Roberts v Ho - Bankruptcy Voting Entitlements

Original Word Document (100.6 KB) Federal Court of Australia

Roberts v Ho, in the matter of Roberts [2026] FCA 385

| File number: | NSD 402 of 2026 | |
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| Judgment of: | DERRINGTON J | |
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| Date of judgment: | 2 April 2026 | |
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| Catchwords: | BANKRUPTCY AND INSOLVENCY – Application for declaration as to voting entitlements of creditor in bankruptcy – where claimed indebtedness arose pursuant to a guarantee issued by the bankrupt – whether the claimed indebtedness fell within the scope of the guarantee to the extent of the amount claimed – application dismissed | |
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| Legislation: | Building and Construction Industry Security of Payment Act 1999 (NSW) | |
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| Cases cited: | Briginshaw v Briginshaw (1938) 60 CLR 336

Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing & Allied Services Union of Australia v Australian Competition and Consumer Commission (2007) 162 FCR 466

Mangano v Bullen [2025] FCAFC 42

Ramsay Health Care Authority Pty Ltd v Compton (2017) 261 CLR 132

Re Dingle; Westpac Banking Corp v Worrell (1993) 47 FCR 478

Seafish Tasmania Pelagic Pty Ltd v Burke, Minister for the Sustainability, Environment, Water, Population and Communities [2013] FCA 782

Staples v Milner (1998) 83 FCR 203

Starkey v Rondo Building Services (2005) 145 FCR 423

Tanning Research Laboratories Inc v O’Brien (1990) 169 CLR 332 | |
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| Division: | General Division | |
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| Registry: | New South Wales | |
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| National Practice Area: | Commercial and Corporations | |
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| Sub-area: | General and Personal Insolvency | |
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| Number of paragraphs: | 52 | |
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| Date of hearing: | 31 March 2026 | |
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| Counsel for the Applicant: | Mr N Mirzai | |
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| Solicitor for the Applicant: | HWL Ebsworth | |
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| Counsel for the Respondents: | Mr R Size | |
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| Solicitor for the Respondents: | Hall & Wilcox | |
ORDERS

| | | NSD 402 of 2026 |
| IN THE MATTER OF DANIEL ROBERTS | | |
| BETWEEN: | DANIEL ROBERTS

Applicant | |
| AND: | BENJAMIN HO

First Respondent

SCOTT PASCOE

Second Respondent | |

| order made by: | DERRINGTON J |
| DATE OF ORDER: | 2 April 2026 |
THE COURT ORDERS THAT:

1. The application is dismissed.

2. The applicant pay the respondents’ costs of the application on the standard basis, to be taxed.

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

REASONS FOR JUDGMENT

DERRINGTON J:

Introduction

1 This is an application for urgent final relief pursuant to which the applicant, Mr Daniel Roberts, seeks a declaration that BH Australia Constructions Pty Ltd (BH Australia) is a creditor of his and is entitled to vote in the full amount of its claimed debt of $4,418,373, at a creditors’ meeting in his bankruptcy. A further order is sought that the first respondent to the application, being Mr Roberts’ trustee in bankruptcy, Mr Ho, hold a further creditors’ meeting within ten business days of receiving a revised composition from Mr Roberts.

2 The essential reason for the current application arises from Mr Roberts’s previous attempt to enter into a composition with his creditors. He proposed that composition to his trustee on 2 February 2026, and three days later a report to the creditors was issued in respect of it. It was then put to the creditors at a meeting on 24 February 2026. At that meeting, BH Australia, which then claimed a debt of slightly in excess of $5 million, was admitted for voting purposes at $1. The composition was rejected with five creditors voting in favour of it and four against. The value of creditors in favour was 49% of the total value and the remaining 51% was against. It is apparent that BH Australia, which is controlled by a Mr Shankar who has a personal relationship with Mr Roberts, voted in favour of that proposed composition, and it is expected that it will do so in the future in respect of any revised proposal.

3 The application is brought on urgently as Mr Roberts’ bankruptcy will soon finalise through effluxion of time and he wishes to propose a further composition to his creditors in the hope that it will be accepted. If it is, he will obtain the benefits of having reached the composition with his creditors, as opposed to his bankruptcy being completed.

