Federal Court of Australia

JML Rose Pty Ltd v Jorgensen (No 2) [2025] FCA 282

ORDERS

THE COURT ORDERS THAT:

1.    The application filed 11 November 2024 to review the sequestration order dated 16 October 2024 be dismissed.

2.    The sequestration order of 16 October 2024 be affirmed, but noting the date of the act of bankruptcy is 31 August 2024, not 30 August 2024 as noted on that order.

3.    The costs of the applicant of and incidental to the application to review the sequestration order be fixed in a lump sum by the Registrar and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966.

4.    The costs of the supporting creditor of and incidental to the application to review the sequestration order be fixed in a lump sum by the Registrar and paid from the estate of the respondent debtor, in accordance with the Bankruptcy Act 1966.

5.    The costs of the trustee of and incidental to the application to review the sequestration order form part of the costs of administration of the estate of the bankrupt by the trustee.

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

REASONS FOR JUDGMENT

(REVISED FROM TRANSCRIPT)

LOGAN J:

1    On 16 October 2024, a Registrar (Schmidt R) on the application of JML Rose, as applicant creditor, ordered that the estate of Mr Leigh Alan Jorgenson be sequestrated under the Bankruptcy Act 1966 (Cth) (the Act). The Registrar made, additionally, these orders as to costs:

…

2.    The applicant creditor’s costs, including reserved costs, if any, be fixed in the sum of $4,585 be paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966.

3.    The costs of the supporting creditor, BODY CORPORATE FOR CAIRNS CENTRAL PLAZA APARTMENTS COMMUNITY TITLES SCHEME 40022, be taxed in accordance with the Federal Court Rules and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).

…

[emphasis in original]

There were two annotations on that order.

2    By one, the Court noted that a consent to act as trustee signed by Mr Leon Lee had been filed under s 156A of the Act. The other was that the court noted that the act of bankruptcy is 30 August 2024.

3    On 1 November 2024, Mr Jorgensen filed an application in which, incorrectly, he attributed to the “Federal Circuit Court of Australia [sic]” (Circuit Court) the making of the order of 16 October 2024. It is quite clear, on the face of the order of 16 October 2024, that the order was one made by this Court, not the Circuit Court. Apart from seeking interim relief, which became the subject of an interlocutory judgment delivered by me on 29 November 2024 (JML Rose Pty Ltd v Jorgensen [2024] FCA 1421) Mr Jorgensen’s application sought orders in these terms:

3.    SET ASIDE THIS BANKRUPTCY ACTION ON GROUNDS OF A SUBSTANTIAL DEFECT ON THE BANKRUPTCY NOTICE INCLUDING SIGNIFICANTLY MATERIALLY DIFFERENT NAME LISTED AS THE DEBTOR.

•    Section 41(5) of the Bankruptcy Act 1966:

•    Federal Corut (Bankruptcy) Rules 2016 – Rule 3.02:

•    This rule requires that bankruptcy notices meet specific requirements, and inconsistencies in the names or addresses between the bankruptcy notice and the judgment it’s based on can be grounds for setting aside the notice if they mislead the debtor.

4.    FOR THE COURT TO “LOOK BEHIND THE JUDGMENT” IF NECESSARY

•    Section 14 of the Bankruptcy Act 1966: This section allows the court to consider various matters relating to the validity of a creditor’s claim. It effectively enables the examination of the circumstances leading to the judgment that resulted in the debt.

•    Federal Court Rules 2011 – Rule 39.05: This rule allows a party to apply to set aside a judgment obtained in their absence. In cases where there are legitimate grounds for questioning the judgment (such as lack of knowledge or fraud), the court can look into the details behind the judgment.

•    Equity Principles: The courts may apply equitable principles in assessing whether a judgment should be enforced, particularly in circumstances involving unfair processes or where a debtor was unaware of the proceedings.

•    The lack of notice of the original proceedings, ongoing proceeding and the Default Judgment made 3 years ago (M193/22) resulted in substantial injustice, which could affect compliance with the bankruptcy process as I the applicant had no prior warning or participation (due process) with the originating matter M193/22.

