FEDERAL COURT OF AUSTRALIA

Strata Plan 94402 v Chen, in the matter of Chen [2025] FCA 1071

ORDERS

THE COURT ORDERS THAT:

1.    The time for filing an application under s 35A(5) of the Federal Court of Australia Act 1976 (Cth) and r 2.02(3) of the Federal Court (Bankruptcy) Rules 2016 (Cth) to review the sequestration order made by the Court against the estate of the respondent on 28 November 2023 not be extended.

2.    The application under s 153B of the Bankruptcy Act 1966 (Cth) to annul the sequestration order made by the Court against the estate of the respondent on 28 November 2023 be dismissed.

3.    The respondent pay the applicant’s costs to be agreed or assessed by a Registrar.

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

TABLE OF CONTENTS

REASONS FOR JUDGMENT

STELLIOS J:

1    This proceeding relates to a sequestration order made by a Registrar of this Court on 28 November 2023 under the Bankruptcy Act 1966 (Cth) (Sequestration Order). The respondent seeks a review of the Sequestration Order under s 35A(5) of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act) (review application) or, alternatively, an annulment of the bankruptcy under s 153B of the Bankruptcy Act (annulment application).

2    The respondent’s review application is made out of time. A review of a decision of the Registrar under s 35A(5) of the Federal Court Act must be made within 21 days after the day on which the power was exercised unless the Court directs otherwise: Federal Court (Bankruptcy) Rules 2016 (Cth) (Bankruptcy Rules) r 2.02(3). Additionally, while there is no specified time limit for the annulment application, delay in bringing such an application is a relevant factor in the exercise of the power under s 153B of the Bankruptcy Act.

3    The respondent first lodged an application in a separate proceeding on 1 November 2024 (NSD 1548 of 2024). That application was accepted for filing on 4 November 2024. Included in the claimed relief was an application for an extension of time to bring the review application. On 5 February 2025, I ordered that, to the extent that it sought an extension of time to review the Sequestration Order made against the estate of the respondent, the application was to be treated as an application in this proceeding under s 35A(5) of the Federal Court Act and r 2.02(3) of the Bankruptcy Rules for an extension of time for a review application or, in the alternative, an annulment application.

4    On 21 February 2025, the respondent filed an Interim Application seeking the following orders:

Setting Aside (Annulment of) Sequestration Orders pursuant to section 153B of the [Bankruptcy Act]

Re-vesting of Real Property and Bank-Related Compensation Pursuant to sections 153B and 154(6) of the [Bankruptcy Act]

Costs are borne by the creditors.

5    The Interim Application does not, on its terms, seek to review the Sequestration Order under s 35A. However, it would appear from the respondent’s submissions that such a review is sought. I have treated the Interim Application as seeking an extension for a s 35A review and, in the alternative, an annulment.

6    For the reasons that follow, I:

(1)    Do not grant an extension of time to file the review application;

(2)    Would have dismissed the review application had I extended time; and

(3)    Dismiss the annulment application.

BACKGROUND

The first creditor’s petition — NSD 974 of 2022

7    On 1 June 2022, the applicant obtained a judgment debt against the respondent in the Local Court of New South Wales, proceeding number 2022/00114621, in the amount of $18,116.64 (First Judgment).

8    On 14 November 2022, the applicant lodged for filing a creditor’s petition in the Court, proceeding number NSD 974 of 2022, for the amount of the First Judgment. On 15 March 2023, the applicant received a payment of $9,400 from the respondent’s mother; thereby reducing the debt below the statutory minimum to proceed with a creditor’s petition. On 21 March 2023, a Registrar dismissed the petition and made an order for costs against the respondent fixed in the amount of $8,103.00 (Costs Order).

The second judgment debt

9    On 10 July 2023, the applicant obtained a further judgment debt against the respondent in the Local Court of New South Wales, proceeding number 2023/00171393, in the amount of $10,210.34 (Second Judgment).

10    The Official Receiver issued a Bankruptcy Notice (numbered BN260829) to the respondent on 11 July 2023 on account of the $27,029.98 debt that the applicant claimed against the respondent. That debt consisted of the amounts of the First Judgment (less the $9,400.00 already paid), the amount of the Costs Order against the respondent following the dismissal of the first creditor’s petition in NSD 974 of 2022, and the Second Judgment. The respondent was given 21 days after service of the Bankruptcy Notice to pay to the applicant the amount of the debt claimed or make arrangements to the creditor’s satisfaction for settlement of the debt.

Service of the Bankruptcy Notice

11    In an affidavit sworn on 6 September 2023, Justin Gerges, a licenced process server contracted by the former solicitors for the applicant, deposed that on 28 July 2023 he placed a copy of the Bankruptcy Notice along with certified copies of the First Judgment and the Second Judgment in an envelope addressed to the respondent at “810/2 Charles Street, Canterbury NSW 2193”. Mr Gerges further attested that at approximately 2.07pm that same day, he attended that address, knocked on the door and had a conversation to the following effect:

[Justin Gerges]: Are you Yikai Chen

Yikai Chen: Yes

[Justin Gerges]: I have a Bankruptcy Notice to serve you

Yikai Chen: Slide it under the door

Mr Gerges attested that, following the conversation, he slid the envelope containing the Bankruptcy Notice, First Judgment, and Second Judgment under the door. While the Costs Order is not referred to in the body of the affidavit as having been served, it is annexed to the affidavit along with copies of the First Judgment and Second Judgment.

12    The respondent contested these events. In giving evidence at the hearing, the respondent claimed that he did not remember the interaction with Mr Gerges. Indeed, he positively asserted that the conversation did not take place. The respondent claims he first received a copy of the Bankruptcy Notice when it was given to him by David Mansfield (Trustee) after the Sequestration Order was made.

13    Counsel for the applicant at the hearing relied upon authorities that drew a distinction between evidence of non-receipt and evidence of non-delivery, arguing that the respondent’s evidence was in the former category and, therefore, not sufficient to displace the evidence of service: see Lion Finance Pty Ltd v Evans [2016] FCCA 1265 at [11]; Skalkos v T&S Recoveries Pty Ltd (2004) 141 FCR 107; [2004] FCAFC 321 at [17]‍–‍[25]. However, I am not persuaded that those authorities apply in these circumstances where the respondent directly challenges the evidence relied on by the applicant for personal service.

14    Nonetheless, I am prepared to accept that service of the Bankruptcy Notice occurred as deposed by Justin Gerges. In the absence of any other evidence casting doubt on that account, I prefer the contemporaneous evidence of the process server. The respondent’s claim that he was unaware of the bankruptcy proceeding does not sit comfortably with his statement in an email dated 10 January 2024 to the office of the Trustee that “the strata is trying to bankrupt me every half year” and then, again, on 17 September 2024 that his health conditions “have prevented [him] from fulfilling certain obligations”.

15    Accordingly, I accept the evidence that the Bankruptcy Notice was served on the respondent as deposed by Mr Gerges.

The second creditor’s petition — NSD 974 of 2023

Service of the second creditor’s petition

16    On 7 September 2023, the applicant filed a second Creditor’s Petition against the respondent. That is the Creditor’s Petition that gave rise to this proceeding.

17    In an affidavit sworn on 26 September 2023, Michel Gerges, a paralegal employed by the former solicitors of the applicant, attested that at approximately 9.19am on 18 September 2023, they attended “810/2 Charles Street, Canterbury NSW 2193” with an envelope containing the Creditor’s Petition and supporting documents. The envelope was marked with the address. They attest that they knocked on the door, and a person claiming to be the respondent refused to open the door. Michel Gerges claimed the following exchange took place:

[Michel Gerges]: Are you Yikai Chen

Yikai Chen: Yes

[Michel Gerges]: I have a Creditors Petition to serve you

Yikai Chen: Slide it under the door

18    Annexed to the affidavit were images of a door marked “810” and an envelope marked with the respondent’s name and the address of the Canterbury property — which contained the Creditor’s Petition — being slid under the door.

19    While the respondent did not give evidence at the hearing that this service did not occur, it is clear from his affidavits and submissions that he challenges the evidence of service given by Michel Gerges. However, for similar reasons to those given above at [14], I am prepared to accept that service occurred as deposed by Michel Gerges.

20    The hearing of the second Creditor’s Petition was adjourned by a Registrar on 24 October 2023 and again on 14 November 2023, and orders were made on those dates for the applicant to file and serve affidavits verifying the Creditor’s Petition and any other affidavits relied on, and also for service of the Court’s orders. The orders of 14 November 2023 adjourned the hearing of the Creditor’s Petition to 28 November 2023 at 11.00am. Each set of orders included orders that service was to be effected by express post to the last known address of the respondent.

