FEDERAL COURT OF AUSTRALIA

Kambouris v Paule, in the matter of Paule (No 2) [2026] FCA 1299

ORDERS

THE COURT ORDERS THAT:

1.    The interim application filed on 2 July 2026 be dismissed.

2.    The orders made by Judicial Registrar Morgan on 11 June 2026 be affirmed.

3.    The applicant’s costs of the interim application be paid from the estate of the respondent in accordance with the Bankruptcy Act 1966 (Cth).

4.    The applicant’s costs be fixed in the sum of $30,255.95. 

5.    The respondent’s trustee in bankruptcy have liberty to apply to vary or set aside paragraph 4 of these orders.

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

REASONS FOR JUDGMENT

GOODMAN J:

A.    INTRODUCTION

1    On 11 June 2026, Judicial Registrar Morgan of this Court made an order that the estate of the respondent, Mr Terry Paule, be sequestrated under the Bankruptcy Act 1966 (Cth).

2    Mr Paule now seeks review of the Registrar’s exercise of power, pursuant to s 35A(5) of the Federal Court of Australia Act 1976 (Cth) (FCA Act).

3    Mr Paule first seeks an adjournment of the hearing of the creditor’s petition that was served by the applicant, Dr Kambouris, so as to allow Mr Paule to appoint a controlling trustee for the purpose of proposing a Personal Insolvency Agreement (PIA) under Part X of the Bankruptcy Act.

4    For the reasons set out below, the adjournment should not be granted and the orders made by the Judicial Registrar should be affirmed.

B.    FINDINGS OF FACT

5    On this application, Mr Paule relied upon affidavits that he made on 30 June and 15 August 2026. He was cross-examined.

6    Dr Kambouris relied upon affidavits made by: (1) him on 25 August 2026; (2) Mr Andrew Lacey, a principal at McCabes Lawyers, who act for Dr Kambouris, on 23 June 2025 and 5 August 2026; (3) Mr William Wade, a solicitor in the employ of McCabes Lawyers, on 23 June 2025 and 25 August 2026; (4) Mr Adam Beggs, a process server, on 14 July 2025 and 14 November 2025; and (5) Ms Iris Law, a solicitor in the employ of McCabes Lawyers, on 24 and 28 July 2025. None of Dr Kambouris’s witnesses were required for cross-examination.

7    As will become plain:

(1)    the events described below address the salient events in this proceeding and various related proceedings in this Court and in the Supreme Court of New South Wales;

(2)    from about mid-April 2025 to about mid-November 2025, Mr Paule’s position (first position) – as represented repeatedly to this Court and the Supreme Court of New South Wales – was that he was in a position to satisfy the judgment debt upon which the bankruptcy notice is based because he was the legal and beneficial owner of a property in Toorak, Melbourne (Toorak property) which had a value in the order of $28 million; and

(3)    from about late November 2025, Mr Paule adopted a new and inconsistent position. This position (second position) was that he is not able to satisfy the judgment debt because the beneficial owner of the Toorak property is, and has since 2021 been, his wife, Ms Anna Paule.

8    On 20 December 2024, Justice Ball in the Supreme Court of New South Wales made orders requiring Mr Paule to pay to Dr Kambouris an amount of USD8,518,852.64: see Driver v Botanical Water Technologies Pty Ltd (No 2) [2024] NSWSC 1641. His Honour also ordered that Mr Paule pay DJD Trading Pty Ltd an amount of USD7,469,896.98. Those orders gave effect to his Honour’s reasons for judgment in Driver v Botanical Water Technologies Pty Ltd [2024] NSWSC 1409.

9    On 6 March 2025, the bankruptcy notice (based upon the judgment debt of USD8,518,852.64) was served upon Mr Paule on behalf of Dr Kambouris. A similar bankruptcy notice was served on behalf of DJD Trading.

10    On 19 March 2025, Mr Paule filed a notice of appeal from the orders of Justice Ball.

11    On 21 March 2025, Mr Paule commenced proceeding NSD 403/2025, seeking an order extending the time for compliance with the bankruptcy notice to a date 21 days after the determination of the appeal to the Court of Appeal of the Supreme Court of New South Wales. He commenced a similar proceeding (NSD 404/2025) with respect to the bankruptcy notice served on behalf of DJD Trading.

12    On 17 April 2025, Mr Paule affirmed an affidavit for use in proceedings NSD 403/2025 and NSD 404/2025. In that affidavit, after indicating that the Toorak property was registered in his name and was unencumbered, Mr Paule proffered an undertaking not to deal with the Toorak property or “any other property owned by me and for which I hold the beneficial interest, other than in the course of ordinary business…”.

