Federal Court of Australia

Phillips v Carrafa, in the matter of Phillips (Bankrupt) [2025] FCA 870

ORDERS

THE COURT ORDERS THAT:

1.    The application is dismissed.

2.    The Respondents’ costs be taxed and paid out of the estate in accordance with s 109(1)(a) of the Bankruptcy Act 1966 (Cth).

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

REASONS FOR JUDGMENT

HILL J:

A.    Introduction

1    The Applicant (Mr Phillips) has applied to have his bankruptcy annulled under s 153B of the Bankruptcy Act 1966 (Cth). The bankruptcy notice relied on a default judgment against him and his sister obtained in the Victorian Magistrates’ Court by Rededge Recruitment Pty Ltd trading as Dent-a-Find. In this Court, Mr Phillips contends that the Magistrates’ Court judgment was irregular, and that he was never indebted to Rededge (and that the debtor was instead Helix Bianca Nominees Pty Ltd, a company connected to him as explained below).

2    In summary, the application must be dismissed with costs, for two independent reasons.

(a)    First, although the Court hearing the creditor’s petition could have gone behind the Magistrates’ Court judgment (because that judgment was initially entered against a business name, not a legal entity), Mr Phillips has not established that there was no debt owing by him upon which bankruptcy proceedings could have been founded. To the contrary, the evidence is that he and his sister were the holders of the relevant business name at the time of the agreement which gave rise to the judgment. The other evidence before the Court does not displace the resulting presumption that the parties intended the contract to be between Rededge and whoever held the business name. Accordingly, I am not satisfied that the sequestration order should not have been made.

(b)    Second, even if I were satisfied that the sequestration order should not have been made, I would not make the annulment order in the exercise of discretion. Mr Phillips has not provided sufficient evidence on which I could be satisfied that he is solvent at the time of this application. Indeed, the evidence of the Respondents (the Trustees) suggests that Mr Phillips is insolvent at this time. That factor is sufficient reason not to exercise the s 153B discretion in Mr Phillips’ favour. Further, Mr Phillips’ conduct during the course of the bankruptcy (as explained below) and the two-year delay in bringing this annulment application provide further reasons for not making an annulment order.

3    Evidence: Mr Phillips relies on an affidavit by him sworn on 7 March 2025 (Phillips affidavit) on the substantive application. The Respondents rely on an affidavit of the Second Respondent affirmed on 15 May 2025 (Brace affidavit).

B.    background

B.1    Parties, entities and properties

4    Applicant: Mr Phillips is a bricklayer by profession. He lives on A’Beckett Street in Seaford, Victoria (the Residential property).

5    Seaford Dental Clinic: The dispute with Rededge concerned non-payment for recruitment services provided by Rededge to the Seaford Dental Clinic between July 2018 and March 2020. The following persons and entities are connected with the Dental Clinic.

(a)    The real property on which the clinic operates, on Frankston-Dandenong Road in Seaford (the Clinic property), was owned at the time by Helix Bianca (a company incorporated in 1981 by Mr Phillips’ father). Since 2011, Mr Phillips has been the sole director of Helix Bianca.

(b)    As discussed below, the trading name “Seaford Dental Clinic” is connected with the Phillips Family Trust, a trust for which Helix Bianca is the trustee and Mr Phillips is the beneficiary. The registered business name “Seaford Dental Clinic” was held by the Family Trust between August 2005 and August 2008, and was held by Mr Phillips and his sister Michelle Phillips in partnership between May 2011 and May 2020.

(c)    Mr Phillips’ evidence is that he bought out his sister Michelle in 2014 and became the sole shareholder of Helix Bianca and the sole beneficiary of the Family Trust. Mr Phillips’ evidence is that the Dental Clinic was in practice operated by his wife Kelly (who I will refer to as “Mrs Phillips”), who died in October 2021.

6    Mr Phillips contends that the Dental Clinic was operated through Helix Bianca. Helix Bianca was placed into liquidation in June 2023 on the application of the Commonwealth, as a result of penalties imposed under the Fair Work Act 2009 (Cth): see further [73] below.

7    Separately, in June 2021, Helix Bianca obtained a loan of $500,000 from a Mr Davis, which was secured by a mortgage over the Clinic property and a personal guarantee from Mr Phillips.

8    Assets Trust and Taylor Bay property: Mr Phillips is also the director and shareholder of Helix SKP Pty Ltd, which was incorporated in 2015 with Mrs Phillips as co-director and co-shareholder. Helix SKP is the trustee of the Phillips Assets Trust, a trust for which Mr Phillips and his wife and children are the named beneficiaries. Until October 2024, Helix SKP was the registered proprietor of real property in Taylor Bay, Victoria (the Taylor Bay property).

B.2    Chronology

9    Default judgment in Magistrates’ Court (Jun 2020): On 9 June 2020, the Victorian Magistrates’ Court entered judgment by default in favour of Rededge against “Seaford Dental Clinic” for a claim of $40,446.73, plus interest of $398.93 and costs of $2,249.20; a total of $43,094.86.

10    On 24 June 2020, the Magistrates’ Court made orders amending the name of the defendant in those proceedings to “Simon and Michelle Phillips trading as Seaford Dental Clinic” (emphasis added). The application for those orders was supported by an affidavit of a solicitor dated 22 June 2020 (the supporting affidavit). It appears that application was made ex parte, and Mr Phillips’ evidence is that he was not served with the amended complaint.

11    Bankruptcy notice (Oct 2022): On 31 October 2022, the Official Trustee in Bankruptcy issued a bankruptcy notice to Mr Phillips and his sister. That notice stated that Rededge claimed Mr Phillips and his sister owed the amount of the final judgment of the Magistrates’ Court, together with post-judgment interest (a total of $52,662.89). The notice required Mr Phillips within 21 days after service of the notice either to pay to Rededge the amount claimed, or make arrangements to Rededge’s satisfaction for settlement of the debt. That notice was served personally on Mr Phillips on 12 December 2022.

12    Creditor’s petition (Jan 2023): On 10 January 2023, a creditor’s petition was filed in the Federal Circuit and Family Court of Australia. That petition refers to the debt owed to Rededge arising out of the Magistrates’ Court judgment. Affidavits of service filed in the sequestration proceedings indicate that the creditor’s petition was served on Mr Phillips on 12 January 2023.

13    Sequestration order; appointment of trustees (Feb 2023): On 23 February 2023, a Judicial Registrar in this Court made an order under s 43 of the Act sequestering the estate of Mr Phillips. On the same day, the Respondents were appointed as joint and several trustees of that estate. (It is convenient to refer to an act done by one of the Respondents as being done by “the Trustees”.) An affidavit of service filed in the sequestration proceedings indicates that the consent to act as trustee dated 19 January 2023 was served on Mr Phillips on 31 January 2023.

14    Caveat lodged over Residential property (Feb 2023): On 28 February 2023, the Trustees’ lawyers lodged a caveat on the title of Mr Phillips’ Residential property in the name of the Trustees.

15    Trustee letter to Mr Phillips (Mar 2023): On 3 March 2023, the Trustees sent Mr Phillips a letter. That letter stated that a sequestration order had been made against Mr Phillips’ estate on 23 February 2023, based on an application by Rededge in relation to an outstanding debt. The letter requested (among other things) that Mr Phillips complete the “Bankruptcy Form”, and complete the “Income Contribution Questionnaire”.

16    Interview with Mr Phillips (Apr 2023): On 19 April 2023, Mr Phillips (with a support person) attended the Trustees’ office for an interview. Mr Phillips stated (among other things) that, while his wife was alive, she said not to pay the invoices from Rededge because a dentist who they had referred to the Dental Clinic had done some poor work.

17    First Creditors’ report (Apr 2023): On 28 April 2023, the Trustees sent an initial notice and report to the creditors about Mr Phillips’ bankrupt estate. A copy of this report was also emailed to Mr Phillips’ support person on the same day.

18    Reminder to complete forms (May 2023): On 5 May 2023, the Trustees sent Mr Phillips a letter, reminding him of his obligations under the Act, including the requirement to complete and lodge the Bankruptcy Form.

19    Trustees anticipate selling Residential property (Aug 2023): On 16 August 2023, the Trustees’ office sent an email to Mr Phillips’ then lawyers, Davies Moloney Barristers and Solicitors. The Trustees referred to Mr Phillips’ outstanding liabilities to the Australian Taxation Office (ATO), and that the estate of Mr Davis (who provided a loan over the Clinic property) had lodged a claim in the bankrupt estate. Further, the Trustees noted that Mr Phillips had yet to complete his Bankruptcy Form, and required Mr Phillips to provide details of the vehicles listed in the first report to creditors. The Trustees then stated that they anticipated taking the necessary steps to realise Mr Phillips’ Residential property (referred to in the letter as the “Seaford property”) shortly for the benefit of the estate “unless [Mr Phillips] proposes to submit an alternate proposal for creditor consideration within the next 14 days”.

20    Trustees require vacant possession of Residential property (Sep-Nov 2023): On 19 September 2023, the Trustees’ office sent Davies Moloney a letter stating (among other things) that the Trustees had not received an acceptable proposal to deal with Mr Phillips’ bankrupt estate, and that the Trustees intended to realise his Residential property to meet the debts, liabilities, costs, charges and expenses of his estate. The Trustees required Mr Phillips to vacate his Residential property within 21 days. The Trustees also noted that they were yet to receive a completed Bankruptcy Form, nor were they provided information about his vehicles. On 23 November 2023, the Trustees’ lawyers sent Davies Moloney a letter to similar effect, requiring Mr Phillips and any other occupants to vacate the Residential property by 1 December 2023.