•    There is a genuine dispute regarding the debt on which the judgment was based and the judgment is being contested in good faith.

[emphasis in original]

4    It is, with all respect to registry officers, a very moot point, indeed, as to whether, in the form it was lodged, the application should ever have been accepted for filing, so much does it part from this Court’s rules of court. However that may be, it was accepted, apparently, and classified within the registry as an application to review a registrar’s decision. Both in interlocutory case management and on today’s hearing, the application has been approached and dealt with on the basis that it should be treated as an application for the review by a judge of the registrar’s decision to make the sequestration order. In my view, it is in the interests of justice to so treat the application.

5    The time for Mr Jorgensen to apply to set aside the bankruptcy notice upon which JML Rose relied had expired long before 1 November 2024. Indeed, there was no such application prior to the filing of the application for sequestration.

6    In Martin v Commonwealth of Australia (2001) 217 ALR 634 (Martin), the Full Court confirmed views that had earlier been expressed in the original jurisdiction that when this Court reviews a decision of a registrar to make a sequestration order of a person’s estate, the Court must conduct the hearing de novo. Thus, at [6] in Martin, the Court stated:

[6]    Section 35A(6) of the Federal Court Act confers on the court a power, on application under s 35A(5), to review an exercise of power by a registrar pursuant to s 35A. It has been held in the past that such a review requires a hearing de novo: see, for example, Jageev Pty Ltd v Deane (unreported, Fed C of A, Davies J, No N63302 of 1996, 15 May 1998) at 3–4; followed in New Era Installations Pty Ltd v Don Mathieson & Staff Glass Pty Ltd (1999) 31 ACSR 53 at [2]–[4] per Katz J and in Meehan v Alfaro (1999) 93 FCR 201 at [2] per Katz J.

…

7    That being so, it is incumbent on me to decide afresh whether or not a sequestration order should be made. If I were so satisfied, and that would require proof of the matters specified in s 52(1) of the Act, the appropriate order in my view would be to affirm the sequestration order made by the registrar, but it is for me to decide whether the proofs exist.

8    If I am not satisfied that the required proofs were present or that, as a matter of discretion, a sequestration order should not be made, then the appropriate order in my view would be to set aside the order of 16 October 2024. In that circumstance, it may be necessary to hear from the trustee in particular as to what provision should be made in relation to the costs incurred by the trustee to date in the administration of the estate pursuant to the order of 16 October 2024.

9    The requirements specified in s 52(1) of the Act are these:

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.

10    If so satisfied, a discretion is then enlivened. It does not follow automatically that a sequestration order must be made.

11    This particular creditor’s application relied, as the foundation for the allegation of the commission of an act of bankruptcy, on alleged non-compliance by Mr Jorgensen with a bankruptcy notice said to have been served on him on 9 August 2024. In turn, that bankruptcy notice was issued on the basis of a judgment, which is a default judgment, of the Magistrates Court of Queensland in proceedings as between JML Rose Pty Ltd and Mr Jorgensen “in his personal capacity and as trustee of the Leigh Jorgensen Family Trust”. The judgment is dated 29 June 2022 and relates to a claim filed on 4 February 2022. The judgment recites the Defendant not having filed a Notice of Intention to Defend, that defendant pay to the plaintiff the amount of $55,983.25, including $360.39 interest to this date and $2153.16 “for costs”.

12    An affidavit of Mr James Matthew Lavercombe, filed on 9 September 2024, attests, and there is no challenge to this, that on that date, using the federal law search public facility, he conducted a search for Mr Jorgensen using the name Leigh Alan Jorgensen, with no result being returned associated with Mr Jorgensen’s having commenced proceedings associated with the bankruptcy notice issued by the official receiver on 7 August 2024. In that same affidavit, Mr Lavercombe attests to having served Mr Jorgensen personally in Cairns with a hard copy of that bankruptcy notice on 9 August 2024. There is evidence before the Court that Mr Lavercombe’s affidavit just mentioned, along with the creditors petition, were duly served on Mr Jorgensen.

