Federal Court of Australia

Natch v Stennson Pty Ltd, in the matter of Natch (Set Aside Application) [2026] FCA 754

ORDERS

THE COURT ORDERS THAT:

1.    The Applicant is granted leave to rely on the Amended Application dated 2 April 2026.

2.    The Amended Application is dismissed.

3.    The Interlocutory Application dated 21 March 2026 is dismissed.

4.    The Applicant pay the Respondent’s costs of the proceeding.

5.    If either party considers that the costs order in paragraph 4 of these orders should be varied, that party may file and serve submissions, limited to two pages in a minimum of 1.5 line spacing and 12 point font, by 4:00pm on 19 June 2026.

6.    If a party makes a submission pursuant to paragraph 5 of these orders, any responsive submission, also limited to two pages in a minimum of 1.5 line spacing and 12 point font, is to be filed and served by 4:00pm on 23 June 2026.

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

REASONS FOR JUDGMENT

BUTTON J:

Background

1    This proceeding concerns an application by the Applicant, Mr Natch, to set aside bankruptcy notice BN284090 (the Bankruptcy Notice) issued by the Official Receiver, on the application of the Respondent, Stennson Pty Ltd (Stennson), pursuant to s 41 of the Bankruptcy Act 1966 (Cth) (the Act), on 24 December 2025.

2    The Bankruptcy Notice is founded upon a series of costs orders made in earlier proceedings in this Court.

The litigation history

3    In 2019, Mr Natch (and other related entities) commenced proceeding VID 569 of 2019 against, inter alia, Stennson (the principal proceeding). The proceeding alleged, amongst other things, losses arising from building works carried out on adjoining land, but which involved the placement of underground anchors on land owned by Mr Natch. In October 2021, Mr Natch reached a settlement with the Respondents other than Stennson. Mr Natch was granted leave to discontinue the proceeding against Stennson on the condition that he pay Stennson’s costs.

4    In the nearly five years following the making of this entirely routine costs order, Mr Natch has brought multiple proceedings and appeals in this Court, which have been almost entirely unsuccessful.

5    The chronology of the principal subsequent proceedings and judgments that form part of the context necessary to understand and assess the present proceeding is as follows:

(1)    Mr Natch belatedly sought to appeal the costs order made by Anastassiou J in the principal proceeding. His application for an extension of time to appeal (proceeding VID 720 of 2021 (the appeal proceeding)) was refused by O'Callaghan J in June 2022, with a further costs order made against Mr Natch: Natch v Stennson Pty Ltd [2022] FCA 641 (O’Callaghan J) (Natch 2022).

(2)    Mr Natch then attempted to appeal O’Callaghan J’s decision to a single judge, but that application was dismissed in July 2022 by McEvoy J: Natch v Stennson Pty Ltd [2022] FCA 801.

(3)    Stennson’s costs in the principal proceeding and the appeal proceeding were subsequently taxed by a Registrar, and certificates of taxation were issued on 12 September 2024 in the amounts of $197,996.72 and $31,631.75 respectively.

(4)    Mr Natch sought an order for discovery from the Registrar conducting the taxation of the costs orders in the principal proceeding and in the appeal. Discovery was refused. Mr Natch sought review of the Registrar’s decision refusing discovery. That application was dismissed on 20 December 2024: Natch v Stennson Pty Ltd (No 2) [2024] FCA 1498 (O’Bryan J) (Natch (No 2)).

(5)    An application for leave to appeal from Natch (No 2) was heard (itself proceeding VID 57 of 2025) and was rejected by Snaden J on 7 February 2025: Natch v Stennson Pty Ltd [2025] FCA 69.

(6)    The costs of the application for review in respect of discovery were subsequently quantified on a lump sum basis on 15 May 2025: Natch v Stennson Pty Ltd (No 3) [2025] FCA 472 (O’Bryan J).

(7)    Mr Natch also sought review of the certificates of taxation themselves. That application was largely unsuccessful, although some reduction was made to reflect an issue concerning the status of Stennson’s solicitors: Natch v Stennson Pty Ltd (No 4) [2025] FCA 473 (O’Bryan J) (Natch (No 4)). Mr Natch was also ordered to pay Stennson’s costs ($8,815). The adjusted costs for the primary proceeding and the appeal proceeding were confirmed by further orders of the Court (made on 16 July 2025) in the amount of $154,377.86 and $26,238.25 respectively: Natch v Stennson Pty Ltd (No 5) [2025] FCA 807 (O’Bryan J).

(8)    Mr Natch sought leave to appeal the decision of O’Bryan J in Natch (No 2). Leave to appeal was refused by Downes J on 9 December 2025: Natch v Stennson Pty Ltd (Natch - Leave to Appeal) [2025] FCA 1550.

(9)    Mr Natch made a further application to set aside the costs order in the primary proceeding pursuant to r 39.05(b) of the Federal Court Rules 2011 (Cth) (the Rules), alleging that the original costs order made by Anastassiou J was procured by fraud, said to arise from misrepresentations having been made by Stennson by its pleadings, submissions and evidence in the principal proceedings. That application was dismissed by O’Bryan J in December 2025: Natch v Stennson Pty Ltd (No 6) [2025] FCA 1683 (Natch (No 6)). Mr Natch was ordered to pay indemnity costs fixed in the amount of $23,364.

(10)    Mr Natch has applied for leave to appeal Natch (No 6). That application is proceeding VID 1688 of 2025 (proceeding 1688). In this proceeding, Mr Natch has sought orders setting aside or permanently staying the original costs orders in the principal proceeding and in the appeal proceeding, as well as costs. The application for leave to appeal was heard on 17 April 2026 by Derrington J. His Honour’s judgment is reserved.

6    For reasons that will become apparent, something more needs to be said about what the principal proceeding concerned, who the parties were, and how the subject matter relates to a proceeding brought by Mr Natch (and related entities) against Stennson (and another defendant) in the Supreme Court of Victoria, by proceeding S ECI 2025 00378 (the SCV proceeding).

7    The principal proceeding was summarised as follows by O’Callaghan J in Natch 2022:

[7]    The first applicant [Mr Natch] was the registered proprietor of the property located at 1 Sebastopol Street, Caulfield North, which is Lot 1 on Plan of Subdivision SP026738V. The second applicant was the registered proprietor of the property located at 3 Sebastopol Street, Caulfield North, which is Lot 2 on the same Plan of Subdivision. The third applicant was an owners’ corporation and owns what counsel in the trial below described as the “common property”.

[8]     The first respondent (Stennson) is the registered proprietor of the property located at 92 Kooyong Road, Caulfield North, which abuts the western boundary of the first applicant’s property. The second respondent (Camillo Builders) is a builder which was engaged by Stennson. The third respondent was the corporate employer of the fourth respondent, who was the building surveyor. (The second, third and fourth respondents did not appear at the hearing of this application for the obvious enough reason that, although they were named as respondents to the application, no part of the application affected them.)