21    In an affidavit sworn on 13 November 2023, George Gerges, the Principal Solicitor at the applicant’s former solicitors, deposed that service of the orders made on 24 October 2023 and accompanying documents was effected by sending the documents by registered post to “810/2 Charles Street, Canterbury NSW 2193” on 3 November 2023. In an affidavit sworn on 17 November 2023, Olivia Atkins, a solicitor employed by the applicant’s former solicitors, deposed that service of the orders of 14 November 2023 and accompanying documents was effected by sending the documents by registered post to “810/2 Charles Street, Canterbury NSW 2193” on 15 November 2023. Annexed to the affidavits of Mr Gerges and Ms Atkins are delivery receipts from Australia Post.

22    The respondent claims he did not receive either set of documents sent on 3 November 2023 and 15 November 2023. While he initially accepted under cross-examination that he resided at 810 at number 2 Charles Street, Canterbury, he then contended that (a) he did not have access to his mailbox and (b) the correct postal address is “810/2B Charles Street”. He contended that “2 Charles Street” and “2B Charles Street” are different addresses that identify completely different locations. The first of these explanations can be put to one side as it would only explain non-receipt, rather than non-delivery: Lion at [11].

23    As to the second, I am not persuaded that these addresses are different. As the applicant submitted, “2 Charles Street, Canterbury” is identified as the address for the Strata Plan in the Minutes of the Annual General Meeting, the applicant’s owner ledger, and the strata management agreements, all of which were annexed to the affidavit of Cassandra Stevenson dated 8 April 2025.

24    Additionally, during the hearing, counsel foreshadowed that the applicant would send by email to my chambers, by way of tender, a reverse title search of the New South Wales Land Revenue Services database which showed that “2 Charles Street, Canterbury” is the address for the relevant Strata Plan 94402. After the hearing, solicitors for the applicant sent to my chambers copies of searches undertaken for “2b charles st canterbury” and “185/sp94402”. The former search returned a result identifying “SP94402”. The latter search identified “2 Charles St, Canterbury” as the location for Strata Plan 94402. They reaffirm the conclusion that “2 Charles Street, Canterbury” is the correct address for Strata Plan 94402.

25    Accordingly, I am satisfied on the balance of probabilities that the Registrar’s orders dated 24 October 2023 and 14 November 2023 were correctly served in accordance with the terms of those orders.

26    Given this conclusion, it is unnecessary to consider further the question of whether the respondent received notice of the Creditor’s Petition hearing by email on 27 November 2023 as disputed between the parties.

The Sequestration Order

27    The Creditor’s Petition was heard on 28 November 2023. The respondent did not attend the hearing, following which a Registrar made the Sequestration Order against the estate of the respondent. The Court noted that a consent to act as Trustee had been filed under s 156A of the Bankruptcy Act. The Registrar also made an order for costs fixed in the amount of $5,077.55, which is not the subject of this review. The Trustee was appointed on 28 November 2023 as sole trustee.

Correspondence between the Trustee and the respondent

28    On 5 December 2023, the Trustee sent a letter to the respondent by registered post and email. The letter stated that the Sequestration Order had been made on 28 November 2023, and that the respondent was required by s 54(1) of the Bankruptcy Act to lodge with the Official Receiver a Statement of Affairs within 14 days of notification of the Sequestration Order and to attend the Trustee’s office for an interview.

29    Further letters were sent by the Trustee to the respondent by registered post and email:

(1)    On 10 January 2024, advising that the respondent had failed to lodge a Statement of Affairs as required by s 54(1). The respondent replied by email seeking a revocation of the bankruptcy and outlining his health and financial challenges. On 19 January 2024, an employee under the Trustee’s supervision replied to the respondent by email recommending that he urgently obtain legal advice if he intended to appeal.

(2)    On 25 January 2024, enclosing a formal notice under s 77 of the Bankruptcy Act directing the respondent to provide to the Trustee certain information about his affairs.

(3)    On 1 February 2024, enclosing a formal notice under s 77 of the Bankruptcy Act requiring the respondent to attend the Trustee’s office.

30    On 17 September 2024, the respondent emailed the office of the Trustee outlining the health challenges that prevented him from fulfilling his obligations and referring to an “appeal for bankruptcy discharge”. On 20 September 2024, the Trustee sent a letter by email to the respondent outlining the circumstances in which the bankruptcy would be discharged. These included the payment of his debts and administration costs, and application to a court in some circumstances. The Trustee again requested that the Statement of Affairs be lodged without further delay and advised that failure to do so would result in the respondent remaining in bankruptcy indefinitely.

31    The respondent sent emails to either the Trustee’s office or the Trustee’s solicitors on 23 October 2024, 8 November 2024, 11 November 2024, 14 November 2024, 15 November 2024, 10 December 2024 and 18 December 2024 variously seeking information; making demands of, and allegations against, the Trustee; and, on one occasion, offering cooperation and support for the Trustee to take action against the applicant.

The Trustee’s evidence of the respondent’s financial position

32    In an affidavit sworn on 14 March 2024, the Trustee deposed that his investigations had revealed that the respondent held realisable assets with a value of approximately $1,346,147, after accounting for amounts owing to secured creditors and the estimated costs of realisation. The Trustee deposed that, at the time of his appointment, the respondent’s asset position was as follows:

(1)    The Trustee was unable to identify any cash in the respondent’s bank accounts.

(2)    No superannuation was identified.

(3)    The Trustee identified shareholdings in two currently registered companies, although no value was specifically assigned to those assets.

(4)    The Trustee identified four properties:

(a)    The respondent was the sole registered proprietor of a property in Southport, Queensland. The estimated property value as at December 2023 was approximately $887,500. This property was subject to a mortgage of $467,778 (as at December 2023). Taking into account the mortgage, unpaid rates, and costs to be incurred in marketing and selling the property, there was approximately $382,714 in equity in the Southport property. On 19 October 2023, Bankwest issued a Notice of Default to the respondent. On 4 April 2024, the Trustee was notified by solicitors for Bankwest that proceedings had been commenced against the respondent for possession of the Southport property. On 6 June 2024, Bankwest’s solicitors informed the Trustee that Bankwest’s owner, the Commonwealth Bank, had taken possession of the Southport property.

(b)    The respondent was the sole registered proprietor of a property in Canterbury, New South Wales. The estimated property value as at December 2023 was approximately $705,000. This property was subject to a mortgage of $673,844 (as at December 2023). Taking into account the mortgage, unpaid rates, and costs to be incurred in marketing and selling the property, there was approximately $8,202 in equity in the Canterbury property. On 4 December 2023, the Trustee registered a caveat on the title to protect the interests of the respondent’s estate. On 4 March 2024, the Commonwealth Bank obtained judgment from the Supreme Court of Queensland against the respondent giving it possession of the Canterbury property. On 22 May 2024, the Trustee was informed that the Commonwealth Bank had entered possession of the Canterbury property.

(c)    The respondent owned a property in Brisbane City, Queensland. The estimated property value as at December 2023 was approximately $737,500. This property was subject to a mortgage of $890,775 (as at December 2023). Taking into account the mortgage, unpaid rates, and costs to be incurred in marketing and selling the property, and assuming that the mortgage would be discharged from the sale of the Campsie property (see the following paragraph), there was approximately $710,578 in equity in the Brisbane City property. On 4 March 2024, the Commonwealth Bank obtained judgment from the Supreme Court of Queensland against the respondent giving it possession of the Brisbane City property.

(d)    The respondent jointly owned with a third party a property in Campsie, New South Wales. The estimated property value as at December 2023 was approximately $1,425,000. This property was collateral for the mortgage on the Brisbane City property (which was subject to a mortgage of $890,775 as at December 2023). Taking into account the mortgage, unpaid rates, and costs to be incurred in marketing and selling the property, the respondent’s 50% share of the equity in the Campsie property was approximately $244,653. On 4 December 2023, the Trustee registered a caveat on the title to protect the interests of the respondent’s estate. The Campsie property remains in the possession of the respondent.

(5)    The following liabilities were identified:

(a)    The applicant was a priority creditor in respect of the costs ordered by the Registrar when making the Sequestration Order in the amount of $5,077.55.

(b)    Bankwest was a secured creditor in respect of the amounts owing under the mortgages for the properties. The Trustee estimated the amount owing to Bankwest as at December 2023 was $2,032,392.