13    The creditor’s petition was originally listed for hearing before a registrar (Registrar Buckingham) on 9 October 2024. Mr Jorgensen appeared by telephone at that hearing. I have the benefit in evidence of a transcript of the hearing before the registrar. Suffice it to say, the registrar was persuaded to grant Mr Jorgensen an adjournment of the hearing of the creditor’s petition on 9 October 2024. He did not grant Mr Jorgensen the four weeks' adjournment that he sought; instead, just one week to 16 October 2024. The registrar went to some length to impress upon Mr Jorgensen the desirability of his taking legal advice and also in response to an assertion which Mr Jorgensen had made about applying to the Queensland Magistrates Court to set aside the default judgment to place whatever evidence he could of that before the Court on the adjourned hearing date.

14    As it transpired, Mr Jorgensen did not appear on 16 October 2024. The sequestration order of 16 October 2024 was made in his absence. Mr Jorgensen, in evidence, attested to some difficulties in communicating with the Court. It is not possible, having regard to such records as are kept on the internal registry side of the court file in this proceeding, to reach a concluded view about the alleged difficulties of communication. I am, however, willing to accept that there may have been some.

15    It is all too easy to assume that the benefits, or at least supposed benefits, of remote hearings, as opposed to hearings in person, work each and every time. They have certainly worked in earlier case management and today, but that was because of an insistence of the attendance at the Commonwealth Law Courts in Cairns, with the sophisticated audio-visual communications link available there. And I should add, although a hearing in person was offered to Mr Jorgensen, it suited him preferentially, because he is resident in Far North Queensland, to appear remotely in this proceeding. In the end, it seems to me, given the very nature of the jurisdiction that I am exercising, that it is truly unnecessary to reach a concluded view about whether there was an absence for some technological deficiency reason or any other reason for that matter for his absence.

16    Even assuming that there was some denial of procedural fairness, any such denial has been wholly addressed by the very nature of the jurisdiction being exercised, which requires a hearing de novo and which Mr Jorgensen has taken up. So I devote no further time to the consideration of the court’s side of events on 16 October 2024, subject to one technical issue concerning the date of the act of bankruptcy noted, to which I will refer shortly.

17    Mr Lavercombe’s further affidavit, as filed on 15 October 2024, attested to having access to the accounts, books and records maintained by JML Rose, and having checked the same, as a result of that, he attested to that, as at 15 October, JML Rose had not received any part of the sum claimed by that applicant as a debt owing by Mr Jorgensen, who is referred to in the bankruptcy notice. He attested that sum concerned remained due and owing, and that there was no agreement between JML Rose and Mr Jorgensen about the debt claimed to be owing in the bankruptcy notice.

18    The bankruptcy notice had allowed 21 days after the date of service for compliance. Against the background recited, I am satisfied that Mr Jorgensen committed an act of bankruptcy, that the petition was served, and that the debt upon which the petitioning creditor relies was still owing as at 16 October 2024. Indeed, having regard to a yet further affidavit of Mr Lavercombe, as filed on 20 March 2025, that amount is still owing, and there has been still no agreement between JML Rose and Mr Jorgensen about the debt claimed in the bankruptcy notice.

19    The creditor’s petition, at [4], alleges in relation to Mr Jorgensen:

4.    The following act of bankruptcy was committed by the respondent debtor within 6 months before presentation of this petition:

The respondent debtor failed to comply on or before 2 September 2024 with the requirements of a bankruptcy notice served on him on 9 August 2024 or to satisfy the Court that he had a counter-claim, set-off or cross demand equal to or more than the sum claimed in the bankruptcy notice, being a counter-claim, set-off or cross demand that he could not have set up in the action in which the judgment referred to in the bankruptcy notice was obtained.

20    The allegation is that the act of bankruptcy occurred on 2 September 2024. For some reason, and the Registrar did not give reasons, at least which are before me for the noting of 30 August 2024, 30 August 2024 is nonetheless noted. Whilst, as mentioned, I am satisfied that Mr Jorgensen committed an act of bankruptcy, I am not satisfied that he did so on 30 August 2024. The last day for compliance, having regard to the terms of the bankruptcy notice, was 30 August 2024. The expression “30 days after” entails excluding the date of service: see as to calculating time, s 36(1), item 6 in the Acts Interpretation Act 1901 (Cth) (Acts Interpretation Act).