21    Applicant asks Trustee to refrain from selling Residential property (Nov 23): On 28 November 2023, Davies Moloney sent the Trustees’ lawyers a letter, noting that a meeting had been convened with Mr Phillips and the Trustees, and requesting that the Trustees refrain from seeking possession of the Residential property.

22    Bankruptcy Form completed; Second Report to Creditors (Dec 2023): Around 4 December 2023, Mr Phillips executed a Bankruptcy Form. On 21 December 2023, the Trustees sent a second report to creditors.

23    Clinic property sold (Dec 2023): It appears that the Clinic property (which was subject to a mortgage held by the estate of Mr Davis) was sold in December 2023. (I note that the loan was paid out of the settlement proceeds, but the lawyers for the Davis estate stated in February 2024 that Mr Phillips was still liable for further fees and expenses incurred by their client.)

24    Trustees seek information and a proposal to deal with estate (Dec 2023-Jun 2024): Between December 2023 and June 2024, the Trustees sought various information from Mr Phillips, and a proposal as to how to deal with his estate.

(a)    The Trustees sent Mr Phillips letters on 13 December 2023 and 4 March 2024, seeking information about his income and compulsory contributions.

(b)    The Trustees’ lawyers sent Davies Moloney letters on 23 January 2024, 4 March 2024, 12 March 2024, 22 April 2024 seeking information about matters such as the Residential property (such as whether it was insured), Mr Phillips’ tax returns and the income contribution questionnaire.

(c)    On 3 May 2024, Mr Phillips’ accountant (Mr Letch) contacted the Trustees’ office and advised that a written proposal would be submitted as to how Mr Phillips intended to deal with his bankrupt estate. On 8 May 2024, Mr Letch sent the Trustees’ office a proposal, which (it was said) would allow Mr Phillips to pay his creditors in full and keep possession of the Residential property. This proposal made certain assumptions; for example, that the Davies mortgage (as mentioned in [7] above) would be fully satisfied by the sale of the Clinic property in November 2023, and that potential claims against Mr Phillips as director of Helix Bianca could be disregarded. The parties corresponded in June and July 2024 about Mr Letch’s proposal.

25    Trustees’ intention to take possession of Residential property (Aug-Sep 2024): On 22 August 2024, the Trustees sent an email to Mr Letch stating that they had not received a response to earlier communications, and they proposed to re-instruct their solicitors to take steps to take possession of the Residential property and sell it. To similar effect, on 13 September 2024, the Trustees’ lawyers sent a letter to Davies Moloney (Mr Phillips’ then lawyers) stating they had instructions to take steps to have Mr Phillips and any other occupants removed from the Residential property (if they fail to provide vacant possession) and place the property on the market.

26    Taylor Bay property sold (Oct 2024): It appears that the Commonwealth Bank of Australia (CBA), as mortgagee, took possession of the Taylor Bay property (which was held by Helix SKP) around June 2024, and that property was sold on 7 October 2024. The CBA’s lawyers paid the surplus funds into court in 2025.

27    Inquiries whether Davies Moloney act for Mr Phillips (Oct-Dec 2024): On 23 October 2024, the Trustees’ lawyers sent a letter to Davies Moloney asking whether they still acted on behalf of Mr Phillips, and whether they had instructions to accept service on his behalf. That letter was followed by an email dated 12 November 2024. On 5 December 2024, the Trustees’ lawyers sent an email to Davies Moloney stating that, if there was no response before 9 December 2024, the Trustees would take steps to realise the assets of the bankrupt estate, including the Residential property, without any further notice or warning.

28    Davies Moloney no longer acts (Dec 2024): On 6 December 2024, Davies Moloney sent the Trustees’ lawyers an email stating that they no longer acted for Mr Phillips.

29    Trustees require Mr Phillips to vacate Residential property (Dec 2024): On 12 December 2024, the Trustees’ lawyers sent a letter to Mr Phillips which (among other things) stated that the Trustees required vacant possession of the Residential property.

30    New lawyers intend to seek annulment (Jan 2025): On 28 January 2025, Mr Phillips’ current lawyers (Marshalls+Dent+Wilmoth Lawyers (MDW Lawyers)) sent an email to the Second Respondent stating that they now act for Mr Phillips, and that they anticipated making an application to annul his bankruptcy. On 29 January 2025, the Trustees’ lawyers sent a letter to MDW Lawyers inviting them to give a substantive response by 14 February 2025.

31    Annulment application (Mar 2025): On 7 March 2025, Mr Phillips applied to this Court to have his bankruptcy annulled.

C.    Consideration

C.1    Adjournment request refused

32    A preliminary matter is that Mr Phillips sought an adjournment of the hearing on Tuesday 29 July 2024. The following explains my decision not to adjourn the hearing.

33    Request for adjournment (25, 28 July 2025): MDW Lawyers (Mr Phillips’ lawyers) sent an email at 4:16pm on Friday 25 July 2025 submitting that the hearing should be vacated and listed for re-hearing not before 10 October 2025, having regard to the following matters:

(a)    the respondents continue to request the provision of further documents and information from the applicant;

(b)    the applicant has not been in a position to gather all the requisite evidence upon which he seeks to rely;

(c)    the applicant is a current bankrupt, he has been deprived from accessing funds of entities which he used to control (but is now prevented from controlling due to his bankruptcy) and therefore unable to properly prepare/advance this application; and

(d)    the applicant’s psychologist is currently unable to provide any material in respect of the applicant’s mental health until September 2025, which will seek to address the applicant’s capacity and otherwise address the reason for delay in making this application.

This email submitted that “the prejudice that the applicant would suffer from being deprived of adducing all the evidence upon which he seeks to rely, far outweighs any prejudice that would be suffered by the respondents as a result of the final hearing being relisted, particularly in circumstances where the respondents neither oppose nor consent to the application and no other creditors have sought to be joined to this proceeding”.

34    I requested that the Trustees advise urgently on their position on the application for an adjournment. The Trustees’ lawyers advised by email on Friday 25 July 2025 that the Trustees did not consent to an adjournment.

35    I directed that MDW Lawyers file an affidavit by 12pm on Monday 28 July 2025 attaching the correspondence referred to in point (a) of their email, and a short description of the evidence on which Mr Phillips seeks to rely as referred to in point (b) of their email, and the reasons that he has not been able to provide it until now.

36    Haddad affidavit: On 28 July 2025, Mr Rodrigo Haddad of MDW Lawyers (Mr Phillips’ solicitor) filed an affidavit sworn on that date (Haddad affidavit). That affidavit attaches the following correspondence between MDW Lawyers and the Trustees’ lawyers:

(a)    On 9 July 2025, MDW Lawyers wrote to the Trustees referring to the notification on 22 May 2025 of the 29 July 2025 hearing date. This letter makes various contentions about the proceeds from the sale of the Taylor Bay property and a purported overpayment to the ATO by Bankwest. Separately, this letter states that the Trustees’ affidavit material and submissions made it necessary for Mr Phillips to gather material to respond to (i) the delay in making the application; (ii) Mr Phillips’ current medical condition; and (iii) the solvency of Mr Phillips. MDW Lawyers sought the Trustees’ consent to the 29 July 2025 hearing being adjourned.

(b)    On 14 July 2025, the Trustees’ lawyers responded. On the second matter set out above, they stated that this information should have always been in Mr Phillips’ possession. The Trustees then sought further information about both matters raised in MDW Lawyers’ letter, including whether the information that Mr Phillips seeks to rely on was in his possession, and the nature of the evidence that he seeks to file.

(c)    On 16 July 2025, MDW Lawyers responded to the questions from the Trustees’ lawyers. The letter states that they are seeking to obtain a report from Mr Phillips’ psychologist (Dr Paul Grech), and a report from the accountant Mr Letch on the financial statements of the Family Trust. In addition, the letter states that MDW Lawyers are seeking to obtain affidavits from family and friends deposing of their willingness to provide financial support to Mr Phillips. The letter attached a report from Dr Paul Grech dated 15 July 2025 (Dr Grech report) (which states that for personal reasons a report would not be available until 5 September 2025), and an email from Mr Letch dated 16 July 2025 (Letch email).

(d)    On 22 July 2025, the Trustees’ lawyers sent a letter making “observations” about MDW Lawyer’s 16 July 2025 letter. One observation was that the statement by MDW Lawyers that they were obtaining a report about the impact that Mr Phillips’ mental health has had on him in actioning things in a timely manner meant the Trustees were concerned that Mr Phillips may not have the mental capacity to appoint a new trustee under the Family Trust. The Trustees’ lawyers also sought information in relation to Mr Letch providing income tax statements for the Family Trust and for Mr Phillips.

(e)    On 24 July 2025, MDW Lawyers responded, stating (among other things) that they would not be able to provide instructions on the matters raised in the 22 July 2025 letter, and that they failed to see how the hearing could proceed. This letter also states that, “[w]hilst we haven’t detected any concerns with our client’s mental capacity, we note your recent enquiries in that regard”. MDW Lawyers state that they need to obtain a report from his treating psychologist addressing the issue.