(c)    The respondent had the following unsecured liabilities:

(i)    An amount of $27,030 owed to the applicant (the amount of the Bankruptcy Notice).

(ii)    Unpaid levies in relation to the Southport property in the amount of $24,769.

(iii)    Unpaid levies in relation to the Brisbane City property in the amount of $22,495.

(iv)    A proof of debt submitted by BMW Australia Finance Limited (Supporting Creditor) in the amount of $111,493.

(v)    An ANZ Consumer Finance bank overdraft in the amount of $388.

(vi)    Revenue New South Wales fines in the amount of $8,268.

33    The Trustee deposed that he was unable to determine the respondent’s income because the respondent had not lodged his Statement of Affairs.

34    The Trustee also deposed that, on 27 August 2024, he was informed by solicitors for Bankwest that the respondent had filed a complaint with the Australian Financial Complaints Authority (AFCA) in respect of the properties and that recovery action by the mortgagee had been put on hold. The Trustee was then advised by AFCA on 10 October 2024 that consideration of the respondent’s complaint had been temporarily paused. On 19 December 2024, an employee under the Trustee’s supervision enquired with the solicitors for the Commonwealth Bank whether the bank would be willing to allow the Trustee to sell one or more of the properties. The response on the same day was that the bank was unable to consent because of the active AFCA complaint.

35    At the hearing, counsel for the Trustee clarified the following matters:

(1)    The Trustee by and large has relied upon information provided in a report to creditors dated 25 January 2024 because nothing that the Trustee has done since that date has enabled him to come to a better view about the respondent’s financial position. Without the lodgement of a Statement of Affairs, the Trustee was limited as to what he could discover.

(2)    The estimates of equity in the four properties represented the position as at December 2023. The Trustee has been unable to shed further light on what has happened since that time, albeit the property valuations are now old and the equity position will have been affected if the mortgage debts have continued to accumulate interest since that time.

(3)    The Court was also taken to information provided by the mortgagee in an annexure to the Trustee’s affidavit that showed the respondent’s home loan accounts, the collateral properties that relate to the mortgage accounts, the current payout figures, and the total mortgage arrears for the three mortgage accounts in the amount of $278,530.39. Those documents contained no identification of their provenance or date of currency. Counsel for the Trustee tendered two emails dated 7 December 2023 and 14 December 2023 from Bankwest to the office of the Trustee which attached zip folders. It was contended that I should infer that the documents annexed to the Trustee’s affidavit identifying the mortgage details were contained in those zip folders. In the absence of any evidence disputing that the respondent’s mortgage position was not what is represented in those documents, I am prepared to draw the inference that those documents were sent in December 2023 and show the respondent’s position at that time.

36    At the hearing, counsel for the applicant also referred to two additional debts at the time the Registrar made the Sequestration Order. Annexed to the Trustee’s affidavit was an Equifax report for the respondent dated 6 December 2023. That report included the following commercial overdue accounts:

(1)    Macquarie Collections in the amount of $241,963. The respondent was listed as guarantor for a leasing account with the reason for the report identified as payment default. The date of the report was 3 May 2023.

(2)    The Supporting Creditor in the amount of $89,453. The respondent was listed as guarantor for a personal loan with the reason for the report identified as payment default. The date of the report was 15 December 2021.

37    Counsel for the applicant also pointed to notices from the Australian Tax Office that were annexed to the Trustee’s affidavit. Notices dated 11 July 2023 and 4 September 2023 listed overdue income tax returns for the income tax years ended 30 June 2021 and 30 June 2022. There was also an undated notice to take immediate action and then a final warning notice dated 18 April 2024 that added the income tax year ended 30 June 2023 to the list of overdue periods. However, there were notices of assessment dated 28 October 2024 for the income tax years ended 30 June 2023 and 30 June 2024 showing a taxable income of zero for each period. Accordingly, this information about the respondent’s tax liabilities can be put to one side.

38    Other than disputing the amount of the debt owed to the applicant, the respondent shed no light on these other aspects of his financial position.

EVIDENCE

39    The respondent relied on his affidavits affirmed on 20 February 2025, 22 February 2025 and 31 March 2025. At the hearing, counsel for the applicant objected to parts of the 31 March 2025 affidavit on the basis that they contained irrelevant submissions and material. As I explained to the respondent at the hearing, only relevant evidence is admissible and able to be considered. In response to the Court’s orders for additional evidence and submissions on the respondent’s medical conditions (see below at [50]–[52]), the respondent also relied upon an affidavit affirmed on 10 May 2025 (May Affidavit).

40    The applicant relied on the following evidence:

(1)    Consent to act as Trustee dated 28 August 2023;

(2)    Affidavit of service of the Bankruptcy Notice of Justin Gerges sworn on 6 September 2023;

(3)    Affidavit verifying the Creditor’s Petition of Samantha Antipas sworn on 6 September 2023;

(4)    Affidavit of service of the Creditor’s Petition sworn by Michel Gerges on 26 September 2023;

(5)    Affidavit of Despina Alevris sworn on 15 November 2023;

(6)    Affidavit of Olivia Atkins sworn on 17 November 2023;

(7)    Affidavit of Cassandra Stevenson affirmed on 8 April 2025;

(8)    Affidavit of Victor Mok affirmed on 29 April 2025; and

(9)    Affidavit of debt of Suzi Bellas affirmed on 29 April 2025.

41    The Trustee relied upon his affidavit sworn on 14 March 2025.

THE EXTENSION OF TIME TO REVIEW THE SEQUESTRATION ORDER

Relevant principles

42    Section 35A(5) of the Federal Court Act provides that:

A party to proceedings in which a Registrar has exercised any of the powers of the Court under subsection (1) may, within the time prescribed by the Rules of Court, or within any further time allowed in accordance with the Rules of Court, apply to the Court to review that exercise of power.

43    Rule 2.02(3) of the Bankruptcy Rules prescribe that, “[s]ubject to any direction by the Court to the contrary, an application under subsection 35A(5) of the Act for review of the exercise of a power of the Court by a Registrar must be made by filing an interim application in accordance with Form B3 within 21 days after the day on which the power was exercised”. There is discretion in the Court to give a direction to the contrary. Here, the application was filed on 4 November 2024, over 11 months after the Registrar’s decision. As such, an exercise of the discretion would be required to extend time for the review application to be heard.

44    In the context of an application to extend time to review a Registrar’s decision to wind up a company, Gordon J said in Deputy Commissioner of Taxation v Australian Investment & Property Corporation Pty Ltd [2014] FCA 666 at [8]:

The matters the Court may take into account when determining and considering an application to grant an extension of time to file an application pursuant to s 35A(5) of the [Federal Court Act] include any explanation for the delay, whether there is an arguable case that the winding up order should not have been made and the prejudice to other parties: see Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344 at 348–‍9 and Lemmen v Porcu [2013] FCA 1056.

45    I accept that these principles should also be applied to the giving of a contrary direction to extend time under r 2.02(3) of the Bankruptcy Rules for the purpose of a review application under s 35A(5) of the Federal Court Act.

46    The respondent provides three reasons why the Court should exercise its discretion to grant an extension of time to hear the review application:

    First, the respondent claims there was insufficient service of the Bankruptcy Notice and Creditor’s Petition which gave rise to the Registrar’s decision;

    Secondly, the debts which gave rise to the Sequestration Order are disputed by the respondent; and

    Thirdly, the respondent was purportedly unable to attend to his legal affairs by reason of his medical conditions and the side effects of medication that he was taking to treat those conditions.

47    I have dealt with the first of these submissions earlier in these reasons. As earlier concluded, I accept that the Bankruptcy Notice and Creditor’s Petition were properly served.

48    To foreshadow my conclusions later in these reasons, I do not accept the respondent’s challenge to the debt owed to the applicant.

49    I will now deal with the respondent’s claimed health conditions and their impact on his capacity to deal with his legal affairs.

The respondent’s health during the relevant period

50    By the time of the hearing, the respondent had filed information about his health during the relevant period. That evidence was fragmented with an unclear chronology of events. To the extent that it was filed to explain the delay in the respondent filing the review application and the annulment application, I considered it appropriate that the respondent, as a litigant in person, be provided with a further opportunity to file evidence of his health conditions and how they impacted on his capacity to manage his legal affairs. Counsel for the applicant at the hearing did not object to that course of action, although the applicant reserved the right to call the respondent for further cross-examination.

