Federal Court of Australia

Gaszewski v Harrison, in the matter of Kazmierczak (Bankrupt) [2026] FCA 1465

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 17(2) of the Federal Court of Australia Act 1976 (Cth) and r 1.36 of the Federal Court Rules 2011 (Cth), these orders and reasons for judgment are made and published from Chambers.

2.    The application is dismissed.

3.    The applicant must pay the respondent’s costs of the application, to be taxed on a party-party basis.

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

REASONS FOR JUDGMENT

JACKSON J:

1    The applicant, Anna Gaszewski, seeks review of a decision of the respondent, acting as the trustee in bankruptcy of the estate of Krzysztof Kazmierczak (Trustee), to reject a proof of debt. For the following reasons, Ms Gaszewski’s application will be dismissed.

Background and evidence

2    Ms Gaszewski claims that in 2011 and 2012 she and her mother provided financial assistance, with the expectation of repayment, to the bankrupt and his late wife, Ms Gaszewski’s sister, Maria. The bankrupt and Maria were experiencing financial hardship. Ms Gaszewski says in her first affidavit, sworn on 24 April 2026, that a property the couple owned in Neutral Bay, New South Wales, ‘was under financial pressure and at risk of default’ and ‘at risk of being lost’ at that time.

3    The amount of financial assistance provided by Ms Gaszewski and her mother is not clear from the materials before me. In her first affidavit, sworn on 24 April 2026, Ms Gaszewski says that her mother provided some $15,000 via three bank transfers to the bankrupt and Maria. But she says that due to the passage of time and ‘the informal family nature of the arrangement’, full records of the transfers are not available. She provides an ‘estimate’ that the total financial assistance provided (by whom it is not clear) was approximately $28,500. Her first affidavit also presents a schedule of payments between September 2011 and June 2012 totalling $30,000, but deducts from that total $1,500, as the value of a mobile phone which Ms Gaszewski says the bankrupt gave her in 2012 as partial repayment for the alleged loans.

4    Ms Gaszewski asserts in her first affidavit that the ‘financial assistance was not intended as a gift but was provided with an expectation of repayment when the financial circumstances of [Maria] and Kris Kazmierczak improved’ and ‘with the understanding between the parties that it would be repaid when financial circumstances improved’.

5    The Federal Circuit and Family Court of Australia (Div 2) made a sequestration order against the estate of the bankrupt on 21 November 2024, being more than 12 years after the last payment that Ms Gaszewski says gave rise to the alleged debt.

6    Ms Gaszewski’s first affidavit further asserts that the money she and her mother advanced to the bankrupt, which was apparently used to meet mortgage repayments and body corporate fees for the Neutral Bay property, ‘contributed to the preservation of the property’ so that it formed part of the bankrupt estate. She says the property was sold in February 2026 for approximately $800,000. Ms Gaszewski gives evidence in her second affidavit that she helped Maria to prepare and submit correspondence to the Financial Ombudsman Service in 2011, requesting that monthly mortgage repayments be reduced because of the financial hardship experienced by Maria and the bankrupt. Ms Gaszewski says that following those communications in 2011, the lender agreed to reduce the mortgage repayments for one year. But Ms Gaszewski has been unable to recover or produce those communications.

7    It is relevant to note in respect of the sale of the Neutral Bay property that, in an email dated 4 November 2025 to the bankrupt’s solicitors, the Trustee expresses the view that, subject to the bankrupt completing his statement of affairs, ‘it is likely that the sale proceeds from the unit will be sufficient to pay all debts and costs of the administration in full enabling the bankruptcy to be annulled pursuant to s 153A [of the Bankruptcy Act 1966 (Cth)] and surplus funds remitted to the bankrupt’. It does not appear, however, that this step has been taken.

