Kim v Goo - [2022] FedCFamC2G 602

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Kim v Goo [2022] FedCFamC2G 602

File number(s): SYG 1960 of 2021

Judgment of: JUDGE STREET

Date of judgment: 12 August 2022

Catchwords: BANKRUPTCY – creditor’s petition – whether act of bankruptcy – whether order a final judgment – whether proof of the matters required under s52 – whether debtor is able to pay his debts – whether other sufficient cause – whether proceedings should be adjourned – sequestration order made

Legislation: Bankruptcy Act 1966 (Cth) ss 27, 33, 40, 41, 43, 44, 47, 52

Cases cited: Commonwealth Bank v Horvath (1999) FCA 143

Division: Division 2 General Federal Law

Number of paragraphs: 86

Date of last submission/s: 10 August 2022

Date of hearing: 22 July 2022

Place: Sydney

Counsel for the Applicant: Mr D Eardley

Solicitor for the Applicant: Praxis Lawyers

Counsel for the Respondent: Mr G McDonald

Solicitor for the Respondent: Rays Lawyer
ORDERS

SYG 1960 of 2021

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

BETWEEN:
JAY KOO KIM

Applicant

AND:
SEOUNG JIN GOO

Respondent

ORDER MADE BY:

JUDGE STREET

DATE OF ORDER:

12 AUGUST 2022

THE COURT ORDERS THAT:
1.A sequestration order is made against the estate of Seoung Jin Goo.
2.The costs of the petitioning creditor be paid out of the bankrupt estate with the priority to which they are entitled in the amount agreed or assessed.

THE COURT NOTES:
3.That a consent to act as trustee was filed on 4 November 2021 by Stewart Free.
4.The act of bankruptcy occurred on 8 October 2021.

Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE STREET:
INTRODUCTION

These are proceedings within the Court’s jurisdiction under s 27 of the Bankruptcy Act 1966 (Cth) (“the Act”) in which the applicant petition creditor is seeking a sequestration order against the respondent. The bankruptcy notice, dated 20 May 2021, was issued on the basis of a judgment or order in the sum of $300,000.00 made in the Supreme Court of New South Wales, in the Equity Division, on 21 April 2021 together with an order for interest thereon. The form of the order attached to the bankruptcy notice was in the usual judgment/order form identifying the Court details and the title of the proceedings, the date of the judgment/order, and the terms of the judgment/order relevantly were as follows:
(1)Order that the contract between the plaintiff [Mr Kim] and the third defendant referred to in [80] [Mr Goo] of the judgment of the Court in Re Hoju Jobs Pty [2021] NSWSC 302 be specifically performed in the following manner:
a.Within 14 days from the date of these orders, the third defendant is to provide all instruments it reasonably requires the plaintiff to execute to give effect to the transfer of the plaintiff’s G class shares in the first defendant [Hoju Australia] to the third defendant [Mr Goo] or any nominee of the third defendant [Mr Goo] notified to the plaintiff [Mr Kim] in writing.
b.If the third defendant [Mr Goo] does not comply with order 1(a), the plaintiff [Mr Kim] may execute the instruments annexed and marked “A” to these short minutes.
c.
The third defendant [Mr Goo] is to pay the plaintiff [Mr Kim] the sum of $300,000 within 28 days from the date of this order.

(d) The plaintiff [Mr Kim] is to deliver to the third defendant [Mr Goo] documents executed in accordance with order 1(a), or 1(b), within 28 days from the date of this order.
(2)The proceedings against the First and Third Defendants [Hoju Australia and Mr Goo] are otherwise dismissed.
(3)Subject to order (4) below, order that each of the plaintiff [Mr Kim], the first defendant [Hoju Australia] and third defendant [Mr Goo] pay their own costs of these proceedings.
(4)Order (3) above does not affect the costs orders made in these proceedings on 4 June 2018 and 9 December 2020.
(5)The Third Defendant [Mr Goo] is to pay interest to the Plaintiff [Mr Kim] on the sum in order 1(c) above from the 9th June 2017 to 26 March 2021 in accordance with s 100 of the Civil Procedure Act 2005 and Practice Note SC 16 – Supreme Court – pre-judgment interest rates, in the amount of $58,294.53.
(6)Liberty to apply to the parties on 5 days’ notice to address any issues of non-compliance with order 1.
The petitioning creditor tendered a court book, the electronic copy of which was marked exhibit A, and the read affidavits in respect of the verification of the creditors petition, service of the creditors petition, the service of the bankruptcy notice, as well as affidavit evidence in respect of the steps required under s 52(1) of the Act. There was also read the other affidavits identified in the court book, which included affidavits relied upon by the respondent and that evidence is relevantly summarised below. The respondent also tendered a supplementary Court book, the electronic copy of which was marked exhibit B this evidence is also relevantly summarised below.
The Court heard cross-examination of the applicant, as well as cross-examination of the respondent and cross-examination of a friend of the respondent, being the sole director of a company purportedly willing to provide a loan facility in the amount of $450,000.00 to the respondent. The Court provided an opportunity after the hearing for further submissions. On 5 August 2022, the Court also made an order giving the parties an opportunity to request a further oral hearing and no such request was made. There were both oral and written submissions for both parties which are relevantly identified below, without all annotations. An issue as to a Harman undertaking was not pursued no doubt because the relevant document was submitted into evidence before this Court and was not the subject to any confidentiality order. There was filed on 30 November 2021 a notice of objection raising 4 grounds however counsel for the respondent confirmed that ground 4 was no longer pressed. Ground 1 alleges the respondent is solvent. Ground 2 alleges the respondent has a real cross claim that has a reasonable prospect of success such that the petition should be dismissed. Ground 3 seeks alternatively that the respondent has a real cross claim that warrants an adjournment of the petition until such claim is determined.
ISSUES
The issues raised by the respondent in relation to the proceedings are:
(a)whether there was an act of bankruptcy because of the nature and form of the above specific performance order which, it was alleged, did not meet the requirements of s 40 (1) (g), 40(3)(b) or (d), s41 or s43;
(b)whether because of the nature of the order being a specific performance order, it was not enforceable in the same manner as a final judgment obtained in an action and/or the form of the order did not meet the requirements of being one which has not been stayed because of the form of the order and the capacity of the Court to revisit a specific performance of order.
(c)whether the petitioning creditor has provided proof of the matters identified in section 52(1)(a) as required by s52 (S) (2).
(d)whether the Court was satisfied by the respondent that the respondent that the debtor is able to pay his debts.
(e)whether there was other sufficient cause so that the sequestration order ought not to be made because of the defamation proceedings commenced on 19 July 2021 brought by the respondent against parties that include the applicant and/or because of proceedings in the Supreme Court commercial list that were commenced on 20 July 2022, brought by the respondent and a corporate entity against the applicant and a corporate entity incorporated in South Korea.
(f)whether because of the proceedings on foot, be it the defamation proceedings, the commercial list Supreme Court proceedings or the contempt motion, there should be an adjournment of the creditors petition.
(g)whether there should be an adjournment of the creditors petition of a brief nature to facilitate a further opportunity to the respondent insofar as the respondent might take steps to comply with the bankruptcy notice.
THE CREDITORS PETITION
The creditors petition, filed on 21 October 2021, identified reliance upon an alleged judgment debt entered in the Supreme Court of New South Wales on 21 April 2021 in respect of which the amount owing was alleged to be $359,798.64. The bankruptcy notice identified an amount of interest on this of $1504.11 and claimed the amount owing to be $359,798.64. Order 5 of the judgment included that the defendant is to pay interest on the sum in order 1(c) above from 9 June 2017 to 26 March 2021 in accordance with section 100 of the Civil Procedure Act 2005 and practice note SC June 16 Supreme Court pre-judgment interest rates in the amount of $58,294.53.
Accordingly, it is apparent that the bankruptcy notice was one based on order 1(c) and order 5 made on 21 April 2021 and it was those two amounts that were identified in the amount specified in the creditors petition.
The petition identified a failure to comply with the bankruptcy notice on or before 8 October 2021 in circumstances where the bankruptcy notice was served on 2 June 2021. It was not in dispute that there were proceedings commenced to set aside the bankruptcy notice on 22 June 2021 before an act of bankruptcy occurred and that time for compliance with the bankruptcy notice was extended up to 8 October 2021, pursuant to a decision by the learned Judge Manousaridis, who dismissed the application to set aside the bankruptcy notice.
The Court notes that the affidavit verifying the creditors petition identified that the paragraphs, 1, 2 and 3, were true and, in respect of paragraph 4, that identified the act of bankruptcy as occurring on 8 October 2021, and the affidavit said that the respondent failed within 21 days after the service of the bankruptcy notice to pay the debt or make an arrangement to the applicant’s satisfaction for payment of the debt.
RESPONDENTS AFFIDAVIT EVIDENCE
The respondent’s affidavit dated 2 February 2022 repeated the grounds in his notice of objection. The respondent referred to the Supreme Court of NSW proceedings no 2017/00316224 between himself as defendant and the petitioning creditor as plaintiff. Those are the proceedings upon which the petitioning creditor relies in respect of the alleged final order supporting the bankruptcy notice. The affidavit refers to costs orders made against the petitioning creditor on 4 June 2018 and 9 December 2020 and asserts although not taxed that those costs are in the order of $20,696.87. The making of these costs orders which have not been assessed do not provide a sufficient potential set-off to warrant dismissal of the bankruptcy notice.
The affidavit then refers to the bringing of defamation proceedings against the petitioning creditor as a result of posts in Korean allegedly made by Mr Kim and others of which the respondent became aware around the end of June 2020. The respondent also alleged at the end of July 2020 he became aware of flyers distributed in identified Sydney suburbs. The respondent alleges a conversation with a third party that showed a mobile number said to be that of the petitioning creditor. The respondent alleged a person distributing flyers went to meet the petitioning creditor.
The respondent also referred to a website and profile page of which he became aware shortly after 4 February 2021.
The affidavit also alleges publishing of an article through Breaknews Australia around 20 July 2020 by the petitioning creditor and annexes a statement of claim for defamation filed in the District Court of NSW proceedings no 2021/00205852.
The affidavit referred to lodgement of a notice of intention to appeal the proceeding in which the judgment was obtained and a decision by the respondent not to pursue the appeal.
The affidavit referred to correspondence sent in respect of the bankruptcy notice and difficulties effecting service of the defamation proceedings. The affidavit deposed to the progress of the defamation proceedings and alleged pursuit of the same in good faith and with due diligence. The respondent estimated his damages against the petitioning creditor to be $400,000.00.
The respondent referred to setting up a company Oakwood Sydney Pty Led and setting up an online business around 2017 and setting up Hoju Australia. The respondent alleges he earns margins by transferring Australian dollars to Korean Won. The respondent alleges negative comments since the publication of what he alleges is the defamatory material and alleges generating less business and less earnings.
The affidavit then refers to a proposed cross claim against the petitioning creditor and an entity Hoju Jobs Pty Ltd incorporated in South Korea. The affidavit refers to the proposed relief that asserts return of $370,000.00 being an amount said to be paid to the petitioning creditor as security, about $480,000.00 being money the petitioning creditor is alleged to have taken from the bank account of Hoju Korea which was said not to have been advanced to Hoju Australia and that the respondent had to pay refunds to customers of Hoju Australia. As well as seeking $170,690.00 being money held in the bank account of Hoju Korea that the petitioning creditor refuses to release to Hoju Australiain respect of refunds amounting to a total of $620,690.00.
The respondent refers to an online remittance business established about June 2016and registering the company Hoju Jobs Australia Pty Ltd and that he registered Hoju Korea in December 2015 and the bank accounts that were set up.
The affidavit refers to visits by the petitioning creditor to the respondent’s office of Hoju Australia and conversations concerning a surplus of funds and lending of money. The affidavit refers to the lending sums by the petitioning creditor on 24 November 2016 and 25 November 2016. The respondent alleges conversations about lending money and the need for security. The affidavit deposes to the security sum payments from 30 November 2016 to 26 May 2017 totalling $370,000.00. The affidavit alleges a failure to hold that sum as security and alleges a breach of trust.
The affidavit refers to the respondent’s rapid increase in transactions in respect of his transactional amounts and an entity Wiztoss commencing trading on 19 January 2017. The respondent sets out conversations about lending money and a form of partnership for the overseas online business and directorship roles for both South Korea and Australia. The affidavit refers to a deposit by the petitioning creditor of $300,000.00 on 23 January 2017 to purchase 49% of shares in both Hoju Jobs Australia and Hoju Jobs Korea. There was a share transfer agreement received from the petitioning creditor on 17 February 2017. The respondent alleges that the proposed agreement did not reflect the shares to be transferred and referred to a conversation about that with the petitioning creditor. The respondent caused the entity Jin Ok Park to sign the share transfer agreement which was not sent to the petitioning creditor due to an alleged failure to pay the balance of the agreed investment. The respondent’s wife had an unsuccessful trip to Korea in alleged contemplation of becoming a director in Hoju Jobs Korea.
The respondent refers to an alleged conversation on 6 March 2017 about attacting an investor to acquire 50% of the shares in Hoju Jobs Pty Ltd and Hoju Jobs Korea. The conversation also allegedly raised the completion of the outstanding balance of the agreed investment. There was an alleged further conversation on 14 March 2017 identifying a dispute about the investment by the petitioning creditor. On 24 march there was an alleged meeting about the Korean investors from Jungdong. The respondent says the petitioning creditor was allowed to work at the office of Hoju Australia and receive wages for April and May 2017. There was alleged agreement for the petitioning creditor to become the sole director of Hoju Australia and Hoju Korea.
On 27 March 2017 there was an alleged conversation about holding 50% of the shares to protect the Korean investors. The respondent addresses the alleged unauthorised change of shares in Hoju Korea by the petitioning creditor and the respondent deciding on about 30 May 2017 not to proceed with the proposed investment. The respondent allegedly discovered that the petitioning creditor had transferred 100% of the shares in Hoju Jobs Korea into his own name without the consent of the respondent. There was a further alleged conversation between the respondent and the petitioning creditor on 31 May 2017 about the transfer of shares and an alleged fraud for want of the investment.
The respondent alleged discovering the lodgement of a share transfer agreement on 9 June 2017 and a registration of the petitioning creditor as being the sole director and shareholder from February 2017. On 14 June 2017 the respondent discovered the online business was shut down and referred to an alleged conversation with the petitioning creditor about money transfers requested by clients and asking for the system to be reactivated. The respondent says that the petitioning creditor asked for $700,000.00 to solve his issue. The respondent alleges he found out that the petitioning creditor withdrew $100,000.00 on 13 June 2017 and $80,000.00 equivalent on 19 June 2017. The respondent referred to an interview record about the withdrawal of the $80,000.00 equivalent and the explanation as to winnings by the petitioning creditor.
The respondent referred to an alleged share transfer that was never signed and correction of the share transfer records. The respondent referred to an additional $70,690.00 remitted by Hoju Australia from ANZ and funds in the amount of $170,690.00 alleged held by Shinhan Bank for Hoju Korea. The respondent then alleges he has suffered financial damages referring to setting up a new company Wiztoss in south Korea and losing income and paying expenses, the costs of his wife’s travel, rent of about $1000.00, withheld funds of about $250,000.00, disruption to his business decreasing his profit margin but not being able to obtain records which he intends to produce as to alleged loss and damage caused by the petitioning creditor and suffering losses of over $300,000.00 based on decrease of his personal annual income. The respondent alleges continuing business and operational disruptions caused by the petitioning creditor and a future intention to assign rights by Hoju Australia under a proposed agreement.
On solvency the respondent refers to his taxable income over 2014 to 2020. The financial years 30 June 2018 being $52,181.00, 30 June 2019 being $52,246.00 and 30 June 2020 being $62,603.00. He respondent provided an estimated income for 30 June 2021 of about $50,000.00, and alleged the decrease in income was caused by the petitioning creditor by alleged misleading conduct and alleged defamation.
The respondent identified his assets as at 24 November 2021 being cash $7000.00, potential claim against Mr Sim (current proceedings and in the Supreme Court and intended in the District Court). The respondent identified other potential claims against other persons and claims against the petitioning creditor for $400,000.00, $370,000.00 and $300,000.00 together with furniture of $3000.00 amounting to $2,401,850.00.