51    On 30 April 2025 I ordered that the respondent file and serve an affidavit:

(1)    setting out a chronology of his medical conditions that are claimed by the respondent to be relevant to the application for an extension of time;

(2)    explaining how those medical conditions impacted the respondent’s capacity to attend to his legal affairs (including responding to the Creditor’s Petition, filing the review application and the annulment application, providing a Statement of Affairs and attending the office of the Trustee for an interview); and

(3)    referring to, and annexing, medical reports substantiating those matters (including reports from medical practitioners and/or medical specialists).

The applicant was given an opportunity to respond and indicate whether the respondent would be required for cross-examination.

52    On 13 May 2025, the respondent filed the May Affidavit and further submissions.

Respondent’s affidavit on health conditions

53    To the extent that it was responsive to the Court’s order, the following can be drawn from the May Affidavit about the respondent’s claimed medical conditions, prescription medications and impact on his capacity to manage his legal affairs during the relevant period.

Medical conditions

54    In broad terms, the respondent identified the following conditions:

(1)    Ear condition and hearing loss: From approximately late 2022, the respondent claims to have suffered from chronic ear infections. I am prepared to accept that the respondent has had a chronic ear condition that impacted his capacity to listen well. There is medical evidence that the condition was suffered from at least June 2023 to early 2024, with the respondent’s own evidence indicating that the severe symptoms were resolved by September/October 2024:

(a)    A clinical audiology report dated 24 June 2023, produced by the respondent, states that the respondent has “very mild conductive hearing loss localised to the lower frequencies. Speech discrimination under headphones confirms the audiogram with 83–‍90% speech discrimination at normal conversational levels (50dBHL)”. That same report identified that there is a difference between hearing and listening, and that the respondent’s “ill health is likely to be impacting his capacity to listen well”.

(b)    A letter from Dr Jingbin Zhang dated 6 January 2024 referring the respondent to Dr Arjuna Ananda at “Central Sydney ENT” for opinion and management in relation to his bilateral ear symptoms. The letter states that the respondent reported his ear problems of blockage, loss of balance, reduced hearing and recurrent infection since 2022 began after receiving the Moderna COVID–‍19 vaccine in October 2021 and November 2021. It further states that he has been assessed and treated with multiple treatments including suction, topical and intramuscular antibiotics.

(c)    A letter from Dr Jessica Elmasry dated 22 February 2024 referring the respondent to “Central Sydney ENT” for opinion and management in relation to chronic left ear issues. It states that for two years the respondent has had a chronic infection and a cholesteatoma diagnosed by his previous ENT. Dr Elmasry further states that the respondent has the sensation of something moving in his ear and has lost 30% of his hearing according to an audiologist. The symptoms usually return 3 days after micro suctioning.

(d)    The respondent also provided a list of his Medicare claims between 6 January 2021 and 6 June 2024, including entries on: 1 July 2023 (“Microscopy and culture of postoperative wounds”); and 1 April 2023 and 11 June 2023 (“Microscopy and culture to detect pathogenic micro-organisms from skin or other superficial sites”). There is also a pathology report dated 7 January 2023. These entries might relate to the respondent’s ear condition, but that is unclear on the face of the document.

(e)    One of the notations alongside a table of medications (see below at [56]‍–‍[57]) indicated that the severe headaches, cognitive fog and ear pain had resolved within two months of commencing the medication in July 2024. There is an image of the box of the corresponding medication dated 5 September 2024.

(2)    Mental health: The respondent annexed some limited medical records relating to his mental health; however, there is no evidence from a general practitioner or psychiatrist about the extent of his condition or its impact on the respondent’s capacity to manage his legal affairs:

(a)    A letter dated 17 October 2022 from Dr Sherry Basily stated that the respondent “has been suffering from tactile hallucination” and that he “has been started on antipsychotic [sic] to help with his symptoms”. The letter further stated that the respondent “might be referred to a psychiatrist if he does not get better”.

(b)    The letter of Dr Zhang stated that the respondent has been assessed by a psychiatrist and treated with prescription medication. The medication is one identified by the respondent as having been taken from October 2022 to September 2024 and which was claimed by him to cause him cognitive and emotional impairment.

(3)    Burn to legs: the respondent provided photographic evidence of burns to his legs and details of pain relief taken.

55    At the hearing, the respondent gave evidence that, until September 2024, he suffered pain, dizziness, and brain fog.

Prescription medications

56    The May Affidavit set out a table of medications which identified a list of medications alongside corresponding “periods” (which I have assumed to be a reference to the periods during which the medications were taken), conditions, symptoms, Therapeutic Goods Administration warnings and impacts. The respondent’s evidence to substantiate these claims consisted of photographic images of: (a) the empty medication boxes with prescription stickers written for the respondent attached to the sides of those boxes; (b) written prescriptions from medical practitioners; and (c) the conditions themselves.

57    There were multiple medications, conditions and symptoms identified. It is enough to note that the respondent made the following claims about the symptoms he has been experiencing because of his medications and/or conditions:

(1)    From June to December 2022, the respondent claims that he experienced severe pain and immobility from burns to his legs. He was on prescription pain relief. The respondent provided photographic images of the prescription pain relief boxes and of the burns to his legs. There is also a copy of a discharge summary from Concord Repatriation General Hospital on 9 June 2022.

(2)    From October 2022 to September 2024, the respondent claims that he experienced cognitive and emotional impairment from a mental health condition, and that this condition directly impacted the proceeding. There is evidence of four related medication boxes dated from October 2022 to December 2023.

(3)    From late 2022 to the present, the respondent claims that he has experienced communication barriers and had difficulty attending hearings. These difficulties appear to be attributed both to hearing loss from his ear condition and side effects of the medication for its treatment. There is evidence of boxes for the nominated medications for this condition dated July 2022, September 2022, July 2023, May 2023, August 2023, November 2023 and September 2024. The respondent claims that one of the medications, taken from July 2024 to the present time, affected his reading and viewing of legal materials.

(4)    From June 2022 to July 2024, the respondent experienced skin discomfort and severe itching from a recurrent skin disorder. The condition is claimed to have significantly impaired his concentration and ability to sit still for extended periods (eg, in court and legal consultations). He also claims that his sleep was disrupted which affected his overall cognitive function. The respondent also appears to claim that the medication he was prescribed for this condition impaired his cognitive function, decision-making and ability to participate in legal proceedings. There was no image of a medication box or other evidence for the medication for this condition.

(5)    From June 2022 to the present, he has experienced ear pain, discharge, itching, burning and impaired hearing. These symptoms and the associated medication appear to relate to his ear condition. The respondent claims that the condition is highly distracting and the impaired hearing from the condition and the associated medication significantly impairs his ability to understand verbal legal advice, participate in discussion and follow court proceedings. There is no medication box or other evidence of the relevant medication.

(6)    From late 2022 to May 2024, he experienced chronic fatigue and vertigo and was immunocompromised. The respondent claims that those conditions severely impaired his physical and mental stamina, concentration and ability to attend hearings. No supporting evidence for those conditions was provided.

58    No expert evidence was provided by a medical practitioner about the medications, used together or separately, or their specific impact on the respondent.

Impact on the management of his legal affairs

59    The respondent claims that these conditions and the side effects from the various medications substantially impaired his cognition, mobility and capacity to manage his legal affairs. In particular, and to the extent that they are relevant, he claimed that:

(1)    Cognitive blunting rendered him incapable of giving coherent instructions, analysing pleadings, or meeting procedural deadlines;

(2)    His medical incapacity, combined with the Trustee’s delayed notification and the applicant’s defective service, made any timely application for review impossible;

(3)    His cognitive and physical impairments made it impracticable to compile the extensive financial information required under s 54(1) of the Bankruptcy Act for a Statement of Affairs within the statutory timeframe; and

(4)    Vertigo, immobility, akathisia and profound hearing loss prevented his attendance for an interview with the Trustee as required by s 77(1)(b) of the Bankruptcy Act, and no reasonable remote alternative was provided.

Respondent’s further submissions on health conditions

60    To the extent that the submissions were responsive to the Court’s order, the respondent submitted that his severe and documented medical incapacities rendered him unable to defend his interests or comply with procedural requirements during the material periods. More particular submissions included:

(1)    The respondent was incapable of comprehending legal documents, instructing legal representatives, or complying with statutory obligations such as the provision of a Statement of Affairs or attending an interview with the Trustee.

(2)    Where a party is, through no fault of their own, incapable of participating in proceedings or asserting their rights, the Court's power to extend time is not only available but is properly and, indeed necessarily, engaged to prevent manifest injustice.