8    It is also relevant to note that, in correspondence with the Trustee leading up to the rejection of the proof of debt, specifically in an email to the Trustee dated 7 October 2025, Ms Gaszewski described what she was seeking as a ‘fairness-based or ex gratia payment in the range of $45,000 to $90,000’. In the same email, Ms Gaszewski went on to say:

This request is not made as a claim for ownership of capital gain but as a proportionate recognition of the financial and preservational contribution that enabled the property to be retained and ultimately to benefit the creditors and the estate. I believe such recognition would represent a reasonable and compassionate outcome consistent with your discretionary powers under section 134(1) of the Bankruptcy Act 1966 (Cth) and the duty to act fairly and properly under section 19 of the same Act.

I understand that section 134(1) grants you broad discretion to deal with the property of the bankrupt estate in such manner as you consider proper for the benefit of creditors, including the ability to compromise or settle claims where appropriate. In this context, I respectfully ask that you consider whether a modest ex gratia payment or equitable recognition may be made from any surplus funds, in acknowledgment of our family's financial assistance which directly preserved the property and maintained its value to the benefit of the estate.

9    The Trustee replied to this on 8 October 2025, saying: ‘The only way that I can consider any claim is if you believe you are creditor of the bankrupt estate and you lodge a proof of debt.’ A proof of debt form was subsequently provided, and Ms Gaszewski completed and submitted it on 16 October 2025. Along with Ms Gaszewski, a Darius Gaszewski is named in the proof of debt as a creditor, although he is not a party to this proceeding. In the proof, the alleged creditors claimed $88,500. The $28,500 that has already been mentioned is described in the proof as ‘[f]inancial help’ and ‘[f]inancial assistance’. In addition, the proof claimed an item described as a ‘Payment from interest’, being a ‘10% claim ($60,000)’ said to be ‘reasonable and defensible’. It is not possible to make out what this pertains to, as the text on the form is cut off.

10    On 8 April 2026, the Trustee provided a notice of rejection of the proof of debt under s 102 and s 104 of the Bankruptcy Act. The reasons given included that:

•     There is no evidence of any loan agreement, acknowledgment of debt, or enforceable obligation requiring the Bankrupt to repay any amounts claimed. The only information provided is that the proof of debt notes that a payment of $1500 was made in June 2012 by the bankrupt.

•     The alleged transactions occurred in or around 2011-2012. No evidence has been provided of any acknowledgment or part payment sufficient to extend the limitation period. Accordingly, any such claim would be statute-barred.

•     The component of the claim described as a ‘10% claim’ is not supported by any evidence.

•     On the basis of the above, I am not satisfied that you have established the existence of a provable debt.

11    In an email dated 15 April 2026 disputing the rejection, Ms Gaszewski asserted that the ‘funds provided were not intended as a gift’ but were provided ‘with the clear understanding that repayment would occur once [Maria] completed her studies and returned to employment’, and that there ‘was an expectation of repayment’ and ‘evidence of at least partial repayment’ (presumably, the provision of the mobile phone). The email said: ‘These factors collectively support the existence of a loan, albeit informal in nature.’

12    In a responsive email on 15 April 2026, the Trustee said:

An issue that you have not addressed in your request that I review my decision is the issue that the claim is statute barred pursuant to the provisions of the Limitation Act. You have not provided any evidence that any recovery action or ongoing acknowledgment of debt has occurred within the six years prior to the date of bankruptcy. On that basis alone it would appear to be the case that you do not have an enforceable debt.

13    In a responsive email to this, dated 16 April 2026, Ms Gaszewski did not dispute the limitations point, but argued that her claim raised ‘broader equitable considerations’ arising out of what she claimed were contributions that helped maintain the value of the Neutral Bay property. She cited, among other cases, Re Universal Distributing Co Ltd (1933) 48 CLR 171, as authority for the proposition that a person who contributes to preserving or realising property may have an equitable basis for recovery from that property. She also claimed to have raised this point in her email of 7 October 2025, albeit in the context of a request for an ex gratia payment. The Trustee simply responded to this, in an email dated 17 April 2026, saying that he did not intend to amend his decision to reject the proof of debt.