The respondent alleges he is solvent and does not want to pay the petitioning creditor until all of his claims against the petitioning creditor have been determined. Reference was made to a facility for $400,000.00 by Wiztoss Pty Ltd alleged available at call.
The respondent alleges no other debts and that he pays his income from his rent $3300.00 per month and living expenses of $700.00 per month and that “any other living expenses are paid by wife who currently lives in Korea”.
The first judgment of Williams J in the Supreme Court proceedings dated 26 March 2021 identifies the parties as being the petitioning creditor as plaintiff, Hoju Jobs Pty Ltd first defendant, Youngseoki Choi second defendant and the respondent as the third defendant. The reasons identify a dispute the alleged contract about $300,000.00 paid to Hoju Australia on 23 January 2017 for shares. The judgment refers to a defence alleging an agreement by the petitioning creditor to invest in Hoju Korea, that he payment was a deposit for purchase of 49 ordinary shares in Hoju Australia and Hoju Korea. The shares were first issued in Hoju Australia on 28 March 2017. The defence pleaded that the shares were held subject to conditions. There was also a dispute about documents signed in escrow. The defence pleaded consequences if the petitioning creditor failed to attract a proposed investment agreed at a meeting of Hoju Australia on 27 march 2017. The absence of investment was common ground and at end May 2017 there was a break in the relationship of the petitioning creditor and the respondent. It is of moment that the judgment identifies that Mr Goo abandoned a defence of set-off and the petitioning creditor abandoned other pleaded claim for relief and elected to seek specific performance. This abandonment is material to the new alleged misleading conduct proceedings and whether they are bona fide or have any real prospect of success. This is because there is an obvious res judicata, Anshun estoppel or abuse of process that arises from the abandoned cross claim so far as concerns the respondent and the first defendant to the proceedings.
The defamation statement of claim joins four plaintiffs and six defendants with the respondent being the first plaintiff and the petitioning creditor being the first defendant. There are five alleged matters complained of as giving rise to defamatory imputations. The pleading is formulaic and baldly alleges “published or caused to be published” for the first, third, fourth and fifth matters complained of against all or some of the defendants. The second matter alleges a publication and a republication from “distributed or caused to be distributed” flyers against all defendants. There is no credible evidence to support the published assertion as against the first defendant being the petitioning creditor, in respect of the first, third, fourth and fifth matters complained of and the evidence concerning the second matter complained of is circumstantial weak as against the first defendant. The inclusion of the other defendants on the second matter complained of materially undermines there being any substance in that circumstantial case as against the first defendant being the petitioning creditors or indeed against the other defendants. The Court is not satisfied that these defamation proceedings in the District Court given the timing, parties and content are bona fide and in good faith. The Court takes into account the caution and high degree of satisfaction required in respect of an arguable case and is satisfied the defamation proceedings in the District Court have no real prospect of success as against the applicant and that there is no real question of fact or law that should be tried.
There was a deposit into a loan account of Wiztoss Pty Ltd in the sum of $400,000.00 to be available for a loan facility agreement confirmed by email to the respondent on 1 February 2022.
There is a further affidavit of the respondent dated 2 March 2022 which purports to address decreased profit margin in respect of an alleged damages claim against the petitioning creditor reflecting an alleged claim of $1,254,730.28. The affidavit purports to explain how the losses were caused. There is annexed a signed loan agreement with Wiztoss and the respondent dated 15 February 2022. The affidavit also annexes a deed of assignment by Hoju Australia dated 15 February 2022 and the giving of notice of the same. The recitals record that Hoju Jobs Pty Ltd trades as Wiztoss AU and that entity which was the first defendant to the Supreme Court proceedings purports to assign the claims that relate to investment that was the subject of agitation in the Supreme Court proceedings as well as alleged payments which overlap with the payments referred in the respondent’s affidavit and which this Court infers were the subject of the set-off that was abandoned. The consideration was $1 and there is no apparent corporate benefit to the corporate entity. The assignment on its face picks up alleged causes of action the subject of a res judicata, Anshun estoppel or abuse of process by the assignor give the abandonment and outcome of the Supreme Court proceedings.
There is an affidavit of Mr Ill Joo Kim dated 2 March 2022 which annexes the loan facility agreement dated 15 February 2022. This affidavit refers to the deposit of $400,000.00 in a trust account and the defamation proceedings. There is a company record as to a start date of 31 October 2019 and Ill Joo Kim was only appointed a director on 10 January 2022 and he is recorded as the sole shareholder. However paragraph 66 of the respondent’s affidavit 2 March 2022 identified Wiztoss commencing trading on 19 January 2017 as referred to above and the reference to the entity Wiztoss AU in the recital of the deed of assignment referred to above leaves the Court unpersuaded as to the genuineness of the loan facility agreement and as to it not being arms-length or a genuine facility available to the respondent. The Court has taken into account the reference in a pleading by the first and third defendants to the proposition that Wiztoss trading name for the entity Wizgroup Pty Ltd which registered the business name Wiztoss on 1 November 2019 and the assertion of there being a distinction between the Wiztoss business operated by the first defendant corporate entity in the Supreme Court proceedings and the Wiztoss business operated by the Wizgroup Pty Ltd. The Court has also taken into account the description as to Wiztoss in the agreement dated 15 January 2021 as being a service of the first defendant Hoju Jobs Pty Ltd.
There is an affidavit of the respondent dated 24 June 2019 filed in the Supreme Court proceedings that clearly overlaps with the respondent’s affidavit dated 2 February 2022 in respect of the alleged payments and claims against the petitioning creditor. The substantial overlap and repetition of annexures in this affidavit the subject of the Supreme Court judgments by Williams J further supports this Court’s conclusion that the new proceedings number 22/212210 in the Supreme Court are not bona fide, are the subject of res judicata, Anshun estoppel or an abuse of process and do not have a reasonable prospect of success.
There is an affidavit of the respondent dated 30 march 2022 that seeks to contend that there was not pursued a formal cross claim and that the alleged misleading conduct was not pursued. That argument given the overlap identified above is unpersuasive. There was clearly a subject matter overlap that gives rise to a res judicata, Anshun estoppel and abuse of process in the proposed resurrection of the misleading conduct issue in fresh proceedings by the respondent. The entities of the respondent Hoju Australia and Hoju Korea do not reflect any personal claim by the respondent that can be raised by the respondent in answer to the judgment debt. Nor is this Court persuaded that those entities do not face issues of the same kind and does not accept that the joinder of those corporate entities in new proceedings makes the same bone fide or reflect any reasonable prospect of success on the alleged misleading conduct or the overlapping allegations. The affidavit further purports to explain the alleged loss and damage.
The affidavit of Jaehak Ray Kim the solicitor for the respondent refers to the contempt notice of motion field in the Supreme Court proceedings which in the order of charge refers to an alleged wilful and deliberate breach of the order requiring the payment of $300,000.00 within 28 days. The affidavit of the respondent referred to above alleging that could but doesn’t wish to make payment provides an obvious basis for the intent, albeit not for this Court to determine and does not of itself prove ability to pay.
There is a further affidavit of Ill Joo Kim dated 17 May 2022 that asserts a right to withdraw the loan facility under the loan facility agreement dated 15 February 2002 to which the Court refers further below. There is a further affidavit of Ill Joo Kim dated 19 July 2022 that refers to the loan facility being increased to $450,000.00 and an erroneous belief that the contempt proceedings have been stayed.
In the supplementary bundle Exhibit B, there is an affidavit of the respondent dated 18 July 2022 which purports to update the respondent’s financial positon, repeats a contention of solvency and being able to pay debts but that he doesn’t want to do so until all his claims against the petitioning creditor are determined. The affidavit identifies the progress of the District Court proceedings. There are also the new proceedings number 22/212210 commenced in the Equity Division Commercial List on 20 July 2022 by the respondent as first plaintiff, Hoju Autralia Pty Ltd as the second plaintiff and the petitioning creditor as the first defendant and Hoju Australia Limted as the second defendant. The first prayer for relief refers to $370,000.00 which was the same subject matter as the defence in the earlier Supreme Court proceedings as this Court is satisfied is the subject of res judicata, Anshun estoppel or is an abuse of process. The Court has taken into account the caution in considering whether there is an arguable case raised by the new Supreme Court Equity Division proceedings as well as high degree of satisfaction and finds the proceedings have no real prospect of success as against the applicant and that there is no real question of fact or law that should be tried.
This Court makes the same finding in respect of the second prayer for relief that clearly duplicate the payment issues that were raised in the earlier proceedings. The differing formulation of causes of action does not persuade this Court that those proceedings are bona fide or that those proceedings have a reasonable prospect of success. The misleading conduct case as to the investment and partnership allegations are founded in substance on the same material that raised in the earlier Supreme Court proceedings and this Court is not satisfied that the proceedings are bona fide or have any reasonable prospect of success. This is because it is an attempt to re-litigate subject matter that has been or was reasonably available to agitate in the earlier proceedings and it was unreasonable not to do so. This means the proceedings are likely to be found to be the subject of res judicata, Anshun estoppel or found to be an abuse of process. The new second plaintiff does not satisfy this Court that the proceedings are bona fide or have any reasonable prospect of success.
PETITIONING CREDITOR’S AFFIDAVIT 21 MARCH 2022
This affidavit which denies publication or distribution of the alleged defamatory matter. That affidavit also says that the subject matter of the proposed Supreme Court proceedings were raised in the Supreme Court proceedings no 2017/00316224 that have concluded. Annexed to the affidavit is a defence in the Supreme Court proceedings no 2017/00316224 that pleads a proposed partnership at para 8 and further alleges as to the proposed investment and the making of payment to the petitioning creditor. Paragraph 43 pleads alleged monies owing that clearly particularises the $370,000.00 and other payments raised in the respondent’s evidence above. The affidavit responds to the respondent’s allegations pointing out the corporate entity difficulties both with the respondent’s personal claims and/or corporate entities involved. The alleged misrepresentation is denied and identifies obvious difficulties with the allegations of loss or damage advanced by the respondent. There has also been included in the Court Book other affidavit evidence and transcripts of those Supreme Court proceedings.
ORAL EVIDENCE
The applicant petitioning creditor was cross-examined about a disconnect between the 21 days in paragraph 3 of the affidavit verifying and the date of the actual act of bankruptcy given the extension of time, which was 8 October 2021.
The applicant identified that the content of paragraph 4 was the subject of discussion with his solicitor and accepted, in relation to paragraph 3 of his affidavit, that 21 days after service of the bankruptcy notice would have been 23 June 2021. The Court finds the applicant was a credible witness.
The Court next heard evidence from Mr Ill Joo Kim, being the sole director of Wiztoss Pty Ltd, which is the lending entity under a loan facility agreement between Wiztoss and the respondent. The affidavit of Mr Ill Joo Kim, sworn 17 May 2022, relevantly said:
“If Mr Jai Koo Kim maintains and does not discontinue this notice of motion in the Supreme Court before any drawdown request is made by Mr Goo, I intend to exercise my right to withdraw the loan facility under the loan facility agreement. I do not want to risk my name or the name of Wiztoss to be published on the internet with any judgment about any contempt. I do not want to lend to a person who is contemptuous. However, I am happy with its use in these proceedings only, as I am prepared to lend to Mr Goo to help him avoid bankruptcy.”
In cross-examination, Mr Ill Joo Kim accepted that he would not provide any funds under the loan facility whilst there were contempt proceedings still on foot in the Supreme Court of New South Wales against the respondent.
The affidavit referred to Mr Ill Joo Kim obtaining information about the loan facility agreement dated 15 February 2022 and since then becoming aware of a new notice of motion, in the Supreme Court alleging contempt against Mr Goo, and that Mr Jai Koo Kim has used a copy of the loan facility agreement in those proceedings.
As at the date of the hearing before this Court that notice of motion is still on foot and has not been stayed.
Mr Ill Joo Kim also accepted a proposition put to him that his right to refuse to proceed with the provision of funds to the respondent fell within cl 13(1)(g) which relevantly provides as follows:
Representations and warranties
13.1 Each Transaction Party represents and warrants that:
….
(g) no litigation, arbitration , Tax claim, dispute or administrative or other proceedings is current or pending or, to its knowledge, threatened, which may have a Material Adverse Effect:
…
Material Adverse Effect was defined in the definition cl 1.1. It was also put to Mr Ill Joo Kim that he had no intention of lending the money to Mr Goo which Mr Ill Joo Kim rejected. There was cross-examination as to the absence of any financial due diligence undertaken by Mr Ill Joo Kim in relation to Mr Goo and the absence of condition precedent steps in respect of legal and financial advice for Mr Goo.
In substance, Mr Ill Joo Kim indicated that he was willing to provide funds under the facility agreement because Mr Goo was a friend. Mr Ill Joo Kim gave oral evidence that he had provided funds not exceeding $20,000.00 to Mr Goo on a verbal basis which it was alleged were repaid. No actual documentary evidence was adduced in this regard. Mr Ill Joo Kim was not a satisfactory or credible witness. The recent nature of his appointment as a director and shareholder, his absence of use of loan facility agreements, his assertions as to a right not to provide the funds, the increased amount and lack of due diligence and the name of the business overlapping in name with that of the respondent all undermine the credibility of the evidence as to there being a genuine loan facility available to the respondent. The Court does not accept that the funds would be provided under the loan facility agreement or that the respondent could repay the same.
Mr Goo was cross-examined and accepted that he had failed to comply with the bankruptcy notice. Mr Goo contended that he had his own reasons for that failure. On Mr Goo’s evidence those reasons appeared to be the on-going conflict and disputes with the applicant. Mr Goo identified that his income disclosed to the ATO was in the order of $45,000.00 per annum and identified having outgoings in the order of $4000.00 a week.
Mr Goo contended that he had other assets and other income available to him. Mr Goo referred to unidentified intangible assets and referred to unspecified property allegedly held on his behalf by his wife and property in South Korea. Mr Goo was cross-examined as to his failure to disclose other sources of income, assets and/or liabilities in respect of South Korea and what appeared to be the falsity of the evidence he had given in his affidavit as to his financial assets and cash-flow.
The Court does not accept that Mr Goo was a credible witness given the inconsistencies about his income and the failure to make proper disclosure of this financial position and cash-flow. The Court does not accept Mr Goo’s assertions as to ability to pay his debts or the availability of other funds. The Court rejects Mr Goo’s evidence as to the bona fides, evidentiary foundation, explanations as of the two proceedings and does not accept that there is credible evidence to support the alleged causes of action for the reasons identified in the respondent’s submissions.
The relevant statutory provisions in this matter are as extracted below in respect of ss 40, 41, 43, 44, 47, 52 and s 33 of the Act.
SECT 40 Acts of bankruptcy
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;
….
For the purposes of paragraph (1)(g):
…
(b) a judgment or order that is enforceable as, or in the same manner as, a final judgment obtained in an action shall be deemed to be a final judgment so obtained and the proceedings in which, or in consequence of which, the judgment or order was obtained shall be deemed to be the action in which it was obtained;
...
(d) a person who is for the time being entitled to enforce a final judgment or final order for the payment of money shall be deemed to be a creditor who has obtained a final judgment or final order;
SECT 41 Bankruptcy notices
(1) An Official Receiver may issue a bankruptcy notice on the application of a creditor who has obtained against a debtor:
(a) a final judgment or final order that:
(i) is of the kind described in paragraph 40(1)(g); and
(ii) is for an amount of at least the statutory minimum; or
(b) 2 or more final judgments or final orders that:
(i) are of the kind described in paragraph 40(1)(g); and
(ii) taken together are for an amount of at least the statutory minimum.
(2) The notice must be in accordance with the form prescribed by the regulations.
…
(3) A bankruptcy notice shall not be issued in relation to a debtor:
(a) except on the application of a creditor who has obtained against the debtor a final judgment or final order within the meaning of paragraph 40(1)(g) or a person who, by virtue of paragraph 40(3)(d), is to be deemed to be such a creditor;
(b) if, at the time of the application for the issue of the bankruptcy notice, execution of a judgment or order to which it relates has been stayed; or
…
SECT 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.
…
SECT 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.
…
SECT 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.
…
SECT 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.
…
SECT 33 Adjournment, amendment of process and extension and abridgment of times
(1) The Court may:
(a) upon such terms as it thinks fit, at any time adjourn any proceeding before it, either to a fixed date or generally;
(b) at any time allow the amendment of any written process, proceeding or notice under this Act; or
(c) extend before its expiration or, if this Act does not expressly provide to the contrary, after its expiration, any time limited by this Act, or any time fixed by the Court or the Registrar under this Act (other than the time fixed for compliance with a bankruptcy notice), for doing an act or thing or abridge any such time.
APPLICANT SUBMISSIONS DATED 15 JULY 2022