13    In submissions dated 27 April 2025 in support of the application in proceedings NSD 403/2025 and NSD 404/2025, Mr Paule’s solicitors submitted that: (1) Mr Paule was the registered owner of the Toorak property; (2) the Toorak property was unencumbered; and (3) according to a valuation obtained by them, was valued at $28 million. They also submitted that the estimate of $28 million exceeded the combined value of the debt the subject of the two bankruptcy notices; and noted the undertaking that had been proffered by Mr Paule. Their ultimate submission was that the Court should exercise its discretion to grant the extension of time sought by Mr Paule in circumstances where, inter alia, Mr Paule prima facie had assets of sufficient value to pay out the judgment debt and he had given the undertaking.

14    On 29 April 2025, the application for an extension of time was heard by Judicial Registrar Birchall. Mr Paule’s 17 April 2025 affidavit was read at that hearing. In the course of that hearing, counsel for Mr Paule reiterated the assertions that Mr Paule owned the Toorak property, that the Toorak property was unencumbered and that it had a value in the order of $28 million; and again relied upon the proffering of the undertaking discussed above.

15    On 5 May 2025, Judicial Registrar Birchall dismissed the applications in proceedings NSD 403/2025 and NSD 404/2025 for an order extending the time for compliance with the bankruptcy notices.

16    On the same day, Justice Needham made the following notations and orders:

THE COURT NOTES THAT:

1.    On [Mr Paule] giving the undertaking that he will not deal with:

a.    [the Toorak Property] …; or

b.    Any other property owned by [Mr Paule] and for which [Mr Paule] holds the beneficial interest, other than in the course of ordinary business,

during the course of these proceedings and, if the relief he seeks is granted in these proceedings, until 21 days after the determination of the Notice of Appeal filed on 19 March 2025 in the New South Wales Court of Appeal.

THE COURT ORDERS THAT:

2.    [Mr Paule] file an application for review of the orders of Judicial Registrar Birchall dated 5 May 2025 by 4pm on 8 May 2025 (the review application).

3.    Pursuant to s 41(6A) of the Bankruptcy Act 1966 (Cth), the time for compliance with Bankruptcy Notice Number BN276549 issued on 28 February 2025, and served on 6 March 2025, be extended until 4pm on the date of the first hearing before a judge in the review application or until further order.

…

(bold and italic emphasis in original)

17    Her Honour published her reasons for making those orders as Paule v Kambouris [2025] FCA 474.

18    On 8 May 2025, Mr Paule affirmed a further affidavit in proceeding NSD 403/2025. In that affidavit he stated that he had current assets in the order of $30 million (as detailed in a schedule to that affidavit) of which the Toorak property comprised $28 million; and that he had no current liabilities in his name.

19    On 19 May 2025, Justice Stellios heard an application by Mr Paule in each of proceedings NSD 403/2025 and NSD 404/2025 for a review of the decision of Judicial Registrar Birchall. Mr Paule’s 8 May 2025 affidavit was read at that hearing. In the course of that application, senior counsel for Mr Paule submitted, by reference to the Toorak property, that Mr Paule owned a very valuable piece of unencumbered real estate; and that Mr Paule had given an undertaking that it would remain unencumbered until the appeal was determined.

20    On 26 May 2025, his Honour made orders which included:

…

3.    The respective proceedings be adjourned to a date after the determination of a Notice of Motion in the Supreme Court of New South Wales to stay the final orders made by Ball J on 20 December 2024 in proceeding no. 2021/00181606 (stay application).

…

7.    Pursuant to s 41(6A) of the Bankruptcy Act 1966 (Cth), the time for compliance with the Bankruptcy Notices (BN276550 and BN276549) issued on 28 February 2025 and served on 6 March 2025 be further extended until the Court’s determination of the interim applications or until further order.

…

(bold and italic emphasis in original)

, and published his reasons for doing so: Paule v Kambouris [2025] FCA 539. His Honour’s reasons refer to evidence that Mr Paule: (1) had assets in the order of $30 million, including a residential property with an estimated value of $28 million (at [46] to [48]); and (2) had no current liabilities in his name ([49]).

21    On 30 May 2025, Justice Williams in the Supreme Court of New South Wales heard an application by Mr Paule for a stay of the 20 December 2024 orders pending the determination of Mr Paule’s appeal from those orders. On that day, her Honour made orders as follows:

1.    Order that the final orders made by Justice Ball on 20 December 2024 in these proceedings be stayed until 5pm on the first day of the hearing in the New South Wales Court of Appeal proceeding 476362 of 2025 conditional upon:

A.    [Mr Paule] filing with this Court, a written undertaking to the Court and to [Dr Kambouris and DJD Trading] that he will not deal with:

(i)    [the Toorak Property]; or

(ii)     any other property owned by [Mr Paule] and for which [Mr Paule] holds the beneficial interest other than in the ordinary course of business, for the period of the stay; and

B.    [Mr Paule] granting to [Dr Kambouris and DJD Trading] a charge in caveatable form over [the Toorak Property] securing the judgment debts arising from the orders made by this Court on 20 December 2024, subject to any contrary order of the Court of Appeal, by 5pm on 3 June 2025.

2.    Order that the stay in order 1 will take effect on and from 5pm on 3 June 2025 if the conditions set out in order 1 are complied with, and will not otherwise take effect.

