Sandhu v Owen (No 2)

Case [2025] FCA 878


FEDERAL COURT OF AUSTRALIA

Sandhu v Owen (No 2) [2025] FCA 878

File number: WAD 69 of 2024
Judgment of: JACKSON J
Date of judgment: 1 August 2025
Catchwords: BANKRUPTCY - sequestration order based on costs order - application for review of decision of Registrar - application for extension of time to file review application - ground alleging bankruptcy notice and creditor's petition have not been issued in good faith because original decision was erroneous and outside jurisdiction and tainted by fraud and collusion - ground alleging costs order on which the petition debt is based was erroneous and unreasonable - ground alleging service of bankruptcy notice invalid - ground alleging creditor's petition served not given to Official Receiver contrary to s 13 Bankruptcy Regulations 2021 (Cth) - extension of time granted - review application dismissed
Legislation:

Bankruptcy Act 1966 (Cth) ss 40, 44, 52, 60, 156A, 306

Evidence Act 1995 (Cth) s 91

Federal Court of Australia Act 1976 (Cth) s 35A

Federal Court (Bankruptcy) Rules 2016 (Cth) rr 2.02, 4.04, 4.06

Bankruptcy Regulations 2021 (Cth) ss 10, 13, 66, 67, 68, 70, 72, 73

Mining Regulations 1981 (WA) r 168

Cases cited:

Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 239 CLR 175

Bechara v Bates [2021] FCAFC 34; (2021) 286 FCR 166

Daly v Watson (1994) 50 FCR 544

de Robillard v Carver [2007] FCAFC 73; (2007) 159 FCR 38

Katter v Melhem (No 2) [2014] FCA 1176

Kitay, in the matter of Frigger (No 2) [2018] FCA 1032

Lowbeer v De Varda [2018] FCAFC 115; (2018) 264 FCR 228

Owen v Sandhu [2020] WAMW 3

Owen v Sandhu [2021] WAMW 15

Owen v Sandhu [2024] FCA 198

Owen v Wilson [2023] WASC 178

Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355

Psevdos v Commonwealth Bank of Australia (No 2) [2017] FCA 19

Ramsay Health Care Australia Pty Ltd v Compton [2017] HCA 28; (2017) 261 CLR 132

Re Flatau; Ex parte Scotch Whisky Distillers Ltd (1888) 22 QBD 83

Sandhu v Owen [2025] FCA 566

Simon v Vincent J O'Gorman Pty Ltd (1979) 41 FLR 95

Totev v Sfar [2008] FCAFC 35; (2008) 167 FCR 193

Tristan David Owen v Tavanth Singh Sandhu [2021] WAMW 18

Waterton v Lafferty, in the matter of Lafferty [2019] FCA 1267

Wren v Mahony (1972) 126 CLR 212

Division: General Division
Registry: Western Australia
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Number of paragraphs: 170
Date of last submissions: 26 May 2025 and 14 July 2025 (applicant)
27 May 2025 and 28 July 2025(respondent)
Date of hearing: 20 May 2025
Counsel for the Applicant: Mr WB Macdonald
Solicitor for the Applicant: Roe Legal Services
Counsel for the Respondent: The respondent appeared in person
Counsel for the Trustee in Bankruptcy: Mr S Taylor
Solicitor for the Trustee in Bankruptcy: Lavan

ORDERS

WAD 69 of 2024
BETWEEN:

TANVANTH SINGH SANDHU

Applicant

AND:

TRISTAN…

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Sandhu v Owen (No 2) [2025] FCA 878
Case
[2025] FCA 878
Decision Date

CaseChat Overview and Summary

The case of Sandhu v Owen (No 2) involves a bankruptcy proceeding where Mr Owen, the bankrupt, challenged the validity of a sequestration order based on a costs order. The matter was brought before the Federal Court of Australia. The primary issue before the court was whether Mr Owen's application for review of the Registrar's decision should be dismissed and, if not, whether the sequestration order should be set aside. The court had to consider various grounds for the review, including allegations of fraud, collusion, and improper conduct in the original decision-making process.