On 15 July 2022, Counsel for the applicant filled the following submissions (relevant to the substantive bankruptcy issue in the proceedings) as follows:
The Respondent is Solvent?
5.The Respondent relies on the following evidence as a basis for asserting that he is solvent:
a.A Loan Facility Agreement entered with Wiztoss Pty Ltd (ACN 636 913 829), and
b.An assertion that his debts are $3,300 in monthly rent, plus $700 a month living expenses, with “no other debts”
The Loan Facility Agreement
6.The Loan Facility Agreement is included in the Respondent’s evidence, at page 2056 of SG-2.
7.The Court should not accept that the Loan Facility Agreement demonstrates that the Respondent is solvent.
8.Mr. Iljoo Kim is a director of Wiztoss Pty Ltd. He has indicated that:
if the Applicant “maintains and does not discontinue [a notice of motion] in the Supreme Court, before any drawdown request is made by Mr. Soo, [he] intend to exercise [his] right to withdraw the loan facility under the loan facility agreement”
9.The solicitors for the Applicant, and Counsel for the Applicant, are the representatives for the Applicant in the relevant Supreme Court proceedings. The motion that Mr. Iljoo Kim refers to has not been “discontinued” or “dismissed.”
10.Accordingly, the evidence suggests that the Facility Agreement is no longer available to the Respondent.
11.The Facility Agreement provides that interest accrues daily on each Advance at the Interest Rate (clause 6.1).
12.The Interest Rate pursuant to the Facility Agreement is 1% per month (clause 1.1(qq)).
13.Even if the Respondent was to draw $340,000 down from the Facility Agreement, the interest he would be required to pay comes to $3,400 a month.
14.The Respondent estimates his income as $50,000 a year4 and his monthly expenses as $4,000. Based on the Respondent’s own evidence, he would be unable to pay the monthly interest that accrues on the Loan Facility Agreement.
15.The Applicant relies on the following passage in Little Creatures Brewing Pty Ltd v Bordin [2006] FMCA 302 at [54] per McInnis FM:
In my view the decision of the Court in Lewis v Doran whilst it is apparent that there may be an analogy between the provisions in the Corporations Act and the Bankruptcy Act it does not necessarily follow that the authorities referred to alter the approach to the question for the Court to consider simply by deletion of the words "from his own money" or as in the Corporations legislation "from its own money". In my view the task for the Court remains consideration of whether the debtor is able to pay his debts as and when they become due and payable. Authorities already make due allowance for the capacity of the debtor to pay debts based upon not simply cash resources immediately available but moneys he can procure. Although due allowance is made for that approach, it is my view that the decision of Mandie J in Harrison v Lewis applies to bankruptcy cases as the Court still needs to consider whether upon obtaining finances from other sources the debtor is capable of servicing any debt raised and/or whether he has assets capable of raising moneys. To ignore those relevant factors would be to a large extent to embark upon a somewhat artificial process where debtors would only need to provide as in this case vague details of a loan which may or may not lead to an advance from the family, friend or friendly creditor without then considering whether that debt substituting for existing debts has any real impact upon the debtor’s solvency. Whilst removal of the words "from his own moneys" may provide at least the opportunity to adduce broader evidence in support of the claim of solvency, it does not relieve the Court from its obligations to properly analyse the nature of the source of funds and the capacity of the debtor to either source and/or finance repayment of any new loan. The task remains in the same manner as the Court’s assessment of the ability of a debtor to liquidate assets which may be claimed to be under his control or power. To the extent that there may be any inconsistency between the views expressed by the Court in Lewis v Palmer and those expressed by Mandie J in Harrison v Lewis, I prefer the reasoning of Mandie J for the reasons stated in applying the principles to bankruptcy law.
16.This reasoning was accepted in BMW Australia Finance Ltd v Richmond [2008] FMCA 1431.
The Respondent’s Income and Liabilities
17.It is for the Respondent to prove his solvency, see The Owners – Strata Plan No 20347 v Saha [2021] FCA 961 per Stewart J at [45]:
The onus lies on the debtor to prove their solvency. To do so, the following principles apply (with reference to Ace Contractors & Staff Pty Ltd v Westgarth Development Pty Ltd [1999] FCA 728 at [44], approved in Expile Pty Ltd v Jabb’s Excavations Pty Ltd [2003] NSWCA 163; 45 ACSR 711 at [16] per Santow J, Meagher and Handley JJA agreeing, in an analogous context):
(1)    In order to discharge that onus the court should ordinarily be presented with the “fullest and best” evidence of the financial position of the respondent: Commonwealth Bank of Australia v Begonia (1993) 11 ACLC 1075 at 1081.
(2)    Unverified claims of ownership or valuation are not ordinarily probative of solvency. Nor are bald assertions of solvency.
(3)    There is a distinction between solvency and a surplus of assets. A person may be at the same time insolvent and wealthy. The nature of a person’s assets, and their ability to convert those assets into cash within a relatively short time, at least to the extent of meeting all their debts as and when they fall due, must be considered in determining solvency.
18.The Respondent has not provided the “fullest and best” evidence of his financial position.
19.The Respondent estimates his income for the financial year ending 2021 “was about $50,000.. There is no evidence as to what his current income is.
20.Based on a $50,000 income, the Respondent would be expected to pay $6,717 in income tax5. This leaves $43,283 in net income, or $3,606.92 a month.
21.The Respondent’s evidence is that he incurs $4,000 a month in “monthly rents” and “living expenses.” The Respondent’s own evidence is that he is insolvent.
22.The Respondent asserts that he has “potential claims” totaling $1,500,000 but adduces no objective evidence as to the prospects of those claims, or the quantum of those claims. Furthermore, there is no evidence that those claims are available as assets now. There is no evidence that those claims can be sold for example, or of their value if sold.
23.The Respondent asserts that he is entitled to $300,000 as a claim for return of security, however this claim was already addressed by Her Honour Justice Williams in the very proceedings that the underlying debt arose in.
24.The Respondent asserts that he is entitled to $300,000 for loss of business/income. The Applicant has raised doubts as to the veracity of this claim based on the evidence, and submits that there is insufficient evidence to establish this as a true asset. The Respondent falls significantly short of providing the “fullest and best” evidence in this regard.
25.The Respondent refers to a claim against a Mr. Sim for $201,850 plus account for profits. The Respondent lost those proceedings. The Applicant’s solicitor and counsel are well informed of the circumstances surrounding that case, as they acted for Mr. Sim, see Goo v Sim [2022] NSWSC 420.
26.The Respondent is required to prove that he has assets available to him to pay his debts as and when they fall due. There is no evidence to support the notion that the claims referred to by the Respondent will afford him an opportunity to pay his debts as and when they fall due.
27.Costs were awarded against the Respondent in the following proceedings. The Respondent has not included a reference to these costs in his evidence, for ease of reference:
a.Goo v Sim [2022] NSWSC 420;
b.Oakwood Sydney Pty Ltd v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2021] FCA 944; and
c.Goo v Kim [2021] FedCFamC2G 108.
28.This ground is not made out and must fail.
The applicant submitted that the requirements for a sequestration order had been made out. The applicant submitted that the order 1(c) was a final order and that annexure A was not relevant to the operative order.
The applicant submitted that affidavit verifying the petition was not defective and that the order extending time did not mean that there was any want of proof within s 51(2) of the Act.
RESPONDENT’S SUBMISSIONS DATED 18 JULY 2022
On 18 July 2022, Counsel for the respondent filed the following submissions, relevantly as follows:
1.The respondent has filed a Notice of Grounds of Opposition and these submissions are separated into the different grounds within that Notice;
(1)The Respondent is solvent.
(2)The Respondent has a cross claim that has reasonable prospects of success such that the petition should be dismissed.
(3)Alternatively, the Respondent has a real cross claim that warrants an adjournment of the petition until such claim is determined.
(4)The Court should go behind the Judgment of the Applicant and, upon doing so, find that there is no debt to the Applicant.
2.The grounds numbered 2 and 3 are expressed in the alternative however they rely upon the proposition that the respondent has a crossclaim of sufficient merit that the sequestration order ought not be made.
3.Further the respondent puts the applicant to the test of satisfying the Court of the matters necessary under sections 43, 44 and 52 of the Act, before the Court may decide to make the orders sought, such as proving
a.the matters stated in the Creditor’s Petition (s 52(1)(a) of the Act), having regard to;
i.the Affidavit Verifying stating that the respondent failed, within 21 days after service of the bankruptcy notice, to pay, whereas the Petition at [4] states a different period for the act of bankruptcy.
ii.The respondent’s connection with Australia (Petition at [3] and s.43((1)(b) of the Act); and
b.Whether there is a debt due at law or in equity (s 44(1)(b) of the Act).
4.For the sake of convenience, the matter noted in (b) above will be addressed under the heading of ground 4 of the opposition “going behind the Judgment”.
5.The respondent will require an interpreter when giving his evidence.
6.There is documentary evidence from the respondent in Korean, which has been translated for the Court.
7.Even though the Court will be familiar with the relevant principals, in order to assist, these submissions are accompanied by extracts from some of the authorities which support the submissions made herein.
Solvency
8.The following submissions are made without prejudice to the later submissions that there is no debt immediately due to the applicant.
9.The respondent has filed evidence in respect of his assets and liabilities and wishes to rely upon a further short affidavit which provides the Court with up-to-date evidence regarding his financial affairs.
10.The Court is to determine the question of solvency on the date of the hearing and the Court should expect the respondent to provide the best evidence of his financial affairs as close to that hearing date, as possible.
11.The respondent submits that he is able to pay his debts, effectively being limited to the obligation to specifically perform the relevant contract and pay $300,000 to the applicant, but the respondent does not wish to make payment until all of the claims he wishes to make against the applicant have been determined.
12.The fact that the respondent does not wish to pay the applicant is not a basis for the creditor to be entitled to make a “recalcitrant” debtor bankrupt, if the debtor satisfies the Court that he is able to pay his debts.
13.In this case, the Court will determine whether or not the respondent is solvent, and, in the circumstances, expert evidence would be of no assistance.
14.The debtor is that the lowest end of the scale in terms of the size and complexity of his financial affairs, as for example, he is not a publicly listed enterprise which must prepare audited financial statements and make them available publicly.
15.The respondent is an individual who is employed on a salary.
16.The overarching purpose of the practice and procedure of the Court is to resolve matters inexpensively and efficiently, such that the expectations of the Court, for example regarding evidence on the question of solvency, must be tailored to the circumstances of the debtor.
17.The evidence of the respondent is that he has no unpaid or outstanding obligations to any creditor, including no unpaid tax debts.
18.It is submitted that there is no evidence of any relevance which could be provided to substantiate the non-existence of any debts or obligations.
19.By contrast, the applicant could have availed himself of the processes of discovery, if there was any inkling that the respondent had any obligations which were not being paid.
20.There is no supporting creditor, despite these proceedings having been commenced about 7 months ago and the litigation between the parties having been well-reported.
21.In the circumstances, these proceedings can be taken for what they are: a debt collection process by the one and only creditor of the debtor, who remains in an acrimonious relationship after having been business associates.
22.There are ongoing proceedings between the parties.
23.It will be relevant that the applicant has sought to avail himself of other enforcement proceedings against the debtor, such as an attempt to garnishee particular funds and the contempt and sequestration proceedings in the NSWSC.
24.The evidence of the respondent is that he has “resources available to him”, in the form of a loan facility of $400,000 from an associate by the name of Wiztoss Pty Limited.
25.Relevantly, there is evidence that the lender has the capacity to make the loan, that the loan must be made whenever the respondent requests and that any loan will be repayable on a long-term basis of 36 months.
26.The loan from Wiztoss meets the tests to enable that $400,000 facility to be treated as a current asset to meet the debt claimed by the applicant of approximately $360,000 before deducting from the $360,000 the costs orders in favour of the respondent.
27.On the various tests of solvency, the respondent passes.
28.If he needed to do so, he could draw down on the Wiztoss facility and expect to receive funds, or direct a payment, within a week, allowing time to process the transaction in clear funds.
29.On the basis of solvency, the Respondent asks the Court to dismiss the petition, as this is not an occasion on which the discretion not to dismiss the petition should be exercised.
Cross Claim
30.If, under s.52(2) of the Act, the Court “is satisfied by the debtor that for some other sufficient cause a sequestration order ought not be made, the Court may dismiss the petition and one matter which may constitute “some other sufficient cause”, is that the debtor has a cross-claim against the creditor for an amount that exceeds the debt on the basis of which the creditor seeks a sequestration order.
31.The respondent has filed evidence of a cross claim in the form of costs orders, which he says total $20,696.8714.
32.The respondent has commenced proceedings against the applicant, described as the defamation proceedings.
33.The applicant gave evidence in February 2022 that he had been served with the defamation proceedings and that, he would file in this Court any defence he filed in respect of those proceedings.
34.The defence has been filed, but this Court has not been provided with a copy and the Court is asked to draw adverse inferences.
35.The respondent says that he did not become aware of all the defamatory conduct, until after the hearing of the relevant NSWSC proceedings which concluded on 4 February 2021.
36.There is evidence to support the contentions of the respondent in his defamation case.
37.The Court will be aware of the principles in awarding damages in this type of proceeding.
38.The respondent has given evidence of his further claims against the applicant, described as the misleading conduct claim.
39.The respondent has filed evidence of the amount of damages caused by the conduct of the applicant, including a large volume of source documents to substantiate the claim, with a financial summary report and Financial Statements.
40.The respondent says that the misleading conduct proceedings will involve parties other than those to the NSWSC proceedings.
41.The respondent proposes to file the statement of claim in respect of the misleading conduct case, before the hearing, as a sign of his commitment to pursue that matter.
42.The need for brevity in an outline of submissions means that these two cross claim will be best explained by oral submissions, with an aide memoir reference to the pleadings and evidence.
Going behind the Judgment
[Not pressed – omitted]
…
Creditor’s Petition
58.The respondent has raised with the applicant the contention that the petition is incorrect and could be amended.
59. The applicant did not take up that opportunity.
60. The applicant must satisfy the Court of the jurisdiction under s 43, producing evidence that the respondent has the requisite connection with Australia.
61.The applicant’s position is clouded by the conflicting dates or period relative to compliance with the bankruptcy notice, noted earlier herein.
62. These are matters which will be addressed under cross examination.
Conclusion
63. The creditors petition should be dismissed, with costs.
64.If the Court is against the respondent, the petition should be adjourned for a short period, having regard to the length of time since the proceedings were commenced and the matters raised under the heading of Solvency.
Respondents extracts from Authorities
1.The Respondent is solvent
Re Ronald Grafton Sarina Ex Parte: the Council of the Shire of Wollondilly
[1980] FCA 66; 1979 Bankruptcy 30 ALR 266 (6 June 1980)
It was submitted on behalf of the petitioning creditor that, even though the debtor had the capacity to pay his debts, his continuing refusal and unwillingness to pay them precluded the Court from being "satisfied by the debtor" that he was "able to pay his debts" for the purposes of s.52(2)(a) of the Act. The word "able" in s.52(2)(a) should, it was argued, be read as meaning "willing and able". In support of this contention, reference was made to a decision of McKercher J. in In re Freeholders Oil Company Limited ((1953) 9 West. W. Rep. (NS) 241) where the view was indicated that the word "able" should be so read. The policy of the Act, it was said, supported this construction of s.52(2)(a) in that it was scarcely to be contemplated that a creditor was entitled to lose the benefit of the procedures available to him under the Act if, on the hearing of the petition, his debtor could prove that he was able to pay his debts while refusing so to do.
While I can see considerable force in the arguments advanced on behalf of the petitioning creditor, they have, in the end, failed to persuade me that the word "able" in s.52(2)(a) should be given other than its ordinary meaning. It does not appear to me that it is possible to divine any policy underlying the provisions of the Act to the effect that a creditor should be entitled to make a recalcitrant debtor bankrupt even though the debtor satisfies the Court that he is plainly solvent and able to pay his debts. It seems to me that it may well be that the legislative intent was to leave a creditor, in those circumstances, to the ordinary remedies by way of execution and garnishee.
Re Ronald Grafton Sarina v the Council of the Shire of Wollondilly [1980] FCA 138; 1980 Bankruptcy 32 ALR 596 (17 November 1980)
The power conferred upon the Court by s. 52 (2) is permissive not mandatory, although it seems that the occasions on which the discretion not to dismiss the petition might be exercised would not be frequent. It may, in a proper case, require the refusal of a sequestration order yet permit the adjournment of the petition rather than its dismissal.
The variety of circumstances that may arise in particular cases renders plain the undesirability of seeking to define parameters of the exercise of the power. Counsel for the respondent submitted that notwithstanding the ability of the appellant to pay his debts within the meaning of s. 52 (2), the Court, in the exercise of its discretion, should make a sequestration order against the estate of the appellant. The essence of the argument was that as the appellant was able to pay the debt due to the respondent but was unwilling to pay it, the Court should make a sequestration order as a mark of its disapproval of such conduct.
In our opinion that would not be a proper exercise of discretion on the facts of this case. This case does not fall within the ambit of the discretion conferred by s. 52 (2). Nor does it call for the adoption of any course except dismissal of the petition.
Murch, in the matter of Annesley v Annesley [2022] FedCFamC2G 435 (2 June 2022)
Solvency
58 By s 52(2), the court is conferred a discretion to dismiss a petition where satisfied that a debtor is able to pay his or her debts or that, for other sufficient cause, a sequestration order ought not to be made. It cannot be ignored that solvency occupies a central role in the exercise of jurisdiction under the Act. More particularly, in light of the quasicriminal nature of the proceeding, it recognises the public interest directed to sequestration orders not being made against the estate of persons who are solvent. One aspect of the public interest arises from the critical importance of recognising the interests of creditors (other than the petitioner), of being paid in full, should not be prejudiced by the making of a sequestration order that should not be made. A corollary of that public interest is the due administration of an insolvent estate for the general body of existing and potential creditors. Contextually, delay is inimical to such proper administration. As importantly, an order for the sequestration of a person’s estate effects a change in the debtor’s status with the significant personal consequences that this entails: Wren vMahony [1972] HCA 5; (1972) 126 CLR 212, 223-225; Kleinwort Benson Australia Pty Ltd v Crowl [1988] HCA 34; (1988) 165 CLR 71, 82; Re Sarina; Ex parte Sarina v Council of the Shire of Wollondilly (1980) 43 FLR 163, 165-166; Sarina v Council of the Shire of Wollondilly [1980] FCA 138; (1980) 48 FLR 372, 376-377; Ahern v Deputy Commissioner of Taxation (Qld) [1987] FCA 312; (1987) 76 ALR 137, 148; Culleton v Balwyn Nominees Pty Ltd (2017) 343 ALR 632, [40]-[46], [55]; Ramsay Health Care Australia Pty Ltd v Compton [2017] HCA 28 ; (2017) 261 CLR 132, [55]; Bechara v Bates (2021) 286 FCR 166; Boensch v Somerville Legal (2021) FCR 293, [85]-[88]. In Boensch, the Full Court considered the scope of obligations owed towards self-represented litigants in bankruptcy proceedings.