...

22    Mr Paule gave evidence in an affidavit he made in the Supreme Court of New South Wales proceeding on 10 June 2025 that: (1) on 30 May 2025, he spoke to his wife, Ms Paule, and informed her of the orders made by Justice Williams and of the granting of the charge in caveatable form to Dr Kambouris and DJD Trading; (2) he told her that he was contemplating providing the charge so as to meet the condition of the granting of the stay; and (3) at the end of that conversation, Ms Paule said that she intended to seek independent legal advice.

23    On 1 June 2025, a caveat was lodged over the Toorak property by lawyers acting on behalf of Ms Paule.

24    On 2 June 2025, Justice Williams published her reasons for making the 30 May 2025 orders as Driver v Botanical Water Technologies Pty Ltd [2025] NSWSC 566. At [19], her Honour recorded:

The evidence presently before the Court establishes that [Mr Paule] owns the Toorak property unencumbered, and that it has a value of between AU$15,000,000 and AU$28,000,000. The parties do not ask me to make any finding about the value within that range for the purpose of determining the stay application. [Mr Paule’s] only other assets are five motor vehicles, which he has estimated have a combined value of $1,165,000, and furniture and household effects with an estimated value of $750,000. [Mr Paule] has given evidence to the effect that he has no current liabilities, other than his liability to [Dr Kambouris and DJD Trading] under the orders made on 20 December 2024 which are the subject of his appeal. As [Dr Kambouris and DJD Trading] submitted, the total amount of [Mr Paule’s] liabilities under those orders, including interest accrued to date, will be approximately US$17,000,000 (or AU$26,000,000) by the time the appeal is heard. If the appeal fails, [Mr Paule’s] liabilities to them will almost exceed the value of his assets if the value of the Toorak property is at the upper end of the range (AU$28,000,000) or will significantly exceed the value of those assets if the value of the Toorak property is at the lower end of the range (AU$15,000,000), even if [Mr Paule] has incurred no further liabilities in the meantime.

25    On 10 June 2025, Mr Paule made the affidavit mentioned at [22] above. In that affidavit he stated:

On 2 June 2025, I became aware that on 1 June 2025 at 1:34pm, a caveat (dealing no. AZ216186Q) was lodged by [Ms Paule] over the Toorak Property (Caveat). The Caveat refers to an “Implied, Resulting or Constructive Trust” as the grounds of the claim. Prior to becoming aware that the Caveat had been lodged, I was not aware that [Ms Paule]was asserting a claim as a beneficiary of any such trust, or the existence of any such trust nor was I aware that she was intending to lodge a caveat. Other than what is set out in the Caveat, I am not aware of the basis of the claim asserted by [Ms Paule].

(bold emphasis in original)

26    On 19 June 2025, Justice Stellios dismissed the applications in each of proceedings NSD 403/2025 and NSD 404/2025 for review of the orders made by Judicial Registrar Birchall: see Paule v Kambouris (No 3) [2025] FCA 648.

27    On 23 June 2025, Dr Kambouris commenced the present proceeding by filing the petition. On the same day, a similar proceeding (NSD 1005/2025) was commenced by DJD Trading.

28    On 25 July 2025, the Court of Appeal of the Supreme Court of New South Wales dismissed Mr Paule’s appeal against the orders made by Justice Ball: see Botanical Water Technologies IP Ltd v Driver [2025] NSWCA 162 (Ward P, Payne and Adamson JJA). Mr Paule lodged an application for special leave to appeal from those orders.

29    On 29 July 2025, Judicial Registrar Morgan adjourned the hearing of the petition to 26 August 2025. On that day, it was adjourned again to 21 October 2025.

30    On 21 October 2025, Judicial Registrar Morgan adjourned the hearing of the petition to 18 November 2025.

31    On 6 November 2025, the High Court of Australia dismissed Mr Paule’s application for special leave to appeal from the orders of the Court of Appeal of the Supreme Court New South Wales: Botanical Water Technologies IP Ltd v Driver [2025] HCADisp 270.

32    On the same day, Justice Needham heard an application in proceeding NSD 1005/2025 brought by DJD Trading against Mr Paule for freezing orders. During the course of that application, the following exchange occurred with respect to the Toorak property:

[COUNSEL FOR MR PAULE]: The writ is - the writ for possession that has been sought and obtained by the applicants has been registered on title of the property. And, in my submission, that would provide a level of protection against Mr Paule dealing with the property. It may not - - -

HER HONOUR: With the legal title, perhaps. But what about the equitable title?

[COUNSEL FOR MR PAULE]: Well, no. It would only be with respect to the legal title.

HER HONOUR: So he couldn’t sell it, but he could perhaps enter into orders agreeing with his wife that she held the equitable title, speaking theoretically.

[COUNSEL FOR MR PAULE]: Yes, there would be no - it only affects the title - - -

HER HONOUR: The writ wouldn’t affect that

[COUNSEL FOR MR PAULE]: - - - the legal transfer, yes.