37    Adjournment – general principles: The Act confers a specific power on the Court to adjourn any proceeding before it upon such terms as it thinks fit, either to a fixed date or generally (s 33(1)(b)). The principles applicable to adjournment under s 33(1)(b) are consistent with those applicable to adjournments generally: see Valladares as executor of the estate of Sabrina Karen Andreazza) v De Angelis [2020] FCA 1865 at [31] (White J), discussing the power in s 33 to permit amendment to written process. It is necessary to consider the particular circumstances of each case: Endresz v Australian Securities and Investments Commission (No 2) [2015] FCAFC 33; (2015) 228 FCR 334 at [59] (the Court).

38    The power of the Court to grant an adjournment is discretionary, to be exercised having regard to the objectives in s 37M(2) of the Federal Court of Australia Act 1976 (Cth): see Luck v Chief Executive Officer of Centrelink [2015] FCAFC 75 at [42] (the Court). The overall question is whether it is in the interests of justice to grant the adjournment, having regard to matters such as whether the party applying for the adjournment has had a reasonable opportunity to prepare their case (and their explanation for seeking an adjournment); whether an adjournment would cause prejudice to the other party; and the effect of any adjournment on the administration of justice more generally.

39    In addition, there is a public interest in having bankruptcy proceedings resolved expeditiously, because (among other reasons) these proceedings not only deal with the private interests as between a creditor and a debtor but also with the general body of creditors of the bankrupt: see Culleton v Balwyn Nominees Pty Ltd [2017] FCAFC 8; (2017) 343 ALR 632 at [40] (the Court); Lahood v Bank of Western Australia Ltd (No 3) [2013] FCA 861 at [103] (Katzmann J); Victorian Legal Services Board v Kuksal (Adjournment of Creditor’s Petition) [2025] FCA 852 at [30] (Downes J).

40    Whether Mr Phillips has had a reasonable opportunity to bring his case: Mr Phillips contends that he will suffer prejudice, if he is unable to adduce “all the evidence upon which he seeks to rely”: see [33] above. However, the real issue is whether he has had a reasonable opportunity to bring this annulment application, as that is what procedural fairness requires: see Bufalo v Official Trustee in Bankruptcy [2011] FCAFC 111 at [51] (the Court).

41    Procedural history: The following procedural history is relevant to that question.

(a)    This is an application brought by Mr Phillips in March 2025, to annul sequestration orders made in February 2023. It could be expected that, as the moving party, Mr Phillips would endeavour to collect all the relevant material when bringing the application (especially material bearing on his solvency): see Miller v Udunuwara [2024] FCA 1403 at [27]-[28] (Dowling J). As noted, Mr Phillips filed an affidavit in support of his annulment application.

(b)    Amended consent orders made on 16 May 2025 extended the time for the Trustees to file evidence to 15 May 2025. The Brace affidavit was filed on that date.

(c)    On 22 May 2025, this matter was listed for hearing on 29 July 2025, after both parties had indicated that their counsel and solicitors were available on that date.

(d)    The consent orders provided for the Applicant to file and serve any additional evidence upon which he intended to rely by 4pm on 29 May 2025; that is, two months ago. Mr Phillips did not file any evidence, nor did his lawyers approach the Court at that time about whether he should be given further time to file evidence. The amended consent orders provided for Mr Phillips to file written submissions by 12 June 2025. No submissions were filed on his behalf, nor did his lawyers approach the Court to seek an extension of time.

(e)    In accordance with the consent orders, the Trustees filed written submissions on 26 June 2025, which responded to the evidence in the Phillips affidavit.

(f)    On 30 June 2025, my chambers emailed the parties, noting that Mr Phillips had not complied with the order for written submissions. That email (as corrected in a further email on 1 July) stated that Mr Phillips should file any written submissions as soon as possible, and by no later than Monday 7 July 2025. There was no response to this email, and no written submissions were filed. On 15 July 2025, my chambers emailed the parties, reminding them that the hearing was listed for 29 July 2025. On 24 July 2025, my chambers emailed the parties again, noting that Mr Phillips had not filed any written submissions, and reminding the parties that the Court has power to decide an application in the absence of a party.

42    Topics on which further evidence sought were obvious: The Haddad affidavit sets out the matters on which Mr Phillips seeks to file further evidence; namely, a report from Dr Grech on Mr Phillips’ mental health, and whether that contributed to the delays in preparing and submitting this application; and evidence addressing Mr Phillips’ solvency, and ongoing access to financial support through personal networks.

43    Contrary to the assertion in the MDW Lawyers’ letter dated 9 July 2025 (see [36](a) above), these matters were obvious, and should have been known to his lawyers at the time of bringing the application and addressed by evidence at that time.

    As explained in section C.4 below, delay in bringing an application is a well-established factor bearing on whether an annulment order should be made, and a two-year delay is considerable. Mr Phillips’ own affidavit raises his mental health, and states that his mental health condition means that he avoids actioning things in a timely manner. Again, Mr Phillips, as the moving party, can be expected to gather the necessary material in support of his application. The Trustees only raised Mr Phillips’ mental health in response to the statement by MDW Lawyers that they were seeking to obtain a report on that topic (cf [36](e) above). Further, as explained below, the proposed evidence going to mental health does not answer the prejudicial effect of this delay: see [112] below.

    As explained in section C.4 below, solvency is a centrally relevant matter in any bankruptcy proceeding, and an important discretionary factor in an annulment application. If Mr Phillips is to seek to rely on financial support from his personal networks, there is no explanation as to why steps have not been taken before now to secure this support. Nor is there any explanation as to why Mr Letch could not have been approached to complete the financial returns of the Family Trust around the time that this annulment application was being brought. Further, Mr Letch’s email states that his firm must be indemnified or guaranteed payment for their cost of services before they will do any work. There is no evidence of that indemnity or guarantee.

44    Available resources: Mr Phillips’ lawyers also submit that Mr Phillips, as a bankrupt, does not have access to sufficient financial resources to prepare for the hearing (point (c) in their email: see [33] above). However, this is an issue faced by all bankrupts. The evidence required from Mr Phillips is about his own circumstances and records. I would not give this factor any weight.

45    No adequate explanation: Mr Phillips has not provided an adequate explanation for why he has not filed any further evidence in accordance with the Court’s orders, or approached the Court in a timely fashion to seek variation to those orders. For example, it might be noted that MDW Lawyers only raised the issues on which an adjournment is now sought with the Trustees on 9 July 2025, almost eight weeks after the Trustees’ evidence was filed and almost seven weeks after the parties were notified of the hearing date, and three weeks before the listed hearing: see [36](a) above.

46    Mental health: Mr Phillips’ lawyers have referred to his mental health (see point (d) in their email: see [33] above). At this stage, there is limited evidence before the Court on this topic, and indeed Mr Phillips is seeking more time to obtain a report from his treating psychologist, Dr Grech. The Dr Grech report attached to the Haddad affidavit discloses the following:

(a)    Mr Phillips was referred for psychological assessment on 19 July 2023, with anxiety, depression, a sense of worthlessness and hopelessness, and adjustment issues. Dr Grech states that he was unable to prepare a report during the preceding four months, but that a report will be able to be completed by 5 September 2025.

(b)    Dr Grech states that “[p]ertinent aspects of Mr Phillips’s psychological functioning are still in the process of being assessed and managed”. In Dr Grech’s opinion, the stress and difficulties reported by Mr Phillips caused significant distress to Mr Phillips over a significant period of time, and Mr Phillips “requires ongoing assistance in relation to his mental and emotional health”.

47    In terms, Dr Grech’s report states that he has been unable to prepare a report in the last four months (that is, around mid-March 2025). That statement does not address whether he could have prepared a report before then, noting that MDW Lawyers took over this matter in late January 2025. Further, it does not appear that any consideration was given to obtaining a report from another qualified psychologist.

48    In any event, the types of mental health issues described by Dr Grech do not suggest that Mr Phillips is unable to provide instructions to his lawyers, and indeed MDW Lawyers have indicated that they have not detected any concerns with Mr Phillips’ mental capacity: see [36](e) above. Dr Grech states only that Mr Phillips has experienced significant distress. The chronology set out in section B above indicates that Mr Phillips is capable of taking steps relevant to his bankruptcy when necessary: he attended a meeting with the Trustees in December 2023, and completed a Bankruptcy Form (see [21]-[22] above); he provided sufficient instructions that Mr Letch could send the Trustees a proposal for dealing with Mr Phillips’ estate in May 2024 (see [24](c) above); he withdrew instructions from his previous lawyers in December 2024 (as the Trustees were seeking confirmation that his previous lawyers could accept service), and he instructed new lawyers in January 2025 to bring this application (see [27]-[28], [30] above). Mr Phillips has sworn an affidavit in support of the application, which contains coherent evidence.

49    The Court presumes that a person of full age has legal capacity until it is proved otherwise: BIF23 v Minister for Immigration, Citizenship and Multicultural Affairs [2024] HCA 44; (2024) 99 ALJR 75 at [37] (Gordon A-CJ, Edelman and Steward JJ). Legal capacity is not assessed generally, but instead the question is whether the person has the legal capacity to take the particular step (here, providing instructions to institute proceedings and prosecute them): BIF23 at [86]-[87], [89] (Jagot and Beech-Jones JJ); [47] (Gordon A-CJ, Edelman and Steward JJ). In summary, what evidence there is before the Court does not suggest that Mr Phillips’ mental health issues provide any, or any sufficient, explanation for the failure by his lawyers to file evidence in accordance with Court orders (made by consent), or to approach the Court about this non-compliance.