[9]    In October 2018, Camillo Builders served a protection works notice on the first applicant setting out protection works, being the drilling of ground anchors beneath the applicants’ properties. The notice did not include a document prescribed by the Building Regulations 2018 (Vic), being a statement in a form approved by the Victorian Building Authority which set out the rights and obligations of the adjoining owner (including to respond formally to the protection works notice within 14 days). Without the statement, the first applicant alleged that he was unaware of his rights and legal obligations. No notice was served on the second and third applicants.

[10]    In November 2018, the first applicant, after consulting with an engineer and learning of the potential impact on his property, objected to the proposed protection works. However, Camillo Builders proceeded with the works, relying on the fact that the first applicant had not lodged a “Form 8” response to the protection works notice (as was required in order formally to disagree with the proposed works under the Building Act).

[11]    The applicants commenced proceedings in this court for the loss in the value of the properties as a result of having ground anchors beneath them, making the following claims:

(a)    as against all respondents, misleading and deceptive conduct in that they made false representations and/or representations by silence which deprived the first applicant of the opportunity to respond to the protection works within the required time and/or appeal to the Building Appeals Board;

(b)    as against Stennson, compensation under s 98 of the Building Act; and

(c)    as against Camillo Builders, trespass.

[12]    The proceeding was heard by Anastassiou J in October 2021. At the start of the fifth day of the hearing (22 October), the parties told his Honour that proceedings against the first respondent were sought to be discontinued, to give effect to the terms of compromise between the applicants and the second to fourth respondents.

8    To this summary may be added that the claims in the principal proceeding against Camillo Builders Pty Ltd (Camillo Builders) also included nuisance and negligence.

9    In the SCV proceeding, Mr Natch brought claims against Stennson and the owners corporation of the development site (owners corporation) arising out of the same protection works. The claims against Stennson were for contraventions of the ACL, trespass and negligence, with Stennson’s liability in each said to arise from Camillo Builders having acted as its agent. The ACL claim was in substantially the same terms as that advanced in the principal proceeding, pleading the same representations and conduct by Camillo Builders said to contravene the ACL and Stennson’s liability as principal for those contraventions. The trespass claim, which had initially been pleaded against Stennson in the principal proceeding but later struck out, was re-agitated in this proceeding, again framed as Stennson being responsible as principal for Camillo Builders’ trespass in installing the ground anchors. The negligence claim, which had not been brought against Stennson in the principal proceeding, was similarly framed as Stennson being responsible, as principal, for the same breach of duty by Camillo Builders that had been the subject of the negligence claim against Camillo Builders in the principal proceeding. Several of the claims brought against Stennson were also brought against the owners corporation, apparently on the basis of its capacity as successor in title to Stennson of the common property.

10    Following the commencement of the SCV proceeding, on 24 December 2025, Stennson applied by summons for summary dismissal or alternatively a permanent stay of the proceeding on the ground that it constituted an abuse of the Court's process. Associate Justice Steffensen found that the two proceedings, the principal proceeding and the SCV proceeding, concerned the same or substantially the same subject matter, both seeking damages for the alleged loss in value of the properties as a result of the installation of the ground anchors and almost identical relief from Stennson, and that the trespass and negligence claims, to the extent not previously pursued against Stennson, arose from the same facts and could with reasonable diligence have been brought in the principal proceeding. Mr Natch had offered no reasonable explanation for discontinuing partway through the trial of the principal proceeding, and allowing the SCV proceeding to continue would work a manifest unfairness on Stennson, which had defended the claims all the way to trial, consented to the dismissal of its cross-claims upon the discontinuance, and now faced relitigating from scratch without the ability to seek contribution or indemnity from Camillo Builders and the other parties, while the costs ordered as a condition of the discontinuance remained unpaid. Her Honour was not satisfied that a temporary stay pending payment of those costs would adequately address the oppression and vexation to Stennson in all the circumstances, and accordingly made orders permanently staying the proceeding.

The current Bankruptcy Notice and proceedings

11    On 24 December 2025, Stennson caused the Bankruptcy Notice to be served on Mr Natch, being the bankruptcy notice presently in issue. The debt claimed is $209,548.20, being the sum of court-ordered costs — $213,548.20 — less payments of $4,000.00. That amount includes, in substance, the adjusted taxed costs of the principal proceeding and the appeal proceeding ($154,377.86 and $26,238.25 respectively), together with further costs orders made in other applications (outlined above in paragraph 5), including orders for $19,917.09 (costs of the review application in respect of discovery), $8,815.00 (costs of the taxation review the subject of Natch (No 4)), $3,000.00 and $1,200.00.

12    This was the second bankruptcy notice served by Stennson on Mr Natch. An earlier bankruptcy notice had been served on him on 10 September 2025 (the notice was dated 27 August 2025). On 17 November 2025, Hespe J set aside the bankruptcy notice, the parties having agreed that the bankruptcy notice was defective. Costs were awarded in favour of Mr Natch.

13    Mr Natch filed this proceeding on 12 January 2026, which was within the time prescribed by the Act (21 days).

14    As his Application was originally framed, Mr Natch contended that the Bankruptcy Notice should be set aside on the grounds that:

a.    The Applicant appealed the judgment debts in the High Court of Australia

b.    The Applicant has issued proceedings against the Respondent in Supreme Court Proceeding S ECI 2025 00378 seeking damages against the Respondent, which claim will exceed the amount of the judgment debt.

15    On 21 March 2026, shortly prior to the hearing of the Application before a Registrar, Mr Natch sought to file an interlocutory application seeking various other forms of relief (only some of which might credibly be regarded as interlocutory) and seeking that relief on numerous further grounds, the focus of which was a contention that Stennson had acted in abuse of process, to which I will return (Interlocutory Application). The Interlocutory Application ran to 22 pages.

16    By the Interlocutory Application, Mr Natch sought, pursuant to s 30(1) of the Act and the Court’s inherent jurisdiction, an order that “these bankruptcy proceedings VID 22/2026 including Bankruptcy Notice BN284090 issued on 24 December 2025 be permanently stayed pending the final determination of Supreme Court of Victoria proceeding S ECI 2025 00378 on the ground that the Bankruptcy Notice was issued for an illegitimate and collateral purpose constituting an abuse of the process of this Court”.

17    In the alternative, Mr Natch sought a declaration pursuant to s 30(1)(b) of the Act that the issuing of the Bankruptcy Notice constituted an abuse of the processes of this Court and a permanent injunction restraining Stennson from issuing any further bankruptcy notice based on the same costs orders, pending the determination of the SCV proceeding.

18    The proceeding came before the Registrar for hearing on 25 March 2026. At that time, the Interlocutory Application had not been accepted for filing, and Stennson had prepared on the basis of the original application to set aside the Bankruptcy Notice. During the hearing, issues arose as to the late introduction of the Interlocutory Application and the addition of a new allegation of abuse of process, which had not formed part of the original grounds.

19    The Registrar directed that the 22 page Interlocutory Application and supporting affidavit be accepted for filing and ordered that the proceeding be fixed for hearing before a Judge of the Court.