The court meticulously evaluated the arguments presented by Mr Owen, who claimed that the bankruptcy notice and the creditor's petition were issued in bad faith, that the costs order on which the petition was based was erroneous, and that the service of both the bankruptcy notice and the creditor's petition was invalid. The court also examined whether the extension of time for filing the review application should be granted. In its reasoning, the court held that Mr Owen's allegations, though numerous, did not sufficiently demonstrate fraud, collusion, or any miscarriage of justice that would warrant a review of the decision. The court found that the proceeding before the Warden was conducted with the expected rigor and that the Warden's decision was well-reasoned and based on the evidence presented. Therefore, the court dismissed the application for review and affirmed the Registrar's orders.

In light of the findings, the court granted an extension of time for filing the application for review and affirmed the Registrar's sequestration order. The court also ordered that the costs incurred by the petitioning creditor and the trustee in bankruptcy in the application for an extension of time and the application for review were to be treated as costs in the bankruptcy. Additionally, the trustee in bankruptcy was granted liberty to apply in relation to the costs.

Orders

Orders of the court

1. The time for filing an application for review of the orders made by the Registrar on 14 January 2025 is extended to 5 March 2025.

2. The Registrar's orders are affirmed and the application for review is dismissed.

3. The reasonable costs of each of the petitioning creditor and of the trustee in bankruptcy, incurred in the application for an extension of time and the application for review, are costs in the bankruptcy.

4. The trustee in bankruptcy has liberty to apply in relation to paragraph 3 above.

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

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

On 6 March 2024, Feutrill J affirmed the Registrar's orders in most respects: Owen v Sandhu [2024] FCA 198 (Set Aside Judgment). However, his Honour ordered that service of the bankruptcy notice could be effected by emailing it to a specified email address, and also ordered that if the notice were served in that way, the time for compliance with it would be the later of 2 April 2024 or 21 days after the date of that service. Mr Sandhu claims that the bankruptcy notice was validly served on Mr Owen by email on 6 March 2024, in accordance with Feutrill J's orders although, as will be seen, Mr Sandhu alleges that this did not supersede or replace the earlier date of service, on which he relies. As will be explained below, Mr Sandhu nevertheless proceeded on the basis that the time for compliance with the bankruptcy notice was extended to 2 April 2024. It is common ground that Mr Owen did not comply with it by that date, and has not complied with it since. On 4 April 2024, Mr Sandhu filed a creditor's petition in this Court, accompanied by an affidavit of search by Mr Sandhu's solicitor, William Macdonald, sworn on 4 April 2024 and an affidavit of service of the bankruptcy notice, sworn by Mr Macdonald on the same date. The affidavit of service annexes the bankruptcy notice issued 25 July 2023 as well as email correspondence from Mr Sandhu's solicitor to Mr Owen on 6 March 2024 attaching the bankruptcy notice. The Registrar then made an order for substituted service of the petition on Mr Owen by way of a specified email address. Mr Sandhu claims that on 16 May 2024, Mr Owen was validly served by that method with the creditor's petition, the affidavit of search, the affidavit of service of the bankruptcy notice, and a copy of the signed consent of Joanne Dunn of FTI Consulting to act as trustee. This is attested to in an affidavit of service of the creditor's petition sworn by Mr Macdonald on 20 May 2024. The Registrar heard the creditor's petition on 22 July 2024, and on 14 January 2025 made the order sequestering Mr Owen's estate. Ms Dunn became his trustee in bankruptcy, presumably by operation of s 156A(1)(a) of the Bankruptcy Act 1966 (Cth). As has been said, Mr Owen filed the application for review of the Registrar's decision on 5 March 2025. It is well established that the hearing of an application for review of a Registrar's sequestration order is to be treated as a fresh hearing of the petition: see Totev v Sfar [2008] FCAFC 35; (2008) 167 FCR 193 at [14]-[15] (Emmett J), quoted with approval in Bechara v Bates [2021] FCAFC 34; (2021) 286 FCR 166 at [21] (Allsop CJ, Markovic and Colvin JJ). It was, therefore, necessary for Mr Sandhu to present an affidavit of search of the National Insolvency Index and an affidavit verifying the petition debt, both sworn afresh shortly before the hearing of the review, in compliance with r 4.06(3) and r 4.06(4) of the Bankruptcy Rules. Mr Sandhu did not file those fresh affidavits prior to the hearing of the application for review on 20 May 2025. But at that hearing, Mr Owen sensibly did not insist on fresh compliance with the above rules. I therefore made orders dispensing with the need for those affidavits, since Mr Sandhu had previously complied with the rules for the purposes of the original hearing before the Registrar.