50    Prejudice: The final matter in the adjournment application is the prejudice to the parties, and the effect on the administration of justice more generally.

51    As noted, Mr Phillips contends that he would be prejudiced if he cannot adduce all the evidence on which he seeks to rely. However, as discussed, the evidence which he seeks to obtain goes to obvious topics which should have been addressed in his evidence in chief. He has had a reasonable opportunity to present his case under the consent orders made by the Court, and has not provided a sufficient explanation for his failure to provide evidence in accordance with those orders.

52    On the other hand, there would be prejudice to the Trustees in the form of costs thrown away, if an adjournment were granted, particularly given the lateness of the application: see FQV18 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2020] FCA 225 at [17]-[18] (Stewart J). Further, there would be clear prejudice to Mr Phillips’ creditors in any further delay in administering his bankrupt estate. As noted, there is a public interest in the expeditious resolution of bankruptcy proceedings: see [39] above. It is irrelevant to this question whether creditors have sought to be joined to this proceeding (cf [33] above): their interests are sufficiently represented by the Trustees, who are under a duty (among other things) to administer Mr Phillips’ estate in the interests of the creditors and Mr Phillips: see Adsett v Berlouis [1992] FCA 368; (1992) 37 FCR 201 at 208 (the Court).

53    More generally, the Court is entitled to be conscious of the “effect of an adjournment on court resources and the competing claims by litigants in other cases awaiting hearing in the court as well as the interests of the parties”: Luck at [43], quoting Sali v SPC Ltd [1993] HCA 47; (1993) 116 ALR 625 at 629 (Brennan, Deane and McHugh JJ).

54    Conclusion – adjournment refused: In summary, Mr Phillips has approached the Court shortly before the hearing to seek an adjournment for an extended period of over two months so that he can obtain further evidence on topics that were obvious, and should have been addressed fully at the time of making the annulment application. As to those topics, the proposed medical evidence is at best of secondary importance (as explained below), and Mr Letch’s financial reports would require completing tax returns from 2020 onwards that are long overdue (and their preparation is subject to his firm obtaining an indemnity or guarantee of payment). No concrete proposal has been made about the possible financial support from friends and family. Other matters tending against granting an adjournment are the age of the judgment debt (which was entered in June 2020), and the facts that Mr Phillips did not seek to challenge the judgment debt, or challenge the bankruptcy notice, or appear in the sequestration proceedings: see Lahood (No 3) at [107]. For these reasons, I refused to grant an adjournment.

C.2    Annulment of bankruptcy

55    Act s 43 (sequestration order): By s 43(1) of the Act, this Court may, on a petition presented by a creditor, make a sequestration order against the estate of a debtor, where (a) the debtor has committed an “act of bankruptcy”; and (b) at the time when the act of bankruptcy was committed, the debtor (relevantly) was personally present in Australia, and had a dwelling-house in Australia.

56    Act of bankruptcy: By s 40(1)(g) of the Act, a debtor commits an act of bankruptcy:

(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 … 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

…

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[.]

57    Bankruptcy notice: By s 41(1)(a) of the Act, the Official Trustee in Bankruptcy may issue a bankruptcy notice on the application of a creditor who has obtained against a debtor a final judgment of a kind described in s 40(1)(g) that is for an amount of at least $10,000 (being the prescribed “statutory minimum”: see Bankruptcy Regulations 2021 (Cth), reg 10A).

58    Act s 153B(1) (annulment): Section 153B(1) of the Act provides that, if the Court “is satisfied that a sequestration order ought not to have been made”, then the Court “may make an order annulling the bankruptcy”.

59    Heavy burden on applicant: An applicant who seeks an annulment of his or her bankruptcy “carries a heavy burden”. It is incumbent on an applicant “to place before the Court all relevant material with respect to his or her financial affairs so that the Court may be properly informed and may make a judgment that is based on the actual circumstances of the applicant”: Francis v Eggleston Mitchell Lawyers Pty Ltd [2014] FCAFC 18 at [16] (point (2)) (the Court), quoting Bulic v Commonwealth Bank of Australia Limited [2007] FCA 307 at [12] (Tracey J); Thompson v Lane [2023] FCAFC 32; (2023) 410 ALR 434 at [26] (Charlesworth J), [99] (Downes J); Re Papps; Ex parte Tapp (1997) 78 FCR 524 at 531 (O’Loughlin J).

60    Two steps: The application of s 153B(1) involves two steps:

    First, the Court considers whether the sequestration order ought not to have been made.

    If it so finds, then the Court considers whether, in the exercise of its discretion, the bankruptcy should be annulled.

Heinrich v Commonwealth Bank of Australia [2003] FCAFC 315 at [20] (the Court); Davidova v Murphy [2009] FCA 601 at [44]-[45] (Flick J), and the cases cited.

61    “Ought not to have been made”: A sequestration order “ought not to have been made” if, on the facts at the time that the sequestration order was made, the Court would have been bound not to make the sequestration order: Francis at [16] (points (3)-(4)); Shaw v Yarranova Pty Ltd [2017] FCAFC 88; (2017) 252 FCR 267 at [20] (the Court).

62    Later evidence of previously unknown facts may disclose matters which show that the sequestration order ought not to have been made. That is, the Court is entitled to consider not only the case as disclosed at the time when the sequestration order was made, but also those facts now known to have existed at that time. However, the Court excludes those facts which have occurred since the order was made: Heinrich at [20]; Szepesvary v Weston (as Trustee of the bankrupt estate of Aaron Szepesvary) [2018] FCAFC 224; (2018) 363 ALR 379 at [10] (the Court); Barnes v Lion Finance Pty Ltd [2015] FCA 951 at [22] (Beach J).

C.3    Whether the sequestration order “ought not to have been made”

63    The first issue raised by s 153B(1) of the Act is whether I am satisfied that the sequestration order “ought not to have been made”; that is, whether on the circumstances at the time of the sequestration order (including facts now known of the circumstances at that time), the Registrar would have been bound not to make the sequestration order.

64    Mr Phillips’ arguments: Here, the act of bankruptcy underlying the sequestration order was failure to satisfy a judgment debt. Mr Phillips contends that the sequestration order could not properly have been made, because the judgment from the Victorian Magistrates’ Court is irregular; and because he had no personal liability to Rededge (as any liability was on the part of the company Helix Bianca, which (it is said) operated the Dental Clinic).

65    Power to go behind judgment debts: A creditor applying for a sequestration order must prove, among other things, that the debt(s) on which he or she relies are still owing (Act, s 52(1)(c)). A judgment is prima facie evidence of the judgment debt; however, the Court has the power to go behind the judgment, to enquire into its subject matter, so as to satisfy itself that the creditor’s petition is founded on a “good debt”: Shaw at [16]; see also (in the context of s 52(2) of the Act) Toyota Finance Australia Ltd v Berro [2022] FCA 497 at [36] (Burley J), citing Ramsay Health Care Australia Pty Ltd v Compton [2017] HCA 28; (2017) 261 CLR 132 at [55] (Kiefel CJ, Keane and Nettle JJ).

    The Court will only go behind a judgment when there are substantial reasons for questioning whether the debt relied on in the bankruptcy notice is in truth and reality owing to the creditor: Re Skaff; Ex parte Farrow Mortgage Services Pty Ltd (in liq) [1993] FCA 169; (1993) 41 FCR 331 at 335 (Drummond J); Shaw at [17]-[18]; Dunkerly v Comcare [2019] FCA 1002 at [68] (Griffiths J) (appeal dismissed: Dunkerly v Comcare [2020] FCAFC 8 at [52]).

    As a practical matter, the Court is more likely to go behind a judgment when the merits of a claim and counter-claim have not been tested in adversarial litigation, such as a default judgment: see Ramsay Health Care at [68], [70]; Dunkerley at [68](e)-(f).

    In an annulment proceeding, the issue is not whether I would exercise the discretion to go behind the judgment, but rather whether the Court hearing the creditor’s petition (here, a Judicial Registrar) would have been bound to go behind the judgment, if the proper inquiry had been made at that hearing: see Szepesvary at [18]-[19]. Even so, it is convenient to test that point by asking whether, on the evidence before this Court, there is a real debt owed by Mr Phillips to Rededge.

66    Existence of “real debt” depends on identity of party to agreement with Rededge: In assessing whether there is a real debt owed by Mr Phillips to Rededge, the only issue in dispute is the proper identity of the party to the agreement with Rededge. As noted, the Magistrates’ Court orders originally referred to “Seaford Dental Clinic”, and that was later amended (on an ex parte basis) to refer to “Simon and Michelle Phillips trading as Seaford Dental Clinic”. This sequence shows that there was an issue about the proper identification of the debtor.

67    Terms of agreement with Rededge (“Dent-A-Find”): The relevant agreement is set out in a “Client Partnership Agreement” with Dent-A-Find (which is identified as a division of Rededge). This document asked the client to sign and return a “Letter of Acknowledgement”.