4 In order to secure the passage of a new proposed composition through any future creditors’ meeting, Mr Roberts asks the Court to determine the indebtedness of BH Australia in the amount claimed by it. In general terms, unless the debt is admitted at or around that amount, the value of the indebtedness in favour of the composition will not reach the required 75% for it to pass.

Principles in relation to reviewing a trustee’s determination

5 The principles relevant to reviewing a trustee’s determination of a creditor’s voting entitlement were set out in the written submissions of the respondent and were not in serious dispute. Counsel for the respondent, Mr Size, accurately summarised the effect of the reasons in Re Dingle; Westpac Banking Corp v Worrell (1993) 47 FCR 478, 486 – 488 (Dingle); Staples v Milner (1998) 83 FCR 203, 205 – 206 (Staples); Starkey v Rondo Building Services (2005) 145 FCR 423, 435 46 as follows:

(a) the determination of a voting entitlement is not a final ruling, akin to the rejection of a proof of debt, but rather a summary decision based upon the available information (Staples 205; Starkey 435 [46]);

(b) the Court will be reluctant to intervene unless persuaded that the determination affected or will affect the outcome of a vote (Dingle 485 – 486; Staples 206);

(c) the Court is not limited to the evidence before the trustee, but rather determines the voting entitlement de novo (Dingle 486); and

(d) the applicant bears the onus of proving that the creditor ought to have been permitted to vote upon the amount claimed (Staples 206), not merely a prima facie or arguable case (Dingle 486).

6 Mr Size also accurately summarised the principles which apply when a Court is faced with a debt which is founded upon a judgment of a court. Those principles were said to arise from the decisions in Tanning Research Laboratories Inc v O’Brien (1990) 169 CLR 332, 338 – 339 (Tanning); Ramsay Health Care Authority Pty Ltd v Compton (2017) 261 CLR 132 (Ramsay), and were articulated in the following manner:

(a) in determining whether to admit or reject a proof of debt, a trustee acts “in a quasijudicial capacity according to standards no less than the standards of a court or judge” (Tanning 338 – 339);

(b) in acting in a quasi-judicial capacity, the trustee is armed with the Court’s power to “go behind” a judgment, covenant or account stated to determine whether the debt claimed is a “true liability” of the bankrupt (Tanning 339 – 341);

(c) the Court and trustee exercise the power to “go behind” a judgment, covenant or account stated to protect the interests of third parties – particularly, other creditors of the bankrupt (Tanning 339; Ramsay 147 – 148 [55] – [56]);

(d) the Court and trustee may exercise the power to “go behind” a judgment where “sufficient reason is shown for questioning whether behind the judgment there is in truth and reality a debt due” (Ramsay 143 [37] – [38], 144 [42]);

(e) a debt claimed will not be a “true liability” of the bankrupt where the debt was founded on an act or omission that “unjustly prejudices” the interests of creditors – including where a judgment was procured by “fraud” or “collusion” or “miscarriage of justice”, or where an underlying compromise “was not a fair and reasonable one, in the sense that even if not fraudulent it was foolish, absurd and improper, or resulted from an unequal position of the parties” (Tanning 340); and

(f) whether the Court or trustee may go behind a judgment does not turn upon the choice of the creditor to base its proof of debt upon the anterior debt or the judgment (Ramsay 150 [64]).

7 Both sets of articulated principle should be accepted for the purposes of this application.

8 It should be added that the party seeking to establish the existence and extent of a debt must adduce sufficient evidence such that the Court must “feel an actual persuasion” of those matters before they can be found: Briginshaw v Briginshaw (1938) 60 CLR 336, 361 – 363; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing & Allied Services Union of Australia v Australian Competition and Consumer Commission (2007) 162 FCR 466, 480 [31] – [32]; Mangano v Bullen [2025] FCAFC 42 [35], [163].