63 The petitioners correctly submitted that the test of solvency is a mixed asset and cash flow test that is often expressed in terms of whether a debtor is able to pay his or her debts as and when they fall due from the assets and resources which are reasonably available to him or her within an appropriate period of time: Re Sarina; Ex parte Wollondilly Shire Council (1980) 43 FLR 163 (Deane J), (appeal dis’d) Sarina v Wollondilly Shire Council [1980] FCA 138; (1980) 48 FLR 372 (Bowen CJ, Sweeney and Lockhart JJ). It is well settled that under s 52(2), the onus of proving solvency lies upon the debtor: see, e.g., Toyota Finance Australia Ltd v Berro [2022] FCA 497, [67].
Quin v Vlahos [2021] VSCA 205 (28 July 2021)
46 The question whether funds held by a third party may be treated as funds available to pay a company’s debts as and when they become due and payable has been considered in a number of cases.
47 In Lewis v Doran,[15] Giles JA (with whom Hodgson and McColl JJA agreed) accepted that funds available to a company from third parties could be taken into account in assessing the company’s solvency. He stated as follows:
[T]here is no compelling reason to exclude from consideration funds which can be gained from borrowings secured on assets of third parties, or even unsecured borrowings. If the company can borrow without security, it will have funds to pay its debts as they fall due and will be solvent, provided of course that the borrowing is on deferred payment terms or otherwise such that the lender itself is not a creditor whose debt cannot be repaid as and when it becomes due and payable. It comes down to a question of fact, in which the key concept is ability to pay the company’s debts as and when they become due and payable.
...
Provision of funds by a third party on the security of the company’s assets is voluntary — the third party can decline. Voluntariness is material to whether the company is able to acquire funds, as part of ability to pay its debts as and when they become due and payable, but if the evidence establishes that the company is able to obtain funds, albeitthey are voluntarily provided, that can suffice.[16]
48 In Lewis, a corporation that was related to the company advanced funds to it which were apparently repayable on demand. Giles JA stated that it was important that it was not suggested that those funds were to be regarded as immediately repayable, nor that their provision was in breach of the directors’ duties owed to the related corporation.[17]
49 In Williams v Scholz, Muir JA held that, when determining whether third-party funds were available to ensure a company’s solvency, ‘[t]he most important consideration is the degree of commitment to the continuation of financial support’.[18]
50 In International Cat Manufacturing Pty Ltd (in liq) v Rodrick, in reference to loans from a director or related company, Morrison JA (with whom Holmes and Gotterson JJA agreed) stated that ‘regard can be had to such financial support where the evidence establishes that the directors are likely to continue it’.[19]
51 As clarified in Chan v First Strategic Development Corporation Ltd (in liq), the provision of funds does not need to be free of any uncertainty or contingency in order to contribute to the solvency of a company.[20] Morrison JA (with whom Gotterson JA and Boddice J agreed) explained as follows:
[I]n cases where the financial support is from a source which cannot be compelled by legal arrangement, ... there [must] be a degree of assuredness that the financial support will be forthcoming and at such a level that one could say the company was able to pay its debts as and when they fall due, rather than being possibly able to do so. Just as a conclusion that the relevant financial support does not have to be absolutely certain in order to be sufficient to meet the test in Lewis v Doran, Scholz and International Cat, equally the financial support does not have to be absolutely uncertain in order to be insufficient to qualify. Between the two extremes the factual circumstances of each case will provide a variety of points at which one might conclude that the financial support was of such a degree of commitment that it was likely to continue, and with the result that the company was able to pay its debts, and therefore that it has sufficient financial support to draw the conclusion of solvency.
However, in my view there is no benefit in attempting to achieve some precise formula as to likelihood, by reference to which the financial support qualifies or does not. To say that the likelihood of it being provided is ‘probable’ or ‘improbable’ adds no more to what has been said in the authorities to which I have referred. Given that the resolution of this issue will almost always depend upon an assessment of facts, in my view it is better to proceed on the basis that, where the financial support is being provided by a director or related entity, and in circumstances where there is no formalised agreement or understanding, what is required is cogent evidence which enables the court to conclude that there is such a degree of commitment on the part of the provider of the financial support to continue it, such that it can be said that at any point of time it was likely to be continued, with the result that, at any of those times, the company was able to pay its debts as and when they fell due.[21]
52 In Chan, one of the directors of the company had the financial resources to assist it to meet its debts and gave evidence of his willingness to do so. He paid some of the company’s debts but not others. The Queensland Court of Appeal upheld the primary judge’s finding that the director’s willingness to financially assist the company was qualified and that his actions did not match his stated intention to assist. Morrison JA agreed with the primary judge’s conclusion that the director’s preparedness to financially support the company had to be assessed objectively against what he did and did not do, rather than on the basis of what he said was in his mind. Morrison JA found that the director’s ‘degree of commitment was low, and insufficient to meet the tests in ... Scholz and International Cat’.[22]
53 In Miles v Editshare Asia Pacific Pty Ltd (in liq),[23] Fraser JA (with whom Henry and Bradley JJ agreed) applied the ‘degree of commitment’ test set out in Chan. He held that the test was not satisfied in that case because there was no evidence identifying the nature of the suggested financial support, its monetary value, any commitment or arrangement of any kind to provide such support or its terms, or the time when such support was to be supplied.[24]
54 In Featherstone v Ashala Model Agency Pty Ltd (in liq),[25] Mr Featherstone was the beneficial owner of the shares in, and effective controller of, Ashala Model Agency Pty Ltd (‘Ashala’). Mr Featherstone and Ashala executed a deed by which he undertook to indemnify Ashala against ‘all costs, claims and expenses’. The Queensland Court of Appeal upheld the primary judge’s finding that the deed was insufficient to establish that Ashala had a sufficiently reliable source of funds from Mr Featherstone because he had no intention of honouring its terms.[26] McMurdo JA considered that the fact that Mr Featherstone controlled Ashala meant that Ashala could not compel him to provide financial assistance unless he chose to do so and, therefore, his resources did not enable Ashala to pay its debts unless he decided that he would support Ashala.[27]
55 In Treloar Constructions Pty Ltd v McMillan,[28] the New South Wales Court of Appeal found that ‘the bare possibility of funding’ raised in a letter of intent was not a promise of funding and could not be considered an available resource to the company.[29] In that case, the letter of intent specified that certain steps be taken, including a formal funding letter, which never eventuated.[30]
56 The availability of a loan will not contribute to solvency where it is for a very short term, such as 30 days, and on onerous terms because it merely substitutes one form of immediate obligation for another.[31] However, a loan which is technically repayable on demand will not be treated as immediately due and payable for the purposes of assessing solvency where there is evidence that the lender does not intend to demand repayment prior to a particular event occurring.[32]
57 Whilst the legal onus to prove insolvency rests with the party alleging insolvency, the party alleging that an inference that a company was insolvent should not be drawn because third-party funds were available to it bears an evidentiary onus on this issue.[33] It is not sufficient to merely assert that a third party was willing and able to provide sufficient funds to enable the company to discharge its debts.[34] Rather, the third party’s preparedness to fund the company is assessed by reference to the objective evidence.
2. The Respondent has a cross claim that has reasonable prospects of success such that the petition should be dismissed
3. Alternatively, the Respondent has a real cross claim that warrants an adjournment of the petition until such claim is determined
Commonwealth Bank of Australia Trading as Bankwest v Mastronardo [2019] FCCA 2371 (28 August 2019)
2. …..If the Court is satisfied that the matters specified in s.43 and s.52(1) of the Act have been proved, and that the requirements of the Bankruptcy Rules have been met (or their compliance is otherwise dispensed with), the Court may make a sequestration order. If the Court is not so satisfied it must dismiss the petition, or if, under s.52(2) of the Act, the Court “is satisfied by the debtor (a) that he or she is able to pay his or her debts; (b) that for some other sufficient cause a sequestration order ought not be made”, the Court may, not must, dismiss the petition.[2] One matter which may constitute “some other sufficient cause”, and which is relevant to the matters I am required to consider in these reasons, is that the debtor has a cross-claim against the creditor for an amount that exceeds the debt on the basis of which the creditor seeks a sequestration order.
1. It is open to a debtor to claim at the hearing of a creditor’s petition that he or she had a cross-claim against the creditor in an amount that exceeds the amount of the debt on which the creditor relies. Such a claim, when made, may be relevant in two ways. The first is where the bankruptcy court is not in a position to determine whether the asserted cross-claim is likely to succeed, but nevertheless is satisfied that the claim is of sufficient substance that the validity of the claim ought to be determined by the ordinary process by which civil claims are determined. Where the bankruptcy court is so satisfied it has a discretion to adjourn the creditor’s petition until such time as the cross-claim is determined in the ordinary course.
1. The assertion of a cross-claim against the creditor may be relevant in another way. The bankruptcy court may not only be satisfied that the cross-claim is of substance, but also that the debtor is likely to have a cross-claim that exceeds the judgment on which the creditor’s petition is based. Here, although the bankruptcy court retains a discretion to adjourn the hearing of the creditor’s petition it has the additional discretion to treat the existence of the cross-claim as “some other sufficient cause” and, for that reason, dismiss the creditor’s petition.
1. What I say in the preceding two paragraphs is based on the following passage from the judgment of Beach J in Liang v LV Property Investments Pty Ltd:[54]
An important distinction is to be made between a cross-claim which is likely to succeed and a cross-claim which is a bona fide and reasonably arguable claim, but where it is not established by the judgment debtor that it is likely to succeed. In the former case, where it is established that the claim is likely to succeed, such a claim may warrant the refusal of a sequestration order (Rigg v Baker at [66] per French J; Singh v Deputy Commissioner of Taxation [2011] FCA 889 (Singh) at [14] perCollier J). In the latter case, only a basis for adjourning the creditor’s petition may be established, but the ultimate refusal of a sequestration order may not be justified (Rigg v Baker at [66] per French J).
4. The Court should go behind the Judgment of the Applicant and, upon doing so, find that there is no debt to the Applicant
Wong v Van Vlymen [2016] NSWSC 161 (1 March 2016)
[20] The general principles on which specific performance is granted are summarised in P W Young, C Croft and M Smith, On Equity, (2009, Lawbook Co.) at [16.900] as follows:
“Specific performance is more likely to be granted in some types of cases than in others. However, the underlying principle is that specific performance is only granted when ‘damages are inadequate to meet the justice of the case’, [Beswick v Beswick [1967] UKHL 2; [1968] AC 58 at 102] which was adopted by the High Court in Trident General Insurance Co Ltd v McNiece Bros Pty Ltd [1988] HCA 44; (1987) 165 CLR 107 at 119. The fact that certain types of cases more readily attract specific performance simply reflects the fact that, in those types of contracts, damages will frequently not be an adequate remedy to meet the justice of the case.”
Wong v Van Vlymen [2020] NSWSC 841 (2 July 2020)
[33] The Van Vlymen Entities further submit that, subsequently, the Wong Entities “unequivocally elected” to enforce the order for specific performance (e.g. through the appointment of receivers) rather than seek an inquiry as to damages for non-compliance with it (Despot v Registrar General [2016] NSWCA 5 at [117]- [118], [123] (‘Despot’) (the ‘election argument’). They further submit that the November 2016 Deed was a “mechanism” for “enforcing” the orders of specific performance (cl 2(m)(iv) of the Deed) and did not create fresh contractual rights with respect to the USD1.75m and SBD15m amounts. They note that on 4 November 2016, the Court made orders noting the existence of the Deed and staying the order for specific performance up to and including the settlement date but not after it (see also cl 5 of the Deed). They submit that at all times the parties’ rights and obligations remained under the supervision and control of the Court (Georges v Wieland [2010] NSWSC 1378 at [25]) so that once the order for specific performance “had sprung back into life” and there was non-compliance with it, the Wong Entities had a second election to make (Despot at [123]).
Georges & anor v Peter Wieland & ors [2010] NSWSC 1378 (30 November 2010)
25 First, when a decree for specific performance is made, the court may grant further relief, including – where, despite the decree, the defendant fails or refuses to complete the contract – by rescinding the order and substituting alternative relief [see Edward Fry, Fry on Specific Performance, 6th ed (1921) Stevens & Sons at 546-7, [1170]-[1173]; Gareth Jones and William Goodhart, Specific Performance, 2nd ed (1996) Butterworths at 258-9; Morrow v Tucker (No 2), [8]-[9]]. So in Johnson v Agnew [1980] AC 367, Lord Wilberforce explained (at 393-4) that where an order for specific performance is not complied with by a purchaser, the vendor may either apply to the court for enforcement of the order, or apply to dissolve the order and ask the court to put an end to the contract. And as Campbell J (as his Honour then was) said in Zorbas v Titan Properties (Aust) PtyLtd [2005] NSWSC 440, (at [12]), it is a general principle concerning orders for specific performance that once such an order has been made, the contractual rights of the parties are not superseded but their future exercise is under the control of the court, so that the working out of the order for specific performance is under the court’s control [see Singh (Sudagar) v Nazeer [1979] Ch 474, 481-
2; Buckman v Rose (1980) 1 BPR 9558; Sunbird Plaza Pty Ltd v Maloney [1988] HCA 11; (1988) 166 CLR 245, 259-60]. Similarly, in Morrow v Tucker, Biscoe AJ said (at 21) that where an order for specific performance has been made, the rights and obligations of the parties come under the control of the court, and the working out of the order of specific performance is under the control of the court; reference was made to Pratt v Hawkins (1991) 32 NSWLR 319. Counsel for the defendants accepted that if, on such an application, the court allowed the contract to be discharged, it could substitute an award of damages; although I have not found a case that goes so far, the concession appears in principle to be necessarily correct. Thus, in the case of a decree for specific performance, it remains open to the court, in the event of continued non-performance, to substitute different relief.
Jagatramka v Coeclerici Asia (PTE) Limited (No.2) [2015] FCCA 2743 (23 October 2015)
1. The parties agree that a bankruptcy notice cannot legitimately be issued if, at the time it is issued, execution of the judgment or order to which it relates has been stayed;[17] that, in a number of circumstances, execution of a judgment may be deemed to be stayed even where there is no express order of a court staying execution;[18] and that one circumstance in which execution of a judgment will be deemed to be stayed is where receivers have been appointed over all of a debtor’s property. That last proposition was affirmed by Beaumont J in Re Eddie Solomon Ex Parte: John Ralph Reid:[19]
It is well established that, for the purposes of s.41(3)(b), execution is deemed to have been stayed where a judgment creditor is not “in a position to issue immediate execution upon it” . . . It is also trite law that a judgment creditor may not, without leave of the court which appointed the receiver, levy execution against the property comprised in the appointment of the receiver . . . Any attempt to interfere with that property is an interference with an officer of the court in the performance of his functions. If done without leave of the court, it is a contempt of court. It will not be permitted even if the property concerned is not yet in the actual possession of the receiver . . . .
It follows, in the light of the construction of the order by McLelland J., that it was not open to the petitioning creditor, at the time of issue of the bankruptcy notice, to execute against any of the property of the debtor without the leave of the Supreme Court, subject to one exception which is not here material. The exception lay in the operation of the proviso to the injunction. Its operation could not be material here because the proviso is limited to the payment of living expenses of the debtor and his family: it did not purport to authorise, expressly or by implication, the payment of the judgment debt out of the property the subject of the receivership. Nor, in my view, did any of the powers conferred upon the receiver, whether specifically or generally, authorise any such payment.
Ramsay Health Care Australia Pty Ltd v Compton [2017] HCA 28 (17 August 2017) 261 CLR at 147–148 [54]–[55]
[54] In point of principle, scrutiny by a Bankruptcy Court of the debt propounded by a judgment creditor seeking a sequestration order in no sense involves an attempt to impeach the judgment. A Bankruptcy Court is not concerned with whether the judgment should be set aside as upon an appeal, or even as a default judgment or a judgment obtained by fraud may be set aside; nor is a Bankruptcy Court concerned to deny the effect of the judgment as “res judicata” between the parties to it. A Bankruptcy Court is not concerned to prevent the judgment creditor from invoking the ordinary processes of execution available under the general law. Rather, a Bankruptcy Court is concerned with whether the debt on which it is based is truly a basis for the making of a sequestration order [(In Re Fraser; Ex parte Central Bank of London [1892] UKLawRpKQB 173; [1892] 2 QB 633 at 636–637)]. A Bankruptcy Court has a statutory duty to be “satisfied” as to the existence of the petitioning creditor’s debt; a creditor should not be able to make a person bankrupt on a debt which is not provable.
[55] The scrutiny required by s 52 as to whether there is, in truth and reality, a debt owing to the petitioning creditor serves to protect the interests of third parties, particularly other creditors of the debtor. It is of critical importance to appreciate that such persons were not parties to the proceedings that resulted in the judgment debt. It has long been recognised that their interest in being paid their debts in full should not be prejudiced by the making of a sequestration order in reliance on a judgment debt which does not reflect the true indebtedness of the debtor to the petitioning creditor [(Ex parte Kibble; In re Onslow [1875] UKLawRpCh 37; (1875) LR 10 Ch App 373 at 376–377; Ex parte Lennox; In re Lennox (1885) 16 QBD 315 at 321–322, 329; In re FraserEx parte Central Bank of London [1892] UKLawRpKQB 173; [1892] 2 QB 633 at 636–637, 638; Corney v Brien [1951] HCA 31; (1951) 84 CLR 343 at 347- 348; Wren v Mahony [1972] HCA 5; (1972) 126 CLR 212 at 221-222)]. In In re Fraser; Ex parte Central Bank of London, Lord Esher MR said ([1892] 2 QB 633 at 636-637): “The decision is based upon the highest ground – viz, that in making a receiving order, the Court is not dealing simply between the petitioning creditor and the debtor, but it is interfering with the rights of his other creditors, who, if the order is made, will not be able to sue the debtor for their debts, and that the Court ought not to exercise this extraordinary power unless it is satisfied that there is a good debt due to the petitioning creditor. The existence of the judgment is no doubt prima facie evidence of a debt; but still the Court of Bankruptcy is entitled to inquire whether there really is a debt due to the petitioning creditor.”
(emphasis added)
[110] …. The circumstances which enliven the discretion to go behind the judgment are not constrained to any categories, even when the judgment debt was obtained after a contested hearing. As for the exercise of the discretion to go behind the judgment and to conduct a hearing into whether the underlying debt existed (which was not in issue on this appeal), Barwick CJ said in Wren v Mahony[135] that the discretion to accept a judgment as satisfactory proof of a debt "is not well exercised where substantial reasons are given for questioning whether behind that judgment there was in truth and reality a debt due to the petitioner"
[111] Whether a matter will amount to substantial reasons so as to permit the exercise of the discretion will depend upon the particular circumstances. But, as history shows, where a judgment debt has been obtained after the testing of the merits in adversarial litigation, then in the absence of some evidence of fraud, collusion, or miscarriage of justice, a court exercising bankruptcy jurisdiction will rarely have substantial reasons to investigate whether the debt which merged in the judgment was truly owed.
Quoted recently in James v Australia and New Zealand Banking Group Limited [2022] FCAFC 18 (19 November 2021)
5. Creditors Petition
s.43 (1) (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; or
See Woolley v Vok [2012] FMCA 228 (23 March 2012)
s. 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;
s. 55 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);
…
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.
RESPONDENT’S FUTHER SUBMISSIONS DATED 29 JULY 2022

