Federal Court of Australia

Sammut v Lawrence, in the matter of Lawrence [2026] FCA 1506

ORDERS

THE COURT ORDERS THAT:

1.    The estate of Wayne James Lawrence be sequestered under s 43(1) of the Bankruptcy Act 1966 (Cth).

2.    The applicant creditors’ costs (of the interlocutory application and creditor’s petition) be assessed and paid from the estate of the respondent in accordance with ss 51 and 109(1)(a) of the Bankruptcy Act 1966 (Cth).

3.    Prayers 7 to 12 of the applicants’ interlocutory application dated 26 March 2026 be otherwise dismissed.

THE COURT NOTES THAT:

1.    The act of bankruptcy is a failure by the respondent debtor to comply on or before 12 November 2024 with the requirements of a bankruptcy notice served on him on 22 October 2024.

2.    A consent to act as trustee signed by David Henry Sampson has been filed under s 156A(1)(a) of the Bankruptcy Act 1966 (Cth).

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

REASONS FOR JUDGMENT

YOUNAN J:

Introduction

Creditor’s petition

1    By a creditor’s petition presented on 9 May 2025, the applicant creditors, Ms Alice Sammut and Mr Paul Ciantar (applicants) seek a sequestration order against the estate of the respondent debtor, Mr Wayne Lawrence (respondent) under s 43 of the Bankruptcy Act 1966 (Cth).

2    The order is sought as a result of the respondent’s failure to comply with bankruptcy notice BN274106 issued on 21 October 2024 (fifth bankruptcy notice). The notice required the respondent to pay $123,022.58 to the applicants by 12 November 2024, or to otherwise satisfy the Court that he had a counter-claim, set-off, or cross demand equal to or more than the sum claimed. The respondent did neither, which conduct constitutes an act of bankruptcy under s 40(1)(g) of the Bankruptcy Act.

3    The petition rests on a certificate of taxation issued by the Federal Circuit and Family Court of Australia (Division 2) (FCFCOA) on 11 October 2024, certifying costs in the amount of $122,814.20. The petition claims that, in addition, the respondent owes the applicants certain other amounts pursuant to costs orders made in separate proceedings. The applicants estimated that, at the date of the hearing on 14 April 2026, the respondent owed to them a total amount of $899,920.34 (inclusive of interest), the relevance of which will become apparent.

4    The applicants rely on the following evidence in support of the petition:

(1)    the affidavit of Karen McLean sworn 9 May 2025 (affidavit of service of bankruptcy notice: Federal Court (Bankruptcy) Rules 2016 (Cth) r 4.04(1)(b));

(2)    the affidavits of Alice Alexandria Sammut and Paul William Ciantar sworn 9 May 2025 (affidavit verifying creditor’s petition: Bankruptcy Act s 47(1));

(3)    the affidavit of Karen McLean sworn 9 May 2025 (affidavit of search: Bankruptcy Rules r 4.04(1)(a));

(4)    trustee consent to act declaration of David Henry Sampson filed on 3 November 2025 (Bankruptcy Act s 156A);

(5)    the affidavit of Karen McLean sworn on 5 November 2025 and exhibit KMC-1 to that affidavit;

(6)    the affidavit of Karen McLean sworn 30 March 2026 (affidavit of service of petition: Bankruptcy Rules r 4.06(2));

(7)    the affidavits of Alice Alexandria Sammut and Paul William Ciantar sworn 13 April 2026 (affidavits confirming debt still owed: Bankruptcy Rules r 4.06(4)); and

(8)    the affidavit of Karen McLean sworn 13 April 2026 (affidavit of final search: Bankruptcy Rules r 4.06(3)).

Notice of opposition

5    The respondent objects to the sequestration order, and seeks an order that the petition be dismissed or stayed. The respondent also asks that the Court record that the money owed under the fifth bankruptcy notice “will be paid into Court” once the matter is determined, and that the conduct of the applicants’ solicitor be referred to the Legal Services Commissioner.

6    On 3 October 2025, the respondent lodged two distinct notices stating grounds of opposition to the petition, accompanied by a single supporting affidavit. A third notice was filed on 4 November 2025, together with an affidavit sworn on the same day. While all three documents were filed in the Federal Court, two contain erroneous references to the FCFCOA. I have proceeded (as have the applicants) on the basis that this is an administrative error, and note that the respondent relies on his most recently filed notice stating grounds of opposition to the petition (notice of opposition).

7    There are five grounds advanced in the notice of opposition, of which two are relevant to the petition (the remaining grounds relate to Bankruptcy Notice BN269292 issued on 30 April 2024 (the fourth bankruptcy notice), or take the form of prayers for relief). First, the respondent claims that the amount claimed under the fifth bankruptcy notice is disputed and subject to a valid set-off. Second, the respondent alleges that the proceeding is “solicitor-driven” and an abuse of process. While not explicitly stated, I take these grounds to be claims under s 52(2)(b) of the Bankruptcy Act, viz., that “for some other sufficient cause” the Court should not make a sequestration order.

8    Although not articulated in the notice of opposition, the respondent later claimed to be solvent, which I understand to be an assertion that he is able to pay his debts for the purposes of s 52(2)(a) of the Bankruptcy Act. I acknowledge that the respondent is a self-represented litigant, and consider that, on a generous construction, it is possible that the respondent proffered his ability and willingness to pay “the full amount of $123,022.58 into the Federal Court of Australia” as an indicator of solvency. Given the absence of notice, the applicants addressed this ground by way of oral submissions.

9    The respondent relies on the following evidence in support of the notice of opposition:

(1)    the affidavit of Wayne James Lawrence sworn 3 October 2025 and its annexures;

(2)    the affidavit of Wayne James Lawrence sworn 4 November 2025 and its annexures;

(3)    the affidavit of Wayne James Lawrence sworn 21 March 2026 and its annexures;

(4)    the affidavit of Wayne James Lawrence sworn 31 March 2026 and its annexures; and

(5)    the affidavit of Wayne James Lawrence sworn 8 April 2026 and its annexures.

10    The applicants object to significant portions of the respondent’s affidavits and note that the affidavit sworn on 8 April 2026 was never served (the applicants state that they obtained a copy through the Court’s online portal on 10 April 2026). The applicants also object to the respondent raising grounds which fall beyond the scope of the notice of opposition. The applicants’ objections, where pertinent, are addressed below.

Interlocutory application

11    On 26 March 2026, the applicants filed an interlocutory application seeking, inter alia, orders pursuant to s 50(1)(a) of the Bankruptcy Act for the appointment of a trustee to take control of the respondent’s property, pending determination of the petition. An affidavit of Karen McLean sworn on 26 March 2026, with exhibit KMC-2, was filed in support of the application. The respondent also filed his affidavit of 31 March 2026 in the context of that application, and seeks to rely on it (and other material filed in relation to the interlocutory application) for the purposes of the present application.