The factual underpinnings of the alleged indebtedness

9 Here, BH Australia and Mr Roberts rely upon the existence of a consent judgment entered against Mr Roberts on 31 March 2023, as the primary foundation for the existence of a debt of $4,406,704 being payable to BH Australia. The entry of that consent judgment occurred only three weeks before Mr Roberts filed his debtor’s petition on 21 April 2023.

10 In these circumstances, the critical question for the Court is whether the debt which is reflected in the consent judgment was founded upon a “true liability” of Mr Roberts to BH Australia. In order to ascertain whether such a liability existed, it is necessary to go behind that consent judgment and consider the underpinning transactions between those parties. There was no suggestion from any party to the effect that this was a case where it was inappropriate to adopt that course.

The alleged underlying indebtedness

11 The origin of Mr Roberts’ indebtedness was said to be found in the terms of a document referred to as a “Profit Share and Consulting Services Agreement with Personal Guarantee”, and in the context of certain dealings between him and BH Australia. That agreement, which will be referred to as the “Services Guarantee”, was entered into in September 2017. It was between Mr Roberts, trading as Quantus Solutions, on the one hand, and BH Australia on the other, and it related to certain building works or projects which DSD Builders Pty Ltd (DSD Builders) was undertaking for developers. DSD Builders, which had secured building contracts from the developers, had put the contracts for development out to tender with BH Australia becoming the successful tenderer. In effect, it became a subcontractor in respect of the projects.

12 Mr Roberts’ position was that he, independently of DSD Builders, oversaw or facilitated the performance of those subcontracts. Though his role was not clearly identified, it is relevant that he was or had been a director of DSD Builders and, at the material times, his former wife held that position. He was also a shareholder in that company. In the circumstances, it appears that BH Australia had desired some security around the performance by DSD Builders’ of its obligations and, in furtherance of that, Mr Roberts was prepared to enter into the Services Guarantee. Relevantly, cl 9 of that document provided:

1. Personal Guarantee

In consideration of the Contractor entering into this Agreement and participating in the projects introduced by the Consultant, Daniel Roberts personally guarantees the proper performance of his obligations under this Agreement.

The Consultant hereby provides an unlimited personal guarantee and indemnity in favour of the Contractor.

Under this guarantee, the Consultant agrees that he will indemnify and hold harmless the Contractor against any losses suffered by the Contractor arising directly or indirectly from:

a. negligent performance of the Consultant’s services;

b. material breach of this Agreement by the Consultant;

c. failure to perform obligations agreed under this Agreement;

d. any failure, refusal or delay by the Head Contractor to make payment to the Contractor for works performed under any project introduced or facilitated by the Consultant, whether such failure, refusal or delay arises from the acts or omissions of the Consultant, the Head Contractor or otherwise.

This guarantee is a continuing guarantee and remains in effect for the duration of any projects governed by this Agreement.

13 The evidence discloses that, in or around early 2018, disputes occurred between BH Australia and Mr Roberts, consequent upon DSD Builders ceasing to positively respond to payment claims issued by BH Australia. This appears to have resulted from the developers ceasing to make payments to DSD Builders in response to payment claims made upon them. Those claims by DSD Builders then became the subject of applications for adjudication under the Building and Construction Industry Security of Payment Act 1999 (NSW) and, so it appears, the subject of litigation in the Supreme Court of New South Wales. It seems that DSD Builders needed successful results in its disputes with the developers in order to pay BH Australia, but did not have sufficient funds to progress those disputes.

14 The affidavit evidence of Mr Roberts and Mr Shankar was to the effect that BH Australia agreed to provide funding by way of loans to DSD Builders, such that the latter could pursue the adjudications and Supreme Court actions. It was hoped that this would result in the recovery of funds which could then be paid to BH Australia in respect of its claims. It is alleged that Mr Roberts accepted that the amounts to be so lent would be within the scope of his guarantee obligation under the Services Guarantee. Similarly, Mr Shankar asserts that he believed that any amounts expended by BH Australia in funding the adjudications and litigation pursued by DSD Builders, were within the scope of cl 9.