HER HONOUR: Whereas the undertaking would prevent that.

[COUNSEL FOR MR PAULE]: It would, yes.

33    Her Honour made a freezing order against Mr Paule, effective until the determination of proceeding NSD 1005/2025, or until further order of the Court: see DJD Trading Pty Ltd v Paule [2025] FCA 1627.

34    On 18 November 2025, Judicial Registrar Morgan heard an application in the present proceeding for an adjournment of the hearing of the petition. During the course of that application, counsel for Mr Paule submitted that:

The short point, Registrar, is that if Mrs Paule is unsuccessful in restraining the sheriff, the sheriff will have no impediment in enforcing the written (sic – writ and) selling the property. And we say when that occurs, [Dr Kambouris and DJD Trading’s] debts will be paid out in full. The property is worth, we say, $30 million. ...

35    On that day, Judicial Registrar Morgan made orders adjourning the further hearing of the petition to 2 December 2025.

36    On 27 November 2025, Mr Paule signed an authority naming and appointing Mr Nicholas Giasoumi as controlling trustee of his estate, under s 188 of the Bankruptcy Act. Mr Paule provided a statement of affairs to Mr Giasoumi in which he asserted that he had: (1) no interest in any land or buildings in Australia; and (2) creditors totalling more than $371 million.

37    On 2 December 2025, Dr Kambouris and DJD Trading commenced proceeding NSD 2242/2025, seeking orders on an urgent basis pursuant to s 208 of the Bankruptcy Act to terminate Mr Giasoumi’s control of Mr Paule’s property.

38    On the same day, Judicial Registrar Morgan adjourned the hearing of the petition to 9 December 2025.

39    On 15 December 2025, Justice Burley made orders under s 208 of the Bankruptcy Act for the release of Mr Paule’s property from the control of Mr Giasoumi and listed the present proceeding and proceeding NSD 1005/2025 in the Registrar’s bankruptcy list on 27 January 2026: see Kambouris v Paule, in the matter of Paule [2025] FCA 1590.

40    On 28 January 2026, Mr Paule commenced proceeding NSD 103/2026 by filing an application for an order under s 188(4) of the Bankruptcy Act for a grant of leave to sign an authority in accordance with the approved form naming and authorising Mr Giasoumi to call a meeting of Mr Paule’s creditors and to take control of his property. Section 188(4) of the Bankruptcy Act prevents a debtor from giving an authority within six months of giving another authority, unless the Court grants leave to do so. Thus, the execution of the authority on 27 November 2025 had the effect of preventing Mr Paule from executing another such authority until 27 May 2026, and as a result he required the leave of the Court.

41    On 27 January 2026, Judicial Registrar Young adjourned the hearing of the petition to 19 February 2026.

42    On 19 February 2026, Justice Bromwich dismissed Mr Paule’s application for leave under s 188(4) of the Bankruptcy Act: see Paule v Kambouris, in the matter of Paule [2026] FCA 133.

43    On the same day, Judicial Registrar Morgan adjourned the hearing of the petition to 24 February 2026. Further adjournments were made on 24 February, 5 and 19 March, 23 April and 14 May 2026.

44    On 14 May 2026, Judicial Registrar Morgan adjourned the hearing of the petition to 28 May 2026 and noted an undertaking from Mr Paule that:

a.    I undertake that I will not sign any authority pursuant to section 188 of the Bankruptcy Act 1966 (Cth), or otherwise engage the processes of Part X of the Bankruptcy Act 1966 (Cth), until 6:00pm on 28 May 2026, or until 6:00pm on such other date as the Court adjourns these proceedings.

b.    I undertake to the Court, and to [Dr Kambouris], that I will consent to the making of any orders pursuant to section 52(4)(b) and 52(5) of the Bankruptcy Act 1966 (Cth) extending the operation of the creditor’s petition filed 23 June 2025.

(italic emphasis in original)

45    On 28 May 2026 and 4 June 2026, the hearing of the petition was further adjourned. The Court again noted the undertaking provided on 14 May 2026.

46    On 11 June 2026, as previously noted, the petition was heard and Judicial Registrar Morgan made a sequestration order against the estate of Mr Paule.

47    On 2 July 2026, Mr Paule filed the present application for review of Judicial Registrar Morgan’s exercise of power.

48    On 10 August 2026, Biocheese Pty Ltd, a company closely associated with Mr Paule, signed a Deed of Guarantee and Indemnity providing an unconditional and irrevocable guarantee of the payment of $5 million to the “Controlling Trustee under a Part X Arrangement”.

49    Mr Paule’s evidence concerning his proposed PIA includes that:

(1)    his friends and family have advised that they will contribute $5 million. This would be funds not previously available, and would dramatically increase the return to creditors. These are not funds that would be available to creditors in bankruptcy;

(2)    the expected return to creditors would be approximately 17 cents in the dollar compared with approximately three cents in the dollar; and

(3)    DJD Trading, being a substantial creditor, supports the adjournment application and the Part X proposal.