12    The applicants also sought urgent ex parte relief by way of preservation orders, and an order that the respondent provide an affidavit setting out his assets and liabilities. This aspect of the application was heard by the Duty Judge (Kennett J) on the date of filing, who made extant orders including that the respondent be restrained, without prior approval of the Court, from paying, lending or depositing money greater than a cumulative amount of $20,000, or from transferring or delivering any property with a value of more than $10,000 to a person or company, including encumbering or further encumbering any property. The respondent was ordered to pay the applicants’ costs of, and associated with, the hearing of the interlocutory application on 26 March 2026.

13    A consent to act as trustee signed by David Henry Sampson and Fleur Evans and dated 23 March 2026 was filed concurrently with the interlocutory application.

14    The balance of the prayers for relief (7 to 12) in the interlocutory application was ultimately adjourned for hearing before me on 14 April 2026. The applicants submitted that the interlocutory order made by Kennett J should continue pending the resolution of the petition, but otherwise did not press the remaining prayers for relief (the applicants accepted that if the petition were to be dismissed, the balance of orders sought under s 50 of the Bankruptcy Act for the appointment of trustees to take control of the respondent’s property, would fall away).

15    For the reasons that follow, it is not necessary to consider the remaining prayers for relief in the interlocutory application. Their utility is subsumed by the orders that I will make in finding that the conditions for a sequestration order have been met, and that none of the grounds of opposition have any merit.

Factual background

16    A comprehensive account of the extensive background to this matter appears in the judgment of Raper J in Sammut v Lawrence [2025] FCA 1040. Only those facts which are presently relevant are reprised below.

17    The parties have been involved in litigation since 2017: Sammut v Lawrence at [1], [78]. The petitioning creditors claim in respect of a debt arising from costs orders made against the respondent in FCFCOA proceeding SYG 346 of 2021.

18    On 11 October 2024, a certificate of taxation was issued by a Registrar of the FCFCOA which certified the total amount of costs owing under that certificate as $122,814.20. On 14 October 2024, a sealed copy was issued, which had the force and effect of an order of the Court: r 40.32(2) of the Federal Court Rules 2011 (Cth).

19    On 21 October 2024, the Official Receiver issued the fifth bankruptcy notice in the amount of $123,022.58, which was founded on the certificate of taxation. Service of the notice was effected on 22 October 2024 by courier to the respondent’s address: see reg 102(1)(a), (c) of the Bankruptcy Regulations 2021 (Cth).

20    Service (on 22 October 2024) was acknowledged by the respondent by way of email on 29 October 2024. Under the bankruptcy notice, the respondent was required to settle the debt owed to the applicants within 21 days after service (i.e., by 12 November 2024).

21    On 8 November 2024, the respondent lodged two applications: (1) an application to the Federal Court seeking to set aside the fifth bankruptcy notice on the basis that it was an abuse of process (which basis did not automatically extend the time for compliance: cf. Bankruptcy Act s 41(7)); and (2) an application to the FCFCOA seeking review of the Registrar’s decision to issue the certificate of taxation.

22    As no order was made extending the time for compliance with the fifth bankruptcy notice, the respondent committed an act of bankruptcy under s 40(1)(g) of the Bankruptcy Act on 12 November 2024 through his failure to comply with the notice. The applicants presented the petition on 9 May 2025, in reliance on that act of bankruptcy.

23    On 30 May 2025, the applicants filed an undertaking not to progress the petition while the respondent’s application to set aside the fifth bankruptcy notice was pending in Federal Court proceeding NSD 1251 of 2024 before Raper J.

24    On 1 August 2025, Judge McCabe made an order in the FCFCOA dismissing the respondent’s application for review of the Registrar’s decision to issue the certificate of taxation.

25    On 29 August 2025, Raper J dismissed the respondent’s application to set aside the fifth bankruptcy notice (one of two bankruptcy notices the subject of the respondent’s application), and made orders pursuant to s 37AO(2) of the Federal Court of Australia Act 1976 (Cth) (FCA Act) that the respondent be prohibited from instituting or continuing with any proceedings in this Court without leave: Sammut v Lawrence. The respondent seeks leave to appeal from that decision pursuant to s 37AR(2) of the FCA Act, which application is addressed in Lawrence, in the matter of Lawrence [2026] FCA 1507 (leave judgment).

26    On 3 October 2025, notwithstanding that service of the petition had not yet been effected, the respondent filed a notice of appearance and two (different) notices stating grounds of opposition.

27    On 7 October 2025, the petition and affidavits in support were served on the respondent by email.

28    On 23 March 2026, the respondent filed an affidavit that deposed to matters relating to his financial position. The affidavit did not refer to real property owned by the respondent (Hill Top property), nor the associated mortgage executed in the previous month.

29    As noted above, on 26 March 2026, the applicants filed an urgent interlocutory application which was heard ex parte by the Duty Judge, and interim preservation orders were made.

30    The petition and interlocutory application were heard consecutively on 14 April 2026. Following the hearing, I ordered that the time for the expiration of the creditor’s petition be extended to 14 October 2026, pursuant to s 52(5) of the Bankruptcy Act.

Legislative framework

31    Section 43 of the Bankruptcy Act empowers the Court to make a sequestration order where certain conditions are met. That section provides:

43 Jurisdiction to make sequestration orders

(1)     Subject to this Act, where:

(a)     a debtor has committed an act of bankruptcy; and

(b)     at the time when the act of bankruptcy was committed, the debtor:

(i)     was personally present or ordinarily resident in Australia;

(ii)     had a dwelling‑house or place of business in Australia;

(iii)     was carrying on business in Australia, either personally or by means of an agent or manager; or

(iv)     was a member of a firm or partnership carrying on business in Australia by means of a partner or partners or of an agent or manager;

the Court may, on a petition presented by a creditor, make a sequestration order against the estate of the debtor.

(2)     Upon the making of a sequestration order against the estate of a debtor, the debtor becomes a bankrupt, and continues to be a bankrupt until:

(a)     he or she is discharged by force of subsection 149(1); or

(b)     his or her bankruptcy is annulled by force of subsection 74(1) or 153A(1) or under section 153B.

32    An act of bankruptcy is defined in s 40 of the Bankruptcy Act, which relevantly 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 or, by leave of the Court, elsewhere, 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

(ii)     where the notice was served elsewhere—within the time specified by the order giving leave to effect the service;

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;

…

33    The conditions for bringing a creditor’s petition are set out in s 44(1) of the Bankruptcy Act, which provides:

44 Conditions on which creditor may petition

(1)     A creditor’s petition shall not be presented against a debtor unless:

(a)     there is owing by the debtor to the petitioning creditor a debt that amounts to the statutory minimum or 2 or more debts that amount in the aggregate to the statutory minimum, or, where 2 or more creditors join in the petition, there is owing by the debtor to the several petitioning creditors debts that amount in the aggregate to the statutory minimum;

(b)     that debt, or each of those debts, as the case may be:

(i)     is a liquidated sum due at law or in equity or partly at law and partly in equity; and

(ii)     is payable either immediately or at a certain future time; and

(c)     the act of bankruptcy on which the petition is founded was committed within 6 months before the presentation of the petition.