    The Letter of Acknowledgment asked for the “Surgery or Clinic Name”, the address, telephone number, after hours telephone number and email address. The clinic was identified as “Seaford Dental Clinic”, and the address was identified as the Frankston-Dandenong Road address of the Clinic property. The email provided appears to be a personal email address of Mrs Phillips.

    The letter of acknowledgement also asked for the “principal name”, billing address and signature. Mrs Phillips crossed out the words “principal name” and printed and signed her own name. The acknowledgment is dated 16 August 2017.

68    The issue is the legal effect of identifying the party to the agreement as “Seaford Dental Clinic”.

69    “Seaford Dental Clinic” business name: As noted, “Seaford Dental Clinic” is both a trading name and a registered business name.

(a)    An “ABN Lookup” search dated 28 February 2023 for the Australian Business Number (ABN) for the Family Trust indicates that, between August 2005 and August 2008, the business name for the Family Trust was Seaford Dental Clinic. That search also indicates that “Seaford Dental Clinic” has been the trading name for the Family Trust since September 2000 (although the extract also states that ABN Lookup will not display trading names from November 2023).

(b)    A historical business name search conducted on 30 April 2025 indicates that Helix Bianca was the holder of the registered business name “Seaford Dental Clinic” (former State identifier B1859904N) between August 2005 and August 2008. The address associated with the business name was the Clinic property.

(c)    An Australian Securities and Investments Commission (ASIC) extract from the business names register dated 28 February 2023 obtained by the Trustees indicates that the business name “Seaford Dental Clinic” (former State identifier B2376002L) was registered on 25 May 2011, with a renewal date of 25 May 2023. The holder details are as follows:

Holder name:    PHILLIPS MICHELLE, PHILLIPS SIMON KENNETH

Holder type:    Partnership

The principal place of business identified is the Clinic property.

(d)    Rededge’s lawyers also obtained a private business name search for “Seaford Dental Clinic” dated 12 June 2020, in support of the application to amend the name of the defendant to the Magistrates’ Court proceeding. That search identifies the same date of registration, the same holders of the business name, and the same place of business, as above. Curiously, this search (obtained before the Trustee’s search) states that the business name “Seaford Dental Clinic” was de-registered on 31 May 2020. However, this reference to de-registration does not appear on the ASIC extract, and the Trustees accept that I should prefer the official extract over this private extract.

70    It can be seen that, at the time that the agreement with Rededge was entered into in August 2017, and at the time that Rededge provided services between March 2018 and July 2020, the holders of the registered business name “Seaford Dental Clinic” were Mr Phillips and his sister, said to be in partnership. The supporting affidavit by Rededge’s lawyers in the Magistrates’ Court relied on these facts in their application to have the name of the defendant in that proceeding amended to refer to Mr Phillips and his sister trading as Seaford Dental Clinic. A business name, in itself, is not a legal entity that can be liable for a debt.

71    Mr Phillips’ evidence about who operated the Dental Clinic: Mr Phillips says, however, that he did not operate the Dental Clinic, and that Helix Bianca operated the Dental Clinic, as trustee of the Family Trust. He says further:

(a)    Helix Bianca was incorporated in 1981 by his father, Kenneth Phillips, who died in February 2011. At the relevant times, Helix Bianca was the registered proprietor of the Clinic property (noting that this property was sold in December 2023: see [23] above).

(b)    On their father’s passing, Mr Phillips and his sister inherited Helix Bianca and the Dental Clinic. In 2014, Mr Phillips purchased his sister’s share, and became the sole shareholder of Helix Bianca and the sole beneficiary of the Family Trust.

(c)    His late wife Kelly Phillips operated the Dental Clinic. She had full control and made all the decisions. Mrs Phillips would liaise directly with Mr Letch (the family accountant) with respect to all aspects of the Dental Clinic.

(d)    Given the nature of the services provided by Rededge, Mr Phillips believes that the services were sought by Helix Bianca for its operation of the Dental Clinic. Mr Phillips says that he did not have any dealings with Rededge. Mr Phillips says that Mrs Phillips engaged Rededge as an employee of Helix Bianca.

(e)    Mr Phillips relies on statements in the Trustees’ first report to creditors to the effect that Helix Bianca is the trustee of the Family Trust, which operated the Dental Clinic and held the trading name “Seaford Dental Clinic”. Mr Phillips also relies on statements in the first and second reports to creditors by the liquidator of Helix Bianca to the effect that Helix Bianca formerly operated a dental clinic in its capacity as trustee of the Family Trust.

(f)    Mr Phillips refers to correspondence from the lawyers for Rededge dated 21 February 2025, where a Mr Peter Davis states that Rededge never had any dealings with Helix Bianca, and that all dealings were done with Seaford Dental Clinic. Mr Phillips states that these remarks are “[o]f interest”, as (it is said) it was him (Mr Davis) who lent Helix Bianca $500,000 and requested a first mortgage over the Clinic property.

72    Two points of detail should be clarified about Mr Phillips’ evidence, although little may turn on them.

    First, the evidence is far from clear about the precise chain of events by which Mr Phillips became sole beneficiary of the Family Trust: cf [71](b) above. The schedule to the trust deed for the Family Trust attached to the Phillips affidavit is dated 20 May 2014, and lists Mr Phillips as the sole beneficiary (and also the appointor). But the document that is said to show the variation to the trust deed by which Mr Phillips bought out his sister is a single page dated 19 September 2014 (ie after the trust deed that shows Mr Phillips as the sole beneficiary), consisting of recitals to a deed (but not the operative provisions) where nearly all of the relevant information is redacted; such as the name of companies and trusts from 1981, the name and Australian Company Number (ACN) of the trustee company, and the names of the parties themselves.

    Second, it appears that the creditors who lent Helix Bianca $500,000 were Mr Davis and his siblings, as trustees for the deceased estate of Mr Bruce Davis: cf [71](f) above.

73    FCC judgment against Helix Bianca (June 2021): Another relevant part of the context is the judgment of the former Federal Circuit Court that imposed penalties on Helix Bianca for contraventions of the Fair Work Act: Fair Work Ombudsman v Helix Bianca Nominees Pty Ltd [2021] FCCA 1351. As noted, ultimately Helix Bianca was placed into liquidation in June 2023 for non-payment of these penalties.

    The proceeding was an application by the Fair Work Ombudsman seeking pecuniary relief in respect of a failure by Helix Bianca to comply with a compliance notice issued by the Ombudsman on October 2020. The Ombudsman also sought default judgment, based on the company’s failure to take any step in the proceedings (such as filing a notice of address for service, or a response or defence). Helix Bianca did not appear at the hearing: Fair Work Ombudsman at [1]-[2].

    Judge McNab stated that Helix Bianca operated a Dental Clinic trading as the Seaford Dental Clinic in Seaford, Victoria: Fair Work Ombudsman at [3].

    Judge McNab was satisfied that Helix Bianca had been properly served, and that default judgment should be entered against it: Fair Work Ombudsman at [15]-[16]. His Honour imposed a penalty of $16,500, being 50% of the maximum penalty for that contravention: Fair Work Ombudsman at [26].

74    Who is the party to the agreement with Rededge? The proper party to the agreement with Rededge can be considered in the light of the evidence summarised above. It is convenient to begin with the legal effect of registering a business name, before considering the relevance of that registration to identifying the proper party to a contract.

75    Registration of business names: The Business Names Registration Act 2011 (Cth) (Commonwealth Business Names Act) provides for a national register of business names. It replaces State Acts such as the Business Names Act 1962 (Vic) (Victorian Business Names Act), and is supported by a reference of power from the States (see, in relation to Victoria, the Business Names (Commonwealth Powers) Act 2011 (Vic)).

    The objects of the Commonwealth Business Names Act include “to ensure that if an entity carries on a business under a business name, those who engage or propose to engage with that business can identify the entity and how the entity may be contacted” (s 16(1)(a)). The extrinsic materials state that this is the primary purpose of the national registration scheme: Explanatory Memorandum to the Business Names Registration Bill 2011 (Cth), p 3.

    Part 2 of the Commonwealth Business Names Act contains offences relating to business names. By s 18(1), an “entity” (defined broadly in s 5 to include a partnership) commits an offence if the entity carries on a business under a name, and the name is not registered to the entity as a business name on the Business Names Register. Section 18(1) is subject to the exceptions in s 18(2). An entity must also include its business name in written communications (s 19), and must display its business name in places open to the public (s 20). It is also an offence for an entity to carry on business under a business name while disqualified (s 21).

    Part 3 of the Commonwealth Business Names Act deals with registering a business name. By s 23(1), an entity that intends to carry on business under a name may lodge with ASIC an application for the name to be registered to the entity as a business name. I note that the definition of “entity” takes account of the capacity in which an entity acts; for example, a person in his or her personal capacity is a different entity from the person acting as a trustee (see s 5(4)).

    Part 4 of the Commonwealth Business Names Act sets out obligations to give information to ASIC. By s 35(1), there is an obligation on an entity to give ASIC notice of any change in circumstances that causes information in the Business Names Register to be no longer correct.

    By s 62S(1)(a) of the Commonwealth Business Names Act, a copy of an extract from the Business Names Register is proof, in the absence of evidence to the contrary, of information in the extract that purports to be held by the Registrar.

76    Business names and proper parties to contracts: The following cases indicate that the fact that a person is the holder of a registered business name is relevant, but not determinative, in identifying the proper party to a contract where the party is identified by the business name.