On 29 July 2022, Counsel for the respondent filed the following supplementary submissions as extracted below:
Further to order 1 made by this Court on 22 July 2022, the Respondent respectfully makes further submissions, as follows:
1.These submissions are filed with respect to the Notice of Grounds of Opposition;
3…. the Respondent has a real cross claim that warrants an adjournment of the petition until such claim is determined.
2.The Respondent refers to his Outline of Submissions dated 18 July 2022, which appears at pages 3424 of the Supplementary Court book, such book having been tendered and marked as Exhibit “B”, but with the Submissions and Extracts etc. being excluded from that evidence.
3.After the Supplementary Court book was provided to this Court, the Court was provided with an amended Respondent’s Outline of Submissions by email on Thu 21/07/2022 7:50 AM, which amended only one paragraph, but for the sake of completeness, that amendment will be repeated, with context, at the end of these written submissions under the heading “No act of Bankruptcy”.
Cross Claim
4.If, under s.52(2) of the Act, the Court is satisfied by the debtor that for some other sufficient cause a sequestration order ought not be made, the Court may dismiss the petition and one matter which may constitute “some other sufficient cause”, is that the debtor has a cross-claim against the creditor for an amount that exceeds the debt on the basis of which the creditor seeks a sequestration order.
5.In the Extracts from Authorities at page 3436 of the Court book, the respondent refers to the following matters of principle:
1. It is open to a debtor to claim at the hearing of a creditor’s petition that he or she had a cross-claim against the creditor in an amount that exceeds the amount of the debt on which the creditor relies. Such a claim, when made, may be relevant in two ways. The first is where the bankruptcy court is not in a position to determine whether the asserted cross-claim is likely to succeed, but nevertheless is satisfied that the claim is of sufficient substance that the validity of the claim ought to be determined by the ordinary process by which civil claims are determined. Where the bankruptcy court is so satisfied it has a discretion to adjourn the creditor’s petition until such time as the cross-claim is determined in the ordinary course.
1. The assertion of a cross-claim against the creditor may be relevant in another way. The bankruptcy court may not only be satisfied that the cross-claim is of substance, but also that the debtor is likely to have a cross-claim that exceeds the judgment on which the creditor’s petition is based. Here, although the bankruptcy court retains a discretion to adjourn the hearing of the creditor’s petition it has the additional discretion to treat the existence of the cross-claim as “some other sufficient cause” and, for that reason, dismiss the creditor’s petition.
1. What I say in the preceding two paragraphs is based on the following passage from the judgment of Beach J in Liang v LV Property Investments Pty Ltd:[54]
An important distinction is to be made between a cross-claim which is likely to succeed and a cross-claim which is a bona fide and reasonably arguable claim, but where it is not established by the judgment debtor that it is likely to succeed. In the former case, where it is established that the claim is likely to succeed, such a claim may warrant the refusal of a sequestration order (Rigg v Baker at [66] per French J; Singh v Deputy Commissioner of Taxation [2011] FCA 889 (Singh) at [14] per Collier J). In the latter case, only a basis for adjourning the creditor’s petition may be established, but the ultimate refusal of a sequestration order may not be justified (Rigg v Baker at [66] per French J).
6.Further, “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."
7.The respondent submits that, having regard to the above principle, it was unnecessary to cross examine the applicant on the facts relating to the cross-claim and any denials by him must be left for another day, at the trial of the cross-claims.
8.The Respondent submits that he has cross-claims, which are;
a.bona fide and made in good faith;
b.reasonably arguable;
c.of an amount, each or accumulatively, exceeding the debt claimed by the applicant, in the petition, of $359,798.64 (say $360,000);
d.could not have been set up, by the respondent, in the proceedings in which judgment was obtained by the applicant; and/or (in this case)
e.not subject to any estoppel.
9.The respondent has two cross-claims, which he has advanced to the point of commencing two proceedings against the applicant: described herein firstly as the defamation proceedings and secondly as the Commercial List proceedings.
10.The court is not boundby the decision of Judge Manousaridis when he considered the defamation proceedings as part of deciding not to set aside the Bankruptcy Notice issued against the respondent (see Goo v Kim [2021] FedCFamC2G 108 (1 October 2021).
11.At the time, His Honour found, at [57], that the defamation proceedings “appear to plead reasonable causes of action in defamation, and the (statement of claim) annexes the publications complained of”, but he then identified a lack of evidence, which it is submitted, has now been rectified.
12.The respondent has filed evidence in respect of the damage caused by the defamatory conduct and a large volume of source documents to substantiate the claim, including a financial summary report and Financial Statements.
13.With the assistance from Counsel in the defamation proceedings, the respondent makes the submissions set out in the document attached titled “Respondent’s Written Submissions as to the Respondent’s Defamation Cross-Claim”.
14.In respect of the Commercial List proceedings, the respondent says that the claims are made in three components, best described in the List Statement, under the heading of “Nature of Dispute”;
a.The Plaintiffs claim that the First Defendant has breached or wrongfully terminated a contract in relation to the Security Fund of $370,000 received by the First Defendant as the Australian Security (“contract claim”).
b.The Plaintiffs claim that the conduct of the Defendants in refusing, failing and/or neglecting to return all of the other funds so demanded, of $250,690, amounted to each or all of (“Breach of Trust claim”);
i.breach of trust,
ii.breach of fiduciary duty,
iii.breach of the partners duty to account,
iv.a breach of the implied duty of good faith, and
v.unjust enrichment
c.The Plaintiffs claim that the First Defendant’s conduct in relation to the Investment from Korea was misleading and deceptive and in breach of s 18 of the Australian Consumer Law or alternatively section 1041H of the Corporations Act 2001 (Cth) and claims damages against the Defendants (“Misleading Conduct claim”).
15.Further, to the extent that any claim vests in the second plaintiff, being the company Hoju Jobs Pty Limited, there is evidence that the claim and/or the fruits of the claim have been assigned to the respondent, pursuant to a deed dated 15 February 2022.
16.The rights which have been assigned to the respondent did not vest in him, at law or in equity, at the time of the proceedings between the applicant and respondent, noted below.
17.The Court will be aware of the proceedings between the applicant and respondent which resulted in the orders which founded the relevant bankruptcy notice, such proceedings being Re Hoju Jobs Pty Ltd [2021] NSWSC 302 (26 March 2021) (“NSWSC Proceedings”).
18.In its reasons for judgment, the Court set out the history of dealings between the parties.
19.The Court noted, in the NSWSC proceedings that “on the final day of the hearing, Mr Kim elected to pursue his claim for specific performance rather than damages in respect of this alleged breach of contract.” (at 25]) and “at the hearing, Mr Kim abandoned all of his other pleaded claims for relief. Hoju Australia and Mr Goo abandoned a defence of set-off under s 21 of the Civil Procedure Act 2005 (NSW) that they had pleaded in response to Mr Kim’s claims for specific performance and damages for breach of contract (at [27]).
20.The Court did not determine any claims which could be said to be the subject of the Commercial List proceedings.
21.As a result, the respondent submits that there is no issue estoppel in respect of any such claims.
22.Relevantly, the Court noted that Hoju Jobs Limited (n.b. correctly described on the Summons at page 3456, rather than mistakenly named as Hoju Australia Ltd on the List Statement at page 3443 and often referred to as Hoju Korea), a company incorporated in South Korea, was not a party to those proceeding (at [2]).
23.The evidence of the respondent is that admissions were made by the applicant in the NSWSC proceedings that any set-off claim, which was abandoned therein by Mr Goo, was relevant to the Korean company.
24.The Commercial List proceedings include pleadings and allegations against both the applicant herein and, relevantly, against Hoju Jobs Ltd (incorporated in South Korea).
25.The respondent could not have set up, within the NSWSC proceedings, those claims now made in the Commercial List proceedings because the latter claims necessarily involve allegations against Hoju Jobs Ltd (incorporated in South Korea) as a defendant.
26.There is a reference in the evidence and the NSWSC proceedings to proceedings in Korea, but there is no evidence of the substance or form or outcome of those proceedings and, it is submitted, the court should therefore safely assume them to be irrelevant.
27.Instructively, in the NSWSC Proceedings the Court found;
a.There were discussions between Mr Kim and Mr Goo about Mr Kim investing in the businesses of Hoju Australia and Hoju Korea (at [4]).
b.Mr Kim pleaded that the terms of a contract were that Mr Kim would secure an investment in Hoju Australia of 3 billion Korean Won (KRW) from overseas investors (at [5]).
c.Mr Kim’s contended that Hoju Australia was also a party to the contract (at [8]).
d.It is common ground that Mr Kim did not succeed in attracting the proposed investment of KRW 3.5 billion from Jungdong Accounting in Hoju Australia (or any other investment from any third party) (at [20])
e.Mr Kim told Mr Goo that he would need more time to make this payment, but Mr Goo and Mr Kim agreed during a telephone conversation in late February 2017 that Mr Kim and Mr Goo’s wife would be registered as the directors of Hoju Korea in the meantime (at [42]).
f.It is common ground that representatives of Jungdong Accounting did visit Australia. Mr Kim gave evidence that they stayed at his home during their visit to Australia. Mr Kim introduced them to Mr Goo at a meeting at Mr Goo’s office on 24 March 2017 (at [47])
g.In their respective affidavits, Mr Kim and Mr Goo deposed that Mr Kim made various payments to Hoju Korea customers in the period from late 2016 to early 2017 to alleviate a liquidity crisis that was the being experienced by Hoju Korea and Mr Goo in South Korea. For each such payment made by Mr Kim in South Korea, Mr Goo paid the equivalent Australian dollar sum to Mr Kim in Australia as security for repayment of the KRW amount to Mr Kim in South Korea. The Australian dollar sums paid as security amounted to $370,000 in total (at [65]).
h.For the reasons explained below, I find that the oral contract between Mr Goo and Mr Kim was formed over a period of time between 23 January 2017 (or shortly before that date) and 29 March 2017, in the context of the changing circumstances in which an investment of KRW 2 billion promised by Mr Kim in January 2017 did not materialise and Mr Kim began instead to put forward proposed third party investors (at [80]).
i.… Mr Kim did take security in Australia for the repayment of money that he paid in KRW in South Korea on behalf of Hoju Korea at Mr Goo’s request (at [84]).
j.Mr Goo was not challenged in cross-examination about his evidence that he required a capital investment of KRW 2 billion into Hoju Korea in order to obtain the relevant licence (at [86]).
k.Rather, Mr Kim’s inability to make the investment himself explains why his efforts appear to have been directed to introducing third party investors with the necessary funds. I reject Mr Kim’s evidence that sought to downplay these efforts as nothing more than responding to some interest expressed by Jungdong Accounting. The representatives from Jungdong Accounting stayed in Mr Kim’s home when they visited Australia in late March 2017. The 29 March 2017 email on which Mr Kim relied was sent within a few days of their visit and referred to potential investors from South Korea who planned to invest approximately KRW 3 billion. I find that Mr Kim was actively seeking to introduce an investment of this magnitude from Jungdong Accounting and/or other potential investors identified by Mr Kim as referred to in the 29 March 2017 email, and that he told Mr Goo about these potential investors and introduced him to Jungdong Accounting in order to keep alive the possibility of Mr Kim being issued with shares in Hoju Australia and Hoju Korea (at [87])
l.Another objective matter that supports a finding that Mr Kim had promised a KRW 2 billion investment in January 2017 is that Mr Goo paid for Mr Kim’s travel to South Korea in February 2017 (at [88])
m.It seems to me that the third element is also consistent with the description in the 29 March 2017 email about what was to happen in the event of a “partnership break”. (at [90]).
28.Having regard to the above findings, the background matters pleaded in the List Statement appear uncontroversial.
29.There are no complex principles of law regarding the Contact claim component of the List Statement.
30.The Contract claim component of the List Statement is pleaded at pars [11] – [27] of the Plaintiff’s Contentions and supported by evidence in Par [52] – [95] of the Goo Affidavit of 2 February 2022.
31.The breach of Contract claim is quantified on the basis that there has been no accounting for or repayment of the funds by the applicant, which total $370,000.
32.To that amount, interest can be added since the date of breach on or about 13 June 2017, thereby making the amount of this component of the cross-claim greater than the amount claimed in the creditors petition.
33.The Breach of Trust component of the List Statement is pleaded at pars [50] – [64] of the Plaintiff’s Contentions and supported by the aforementioned evidence.
34.The claim is quantified on the basis that funds were transferred, as follows, and such amounts were held for the benefit of the Plaintiffs, including the respondent, and have not been returned.
a.to Korea, in the amount of AUD $100,000 on 13 June 2017 (par [90] page 61 of Exhibit “A”),
b.out of the second Korean bank account for KRW 62,784,676 (equivalent to about AUD $80,000) on 17 June 2017 (par [91] – [92]), and
c.to Korea for AUD $70,690 on 29 September 2017 (par [95])
35.There has been no repayment of the funds, which total AUD$250,690.
36.This component of the List Statement relies on the fact that funds had been transferred to the control of the applicant and/or the Korean company, and that such funds were either received for no consideration or, alternatively, were held in trust for the benefit of Mr Goo and/or Hoju Australia.
37.At the time, the applicant Mr JK Kim, had been appointed as director of the Korean company (par [32]) and had a partnership with Mr Goo (par [28c]), placing him in a position of fiduciary.
38.To the extent that the Korean company received the funds, or allowed Mr JK Kim to withdraw the funds, then the Korean company is liable, due to its knowledge that the money was misapplied by the company's officer in breach of their fiduciary duty.
39.These transactions involved the Korean company, as a result of which, they could not have been properly raised in the NSWSC Proceedings.
40.The Misleading Conduct component of the List Statement, in respect of the representations, is pleaded at pars [33] – [49] of the Plaintiff’s Contentions, in respect of s. 18 of the Australian Consumer Law (alternatively s 1041H of the Corporations Act [relating to securities]) at pars [65] – [72] and in respect of damages at par [72].
41.The findings in the NSWSC proceedings, identified earlier herein, support the contention that representations were made by Mr JK Kim, that the subject matter was the raising of funds by him for the partnership and businesses of Hoju in Australia and Korea and further, that such funds were never raised.
42.The Court will be aware of the principles for this Misleading Conduct component of the List Statement. The following principles are worth restating.
1.A contravention of s 52(1) of the TPA is established by “conduct” which is misleading or deceptive or likely to mislead or deceive: Global Sportsman Pty Ltd [1984] FCA 180; 2 FCR 82, 87. The “conduct”, in the circumstances, must lead, or be capable of leading, a person into error (Hannaford (trading as Torrens Valley Orchards) v Australian Farmlink Pty Ltd [2008] FCA 1591 at [252] citing Taco Company of Australia Inc v Taco Bell Pty Ltd [1982] FCA 136; (1982) 42 ALR 177 at 200; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191 at 198) and the error or misconception must result from “conduct” of the corporation and not from other circumstances for which the corporation is not responsible: Global Sportsman Pty Ltd [1984] FCA 180; 2 FCR 82, 91. “Conduct” is likely to mislead or deceive if there is a “real or not remote chance or possibility regardless of whether it is less or more than fifty per cent”: Global Sportsman Pty Ltd [1984] FCA 180; 2 FCR 82, 87.
2.Section 52(1) is concerned with the effect or likely effect of “conduct” upon the minds of that person or those persons in relation to whom the question of whether the “conduct” is or is likely to be misleading or deceptive falls to be tested. The test is objective and the Court must determine the question for itself: Global Sportsman Pty Ltd [1984] FCA180; 2 FCR 82, 87. Section 52 is not designed for the benefit of persons who fail, in the circumstances of the case, to take reasonable care of their own interests: Elders Trustee and Executor Co Ltd v E G Reeves Pty Ltd [1987] FCA 332; (1987) 78 ALR 193 at 241. Moreover, it would be wrong to select particular words or acts which although misleading in isolation do not have that character when viewed in context: Elders Trustee [1987] FCA 332; 78 ALR 193 at 241 citing Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191 at 199.
3.“Conduct” can, of course, include making a statement which is misleading or deceptive or likely to mslead or deceive: Global Sportsman Pty Ltd [1984] FCA 180; 2 FCR 82, 88.
4.By making a statement of past or present fact, a corporation’s state of mind is irrelevant unless the statement involved the state of the corporation’s mind: Global Sportsman Pty Ltd [1984] FCA 180; 2 FCR 82, 88. Contravention of s 52(1) does not depend upon the corporation’s intention or its belief concerning the accuracy of the statement of fact but upon whether the statement conveys a meaning which is false. A false meaning will be conveyed if what is stated concerning the past or present fact is inaccurate but also if, although literally true, the statement conveys a meaning which is false.
5.Precisely the same principles control the operation of s 52(1) to statements involving the state of mind of the maker when the statement was made (e.g. promises, predictions and opinions). A statement which involves the state of mind of the maker ordinarily conveys the meaning (expressly or impliedly) that the maker of the statement had a particular state of mind when the statement was made and, commonly, that there was a basis for that state of mind: Global Sportsman Pty Ltd [1984]FCA 180; 2 FCR 82, 88.
6.A statement of opinion will not be misleading or deceptive or likely to mislead or deceive merely because it turns out to be incorrect, misinforms or is likely to do so: Elders Trustee [1987] FCA 332; 78 ALR 193, 242 and Bateman v Slatyer (1987) 71 ALR 553, 559. An incorrect opinion does not of itself establish that the opinion was not held by the person who expressed it or that it lacked any or any adequate foundation: Global Sportsman Pty Ltd [1984] FCA 180; 2 FCR 82, 88. An expression of an opinion which is identifiable as an expression of opinion conveys no more than that the opinion is held and perhaps that there is a basis for the opinion. If that is so, an expression of opinion however erroneous misrepresents nothing: Global Sportsman Pty Ltd [1984] FCA 180; 2 FCR 82, 88.
7.However, an opinion may convey that there is a basis for it, that it is honestly held and when it is expressed as the opinion of an expert, that it is honestly held upon rational grounds involving an application of the relevant expertise. If the evidence shows that the opinion was not held or that it lacked any or any adequate foundation, particularly if the opinion was expressed as an expert, a statement of opinion may contravene s 52 of the TPA: Elders Trustee [1987] FCA 332; 78 ALR 193, 242, proposition (4): see also Hannaford [2008] FCA 1591 at [253] and RAIA Insurance Brokers Ltd v FAI General Insurance Co Ltd [1993] FCA 92; (1993) 41 FCR 164; Murphy v Overton Investments Pty Ltd [2004] HCA 3; (2004) 216 CLR 388; NC Seddon and MP Ellinghaus, Cheshire and Fifoot’s Law of Contract (9th Australian Edition, 2008), [11.116].
43.In respect of the elements noted above, the findings in the NSWSC proceedings, at paragraphs 4, 5, 20, 47, 80, 86, 87 and 88 noted earlier herein, support the respondent’s claim.
44.Further, the evidence read in these proceedings, supports these contentions, as follows;
a.The applicant Mr JK Kim represented that he would deposit the balance of KRW 2 billion in Hoju Korea ([66] on pp 53, 54 Exhibit A) and that he had attracted an investor, Jungdong to invest KRW 3.5 billion ([74] on p 56 and [76] – [80] on pp 57, 58 of Exhibit A).
b.The respondent relied on the representations and allowed the applicant to take steps to become a director and shareholder of Hoju Jobs in Korea ([81] - [88] on pp 59, 60 of Exhibit A).
c.The applicant admits that, at minimum, he introduced potential investors ([40], p 2802 Exhibit A)
45.It is not in issue that no balance of investment funds were provided or procured by the applicant.
46.The applicant Mr JK Kim had no basis for making the representations, and if they were relating to future matters, the onus is on Mr JK Kim to show that he had reasonable grounds (s 4(2) Australian Consumer Law).
47.The amount of damage claimed by the respondent is significantly greater than the amount claimed under the creditors petition.
48.The evidence of the damage is at par [96] of the 2 February affidavit of the respondent and pars [5] – [11] of his 2 March 2022 affidavit and [17] – [19] of his 30 March 2022 affidavit, such evidence supporting the calculation of $1,255,730.28 in losses (at par [8] of 2 March 2022).
49.The evidence of the respondent under cross examination, in blaming the respondent for the decrease in his personal income, should leave the Court in no doubt that he passionately believes that he has suffered loss, at the hands of the applicant.
50.The respondent makes the cross-claims with genuine belief in the facts and in good faith.
51.The filing of the List Statement was, admittedly late, however, the claim was not a ‘recent invention’, and had been squarely raised by the respondent in his evidence as early as 2 February 2022.
52.The respondent has filed and served the List Statement and must now, in accordance with the rules15, prosecute his claim with due dispatch.
53.In addition to the above cross-claims, the respondent has unchallenged evidence of a cross claim in the form of costs orders, which he says total $20,696.87.
54.In the course of the hearing, it was submitted that the respondent is subject to costs orders in favour of the applicant, however these have not been quantified or assessed and there is no evidence of any amount being owed.
No act of Bankruptcy
55.The applicant’s claim arises from the orders of the NSWSC that “the contract between the plaintiff and the third defendant referred to at [80] of the judgment of the Court in Re Hoju Jobs Pty Ltd [2021] NSWSC 302 be specifically performed”.
56.Where an order for specific performance has been made, the rights and obligations of the parties come under the control of the court.
57.The applicant’s rights are subject to the control of the NSWSC and, without leave of that court, the applicant is not entitled to pursue execution or seek orders from this Court.
58.There are circumstances in which there is a “stay of a judgment” when the execution creditor is, for some reason, not in a position to issue execution upon his judgment18. As a result of the order for specific performance being under the control of the Court, there was an effective stay of the applicant’s rights to issue a Bankruptcy Notice (see s. 41(3)(b) of the Act). As a result, the Bankruptcy notice could not be issued and there was no act of Bankruptcy. If there is no act of Bankruptcy, the Petition should be dismissed19.
AS TO THE RESPONDENT’S DEFAMATION CROSS-CLAIM
The Defamation Proceedings
1.The Respondent commenced defamation proceedings in the District Court of New South Wales on 19 July 2021, being case number 2021/00205852 (‘the defamation proceedings’).
2.The Plaintiffs in the defamation proceedings are the Respondent, along with Hoju Jobs Pty Ltd and Oakwood Sydney Pty Ltd. The Respondent is the beneficial shareholder of all shares in both these companies, and both are ‘excluded corporations’ for the purposes of the Defamation Act 2005 (NSW) (‘the Defamation Act’) in that they have less than 10 employees.
3.There are six Defendants in the defamation proceedings. For ease of reference, the details are as follows:
i.the First Defendant is the Applicant;
ii.the Second Defendant is Mr Sun Sick Sim (‘Mr Sim’);
iii.the Third Defendant is Mr Jun Won You (‘Mr You’);
iv.the Fourth Defendant is Mr Hyun Min Kim (‘Mr HM Kim’);
v.the Fifth Defendant is Ms Hyun Jung Cho (‘Ms Cho’); and
vi.the Sixth Defendant is Mr Dong Jin Kim (‘Mr DJ Kim’).
4.Defences have been filed by the Applicant, Mr You and Ms Cho. An appearance has been entered by Mr Sim. There have been no appearances by the Mr HM Kim and Mr DJ Kim, despite orders for substituted service being granted by the District Court and service of the Statements of Claim being effected by licensed agents.
5.The defamation proceedings are in a relatively early stage in terms of procedure. The matter was last before the Court for directions on 6 June 2022, at which Her Honour Judge Gibson ordered that the parties are to engage in mediation scheduled on 11 August 2022. It is with this in mind that these submissions have been carefully crafted to cover the essential elements of the defamation proceedings while minimising any potential prejudice to those proceedings.
The Nature of the Defamation Proceedings
6.The Respondent’s defamation proceedings consist of five ‘Matters Complained Of’, each being publications attributed to certain defendants and each carrying defamatory imputations on which the Respondent seeks damages for harm to his reputation. The Matters Complained Of are as follows:
i.an article on the Korean language website known as Breaknews (the ‘First Matter Complained Of’). Publication is alleged against all Defendants;
ii.Korean-language flyers which the Respondent alleges were distributed or caused to by distributed by all Defendants (the ‘Second Matter Complained Of’);
iii.contents on a Korean language website known as ‘thecheat.me’ (the ‘Third Matter Complained Of’). Publication is alleged against the Applicant, Mr Sim, Mr You and Mr DJ Kim;
iv.a second publication of contents on ‘thecheat.me’ (the ‘Fourth Matter Complained Of’), again alleging publication by the Applicant, Mr Sim, Mr You and Mr DJ Kim; and
v.a post on the blogging site known as ‘Missy Hoju’ alleged to be published by Ms Cho (the ‘Fifth Matter Complained Of’).
7.In relation to the Second Matter Complained Of, the Respondent pleads a ‘further or in the alternative’ republication as against all Defendants. The alleged republication relates to the distribution of the flyers by the Defendants.
8.The imputations pleaded by the Respondent in relation to each of the Matters Complained Of are many are varied. For the purposes of these submissions, it can be said that the general tenor exhibited by all imputations is that the Respondent committed investment fraud and is a person of poor repute and a criminal.
9.Only the Defence filed by Mr You pleads a specific defamation defence, being the defence of contextual truth in relation to various imputations in the First to Fourth Matters Complained Of. Generally speaking, the Defences of Mr You, the Applicant and Ms Cho do not admit publication and deny that the imputations are carried by the publications in any of the matters complained of. Ms Cho’s Defence raises a limitation issue in relation to the Fifth Matter Complained Of. As noted above, the proceedings are in relatively early stages and the Court should be aware that pleadings are often subject to amendments in defamation matters. As such, this summary of the Defences should only be taken as a general outline of the pleadings as they currently stand.
Sufficient Grounds for the Defamation Proceedings
10.His Honour Justice Street has requested that these written submissions speak to the sufficient causes and grounds for the Defamation Proceedings.
11.Essentially, for there to be a cause of action in defamation, three elements must be satisfied – publication by the Defendants, identification of the Plaintiff within that publication, and the carriage of defamatory imputations within that publication.
12.In the Respondent’s defamation proceedings there is no foreseeable issue with identification. The First through Fourth Matters Complained Of specifically name the Respondent. In such cases of direct identification there is no further hurdle for a defamation plaintiff to overcome – that is, it is not necessary to establish that Matters Complained OF were published to those who had knowledge of that identity.2 In relation to the Fifth Matter Complained Of, the Respondent contents that sufficient particulars of identification are pleaded, and that further explanation is not required for the purposes of these submissions given that the Fifth Matter Complained Of is only brought against Ms Cho who is not a party to these proceedings.
13.The imputations against the Respondent have been addressed briefly above in paragraph 9. These imputations are specified in the Respondent’s Statement of Claim in the defamation proceedings and as such it would serve little purpose to repeat them wholesale in these submissions. The Respondent’s position is that the multiple imputations plead in each Matter Complained Of are enough to satisfy the base threshold that an imputation must be capable of reflecting adversely on the Respondent’s reputation.3 As these particular imputations have not been tested in the defamation proceedings, it would not be proper for the purposes of these submissions to delve any deeper into the defamatory capacity of these imputations.
14.The final, and for the purposes of these submissions, most important element of a cause of action in defamation is the publication of the defamatory matter by the Defendants. There has already been some discussion in the current proceedings as to the capability of the Matters Complained Of in the defamation proceedings as being published by the Defendants and in particular the Applicant.
15.First and foremost, it must be understood that a published for the purposes of a cause of action in defamation is not limited to the ‘traditional’ definition of a ‘publisher’. In common usage, a ‘publisher’ may be seen as someone who disseminates material, such as a the publisher of a newspaper. This is not the case in defamation law. Rather, any person who is involved in promulgating defamatory material can be a publisher – that is, ‘publication’ is the act of communicating defamatory matter.
16.Relevant to the defamation proceedings is the extension of ‘publisher’ to include those who give interviews. His Honour Justice Street in this matter has enquired, for example, how the Applicant may be seen as a publisher of the First Matter Complained Of. In the matter of Dank v Whittaker (No 1) [2013] NSWSC 1062, Her Honour Justice McCallum made the following observation in relation to the capacity of an interviewee to be a publisher:
…in order to establish that a person is jointly liable as an original publisher of allegedly defamatory matter, it is necessary to establish either control or assent. Having reviewed the authorities relied upon, I accept that to be a correct statement of principle… a person who merely contributes part of what is published will not be jointly liable as an original publisher of the whole unless he or she assents to its final form.
17.The defamation proceedings plead that the Applicant had control over and/or assented to the publication of the First Matter Complained Of, thereby rendering him liable for the original publication of his contribution. Again, given the ongoing nature and progress of the defamation proceedings, it would be improper to make further submissions in this matter outside the core principles at play and the content of the pleadings.
18.Further to the above discussion on publication, it is important to note that the defamation proceedings make allegations in relation to republication of the Second Matter Complained Of. For the purposes of these submissions, it is enough to note that it is established that a person who repeats defamatory matter originally published by another person is taken to have published defamatory material, thereby giving rise to a cause of action in defamation.His Honour may find the decision of Her Honour Judge Gibson in Chow v Un [2017] NSWDC 254 to be relevant in relation to the publication and republication of the Second Matter Complained Of, relating as it does to a successful claim for the a plaintiff who was found to be defamed by distribution of pamphlet in a foreign language.
19.Given the above, the Respondent submits that it has sufficient grounds to bring the defamation proceedings against the Applicant and Defendants.
Potential Damages
20.A short note should be made on the core principles of damages in defamation. A plaintiff in proceedings for defamation benefits from a presumption of damage – that is, it is not necessary to prove that one’s reputation has been changed following the publication of defamatory material. Instead, damage to reputation will be inferred from the very fact that defamatory material was published.7 While evidence may be lead by defamation plaintiff as to the extent of damage to reputation in order to increase the quantum available under the various heads of damage in defamation law, the presumption provides a backbone of potentially substantial damages even in the absence of any evidence.
21.In relation to the various heads of damages discussed above, the Respondent pleads “the grapevine effect” in relation to the Matters Complained Of. This approach to defamation damages, which builds upon the presumption of damages by seeking to identify the spread and extent of damage to reputation, can be an important component in matters such as the defamation proceedings where a professional business trading reputation is said to be damaged by the publications.
22.Finally, the Respondent pleads aggravated damages, the particulars of which are specified in the Statement of Claim in the defamation proceedings. These are a further category of compensatory damages which may be awarded to a defamation plaintiff in circumstances where the defendant acted so as to increase the hurt or humiliation to the plaintiff.10 The Court will look to the conduct of the defendant, through the lens of the subjective experience of the plaintiff, to identify behaviour which increases damage to the plaintiff’s reputation and the feelings of the plaintiff.
APPLICANTS FURTHER SUBMISSIONS DATED 3 AUGUST 2022