34    Section 47 of the Bankruptcy Act sets out the formal requirements, as follows:

47 Requirements as to creditor’s petition

(1)     A creditor’s petition must be verified by an affidavit of a person who knows the relevant facts.

(1A)     If the rules of court prescribe a form for the purposes of this subsection, the petition must be in the form prescribed.

(2)     Except with the leave of the Court, a creditor’s petition shall not be withdrawn after presentation.

35    The requirements under s 47 are supplemented by the Bankruptcy Rules, particularly rr 4.02, 4.04, 4.05 and 4.06.

36    Section 51 of the Bankruptcy Act provides that, subject to s 109, the prosecution of a creditor’s petition to and including the making of a sequestration order on the petition shall be at the expense of the creditor. Section 109(1) provides that that the trustee must, before applying the proceeds of the property of the bankrupt in making any other payments, apply those proceeds in a certain order. The first priority is provided in s 109(1)(a), which includes the taxed costs of the petitioning creditor.

37    The Court’s power to make a sequestration order is conditioned upon satisfaction with the proof of certain matters in s 52(1) of the Bankruptcy Act, and qualified by its discretion to dismiss the petition under s 52(2) of the Bankruptcy Act. Section 52 relevantly provides:

52 Proceedings and order on creditor’s petition

(1)     At the hearing of a creditor’s petition, the Court shall require proof of:

(a)     the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient);

(b)     service of the petition; and

(c)     the fact that the debt or debts on which the petitioning creditor relies is or are still owing;

and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor.

…

(2)     If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor:

(a)     that he or she is able to pay his or her debts; or

(b)     that for other sufficient cause a sequestration order ought not to be made;

it may dismiss the petition.

…

Petition requirements

38    The petitioning creditors have a prima facie right to a sequestration order once proof of the matters required by s 52(1) is satisfied: Cain v Whyte (1933) 48 CLR 639 at 646, 648; Rozenbes v Kronhill (1956) 95 CLR 407 at 414 per Dixon CJ, Webb and Fullagar JJ.

39    The applicants bear the onus of prosecuting the petition. As identified by Raper J in Deputy Commissioner of Taxation, in the matter of Adgemis [2025] FCA 1218 at [11], Div 2 of Pt IV of the Bankruptcy Act, together with Pt 4 of the Bankruptcy Rules, requires proof of the following matters for a sequestration order under s 52 to be made:

(1)    the debtor has committed an act of bankruptcy within the meaning of s 40 of the Bankruptcy Act;

(2)    at the time that the act of bankruptcy was committed, the debtor had a territorial connection to Australia of the type prescribed (s 43(1)(b) of the Bankruptcy Act);

(3)    the petition has been presented within the period of six months of the commission of the act of bankruptcy (s 44(1)(c) of the Bankruptcy Act);

(4)    the creditor is owed a liquidated sum of $10,000 or more which is payable immediately or at a certain future time (s 44(1)(b) of the Bankruptcy Act);

(5)    the petition is verified by a person who knows the relevant facts relied on (s 47 of the Bankruptcy Act);

(6)    the matters stated in the petition are true (for which purpose the Court may accept the affidavit verifying the petition as sufficient pursuant to s 52(1) of the Bankruptcy Act); and

(7)    service of the petition, the fact that the debt or debts on which the petition relies are still due, and that a search has been made in respect of the debtor in the National Personal Insolvency Index (r 4.06 of the Bankruptcy Rules).

Service of the fifth bankruptcy notice and creditor’s petition

40    The respondent submits that the fifth bankruptcy notice was not personally served on him, and is therefore “invalid”. I note that this argument was not raised by the respondent in his application to set aside the fifth bankruptcy notice: see Sammut v Lawrence. However, s 52(1) of the Bankruptcy Act requires proof of the matters stated in the petition, which includes that the fifth bankruptcy notice was served on the debtor on 22 October 2024. It is therefore necessary for the applicant to demonstrate service of the fifth bankruptcy notice (s 52(1)(a)) and of the petition (s 52(1)(b)) in accordance with the relevant rules and regulations.

41    I accept that service of the fifth bankruptcy notice was effected by way of courier leaving the notice at the letter box at the gate of the respondent’s residential address on 22 October 2024, in accordance with the Bankruptcy Regulations.

42    Regulation 102 of the Bankruptcy Regulations relevantly provides:

102 Service of documents

(1)     Unless the contrary intention appears, if a document is required or permitted by the Act or this instrument to be given or sent to, or served on, a person (other than the Inspector‑General, the Official Receiver or the Official Trustee), the document may be:

(a)     sent by a courier service to the person at the address of the person last known to the person serving the document; or

…

(c)     given in a manner specified in section 28A of the Acts Interpretation Act 1901;

…

43    Section 28A of the Acts Interpretation Act 1901 (Cth) relevantly provides:

28A Service of documents

(1)     For the purposes of any Act that requires or permits a document to be served on a person, whether the expression “serve”, “give” or “send” or any other expression is used, then the document may be served:

(a)     on a natural person:

(i)     by delivering it to the person personally; or

(ii)     by leaving it at, or by sending it by pre‑paid post to, the address of the place of residence or business of the person last known to the person serving the document;

…

44    Furthermore, by an email dated 29 October 2024, the same date as delivery of the notice to the respondent’s residential address, the respondent acknowledged receipt of the bankruptcy notice.

45    The applicants submit that, in any event, non-receipt does not displace the result that delivery is deemed to have been effected at the time at which it would have taken place in the ordinary course of post, provided there is no proof to the contrary: Skalkos v T & S Recoveries Pty Ltd (2004) 141 FCR 107 at [25] per Sundberg, Finkelstein and Hely JJ; see also Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 at 96–97 per Mason, Murphy, Wilson, Deane and Dawson JJ.

46    A creditor’s petition is an originating process: CSR Ltd (t/as CSR Construction Materials) v Barillaro (2001) 184 ALR 308 at [18] per Raphael FM (approved in Skalkos at [31]). Accordingly, personal service is required under r 8.06 of the Federal Court Rules.

47    Rule 10.11 of the Federal Court Rules provides that, unless an application has been made under r 13.01, if a respondent files a notice of address for service, defence or affidavit, or appears before the Court in response to an originating application, the originating application is taken to have been served personally on the respondent on the date on which the first of those events occurred (if personal service on the respondent is not proved on an earlier date).

48    Rule 11.01(5) of the Federal Court Rules provides that, if the party is not represented by a lawyer but provides an email address, the party agrees to receive documents at the email address.