77    As a preliminary point, the parties to a contract are identified according to the objective theory of contract, which involves ascertaining the intention of the parties from their communications and the circumstances in their mutual knowledge, including their evident commercial aims and expectations. The parties’ subjective beliefs and intentions are irrelevant, save insofar as they are manifest and shared: see, for example, Mills v Walsh [2022] NSWCA 255 at [73] (Brereton JA, with Bell CJ and White JA agreeing); Lederberger v Mediterranean Olives Financial Pty Ltd [2012] VSCA 262; (2012) 38 VR 509 at [19] (the Court).

78    In Pethybridge v Stedikas Holdings Pty Ltd [2007] NSWCA 154, the issue was whether the party to a building contract made in the name of “C & D Asphalt Service” was the person who was registered to that business name (the Appellant), or a company (Torpoint Investments) in which the Appellant and his wife were directors and shareholders. The Court held that, on the facts of that case, the relevant party was Torpoint Investments: Pethybridge at [39] (Campbell JA, with Beazley and Basten JJA agreeing). The key steps in the Court’s reasoning were as follows:

    In that case, a reasonable observer would conclude that the parties intended that the contract would be with whoever was in fact carrying on business under the name “C & D Asphalt Service”: Pethybridge at [51], [54].

    The effect of State Business Names legislation was that, if there had been no other evidence on the topic, tender of the extract from the business names register would have been sufficient to establish that it was the Appellant (as the holder of the business name) who was carrying on business under that name: Pethybridge at [55].

    However, in that case, there was undisputed evidence that it was Torpoint Investments that carried on business under the name “C & D Asphalt Service”. In addition, there were objective indications that the party to the contract was a corporation, because the quotations (which formed part of the communications that led to the contract) included the ACN for Torpoint Investments: Pethybridge at [56].

    The subjective belief of the other party as to who he believed he was contracting with was not relevant. A party’s subjective beliefs could only be taken into account if those beliefs were manifested in words and actions that were known to the other party: Pethybridge at [60].

79    In El-Kazzi v Kassoum [2009] NSWSC 99, the issue was the identity of the lender in a loan agreement signed by “Kulnura Finance”. On the evidence, the persons carrying on business under the name Kulnura Finance were not the person whose name was on the business names register: El-Kazzi at [20]-[21]. The contemporaneous documents included a note of a meeting taken by the debtor recording a loan to “Charbel” (the first name of one of the persons who in fact carried on the business): El-Kazzi at [22], [28]. Ward J applied the reasoning in Pethybridge to find that the parties’ intention was that the debtors would enter into the relevant loan agreement with whoever was carrying on business under the name “Kulnura Finance” at the relevant time: El-Kazzi at [28].

80    Similarly, in Mediterranean Olives Financial Pty Ltd v Lederberger [2011] VSC 301, the issue was whether the party to a contract made with “Loaders Manufacturers & Traders” was a company that was registered in relation to that business name, or a partnership that was trading by that name: see Mediterranean Olives at [1], [4]. By the time of the hearing, the company had entered into a deed of arrangement and could not be pursued: Mediterranean Olives at [1].

81    Justice Pagone at first instance held that the partnership was the party to the contract: Mediterranean Olives at [17]. An important textual indication was that the contractual documents indicated that the relevant party was registered for Goods and Services Tax (GST). The evidence showed that the partnership was registered for GST, but the company was not: Mediterranean Olives at [17], [21]. The nature of the contracts, the surrounding circumstances and the objectives to be secured by the contracts made it clear that the contracting party was the party that would claim the benefit of the tax deductions to be obtained from the contracts. That also was the partnership, not the company: Mediterranean Olives at [21], read with [11] and [19]. Further, the evidence also showed that the company made a declaration of trust that it acted as the bare trustee for the partnership: Mediterranean Olives at [20]. Although an appeal was allowed, this aspect of Pagone J’s reasons was upheld: see Lederberger at [22].

82    Conclusions on proper party to agreement with Rededge: Applying those principles to this case, the proper party to the agreement with Rededge is to be determined objectively, having regard to the parties’ communications and the circumstances in their mutual knowledge. The fact that Mr Phillips and his sister were the holders of the registered business name “Seaford Dental Clinic” at the time gives rise to a prima facie position that they are the party liable; however, that prima facie position can be displaced by evidence to the contrary.

83    Some objective matters indicate that the Seaford Dental Clinic was in fact operated by Helix Bianca, such as the conclusions reached in the reports to creditors by the Trustees, and by the liquidator of Helix Bianca, as well as the statement in Fair Work Ombudsman at [3]: see [71](e) and [73] above.

84    However, the specific question is who the parties intended to be bound by the agreement with Rededge. The identity of the person(s) or body that in fact operated the Dental Clinic is relevant to that question, but it is not determinative. Mr Phillips submits that the parties must have intended that the party to the contract would be whatever entity received the benefit of Rededge’s services. I do not accept that argument.

    In Pethybridge, the court relied on objective circumstances to conclude that the parties intended that the agreement be with whoever was in fact operating the business; in particular, the contractual documents included ACNs for the relevant company that was in fact trading under that business name. Similarly, in Mediterranean Olives, the objective circumstances included that the party to the contract would be registered for GST, which the partnership was and the company was not. And in El-Kazzi, there was a record of the creditor from which it could be inferred that the creditor knew that the business was being run by someone other than the holder of the business name. There is no comparable objective circumstance here which makes it clear that Rededge intended to contract with whoever was operating Dental Clinic, as distinct from the person or entity who held that business name.

    Further, there is an important and unexplained gap in Mr Phillips’ evidence: the evidence shows that between 2005 and 2008, the registration of the business name “Seaford Dental Clinic” matched what Mr Phillips says is the correct position: that is, this name was registered to Helix Bianca and linked to the Family Trust. However, this registration was cancelled, and in May 2011 the business name “Seaford Dental Clinic” was re-registered in his and his sister’s name: see [69] above. From Mr Phillips’ evidence, this registration of the business name was consistent with the position as between him and his sister at the time: they had jointly inherited the Dental Clinic and Helix Bianca, and he had not yet bought out her share: see [71](b) above. At this time, an application to register a business name was required to set out “a concise description of the true nature of the business carried on or proposed to be carried on under that name by the applicant or applicants” (Victorian Business Names Act, s 7(1)(b), emphasis added). That registration remained in force for three years, subject to renewal (s 11(1) of that Act).

85    In other words, any liability imposed on Mr Phillips from the use of the registered business name “Seaford Dental Clinic” in the agreement with Rededge results from the deliberate and voluntary act to register that business name in 2011, with him and his sister as the holders of that name.

    Once the operative parts of the Commonwealth Business Names Act came into effect in 2012 (see s 2(1)), the registration of that name took effect under that Act, pursuant to the Business Names Registration (Transitional and Consequential Provisions) Act 2011 (Cth). It was a criminal offence under the Commonwealth Business Names Act for an entity such as Helix Bianca to carry on a business under a registered business name if that name was not registered to it (s 18(1)). That Act also imposed obligations on the holders of a business name to correct any information on the business names register that was incorrect (s 35(1)). Further, it appears from the records that the registration of the business name would have been renewed at least three times after its initial registration in May 2011 (as the records refer to the name being registered until at least May 2020, and registration can be renewed for no more than three years: see s 55(1)). The primary purpose of registration under the Commonwealth Business Names Act is to enable people who deal with an entity carrying on business under a business name to identify the entity and how it can be contacted (see s 16(1)(a)).

    But on Mr Phillips’ argument, the registration of the business name “Seaford Dental Clinic” in 2011 contained incorrect information from the date of application, and never disclosed the entity that in fact carried on business under the registered business name. And the 2011 application was made after the previous registration of the business name “Seaford Dental Clinic”, which did disclose the entity that carried on business under that name, was cancelled in 2008.

86    No weight could be given to Mr Phillips’ statement that Mrs Phillips entered into the agreement with Rededge in her capacity as an employee of Helix Bianca (noting there is no evidence of her employment status). Mr Phillips’ subjective understanding of the position is not relevant, because the test of contractual intention is objective. Equally, the subjective understanding of the persons at Rededge is not relevant, except to the extent that the evidence is that Rededge did not have any knowledge of Helix Bianca: see [71](f) above. Rededge’s lack of knowledge of Helix Bianca is relevant, because it distinguishes this case from El-Kazzi, where both parties were aware that the persons in fact running the business were different from the holder of the registered business name. Consistent with this lack of knowledge, the Trustees point in this context to the lack of any reference to Helix Bianca in Rededge’s invoices. Contrary to Mr Phillips’ submission, I do not think that any knowledge of Helix Bianca held by the lawyer for Rededge (cf [71](f) above) can be imputed to Rededge itself, given the issue is Rededge’s knowledge at the time that the agreement was entered into.

87    Conclusions on “real debt”: For these reasons, the evidence is not sufficient to displace the prima facie position that the parties intended that Rededge would contract with whatever entity was the holder of the registered business name; namely, Mr Phillips and his sister. In particular, the evidence does not establish that the parties’ objective intention was that Rededge would enter into a contract with whoever was in fact operating Dental Clinic (on Mr Phillips’ case, Helix Bianca), given the unexplained gap in Mr Phillips’ evidence, and the absence of objective circumstances indicating to the contrary of the prima facie position, as set out above.