21    Although s 36 of the Acts Interpretation Act makes provision for the exclusion of “holidays” as defined, and for excluding a Saturday, a Sunday or a holiday from a calculation of time where such a day is the last day of a particular period, that is not applicable here. The last day for compliance in respect of a period defined as 21 days after date of service. With the date of service being 9 August 2024, the 21 day period expired 30 August 2024, which was a Friday. In these circumstances, it seems to me that the act of bankruptcy occurred on 31 August 2024, not the following Monday.

22    It does not follow from this that I should decline to affirm the sequestration order, but it is necessary to correct the noting of the date of the act of bankruptcy.

23    The real question in this proofs case is not whether the requisite proofs as required by s 52 of the Act are present, but rather whether the Court should, even being satisfied as to those proofs, nonetheless decline to sequestrate.

24    Mr Jorgensen urged that the Court should go behind the Magistrates Court judgment. A convenient summary of the jurisprudence in relation to a court of bankruptcy going behind a judgment was offered in this Court in Dunkerley v Comcare [2019] FCA 1002, at [68]:

68    I turn now to summarise the principles relating to the circumstances in which the Court may go behind a judgment debt. It is generally accepted that a Court will accept a judgment as being conclusive of the existence of a debt, however, the Court has a discretion in an appropriate case to go behind a judgment debt to examine whether there is in truth consideration for it. The relevant principles may be summarised as follows:

(a)    The Court has the power in an appropriate case to go behind a judgment in an application to set aside a bankruptcy notice, but that power “is not readily exercised if there has been a substantive hearing of the matter on its merits by the court in which the judgment was granted” (see Xu v Wan Ze Property Development (Aust) Pty Ltd (in liq) [2014] FCA 461; 315 ALR 523 at [55] (Xu) per Robertson J).

(b)    In determining whether to go behind a judgment on which a bankruptcy notice is based, the Court will take into account similar considerations to those which apply when determining whether or not to go behind a judgment on the hearing of a creditor’s petition (see Xu at [55], [118]-[120] and [131] per Robertson J).

(c)    Although the Court has the power in an appropriate case to go behind a judgment on which a bankruptcy notice is based, the Court does not have the power to set aside the judgment itself and it is also important to bear in mind that the Court is not hearing an appeal from the judgment on which a bankruptcy notice is based (Xu at [57]).

(d)    A judgment debt is usually expected to provide the most reliable statement of debt humanly attainable because the ordinary processes of the adversarial system provide a practical guarantee of reliability. That is why there usually is no occasion in a bankruptcy proceeding to investigate whether the judgment debt is a true reflection of the underlying debt (Ramsay Health Care Australia Pty Ltd v Compton [2017] HCA 28; 261 CLR 132 (Ramsay) at [68] per Kiefel CJ, Keane and Nettle JJ).

(e)    Ms Dunkerley must establish special circumstances for the Court to go behind the underlying judgment debt (Petrie v Redmond [1943] St R Qd 71 at 75-76 per Latham CJ, with whom Rich and McTiernan JJ agreed and see also Ramsay at [69] per Kiefel CJ, Keane and Nettle JJ). As a matter of practical experience, special circumstances of this nature are usually only when there has been a consent judgment, default judgment or some other circumstance which means the judgment debtor was unable to present his or her case on its merits in the litigation leading to the judgment debt (Ramsay at [70] per Kiefel CJ, Keane and Nettle JJ).

(f)    The Court is reluctant to go behind a judgment once it has been the subject of adjudication by a Court, even if there were problems relating to such matters as the debtor’s representation or some other unusual feature. It is accepted, however, that the Court can inquire into the validity of a judgment where there is evidence that it has, for example, been obtained by fraud, collusion or a miscarriage of justice, but the debtor carries the onus of establishing that the fraud was “directly material to the judgment” (see Kirk v Ashdown [1999] FCA 522) and Emerson v Wreckair Pty Ltd (1992) 33 FCR 581 (Emerson) at 588). There may be other substantial reasons for going behind a judgment debt, however, in the absence of some evidence of fraud, collusion or miscarriage of justice, a court sitting in bankruptcy will rarely have substantial reasons to investigate whether the judgment debt was truly owed (Ramsay at [111] per Edelman J).