20    The Registrar also made timetabling orders. Those orders permitted Mr Natch to file and serve any further affidavit material in support of his applications (plural) and any further submissions, limited to 3 pages, by 2 April 2026.

21    The orders expressly precluded Mr Natch from filing any amended application or further interlocutory application without leave. In clear disregard of that order, on 2 April 2026, Mr Natch filed an Amended Application, which was not accompanied by any application for leave. However, it appears from his subsequent affidavits and conduct that Mr Natch accepts he requires leave to rely on the Amended Application. While Stennson did not expressly consent to leave being granted to Mr Natch to rely on his Amended Application, it did not oppose the grant of leave. It also made submissions on the matters raised by the Amended Application. In many — but not all — respects, the Amended Application that Mr Natch sought to pursue overlapped with the issues introduced through the 22 page Interlocutory Application that the Registrar had already permitted to be filed.

Evidence and submissions relied on

22    At the hearing before me, Mr Natch relied on his three written submissions, being submissions dated 26 February 2026, also 26 February 2026 (but filed on 11 March 2026) and 2 April 2026 (filed on 5 April 2026). Stennson relied on its two sets of submissions dated 12 March 2026 and 17 April 2026.

23    Mr Natch relied on six affidavits, all sworn by him, being affidavits dated 12 January 2026, 23 February 2026, 21 March 2026, 2 April 2026, 10 April 2026 and 18 May 2026. Although the affidavits of 10 April 2026 and 18 May 2026 were filed in contravention of the Registrar’s orders, and no variation of those orders was sought by Mr Natch, Stennson did not oppose Mr Natch relying on them.

24    I refused to allow Mr Natch to rely on a further affidavit, dated 3 June 2026, which was filed the afternoon before the hearing on 4 June 2026, and which had not been foreshadowed in any way. Stennson opposed Mr Natch being permitted to rely on that affidavit. Reasons for refusing to allow this affidavit to be relied upon were given ex tempore on 4 June 2026. I did, however, permit Mr Natch separately to tender two emails from Mr Leon Mrocki (director of Stennson) which had been annexed to the 3 June 2026 affidavit. Those emails were relevant to his abuse of process contentions.

25    The day before the hearing, Mr Natch also filed applications for leave to issue subpoenas to two of Stennson’s solicitors, and Mr Mrocki, to give oral evidence. Those applications were refused, for reasons also given ex tempore on 4 June 2026.

26    Stennson relied on an affidavit of Simon Matters dated 11 February 2026. I also permitted Stennson to tender an order of Justice Stynes of the Supreme Court of Victoria in the SCV proceeding, which is relevant for reasons I will come to.

27    At the hearing, I gave Mr Natch leave to file a short additional submission addressing two discrete points that he said took him by surprise at the hearing, and I also allowed an opportunity for Stennson to respond. Mr Natch took up the opportunity and filed supplementary submissions, to which Stennson filed reply submissions two days later.

The Issues

28    While the material filed is extensive, the issues arising under the Amended Application are as follows:

(1)    Should the Bankruptcy Notice be set aside on the basis that an “appeal is currently on foot in [the] High Court”? (Ground (a)(i) of the Amended Application.)

(2)    Should the Bankruptcy Notice be set aside on the basis that proceeding 1688 is currently on foot? (Ground (a)(ii) of the Amended Application.)

(3)    Should the Bankruptcy Notice be set aside on the basis that the debt is not presently due and payable because Mr Natch has an equitable set-off that extinguishes the debt arising from:

(a)    his claims under ss 97 and 98 of the Building Act 1993 (Vic) (the Building Act), currently before the Building Appeals Board (the BAB), being a claim for at least $2,400,000 arising from allegedly unlawful protection works that Stennson carried out in February 2019 (the BAB proceeding); and/or

(b)    his claims in the SCV proceeding, also being a claim for at least $2,400,000 arising from the allegedly unlawful protection works?

(Ground (b) of the Amended Application.)

(4)    Should the Bankruptcy Notice be set aside on the basis that the debt is not presently due and payable because Mr Natch has a counter-claim, set-off and cross-demand under s 40(1)(g) of the Act comprising:

(a)    the BAB proceeding; and/or

(b)    the SCV proceeding?

(Ground (c) of the Amended Application.)

(5)    Should the Bankruptcy Notice be set aside on the basis that it was issued for a collateral purpose constituting an abuse of process? (Ground (d) of the Amended Application.)

(6)    Should “these proceedings or the bankruptcy notice BN284090… be permanently stayed” pursuant to s 30(1) of the Act and the inherent jurisdiction of the Court pending final determination of: the BAB proceeding, the SCV proceeding, proceeding 1688 in this Court and the so-called “High Court proceeding”? (Relief Sought paragraph 2 of the Amended Application.)

29    The first two grounds of Mr Natch’s Amended Application (grounds (a)(i) and (a)(ii)) were framed in terms asserting that the existence of the supposed High Court appeal and proceeding 1688 meant that the judgment debts the subject of the Bankruptcy Notice are not finally established. Ground (a)(ii) also made reference to s 41(6C) of the Act.

30    There are two preliminary issues with these aspects of Mr Natch’s application. First, orders of a superior court are final and binding unless and until set aside, so the mere existence of proceedings of this kind does not mean that the Bankruptcy Notice should automatically be set aside on the grounds that no final judgment or order exists to support the issue of the Bankruptcy Notice: see paragraph 45 below. Rather, the Act makes provision for the recipient of a bankruptcy notice to apply for an extension of the time for compliance where the underlying judgment or order is the subject of proceedings seeking to set it aside: ss 41(6A), (6C). Secondly, it should be noted that Mr Natch did not apply under s 41(6A) of the Act for any extension to the time for compliance with the Bankruptcy Notice. Rather, his Amended Application sought orders setting aside the Bankruptcy Notice (or alternative relief that includes a “stay” of the Bankruptcy Notice and this proceeding).

Legislative Framework and legal Principles

31    Although the Act does not expressly confer a power to set aside a bankruptcy notice, such a power is well established. It arises under s 30(1) of the Act, and reflects the principle that a statutory power carries with it the powers necessary for its exercise: Australian Securities and Investments Commission v Forge [2003] FCAFC 274; (2003) 133 FCR 487 at [26] (Emmett J, Branson and Stone JJ agreeing) (Forge), citing Re Sterling; Ex parte Esanda Ltd [1980] FCA 61; (1980) 44 FLR 125 (Lockhart J).

32    However, that power is confined. The Act does not confer a general discretion to set aside a bankruptcy notice that is valid in form and not an abuse of process: Forge at [27]. Rather, any challenge must relate to the form or content of the notice, its service, or the existence of the underlying debt: Forge at [27]. Importantly for present purposes, a challenge to the existence of the debt extends to a contention that the debtor has a counter-claim, set-off or cross demand equal to or exceeding the judgment debt: Forge at [27], citing Re Briggs; Ex parte Briggs v Deputy Commissioner of Taxation (WA) (1986) 12 FCR 310 at 312 (Toohey J); Re Athans; Ex parte Athans (1991) 29 FCR 302 at 310 (Hill J).