49    The respondent filed a notice of appearance and notices stating grounds of opposition to the creditor’s petition on 3 October 2025. The petition was sent by way of service to the email address provided by the respondent on these documents on 7 October 2025 (i.e., service of the petition was effected after the notice of appearance and grounds of opposition were filed).

50    The applicants submit that any one of the actions taken by the respondent (viz., filing the notice of appearance, filing the notices of opposition, and/or appearing in Court in opposition to the petition) is sufficient to waive the requirement for personal service. More precisely, the petition is taken to be served personally on the respondent on the date on which the first of those events occurred, viz., 3 October 2025, in accordance with r 10.11 of the Federal Court Rules.

Failure to comply with the bankruptcy notice

51    Rule 4.04(1) of the Bankruptcy Rules relevantly provides:

4.04 Creditor’s petition founded on failure to comply with bankruptcy notice etc.

(1)     If a creditor’s petition is founded on an act of bankruptcy specified in paragraph 40(1)(g) of the Bankruptcy Act, the petition must also be accompanied by:

(a)     an affidavit stating:

(i)     that the records of the Court and the records of the Federal Circuit Court have been searched and no application in relation to the bankruptcy notice has been made; or

(ii)     that an application was made in the Court or in the Federal Circuit Court (as the case may be) for an order setting aside the relevant bankruptcy notice and the application has been finally decided; or

(iii)     that an application was made in the Court or in the Federal Circuit Court (as the case may be) for an order extending the time for compliance with the bankruptcy notice and the application has been finally decided; and

(b)     an affidavit of service of the relevant bankruptcy notice.

…

52    In the affidavit of search filed by the applicants on 9 May 2025, the deponent confirms that the respondent had applied to set aside the fifth bankruptcy notice (see Sammut v Lawrence), which proceeding remained on foot. However, no order was made to extend the time for compliance with the notice. The applicants submit that the Bankruptcy Rules do not contemplate the circumstance that a person served with a bankruptcy notice might fail to comply with it, thereby committing an act of bankruptcy, and nevertheless move to set that notice aside. In any event, the respondent’s application to set aside the fifth bankruptcy notice was dismissed on 29 August 2025, being over nine months after the subject act of bankruptcy: Sammut v Lawrence.

53    I am satisfied that the respondent committed an act of bankruptcy on 12 November 2024, by failing to comply with the requirements of the fifth bankruptcy notice (and in the absence of a relevant counter-claim, set-off or cross demand, as examined below): Bankruptcy Act s 40(1)(g).

54    I accept that at the time the act of bankruptcy was committed, the respondent was personally present and ordinarily resident in Australia, and that he had a dwelling house or place of business in Australia. It follows that s 43(1)(a) and (b) of the Bankruptcy Act are satisfied.

55    I am also satisfied:

(1)    of the matters stated in the petition, for which purpose I accept as sufficient the affidavits verifying the petition sworn by Alice Alexandria Sammut and Paul William Ciantar on 9 May 2025: Bankruptcy Act s 52(1)(a);

(2)    that the petition was served on the respondent, as evidenced in the affidavit of service of the creditor’s petition sworn by Karen McLean on 30 March 2026: Bankruptcy Act s 52(1)(b); Bankruptcy Rules r 4.05(a);

(3)    that a search has been made in respect of the respondent in the National Personal Insolvency Index, as evidenced in the affidavit sworn by Karen McLean on 13 April 2026, one day before the hearing: Bankruptcy Rules r 4.06(3); and

(4)    that the debt on which the creditors rely is still owing, as evidenced by the affidavits of final debt sworn by Alice Alexandria Sammut on 13 April 2026 and Paul William Ciantar on 13 April 2026, one day before the hearing: Bankruptcy Act s 52(1)(c); Bankruptcy Rules r 4.06(4).

56    By reason of my findings above as to the matters proved by the applicant creditors, the Court’s discretion to make a sequestration order against the respondent’s estate under s 52(1) of the Bankruptcy Act is enlivened.

Notice of opposition

57    The respondent’s notice of opposition is supplemented by written submissions filed on 4 November 2025 and 8 April 2026.

58    The applicants submit that the respondent’s submissions expand upon the grounds in the notice of opposition, and that a debtor may be disentitled from leading evidence in such circumstances, noting the time that the petition has been on foot and the absence of any explanation for the delay in proffering new grounds: Bates v Bechara (No 2) [2021] FCCA 1809 at [60(g)] per Judge Kelly.

59    If leave is granted for the respondent to rely upon additional grounds, the applicants submit that the Court should consider the particular circumstances of the case, including whether the new grounds are bona fide and supported by cogent evidence, rather than being opaque, ambiguous or lacking in substance: see Bates v Bechara at [60(d)–(e)].

60    I find much of the respondent’s notices of opposition and written submissions to be opaque, ambiguous and lacking in substance. Further, much of the respondent’s oral submissions lacked relevance or had been traversed by Raper J in her Honour’s judgment, including those submissions as to a prior caveat (this was the subject of the judgment in Lawrence v Ciantar [2019] NSWSC 464 (at [218]–[219])) and as to a “$21,000 credit” (which was a reference to the judgment of Schmidt JA in Lawrence v Sammut (No 4) [2022] NSWSC 1033 and referable to the fourth bankruptcy notice): see Sammut v Lawrence at [44]–[45]. With that qualification, and putting aside the allegation of defective service (which I have addressed above), I find that there is, in substance, only one additional ground that the respondent seeks to advance: viz., the claim of solvency under s 52(2)(a) of the Bankruptcy Act, that the respondent sought to advance at the hearing.

61    It may be that the spectre of this ground was raised by way of the respondent’s claim (in the notice of opposition) that he has a “genuine offset and cross-claim” under a deed of loan, and is therefore able to pay the amount owed under the notice. However, the fact that proof that the debtor is able to pay his or her debts for the purposes of s 52(2)(a) is not satisfied simply by demonstrating that the debtor is able to acquit the obligation that is the subject of the bankruptcy notice (Ejueyitsi v Thomas [2026] FCAFC 123 at [61], [63], [66] per O’Sullivan, Younan and Bennett JJ), as discussed further below, demonstrates the mismatch.

62    On a generous construction of the ambiguity born of sweeping statements, it may be said that (other) “further grounds” to which the applicants refer are encompassed within the notice of opposition, and I have proceeded on that basis that they are subsumed within those grounds. That ambiguity may save the grounds for consideration, but, along with a lack of substantiation, it has not aided in their acceptance.

Consideration

Legal principles: dismissing a creditor’s petition

63    On proof of the matters in s 52(1) of the Bankruptcy Act, the Court will generally proceed to make a sequestration order unless the debtor can show that the public interest in dealing with the insolvent debtor and the rights of individual creditors are outweighed by other considerations: Totev v Sfar (2006) 230 ALR 236 at [37] per Allsop J, citing Cain v Whyte at 645–646, 648. The countervailing factors must be of “significant weight” to displace the interest of the community in avoiding insolvent trading: Klinger v Nicholl [2005] FCAFC 153 at [32] per Emmett J.