50    Mr Paule also gave evidence that the consequences of bankruptcy would include that he would:

(1)    no longer be able to act as a director of any company;

(2)    be unable to continue building, operating, or contributing to businesses of the kind that he founded over his career, including businesses developed from inception through his own efforts;

(3)    suffer significant and permanent damage to his professional reputation, which he has spent more than 40 years establishing as a person whose name and word can be relied upon in business;

(4)    be adversely affected by the damage caused to his standing in the business community and his ability to form commercial relationships;

(5)    as a 65 year old, lose the practical ability to generate income in the manner he has done throughout his working life, with consequent effects on his financial independence and livelihood; and

(6)    be unable to continue expanding upon charitable initiatives to which he has committed time and resources in recent years, including projects aimed at providing safe drinking water to vulnerable communities.

51    In his affidavit evidence on this application, Mr Paule deposed that:

(1)    from 2009 to December 2021, Ms Paule was the sole registered proprietor of the Toorak property;

(2)    during that time, both he and Ms Paule resided in the Toorak property, although they were “separated under one roof”;

(3)    on or around 20 May 2021, Ms Paule purchased a separate property;

(4)    in or about December 2021, Ms Paule asked Mr Paule if he would be prepared to have the Toorak property transferred into his name, to be held on trust for her;

(5)    he was happy to assist her and to hold the Toorak property on trust for her while they finalised their financial separation and she made the move to her new property. They agreed that he would hold the Toorak property on trust for Ms Paule pending the formal division of their matrimonial assets, and that he would transfer the Toorak property back to her once that division was finalised;

(6)    the Toorak property was then transferred into his name;

(7)    he is the current registered proprietor of the Toorak property and holds legal title to it. He does not assert any beneficial ownership of the Toorak property;

(8)    the statements that he made in his affidavits affirmed on 17 April 2025 and 8 May 2025 to the effect that he owned the Toorak property unencumbered were made in circumstances where he held legal title to the Toorak property. At that time, he did not turn his mind to the legal distinction between holding legal title and holding property on trust for another person; and

(9)    he accepts that he ought to have disclosed the December 2021 arrangement in those affidavits.

52    In cross-examination on the present application, Mr Paule gave evidence that:

(1)    contrary to [51(8)] above, as at April, May and June 2025, he believed that he held the Toorak property on trust for Ms Paule (T24.13; T26.31-45; T36.30);

(2)    he knew that his solicitors, in making the submissions dated 27 April 2025 ([13] above) were representing to the Court that he held assets sufficient to pay out the judgment debt (T25.30-31.7-9);

(3)    although he believed that he held the Toorak property on trust for Ms Paule, it was not necessarily the case that the proceeds of any sale would be unavailable to his creditors because Ms Paule might have elected to deploy those funds to the benefit of Mr Paule’s creditors (T27.15-28; T29.20-27);

(4)    the fact that the proceeds of sale of the Toorak property would not be available to his creditors without the charity of Ms Paule was a relevant matter for disclosure to the Court (in hindsight) (T29.16 to 30);

(5)    he was aware that counsel representing him was making submissions to Justice Stellios on 19 May 2025 ([19] above) that he was a man of commercial substance able to meet his judgment debts (T33.18);

(6)    the statement in his 10 June 2025 affidavit that: “Prior to becoming aware that the Caveat had been lodged, I was not aware … the existence of any such trust”, was false to his knowledge at the time that he made the affidavit (T35.33-36.36);

(7)    he was aware that his legal representatives were making submissions to Justice Needham on 6 November 2025 that he was both the legal and beneficial owner of the Toorak property; and this was false to his knowledge (T37.27-38.14);

(8)    he obtained adjournments in this proceeding and NSD 1005/2025 on the basis of submissions that his legal representatives made to the effect that if the Toorak property were to be sold then the proceeds of sale would be available to his creditors (T38.28-30);

(9)    he maintained the position that he was the legal and beneficial owner of the Toorak property until at least 18 November 2025 and only took the position that Ms Paule was the beneficial owner of that property after the High Court of Australia dismissed his application for special leave to appeal (T38.40-45); and

(10)    he was content to spend much of 2025 misleading this Court and the Supreme Court of New South Wales as to his asset position (T51.23-25).

C.    CONSIDERATION

53    It is common ground that the requirements in the Bankruptcy Act to enliven the Court’s discretion to make a sequestration order have been met. The focus of the submissions made on behalf of Mr Paule were as to why the Court should, instead of making the sequestration order, adjourn the hearing of the petition. Thus, it is convenient to consider first the application for an adjournment.

C.1    The application for an adjournment

54    As previously noted, Mr Paule contends that the creditor’s petition should be adjourned because he wishes to advance a further PIA.

55    The Court has a broad discretion with respect to the granting of such an adjournment. The exercise of that discretion is informed upon 37M of the FCA Act which requires the Court to have regard to the over-arching purpose of facilitating the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible.