33    That proposition is given operative effect by s 40(1)(g) of the Act, which provides:

40    Acts of bankruptcy

(1)    A debtor commits an act of bankruptcy in each of the following cases:

…

(g)    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 … a bankruptcy notice under this Act and the debtor does not:

(i)    where the notice was served in Australia—within the time fixed for compliance with the notice; or

    …

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, as the case may be, being a counter‑claim, set‑off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained;

34    Under s 40(1)(g), a debtor commits an act of bankruptcy by failing to comply with a bankruptcy notice, unless the debtor satisfies the Court that there exists a counter-claim, set-off or cross demand of the requisite kind, that is, a monetary claim equal to or exceeding the judgment debt or sum specified in the final order, and not available to be raised in the proceeding in which the judgment or order was obtained: Re Brink: Ex parte Commercial Banking Co of Sydney Ltd [1980] FCA 78; (1980) 44 FLR 135 (Re Brink) at 138 (Lockhart J); Patane v Asteron Life Ltd [2004] FCA 232; (2004) 2 ABC(NS) 85 at [28] (Lander J). Establishing the existence of such a claim therefore operates as a substantive answer to the consequences that would otherwise flow from non-compliance with a bankruptcy notice.

35    In referring to a counter-claim, set-off or cross demand that could not have been set up in the action or proceeding in which the judgment or order was obtained, s 40(1)(g) is concerned with a legal inability to advance the claim, not any practical or personal considerations. This was clearly explained by Gilmour J, with whom McKerracher J agreed, in Palaniappan v Westpac Banking Corporation [2017] FCAFC 121; (2017) 252 FCR 486 (Palaniappan) at [32]:

[32]     The principles applicable to the proper construction of s 40(1)(g) of the Act, which the parties accept, correctly, are relatively well settled. They are relevantly:

(1)    The question of whether or not a counterclaim or cross-demand ‘could not have been set up’ is a question to be determined with reference to legal inability, not practical or personal considerations; Re Brink at 434, 437.

(2)    ‘…[A] counterclaim-claim, set-off or cross demand which could not be set up [is] one which, from point of time, or from its nature, or from absence of empowering provisions, or from positive inhibition so to do, could not be set up in the particular case in which judgment was obtained. …Mere failure to take advantage of the opportunity can hardly be said to be inability’: Re Stokvis at 57.

(3)    The debtor bears the onus of satisfying the Court that he/she was legally incapable of setting up his/her counterclaim in the proceedings in which the judgment was obtained: Re Ling; Ex parte Ling v Commonwealth (1995) 58 FCR 129 at 130 and 137.

36    The focus being on legal inability — and not on what is practical or convenient — s 40(1)(g) may not be satisfied even if there are procedural or other hurdles which would need to be met in order to agitate the claim in the relevant proceeding (eg an application for leave, or an application to transfer proceedings to another court): Axarlis v Pets Paradise Franchising (SA) Pty Ltd [2010] FCA 319; (2010) 183 FCR 521 at [53], [68] (Dodds-Streeton J).

37    Section 41(7) provides a procedural protection to a debtor who advances a contention that he or she has a counter-claim, set-off or cross demand of the kind referred to in s 40(1)(g), as follows:

41    Bankruptcy notices

    …

(7)    Where, before the expiration of the time fixed for compliance with a bankruptcy notice, the debtor has applied to the Court for an order setting aside the bankruptcy notice on the ground that the debtor has such a counter‑claim, set‑off or cross demand as is referred to in paragraph 40(1)(g), and the Court has not, before the expiration of that time, determined whether it is satisfied that the debtor has such a counter‑claim, set‑off or cross demand, that time shall be deemed to have been extended, immediately before its expiration, until and including the day on which the Court determines whether it is so satisfied.

38    Where, within the time fixed for compliance, the debtor applies to set aside the notice on the basis of a counter-claim, set-off or cross demand of the kind identified in s 40(1)(g), time for compliance is taken to be extended until the Court determines whether it is satisfied that such a claim exists. It should be noted that this mechanism operates automatically upon the debtor invoking s 40(1)(g), such that no separate application for an extension of time is required: James v Abrahams [1981] FCA 46; (1981) 51 FLR 16 at 21 (Deane and Lockhart JJ).

39    I set out in Anderson v Stonnington City Council [2024] FCA 1288 the principles governing when such a claim, being a counter-claim, set-off or cross demand, may be relied upon for the purposes of s 40(1)(g) (and s 41(7)) of the Act: at [28]–[31]. These principles were very recently approved by the Full Court in Anderson v Stonnington City Council [2026] FCAFC 34 at [29] (Banks-Smith, Dowling and McDonald JJ). For present purposes, they may be stated as follows.

40    First, as set out by Lindgren J in Re Glew; Glew v Harrowell of Hunt & Hunt Lawyers [2003] FCA 373; (2003) 198 ALR 331 (Re Glew) at [9], the Court must be satisfied that the asserted claim meets three interrelated requirements, namely that it:

(a)    discloses a prima facie case;

(b)    has a real or fair prospect of success, such that the applicant is fairly entitled to litigate it; and

(c)    is genuine or bona fide.

41    Secondly, the assessment of the above three matters does not require the Court to undertake a preliminary trial of the asserted claim. However, the Court clearly must nevertheless make some type of assessment: Re Glew at [10] (Lindgren J), citing Re Brink at 141 (Lockhart J).

42    Thirdly, the assessment involves weighing the apparent strength of the asserted claim together with all relevant circumstances, including whether it is just that the bankruptcy proceedings go ahead or be required to await determination of the asserted claim: Guss v Johnstone [2000] HCA 26; (2000) 74 ALJR 884 at [40] (Gleeson CJ, Gaudron, McHugh, Kirby and Callinan JJ).

43    Fourthly, it is not sufficient merely to assert a claim or to produce a pleading. The Court must be satisfied that it is just that the claim be determined before the bankruptcy proceeding is permitted to continue: Massih v Esber [2008] FCA 1452; (2008) 250 ALR 748 (Massih) at [18] (Flick J), citing Dekkan v Evans [2008] FCA 1004; (2008) 6 ABC(NS) 334 at [54] (Jacobson J). Mere production of a statement of claim, without more, will not suffice: Massih at [18] (Flick J), citing Re Cox (1934) 7 ABC 98.

44    The observations of Colvin J, at [32]–[35], in CFB18 v Reader Lawyers & Mediators [2018] FCA 611; (2018) 16 ABC(NS) 26 are particularly apposite to this case:

[32]    A debtor served with a bankruptcy notice who brings a set aside application within time will not commit an act of bankruptcy in failing to comply with the notice if the debtor satisfies the Court that he or she has a counterclaim, setoff or cross demand equal to or exceeding the amount claimed that he or she could not have set up in the action or proceeding in which the judgment or order for the amount claimed was obtained: s 40(1)(g) of the Bankruptcy Act.