(3)    The potential prejudice to the respondent, should an extension be refused, is manifest and severe: the irreversible loss of an opportunity to challenge an order with profound implications for his status and property.

(4)    The balance of justice, therefore, decisively tilts in favour of granting the extension sought, thereby permitting a full and fair adjudication of the annulment application on its merits.

61    I will return below to other contentions and allegations that the respondent made in his May Affidavit and his further submissions.

Applicant’s submissions on health conditions

62    The applicant submitted that the respondent’s May Affidavit does not support the proposition that the respondent lacked capacity or was unable to make arrangements for the conduct of his affairs (legal or otherwise) from early 2022 (the date of the First Judgment being 1 June 2022) to 28 November 2023 (the date of the Sequestration Order) or further to 4 November 2024 (when the respondent commenced proceeding NSD 1548 of 2024). In particular, the applicant submitted:

(1)    The table of medications containing the list of medications and corresponding conditions, symptoms and impacts contain speculation or submission. There is no evidence as to which, if any, of the listed side effects were experienced by the respondent and, if so, at which times; nor as to how his ability to conduct his legal affairs was impacted.

(2)    There is no evidence that the respondent was unable to attend to his legal affairs, retain legal representation or provide instructions to them. To the contrary, the evidence demonstrated that he was able to attend his medical appointments.

(3)    Legal proceedings are a serious matter and there is nothing in the evidence that rises high enough to displace public expectation that the respondent would apply an appropriate level of attention to, and timely engagement with, legal proceedings which he disputes.

(4)    There is a complete lack of any medical report or third-party medical evidence supporting his symptoms, the effects he allegedly suffered and impact on his capacity. The Court can infer that, if that evidence existed, it would have been deployed: Blatch v Archer (1774) 1 Cowp 63; (1774) 98 ER 969.

Conclusions on health conditions and their impact on capacity to manage legal affairs

63    I accept that the evidence shows that the respondent has experienced serious health issues over the last few years. I do not doubt that those health conditions have caused the respondent pain, suffering and considerable concern, and have disrupted his life in significant ways. However, as the moving party seeking to bring the review application out of time, the onus is on the respondent to explain the delay in bringing the review application.

64    The respondent’s primary position is that he was not properly served with the Bankruptcy Notice or Creditor’s Petition. That is, his health conditions were not the direct and immediate cause of him failing to engage with those processes.

65    I will assume for the limited purpose of determining whether to extend time to hear the review application that the respondent did not receive notice of the Sequestration Order until 10 January 2024. Noting that assumption is favourable to the respondent, the period of delay to be explained is between 10 January 2024 until the review application was filed in November 2024.

66    I accept that, at the start of that period, the respondent was suffering ongoing issues with his chronic ear infection. The referral letters of Dr Zhang on 6 January 2024 and Dr Elmasry on 22 February 2024 support that position. There is, however, no medical report after that time explaining the outcome of those referrals, or the impact that the chronic ear infection had on the respondent’s capacity to file a review application.

67    There is even less evidence before the Court about the respondent’s mental health. Dr Basily’s letter of 17 October 2022 states that the respondent had been suffering from tactile hallucinations and was on antipsychotic medication. Dr Zhang’s letter of 6 January 2024 mentioned that the respondent had been assessed by a psychiatrist and had been treated with prescription medication. In the table of medications, the respondent refers to PTSD and symptoms consistent with bipolar depression. However, the respondent has not adduced evidence of any psychiatric or other assessment of his mental health. I am prepared to infer from the images of medication boxes that the respondent was on medication between 10 January 2024 and November 2024. However, there is no medical evidence to support the claim that he was unable, on mental health grounds, to commence a review proceeding until November 2024.

68    At the hearing, the respondent sought to explain that he tried to see an ENT specialist twice, but could not afford the cost. He also sought to explain that he had difficulty obtaining medical reports from his general practitioners because he had to change them on multiple occasions. I explained to the respondent the importance of providing medical reports to substantiate his claims, and he indicated that he had medical reports that he could produce. I consequently made orders to provide the respondent with a further opportunity after the hearing to do so. However, despite the further opportunity, the respondent did not provide medical reports other than those described above.

69    I also accept the applicant’s submission that the statements made by the respondent in the table of medications are, objectively, insufficiently supported by the evidence that has been adduced.

70    Accordingly, there is insufficient evidence, whether or not contemporaneous with the period between 10 January 2024 to November 2024, to explain the impact of the respondent’s conditions and medications on his capacity to attend to his legal affairs including the filing of his review application.

Conclusion on permitting the application to be determined

71    Because the respondent has not sufficiently explained the delay in filing the review application, and given my conclusions below that such an application would be unsuccessful in any event, I refuse the respondent’s application to extend time to file a review application.

REVIEW OF THE SEQUESTRATION ORDER

72    I will now turn to explain why I would have dismissed the review application had I extended time for that application to be filed.

73    The review application requires a hearing de novo. In Totev v Sfar (2008) 167 FCR 193; [2008] FCAFC 35, Emmett J explained the position at [12]‍–‍[15]:

In the case of a hearing de novo … the judge reviewing the order begins afresh and exercises for himself or herself any discretion exercised by the registrar. The parties commence the proceeding again, subject to any rules concerning the use of evidence adduced before the registrar. The hearing de novo involves the exercise of the original jurisdiction and the petitioner, in the case of a bankruptcy petition, must start again, call witnesses and make out the petitioner’s case (Harris v Caladine 172 CLR at 124).

Because the hearing of an application for review of a sequestration order is a hearing de novo, it would not be sufficient for the reviewing judge to be satisfied that the registrar made no error and simply to dismiss the application for review. The judge who hears the review application must hear the petition afresh and must be satisfied as to the matters referred to in s 52 of the Bankruptcy Act. Thus, the reviewing judge must herself or himself be satisfied with the proof of:

•    the matters stated in the petition;

•    the service of the petition; and

•    the fact that the debt or debts on which the petitioning creditor relies is or are still owing.

The reviewing judge must also exercise afresh the discretions conferred by s 52(2).

In particular, unless the Bankruptcy Rules are waived, the judge must have the affidavits referred to in r 4.06 of the Bankruptcy Rules, which must be sworn shortly before the hearing. Except in the case of a review on the same day as the sequestration order was made, the affidavits relied upon before the registrar would not satisfy r 4.06. In the absence of fresh affidavits, it would be necessary that compliance with the Bankruptcy Rules be waived.

74    This statement of principle was referred to with approval by a Full Court in Bechara v Bates (2021) 286 FCR 166; [2021] FCAFC 34 at [21] (Allsop CJ, Markovic and Colvin JJ).

The requirements for hearing a creditor’s petition

Statutory requirements

75    The applicant for a sequestration order must satisfy a number of requirements before the Court will hear a creditor’s petition. They are relevantly set out in ss 44, 47 and 52 of the Bankruptcy Act.

44    Conditions on which creditor may petition

(1)    A creditor’s petition shall not be presented against a debtor unless:

(a)    there is owing by the debtor to the petitioning creditor a debt that amounts to the statutory minimum or 2 or more debts that amount in the aggregate to the statutory minimum …

(b)    that debt, or each of those debts, as the case may be:

(i)    is a liquidated sum due at law or in equity or partly at law and partly in equity; and

(ii)    is payable either immediately or at a certain future time; and

(c)    the act of bankruptcy on which the petition is founded was committed within 6 months before the presentation of the petition.

…

47    Requirements as to creditor’s petition

(1)    A creditor's petition must be verified by an affidavit of a person who knows the relevant facts.

(1A)    If the rules of court prescribe a form for the purposes of this subsection, the petition must be in the form prescribed.

…

52    Proceedings and order on creditor’s petition

(1)    At the hearing of a creditor's petition, the Court shall require proof of:

(a)    the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient);

(b)    service of the petition; and

(c)    the fact that the debt or debts on which the petitioning creditor relies is or are still owing;

    and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor.

…

(2)    If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor:

(a)    that he or she is able to pay his or her debts; or

(b)    that for other sufficient cause a sequestration order ought not to be made;

    it may dismiss the petition.

76    Also relevant to the review application are the following Bankruptcy Rules:

4.02    Requirements for creditor's petition and supporting affidavit

(1)    For subsection 47(1A) of the Bankruptcy Act, a creditor's petition must be in accordance with Form B6.

(2)    The affidavit (the verifying affidavit ) verifying the petition required by subsection 47(1) of the Bankruptcy Act must:

(a)    be included in the petition in accordance with Form B6; or

(b)    accompany the petition.