Ms Gaszewski’s application

14    In her application, Ms Gaszewski relies on ss 90–15 and 90–20 of the Insolvency Practice Schedule (Bankruptcy) to the Bankruptcy Act, as well as s 178 of the Bankruptcy Act (a provision which is no longer in force). She seeks orders that the Trustee’s decision rejecting the proof of debt be set aside and her claim be admitted as a provable debt in the amount of ‘approximately $28,500’ or such other amount as the Court determines, as well as costs. Alternatively, she seeks an order remitting the question to the Trustee. It therefore seems that the claim now appears to be limited to the amount of money Ms Gaszewski says she and her mother paid to the bankrupt and Maria (minus the value of the mobile phone), and is not increased by $60,000 or any other amount.

15    Under the heading ‘Nature of claim’ in her first affidavit, Ms Gaszewski says:

28.    I rely on the financial assistance as giving rise to a debt owed to me, based on the expectation of repayment described above.

29.     In the alternative, if the Court finds the claim is not strictly contractual, I say equitable considerations support reimbursement.

16    Nevertheless, Ms Gaszewski’s written submissions do not state any claim for debt, nor do they engage with the limitations point raised by the Trustee against that claim. The tenor of the submissions and of her affidavits is that the Trustee misunderstood her request as to ‘whether any equitable, fairness-based or ex gratia recognition could be given’ for the contributions she said she and her mother made, and that he misdirected her into the proof of debt process, when her claim was not really a claim in debt. Her complaint is therefore that ‘the Trustee failed to properly address the actual request that was made’.

Review of the proof of debt

17    Whatever the merits of Ms Gaszewski’s complaints about her correspondence with the Trustee, she did submit a proof of debt to him, and the proof did make a claim in debt (albeit that it ambiguously may have gone further than that, in relation to the $60,000 additional sum which she no longer seems to be claiming). The Trustee was obliged to adjudicate on the proof (Bankruptcy Act s 102(1)), and he did.

18    To the extent that Ms Gaszewski is still pressing for review of the rejection of her proof, the Court is not confined to considering the correctness of the views the Trustee reached. Rather, the Court is conducting a re-hearing in order to make the correct decision based on the materials before it. Ms Gaszewski, as the party seeking review, has the onus of persuading the Court that it should intervene. The question for the Court is whether the claim ought to be admitted to proof, or ought not to be rejected, as the case may be. The role of the trustee in bankruptcy is to ensure that all relevant evidence is before the Court, and to assist the Court to ensure that appropriate arguments are made. The role of the trustee is not to actively defend the decision under review. See the summary of relevant principles in Moses v Harris; Re Harris [2026] FCA 254 at [12]-[15] (Markovic J).

19    Having reviewed the materials, I have come to the conclusion that the claim of debt should not be admitted to proof. The alleged debt on which Ms Gaszewski relies was either one where there was no time specified for repayment, or one where the time specified was when the financial circumstances of the bankrupt and Maria improved.

20    If it was the latter, there is no evidence that the couple’s financial circumstances ever did improve, meaning there is nothing before the Court to establish that the debt has ever fallen due and payable.

21    If it was the former, then the limitation period for the debt started running when the money was advanced: Young v Queensland Trustees Ltd (1956) 99 CLR 560 at 566; Ogilvie v Adams [1981] VR 1041 at 1043. The latest date on which that is alleged to have occurred was in June 2012. It is not clear whether the proper law governing the debt is that of New South Wales or Western Australia, but either way the limitation period expired in June 2018: Limitation Act 1969 (NSW) s 14(1)(a); Limitation Act 2005 (WA) s 13(1).

22    The only suggestion in the evidence that the debt was ever confirmed by the bankrupt subsequent to its being incurred is the claim that he repaid it in part by giving Ms Gaszewski a mobile phone. But this is said to have occurred in 2012, so even if it did effectively start the limitation period running again (see Limitation Act (NSW) s 54 and Limitation Act (WA) s 47), the limitation period still expired in 2018.