[33]     Where an application is made to set aside a bankruptcy notice on the basis of such an offsetting claim, the Court must weigh up considerations as to the legal and factual merit of the claim relied upon by the debtor and the justice of allowing the bankruptcy proceedings to go ahead or requiring them to await the determination of the claim: Guss v Johnstone [2000] HCA 26 at [40]. The offsetting claim must sound in money and it must be a claim that it is proper and reasonable for the debtor to litigate: Vogwell v Vogwell (1939) 11 ABC 83, 85. It must be raised in the same right as the claim the subject of the bankruptcy notice: Ebert v Union Trustee Co of Australia Ltd (1960) 104 CLR 346, 351-352. So, for example, a claim made in a trustee capacity can only be met by an offsetting claim against the debtor in the same trustee capacity.

[34]    The various formulations in the cases as to what must be established by the party seeking to set aside the notice were summarised by Lindgren J in Re Glew; Glew v Harrowell [2003] FCA 373 at [9]. They include, the existence of a prima facie case, a fair chance of success or the party is fairly entitled to litigate the claim and that the party is advancing a genuine or bona fide claim. However, it is not simply a matter of evaluating whether there is a claim with the requisite strength. Rather, the question is whether the claim is of a kind that, in all the circumstances (including the Courts view of the strength of the offsetting claim), it is just to allow the party to pursue rather than face bankruptcy. One aspect of the claim to consider is its strength. A weak claim will not suffice. Otherwise, an assessment of strength is to be considered in the context of other considerations that bear upon the justice of allowing the bankruptcy proceedings to continue without the claim first being determined.

[35]     The claim must be articulated in the supporting affidavit filed with the application to set aside. After reviewing the relevant cases, Bromwich J concluded in Coshott v Prentice (No 2) [2016] FCA 1531 at [40] that:

for an application to set aside a bankruptcy notice to be competent and trigger the automatic statutory extension of time for compliance in s41(7), the offsetting claim must be effective or real at the time the application is made; it must be bona fide; it must on its face show a relevant offsetting claim. Such a jurisdictional requirement for a competent application cannot be supplemented after the time for compliance has expired because that is too late to engage jurisdiction and trigger an extension of time.

(Bold emphasis added.)

45    It should be emphasised that, for the purposes of s 40(1)(g), a “final judgment or final order” remains final notwithstanding that an appeal or other challenge may be on foot. As the High Court explained in Clyne v Deputy Commissioner of Taxation (NSW) (1983) 57 ALJR 673 at 675 (Gibbs CJ, Murphy, Wilson, Brennan and Deane JJ agreeing), a judgment is “final” if it finally disposes of the rights of the parties, and this is so even if it may later be set aside or overturned. This principle was applied in the context of the Act by the Full Court in Francis v Eggleston Mitchell Lawyers Pty Ltd [2014] FCAFC 18; (2014) 12 ABC(NS) 25 at [29]–[31] (Rares, Flick and Bromberg JJ).

Consideration of the Amended Application

Issue 1: Should the Bankruptcy Notice be set aside on the basis of the High Court appeal?

46    In his affidavit dated 12 January 2026, Mr Natch asserted that he has “appealed the judgment debts in the High Court”, referring to the judgment debts upon which the Bankruptcy Notice was founded. No application filed in the High Court was exhibited or annexed to that affidavit. In an affidavit, dated 11 February 2026, Stennson’s solicitor deposed that Stennson “has not received any application for special leave to appeal to the High Court of Australia from the Applicant”.

47    In the next affidavit Mr Natch filed (dated 23 February 2026), he again asserted that there was an appeal in the High Court, stating that “[t]he Applicant appeal of the judgment debts in the High Court of Australia appealing the orders of J Downes decision of 9 December 2025 a copy will be filed to this court in due course”. No copy of whatever was said to constitute the basis of an extant appeal to the High Court was exhibited or annexed to this affidavit.

48    Mr Natch annexed to his affidavit dated 2 April 2026 a document that he described as the “High Court proceeding appealing the decision of J Downes of 9 December 2025 on grounds the court failed in jurisdictional error to tax an invalid bill of costs and was not validly served.” The document annexed is an affidavit of Mr Natch dated 26 January 2026, which bears no indication that it has even been filed with the High Court. While the affidavit sets out a long history of proceedings, it does not clearly identify any points of appeal, or seek special leave. Further, Mr Natch does not suggest that he has served any High Court documentation on Stennson.

49    Accordingly, I am not satisfied that there is an appeal — or even an application for special leave to appeal — on foot in the High Court. What might follow were there such an appeal on foot (or application for leave to appeal) need not be further considered.

50    The assertion of a High Court appeal does not warrant the Bankruptcy Notice being set aside. Nor does it support the alternate relief sought by Mr Natch by his Amended Application (see further Issue 6 below).

Issue 2: Should the Bankruptcy Notice be set aside on the basis of proceeding 1688?

51    In Natch (No 6), O’Bryan J described Mr Natch’s application to set aside the costs order made by Anastassiou J on the discontinuance of the principal proceeding as “utterly baseless”: at [7]. Mr Natch’s application, advanced by Interlocutory Application dated 16 October 2025, suggested that the costs orders had been obtained by misrepresentations made by Stennson through its pleadings, submissions and evidence filed in the principal proceeding. The application before O’Bryan J was, as his Honour observed, yet another attempt made by Mr Natch to set aside the costs order made on 27 October 2021: at [6]. In Natch (No 6), O’Bryan J described Mr Natch’s conduct in bringing the application as involving the “use of the Court’s procedures to cause vexation or oppression to Stennson” and as “an abuse of process”: at [7].

52    Against such damning findings, Mr Natch has applied for leave to appeal. A rich variety of errors is asserted in the proposed notice of appeal. As set out above, the application for leave to appeal was heard on 17 April 2026, and judgment is reserved at the time of publication of these reasons.

53    In the factual context in which proceeding 1688 has been brought, and having regard to the need for any appeal first to be the subject of a grant of leave, I am not satisfied that the application for leave to appeal has sufficient prospects of success as to constitute a claim of the kind referred to in s 40(1)(g), according to the authorities referred to above (see paragraph 40ff).

54    In addition, the circumstances involved are also ones in which the decision the subject of the application for leave to appeal constitutes yet another in a long series of attempts by Mr Natch to set aside a routine costs order made in 2021 when Mr Natch elected to discontinue his own proceeding. This is not a case in which justice requires that proceeding 1688 should be determined before Mr Natch is required to meet the Bankruptcy Notice, or face bankruptcy, applying the principles referred to in the authorities set out in paragraphs 42–44 above.

55    The existence of proceeding 1688 does not warrant the Bankruptcy Notice being set aside. Nor does it support the alternate relief sought by Mr Natch by his Amended Application (see further Issue 6 below).

Issues 3 and 4: Should the Bankruptcy Notice be set aside on the basis of equitable set-off arising from the BAB proceeding or the SCV proceeding, or on the basis of a counter-claim, set-off or cross-demand under s 40(1)(g) comprising the BAB proceeding or the SCV proceeding?

