Federal Court of Australia

CharterLaw Legal Pty Limited v Michales (Notice to Produce) [2026] FCA 1002

ORDERS

THE COURT ORDERS THAT:

1.    The notice to produce dated 12 March 2026 be set aside.

2.    The three notices to produce dated 24 April 2026 be set aside.

3.    The respondent pay the applicant’s costs of its interlocutory application dated 12 May 2026 as taxed, assessed or otherwise agreed.

4.    The applicant’s interlocutory application dated 12 May 2026 be otherwise dismissed.

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

REASONS FOR JUDGMENT

PERRAM J:

1    This is an application to set aside four notices to produce issued by the respondent, Mr Michales, to the applicant, CharterLaw Legal Pty Limited (‘CLL’).

Background

2    The underlying proceeding is an application for orders sequestrating Mr Michales’ estate on ground that he is bankrupt. The act of bankruptcy relied upon by CLL is that Mr Michales failed to comply with a bankruptcy notice. The bankruptcy notice sought the payment of the sum of $107,654.53 which comprised two judgment debts in the Local Court of New South Wales:

Amount        Date

$99,449.58        13 March 2025

$8,204.95        16 June 2025

Total    $107,654.53

3    Ground 2.2 of Mr Michales’ notice of grounds of opposition to the creditor’s petition is that ‘The creditor ceased legal practice, had no practice certificate, no principal, no insurance, and no trust account. It lacked legal capacity to recover costs’.

4    Underpinning that contention is the fact that CLL ceased trading as a law practice on 30 June 2024. The judgment debts relate to work done by CLL as the solicitors for Mr Michales (and his company) prior to April 2023 at which time it ceased to act for him. As Perry J noted at [10]-[11] in Michales v CharterLaw Legal Pty Limited [2026] FCA 209, the two judgment debts resulted from the registration of two costs assessment certificates which in turn derived from costs assessment processes which took place between 12 April 2024 and 3 June 2025. These included not only the costs assessment but a review proceeding before a review panel.

The first notice to produce

5    The first notice to produce seeks the production for the years 2019 to 2025 of evidence of CLL’s professional indemnity insurance and practising certificates for its principal, Mr McCrohon, and another solicitor, Mr Willson. According to the notice, the material is relevant to CLL’s legal capacity and its standing to sue. As I understand the argument, it is that whilst CLL was a law practice at the time the costs assessment process commenced, it was no longer a law practice when the costs certificates were issued or when those certificates were registered and became judgment debts. Mr Michales submits that since CLL was no longer a law practice it lacks the capacity to sue to recover its fees.

6    This proposition may be problematic since it has been rejected by Black J in In the matter of CharterLaw Legal Pty Ltd [2025] NSWSC 297 at [21] and by Perry J in Michales v CharterLaw Legal Pty Limited [2026] FCA 209 at [57].

7    However, it is not necessary to determine that issue. The relevant fact giving rise to Mr Michales’ argument consists solely of the fact that CLL ceased to trade as a law practice on 30 June 2024. That fact is admitted. The production of the material sought by the notice would not advance that case since there is no dispute about that fact.

8    On the other hand, it might be that the practising certificates and certificates of insurance could be relevant to a contention that CLL was not lawfully practising law during the period that it acted for Mr Michales. That period was February 2020 to April 2023. However, such a contention does not appear in Mr Michales’ notice of grounds of opposition which clearly links his contention to CLL’s cessation of legal practice. As such, the documents sought are not relevant to any issue in the proceeding.

9    The notice to produce dated 12 March 2026 and lodged for filing on 2 April 2026 will be set aside.

The Three Other notices to produce

10    These notices to produce seek documents which Mr Michales wishes to deploy to show that the work done by CLL was not done competently. It may be accepted that a solicitor is not allowed to charge for work which was not done competently. In his notice of grounds of opposition, however, Mr Michales does not suggest that CLL’s fees were not due on this basis. This is a sufficient reason to set aside these three notices to produce. I note that Mr Michales has filed an interlocutory application seeking to amend his notice of grounds of opposition to raise negligent legal advice. That application has not yet been determined and there is presently no issue about it.

11    Even if there were such an issue, there is a second basis upon which I would reach the same conclusion. Mr Michales informed me from the bar table that his allegations of negligently done work were made both to the original costs assessor and also to the review panel. In that circumstance, the issue of whether the work was done competently by CLL has been determined adversely to him in the costs assessment process (and review application) and has now merged in the two judgments against him.

12    Of course, this is a proceeding on a creditor’s petition and it is open to this Court, in an appropriate case, to go behind the judgment debts on which a bankruptcy notice has been issued. Mr Michales says that this Court should do so because the costs assessor did not deal with these arguments. Accepting that to be so for the sake of argument, the appropriate course was for him to seek to set aside the costs certificates in proceedings in the District Court or the Supreme Court of New South Wales. There is no evidence that such a proceeding was pursued.

13    The three notices to produce dated 24 April 2026 will be set aside.

other matters

14    There are two remaining matters. First, in CLL’s interlocutory application a number of orders are sought about which no submissions were made. In that circumstance, it is inappropriate to make those orders and, to that extent, the interlocutory application should be otherwise dismissed. However, CLL was substantively successful in having the notices to produce set aside so it should have its costs of the interlocutory application as taxed, assessed or otherwise agreed.

15    Secondly, at 11.19 am on Tuesday 28 July 2026, after these reasons had been prepared, my chambers received an email from Mr Michales. In the email, he sought an urgent case management hearing or a stay of the proceedings until such time as CLL produced authenticated copies of several documents whose production was sought under the first notice to produce. By way of explanation, during the hearing CLL read an affidavit which attached some, but not all, of the documents which had been sought under the notice. Since the notice is to be set aside, the question of whether CLL should now be ordered to produce authenticated copies of those documents does not arise. I therefore decline to convene an urgent case management hearing or to stay the proceedings as sought by Mr Michales.

RESULT

16    The Court’s orders will be:

(1)    The notice to produce dated 12 March 2026 be set aside.

(2)    The three notices to produce dated 24 April 2026 be set aside.

(3)    The respondent pay the applicant’s costs of its interlocutory application dated 12 May 2026 as taxed, assessed or otherwise agreed.

(4)    The applicant’s interlocutory application dated 12 May 2026 be otherwise dismissed.

Associate:

Dated:    28 July 2026