(g)    It is insufficient to set aside a bankruptcy notice merely because the debtor establishes that a judgment is irregular because, for example, the pleadings or proof that were offered were inadequate to support the judgment or the judgment is for the wrong amount (see, for example, Re Skaff; Ex parte Farrow Mortgage Services Pty Ltd (1993) 41 FCR 331 per Drummond J and Re Bedford; Ex parte H E Sleigh (Queensland) Pty Ltd (1967) 9 FLR 497 per Gibbs J).

(h)    Absent some good reason for doing so, a Court exercising bankruptcy jurisdiction should avoid embarking on a course which amounts to a re-trial of the issues that have been determined by another Court after a contested hearing. This is, particularly so where that other Court’s determination has been the subject of an appeal because the appeal is the appropriate form in which to review the correctness of the judgment (Emerson at 588).

(i)    A court exercising jurisdiction in a bankruptcy proceeding should not re-litigate on the same evidence, a dispute which has already been fully litigated in adversarial proceedings (Doggett v Commonwealth Bank of Australia [2019] FCAFC 19 (Doggett) at [49] per Kerr, Davies and Thawley).

That summary notably includes a reference to the High Court’s judgment in Ramsay Health Care Australia Pty Ltd v Compton (2017) 261 CLR 132.

25    The Magistrates Court judgment is a default judgment. In relation to such judgments, the Court will more readily than in respect of a judgment which has resulted from an adversarial proceeding, go behind a judgment, see Katter v Melhem (No 2) [2014] FCA 1176, at [69]. But, there still needs to be what the Court regards as a bona fide allegation that no real debt lies behind the default judgment. As to this, Mr Jorgensen relied on affidavit evidence by him, one filed on 15 October 2024, the other on 1 November 2024. In Mr Jorgensen’s affidavit filed on 15 October 2024, he attests to JML Rose lawyers litigating a successful appeal against another legal firm, Grace Lawyers, who he alleges were:

Attempting to claim a default judgment against a trust I was trustee of.

26    Mr Jorgensen attests that he believes that JML Rose lawyers were:

Overpaid for the task and, with all due respect, did a substandard job in the engagement, for reasons I'm happy to discuss further, if necessary.

27    He also attests to:

Working with JML lawyers became untenable after also learning Mr James Lavercombe was previously employed by Lillas & Loel Lawyers, whom he would be disputing a claim against.

28    Mr Jorgensen further states:

There seemed to be a conflict of interest, and it felt like an untenable situation.

Many times I indicated to Mr James Lavercombe how I would demand a cost assessment for any fees he claimed he (JML lawyers) was owed.

29    Mr Jorgensen also attests that shortly after this particular dispute, when he was:

Allegedly served with the originating claim for unpaid fees by JML Rose Proprietary Limited in 2021/2022. I was medically diagnosed with a serious mental health illness.

30    Mr Jorgensen annexed to that affidavit an excerpt from a report of a Dr Foxtrot, which attested to a particular severe depressive disorder as at 8 November 2021.

31    Also in evidence, via another affidavit of Mr Lavercombe, as filed on 26 November 2024, is an exchange of correspondence as between that legal firm and Mr Jorgensen, in which, amongst other things, by an email dated 1 February 2021 to Grace Lawyers, a cost statement was enclosed relating to a costs order in Mr Jorgensen’s favour. The cost statement concerned totals $51,591.79. By an email on 16 September 2024, exhibited to Mr Lavercombe’s affidavit, Mr Jorgensen admits having received the benefit of the costs order in stating:

In fact, it took years to get Grace Lawyers to comply with that costs order, and, interestingly, they paid it directly themselves, rather than the client of their [sic] who lost the case.

32    Mr Lavercombe’s affidavit also attests to, and I find, that, on 4 February 2022, the statement of claim and the claim in the Queensland Magistrates Court relating to costs was sent to Mr Jorgensen.