23    That expiry is to be measured against the date of the presentation of the bankruptcy petition: see Ogbonna v CTI Logistics Ltd (No 7) [2025] FCA 1125 at [44(3)] (Feutrill J) applying O’Mara Constructions Pty Ltd v Avery [2006] FCAFC 55; (2006) 151 FCR 196. The evidence in this proceeding does not disclose when that was, but the sequestration order records that the act of bankruptcy took place on 7 June 2024, so the petition must have been presented after that. Hence at that time any debt owing to Ms Gaszewski was statute barred, and should not have been admitted to proof.

24    Either way, the Trustee was right to reject the proof of debt. There is no need to delve into the merits of the claim and the evidence beyond that, although the evidence is so vague and problematic that the Trustee was probably justified to reject the proof on that basis too. I confine myself to the bases stated in the paragraphs above this one.

The claim based on ‘equitable considerations’

25    Ms Gaszewski’s references to ‘equitable considerations’ might be thought to rely on some doctrine or remedy arising under the body of law developed by the Court of Chancery in England that is now known to English and Australian lawyers as ‘equity’. But, despite fleeting case references in some of her correspondence with the Trustee, her submissions do not invoke any aspect of that body of law. In saying that, I do not suggest that any such aspect might support a claim to a legally enforceable right to payment of money.

26    It is clear from Ms Gaszewski’s submissions that her present contention is that the Trustee, even if not legally bound to provide monetary recompense for the payments that she and her mother are said to have made, should have provided recompense by way of recognition of the role of those payments in preserving the Neutral Bay property, which has since been realised for the benefit of the bankrupt estate. Essentially, Ms Gaszewski submits that this was the right thing to do.

27    In her written submissions, Ms Gaszewski claims that her original request, which I understand to be the request made in her email to the Trustee on 7 October 2025:

… sought consideration of substantial financial and practical assistance provided during a period of financial hardship which assisted in preserving a property that was later realised by the Trustee for the benefit of creditors.

28    In her submissions and affidavit sworn on 8 July 2026, Ms Gaszewski repeatedly makes reference to her ‘broader request’ to the Trustee contained in that email. She also states that she did not realise (and the Trustee did not explain to her) that lodging her proof of debt with the Trustee ‘would limit the Trustee’s consideration of [her] request to a conventional debt claim.’

29    That Ms Gaszewski does not pursue a legally enforceable claim is confirmed by her references to the ‘requested’ payment as being ‘ex gratia’, including a confirmation in her reply affidavit sworn 8 July 2026 that she asked the Trustee ‘whether any equitable, fairness-based or ex gratia recognition could be given for those contributions’. It is also confirmed by her further description in the same affidavit of:

the fairness-based recognition [that I] had requested in my letter of 7 October 2025, in which I sought consideration of an ex gratia payment in the range of $45,000 to $90,000 because our contributions had helped preserve the property that was later realised by the Trustee for the benefit of creditors in the bankruptcy estate.

30    In the same vein, Ms Gaszewski’s first affidavit closes by saying: ‘I seek only reimbursement of the funds contributed, as it would be unfair for the estate to retain the benefit of those contributions without recognition.’

31    At first blush, this appears to be misconceived. The duty of the Trustee was and is to administer the estate in the interests of the creditors and the bankrupt: see Doolan v Dare [2004] FCA 682 at [37] (Spender J). In Adsett v Berlouis (1992) 37 FCR 201 at 208, Northrop, Wilcox and Cooper JJ said:

The discharge of a public duty imposed by the [Bankruptcy Act] is to be performed conformably with the requirements of that duty, but also conformably with the trustee’s obligation to administer the estate in such a manner as to maximise the return from estate assets, and thereby to maximise satisfaction of the creditors’ claims and any possible surplus for the bankrupt.

32    Their Honours went on to adopt a passage from the judgment of Smithers J in Mannigel v Aitken (1983) 77 FLR 406 at 408-409 which included the following at 408:

In the case of bankruptcy the trustee is in charge of the assets of the bankrupt and those assets are to be applied for the benefit of the creditors and if there be any surplus for the benefit of the bankrupt. It is clear that the minimum standard required of the Trustee is that he shall handle the assets with a view to achieving the maximum return from the assets to satisfy the claims of the creditors and to provide the best surplus possible for the bankrupt.