56    Relatedly, it is in the public interest that a creditor’s petition be dealt with as expeditiously as possible. This is a principle of long standing: see, e.g., Cirillo v Consolidated Press Property Pty Ltd (formerly known as Citicorp Australia Limited) [2007] FCAFC 167 at [51] (Ryan, Moore and Tamberlin JJ).

57    It is also necessary to take into account the nature of the bankruptcy jurisdiction. In Culleton v Balwyn Nominees Pty Ltd [2017] FCAFC 8; (2017) 343 ALR 632, the Full Court of this Court (Allsop CJ, Dowsett and Besanko JJ) explained at 643 to 645 ([40] and [44]) and 647 ([54] to [55]):

[40]     In considering the question of an adjournment of the hearing of a creditor’s petition, it is fundamental to keep firmly in mind, at all times, the nature of the jurisdiction. Bankruptcy is not just a variety of inter partes litigation; it does not deal only with the private rights and obligations of the debtor and creditor; it is not a form of judgment execution. It is directed to the estate of a person who is insolvent. In that sense it has a public interest, through the general body of creditors and potential creditors of the debtor and prospective bankrupt, and through what is referred to as the change of status of the person who becomes a bankrupt. That status is changed because of the provisions of the Act which inhibit conduct and affect rights and obligations of the bankrupt, including making the bankrupt susceptible to criminal punishment for what would otherwise be innocent conduct. The matter was put pellucidly by Bowen CJ, CA Sweeney and Lockhart JJ in Re Sarina; Ex parte Wollondilly Shire Council (1980) 32 ALR 596; 48 FLR 372 (Ex parte Wollondilly); dismissing an appeal from a judgment of Deane J (Re Sarina; Ex parte Wollondilly Shire Council (1980) 30 ALR 266; 43 FLR 163 (Re Sarina). …

…

[44]     Whilst it is legitimate for a creditor to proceed in bankruptcy for the purpose of recovering a debt, that does not mean that bankruptcy should be viewed in its essential character as part of the process of execution of judgment debts. It is the changing of the status of an insolvent person: O’Mara Constructions Pty Ltd v Avery (2006) 151 FCR 196; 230 ALR 581; [2006] FCAFC 55 at [53] (and the cases there discussed) and see also O’Farrell v Palicave Pty Ltd (2009) 176 FCR 134; [2009] FCAFC 64 at [24]. A sequestration order, as demonstrated by Re Sarina, will not be made against the estate of someone who refuses to pay a debt if that person can prove (the onus being on him or her) that he or she is solvent.

…

[54]     The question of an adjournment of a creditor’s petition is often not easy. Bankruptcy lists, by their nature, have many litigants who are insolvent, who may be insolvent, and who may be desperate to avoid bankruptcy. A desire to delay and prevaricate is not uncommon. Often delay is in no one’s (including an insolvent debtor’s) interests. Sometimes, however, an adjournment will be necessary to avoid injustice. Each case should be dealt with on the merits. Central to the decision will generally, if not invariably, be the consideration of solvency or insolvency, because of its essentiality in the exercise of the jurisdiction.

[55]     Further, the human reality of bankruptcy is never to be forgotten. Whilst the words of Deane J in Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71 at 82 ; 79 ALR 161 at 167 may not describe the appellant, they are words worthy of repetition and of being reminded of to illuminate the important consequences of a sequestration order:

It is true that the strictness of the above rules leaves open the possibility of abuse by unscrupulous debtors. That is, however, an unavoidable concomitant of the protection of ordinary people faced with the threat of being made bankrupt. Many, and possibly most, of the petitions in the bankruptcy lists of this country see the bankruptcy of honest, albeit unbusinesslike or naïve, people whose indebtedness springs from causes which evoke sympathy rather than indignation. For such people, bankruptcy does not represent a game to be played to the frustration of their creditors. It represents a pronouncement of failure and humiliation attended by the fear of unknown consequences and the susceptibility to criminal punishment for what would otherwise be innocent conduct. (citations omitted)

(italic emphasis in original)

58    Also relevant, in the context of an adjournment sought for the purpose of allowing the pursuit of an arrangement under Part X of the Bankruptcy Act, is the decision of the Full Court of this Court in Field v Commercial Banking Co of Sydney Ltd (1978) 22 ALR 403. In that case, the Full Court considered an appeal from the refusal by a judge of an application by a debtor for an adjournment on the basis that he had, on the previous day, executed an authority pursuant to Part X of the Bankruptcy Act. In the course of dismissing the appeal C A Sweeney J (with whom Franki J agreed) observed at 411 to 412:

It would be unwise to attempt to draw up an exhaustive catalogue of the circumstances to which the court should pay regard in considering an application for an adjournment of a creditor's petition. However, to illustrate the point that the one circumstance of the execution of an authority should be looked at in the general context of each individual case, one may usefully refer to some other relevant circumstances in such a case, as for example:-

(1)    The course of dealings between the parties, from the time when the obligation to the petitioning creditor is said to have arisen to the date of the hearing.