15 In his affidavit of 30 March 2026, Mr Shankar identifies a number of invoices which relate to the costs and expenses he says were incurred in relation to the funding of DSD Builders. The invoices themselves identify the amount claimed as:

Claim – Variation and consequential damages as per attached assessments including additional works agreed with DSD Builders Pty Ltd.

16 Several attached schedules to the invoices identify the source of the indebtedness as arising from such matters as:

• Consultancy (Negotiation, Adjudication and Supreme Court);

• Business expense related to none (sic) paid invoices, damages fee;

• Management (Business overheads 12 months, lost);

• Loss of business, consequential delay and breach of contract;

• Additional works agreed, between BH and DSD.

17 The above items are repeated on a number of occasions for different months, between October 2018 and September 2019.

18 Similar invoices, together with similar particulars, were delivered in relation to the several projects.

19 It can be assumed that the adjudications and litigation pursued by DSD Builders was not successful and that, as a result of the non-payment of the amounts claimed by BH Australia, a draft statement of claim was issued to Mr Roberts. It threatened an action against him in his capacity as Quantus Solutions, being a business name under which he acted, as well as against him personally. It is a confused document and vague in the nature of the claims being advanced. Nevertheless, in substance, it appears to claim $1.6 million for building work and $2.46 million in respect of the amounts advanced by BH Australia for the adjudications. That is, at best, a guess and the constituent elements of the claimed indebtedness or damage are far from clear.

20 Mr Roberts asserts that the threat of legal proceedings pursuant to the draft statement of claim caused the parties to enter into a new Deed of Settlement, Release, Guarantee and Indemnity on 15 July 2021. A document bearing that title is produced in these proceedings and will be referred to as the “Release Guarantee”. It makes provision for the payment of $4,238,034.53 to BH Australia by Mr Roberts pursuant to a schedule of payments. Those payments were to occur on or before 30 January 2022, and yearly thereafter on the 30 th day of June each year with a final payment of $638,034 on or before 30 June 2028.

21 The total of approximately $4.2 million reflects the amount claimed in the statement of claim to which reference has been made.

22 A curiosity of the Release Guarantee is that it purports to treat Mr Roberts in his capacity as Quantus Solutions, as being the principal debtor, and then in his personal capacity as a guarantor. At best, it can be taken as an intention that Mr Roberts was the principal debtor under the agreement, though that is an assumption favourable to Mr Roberts on this application.

23 It is apparent that Mr Roberts made no payments under that agreement and, on 15 March 2023, BH Australia filed a further statement of claim against him in the Supreme Court of New South Wales. It claimed the amount of $4.2 million pursuant to the Release Guarantee, plus interest and costs.

24 Subsequently, on 28 March 2023, the terms of a consent judgment were agreed between the parties and orders were made giving judgment in favour of BH Australia against Mr Roberts in the sum of $4.4 million, that being the principal claims together with interest to the date of judgment.

25 The trustee’s initial rejection of BH Australia’s debt was based on its failure to produce any guarantee supporting the existence of the alleged debt. Though the guarantees were subsequently provided, the trustee continues to maintain the position that the underlying indebtedness has not been established.

Construction of the 2017 guarantee

26 Clause 9 of the Services Guarantee does not cover the liability of DSD Builders to refund monies paid by BH Australia in respect of the adjudications and Supreme Court litigation.

27 There is not any real doubt as to the appropriate approach to the construction of guarantees. It is sufficiently stated in Law Relating to Banker and Customer, Westlaw Australia, online edition, 2026 as follows:

[12.40] Interpretation of a guarantee

The traditional view is that the liability of a guarantor is strictissimi juris and any ambiguity in the terms of the guarantee should be construed in favour of the surety, first by a strict construction in the contract as a whole and then contra proferentem the creditor to the extent that there remained any ambiguity. However, one must first read the document as a whole with such background information as was known by all parties to the document, with no requirement to depart, in favour of the surety, from the natural and ordinary meaning of the language in its contractual context if there was no ambiguity: Ankar Pty Ltd v National Westminster Finance (Aust) Ltd (1987) 162 CLR 549; 70 ALR 641; 61 ALJR 245 at 561 (CLR); Chan v Cresdon Pty Ltd (1989) 168 CLR 242; 64 ALJR 110. There is a clear overlap between the strictissimi juris doctrine and the contra proferentem rule, and the two co-exist but are not co-extensive or co-dependent: Todd v Alterra at Lloyds Ltd (2016) 239 FCR 12; [2016] FCAFC 15 at [34]; Mineralogy Pty Ltd v BGP Geoexplorer Pte Ltd [2018] QCA 174 at [51] - [52].