On 10 August 2022, Counsel for the respondent filed further submissions in reply as follows:
Further to Order 1 made by this Court on 5 August 2022, the Respondent respectfully replies to the written submissions of the Applicant, filed on 3 August 2022, using the defined terms contained in the Respondent’s written submissions filed on 29 July 2022, as follows:
1.In pars [3] – [10], the Applicant submits that the Commercial List proceedings are subject to issue estoppel or res judicata, as a result of the decision in the NSWSC Proceedings.
2.The submission is made on the basis that it is merely “arguable” (at [9]).
3.The Respondent submits that the court did not, in the NSWSC proceedings, determine the merits of the off-set defence of the Respondent, such defence appearing at par 43 on page 3172 of the Court Book.
4.In the NSWSC proceedings, the court considered a damages claim for “breach of Concluded Agreement”, rather than the “breach of Contract” claim (see different relief claimed at page 3146 of the Court Book) which latter claim was abandoned (see also par [19] of Respondent’s written submissions filed on 29 July 2022) and former claim was dismissed.
5.It would be pure speculation to say what evidence the Court would or would not have considered, once part of the case was abandoned, and the Applicant does not point to any facts which were determined in the NSWSC Proceedings which could be the subject of any future contrary finding in the Commercial List proceedings.
6.In pars [3] – [6], [11] – [16], [24] – [26] the Applicant submits that the Commercial List proceedings are also subject to Anshun estoppel.
7.Contra par [11], there were no concessions made in the prior litigation and there is no identification of what, when or how concessions were made.
8.The Respondent submits that, in applying Anshun, there are “at least two related assessments … was the matter so relevant that it can be said to have been unreasonable not to rely upon it in the first proceeding?”
9.Further, a “strict approach is necessary in an Anshun estoppel case to the inquiry whether there exists the requisite identity between the proceedings; the mere fact that the proceedings are closely related is insufficient”. In considering whether an Anshun estoppel has been established it is necessary to bear in mind that “shut[ting] out a claim ... a party wishes to pursue, without determination of its intrinsic merit, on the ground that it ought to have been raised in earlier litigation...is a serious step, [and] a power not to be exercised except ‘after a scrupulous examination of all the circumstances’.
10.The Respondent submits that, once the Applicant “abandoned all of his other pleaded claims for relief” it was reasonable and certainly not unreasonable for “Hoju Australia and Mr Goo (to) abandon a defence of set-off under s 21 of the Civil Procedure Act 2005 (NSW)”
11.In par [17], the Applicant refers to the Deed of Assignment, however, the Respondent is not submitting that such Deed was required or could have occurred earlier.
12.The Deed of Assignment occurred when it occurred and only thereafter did the rights, so assigned, vest in the Respondent, which is a date after the NSWSC Proceedings.
13.In par [18], the Applicant submits that there is a lack of admissible evidence.
14.The Court does not “try the cross-claim in advance”⁵, and the debtor has to satisfy the Court that he or she has a prima facie case of a counter-claim, set-off or cross demand “even if the debtor does not adduce admissible evidence to support its existence.”
15.The evidence which was adduced within the NSWSC proceedings supports the submission that a prime facie case exists, as pleaded in the Commercial List proceedings.
16.At pars [25] and [26] the Applicant refers to contract between the parties and, relevantly, it has been held that contractual warranties are conduct for the purposes of TPA s 52 and its successor s 18 of the ACL.
…
Solvency
26.At [46] the Applicant submits that the Respondent made admissions about insolvency.
27.The Applicant was firm with his evidence under cross examination, that, despite his misguided view of the relevance of his assets and income from Korea, he had access to such resources as needed to meet his day to day living expenses and his liabilities.
Conclusion
28.If the Court is not satisfied that there was an act of bankruptcy, the Court should dismiss the Creditors Petition or alternatively, if it is so satisfied, it should adjourn the Petition, under strict conditions, to enable the Commercial List Proceedings and Defamation proceedings to be determined.
THE ACT OF BANKRUPTCY
In summary, Mr McDonald on behalf of the respondent took the court to authorities as to the nature of specific performance orders, including references to a specific performance order not being appropriate where damages are an adequate remedy. Mr McDonald contended that the form of the specific performance order was not a final judgment or final order of the kind meeting the criteria under section 40 and 41 of the Bankruptcy Act and accordingly, there had been no act of bankruptcy. Mr McDonald made reference to the liberty provision and notice of motion for contempt and submitted that there was not a final judgment or order. Mr McDonald conceded that the step identified in respect of order 1(a) in the provision of an executed transfer of the plaintiff’s G class shares in the first defendant to the third defendant had occurred.
Accordingly, there was no suggestion that there had been any failure to comply with order 1(a) and consequently order 1(b) had no work to do. The instruments the subject of order 1(b) were identified in what was said to be annexed and marked “A”. No such annexure was attached to the order attached to the bankruptcy notice.
In summary, Mr Eardley submitted that the annexure marked A and its omission from the terms of the judgment Court order attached to the bankruptcy notice was irrelevant and was not of significance as it was not the relevant order the subject of enforcement. The Court accepts the submission of Mr Eardley in that regard. The authorities identify the penal consequence of a sequestration order the need for strict compliance with essential requirements of a bankruptcy notice. The bankruptcy notice in the present case was in the form required by the Act and materially the annexure A to the orders was not part of the operative order the subject of enforcement. Annexure A to the orders did not qualify the monetary order and was not the order replied upon, see Commonwealth Bank v Horvath (1999) FCA 143 at para 3.
Order 1 and Order 5 were not qualified or subject to annexure A and it was not an essential requirement of a valid bankruptcy notice that annexure A which was concerned with a different order 1(b) not the subject of enforcement by the bankruptcy notice.
Mr McDonald submitted that because the concept of an order for specific performance remains in the control of the Court, it is not the case that the order meets the necessary requirements of a final judgment or order for a judgment debt so as to fall within section 40(1)(g) or meet the requirements of section 40(3) and/or the requirements of section 40(1) and contended that, accordingly, there had not been an act of bankruptcy within section 43(1)(a).
The Court is satisfied that the order made in the Supreme Court for the third defendant to pay the plaintiff the sum of $300,000 within 28 days from the date of the order, notwithstanding the preamble, is a final order for the payment of a debt being the sum of $300,000. The order for interest also supports a finding that order 1(c) by the Supreme Court was a final order for the payment of money.
There was no suggestion that the terms of order 5 in respect of the interest calculation were not a final order within the said provisions. The Court does not accept the preamble to order 1 in terms of the manner of specific performance gives rise to order 1(c) not being an order falling within section 40(1)(g) and within section 40(3)(b) as well as 40(3)(d) and accordingly met the requirements of final judgment or final order within the meaning of section 41. The Court finds that the bankruptcy notice complied with the requirements of section 41(2) and on the evidence before the Court, that an act of bankruptcy within s43 (1) (a) of the Act occurred on 8 October 2021.
The ability of a Court to supervise or revisit a specific performance order and the liberty order as to issues of non-compliance does not make the form of the order in the present case one that was not final. The Court does not accept that a specific performance order for the payment of a specified amount of money as expressed in the terms of the order in this case is not a final judgment or final order for the payment of money.
Whilst the Court accepts there is a contempt notice of motion on foot in the Supreme Court referrable to the failure to comply with order 1 (c) there is no stay on foot in respect of that order. The nature and form of the specific performance order as well as the liberty provision does not meant that order 1(c) is not an enforceable order or that order 1 (c) is the subject of any form of stay. The Court finds that there had been no stay of the final order within s40(3) (e) or s 41(3)(c). The Court rejects the respondent’s submissions that the petition is defective and rejects the submissions that there has been no act of bankruptcy, rejects the submissions as to there being a form of stay and rejects any submissions that there was no final order. Accordingly, the respondent has not succeeded on the issues (a) and (b) raised above.
PROOF OF MATTERS UNDER SECTION 52(1)
It was accepted by Mr McDonald on behalf of the respondent that if there was an act of bankruptcy, it was one that occurred within the requirements of section 43(1). The submission advanced by Mr McDonald that the Court should have concern as to whether or not there was proof of the matters stated in the petition because of the disconnect between the affidavit referring to 21 days and the petition referring to a period reflecting the extension of time as a result of the orders made by the learned Judge Manousaridis up to 8 October 2021 are not, that is, to persuade the court that the affidavit verifying the petition was not sufficient. As a matter of fact there was no payment within 21 days. The operation by law of the extension of the time under the bankruptcy notice does not render the affidavit false or cause the Court to find that the facts in the petition have not been proved. Further there was no failure to comply with an essential requirement in respect of the petition. Further, the court is satisfied on the evidence from the respondent that he failed to comply with the bankruptcy notice that the matter stated in the petition have been the subject of proof as required under s 52(1)(a). The Court finds that it is satisfied with the proof of the matters identified in s52 (1) as required by s52 (2) and rejects the respondent’s submission to the contrary. Mr McDonald accepted that the requirements of s 52(1) (b)(c) were met. Accordingly the court finds that its powers to make a sequestration order have been enlivened. It follows that the respondent has not succeeded on the issue (c) raised above.
SOLVENCY
Under section 52(2)(a) of the Act it was submitted that the court should be satisfied by the debtor that he’s able to pay his debts. The Court accepts the principles identified in paragraphs [15] and [17 of the petitioning creditor’s submissions dated 15 July 2022 and the principles identified in the respondent’s submissions on solvency dated 18 July 2022. It was accepted that this was a cash flow test and in this regard Mr McDonald accepted that the contention of solvency in the present case depended upon the court accepting that the loan facility from Mr Ill Joo Kim’s company were assets available or were funds available to the respondent. The court is satisfied that the respondent, on the evidence before the court, is unable to pay his debts as they fall due. The respondent’s affidavit identifies requiring funds from his wife to meet his weekly outgoings in the sum of $4400, whereas his income is something in the order of approximately $4100.
The respondent has no liquid assets available to meet the judgment debt. Turning to the contention of solvency based on the loan facility agreement. Mr McDonald relied on the proposition that it was not one where the court had to find that the available funds were free from any uncertainty. The difficulty faced by the respondent in the present case is the unequivocal evidence considered in cross-examination that the funds would not be provided while proceedings are still on foot in relation to contempt. The evidence from Mr Ill Joo Kim was that he had not entered into a loan agreement of this kind before and the evidence that he has of a right to refuse to provide if the contempt proceedings continue does not sit neatly with the actual terms of the loan facility. Given the adverse credibility findings made above the Court finds that the respondent does not have access to resources from Korea to meet his debts or from the alleged loan facility
There is no express provision in the loan facility that addresses a right not to provide the funds because of the contempt notice of motion. The court does not accept that clause 13(1)(g) reflects the breadth of the right that Mr Ill Joo Kim asserted in respect of the grounds on which he would not proceed to provide the loan funds. This means the provision of the funds is not on the evidence governed strictly by terms of loan facility so far as the corporate mind of the lender is concerned. It did appear that Mr Ill Joo Kim was proceeding on the basis of a friendship with the respondent and trusting the respondent to be in a position to repay the loan amount provided. The evidence in relation to the respondent’s income before this court identifies no basis upon which the respondent had the ability to service the proposed loan agreement. The Court accepts the applicant’s submission that this means even if there was an obtaining of the loan funds the respondent debtor is not capable on the evidence before this Court of servicing the loan debt raised. The Court finds that the respondent does not have funds to service the proposed borrowing be it $450,000 or $360,000. The respondent’s evidence about having other income from South Korea was entirely unsatisfactory, given the failure to identify and address for same in his affidavit to demonstrate solvency. The Court does not accept that the unspecified intangible assets of the respondent are liquid assets available to the respondent to establish that the can pay his debts as they fall due.
It appears that the respondent is treating income he receives in South Korea or assets of his wife as if they are funds that would be available to him. The respondent, however, failed to properly address in affidavit form the nature of these assets in South Korea or income streams and his affidavit sworn on 2 February 2022 relevantly stated in 108:
“I have no other debts other than day to day living expenses which I pay from my income as follows (300,000 in monthly rents for my rented unit), 700 in living expenses for my two daughters and myself). Any other living expenses are paid by my wife who currently lives in Korea.”
The Court finds that the respondent has not provided “fullest and best” evidence of his financial position. The respondent’s disclosed income in relation to the ATO does not support an income capable of meeting the expenses identified in paragraphs (a) and (b) or the proposed loan facility. There is no proper identification expenses being paid by the respondent’s wife and the respondent’s evidence does not identify the other sources of income or assets in South Korea. The Court does not accept the respondent’s evidence that he is solvent. The failure to comply with the bankruptcy notice is evidence that the respondent cannot pay his debts as they fall due. The Court does not accept that the respondent can pay his debts as they fall due. The Court finds the respondent was not a satisfactory witness in relation to his assets, liabilities, cashflow income and expenses. The Court does not accept that the evidence given by the respondent as to his ability to pay his debts and to service the loan facility is credible. This is because of the conceded omission of identification of the intangible assets, the other assets and income, and/or expenses or liabilities in South Korea. The failure to properly address these matters in affidavit form by the respondent undermines the reliability of the respondent’s evidence as to cashflow, ability to service any drawdown of the loan facility or alleged ability to pay his debts as they fall due. The onus on the ability to pay his debts fell on the respondent and he has failed to prove his ability to pay his debts within s52 of the Act.
The Court does not accept that the loan facility agreement is one that shows that the respondent has available resources from which he could meet the judgment debt. The Court does not accept that the loan facility agreement, in the circumstances of this case, and the evidence adduced by Mr Ill Joo Kim, give rise to the respondent having available resources by reason of which the respondent is able to pay his debts. This is because the Court does not accept that the loan agreement is one that reflects a current entitlement to obtain funds the subject of the loan agreement and because the corporate mind of the lender asserts a right not lend that is not expressly found in the loan agreement. The Court also is unsatisfied that the non-compliance with the preconditions to the loan agreement are a mere uncertainty.
The Court finds that Mr Ill Joo Kim would not provide the funds while contempt proceedings are still on foot, and that this reflects an asserted right beyond the terms of the loan agreement. This non-existent contractual right undermines the Court’s satisfaction that the loan agreement is one that reflects a genuine intention to provide funds in accordance with its terms. The asserted right of Mr Ill Joo Kim to refuse to provide the funds if a drawdown notice was made means the Court is not satisfied that if there was a drawdown notice issued regardless of whether contempt proceedings were still on foot, there would be payment made by Mr Ill Joo’s company Wiztoss Pty Ltd. The Court does not accept that the loan facility agreement identifies available resources to the respondent. Further the respondent on his own evidence as to his Australian income does not have capacity to meet repayments under the proposed loan facility and does not have ability to source and finance repayment of any new loan to discharge the debt the subject of the bankruptcy notice. The Court is not satisfied that the debtor is able to pay his debts within the meaning of section 52(2)(a). The Court rejects the respondent’s submissions as to solvency. Accordingly the respondent has not succeeded on the issue (d) raised above.
OTHER SUFFICIENT CAUSE
In relation to the respondent’s submissions as to other sufficient cause under section 52(2) of the Bankruptcy Act, Mr McDonald, in substance, relied upon the defamation proceedings and the proceedings in the commercial division recently commenced. The Court has taken into account the principles identified in paragraphs 5 and 6 of the petitioning creditor’s submissions dated 3 August 2022 and in paragraph 5 of the respondent’s submissions dated 29 July 2022 and paragraph 9 of the respondent’s submissions dated 10 August 2022. The Court is not satisfied that either of the two proceedings are bona fide and in food faith. The timing of both proceedings occurred after the judgment in the Supreme Court the subject of the bankruptcy notice. The Court is not satisfied that either of the two proceedings is likely to succeed. The defamation proceedings on their face are not ones that the Court is satisfied disclose a reasonably arguable cause of action against the applicant. The evidence does not identify a publication by or distribution by the applicant and there is no satisfactory or credible evidence of this essential element in the alleged defamatory causes of action.