33    Looking at the exchanges which occurred in 2022, I am not satisfied that this is one of those cases where I should view with suspicion either the default judgment or the existence of an underlying debt in respect of costs. It is rather odd, indeed, to see occasion for going behind this judgment in circumstances where Mr Jorgensen has had the benefit of a payment in respect of a costs order resultant from the endeavours of his former solicitors, JML Rose. And that is so, even though I do not doubt that Mr Jorgensen was experiencing quite some depression in late 2021, and I am willing to accept into 2022.

34    Another factor which I take into account in deciding not to exercise a discretion not to make, or at least not to affirm the sequestration order made, is that there exists a supporting creditor. The supporting creditor is Cairns Central Plaza Apartments Community Title Scheme 40022 (the Body Corporate). The registered proprietor of that lot was, and is, Mr Jorgensen, in his capacity as trustee of the Lee Jorgensen Family Trust. Evidence has been given by affidavits on behalf of the Body Corporate by its solicitor, Mr Schoch. As at 2 September 2024, as confirmed by Body Corporate records annexed to Mr Schoch’s affidavit, the following amounts were owing on Lot 1203:

(a)    $32,526.70 for contributions for the periods:

i.    1 August 2023 to 31 October 2023 (with a due date of 1 August 2023, the balance of the insurance component) in the sum of $3,765.00.

ii.    1 November 2023 to 31 January 2024 (with a due date of 1 January 2024) in the sum of $7,480.40.

iii.    1 February 2024 to 30 April 2024 (with a due date of 1 February 2024) in the sum of $7,480.40.

iv.    1 May 2024 to 31 July 2024 (with a due date of 1 May 2024) in the sum of $6,900.45; and

v.    1 August 2024 to 31 October 2024 (with a due date of 1 August 2024) in the sum of $6,900.45;

(b)    $2,106.15 for penalty interest; and

(c)    $55,843.60 for recovery costs.

35    Mr Schoch further attests, and the annexed Body Corporate records evidence, that as at 16 October 2024, the amounts owing on Lot 1203 were:

(a)    $32,526.70 for contributions for the periods:

i.    1 August 2023 to 31 October 2023 (with a due date of 1 August 2023, the balance of the insurance component) in the sum of $3,765.00.

ii.    1 November 2023 to 31 January 2024 (with a due date of 1 January 2024) in the sum of $7,480.40.

iii.    1 February 2024 to 30 April 2024 (with a due date of 1 February 2024) in the sum of $7,480.40.

iv.    1 May 2024 to 31 July 2024 (with a due date of 1 May 2024) in the sum of $6,900.45; and

v.    1 August 2024 to 31 October 2024 (with a due date of 1 August 2024) in the sum of $6,900.45;

(b)    $2,431.40 for penalty interest; and

(c)    $63,763.60 for recovery costs.

36    Quite properly, Mr Schoch attested that the amount for recovery costs, as set out in para (c) in each instance above, are disputed, and are the subject of Magistrates Court and also some appeal proceedings. As to Magistrates Court proceedings, Mr Schoch attested, and the position is, that on 19 March 2019 summary judgment was awarded to the Body Corporate for the following:

11    On 19 March 2019 summary judgment was awarded to the Body Corporate for the following:

(a)    $29,033.76 for outstanding contributions;

(b)    $3,841.25 for penalty interest on the outstanding contributions; and

(c)    $40,280.61 for recovery costs.

(the Summary Judgment)

37    He further attests that on 16 July 2019 Mr Jorgensen filed a notice of appeal and a notice of appeal subject to leave to appeal the Summary Judgment in the District Court of Queensland.

38    Mr Schoch further attests that on 26 November 2020, Mr Jorgensen’s appeal was granted with the summary judgment made on March 2019 being set aside and the order dismissing the application to set aside the summary judgment as subsequently made on 18 June 2019 also being set aside.

39    Mr Schoch further attests that another outcome of that District Court appeal was the remitting of the proceedings back to the Magistrates Court for determination. As to that, Mr Schoch attests that the remitted proceedings were heard in the Magistrates Court at Cairns on 14 February 2023 with judgment given on 11 April 2023. That judgment delivered by Magistrate Priestley, was:

(a)    The Defendant pay the Body Corporate's recovery costs incurred from 17 January 2017 to 30 June 2022 in the sum of $22,186.59.