33    On the face of things, then, the Trustee had no power to make an ‘ex gratia’ payment to Ms Gaszewski, even if he wanted to. While Ms Gaszewski’s application relies on the broad power of the Court found in s 90–15 of the Insolvency Practice Schedule, it is doubtful that this provision authorises the Court to alter substantive rights or to ‘outflank’ specific provisions of the Act providing for the distribution of funds to creditors and/or to the bankrupt: see Kirkalocka Gold SPV Pty Ltd (subject to DOCA) (recs and mgrs apptd) v SCL AUS Ltd [2025] FCA 1490 at [195] (affirmed on appeal); Australian Securities and Investments Commission v Marco (No 13) [2023] FCA 83 at [30] (Feutrill J) and the authorities referred to there; Bertram v Naudi [2026] FCAFC 40; (2026) 315 FCR 238 at [53]-[60] (Perry, O’Callaghan and Goodman JJ). Also, Ms Gaszewski’s earlier reliance on s 134 seems misconceived, as it confers powers on the Trustee to do specified things without, on its face, giving him a discretion to pay money to someone who is neither a creditor nor the bankrupt.

34    However, on reflection, it appeared to me that the case Ms Gaszewski makes arguably engages a principle that is often attributed to the case of Ex parte James (1874) LR 9 Ch App 609. There, a creditor of the bankrupt, who had obtained payment by execution of judgment against the bankrupt prior to the bankruptcy, paid the money recovered to the trustee in bankruptcy under the mistaken belief that he had no legal defence to an action by the trustee to recover the money. When the mistake was discovered, the creditor sought repayment of the money from the trustee. James LJ, speaking of a trustee in bankruptcy’s reliance on a principle that ‘that money paid voluntarily with a knowledge of the facts, but under a mistake of law, cannot be recovered’, said (at 614) that this:

must not be pressed too far, and there are several cases in which the Court of Chancery has held itself not bound strictly by it. I am of opinion that a trustee in bankruptcy is an officer of the Court. He has inquisitorial powers given him by the Court, and the Court regards him as its officer, and he is to hold money in his hands upon trust for its equitable distribution among the creditors. The Court, then, finding that he has in his hands money which in equity belongs to some one else, ought to set an example to the world by paying it to the person really entitled to it. In my opinion the Court of Bankruptcy ought to be as honest as other people.

35    In Re Tyler [1907] 1 KB 865 at 873, Buckley LJ expressed the opinion that when James LJ was speaking of ‘money which in equity belongs to some one else’, his Lordship:

meant money which in point of moral justice and honest dealing belongs to some one else. He was using the words in a popular sense, and not in the sense of money which in a Court of Equity would belong to some one else.

36    As an unrepresented litigant, Ms Gaszewski cannot be expected to cite the sources of this principle. But it does appear to be the principle she seeks to invoke. If it does operate in her favour, s 90–15 would probably give the Court the power to order the money she claims to be paid to her.

37    In view of the above, my Chambers wrote to the parties, inviting them to make further written submissions on the principle. Each party did so. Having reviewed these submissions, and the other evidence before me, I do not consider that the principle in Ex parte James avails Ms Gaszewski in the circumstances of this case.

38    Ms Gaszewski relies on the reference in Re Tyler to ‘moral justice and honest dealing’ to submit that the principle in Ex parte James applies. She submits that her case is ‘not only’ about proving that the alleged payments were made, but also about whether the bankrupt estate should benefit from those payments, which she says helped preserve the Neutral Bay property.