(3)    The petition must also be accompanied by any affidavits relating to the petition required by rule 4.04.

…

(5)    If the petition is accompanied by the verifying affidavit in accordance with paragraph (2)(b), a copy of the petition must be attached to the verifying affidavit.

…

4.04    Creditor's petition founded on failure to comply with bankruptcy notice etc.

(1)    If a creditor's petition is founded on an act of bankruptcy specified in paragraph 40(1)(g) of the Bankruptcy Act, the petition must also be accompanied by:

(a)    an affidavit stating:

(i)    that the records of the Court and the records of the Federal Circuit Court have been searched and no application in relation to the bankruptcy notice has been made; or

(ii)    that an application was made in the Court or in the Federal Circuit Court (as the case may be) for an order setting aside the relevant bankruptcy notice and the application has been finally decided; or

(iii)    that an application was made in the Court or in the Federal Circuit Court (as the case may be) for an order extending the time for compliance with the bankruptcy notice and the application has been finally decided; and

(b)    an affidavit of service of the relevant bankruptcy notice.

(2)    If an affidavit required by paragraph (1)(a) states the matters referred to in subparagraph (1)(a)(i), a copy of the search must be attached to the affidavit.

(3)    If an affidavit required by paragraph (1)(a) states that an application referred to in subparagraph (1)(a)(ii) or (iii) was made, a copy of the order finally deciding the application must be attached to the affidavit.

(4)    A copy of the bankruptcy notice must be attached to the affidavit required by paragraph (1)(b).

4.05    Documents to be served

Unless the Court otherwise orders, at least 5 days before the date fixed for the hearing of a creditor's petition, the applicant creditor must serve on the respondent debtor:

(a)    the creditor's petition; and

(b)    a copy of the affidavit, or affidavits, verifying the petition required by subsection 47(1) of the Bankruptcy Act; and

(c)    if applicable, a copy of the affidavits relating to the petition required by rule 4.04; and

(d)    a copy of any consent to act as trustee of the debtor's estate filed under section 156A of the Bankruptcy Act.

4.06    Additional affidavits to be filed before hearing

(1)    Before the hearing of a creditor's petition, the applicant creditor must comply with this rule.

(2)    The applicant creditor must file an affidavit that:

(a)    states that the documents required to be served under rule 4.05 have been served, and when and how they were served; and

(b)    has attached to it a copy of the documents that were served and proof of service in relation to the documents.

(3)    The applicant creditor must file an affidavit, of a person who has, no earlier than the day before the hearing date for the petition, searched, or caused a search to be made, in the National Personal Insolvency Index, that:

(a)    sets out the details of any references in the Index to the debtor; and

(b)    states that there were no details of a debt agreement, about the debt on which the applicant creditor relies, in the Index:

(i)    on the day when the petition was presented; and

(ii)    on the day when the search was made; and

(c)    has attached to it a copy of the relevant extract of the Index.

(4)    The applicant creditor must file an affidavit of a person who knows the relevant facts that:

(a)    was sworn as soon as practicable before the hearing date for the petition; and

(b)    states that each debt on which the applicant creditor relies is still owing.

(5)    If a debt stated in the petition is an amount payable to the applicant creditor under a judgment of a court that ordered the amount to be paid into the court, the applicant creditor must file an affidavit:

(a)    of a person who has, not earlier than the day before the hearing date for the petition, searched in the proper office of the court; and

(b)    that states whether the amount of the debt (or part of that amount) has been paid as ordered.

The Creditor’s Petition and applicant’s affidavits

77    The applicant moved on the Creditor’s Petition that was in accordance with Form B6: r 4.02(1). The claimed debt is a liquidated sum due at law and payable immediately. It is above the statutory minimum of $10,000: Bankruptcy Act ss 5 and 44(1)(a); Bankruptcy Regulations 2021 (Cth) reg 10A. The Bankruptcy Notice allowed 21 days for compliance after service was effected on 28 July 2023. The respondent did not comply with the requirements of the notice, thereby committing an act of bankruptcy: Bankruptcy Act s 40(1)(g). The Creditor’s Petition was filed on 7 September 2023 and served on 18 September 2023. Thus, the act of bankruptcy on which the petition is founded was committed within 6 months before the presentation of the petition. Accordingly, the requirements of s 44(1) are satisfied.

78    In the affidavit of service sworn on 26 September 2023 (Bankruptcy Act s 52(1)(b); Bankruptcy Rules rr 4.06(1) and (2)), Michel Gerges deposed that the following documents were served on the respondent on 18 September 2023:

(1)    The Creditors’ Petition (r 4.05(a));

(2)    The affidavit of George Gerges sworn on 6 September 2023 and filed on 7 September 2023 verifying that on 6 September 2023 he searched:

(a)    the records of the Court and the Federal Circuit Court and that no application in relation to the bankruptcy notice had been made. A copy of that search was annexed (rr 4.04(1)(a) and 4.05(c)); and

(b)    the National Personal Insolvency Index and attached the result showing that the earlier Creditor’s Petition heard on 21 March 2023 had been dismissed;

(3)    The affidavit verifying the Creditor’s Petition of Samantha Antipas, the General Manager of Netstrata (the managing agent), sworn on 6 September 2023 and filed on 7 September 2023, verifying the petition: Bankruptcy Act ss 47(1) and 52(1)(a); Bankruptcy Rules rr 4.02(2) and 4.05(b). Ms Antipas deposed that the respondent failed within 21 days after service of the Bankruptcy Notice to pay the debt or make an arrangement to the satisfaction of the applicant for payment of the debt;

(4)    The affidavit of Justin Gerges sworn on 6 September 2023 and filed on 7 September 2023: rr 4.04(1)(b), 4.04(4) and 4.05(c). Mr Gerges deposed that the respondent was served with the Bankruptcy Notice on 28 July 2023. The affidavit annexed copies of the Bankruptcy Notice, the First and Second Judgments and the Costs Order;

(5)    A copy of a consent by the Trustee dated 28 August 2023 and filed on 7 September 2023 (r 4.05(d)); and

(6)    Photographic images of the Creditor’s Petition and the accompanying documents being slid under the respondent’s door.

79    In an affidavit affirmed on 8 April 2025 and filed on 9 April 2025, Cassandra Stevenson, Senior Relief Strategy Manager at Netstrata, deposed that she had access to the books and records of Strata Plan 94402 and managed the scheme while the usual strata manager, Suzi Bellas, was on leave. Ms Stevenson annexed the Annual General Meeting (AGM) minutes for SP94402 for 2017 to 2024; the ledger for lot 185 in SP94402, starting in September 2018; the Managing Agency Agreement between SP94402 and Netstrata for 2016 and 2019 to 2023; and the current registered By-Law for SP94402.

80    In the affidavit of Suzi Bellas, Associate Director of Netstrata, affirmed on 29 April 2025 and accepted for filing on 30 April 2025 (Bankruptcy Act s 52(1)(c); Bankruptcy Rules r 4.06(4)), Ms Bellas deposed that:

(1)    She has access to books and records of Strata Plan 94402 and manages the scheme;

(2)    As of 29 April 2023, the amount of $27,029.98 remained due and payable by the respondent to the applicant; and

(3)    The respondent had failed to pay the applicant $27,029.98 or to secure or compound it to the reasonable satisfaction of the applicant.

Ms Bellas also annexed a copy of the owner’s ledger.

81    In the affidavit of Victor Mok, a paralegal employed by the applicant’s solicitors, affirmed on 29 April 2025 and accepted for filing on 30 April 2025 (rr 4.06(1) and (3)), he deposed that:

(1)    On 29 April 2025 he searched the National Personal Insolvency Index in respect of the respondent (a copy of the search results was annexed to the affidavit);

(2)    There were no details of any debt agreement in place on the date that the petition was presented and also on the date that the further search was undertaken; and

(3)    There was no application seeking to set aside the Creditor’s Petition.

Satisfaction of statutory requirements

82    With two exceptions, the statutory requirements for the hearing of the Creditor’s Petition would have been satisfied if I had extended time.

83    The first exception relates to the affidavit of Ms Antipas sworn on 6 September 2023 verifying the Creditor’s Petition. Rule 4.02 provides that the verifying affidavit required by s 47(1) of the Bankruptcy Act must (a) be included in the petition in accordance with Form B6 or (b) accompany the petition. In the event that it accompanies the petition, r 4.02(5) provides that “a copy of the petition must be attached to the verifying affidavit”. The verifying affidavit of Ms Antipas did not attach the Creditor’s Petition. The affidavit and petition were filed as separate documents — although they were lodged and accepted for filing at the same time.