64    The Court retains a discretion to dismiss a petition if satisfied by the debtor (who bears the onus) that they are able to pay their debts (Bankruptcy Act s 52(2)(a)) or that for some “other sufficient cause” the sequestration order should not be made (Bankruptcy Act s 52(2)(b)). To be clear, there is a residual discretion as to whether a sequestration order should be made notwithstanding the requirements in s 52(2) have been satisfied: Ejueyitsi at [56]. In the present case, I am not satisfied that those requirements are met.

65    A debtor seeking to rely on solvency under s 52(2)(a) of the Bankruptcy Act must prove that they are solvent, on the balance of probabilities: Culleton v Balwyn Nominees Pty Ltd 343 ALR 632 at [44] per Allsop CJ, Dowsett and Besanko JJ; Mangano v Bullen [2025] FCAFC 42 at [29] per Cheeseman J, [152] per Shariff and Needham JJ; Bank of Queensland Limited v Pascoe [2014] FCCA 1394 at [12] per Judge Burnett. Likewise, the debtor bears the onus of proof in establishing “other sufficient cause” for the purposes of s 52(2)(b) of the Bankruptcy Act: Ling v Enrobook Pty Ltd (1997) 74 FCR 19 at 24 per Davies, Wilcox and Branson JJ.

66    Notwithstanding the permissive language of s 52(2), fundamental to the law of bankruptcy is that a sequestration order should not be made against the estate of a person who is solvent: see Culleton v Balwyn at [40]–[44] discussing Re Sarina; Ex parte Council of the Shire of Wollondilly (1980) 43 FLR 163 and Sarina v Council of the Shire of Wollondilly (1980) 48 FLR 372.

67    The test for insolvency is well-settled. The authoritative statement is that of Barwick CJ in Sandell v Porter (1966) 115 CLR 666, who stated (at 670) that the test is not limited to a debtor’s immediately available resources, but may:

… extend to moneys which he can procure by realization by sale or by mortgage or pledge of his assets within a relatively short time – relative to the nature and amount of the debts and to the circumstances, including the nature of the business, of the debtor.

68    The test for solvency is a cash flow test: Do (Trustee), in the matter of Andrew Superannuation Fund v Sijabat (2023) 295 FCR 584 at [148] per Markovic, Halley and Goodman JJ. The onus of proving the sufficiency of the debtor’s assets lies on the debtor: see, e.g., Australia & New Zealand Banking Group Ltd v Foyster [2000] FCA 400 at [17] per Hely J.

69    The question of solvency must be assessed at the date of the hearing of the creditor’s petition, although future events are not to be ignored: Leslie v Howship Holdings Pty Ltd (1997) 15 ACLC 459 at 466 per Sackville J; Ejueyitsi at [56]. The assessment usually involves looking to the reasonably immediate future: Bank of Australasia v Hall (1907) 4 CLR 1514 at 1527 per Griffith CJ; Lewis (as liquidator of Doran Constructions Pty Ltd (in liq)) v Doran (2005) 219 ALR 555 at [103] per Giles JA; Brooks v Heritage Hotel Adelaide Pty Ltd (1996) 20 ACSR 61 at 65 per Olsson J; Re Kolback Group Ltd (1991) 4 ACSR 165 at 169 per Bryson J.

70    The circumstances which may constitute “other sufficient cause” under s 52(2)(b) are extremely variable, and it is inappropriate to catalogue or circumscribe them: Clyne v Deputy Cmr of Taxation (1985) 5 FCR 1 at 5 per Fisher, Morling and Wilcox JJ; Cain v Whyte at 645. Given the residual discretion that resides in the Court, a debtor who is able to bring himself or herself within the ambit of s 52(2)(b) is not automatically entitled to have a sequestration order dismissed: Endresz v Australian Securities and Investments Commission (No 2) (2015) 228 FCR 334 at [37] per Edmonds, Gordon and Beach JJ, citing Russell v Polites Investments Pty Ltd [2012] FCA 11 at [24] per Flick J.

71    A cross-claim may be a “sufficient cause” for a Court to decline to make a sequestration order under s 52(2)(b) of the Bankruptcy Act. The relevant principles are summarised by Sundberg J in St George Bank Ltd v Helfenbaum [1999] FCA 1337 at [13]:

The existence of a cross-claim may be a “sufficient cause” within s 52(2)(b) for declining to make a sequestration order: Ling v Enrobook Pty Ltd (1997) 74 FCR 19 at 25. It is for the debtor to establish the existence of “sufficient cause”: Cain v Whyte (1933) 48 CLR 639 at 645-646; Ling at 24. He must establish that he has a real claim against the creditor that is likely to succeed. If the Court is satisfied that there is such a claim, and that its quantum is likely to equal or exceed the creditor’s claim, it will not make a sequestration order. If the claim is likely to be less than the creditor’s claim, the Court will require the debtor, if he is to avoid a sequestration order, to pay the difference between the judgment debt and the amount he is likely to recover on his claim. See Re Player (1962) 19 ABC 277 at 282; Re Schmidt; Ex parte Anglewood Pty Ltd (1968) 13 FLR 111 at 115-116; Ling at 25-26; Commonwealth Bank v McDonald [1999] FCA 984. A debtor does not establish a real claim that is likely to succeed merely by producing a statement of claim in an action against the creditor: Re Rivett; Ex parte Edward Fay Ltd (1932) 5 ABC 182; Player at 282, or by pointing to the existence of current litigation against the creditor: cf Re Douglas Griggs Engineering Ltd [1963] 1 Ch 19 at 23. While the Court does not try the cross-claim in advance, the debtor must adduce sufficient evidence to show that it is a real claim which is likely to succeed: cf Vogwell v Vogwell (1939) 11 ABC 83 at 88; Player at 282.

(Emphasis added)

72    When the creditor’s petition is based upon a judgment debt, the existence of a pending appeal against that judgment may be a ground for adjourning the petition provided that the appeal is based on genuine grounds: Ahern v Deputy Commissioner of Taxation (1987) 76 ALR 137 at 148. The focus is on a “real claim” which has sufficient prospect to warrant the debtor being granted an opportunity to have it litigated: Rigg v Baker (2006) 155 FCR 531 at [66] per French J. Barring such a claim, there is no support in the authorities for the proposition that it is in the public interest to allow insolvent debtors to prosecute litigation: Ling v Enrobook at 26.