While the pleading makes assertions of such a publication, the annexed publications are inconsistent with there being any publication of defamatory imputations by the applicant. The applicant has also put on evidence disputing control, assent, publishing or distribution of any defamatory imputations. The Court is not satisfied that the defamation proceedings commenced shortly after the judgment in this case were either bona fide and in good faith as against the applicant, are proceedings that are likely to succeed against the applicant or that those proceedings disclose a reasonably arguable case against the applicant. The Court has taken into account the principles identified in paragraphs 15 and 16 of the respondent’s submission attached to the submissions dated 29 July 2022. The Court does not accept that there is credible evidence of the alleged control over or assent to publication or distribution by the petitioning creditor as submitted by the respondent. The Court does not accept there is any credible evidence of original publication by the petitioning creditor. The defamation proceedings given the want of credible evidence as to publication or distribution by the petitioning creditor the Court finds the defamation proceedings do not disclose a real cause of action against the applicant and the Court is not satisfied that those proceedings have any real prospect of success. In these circumstances, the existence of the defamation proceedings fail to provide other sufficient cause why a sequestration order ought not to be made.
In relation to the commercial list proceedings, these were commenced on 20 July 2022. The parties to the proceedings include corporate entities, as well as the respondent as a first plaintiff and the applicant as a first defendant. It is immediately apparent from the subject matter of the nature of the dispute that it appears that the proceedings are seeking to re-agitate, in part, the subject matter of the proceedings that were the subject of the judgment giving rise to the bankruptcy notice. There is no satisfactory explanation for the failure of the respondent to bring forward the whole of his case and the Court finds that he issues ought to have been advanced and would have been able to be advanced in the proceedings before Williams J. The Court rejects the contention that the observations of counsel for the respondent in the transcript as to the abandonment prevent a res judicata, Anshun estoppel or an abuse of process in answer to the claims in the new Supreme Court Equity Division proceedings. Further the Court finds it was unreasonable for the respondent not to bring forward those claims in the Supreme Court proceedings. The assignment deed does not assist the respondent for the reasons identified in para [32] above. The Court is not satisfied that the respondent has a cross claim for an amount that exceeds the judgment debt on the petitioning creditor seeks the sequestration order.
Whilst the Court accepts that there may be a difference in the corporate entities, the Court regards the timing of the proceedings as being ones that reflect the same has not been brought in bona fide and in good faith as against the applicant. The timing, parties and overlapping subject matter support this finding. The contention by the respondent that the Supreme Court proceedings did not determine the cross claim the subject of the new commercial list proceedings is rejected. Further, the Court finds that the overlap of the proceedings as against the first defendant in those proceedings being the applicant petitioning creditor on their face appeared to be an attempted re-agitating of the issues in the earlier proceedings the subject of the judgment giving rise to the bankruptcy notice. The Court finds that the new Supreme Court proceeding by the respondent against the petitioning creditor are not likely to succeed, and have no reasonable prospect of success being an abuse of process or the subject of an Anshun estoppel.
The Court does not regard the commercialist proceedings as disclosing a reasonable cause of action as against the applicant. The Court does not accept the commercialist proceedings have a reasonable prospect of success and finds that the existence of the existence of the commercial proceedings are not of a sufficient cause why a sequestration order ought not to be made. Further, insofar as the existence of the proceedings give rise to a discretion, in the circumstances of this case and the want of bona fides which the Court has found as identified above in respect of the bringing of the two proceedings and the Court has found above that neither the District Court defamation proceedings or the new Supreme Court Equity Division proceedings have a reasonable prospect of success, accordantly the Court is not satisfied that it is a proper basis to dismiss the petition under section 52(2). The respondent’s submissions that the defamation proceedings and the Supreme Court proceedings are bona fide and in good faith is rejected. The respondent’s submissions that the defamation proceedings and new Supreme Court proceedings are likely to succeed is rejected and finds neither proceedings have a reasonable prospect of success for the reasons identified above.
The Court does not accept that the cross claim for untaxed costs which is well below the amount of the judgment debt provides a proper basis to decline to make a sequestration order Accordingly the respondent has not succeeded on the issue(s) raised above.
NO ADJOURNMENT
Further, the Court is not satisfied that the existence of the proceedings are ones whereby the proceedings should be adjourned pending the determination of either the defamation proceedings or the new Supreme Court Equity Division Commercial List proceedings. The Court has found those proceedings are not bona fide and have no real prospect of success. The petitioning creditor has made out the statutory requirements entitling the petitioning creditor to a sequestration order.
The Court finds that an adjournment of the proceedings under section 33 of the Bankruptcy Act is not required in the interests of the administration of justice in this case. That is because of the findings as to no bona fide and genuine cross claims in the two proceeding on foot, no likelihood of success of either proceedings, no reasonable prospect of success in either proceeding and because these proceedings have been on foot since 21 October 2021 and bankruptcy proceedings are of a kind that should be dealt with expeditiously as reflected in the steps that were taken by the learned Judge Manousaridis in dealing with the application to set aside the bankruptcy notice. The respondent has had ample time to take steps if he was able to pay out the judgment debt to do so. The Court is not satisfied there would be any utility in an adjournment because the Court is not satisfied the respondent would be able to obtain other funds from other sources or to successfully draw down on a loan facility or to service any such borrowings from his own funds.
Accordingly, the Court is not satisfied that this is an appropriate case to provide a further short adjournment following the publication of the Court’s reasons and finds that the judgment creditor is entitled to relief in the form of a sequestration order against the estate of the respondent. An adjournment is not warranted in the interests of the administration of justice. The Court is not satisfied it would be appropriate to defer the making of a sequestration order in the circumstances of the present case. The Court rejects the respondent’s submissions seeking an adjournment pending determination of the two proceedings or for a short adjournment. The two proceedings in light of the Court’s findings do not warrant the exercise of the discretion not to make a sequestration order. There would be no utility in any adjournment given the above findings and as the respondent has had ample opportunity to pay out the judgment debt if able to do so and because the petitioning creditor has made out the entitlement to a sequestration order. Accordingly the respondent has not succeeded on the issues (f) and (g) raised above.
CONCLUSION
The Court is has not been satisfied by the respondent debtor that there is other sufficient cause why a sequestration order ought not to be made. The Court finds that the petitioning creditor is entitled to a sequestration order and that there is no proper basis to defer the pronouncement of the orders.