56    Mr Natch’s contention is that the Bankruptcy Notice should be set aside on the basis that the debt is not presently due and payable because he has an equitable set-off that extinguishes the debt and arises from either or both of the BAB proceeding and the SCV proceeding. He points to the same two actions as constituting proceedings falling under s 40(1)(g).

57    It is convenient to deal with Mr Natch’s equitable set-off and statutory claims together (noting also that it is not clear why Mr Natch advanced his equitable set-off argument separately from his contentions relying on s 40(1)(g)).

The SCV proceeding

58    The SCV proceeding has been permanently stayed. Mr Natch emphasised that he has filed an appeal against the permanent stay. Mr Natch submitted that the appeal will be heard by a single judge on the basis that it is an appeal from an Associate Judge, to be heard de novo. He also observed that the permanent stay does not extinguish his claims.

59    Stennson accepted that the appeal has been filed and served. It contended, however, that the appeal is incompetent on the basis that any appeal would have to be heard by the Court of Appeal — not a single judge de novo — and would require the grant of leave. That was said to be the case because Stynes J of the Supreme Court of Victoria made an order referring the hearing of all interlocutory applications in the proceeding to an Associate Judge. Such a referral was one made under r 77.05 of the Supreme Court (General Civil Procedure) Rules 2025 (Vic) (SCV Rules), the consequence being that, pursuant to r 77.07(1)(a), any appeal can only be heard by the Court of Appeal, and is subject to the usual requirements in that court concerning leave to appeal. In response, Mr Natch submitted that because the application for summary dismissal and a stay fell within the original authority of an Associate Judge of the Supreme Court of Victoria, the order of Stynes J was not the source of the power of the Associate Judge to determine the application, and so r 77.07(1)(a) of the SCV Rules does not operate.

60    Whether or not an appeal from the permanent stay in the Supreme Court of Victoria must be heard by the Court of Appeal is a matter that will fall to be determined in due course in that court. It is sufficient to note, for present purposes, that Stennson’s position is far from being clearly correct. In Nom de Plume Nominees Pty Ltd v Ascot Vale Self Storage Centre Pty Ltd (Receivers and Managers Appointed) (in liq) (No 2) [2020] VSCA 70, the Court of Appeal heard an appeal from a judgment of a judge who had allowed an appeal against a permanent stay ordered by an Associate Judge; the point being that it did not appear that any referral by a judge to an Associate Judge was necessary in order for the Associate Judge to order a permanent stay, and the appeal was heard by a single judge, with only the subsequent appeal going to the Court of Appeal. In YZ v Beit Habonim Pty Ltd [2023] VSC 222, a single judge of the Supreme Court of Victoria heard an appeal from a decision of an Associate Judge refusing an application for a permanent or temporary stay. Mr Natch also drew attention to Atomos Ltd v McGechie [2023] VSC 754 as another example of a case in which a stay order made by an Associate Judge was appealed to a single judge of the Supreme Court of Victoria.

61    Whether or not the appeal from the permanent stay is to be heard by a single judge, and whether or not leave to appeal will be required, I am not satisfied that the claims advanced by the SCV proceeding answer the description of s 40(1)(g). That is so for two independent reasons.

62    First, Mr Natch has not established that the claims there advanced could not have been set up in the principal proceeding in this Court. All of the matters raised by Mr Natch on this point either constituted reasons why he did not, in fact, raise or persist with, such claims in the principal proceeding, or relied on the fact that the principal proceeding was discontinued rather than having been determined on the merits. None of those matters establishes that the claims that are the subject of the SCV proceeding could not have been pursued by Mr Natch in the principal proceeding.

63    Secondly, the claims are not claims in respect of which the justice of the case requires that Mr Natch should be allowed to litigate them to completion before having to comply with the Bankruptcy Notice, or face bankruptcy, applying the principles referred to in the authorities set out in paragraphs 42–44 above. The justice of the case does not demand that the SCV proceeding be finally determined — whether by appeals against the permanent stay being exhausted, or otherwise — before Mr Natch ought to be required to comply with the Bankruptcy Notice, or face bankruptcy. As set out above, there is significant overlap between the claims advanced in the SCV proceeding and the claims that were advanced in the discontinued principal proceeding.

64    The existence of the (permanently stayed) SCV proceeding does not warrant the Bankruptcy Notice being set aside, notwithstanding the fact that Mr Natch is presently pursuing an appeal seeking to overturn the stay. Nor do these matters support the alternate relief sought by Mr Natch by the Amended Application (as to which see further Issue 6 below).

The BAB proceeding

65    The BAB proceeding advances claims under ss 97 and 98 of the Building Act. That proceeding was commenced by an application form dated 30 March 2026.

66    Section 97 of the Building Act provides that an owner must pay an adjoining owner “all costs and expenses necessarily incurred by the adjoining owner in assessing proposed protection work and in supervising the carrying out of protection work in respect of the adjoining property”. Mr Natch said in oral submissions that he intends to claim costs of the litigation in which he has been engaged with Stennson and others, under s 97.

67    Section 98 provides that “[a]n owner must compensate any adjoining owner or adjoining occupier for inconvenience, loss or damage suffered by the adjoining owner or adjoining occupier in connection with the carrying out of protection work under this Part”.

68    Sections 97 and 98 form part of Pt 7 of the Building Act.

69    Mr Natch’s Further Amended Statement of Claim in the SCV proceeding includes a claim under s 98 of the Building Act. Although Mr Natch had initiated steps to amend his statement of claim in that proceeding to remove the Building Act claims before the proceeding was permanently stayed, at the time orders were made permanently staying the SCV proceeding, the s 98 Building Act claim remained part of the pleaded claims in the SCV proceeding. Nevertheless, Mr Natch has initiated the BAB proceeding, he says on the basis that he was advised that s 159 of the Building Act was an exclusive jurisdiction clause and so only the BAB has jurisdiction to determine his claims. That section provides as follows:

159 Compensation—protection work

An adjoining owner who suffers inconvenience, loss or damage during the carrying out of protection work under Part 7 may apply to the Building Appeals Board for an order determining the amount (if any) of compensation for that inconvenience, loss or damage.

70    On its face, this provision does not appear to render the jurisdiction of the BAB an exclusive jurisdiction. No authority was cited suggesting that the jurisdiction was exclusive. Stennson drew attention to s 260 of the Building Act, which limits the jurisdiction of the Supreme Court of Victoria, but only to the extent necessary to prevent it from “entertaining actions of a kind referred to in section 128 and clause 10 of Schedule 4” and “to ensure that proceedings are determined in accordance with sections 129 to 134”. Neither of those limbs is of a kind that affect a claim under ss 97 or 98.

71    It was also common ground that claims were advanced by Mr Natch under the Building Act in the principal proceeding, and that no contention was raised that this Court lacked jurisdiction to deal with the claims advanced under the Building Act. On the contrary, Mr Natch submitted that, had the principal proceeding not been discontinued, “his Honour … would have probably made a determination on the Part 7 claims if the matter had proceeded”.