28 Despite that accepted method of interpretation, it is not necessary to apply it in this case where no real relevant ambiguity exists.

29 Though the scope of cl 9 is somewhat wide, it is limited by its own terms. Whilst the guarantee extends to losses suffered by BH Australia arising directly or indirectly from any failure by DSD Builders to make payments to BH Australia, those payments are confined to those which were in respect of work performed on any project introduced or facilitated by Mr Roberts. In this case, the payments the subject of the alleged default are loan repayments. Those loans were made by BH Australia for the purposes of facilitating DSD Builders’ adjudication claims against subcontractors. Therefore, the failure to repay the loans is not a failure to make a payment for works performed by BH Australia in the relevant sense.

30 In the written submissions on behalf of Mr Roberts, the construction of the clause was said to be as follows:

1.     As a matter of properly construing clause 9 of the Guarantee, the monies provided from BH Australia to DSD Builders to fund adjudications and legal proceedings falls within the scope of “losses suffered by [BH Australia] arising directly or indirectly from … any failure, refusal or delay by [DSD Builders] to make payment … whether such failure, refusal or delay arises from the acts or omissions of [BH Australia], [DSD Builders] or otherwise.” In this case the “otherwise” concerned the clients of DSD Builders who were responsible to pay DSD Builders – who was to on-pay BH Australia.

31 That construction unduly seeks to expand the scope of the clause by eliding the reference to the important words, “for works performed under any project …”.

32 Here, any loss sustained by BH Australia, or at least a substantial part of it, arose directly from DSD Builders’ failure to repay the loans which had been advanced for the purposes of the adjudications and Supreme Court proceedings. It cannot be sensibly suggested otherwise.

33 It can also not sensibly be said that BH Australia’s loss arising from DSD Builders’ failure to repay the loans arose indirectly from a failure by DSD Builders to make payment for the work referred to in cl 9. Whatever might be the scope of cl 9, which it is not presently necessary to delineate, it is not so wide as to capture the loss suffered by BH Australia arising from DSD Builders’ failure to repay the loans. Taking a sensible commercial approach to the scope of the clause, it would require that the indirect losses are consequential upon the initial failure to make a payment. In that sense, it might include interest or charges for which BH Australia became liable consequent upon it having not received the payments. Indeed, other losses might arise from BH Australia’s lack of funds consequent upon non-payment and might extend, for example, to the expense of attempting to fend off claims by third party creditors because BH Australia could not pay them. However, here, the loss in question arises from a new transaction into which BH Australia entered, being the advancement of loans to DSD Builders. The loss arising from the failure to repay them did not flow naturally or at all from the initial failure to make payments under the subcontracts, rather, it was a consequence of a different transaction.

The invoices relied upon are not within the scope of cl 9

34 It follows that the invoices sent by BH Australia to DSD Builders as discussed above (see supra [15 ] – [18 ]), were not in respect of any indebtedness covered by Mr Roberts’ guarantee. It is clear that, however they might be expressed, they were not invoices for work done by BH Australia under the projects in question. Therefore, to the extent to which they are the subject of BH Australia’s claimed debt in Mr Roberts’ bankruptcy, they should not be considered.

35 By a very late submission on behalf of BH Australia, it was suggested that the discussions between Mr Roberts and Mr Shankar in relation to the loans advanced by BH Australia for the adjudication processes, constituted an independent agreement for Mr Roberts to be responsible for repayment of the monies. That submission should be rejected. Those conversations sought to bring a liability for the payments within the scope of the existing guarantee created by cl 9 of the Services Guarantee and it is not possible to construe the words spoken as constituting a new agreement. It is sufficiently clear that the parties believed, albeit wrongly, that the existing guarantee was wide enough to cover the loans made to DSD Builders. No additional or new agreement was formed.