Ratio Decidendi

Legal Principle Established

Mr Owen also relied on the temporary cancellation of his Starlink service, what he says is Ms Dunn's attempt through Telstra to have it reconnected (after a request from the Court) and the freezing of his bank accounts, as further evidence of collusion. The evidence concerning those matters, if there is any, is however impossibly unclear, and I will not attempt to describe them further.Consideration The threshold question to be answered now is whether the matters advanced by Mr Owen provide sufficient reason to embark on an inquiry into whether the petition debt should not truly be taken to be owing, because the Warden's Decision on which it is based is tainted by fraud, collusion or miscarriage of justice, or because there are other circumstances that have been shown which make it appropriate to conduct an inquiry into the existence of the petition debt. That question needs to be answered in the context of the overall issue being whether Mr Sandhu, on whom the onus rests, has proven that the petition debt is truly owing. That question also needs to be answered in the context of the observations in Ramsay Health Care at [68] about the ability of the Court to rely on the ordinary processes of the adversarial system. In making the Warden's Decision, the Warden was acting in an administrative capacity, not in a judicial one: see Judicial Review Decision at [26]. But neither party submitted to me that anything about the jurisdiction or procedure in the Wardens Court affected the application of the observations from Ramsay Health Care. The transcript of the forfeiture hearing and the Warden's Decision itself reveal that the proceeding was conducted by the Warden and the legal practitioners who appeared before him with the degree of rigour to be expected of formal legal proceedings. In answering the threshold question, I need to consider the matters advanced by Mr Owen as a whole; a matter which would not by itself justify an inquiry into the judgment debt may still provide relevant support when considered with all the other matters relied on. Also, I will proceed on the basis that matters occurring after the Warden's Decision may be taken into account as supporting an inference that fraud, collusion or other improper conduct occurred before the Warden's Decision and so tainted that decision. I have, however, concluded that the matters on which Mr Owen relies, taken together, do not provide good reason to embark on an inquiry into whether the Warden's Decision was affected by fraud, or collusion, or was a miscarriage of justice, or should otherwise not be treated as proper basis for the petition debt. Mr Owen's contentions about the Warden's Decision are palpably an attempt to relitigate the proceeding that was before the Warden. To a large extent, Mr Owen points to minutiae concerning matters such as HGS's invoices or lists of tenements in authorisation letters and tenement reports, and then expands those points into large allegations of fraud. But even taken together, the matters on which he relies do not provide any sound support for such serious allegations. To address them all:(1)Mr Sandhu was found not to be an honest witness in the proceeding before Warden Hills-Wright (see above [53]), but he did not give evidence at the forfeiture hearing. What Mr Owen wanted the Court to take from that circumstance was never made clear. An assessment made of a witness in a different proceeding provides a slender basis for impugning the evidence adduced by senior counsel on behalf of that person (not being any testimony by the person himself), and the decision of an impartial and independent Warden after thorough consideration of that evidence.(2)One incorrect reference to a prospecting licence in a letter from Mr Sandhu is hardly significant and by no means points to any fraud. What Mr Owen wanted the court to take from that letter was entirely unclear.(3)The complaints about the HGS invoices were properly characterised by Mr Sandhu's counsel at the hearing before me as concerning minutiae. Mr Hawker's explanation for them was essentially that he did not check the tenements properly. The Warden appeared to accept that. The minor respects in which the invoices have been shown to have been incorrect do not provide any reason to think that the main body of the expenditure on the existing tenements which they evidenced was never conducted, let alone that the invoices as a whole were fraudulent fabrications. It was not at all clear why the proposition that Mr Hawker was, effectively, being paid for his work in shares was indicative of fraud. If anything, the fact that it was disclosed on the face of the invoices that were put into evidence was suggestive of transparency. If the suggestion was this disclosure was anachronistic or proleptic, that suggestion was never made clear. The Warden took Mr Owen's complaints about the invoices into account but did not find that they showed fraud or dishonesty or that the expenditure relied on had not occurred. To the contrary, the Warden accepted that the activity that it reflected had occurred in relation to the disputed ground, albeit that a small proportion of it had been attributed to an incorrect tenement.