73    In the present case, the respondent seeks leave to appeal from the decision of Raper J in Sammut v Lawrence to dismiss the respondent’s application to set aside the fifth bankruptcy notice, which leave application was heard immediately before the hearing of the creditor’s petition. This is not the same thing as an appeal against the judgment giving rise to the debt. Putting aside the necessity of obtaining leave, here, the respondent seeks to attack the notice (claiming the debt) after he has failed to comply with it. As indicated above, the applicants contend that “other sufficient cause” in s 52(2)(b) of the Bankruptcy Act does not contemplate an application to set aside a bankruptcy notice in circumstances where the applicant has been served with the notice and failed to comply with it, thereby committing an act of bankruptcy. I agree, and add that the circumstances include those where the respondent did not appeal the judgment giving rise to the debt, but rather sought a review of the registrar’s decision to issue the certificate of taxation, which did not succeed, and further an application to set aside the bankruptcy notice, which did not succeed. The application for leave to appeal that decision should not be used to circumvent the requirements of the Bankruptcy Act.

74    In any event, for the reasons outlined in the leave judgment, the respondent’s application to set aside the fifth bankruptcy notice is not a “real claim” against the creditor that is likely to succeed.

Additional ground: solvency (s 52(2)(a))

75    The respondent submits that he is solvent and able to satisfy the petition debt. He relies on two affidavits in support of this claim, sworn on 21 March 2026 (filed 23 March 2026) and 31 March 2026 (filed on the same day). The latter affidavit was filed in the interlocutory application, pursuant to orders made by the Duty Judge on 26 March 2026.

76    The respondent deposes to a list of assets, which comprise (excluding his claims of entitlement under the deed of loan):

(1)    money held in various bank accounts, amounting to roughly $295,000;

(2)    the Hill Top property, which the respondent owns and estimates to be valued at $5.4m;

(3)    two motor vehicles, with a combined value of roughly $35,000–$40,000;

(4)    a loan secured by a registered mortgage of $500,000, under which the respondent receives payments of $4,100 per month; and

(5)    two unencumbered car parking lots (strata lots), with an approximate combined value of $300,000;

77    The respondent indicates that he has a further $193,000 available to him through his son, David Wayne Lawrence. In an affidavit sworn on 21 March 2026 and annexed to the respondent’s affidavit of 31 March 2026, the respondent’s son confirms that he holds $193,743.19 of his own money in a personal bank account, which he will make available to his father upon request for the purpose of satisfying any amount determined by the Court. This evidence, which is also referred to in the respondent’s affidavit, was objected to by the applicants on the basis that it constituted hearsay. The objection has merit. Whether as a matter of admissibility or weight, the evidence cannot be tested, and as such is of little, if any, utility in demonstrating that the respondent is solvent for the purposes of s 52(2)(a) of the Bankruptcy Act.

78    Similarly, the respondent does not provide any evidence in support of his valuation claims in relation to either the Hill Top property or the motor vehicles.

79    The respondent lists his liabilities as follows:

(1)    approximately $65,000 in credit card debt; and

(2)    A debt of $100,000 owed under a mortgage facility over the Hill Top property with a maximum drawn down capacity of up to $1,000,000.

80    The respondent does not list any outstanding costs orders or judgment debts as liabilities in his affidavit, nor does he provide any evidence of his outgoings and living expenses.

81    The respondent states that the “additional amounts” in the applicants’ account of the respondent’s liabilities (being, presumably, the list of costs orders against the respondent in the affidavit of Karen McLean dated 26 March 2026 filed in support of the interlocutory application) “include matters subject to taxation, review or further process” such that they “are not final or presently ascertainable liabilities” and “do not give rise to any presently payable debt”. This is challenged by the applicants. Even so, these liabilities cannot be discounted in the assessment of solvency (see above at paragraph [69]).

82    In his affidavit sworn on 21 March 2026, the respondent claims to hold the amount owed under the fifth bankruptcy notice in a personal ANZ bank account. The respondent states that he deposited the money into that account following the issue of the certificate of taxation on 11 October 2024. Throughout this proceeding, the respondent has repeatedly offered to pay this money “into Court” (though never directly to the applicants). The respondent states that, rather than accepting this “offer”, the applicants instead “required payment of additional amounts including other costs, interest and amounts not forming part of the petition debt”.

83    The respondent details amounts paid to the applicants in previous years in satisfaction of four separate bankruptcy notices, as “[e]vidence of prior payments”. He explains that on each occasion, he set aside the amount owed in one of his personal bank accounts “for the purpose of ensuring that the amounts claimed could be paid within the time required under the relevant bankruptcy notice” which he paid “following final determination” of those amounts. The apparent relevance of the respondent’s account is to show that he has, over the years, established a practice of assigning money that he owes under a bankruptcy notice to a personal bank account, before satisfying the subject debt at a later date.

84    At the hearing, the respondent sought an order that he pay the amount owed under the petition, submitting that “if I pay the amount of the petition today, that finishes it”. The applicants submitted that they would not consent to such an order being made, as the evidence suggests the respondent is insolvent.

85    In relation to the respondent’s proposal to put the money owed under the bankruptcy notice into the Court, the applicants submit that the problem is twofold: first, the bankruptcy notice requires that the money be tendered unequivocally to the creditor; and second, if there are reasonable grounds to think that the respondent is insolvent, then a tender can be rejected even if paid directly to the creditor. Once an act of bankruptcy is committed, there is no obligation on the part of the creditor to accept the tender of payment of the debt the subject of the bankruptcy notice: Allison v Murphy [2021] FCAFC 232 at [46]; McIntosh v Shashoua (1931) 46 CLR 494 at 505 per Gavan Duffy CJ and Dixon J, 508 per Starke J; Taylor v Deputy Commissioner of Taxation (Cth) (1999) 42 ATR 220 at [39] per Cooper, Tamberlin and Kiefel JJ; and Psevdos v Commonwealth Bank of Australia (No 2) [2017] FCA 19 at [70] per Charlesworth J.

86    The respondent was cross-examined on the basis that he did not consider judgments for costs to be “final” debts. The respondent accepted that costs judgments have been made against him in separate proceedings, and that they have not been paid. The respondent accepted that he has not put forward any evidence disputing the amount of costs estimated to be owed in the proceeding before Raper J, because “I’m still seeking leave to appeal… There’s no need for me [to pay those costs] at the moment”.

87    The respondent was pressed as to his knowledge of the operation of costs certificates, and in particular, the certificate of taxation on which the fifth bankruptcy notice rests. When asked whether the respondent was aware that the certificate carried interest from the date of registration, he replied: “No, usually it doesn’t. Because you pay the debt. So in other words you get a bankruptcy notice. You pay the debt. I mean, that you pay it when a certain time. Or you appeal it. Or do whatever you’ve got to do”. When asked whether the respondent understood that the debt does not arise because a bankruptcy notice is issued, and that it is a debt from the day the Court issues the certificate of judgment, the respondent responded that he did not “understand the way you’re putting it to me”.

88    If this evidence is proffered as an explanation of why certain debts have not been paid, then alone it may be consistent with solvency (in that the failure to pay debts was a choice born of a misunderstanding as to the operation of costs certificates). More importantly, it explains why certain debts have not been accounted for by the respondent, and that the respondent has underestimated his liabilities.