36 It follows that the indebtedness of $4.2 million claimed by BH Australia as arising under the Services Guarantee, the later Release Guarantee and the Consent Judgment did not truly exist, such that the declarations sought by Mr Roberts should not be made. It follows that no foundation exists for requiring the trustees to convene a meeting of creditors.

Should any other order be made in relation to any indebtedness of BH Australia?

37 The next question is whether the Court should attempt to ascertain what indebtedness, if any, there was as between Mr Roberts and BH Australia pursuant to the Services Guarantee.

38 It is sufficiently clear that the amount of $2.4 million, which can be directly linked to the further advances for DSD Builders’ adjudication and litigation, was not part of Mr Roberts’ indebtedness. However, an amount of $1.6 million was said to have been established by BH Australia as being payable in relation to the work it performed in respect of the several projects and, therefore, within the scope of the guarantee.

39 However, in this case there are several difficulties with determining the amount of any indebtedness. First, it is impossible to accurately identify the amount of indebtedness which might truly come within the scope of the Securities Guarantee. Whilst the amount of $2.4 million can be readily excluded, it does not follow that the remaining $1.6 million has been sufficiently established as an indebtedness within its scope.

40 On this application, the Court needs to feel some “actual persuasion” of the existence of the debt. The evidence which may satisfy that standard is not susceptible to any precise articulation because it will vary in the circumstances of each case. Here, there are a number of factors which would lead the Court to require more definitive proof than might be satisfactory in other circumstances. In this context, it is particularly relevant that Mr Roberts on the one hand and, BH Australia and Mr Shankar on the other, have a close connection. They are not independent arms’ length commercial parties. It is pellucidly clear that Mr Shankar is seeking to assist Mr Roberts in reaching a composition with the creditors. Indeed, he acknowledges as much in his affidavit of 16 March 2026. There, he indicates he wishes to work with Mr Roberts in the future and there are licensing restrictions that may impact Mr Roberts in the construction industry were his bankruptcy to be completed. Moreover, he claims to be the person who will make funds available for the composition with the creditors and, if that is true, it is clear that he has a substantial interest in the outcome of the application.

41 It was submitted, on behalf of the trustee, that Mr Shankar and Mr Roberts were friends and there was no demur to that characterisation of the relationship. Indeed, that is supported by the fact that Mr Shankar is presently the trustee of Mr Roberts’ family trust.

42 To the above can be added that the invoices from BH Australia which underpin the amount of indebtedness of $2.4 million were vague, perhaps even to the point of being misleading. The narrations are conclusory in nature and unsupported by any explanation or evidence. That being so, the other invoices need to be treated with a degree of suspicion.

43 In the foregoing circumstances, some clarity around the existence of the indebtedness is required. The circumstances of this matter are not equivalent to those which pertain at a first creditors’ meeting in a bankruptcy. In those circumstances, much less is required, as was observed by French J in Starkey at 435 [46]:

The admission by the trustee of a person to vote does not involve a final determination of that person's proof of debt. The Act requires only that, at the time of the first meeting, a creditor is required to have submitted a written statement setting out the amount which the creditor says is owed (s 64D(a)) and “brief particulars of the transaction and circumstances that gave rise to the debt” (s 64D(b)(ii)). No doubt a statement of particulars that discloses on its face a frivolous or baseless claim or a debt not provable in bankruptcy would lead to the trustee refusing entitlement to vote. To that extent the particulars may be seen as providing a procedural protection against frivolous or baseless claims: Re Zantiotis; Ex parte Andrew (unreported, Federal Court, Beaumont J, 17 May 1998). But generally speaking the section contemplates the trustee acting in a summary way on the information available and does not require him or her to determine the matter finally: Re Spanney; Ex parte Holtzmann (1936) 38 WALR 13. Cooper J pointed out in Staples v Milner (1998) 83 FCR 203 that the trustee’s decision is not final and only relates to the right to vote at the meeting. Against this background the objections raised by Rondo to the four creditors can be considered.

