman requested loans. Mr Philp explained the mechanics of the payments, and so the reason that Mr Gorman was referred to in some of the notes. I have dealt with relevant example above at [55]-[58], and having regard to this and the evidence at [53]-[54], I am satisfied that references to 'loans to Chris' are explicable on a basis consistent with there being a loan to Ms Gorman. Weighed against other evidence, Mr Philp's somewhat loose terminology is an insufficient basis upon which to infer an agreement with Mr Gorman. This is more so when it was unclear how and on what purported terms it was alleged that Mr Gorman was to repay Mr Philp.

93    Ms Mann submitted, based on certain passages in Kriketos v Livschitz [2009] NSWCA 96 (in particular [160]), that the conduct of Mr Philp was equally referable to a contract with Mr Gorman, so that I cannot be satisfied that a contract was made between Mr Philp and Ms Gorman. It was submitted that consistency of conduct with a pleaded agreement is not sufficient of itself to establish an agreement. Observing that Kriketos did not concern an oral contract, I further note that in any event this is not a case where there is another agreement to which Mr Philp's and Ms Gorman's conduct might be referable. I have declined to draw an inference that there was an agreement between Mr Philp and Mr Gorman because there is insufficient evidence from which to do so. And in this case I am not left only with consistent conduct (although the fact that it existed is important), but more importantly with Mr Philp's direct evidence about his conversations with Ms Gorman, evidence which I have accepted.

94    The absence of an interest term and the absence of security do not undermine such a finding. Based on Mr Philp's evidence, Ms Gorman had no assets to offer by way of security. Mr Philp understood there would be a source of repayment, being the anticipated funds. When the funds might be realised, and so the anticipated delay until payment, was unclear.

95    Similarly, the fact that Ms Gorman apparently did not have income from which to meet the alleged loan payments does not tell against the formation of the contract in circumstances where Mr Philp did not suggest that he expected payment other than from the funds when eventually repatriated to Australia.

96    I also note that Mr Philp had commenced making payments for use by Ms Gorman before Ms Mann commenced the District Court proceedings against her. That he continued to make advances despite the proceedings (in which he was not personally involved) is objectively explicable in circumstances where his evidence was that he understood the process to sell the land and ultimately achieve the repatriation of funds would take time and involved various modules.

97    Nor did I find compelling Ms Mann's submission challenging Mr Philp's belief as to the genuineness of the inheritance or the formation of any agreement on the basis that he knew certain bribes might be required. Whilst there might be other ramifications, those particular payments were but part of what he understood to be a longer and ongoing process being undertaken in Cambodia to facilitate the sale of the land and transfer of funds, a process revealed by the nature of Ms Gorman's requests (see, for example, at [25]), Mr Philp's notes and his other evidence. Further, I am not satisfied that those particular payments impugn any of the other advances made by Mr Philp upon request from Ms Gorman the subject of the proof of debt.

98    Ms Mann invited the Court to find that there was no contract between Mr Philp and Ms Gorman having regard to 'the probabilities'. For the reasons given, and having considered the various matters relied upon by Ms Mann, Ms Mann has not satisfied me on the balance of probabilities that no loan agreement was made between Mr Philp and Ms Gorman. It follows that the decision of the trustee is affirmed, with the qualifications I have already noted (at [82]).

99    As to the payment of legal fees, Mr Philp's evidence that he agreed to pay those on terms that Ms Gorman would repay him from the proceeds of land was not impugned. I accept Mr Philp's evidence in this regard. Objectively, Mr Philp's uncontested evidence, together with the fact that he was provided with the invoices and his conduct in continuing to make payment of the invoices, support the finding of an agreement to the effect that he paid the invoices on Ms Gorman's behalf as and when requested and on the basis he would be repaid from the proceeds of the land when available.

Jones v Dunkel

100    Ms Mann's counsel submitted during the hearing that:

The failure of Ms Low to call Ms Gorman, Mr Gorman or Ly Mao is unexplained, leading to a Jones v Dunkel inference being drawn.

101    In her written submissions it was said that:

The Court may draw a Jones v Dunkel inference that their evidence would not have assisted Ms Low.

102    The submissions were at an unhelpful level of generality. Although the trustee's counsel appeared to accept the potential for the application of Jones v Dunkel, that concession in the circumstances does not assist Ms Mann.

103    Jones v Dunkel (1959) 101 CLR 298 indicates that where a particular inference is fairly available on the evidence, the court may more readily draw the inference by the unexplained failure of a party to call a witness who is likely to have relevant knowledge and may be regarded as having been 'in the camp' of that party.

104    Ms Mann has not identified particular inferences that might be affected by the application of Jones v Dunkel.

105    It has not been necessary to apply Jones v Dunkel principles in relation to any particular finding based on inferences. The failure on the part of the trustee to call Ms Gorman is explicable. She is the bankrupt and can hardly be said to be in the trustee's camp. In any event, the trustee is not obliged to prove anything in this proceeding. It is unclear how Mr Gorman's evidence would have assisted Ms Low. Again, there was no obligation on the part of Ms Low to call witnesses. I was invited to draw an inference that if there was any agreement, it was with Mr Gorman, but that invitation was made by Ms Mann, not the trustee. On the evidence, I have found that there was an insufficient basis to draw an inference that Mr Gorman entered into any contract with Mr Philp. There is no inference to that effect available on the evidence. As to Ly Mao, again there was no obligation on the trustee's part to call him. It is also unclear on what basis Ms Mann asserts the trustee could have facilitated and compelled his appearance to give evidence in Australia in this proceeding. In any event, it is unclear what light he could have shed on the formation or terms of a contract agreed between Mr Philp and Ms Gorman.

Orders

106    There will be orders affirming the decision of the trustee to admit Mr Philp's proof of debt in the sum of $992,638 on the basis explained at [82] above. The review is otherwise adjourned.

107    There will be orders to provide for the joinder of Mr Philp and the provision of any further submissions. Questions of costs will be dealt with after the balance of the review is finalised.

Associate:

Dated:    4 February 2026