88    It follows that Mr Phillips has not established that there was no “real debt” owing by him to Rededge upon which bankruptcy proceedings could have been founded. Accordingly, he has not established that the Judicial Registrar would have been bound to go behind the Magistrates’ Court judgment at the hearing in February 2023 and find that no real debt existed. That in turn means that I am not satisfied for the purposes of s 153B(1) that the Registrar would have been bound not to make a sequestration order, such that this order “ought not to have been made”.

C.4    Whether an annulment order should be made in the exercise of discretion

89    Even if I had been satisfied that the sequestration order ought not to have been made, there would still be an issue whether I should make an order under s 153B(1) annulling Mr Phillips’ bankruptcy. That is, the use of “may” in s 153B(1) confers a discretion, and the Court is not obliged to make an annulment order, even if satisfied that a sequestration order ought not to have been made: see Francis at [16] (point (7)); Shaw at [6].

90    Relevant factors: Relevantly to this case, the factors that bear on this discretion include:

    whether the applicant is solvent at the time of the annulment application;

    whether the applicant has made full disclosure of his financial affairs;

    whether the applicant has delayed in making the annulment application and the time that has elapsed since the making of the sequestration order;

    the conduct of the applicant during the period of the bankruptcy, including the applicant’s co-operation with the trustee and also whether there has been any conduct that may give rise to bankruptcy offences.

See the factors set out in Yang v L & H Group (a limited partnership) [2015] FCA 932 at [29](d) (Beach J); Cooper v Selection Steel Trading Pty Ltd [2023] FCA 979 at [69] (O’Sullivan J); Francis at [16] (point (8)).

91    Each of the above factors tend strongly against making an annulment order in this case.

92    Solvency: The first and most important discretionary matter is that Mr Phillips has not established that he is solvent, assessed at the time of this annulment application. This Court has emphasised the centrality of solvency to bankruptcy, including in annulment applications: see Shaw at [109]-[110], referring to Culleton at [43]-[44] (the Court); see also Thredgold v Fyfe Pty Ltd [2013] FCA 1363 at [71] (White J).

    The discretion to make an order under s 153B is not ordinarily exercised unless all of the provable debts have been paid in full (or can be paid in full), and the trustee’s remuneration and expenses are met: Hardaker v Phair t/as Proctor Phair & Associates [2002] FCA 1176 at [19] (Jacobsen J); Kessly v Beadle as Trustee of the Bankrupt Estate of Evangelina Francisca Kessly [2020] FCA 607 at [46], [123] (Burley J); Toyota Finance at [68]; see also Stankiewicz v Plata [2000] FCA 1185 at [29] (the Court) (a bankrupt whose assets exceed their debts at the time of sequestration is ordinarily entitled to an annulment of the bankruptcy, on giving an undertaking that the bankrupt pay the costs of the petitioning creditor and the trustee’s costs of administration).

    By s 5(2) and (3) of the Act, a person is solvent if, and only if, the person is able to pay the person’s debts, as and when they become due and payable; and otherwise the person is insolvent.

    The onus is on Mr Phillips to establish that he is solvent: Mangano v Bullen [2025] FCAFC 42 at [162] (Shariff and Needham JJ), citing Australia & New Zealand Banking Group Ltd v Foyster [2000] FCA 400 at [17] (Hely J) and Trojan v Corporation of Hindmarsh [1987] FCA 276; (1987) 16 FCR 37 at 47-48 (the Court). As noted, an applicant for annulment is required to place before the Court all relevant material with respect to his or her financial affairs so that the Court may be properly informed and may make a judgment that is based on the actual circumstances of the applicant: see [59] above.

93    Mr Phillips’ evidence: Mr Phillips has completed a Bankruptcy Form (in December 2023) but, at the date of the Brace affidavit in May 2025, had not completed the Income Contribution Questionnaire (the “ICQ”) or provided details of his income. The Bankruptcy Form states that he had been unemployed for three years, and did not list any sources of expected income for the next 12 months. This form lists two bank accounts but does not suggest that these accounts have any more than a nominal amount in them. The form does not provide any information on whether Mr Phillips has superannuation accounts or shares (writing “tbc” on both questions). The form also does not provide any information about Mr Phillips’ vehicles, but refers to a letter from Davies Moloney (his then lawyers). Davies Moloney provided some information about the ownership and location of vehicles owned by Mr Phillips in a letter to the Trustees’ lawyers dated 12 January 2024. Mr Phillips’ bankruptcy form does not provide any information about whether Mr Phillips was a director or secretary of a company, or whether he was involved with a family trust (including as a beneficiary).

94    Mr Phillips’ affidavit refers to him being entitled to receive the surplus of the proceeds of the sale of the Taylor Bay property. There are recent untested statements by Mr Letch on behalf of Mr Phillips that the ATO was forwarded a sum of $162,500 foreign resident capital gains withholding, which was withheld from the sale of the Taylor Bay property, and which would be payable to the Assets Trust (noting that Mr Phillips proposes that this amount be paid to his son). Mr Phillips also states that there is “ample equity” in the Residential property, that he is able to service the “small mortgage” on that property, and that he cannot afford to lose his house.

95    Trustees’ evidence: The Brace affidavit contains the following evidence about the debts owed by Mr Phillips, as at May 2025.

(a)    Rededge lodged a proof of debt in May 2023 in the sum of $62,828.17.

(b)    The Davis estate lodged a proof of debt (for the mortgage over the Clinic property). Following the sale of that property around December 2023, the Davis estate advised in May 2025 there was an outstanding debt of $3,978.95.

(c)    The ATO lodged a proof of debt in May 2023 in the sum of $421,970.12. In May 2025, the ATO advised the Trustees that this debt was currently approximately $353,444.82. The Trustee is waiting on a revised proof of debt.

(d)    Tobin Brothers lodged a proof of debt in May 2024 in the sum of $19,059.13.

(e)    The Liquidator of Helix Bianca advised the Trustees in January 2025 that the Liquidator considered he had claims against Mr Phillips in his capacity as director of Helix Bianca for breaches of directors’ duties, and for insolvent trading. The Liquidator stated that, in total, these claims amounted to $257,396.04, of which the claims for insolvent trading exceed $240,000.

(f)    The lawyers for the mortgagor of the Residential property (Bankwest) have advised that Bankwest served a default notice on Mr Phillips on 12 May 2025, which required him to pay $40,833.95 by 23 June 2025. At 12 May 2025, the payout figure on the mortgage over the Residential property was $168,230.11. There are untested statements in the Haddad affidavit that a friend of Mr Phillips has brought this mortgage up to date.

(g)    Peninsula Accounting Partners are claiming a debt of $2,101, which is subject to a proof of debt.

96    It appears that none of these debts has been formally admitted by the Trustees (cf Act s 102). However, the fact that the Trustees are yet to determine the extent to which these debts will be admitted does not mean that their opinions as to Mr Phillips’ solvency (based on the figures set out above) should not be accepted: Thompson at [177] (Downes J). The onus of showing that a proof of debt is excessive, and by how much, falls on the debtor as part of demonstrating solvency: CSM Lawyers Pty Ltd v Manzo, in the matter of Manzo [2023] FCA 236 at [93] (Downes J); Thompson at [161] (Downes J).

97    An additional liability is the Trustees’ remuneration and expenses. The creditors have approved remuneration of $51,415 and internal disbursements of $863. Mr Brace states that the remuneration, disbursements and expenses have increased, and that between February 2023 and April 2025 the Trustees have done work resulting in work in progress in the order of $90,000.

98    As to Mr Phillips’ assets, the Trustees state that the sum of $103,108.31 has been paid into Court, as the surplus of the funds obtained from the sale of the Taylor Bay property. The Trustees have obtained two valuations of the Residential property: one values that property in the range of $700,000-770,000, and the other in the range of $700,000-900,000. The Trustees have not yet valued the vehicles owned by Mr Phillips: their second report to creditors dated 21 December 2023 pre-dated the information provided about those vehicles in January 2024 (as to which, see [93] above).

99    Conclusions on solvency: As noted, there is no evidence before the Court about Mr Phillips’ income. Considering Mr Phillips’ assets, I am prepared to assume for the purposes of argument that he would be entitled to receive the surplus funds for the sale of the Taylor Bay property (a sum of little over $103,000). And as noted, there are some untested statements in the Haddad affidavit that $162,500 could be repayable from the ATO arising out of the sale of the Taylor Bay property: see [94] above. However, the parties agree, and I accept, that the distribution of the surplus amount and any refund amounts is a matter for the trustee of the Assets Trust, who will act in accordance with equitable principles set out in cases such as Owies v JJE Nominees Pty Ltd (in its capacity as trustee for the Owies Family Trust) [2022] VSCA 142 at [82]-[98] (the Court). Mr Phillips’ affidavit indicates that he is resistant to the sale of the Residential property, although it should be noted that this property (along with all of Mr Phillips’ property that is not “after-acquired” property) vested in the Trustees once Mr Phillips became bankrupt (Act s 58(1)).