(4)Mr Owen's complaints about Mr Hawker's report about the Shallow Mining Gold project were unclear. To the extent that they identified that six prospecting licences had been incorrectly identified in the report as pending, it does not follow from that error that the report as a whole was falsified. Mr Hawker explained the error at the forfeiture hearing. Nothing in the nature of the explanation justifies this Court as treating the error as potential evidence of fraud.(5)Nor can Mr Owen's broader attack on Mr Hawker's credibility provide support for an inquiry behind the Warden's Decision. The Warden heard all the evidence and was in a position to weigh and assess it, as he did. The main specific matter on which Mr Owen relied in this regard, being Mr Hawker's evidence about a drilling program supposedly conducted in December 2018, was considered by the Warden. The Warden did not rely on Mr Hawker's evidence in that regard; he relied on other evidence produced by Mr Hawker, including documentary evidence, and on oral, documentary and photographic evidence produced by a different witness. An error in referring to parts per million rather than parts per billion is more indicative of inattention than fraud; if, as Mr Owen asserts, an experienced geologist would not make that error, it is a mystery as to what would be gained by deliberately falsifying a report in that way. And, again, the Warden specifically (and emphatically) rejected Mr Owen's claims that evidence had been fabricated.(6)Mr Owen's complaint about the Warden's treatment of the evidence about his own activities on the contested ground is merely an expression of disagreement with the Warden. The Warden's line of reasoning was open to him. While Mr Owen may be right to say that he could not have photographed all the ground, he could have taken photographs that could have been presented as samples. I would be slow to look behind the conclusion of an experienced Mining Warden about a matter such as this.(7)Mr Owen's submission that Mr Sandhu did not rely on Mr Scattini's evidence before the Warden is inaccurate. The transcript of the forfeiture hearing reveals that, initially, Mr Sandhu sought to adduce Mr Scattini's evidence as expert evidence. Counsel for Mr Owen objected to this, and ultimately the objection was resolved by senior counsel for Mr Sandhu effectively stipulating that he only relied on Mr Scattini as a witness of fact, concerning various observations he had made, and not as an expert witness as to his opinions. Mr Sandhu did not rely on a particular calculation and graph found in Mr Scattini's report. So it was open to the Warden to rely on the rest of Mr Scattini's evidence as to factual observations he had made, and that is what the Warden did: see e.g. Warden's Decision at paras 298 and 300-301.(8)Mr Owen's evidence that Mr Kavenagh accompanied Mr Scattini on a visit to relevant tenements does not establish anything untoward. It is commonplace for solicitors to participate in the engagement and briefing of expert witnesses and they have professional obligations not to interfere with the experts' independence when they do so. In any event, Mr Scattini's evidence did not end up as expert evidence. While it is unnecessary to make a finding about what Mr Kavenagh meant when he said 'we probably shouldn't be talking', one obvious explanation is the rule of courtesy that prevents solicitors from talking to legally represented parties on the opposing side without those parties' lawyers present.(9)As to Mr McCarty's evidence, the reason why he terminated the audio link during the forfeiture hearing is unclear. The material piece of evidence on which the Warden relied was a satellite image that Mr McCarty had supplied to Mr Hawker. It does not follow from Mr McCarty's conduct in the witness box that the image was fabricated, and it was open to the Warden to accept it as relevant evidence. The reason why Mr McCarty refused to supply the satellite image to Mr Owen is also unclear. Mr McCarty's own explanation was he did not have the time to deal with Mr Owen as a customer. It was open to the Warden to accept that, as he did, and Mr Owen has not advanced any good reason for thinking that anything untoward was behind Mr McCarty's refusal.