I certify that the preceding eighty-six (86) paragraphs are a true copy of the reasons for judgment of Judge Street on 12 August 2022.

Associate:
Date: 12 August 2022

File number(s):	SYG 1960 of 2021
Judgment of:	JUDGE STREET
Date of judgment:	12 August 2022
Catchwords:	BANKRUPTCY – creditor’s petition – whether act of bankruptcy – whether order a final judgment – whether proof of the matters required under s52 – whether debtor is able to pay his debts – whether other sufficient cause – whether proceedings should be adjourned – sequestration order made
Legislation:	Bankruptcy Act 1966 (Cth) ss 27, 33, 40, 41, 43, 44, 47, 52
Cases cited:	Commonwealth Bank v Horvath (1999) FCA 143
Division:	Division 2 General Federal Law
Number of paragraphs:	86
Date of last submission/s:	10 August 2022
Date of hearing:	22 July 2022
Place:	Sydney
Counsel for the Applicant:	Mr D Eardley
Solicitor for the Applicant:	Praxis Lawyers
Counsel for the Respondent:	Mr G McDonald
Solicitor for the Respondent:	Rays Lawyer

SYG 1960 of 2021
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN:	JAY KOO KIM Applicant
AND:	SEOUNG JIN GOO Respondent

ORDER MADE BY:	JUDGE STREET
DATE OF ORDER:	12 AUGUST 2022