39    However, Ms Gaszewski’s evidence about the connection between the payments allegedly made in 2011 and 2012 and the retention of the Neutral Bay property is palpably vague. In truth, it is mere assertion. To the extent that Ms Gaszewski descends to specifics, in her reply submissions on the applicability of Ex parte James, she refers to what appears to be a bank record showing a transfer of $5,000 from her mother to Maria in 2011. But the record shows no more than that, and there is no evidence indicating the purpose of the transfer. She further submits the alleged preservation of the property at that time is linked to communications she helped her sister Maria to make, which resulted in a reduction of mortgage repayments for one year. Ms Gaszewski says, in general terms, that in 2011 to 2012 the property ‘was under financial pressure’ and ‘at risk of being lost’. But nowhere does she establish that the mortgage was in arrears, let alone that the mortgagee was taking steps to sell the property.

40    The lapse of time of more than a decade between those events and the sale of the property (according to Ms Gaszweski’s evidence) in February 2026, means that the connection Ms Gaszweski asserts, between the payments and the ultimate sale of the property for the benefit of creditors, cannot be inferred from the skeletal facts; to the contrary it seems unlikely. Without more, it is difficult to see how there can be a real causal connection between payments made in 2011 to 2012 and the fact that the property was still held by the bankrupt at the time of the sequestration order in 2024. Ms Gaszewksi’s case thus fails on the facts.

41    Even if it does not fail on that basis, I do not consider that the principle in Ex parte James avails Ms Gaszewski here. The events on which she relies occurred more than a decade before the Trustee was appointed. Only in exceptional cases will the principle be applied where the trustee in bankruptcy or his predecessor was not personally concerned in the transaction: Downs Distributing Co Pty Ltd v Associated Blue Star Stores Pty Ltd (in liq) (1948) 76 CLR 463 at 482 (Williams J).

42    In Re Clarke; Ex parte The Trustee v Texaco Ltd [1975] 1 WLR 559 at 563-564, Walton J held that for the rule in Ex parte James to operate, ‘it is clear that certain conditions must be present’. In summary those conditions are that:

(1)    there must be some form of enrichment of the assets of the bankrupt resulting from conduct of the claimant;

(2)    except in the most unusual cases, the claimant must not be in a position to submit an ordinary proof of debt;

(3)    the rule will nullify the trustee’s claim to the money if, in all the circumstances, an honest person who would be personally affected by the outcome of the claim would be bound to admit it was not fair to keep the money; and

(4)    the rule applies only to the extent necessary to nullify the enrichment.

43    This Court has applied these requirements on numerous occasions, for example: Re Elias Ayoub; Ex parte Silvia (1983) 67 FLR 144 (Morling J); Ah Toy v Registrar of Companies (NT) (1986) 10 FCR 256 (Toohey, Morling and Wilcox JJ); Hartogen Energy Ltd (in liq) v Australian Gas Light Co (1992) 36 FCR 557 (Gummow J); Ebner v Official Trustee in Bankruptcy; Re Ebner [2003] FCA 73; (2003) 126 FCR 281 (Finkelstein J); Green v Official Trustee in Bankruptcy [2003] FCA 164; (2003) 128 FCR 383 (Moore J); Rambaldi; Re Houston (Bankrupt) [2008] FCA 1519 (Kenny J).

44    Applying the relevant requirements in Re Clarke here, I am not satisfied that they are met.

45    Ms Gaszewski submits the first requirement will be satisfied if the Court accepts that the payments allegedly made in 2011 and 2012 preserved the Neutral Bay property. She invokes two cases to submit, in effect, that the Court should adopt a broad understanding of what constitutes an enrichment to the bankrupt estate. However, even accepting that such payments could constitute an enrichment, for the reasons given above, the connection between the alleged payments and the preservation of the Neutral Bay property is doubtful.