(b)    The Defendant pay the Body Corporate's recovery costs incurred in this proceeding from 1 July 2022 to be assessed in accordance with section 156(1 )(c) of the Body Corporate and Community Management (Accommodation Module) Regulation 2020.

40    The defendant in that is Mr Jorgensen. Mr Schoch attests that the costs as referred to in paragraph (b) above have not been assessed but that the quantum of the costs to be assessed is $39,333.94. Again, quite properly, Mr Schoch attests that on 8 May 2023, Mr Jorgensen filed a notice of appeal against that judgment given on remitter by the Magistrates Court with the appeal being heard on 29 August 2024 with judgment being reserved. There is an order staying the proceedings on the Magistrates Court judgment.

41    Mr Schoch also quite properly attests that on 21 October 2024 the Body Corporate received a payment of $20,000 to the account of lot 1203.

42    Mr Schoch filed by leave today an affidavit which updates the position in respect of the amounts alleged to be owed to the Body Corporate by Mr Jorgensen. I shall not detail those but note that, even excluding amounts the subject of the proceedings which have been stayed pending the result of the appeal, there exists a debt well in excess of the present bankruptcy threshold.

43    Mr Jorgensen did come to file an application in the Queensland Magistrates Court to set aside the default judgment. I fixed a hearing date originally of 4 February 2025, to accommodate not just the hearing, but also the determination of that application to the Queensland Magistrates Court. The application was heard in December 2024. Upon it being made clear that judgment remained reserved on 4 February 2025, I was persuaded that the interests of justice required the adjournment of a hearing of the application to review the registrar’s decision. Even as at today, the Queensland Magistrates Court is yet to deliver a judgment in respect of the application to set aside the default judgment.

44    There may be many reasons why that is so, and the Magistrates Court is undoubtedly a very busy court, with magistrates being time poor, in respect of time to devote to reserved judgments. In any event, this review jurisdiction is not in the nature of an appeal against that default judgment, and I have no power to compel a magistrate to deliver a judgment. But there does come a time when this Court’s jurisdiction needs to be exercised on the merits.

45    For reasons which I have given, I am not satisfied that there is occasion to look behind the default judgment, although I accept, as I have mentioned, that a bankruptcy court will more readily do so in respect of default judgments than in respect of judgments which have resulted from adversarial proceedings. I am also not satisfied, for the reasons which I have given, that there is occasion to question the existence of the debt concerned. It looks to me just a case where solicitors have done work which was of value and have not been paid in respect of that work. It also looks to me to be a case where the claim concerned and related statement of claim were served on Mr Jorgensen prior to the entry of default judgment, and the default concerned was default in the filing of a notice of an intention to defend.

46    If it transpires that Mr Jorgensen receives a beneficial result in respect of his application to set aside the default judgment, it would be open to him to apply to annul the bankruptcy. But it is highly persuasive, in terms of exercising discretion as to whether or not to sequestrate, that there is a supporting creditor who is disposed immediately to substitute as the petitioning creditor, which has on any view, and disregarding even contested portions of the debt, a debt well in excess of the bankruptcy threshold.

47    In these circumstances, the conclusion I reach is that the act of bankruptcy has been proved, although the act of bankruptcy occurred not on 30 August 2024, but 31 August 2024. I see no reason, for reasons which I have given, to exercise a discretion not to sequestrate. The petition has been served. The underlying debt remains owing, as, indeed, the debt to the Body Corporate remains owing, even excluding contested matters.

48    Mr Jorgensen saw some defect in his being the trustee of a family trust, but the judgment concerned is against him both personally and as trustee. Further, having regard to Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360, Mr Jorgensen’s liability, even as trustee, was a personal liability in respect of which, as trustee, he was entitled to claim indemnity out of trust property. That trustee status does not provide any basis for declining to sequestrate, much less for finding any defect in the bankruptcy notice or in the creditor’s petition.

Associate:    

Dated:    28 March 2025