44 The present circumstances are quite different. Here, almost three years have passed since the bankruptcy occurred. The issue of BH Australia’s actual indebtedness has been raised in a substantive way, and it has been on notice that the trustee is unconvinced by mere assertions by it of indebtedness as might appear in invoices or payment claims. Despite that, no greater attempt was made to establish that liability which was within the scope of the Services Guarantee.

45 In all the above circumstances, much more is required to establish Mr Roberts’ indebtedness to BH Australia in court proceedings. To that end, the applicant’s onus of establishing the facts upon which the application might succeed are more akin to those considered by Cooper J in Staples, where his Honour observed at 206:

The bankrupts, to succeed on the present application, must establish, on the civil standard of proof, that the creditor respondents, or some of them, were not creditors, and that if excluded from the vote the remaining votes cast were sufficient to satisfy the requirements for a special resolution: Re McLean; Ex parte Friends Provident Life Office (1992) 36 FCR 502 at 512.

46 Here, very little is identified by BH Australia as to its entitlements to payment in respect of work done by it. Though some schedules of final accounts were produced, there was a distinct lack of specificity as to the actual liabilities for which the debt is claimed. Though a form of running account ledger was produced by BH Australia, it is difficult to identify which amounts received were used to discharge which indebtedness. There was also no further evidence establishing that the work was done and not paid for.

47 In the result, the Court would be required to sift through invoices and accounts in order to ascertain, if it could, the nature of any indebtedness arising from any unpaid work. That is inappropriate in a matter of this nature.

48 In any event, given the conclusion in relation to the claim for $2.6 million vis-à-vis the amounts paid for the litigation and adjudication, even if it were possible to identify the existence of some indebtedness, it would be insufficient to alter the voting at any creditors meeting. As was observed by Cooper J in Staples at 206:

The court will be reluctant to intervene in cases unless persuaded that the determination of the question of entitlement to vote did affect, or, depending on the view taken, would have affected, the fate of the proposal by producing a different result: Re Dingle; Westpac Banking Corp v Worrell at 485-486.

49 It is appropriate to follow that course and not attempt to ascertain the true liability of Mr Roberts to BH Australia, if any. The submission made to the contrary, that to accept BH Australia’s indebtedness for $1.6 million might affect the votes of other creditors who previously voted against the earlier compositions, is no more than mere speculation and should not be accepted.

Conclusion

50 It follows that the applicant has not established any foundation for the making of any order in respect of its proof of debt. The application should be dismissed.

51 There is no reason why the ordinary order as to costs should not follow, such that the applicant should pay the respondents’ costs of the application on the standard basis to be taxed.

Note on unwarranted submissions

52 It is unfortunate but necessary to observe that, following the hearing of this matter, the applicant sent to the Court further written submissions, which had not been invited by the Court and were made gratuitously. In this respect, it is appropriate to recall that which was said by Logan J in Seafish Tasmania Pelagic Pty Ltd v Burke, Minister for the Sustainability, Environment, Water, Population and Communities [2013] FCA 782 [3] – [4]:

[3]    It is necessary to remind those acting for the applicants as well as the profession more generally, I think, of what was said by the High Court in NT Power Generation Pty Ltd v Power and Water Authority (2004) 219 CLR 90 at [192]. In that case also there had been a gratuitous addition of submissions to written submissions which were the subject of a restricted grant of leave. In their joint judgment McHugh ACJ and Gummow, Callinan and Heydon JJ observed of that gratuitous addition:

This is unsatisfactory. It is impermissible to file further submissions without leave, and this cannot be evaded by adding on to submissions filed with leave other material for which leave should have been obtained.

[footnotes omitted]

[4] Those observations, though made in relation to the exercise of appellate jurisdiction, are no less pertinent in relation to the exercise of original jurisdiction. There is an important principle which underlies those observations. That is, the judicial power of the Commonwealth must be exercised in open court, save in respect of a restricted class of case (of which the trial was not one) which may truly be dealt with in chambers, and fairly.

| I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Derrington. |
Associate:

Dated: 2 April 2026

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