84    However, s 306(1) of the Bankruptcy Act provides that proceedings under the Act “are not invalidated by a formal defect or an irregularity, unless the court before which the objection on that ground is made is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied” by court order. Leaving aside that the respondent did not object on this ground, I consider that the non-compliance with r 4.02(5) is, in this case, “a formal defect or an irregularity”. Whether the Creditor’s Petition is attached to the verifying affidavit is not a matter that conditions the jurisdiction of the Court to make a sequestration order: Winn v Boss Lawyers Pty Ltd [2022] FCAFC 156 at [92] (Charlesworth, Downes and Goodman JJ). Furthermore, given the Creditor’s Petition was filed and served at the same time as the verifying affidavit, it could not be said that the respondent has suffered substantial injustice because of the formal defect or irregularity.

85    Secondly, in identifying that the respondent owes a debt of $27,029.98, the Creditor’s Petition refers to the First Judgment and the Second Judgment, but does not refer to the Costs Order. Again, leaving aside the fact that the respondent did not object on this ground, I consider that the failure to refer to the Costs Order is, in this case, a formal defect or an irregularity for the purposes of s 306(1) of the Bankruptcy Act. I have reached that view because: (a) the Creditor’s Petition identified the correct amount owed by the respondent to the applicant; (b) the Creditor’s Petition specified that the respondent committed an act of bankruptcy by failing to comply with a bankruptcy notice; and (c) the Bankruptcy Notice that had been served on the respondent on 28 July 2023 specified the debt owing was $27,029.98 and was served along with the First and Second Judgments and the Costs Order. For those reasons, it also could not be said that the formal defect or irregularity caused substantial injustice. In any event, as counsel for the applicant submitted during the hearing, the First and Second Judgments are, together, for an amount that exceeds the statutory threshold for the making of a sequestration order.

Consideration of a sequestration order

86    Section 52 of the Bankruptcy Act, set out above, prescribes the preconditions for the making of a sequestration order. As a Full Court said in Mangano v Bullen [2025] FCAFC 42 at [160] (Cheeseman, Shariff and Needham JJ):

It is uncontroversial that a petitioning creditor has a prima facie right to a sequestration order once proof of the matters required by s 52(1) have been satisfied, but that there is a discretion to refuse such an order if the debtor is able to pay his or her debts (s 52(2)(a)) or for other sufficient cause (s 52(2)(b)): Liang v LV Property Investments Pty Ltd [2015] FCA 1057 at [50] (Beach J) and the authorities there cited.

87    The respondent opposed the making of a sequestration order on the following grounds:

(1)    Service of the Creditor’s Petition was not effected as required: s 52(1)(b). I have already considered and rejected the challenge to service earlier in these reasons.

(2)    The debts upon which the Creditor’s Petition relies are not owing: s 52(1)(c).

(3)    The respondent is able to pay his debts: s 52(2)(a).

(4)    There are other sufficient causes why a sequestration order should not be made: s 52(2)(b).

Section 52(1)(c): are the debts owing?

88    The respondent invited the Court to go behind the First and Second Judgments and the Costs Order to determine that the underlying debts are not owed by the respondent to the applicant.

89    As Kiefel CJ, Keane and Nettle JJ said in Ramsay Health Care Australia Pty Ltd v Compton (2017) 261 CLR 132; [2017] HCA 28 at [54], there is no doubt that the Court has the power to go behind a judgment debt to determine:

whether the debt on which [a judgment] is based is truly a basis for the making of a sequestration order. A Bankruptcy Court has a statutory duty to be “satisfied” as to the existence of the petitioning creditor’s debt; a creditor should not be able to make a person bankrupt on a debt which is not provable.

90    In Sandhu v Owen (No 2) [2025] FCA 878 at [31], Jackson J summarised the principles from Ramsay Health Care in terms with which I respectfully agree:

(1)    In some circumstances, a Bankruptcy Court exercising the jurisdiction to make a sequestration order under s 52 of the Bankruptcy Act may, as a necessary foundation for that order, “go behind” a judgment so as to be satisfied that the debt is truly owing: Ramsay Health Care at [1].

(2)    Section 52 requires the court to be satisfied with the proof of the fact that the debt on which the petitioning creditor relies is still owing: Ramsay Health Care at [14].

(3)    A convenient practice which may be followed in cases where the alleged debtor invites the court to go behind the judgment is to determine first whether the court should take up that invitation, before embarking on any inquiry as to whether the debt is truly owing: see Ramsay Health Care at [16].

(4)    The circumstances in which the court may decide to conduct that inquiry are not confined to cases of fraud or collusion, and nor is the inquiry necessarily precluded by the fact that the judgment relied on was obtained after a contested hearing: Ramsay Health Care at [47].

(5)    Scrutiny by a Bankruptcy Court of the debt propounded by the judgment creditor does not involve impeaching the judgment, such as by an appeal or an application to set the judgment aside. The judgment will still be in place, and give rise to a res judicata, and be enforceable by means of the usual procedures for execution of judgments. The duty of the court to be satisfied of proof that the debt is owing before making a sequestration order protects the interests of third parties, such as other creditors of the debtor. Bankruptcy is not just inter partes litigation, but involves a change in the status of a person, and can have penal consequences: Ramsay Health Care at [54]‍–‍[56].

(6)    That being so, it is no answer to an application to go behind a judgment debt to say that the judgment debtor is bound by the way the case was put at trial: Ramsay Health Care at [67].

(7)    The principle that a debt merges in a judgment is not necessarily an impediment to going behind the judgment debt in the sense contemplated: Ramsay Health Care at [57]‍–‍[59].

(8)    The authorities have described grounds to go behind the judgment debt in terms of “substantial reasons ... for questioning whether behind [the] judgment there was in truth or reality a debt due to the petitioner” (Wren v Mahony [1972] HCA 5; (1972) 126 CLR 212 at 225) or whether “there was on the face of things a real question as to whether [the alleged debtor] had failed to present his case on its merits at the trial” in the court that gave judgment against him, or whether there was “a substantial question” as to whether the debt was owing: Ramsay Health Care at [65]‍–‍[66], [72].

(9)    The circumstances in which the court will inquire into the validity of the judgment debt are not closed. That said, the court will be reluctant to exercise the discretion where the judgment was obtained after a full investigation of the issues at a trial at which both parties appeared and had ample opportunity to put their respective cases: Ramsay Health Care at [48]‍–‍[49], quoting in particular with approval from Simon v Vincent J O'Gorman Pty Ltd [1979] FCA 75; (1979) 41 FLR 95 at 111 (Lockhart J).

(10)    In Ramsay Health Care at [68] their Honours said of the significance, in this context, of a judgment obtained after trial (footnote omitted):

For the purposes of s 52 of the Act, a judgment may usually be taken to be sufficient evidence of a debt in that a judgment against a debtor in favour of a creditor obtained after a trial is, generally speaking, a reliable indication of the true state of indebtedness as between creditor and debtor. Indeed, such a judgment can usually be expected to provide the most reliable statement of the debt humanly attainable because the ordinary processes of the adversarial system provide a practical guarantee of reliability. The testing of the relative merits of a claim and counterclaim under the rigours of adversarial litigation will usually establish the true state of accounts as between the parties to the proceedings. Accordingly, a Bankruptcy Court will usually have no occasion to investigate whether the judgment debt is a true reflection of the real debt. But where the merits of a claim and counterclaim have not been tested in adversarial litigation, a judgment debt will not have this practical guarantee of reliability.

91    In relation to the Costs Order, the respondent argued that it was erroneous because the Registrar should have ordered the applicant to bear the costs of withdrawing the first creditor’s petition. At the hearing, the respondent further submitted that the usual rule is that applicants pay the costs of a creditor’s petition and, accordingly, the Costs Order must have been erroneous. I do not accept these submissions. The Costs Order is clear on its face that the respondent was ordered to pay the applicant’s costs in the amount of $8,103.00. As the applicant submits, that is likely the case because a payment of $9,400.00 was made 6 days prior to the hearing of the petition to reduce the outstanding debt below the statutory minimum. However, the Costs Order has not been appealed, and I see no good reason to look behind the order so as to collaterally scrutinise the Registrar’s award of costs.