100    In considering whether Mr Phillips can pay his debts, it is sufficient to focus for the moment on the debts claimed by Rededge and the Davis estate (both based on judgment debts), the ATO and Tobin Brothers. These debts alone amount to debts in the vicinity of $440,000, far in excess of the surplus funds from the sale of the Taylor Bay property (and in excess of that surplus and any refund from the ATO that is claimed to be payable). And these are not the only amounts that will need to be paid. The Trustees’ remuneration and expenses will also be payable, in the event that the bankruptcy were annulled (see Act s 154(1)(b) and (2)). Finally, there are the claims of the Liquidator of Helix Bianca, which are more difficult to quantify with precision, but which are potentially very significant. These claims are included by the Trustees in the list of Mr Phillips’ unsecured creditors in the second report to creditors, estimated at a value of $200,000. The claim against Mr Phillips for insolvent trading is provable in bankruptcy: see Mableson v Tarbotton, Bankrupt Estate of Tarbotton [2022] FCA 1433 at [24] (Banks-Smith J); Markel Syndicate Management Ltd v Taylor as Liquidator of Heading Contractors Pty Ltd (in liq) [2021] FCAFC 198; (2021) 399 ALR 659 at [7](6) (the Court).

101    Taking these matters together, even taking the most favourable position for Mr Phillips, he has not established that he is able to pay his debts, as and when they become due and payable (see Act s 5(2)). His evidence is incomplete (it does not address at all his liability to the ATO) and in other respects is bare assertion (such as his claim that he can pay his debts from the proceeds of the Taylor Bay property): cf Mangano at [171]. Mr Phillips asserts that there is “ample equity” in the Residential property, but he has not put forward any proposal about how he could use that equity to satisfy his debts as and when they fall due, if the bankruptcy were annulled.

102    The Haddad affidavit refers to the possibility that Mr Phillips could obtain financial support from his family and friends. However, his affidavit does not attach any evidence of support (such as a loan agreement or bank transfer), and Mr Haddad states only that this evidence, if it were obtained, “may” further substantiate this position. This factor is only speculation at this stage. I understood Mr Phillips’ lawyer to accept at the hearing that, on the evidence before the Court, the Court could find that Mr Phillips is insolvent.

103    As noted, there are statements in the Haddad affidavit that seek to challenge the extent of some of the debts set out above. Further, Mr Phillips submits that any debt owed to the liquidator requires further examination. However, the onus is on Mr Phillips to establish his solvency. He has been given a reasonable opportunity to present his case and, as explained, I have decided not to adjourn these proceedings to give him any further opportunity. Mr Phillips’ inability to establish solvency, assessed at the time of this application, is a sufficient discretionary reason by itself to refuse to annul the bankruptcy. However, there are other factors which support that conclusion.

104    Whether full disclosure; conduct during bankruptcy: Other relevant discretionary factors are the failure by Mr Phillips to make full disclosure of his financial affairs, and his conduct during the bankruptcy. These matters can be considered together.

105    Relevance of bankrupt’s conduct: The conduct of a bankrupt is a relevant consideration in determining whether an order annulling the bankruptcy should be made: Shaw at [112]. In particular, a failure to cooperate with the trustee in bankruptcy tends against making an annulment order: see Nathan v Burness (No 2) [2011] FCA 289 at [47] (Tracey J); Selection Steel at [74]-[75]. So does material non-disclosure in the statement of affairs: Ozer v Australian Liquor Marketers Pty Ltd [2001] FCA 1197 at [33] (the Court); or a failure to provide records as required by s 77 of the Act: Thompson at [118]-[120] (Downes J), [229] (Goodman J).

106    Failures to provide information: The chronology of events set out in [15]-[31] above indicates that Mr Phillips has not provided the Trustees with information sought by them and required under the Act. Any information that was provided was late, and often incomplete.

(a)    The Trustees first requested that Mr Phillips complete a Bankruptcy Form in early March 2023: see [15] above. The Trustees informed Mr Phillips, correctly, that he was required to complete that form within 14 days of receiving notification of his bankruptcy (see Act s 54). The Trustees reminded Mr Phillips or his lawyers of this obligation in May, August and September 2023: see [18]-[20] above. Mr Phillips completed a Bankruptcy Form in December 2023; however, the Form is incomplete, and does not contain information that must have been well known to Mr Phillips, such as his directorships and his family trusts (and whether he had a superannuation account or held shares): see [93] above.

(b)    The Trustees have also repeatedly requested Mr Phillips since March 2023 to provide details about his income (using the ICQ), as required by s 139U of the Act. Mr Phillips has not completed the ICQ or provided details of his income, other than what can be gleaned from the Bankruptcy Form.

(c)    The Trustees’ first report to creditors in April 2023 states that their investigations had been hampered due to the failure by Mr Phillips to provide them with his Bankruptcy Form, and his books and records (which are required to be provided “forthwith” by s 77 of the Act). The Trustees’ second report to creditors in December 2023 refers to a number of matters on which further information was required, such as whether Mr Phillips had a superannuation account.

107    Delays caused to administering the estate: The chronology set out above also indicates that Mr Phillips’ conduct has caused significant delays in the Trustees’ administration of Mr Phillips’ estate. Mr Phillips has not provided the Trustees with information sought by them, and has refused to vacate the Residential property (noting again that this property vested in the Trustees when Mr Phillips was made bankrupt).

(a)    The Trustees first informed Mr Phillips in August 2023 that they anticipated selling the Residential property for the benefit of the bankrupt estate, unless Mr Phillips provided a proposal for administering his estate within 14 days. In September 2023, the Trustees stated that they had not received an acceptable proposal, and required Mr Phillips to vacate the Residential property within 21 days. In November 2023, the Trustees’ lawyers stated that Mr Phillips was required to vacate the Residential property by 1 December 2023: see [19]-[20] above.

(b)    In late November 2023, Mr Phillips’ then lawyers referred to a meeting having been convened between the Trustees and Mr Phillips. Mr Phillips then executed a Bankruptcy Form in early December 2023: see [21]-[22] above.

(c)    Between December 2023 and June 2024, the Trustees sought from Mr Phillips information and a proposal to deal with the estate. Mr Phillips’ accountant provided a proposal in May 2024. There were communications between the Trustees and the accountant about this proposal in June and July 2024: see [24] above.

(d)    In August 2024, the Trustees again stated that they had not received an acceptable proposal from Mr Phillips, and that they would be instructing their solicitors to take possession of the Residential property. The Trustees’ lawyers sent a letter and emails to Davies Moloney in November and December 2024, asking whether Davies Moloney had authority to accept service on Mr Phillips’ behalf. In early December 2024, Davies Moloney stated that they no longer acted for Mr Phillips: see [25], [27]-[28] above.

(e)    In January 2025, the Trustees were informed that Mr Phillips had instructed new lawyers, who were intending to bring an application to annul the bankruptcy: see [30] above.

108    In short, the Trustees have been proposing since August 2023 to meet Mr Phillips’ debts by selling the Residential property. Mr Phillips attended a meeting with the Trustees in December 2023, submitted a proposal in May 2024 through his accountant, and now has brought an application to annul the bankruptcy in March 2025, using different lawyers from those he engaged throughout 2023 and 2024. Mr Phillips has not provided any evidence to explain the delays in providing information to the Trustees, or to explain the circumstances in which he withdrew instructions from his long-standing lawyers in December 2024 and engaged new lawyers in January 2025.

109    The failure by Mr Phillips to make full disclosure of his financial affairs, and his conduct during the bankruptcy set out above, together provide sufficient reasons not to make an annulment order.

110    Delay: The final discretionary factor is the delay between Mr Phillips being notified of the sequestration order (which could be no later than on receipt of the Trustees’ letter dated 3 March 2023), and the bringing of this application on 7 March 2025; a period of two years. As noted, there is a general public interest in bankruptcy proceeding being resolved expeditiously: see [39] above.

111    In Szepesvary, the Full Court held (at [68]) that Mr Szepesvary’s delay in seeking an annulment on this ground for well over two years created insuperable difficulties in justifying the exercise of a discretion in his favour under s 153B of the Act. Similarly, in Nathan (No 2), Tracey J held (at [46]) that the unexplained delay of some two years between the making of the sequestration order and Mr Nathan’s application to have it set aside weighed against an annulment.

112    Here, the chronology set out above indicates that the Trustees have incurred some considerable expense attempting to engage with Mr Phillips since March 2023 for the purposes of administering his estate. Mr Phillips sought an adjournment to obtain evidence about his mental health, which (it was said) would explain the delay in bringing this application. However, the discretionary weight to be given to delay is not just an issue of the blameworthiness of Mr Phillips (on which evidence of his mental health could in theory provide some mitigation), but more fundamentally the prejudice caused to the Trustees and the creditors by this delay. As in Szepesvary, this factor creates very considerable difficulties by itself in justifying the exercise of discretion to make an annulment order. This factor also adds very considerable weight to the other discretionary factors discussed above.

D.    conclusion

113    The application under s 153B of the Act raises two questions: whether the annulment order “ought not to have been made” and, if so, whether an annulment order should be made in the exercise of discretion. For the reasons set out above, I would answer both questions adversely to Mr Phillips. The application must therefore be dismissed.

114    Costs: By s 32 of the Act, the Court has a general power to make “such orders as to costs as it thinks fit”. It has been necessary for the Trustees to defend these proceedings brought by Mr Phillips. Their costs should be taxed and paid out of the estate in accordance with the priority given by s 109(1)(a) of the Act: see Culleton v Balwyn Nominees Pty Ltd (No 2) [2017] FCAFC 12 at [8]-[10] (the Court), and the cases cited.

Associate:

Dated:    31 July 2025