(2)    The attitude to the application of the petitioning creditor, as prima facie, on proof of the matters mentioned in s 52(1) of the Bankruptcy Act 1966, the court will proceed to make an order for sequestration (see Rozenbes v Kronhill (1956) 95 CLR 407).

(3)    The general financial position of the debtor.

(4)     The relation between the debt of the petitioning creditor and the total liabilities of the debtor, as it may be seen, for example, that the petitioning creditor's opposition would be sufficient to defeat any special resolution proposed at a creditor's meeting.

(5)     Any attitude to the application disclosed by other creditors.

(6)     Any evidence bearing upon the question whether it would be for the advantage of the creditors that the debtor's affairs be administered under Pt X of the Act

(7)     The likelihood that the debtor would be able to place before a meeting of creditors a particular proposal, or evidence of his general circumstances, calculated to persuade them to vote for the administration of his affairs under Pt X.

(italic emphasis in original)

59    I acknowledge that with the introduction of s 189AAA of the Bankruptcy Act from December 2004, the execution of an effective authority after the presentation of a creditor’s petition would have the effect of staying such a petition, save with respect to the operation of s 206(1) of the Bankruptcy Act. Nevertheless, in the present case – where there is no extant authority executed by Mr Paule – the observations in Field and particularly the need to consider all relevant circumstances, are apposite.

60    For the following reasons, I have reached the firm conclusion that there should not be a further adjournment of the hearing of the petition.

61    First, the course of dealings between Mr Paule and Dr Kambouris since the judgment debt arose tells strongly against the grant of the adjournment sought.

62    In this regard, as set out in some detail above, Mr Paule maintained his first position – that he was in a position to satisfy the judgment debt because he was the legal and beneficial owner of the Toorak property – from about mid-April 2025 to about mid-November 2025. That position was reflected in: (1) affidavit evidence affirmed by Mr Paule; (2) submissions made on his behalf; and (3) undertakings that he provided. At the hearing of the present application, Mr Paule’s evidence was that by maintaining his first position, he had misled both this Court and the Supreme Court of New South Wales.

63    In late November 2025, Mr Paule switched to the second position, namely that he is not in a position to satisfy the judgment debt because Ms Paule is, and has since December 2021 been, the beneficial owner of the Toorak property.

64    It is not necessary or appropriate on this application to determine whether Mr Paule’s first position or his second position is true.

65    It is sufficient to note that the Court cannot, and does not, rely upon the evidence of Mr Paule, a witness who has advanced two inconsistent positions and has given evidence that he has knowingly misled this Court and the Supreme Court of New South Wales.

66    In circumstances where the Court can place no reliance upon Mr Paule’s evidence, it would not be appropriate, nor in the interests of creditors, to adjourn the hearing of the petition for the purpose of allowing Mr Paule to put to his creditors a proposal which is only as good as the veracity of the information contained in it: see, e.g., s 222(5) of the Bankruptcy Act.

67    Moreover, the discretion to grant an adjournment ought not be exercised in favour of a party who has either: (1) repeatedly and knowingly misled this Court and the Supreme Court of New South Wales and thereby engaged in, at least, an abuse of process (if his present evidence is true); or (2) misled this Court on the present application as to (1) (if his present evidence is not true).

68    The course of dealings between Mr Paule and Dr Kambouris since the judgment debt also demonstrates that Mr Paule has had ample opportunity to call in aid Part X of the Bankruptcy Act.

69    Although the denial of the adjournment will have the result that the review application is heard and this may result in the affirmation of the orders made by Judicial Registrar Morgan with the consequence that it will no longer be open to Mr Paule to call in aid Part X the Bankruptcy Act, the deprivation of this opportunity needs to be considered in the context of the present proceeding and the proceedings that were before Justice Burley and Justice Bromwich.

70    The present proceeding was commenced on 23 June 2025. There is no evidence of any attempt by Mr Paule to invoke the provisions of Part X of the Bankruptcy Act prior to 27 November 2025, nor any explanation for not having done so.

71    On 27 November 2025, Mr Paule, as noted above, signed an authority appointing Mr Giasoumi as the controlling trustee of his estate. That was set aside by Justice Burley on 15 December 2025. A further attempt was denied by Justice Bromwich on 19 February 2026.

72    Further, as also noted above, on 14 May 2026, Mr Paule expressly undertook not to sign another authority under s 188 of the Bankruptcy Act.

73    In these circumstances, Mr Paule has had ample opportunity to invoke the provisions of Part X of the Bankruptcy Act and the refusal of the adjournment would not be contrary to the legislative intention of allowing debtors an opportunity to invoke those provisions.

74    Secondly, I am not persuaded that it is in the interests of creditors that the hearing of the creditor’s petition be further adjourned. As noted above, such hearings should occur as expeditiously as possible and there is a public interest in the protection of the interests of both actual and potential creditors. In the present case, there have been multiple adjournments, many of them on the basis of Mr Paule’s first position (which, as previously noted, involved misleading the Court).