89    The applicants submit that the money offered by the respondent to discharge the debt is not only insufficient, it is beside the point. The question is whether the respondent is solvent. In that regard, the applicants submit that the respondent has not tendered any direct evidence of the quantum or sources of his income, and that in the absence of that evidence, it is open to the Court to infer that it would not assist him: Sagacious Legal Pty Ltd v Wesfarmers General Insurance Ltd [2011] FCAFC 53 at [78], citing Jones v Dunkel (1959) 101 CLR 298. I draw that inference.

90    The applicants submit that the available evidence shows the respondent is a retired builder who receives monthly payments of $4,100 on a mortgage debt; and, in cross-examination, that he has deductions sufficient to offset that amount such that the respondent pays no tax. There is no evidence as to how quickly the respondent might realise his non-monetary assets.

91    Under cross-examination, the respondent did not dispute that evidence of land title searches show that the respondent is not the registered proprietor of the strata lots, and that both are encumbered. On the basis of the evidence of money held in various bank accounts, the applicants calculate that, as at 27 March 2026, the respondent has $287,004.54 in his bank accounts.

92    Furthermore, the applicants’ account of the respondent’s liabilities includes the following additional items:

(1)    a debt of $122,814.20, the subject of the certificate of taxation and owed under the fifth bankruptcy notice, plus interest (pursuant to r 40.32(3) of the Federal Court Rules) of $18,435.33 at the date of hearing, being $141,249.53 in total;

(2)    an order for costs made by a Registrar of the Federal Court on 29 August 2025 for $58,200, which together with interest amounts to $61,676.69;

(3)    a District Court judgment made 8 April 2026 for $159,598.13 (comprising three costs orders);

(4)    estimated monthly expenses of $10,876.12; and

(5)    unknown outgoings not provided by the respondent (e.g., vehicle registration, insurance and maintenance; expenses in relation to the 145-acre Hill Top property).

93    The applicants submit that the total current amount due and payable under orders of the Court comprises $362,524.35, which sum does not include those orders yet to be quantified. In this regard, the applicants provide affidavit evidence estimating those costs to be in the order of $400,000 in relation to the proceeding before Raper J (Sammut v Lawrence) and $45,000 in relation to the applications to set aside the fourth and fifth bankruptcy notices.

94    The applicants’ calculations show that the respondent’s cash flow is negative, and that at the very least, the respondent would need to borrow $75,519.81 simply to discharge the liabilities currently due. On that basis, the respondent is unable to pay his debts as and when they fall due.

95    The applicants submit that, where a person is under an undisputed obligation to pay a specific sum and has failed to do so, it can be inferred that he is unable to do so. As will be seen below, such an obligation is disputed. Furthermore, such an inference may compete with the evidence elicited from the respondent as to when, in his opinion, certain judgment debts fall due. A reason for non-payment has to be substantial. It is not enough if a thoroughly bad reason is put forward honestly: see, e.g., Just Juice Corporation Pty Ltd v Murrayland Fruit Juice Pty Ltd (1990) 2 ACSR 541 at 545 per Young J (noting the corporate context). If the respondent’s understanding of the operation of costs certificates is proffered as a reason for non-payment, it appears to fall within that category.

96    Other than the two original proceedings, one in the Supreme Court of New South Wales and another on appeal, the entire history of litigation between the parties relates to the enforcement of costs. The applicants submit that a person cannot claim to be solvent if their way of avoiding the payment of debts is by commencing or maintaining vexatious litigation, and that the Court must consider the respondent’s conduct in pursuing proceedings to avoid paying orders for costs made against him.

97    The applicants submit that the public interest would not be served by a private or public arrangement between the respondent and a single creditor, as is urged by the respondent. To do so would subvert the preferential payments system and would lead to insolvent trading, which is the ill that the scheme was designed to prevent.

98    These submissions have force and are relevant to the exercise of the Court’s discretion under s 52(2) of the Bankruptcy Act. However, I do not have cause to exercise that discretion, as the respondent has not satisfied me that he is able to pay his debts (as and when they fall due) for the purposes of s 52(2)(a) of the Bankruptcy Act. I consider that the respondent both overstates his assets and underestimates his liabilities. His professed ability to meet the judgment debt the subject of the bankruptcy notice, even if demonstrated, does not answer the question posed by s 52(2)(a) of the Bankruptcy Act.

The “disputed” debt and set-off claim (s 52(2)(b))

99    The respondent disputes the amount claimed under the fifth bankruptcy notice and contends that it is subject to a valid set-off under a deed of loan between the parties dated 26 March 2015. The respondent also states that he “will pay the full amount of $123,022.58 into the Federal Court of Australia” to be held until this proceeding is determined, “as satisfaction of the debt” and “to prevent any further bankruptcy notices or proceedings being issued by Ms Karen McLean or her clients in respect of the same or related debt once payment is made”.

100    The respondent takes issue with the difference between the amount claimed under the certificate of taxation ($122,814.20) and that stated in the bankruptcy notice ($123,022.58). The respondent submits that the difference reflects the inclusion of interest, which the respondent says is a “unilateral calculation” by the applicants, and an overstatement that renders the bankruptcy notice invalid. The respondent also contends that the debt claimed has changed over time and as such is not “fixed, stable or final” (including in relation to the fourth bankruptcy notice, which is not the subject of this proceeding), and that the certificate of taxation comprises multiple costs orders “aggregated into a composite figure”, rather than a single judgment debt.

101    The applicants submit that the certificate of taxation upon which the notice relies was the subject of an application for review filed by the respondent on 8 November 2024, which was dismissed with costs on 1 August 2025, and that there is otherwise no evidence of dispute in relation to that debt. The applicants assert that the entitlement to interest arises under r 40.32(3) of the Rules, and that even if multiple debts were claimed (which they are not here, as the certificate of taxation certifies a single debt), this is authorised under s 41(1)(b) of the Bankruptcy Act.

102    Accordingly, the respondent does not establish that his complaints render the bankruptcy notice “invalid”, or that they warrant dismissing the petition. The fact of multiple bankruptcy notices is not an indictment on the petitioning creditors. It is, as the applicants submit, indicative of the failure by the respondent to pay the debt unless a bankruptcy notice is issued, which in turn reflects the respondent’s failure to accept that this approach has led to further liabilities to pay the costs associated with his many unsuccessful applications.

103    Further, the respondent claims that he “maintains a genuine offset and cross-claim of $207,146.33 plus interest” under the deed of loan, for money which he says was advanced as a loan comprising “cash, equipment and site works” (rather than a lump sum payment) toward the subdivision of a property owned by the applicants. The respondent claims that this was recognised in other proceedings, and relies particularly on the judgment of Manousaridis J in Lawrence v Sammut [2021] FCCA 1929 at [73]. The respondent submits that his “established” contribution is inconsistent with the existence of a debt “suitable for enforcement by bankruptcy”, and that the reason he has been unable to prove that he advanced money to the applicants is because the applicants have never filed tax returns in relation to the property development.