72    Mr Natch went on to claim that the Pt 7 claims had initially been advanced in the principal proceeding against Stennson, but were then removed and articulated against Camillo Builders after Stennson disclaimed responsibility for the Pt 7 claims on the basis that Camillo Builders was its independent contractor. That account cannot be reconciled with the documentary record.

73    According to the documentary record, the current pleading, at the time of the discontinuance of the principal proceeding, was the Further Amended Statement of Claim dated 1 October 2020. That pleading was in evidence before me, and included claims against Stennson under s 98 of the Building Act. I am not satisfied that the claims made against Stennson under Pt 7 of the Building Act were removed from the principal proceeding as Mr Natch said occurred.

74    In any event, whether or not the Building Act claims against Stennson were removed from the principal proceeding as Mr Natch contended occurred, I am not satisfied that claims under Pt 7 of the Building Act could not have been brought in the principal proceeding. The relevant enquiry is not whether there are factual circumstances that might explain why certain claims were not pursued in a particular proceeding, but whether the claims could legally have been advanced in that proceeding: see Palaniappan above at paragraph 35.

75    Because that is the nature of the enquiry, it is also not necessary to reach any view on whether Mr Natch’s asserted withdrawal of those claims against Stennson in the principal proceeding came about (as he suggested in submissions) because Stennson failed to disclose details of its contractual relationship with the contractor. It is also unnecessary to address submissions made by both sides from the Bar table regarding who said what in the Supreme Court of Victoria about the jurisdiction of the Supreme Court to address the claims made under Pt 7 of the Building Act. The issue is whether the Pt 7 claims could have been pursued in the principal proceeding in this Court, not whether the Supreme Court of Victoria has jurisdiction, or who said what on that topic.

76    The BAB proceeding represents the third occasion on which Mr Natch has sought to litigate overlapping claims under the Building Act, the first being the principal proceeding, and the second being the SCV proceeding. I am not satisfied that these are claims of a kind that should be allowed to proceed to finalisation before Mr Natch is required to either meet the Bankruptcy Notice or face bankruptcy; I refer again to the principles set out in paragraphs 42–44 above.

77    The existence of the BAB proceeding does not warrant the Bankruptcy Notice being set aside. Nor does it support the alternate relief sought by Mr Natch by the Amended Application (as to which see further Issue 6 below).

78    For completeness, I note that it is unnecessary to address Stennson’s contention — advanced for the first time in oral submissions — that the BAB proceeding is statute barred. That contention depended on an initial expert report — said to, in effect, “start the clock” running on a six year limitation period — having been obtained in December 2019, but the report in question was not in evidence before me.

Issue 5: Should the Bankruptcy Notice be set aside on the basis of abuse of process?

79    The Amended Application contends that the Bankruptcy Notice should be set aside on abuse of process grounds. Mr Natch also advanced his abuse of process contention by way of his Interlocutory Application; in fact, the Interlocutory Application was the focus of the abuse of process arguments put by Mr Natch. Accordingly, the abuse of process contentions are addressed below in relation to the Interlocutory Application. It follows from what is said there that Mr Natch has not established any abuse of process in the issue of the Bankruptcy Notice and its service by Stennson, and this aspect of his Amended Application fails.

Issue 6: Should these proceedings or the Bankruptcy Notice be permanently stayed?

80    Below I address, in considering Mr Natch’s Interlocutory Application, various issues arising from the peculiarity of an applicant in this Court, having invoked its jurisdiction, seeking to permanently stay his own proceedings, and it not being clear what “staying” a bankruptcy notice is intended to mean. It is not necessary to repeat those observations here.

81    In substance, this alternative relief specified in the Amended Application sets up the existence of the BAB proceeding, the SCV proceeding, proceeding 1688 and the supposed High Court proceeding as reasons why the present bankruptcy processes invoked by Stennson against Mr Natch should be stopped.

82    In respect of each of these matters, I have concluded above that the justice of the case does not require that they be pursued to their conclusion before Mr Natch should have to meet the terms of the Bankruptcy Notice, or face an application for a sequestration order. They likewise do not support the exercise of this Court’s power to stay proceedings.

83    To the extent that the broad contention that bankruptcy processes against Mr Natch should be stopped is otherwise founded on abuse of process contentions, it is addressed, and rejected, below.

The Interlocutory Application: Abuse of Process

84    The only issue arising under the Interlocutory Application that has not already been disposed of pursuant to the determination of the Amended Application is the abuse of process contention.

85    By his Interlocutory Application, Mr Natch seeks an order pursuant to s 30(1) of the Act and the inherent jurisdiction of the Court staying “these bankruptcy proceedings VID 22/2026 including Bankruptcy Notice BN284090”. Although described as a permanent stay in the Interlocutory Application, the terms of the Interlocutory Application seek a stay “pending the final determination of Supreme Court of Victoria proceeding S ECI 2025 00378”. However, in oral submissions, Mr Natch made it clear that he wants a permanent stay of his own proceeding, and the Bankruptcy Notice.

86    I note that the proceedings that Mr Natch wants stayed are proceedings that he commenced; Stennson has not presented a creditor’s petition. It is not clear, then, what Mr Natch means when he seeks an order staying his own application to set aside the Bankruptcy Notice, or what he means by “staying” the Bankruptcy Notice itself.

87    Nevertheless, the gravamen of the abuse of process contention appears to be that, because on the same day (24 December 2025) Stennson served the Bankruptcy Notice, and also applied in the SCV proceeding for orders summarily dismissing or permanently staying the case against it, it can be seen that Stennson’s actions were in pursuit of a collateral purpose; Stennson is thereby shown to be abusing the personal insolvency regime of this Court and this Court should make orders that effectively stop Stennson from pursuing any steps towards bankrupting Mr Natch. The asserted collateral purpose of Stennson is to stifle the SCV proceeding and thwart Mr Natch’s monetary claims, and also the s 40(1)(g) cross-demand which Mr Natch seeks to set up against the judgment debts the subject of the Bankruptcy Notice.

88    Mr Natch’s contentions must be rejected.

89    First, for the reasons I will come to, he has not made out the collateral purpose and abusive conduct asserted against Stennson.

90    Secondly, even if procuring and serving the current bankruptcy notice involves some abuse or collateral purpose, the appropriate response would be to set it aside, not to forever stop Stennson — which, it must be remembered, has numerous costs orders in its favour which remain outstanding — from pursuing the issue of a further bankruptcy notice. If such a further bankruptcy notice were to be issued and served, whether or not that course involved any abuse would fall to be determined by reference to the facts at the time.

91    I return to the abuse of process contention.

92    The collateral purpose is said by Mr Natch to be evident from the fact that, from 1 October 2025, Stennson was aware of Mr Natch’s intention to rely on the SCV proceeding as a s 40(1)(g) set-off. 1 October 2025 is the date that Mr Natch applied to set aside the first bankruptcy notice. Mr Natch observed that, over the period in which proceedings concerning the first bankruptcy notice were on foot, Stennson did not raise any abuse of process argument concerning the SCV proceeding in any court. Mr Natch then pointed to the abuse of process argument being raised by Stennson on 24 December 2025, when it filed its application in the SCV proceeding, being the same day it served the second, and current, bankruptcy notice.