75    Further, for the reasons discussed above, it cannot be in the interests of creditors for them to be asked to consider a proposal containing representations from a party whose representations, on his own evidence, cannot be trusted.

76    Thirdly, the application for an adjournment is opposed by Dr Kambouris. Although there is evidence that an adjournment and the foreshadowed PIA was supported by DJD Trading at the hearing before Judicial Registrar Morgan on 11 June 2026, there is also evidence that: (1) DJD Trading was and remains under the control of a receiver and manager purportedly appointed by Biocheese on 10 June 2026 after it took an assignment of a debt owing by DJD Trading which assignment allowed it to appoint the receiver and manager; and (2) that appointment is the subject of challenge by DJD Trading in the Supreme Court of New South Wales, in a proceeding in which a declaration is sought pursuant to s 418A of the Corporations Act 2001 (Cth) that the purported appointment of the receiver and manager was invalid for reasons including that the purported appointment was in bad faith or for an improper purpose, namely to frustrate DJD Trading’s recovery of funds from Mr Paule. There is no evidence as to the position of other creditors, although I note that counsel for Mr Paule submitted that Biocheese, as a company related to Mr Paule, should be regarded as supportive of the application for adjournment and the foreshadowed Part X proposal. In these circumstances, the wishes of Dr Kambouris carry greater weight.

77    Fourthly, I have had regard to Mr Paule’s evidence as to the effect of a sequestration order upon him. The change of status effected by sequestration and the personal consequences are matters of importance in the exercise of the discretion: see, e.g., Culleton at [57] above. However, this factor must be considered in the context of all of the other factors discussed above and below which are strongly against the grant of an adjournment.

78    Further, Mr Paule, if made bankrupt, will not lose the opportunity to seek a compromise with his creditors. Section 73 of the Bankruptcy Act provides a means by which such a compromise may be reached. In this regard, I do not regard as reliable Mr Paule’s uncorroborated evidence that the funds said to be available for a PIA would not also be available for a compromise under s 73 of the Bankruptcy Act. Of course, if a compromise were to be reached under s 73 of the Bankruptcy Act, Mr Paule would nevertheless be bankrupt for the period until such a compromise is approved, but I do not regard this as a matter of particular moment when regard is had to all of the circumstances.

79    Finally, a consequence of the concession that the matters mentioned in s 52(1) of the Bankruptcy Act have been proven is that Dr Kambouris has a prima facie entitlement to an order for sequestration: Rozenbes v Kronhill (1956) 95 CLR 407 at 414 (Dixon CJ, Webb and Fullagar JJ, citing Cain v Whyte (1933) 48 CLR 639); Field at 411; Clapham v Commonwealth Bank of Australia [2013] FCAFC 84 at [54] (North, Barker and Nicholas JJ); and it is for Mr Paule to show other sufficient cause why such an order should not be made: Ling v Enrobook Pty Ltd [1997] FCA 226; (1997) 74 FCR 19 at 24 (Davies, Wilcox and Branson JJ). Mr Paule does not (presently) contend that he is solvent. In view of all of the circumstances, and in particular those discussed at [61] to [78] above, the prima facie position has not been displaced.

80    As the adjournment is to be refused, it is unnecessary to address Mr Paule’s submissions that he ought be released from the undertaking that he gave on 14 May 2026.

C.2     The application for review of the Judicial Registrar’s decision

81    I turn now to the application for review of the orders made by Judicial Registrar Morgan.

82    An application for the review of a Registrar’s exercise of power so as to make a sequestration order involves a hearing de novo of the creditor’s petition so as to determine whether or not a sequestration order should be made by the Judge on the evidence then available: Bechara v Bates [2021] FCAFC 34; (2021) 286 FCR 166 at 176 [27], 185 to 186 [74], 189 to 190 [88] and 190 [92] (Allsop CJ, Markovic and Colvin JJ); Robson v Body Corporate for Sanderling at Kings Beach CTS 2942 [2021] FCAFC 143; (2021) 286 FCR 494 at 502 [21] (Allsop CJ) and 525 [151] (Colvin J).

83    As previously noted, it is common ground that all of the matters required to be proved on an application for a sequestration order have been proved and that the Court’s discretion to make such an order has been enlivened.

84    As noted at [79] above, it follows that the prima facie position is that a sequestration order ought be made. Further, as Mr Paule does not (presently) contend that he is solvent, and the submissions advanced on his behalf as to another sufficient cause did not travel beyond the submissions advanced in support of the application for an adjournment, which application I have refused for the reasons set out above, the orders made by Judicial Registrar Morgan should be affirmed.

D.    CONCLUSION

85    For the foregoing reasons, the application for an adjournment should be dismissed and the orders made by Judicial Registrar Morgan affirmed. There is no reason why costs should not follow the event. I will make orders accordingly.

Associate:

Dated:    3 September 2026