46    As to the second requirement, the Trustee submits that any difficulty Ms Gaszewksi had in submitting an ordinary proof of debt arises from a lack of evidence, and that the requirement does not apply in such circumstances. In reply, Ms Gaszewski submits that her argument is ‘different’ (it appears from her earlier submissions that her case is ‘not only about proving a loan’ and that the question ‘is different from simply deciding whether there was a legally enforceable loan’). The difficulty in submitting an ordinary proof of debt in both Ex parte James and Re Clarke arose from the nature of the payments in those cases, which were made post-bankruptcy. It did not arise from a lack of evidence about the nature of the payments. As Walton J notes, the purpose of the second requirement in Re Clarke is not ‘to confer a preference on an otherwise unsecured creditor, but to provide relief for a person who would otherwise be without any’: Re Clarke at 564.

47    In any event, I do not accept that Ms Gaszewski is a person who was unable to submit a proof of debt, so that the principle in Ex parte James operates in her favour. Ms Gaszewski maintains that the money was advanced on terms that it was to be repaid. On the assumption that it was repayable on demand, she had the opportunity to recover it as a debt. If she cannot do so now, that is because she failed to commence proceedings within the limitation period prescribed by the applicable statute. On the assumption that it was repayable when the debtors’ financial circumstances improved, it has not been established that this ever happened. Neither of those states of affairs are ones which ‘moral justice and honest dealing’ require the Trustee to remedy.

48    Even accepting the connection between the payments and retention of the Neutral Bay property which Ms Gaszewski asserts, her case also falls short on the third and ‘crucial’ requirement: that an honest person in the Trustee’s position would admit that it is not fair that the bankrupt estate should keep the money (in this case, presumably, a portion of the proceeds of the sale of the property equal to the alleged contribution). There are at least two reasons why that is so:

(1)    The Trustee had no involvement in the events of 2011 to 2012. The situation on his appointment was simply that the bankrupt estate had an asset which, in performance of his normal functions and duties, he realised. As Downs Distributing Co shows, this is a powerful consideration. It is all the more so, given the long period of time between the alleged payments and the Trustee’s appointment.

(2)    It can be inferred that the assistance Ms Gaszewski provided was out of familial affection for her sister, and possibly her then brother-in-law. That is not a sound foundation for the assertion that the payments are now to be treated as contributions for which recompense is called. That is so even if, as Ms Gaszewski asserts, it was agreed that the money would be repaid. Such an agreement is not necessarily inconsistent with the familial motivation for making the advance. The Trustee’s conscience does not require ‘recognition’ of an advance motivated by personal reasons.

49    I therefore do not apply the principle in Ex parte James to this case.

50    I have noted that, according to correspondence from the Trustee, there is likely to be a surplus of assets after creditors are repaid leading to an automatic annulment under s 153A of the Bankruptcy Act. If that occurs, then the Trustee’s duty under s 154 of the Act will be to remit the surplus to the bankrupt. If there is any doubt about that, it will be open to the Trustee to apply to the Court for directions.

Conclusion on Ms Gaszewski’s application

51    Whichever way it is conceived, Ms Gaszewski’s application will be dismissed.

Costs

52    In view of the desirability of limiting legal fees, given the relatively small amount of money involved, the Trustee sought and was given leave to adduce evidence going to the question of costs, and to make submissions on it, at the same time as the provision of the substantive submissions and evidence in the proceeding.

53    The Trustee relies on a purported Calderbank letter, dated 2 June 2026, in that regard, to seek indemnity costs. This letter is annexed to an affidavit of Lachlan Wilson affirmed on 23 July 2026. Ms Gaszewski did not object to the letter going into evidence before judgment was delivered in the proceeding as a whole. Although I am conscious that she did not have legal representation, as will be seen, the nature and content of the letter gave rise to no concern that it might expose me to extraneous information that could cause me to determine the matter otherwise than on the basis of the submissions of the parties and the admissible evidence.

54    The letter made assertions about the merits of the matter that essentially relied on the submission that any alleged debt was statute barred. Then, materially, it made:

the following without prejudice offer for the settlement of these proceedings:

a.     you discontinue the Proceedings prior to 4pm on 5 June 2026; and

b.     you pay the Trustee’s costs thrown away as agreed or assessed, as at today's date, in responding to the application.

(Bold in original.)