104    The respondent submits that the deed of loan is legally enforceable, and that he is “willing for the amount of $123,022.58 to be extinguished from that offset, and for the balance to be applied toward final settlement of all liabilities in these proceedings”. The respondent asks the Court dismiss or stay the petition as the deed shows the respondent has a genuine offset under s 40(1)(g) of the Bankruptcy Act that is equal to or exceeds the “petition debt”.

105    The applicants submit that the respondent’s claim for a set-off cannot succeed for a number of reasons.

106    First, any claim in contract, tort or quantum meruit would be defeated by s 14 of the Limitation Act 1969 (NSW), given that the most recent of the amounts claimed appears to date from 22 June 2017.

107    Second, the respondent would be prevented from raising any such claim by reason of Anshun estoppel: see Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; Lawrence v Sammut [2021] at [77]. The deed of loan to which the respondent refers relates to a dispute over property owned by the applicants and was the subject of a Supreme Court proceeding: Lawrence v Ciantar [2019]. There, the respondent sought to raise (but did not press) a claim for a constructive trust over the applicant’s property to the extent of his contribution to its development: at [65], [215]. The respondent also accepted that he had not advanced any money under the deed (at [218]), which finding was upheld on appeal: Lawrence v Ciantar [2020] NSWCA 89 at [112].

108    Third, the materials provided by the respondent are insufficient to establish any set-off. The respondent is not assisted by the findings to which he refers in Lawrence v Sammut [2021]. There, Manousaridis J found that “there is no material before me that is reasonably capable of sufficiently disclosing the work Mr Lawrence claims he performed, or the value of that work”, and that, in any event, “Mr Lawrence’s application would fail even if he were to claim such amounts are payable under the [deed]”, as the claim did not exceed the debt owed under the subject bankruptcy notice: Lawrence v Sammut [2021] at [73]–[74].

109    Furthermore, in Sammut v Lawrence, Raper J addressed essentially the same claim for a set-off on the basis of the deed of loan (albeit in relation to the fourth bankruptcy notice), and found there to be no basis upon which the respondent “can litigate a claim under the deed of loan, because there are findings that prevent him from doing so, and it would be an abuse for him to do it”: at [45].

110    While the applicants do not propose that a decision made on an application to set aside a bankruptcy notice (as in Lawrence v Sammut [2021] and Sammut v Lawrence) gives rise to Anshun estoppel on the hearing of a petition, they submit that the respondent cannot rely on those decisions to establish a set off or cross-claim by virtue of the operation of s 91 of the Evidence Act 1995 (Cth). Accordingly, the material relied upon by the respondent is incapable of establishing any such claim.

111    The respondent has not satisfied me of the existence of a set-off or cross-claim, let alone that such warrants sufficient cause not to make a sequestration order and dismiss the petition.

Pattern of “solicitor-driven proceedings” and abuse of process (s 52(2)(b))

112    The respondent alleges that the conduct of the applicants’ solicitor in the proceeding lacks “proper client instructions” and constitutes an abuse of process. The respondent asks that the Court refer the conduct of the applicants’ solicitor to the Legal Services Commissioner (NSW).

113    The respondent’s submissions in this regard do not rise about mere assertion. They are difficult to understand and their relevance to the creditor’s petition is elusive.

114    The respondent relies on the fact that the applicants’ case is advanced largely through affidavit material sworn by the applicants’ solicitor, and submits that the applicants’ solicitor has “repeatedly initiated bankruptcy notices and cost[s] proceedings” in relation to the same underlying dispute. The respondent argues that the “repeated filings… constitute a cycle of costs-on-costs” contrary to the overarching purpose in s 37M of the FCA Act, and notwithstanding that every prior notice was met or resolved. The respondent does not make good that proposition.

115    The respondent submits that the applicants’ solicitor has “denied” the existence of the deed of loan, “re-labelling” the loan as a “building-contract deposit” and “relying on that mischaracterisation to pursue bankruptcy proceedings”. Accordingly, the respondent submits that the petition “rests on a false premise and represents a misuse of the bankruptcy jurisdiction”. The respondent’s claims against the applicants’ solicitor is without substantiation.

116    Accordingly, as the applicants submit, the respondent fails to meet the “heavy onus” upon him in establishing an abuse of process or a collateral purpose, which is a serious claim requiring a sufficient factual foundation: Nobarani v Mariconte [2021] FCAFC 96 at [32] per Allsop CJ, Farrell and Derrington JJ citing Williams v Spautz (1992) 174 CLR 509 at 529 per Mason CJ, Dawson, Toohey and McHugh JJ; Prentice v Fewin Pty Ltd, in the matter of Prentice [2017] FCA 490 at [48]–[49] per Bromwich J; Royal v Nazloomian [2019] FCA 555 at [31], [37] per Stewart J; Cavoli v Etl [2007] FCA 1191 at [17] per Heerey J.

117    The applicants submit that it is not a precondition to the issue of a bankruptcy notice that other means of satisfying the debt have been exhausted: Nobarani at [43]. Furthermore, the respondent does not contend that he has made any serious attempt to pay the costs under the certificate of taxation, nor that he is willing to do so absent further determination. Rather than establishing a collateral purpose, the evidence suggests the respondent is unable to pay the debts he currently owes and will owe in the future.

118    I observe that the respondent seeks to re-agitate arguments rejected by Raper J in Sammut v Lawrence at [56], [58], [61]–[67]. The applicants did not object to this on the basis of Anshun estoppel (although it would have been open to them to make that objection, in circumstances where debtor sought to raise new challenges to validity of a bankruptcy after an application to set aside the bankruptcy notice had failed: see Ashdown v Kirk [1999] FCA 1263). I note that the respondent seeks leave to appeal from that decision. For the purposes of hearing the creditor’s petition, it is not necessary to resolve those claims. The respondent has failed to establish their relevance to the creditor’s petition. As the applicants argue, even assuming that the conduct of the applicants’ solicitor warranted referral, which is not established, the respondent has not demonstrated that the clients of that practitioner should be denied the relief they seek in accordance with statutory criteria, and in the exercise of the Court’s residual discretion.

119    Accordingly, the respondent has not satisfied me that there is sufficient cause not to make a sequestration order, and dismiss the petition, under s 52(2)(b) of the Bankruptcy Act.

Conclusion

120    The applicants have satisfied me with proof of the matters stated in s 52(1) of the Bankruptcy Act. The respondent has not satisfied me of the matters in s 52(2) of the Bankruptcy Act. Accordingly, the creditor’s petition will be granted, with costs, and a sequestration order made against the estate of the respondent.

121    As mentioned above, it is therefore not necessary to address the balance of the interlocutory application (i.e., prayers 7 to 12), which is dismissed on that basis.

Associate:

Dated:    13 October 2026