93    I do not accept that the failure of Stennson to assert that the SCV proceeding was an abuse of process in the period between 1 October 2025 and 17 November 2025, while the first bankruptcy notice was on foot, and its subsequent raising of that contention in the SCV proceeding by its application in that court dated 24 December 2025, exposes that this proceeding was commenced in abuse of this Court’s processes. The assertion simply lacks any coherent foundation. While I note that Stennson submitted that its contention that the SCV proceeding was in abuse of process was in fact raised at an earlier point in time — namely when it filed its defence in that proceeding — Stennson’s defence in the SCV proceeding was not in evidence before me. In any event, nothing turns on whether the abuse allegation was raised only when the application for summary dismissal or a permanent stay was made, or somewhat earlier, when Stennson’s defence was filed.

94    Nor does the timing of the steps taken on 24 December 2025 expose that the Bankruptcy Notice was served by Stennson in pursuit of the collateral purpose, so as to involve an abuse of this Court’s personal insolvency jurisdiction. Mr Natch relied on the timing of the service of the Bankruptcy Notice and summons in the Supreme Court of Victoria, both being on the day before Christmas (and the prejudice to his capacity to obtain legal advice). While the timing of service of the Bankruptcy Notice may be assumed not to be coincidental, and to have put pressure on Mr Natch at a time of year when legal services are not as readily available, that is insufficient to show that the Bankruptcy Notice was served in pursuit of an illegitimate and abusive collateral purpose.

95    Mr Natch also contended that Stennson had to follow only one of two available paths: either wait to see the outcome of a permanent stay or dismissal application in the SCV proceeding and, if successful, only then seek the issue of a bankruptcy notice, or allow this Court to assess whether the SCV proceeding gave rise to a cross-demand under s 40(1)(g) and, if no cross-demand was established, proceed with the present bankruptcy process. I can see no basis why Stennson’s options should be confined in the manner for which Mr Natch contended, still less that taking both steps at the same time exposes an abuse that should result in the relief sought by Mr Natch.

96    Mr Natch also pointed to various steps that he says Stennson could have taken — instead of the steps in fact taken on 24 December 2025 — and characterises them as “other proportionate avenues”. Those steps are: applying for a temporary stay of the SCV proceeding; making an application in the principal proceeding under r 26.15 of the Rules to restrain the SCV proceeding; and seeking, in this Court, an anti-suit injunction restraining the SCV proceeding. The argument, then, is that Stennson knew that any such application in this Court would fail — because this Court would refuse to participate in the destruction of Mr Natch’s cross-claim — thus Stennson’s failure to seek that relief shows its collateral purpose. The argument made is barely comprehensible, is entirely speculative and is rejected. No inference as to collateral purpose can be drawn from Stennson’s failure to make the applications suggested.

97    Mr Natch also suggested that the predominant purpose of Stennson procuring the issuing of the Bankruptcy Notice was not to recover the costs debts, but to “eliminate” his cross-demand so that a sequestration order can be obtained and his $2.4 million Supreme Court of Victoria claim permanently extinguished. A related contention of Mr Natch is that it is only for this Court to assess whether Mr Natch’s s 40(1)(g) cross-demand is genuine and satisfies the statutory requirements. He contends that Stennson was not entitled to “pre-emptively eliminate” that cross-demand through processes in another Court.

98    Mr Natch commenced the SCV proceeding against Stennson. The fact that Mr Natch has, in this Court, set the SCV proceeding up as a counter-claim under s 40(1)(g), does not insulate him from Stennson taking such procedural steps as it may decide to take in the Supreme Court of Victoria. Preservation of this Court’s effective jurisdiction in respect of the Bankruptcy Notice the subject of these proceedings does not require that no steps that may affect a counter-claim on foot in another court be taken in that other court. Contrary to Mr Natch’s contention, the steps taken by Stennson in the SCV proceeding do not render s 40(1)(g) nugatory. Rather, the steps taken by Stennson — applying in the Supreme Court of Victoria for orders dismissing or staying that proceeding — and the subsequent orders of that court permanently staying the SCV proceeding, form part of the factual matrix on which this Court assesses whether the Bankruptcy Notice should be set aside (to say nothing of arguments that may be made if and when a creditor’s petition is presented).

99    It follows that I do not accept that this Court should exercise its powers to stay this proceeding in order to “give effect to the Act” and prevent Stennson “using the processes of this Court as an instrument to defeat the very statutory protection the Act confers on the Applicant [by s 40(1)(g)]”. I also reject the related submission that Stennson sought to “procure a constitutional breach under section 109 of the Australian Constitution” by applying to the Supreme Court of Victoria for a permanent stay or dismissal of the SCV proceeding, on the basis that Stennson was trying to make the Supreme Court of Victoria an instrument for “destroying” a Commonwealth right conferred by Commonwealth legislation (specifically s 40(1)(g)).

100    In one of his affidavits, Mr Natch stated that, after Stennson served the Bankruptcy Notice and brought its summons in the SCV proceeding, he received phone messages from Stennson’s director, Mr Mrocki, demanding that he discontinue his appeals in this Court and the SCV proceeding, as well insulting him and threatening him with financial destruction. Mr Natch regards those messages as threatening him with bankruptcy and thereby confirming his opinion that Stennson’s purpose in serving the Bankruptcy Notice and the summons in the SCV proceeding was to put pressure on him to abandon his litigation in this Court, and in the Supreme Court of Victoria.

101    The events recounted by Mr Natch, to which Stennson has not responded on affidavit, are serious but I am not satisfied that they expose an abuse by Stennson in serving the Bankruptcy Notice, and which would warrant the relief sought by Mr Natch. Likewise, emails sent by Mr Mrocki to Mr Natch, which were tendered by Mr Natch, do no credit to Mr Mrocki. They are personally insulting, rude and intemperate. However, in light of the years-long litigation saga in which Stennson has been engaged, in my view those emails do not go much beyond revealing intense frustration and even anger on the writer’s part. They do not establish that service of the Bankruptcy Notice or the steps taken in the Supreme Court of Victoria were in pursuit of the collateral purpose that Mr Natch contends for.

102    Lastly, I note that Mr Natch contended (in his affidavit of 10 April 2026) that Stennson’s failure to accept an offer of compromise demonstrates that Stennson’s purpose in this bankruptcy proceeding is not recovery of the debt, but to use the bankruptcy process as a weapon to prevent him prosecuting his substantive claims by forcing him into bankruptcy. Inspection of the terms of the open offer shows it to involve numerous terms and conditions across multiple proceedings, and only to involve payment of the judgment debts into a solicitor’s trust account, and even then, significantly after steps adverse to Stennson would have to have been taken. I do not accept the submission that refusal of this offer of compromise exposes the alleged improper purpose.

Conclusion

103    Mr Natch will have leave to rely on the Amended Application, the Amended Application will be dismissed, the Interlocutory Application will be dismissed, and I will further order that Mr Natch pay Stennson’s costs.

Associate:

Dated:    17 June 2026