55    The letter said that this ‘offer’ was made in accordance with the principles Calderbank v Calderbank [1975] 3 All ER 333 and that if it were not accepted, it would be relied on in support of an application for indemnity costs.

56    On the basis of subsequent correspondence, annexed to Mr Wilson’s affidavit, it appears that Ms Gaszewski did not respond to the offer, so it lapsed. The Trustee submits that if the proceedings are dismissed (as they will be), the outcome will be more favourable to him than the outcome contemplated by the letter of 2 June 2026, justifying an indemnity costs order.

57    There is, however, no presumption in favour of an indemnity costs order in these circumstances. It is necessary for the Trustee to establish that the letter of 2 June 2026 contained a genuine offer of compromise, and that Ms Gaszewski’s rejection of the offer was unreasonable: Caporaso Pty Ltd v Mercato Centrale Australia Pty Ltd (Costs) [2025] FCAFC 29 at [25] (Katzmann, Wheelahan and Hespe JJ). ‘The mere making of an offer of compromise and its non-acceptance, followed by a result more favourable to the offeror, does not automatically lead to an order for payment of costs on an indemnity basis’: Dukemaster Pty Ltd v Bluehive Pty Ltd [2003] FCAFC 1 at [7] (Sundberg and Emmett JJ). The reasonableness of the rejection of the offer ‘will be judged by reference to the circumstances facing the offeree at the time of the offer’: CGU Insurance Ltd v Corrections Corporation of Australia Staff Superannuation Pty Ltd [2008] FCAFC 173 at [75] (Moore, Finn and Jessup JJ).

58    An offer, however, ‘that invites discontinuance of a claim on the payment of the offeror’s costs to date offers not very much at all other than the stemming of future costs which in a particular case may nevertheless be very real’: Uniline Australia Ltd v S Briggs Pty Ltd (No 2) [2009] FCA 920; (2009) 232 FCR 136 at [38] (Greenwood J, approved in Sagacious Legal Pty Ltd v Wesfarmers General Insurance Ltd [2011] FCAFC 53 at [131]–[132] and quoted with approval in subsequent Full Court cases). An ‘offer of compromise which provides little benefit to the offeree may be relevant to the question of whether the offeree’s failure to accept the offer was unreasonable’: Caporaso at [35]. Generally, ‘where an offer involves “no real element of compromise” but merely “invites capitulation by the appellant” it will not result in a variation of the usual costs order’: Herning v GWS Machinery Pty Ltd (No 2) [2005] NSWCA 375 at [5] (Handley, Beazley and Basten JJA) quoting Townsend v Townsend (No 2) [2001] NSWCA 145 at [5] (Giles JA).

59    On the basis of those principles, in this case I decline to exercise the discretion to order that Ms Gaszewski pay costs on an indemnity basis. It does not matter whether this decision is based on the absence of a genuine offer of compromise, or because it was not unreasonable for Ms Gaszewski not to accept the offer, or both. For both bases depend on the same point: the letter of 2 June 2026 offered Ms Gaszewski nothing (other than the stemming of future costs). It was within her own power to discontinue the proceeding at any time without any offer from the Trustee, and if she had done so she would have been liable for the Trustee’s costs up to the time of discontinuance: Federal Court Rules 2011 (Cth) r 26.12(2)(a)(i) and r 26.12(7). The letter therefore was not a genuine offer of compromise and, viewed as at the time at which it was made, it was not unreasonable for Ms Gaszewski to have declined to accept it.

60    For completeness, I note that the Trustee submits that Ms Gaszewski’s application was misconceived. This is because no enforceable debt has been established on the evidence, and because any such debt would be statute barred. Had that been the end of the matter, in view of the time bar I would agree that the claim had no proper foundation. But it does not engage with Ms Gaszewski’s attempt to invoke ‘equitable considerations’ and while the attempt has failed, as outlined above there was a basis at law for it to be sensibly put, essentially in the way that Ms Gaszewski has.

61    Costs will follow the event, to be taxed on a party-party basis.

Associate:

Dated:    7 October 2026