92    In relation to the First and Second Judgments, counsel for the applicant submitted at the hearing that the Court should not look behind those judgments because: part of the First Judgment had been paid down by the respondent’s mother; considerable time had elapsed since the orders were made on 1 June 2022 and 6 July 2023; and no steps were taken to have those judgments set aside.

93    A judgment is prima facie evidence of a debt: Shaw v Yarranova Pty Ltd (2017) 252 FCR 267; [2017] FCAFC 88 at [16] (North, Perry and Charlesworth JJ). Because the First and Second Judgments were given in default and, consequently, the claimed debts “have not been tested in adversarial litigation” (Ramsay Health Care at [68]), I am prepared to “engage in a preliminary investigation about the merits of the attack that is made”: Shaw at [18] (North, Perry and Charlesworth JJ).

The respondent’s submissions

94    Across his affidavits and submissions, the respondent challenged the strata fees that formed the basis of the First and Second Judgments. The respondent put forward the following arguments:

(1)    The legal fees of $19,559.30 are inherently vexatious. They are further tainted by material irregularities within the ledger.

(2)    The fees arising from arrears, the levy postage fees and the arrears initiation fee recoveries (in the combined amount of $661.80) are excessive when viewed through the overarching principles of reasonableness.

(3)    The interest on levy arrears in the amount of $3,047.38 is disproportionate and warrants further scrutiny. Specifically, the initial interest charge of $216.37 on 26 December 2018 to a principal amount of $901.35 and arising from a three-day delay due to home relocation, yielded an annualised interest rate of 2,920.62%, 292 times the allowable 10% per annum.

(4)    Fire related charges (including fire door levy, fire inspection fees and false alarm fees) in the amount of $2,030.35 are unsubstantiated.

(5)    An administrative stationery charge in the amount of $160 is inappropriate and lacking justification.

(6)    Other questionable charges included an administrative recovery access fee ($18,119.20), an administrative deficit levy ($1,140.90), child safety locks ($112.80), CCTV levy ($178.60), and defective structural levies ($103.05).

95    The respondent argued that these charges in the combined amount of $45,951.28 were not lawfully charged. The respondent further argued that the total amount that he actually owed as at 1 November 2023 was only $3,169.76.

96    It should be noted that many of the respondent’s claims are speculative, inviting the Court to further scrutinise the calculation of the levies and charges. Furthermore, they generally lack a detailed account of why the respondent considers them to be unauthorised.

The applicant’s submissions

97    In written submissions, the applicant argued that the amounts comprising the First and Second Judgments relate to unpaid levies and charges properly incurred and payable by the respondent in accordance with s 86 of the Strata Schemes Management Act 2015 (NSW) (SSM Act). This position was developed during the course of the hearing. Counsel for the applicant took me to the following:

(1)    Sections of the SSM Act:

(a)    Section 85(1) allows an interest rate of 10% per annum to be applied to contributions not paid when due and payable; and

(b)    Section 86(2A) permits an owners corporation to recover as a debt in a court of competent jurisdiction a contribution not paid at the end of 1 month after it becomes due and payable, together with interest and reasonable expenses incurred in that recovery.

(2)    The By-Law of the owners corporation, which provides:

(a)    For a fair and equitable mechanism to recover the costs of reasonable administrative charges incurred by the owners corporation for additional management operations that have occurred due to the activities or behaviour of an owner or tenant. A specific example set out in the By-Law refers to fines or call out fees imposed by the New South Wales Fire Brigades due to false alarms.

(b)    In relation to the recovery of administrative costs:

(i)    A lot owner shall be liable to compensate the owners corporation for the administrative costs charged to the owners corporation by the owners corporation’s agents (that is, Strata Managing Agent, Strata Committee or any contractor, consultant, legal counsel or other personnel engaged by the owners corporation); and

(ii)    The owners corporation shall have the power to recover all such costs from a lot owner as a debt by way of a levy charged to the lot; may charge interest upon any such contribution pursuant to s 85 of the SSM Act; and may initiate debt recovery proceedings pursuant to s 86 of the SSM Act.

(c)    In relation to fire inspection access and administration:

(i)    The owners corporation shall have the power to recover certain costs from a lot owner as a debt by way of a levy charged to the lot, including specified fees where access for an initial inspection of fire apparatus is unsuccessful and additional inspections are required;

(ii)    The owners corporation may charge interest upon any such contributions pursuant to s 85 of the SSM Act and may initiate debt recovery proceedings pursuant to s 86 of the SSM Act; and

(iii)    The owners corporation may pass the call-out fees charged by the Accredited Fire Safety Practitioner to the lot owner.

(d)    In relation to the recovery of stationary expenses:

(i)    The owners corporation shall have the power to recover certain costs from a lot owner as a debt by way of a levy charged to the lot, including an administrative fee of $20 per quarter for reimbursement of serving documents where a lot owner has not provided an email address for the service of notices; and

(ii)    The owners corporation may charge interest upon any such contributions pursuant to s 85 of the SSM Act and may initiate debt recovery proceedings pursuant to s 86 of the SSM Act.

(3)    AGM minutes, which identify that the following motions and resolutions were passed:

(a)    For the budget and strata levies:

(i)    That the owners corporation would raise a special levy to repay the deficit in the Administrative Fund; and

(ii)    That levy interest would be charged at 10% in accordance with s 85 of the SSM Act;

(b)    That the owners corporation would not accept payment plans and would initiate debt recovery proceedings;

(c)    That Netstrata would be appointed as the managing strata agent; and

(d)    That a CCTV system would be installed and maintained.

(4)    The strata management agreements over the relevant period which identify the various fees and disbursements to be paid to the strata managing agent. Those include copying, printing and arrears collection processes.

98    Counsel for the applicant submitted that, even if the Court were to go behind the First and Second Judgments, the applicant is entitled to claim the underlying debts under ss 85 and 86 of the SSM Act, the By-Law and the resolutions passed at the AGMs.

99    The levies and charges that had been imposed on the respondent’s account were set out in the strata plan ledger for the respondent’s lot which was annexed to the affidavit of Ms Bellas. The ledger showed the following:

(1)    At the date of the First Judgment ($18,116.64, inclusive of costs), the arrears in the ledger were $17,952.03.

(2)    At the date of the Second Judgment ($10,210.34, inclusive of costs), the arrears in the ledger were $27,402.36.

(3)    The last entry before the hearing on 30 April 2025 (25 March 2025) showed an arrears of $58,536.03.

100    The respondent did not engage directly with these submissions nor the applicant’s justification for the underlying debts.

Conclusions on going behind the judgments

101    Having engaged in a preliminary investigation, I do not consider that there would have been substantial reasons to go behind the First and Second Judgments. First, the respondent did not advance any detailed arguments to support his challenge to the identified items in the ledger. There is no reason to doubt that those levies and charges were authorised in the way contended by the applicant. Secondly, there is no reason to doubt that the orders made in the First and Second Judgments represented amounts that were owed by the respondent to the applicant, taking into account that those orders were inclusive of costs. Accordingly, I accept that the First and Second Judgments are satisfactory proof of the underlying debts.

102    If I were wrong in reaching that conclusion, there would still have been no reason to deny the existence of a debt to found a sequestration order. At the time of the hearing of the review application, the debt owed by the respondent to the applicant far exceeded the statutory minimum. Furthermore, as the applicant submitted, even if the disputed amounts were excluded, the respondent accepts that he owes $3,169.76 in unpaid levies to the applicant. When that amount is combined with the Costs Order, the debt owed by the respondent to the applicant would have exceeded the statutory minimum.

103    Accordingly, the respondent’s argument to resist the making of a sequestration order on the basis that the debts are not owing would have failed.

Section 52(2)(a): is the respondent able to pay his debts?

104    I accept the following legal principles as submitted by the applicant:

(1)    The onus is on the respondent to satisfy the Court that he can pay his debts at the time of the review hearing: Mangano at [162] (Cheeseman, Shariff and Needham JJ); Balwyn Nominees Pty Ltd v Culleton [2016] FCA 1578 at [44] (Allsop CJ, Dowsett and Besanko JJ); Pineview Property Holdings Pty Ltd v Dimitriou (No 2) [2019] FCA 1416 at [105] and [110] (Wigney J).

(2)    The test for solvency “is a cash flow test”: Mangano at [162] (Cheeseman, Shariff and Needham JJ). That is, “the ability of the [debtor] to pay [their] debts as and when they fall due”: Stone v Melrose Cranes & Rigging Pty Ltd, in the matter of Cardinal Project Services Pty Ltd (in liq) (No 2) [2018] FCA 530 at [145] (Markovic J).

(3)    That question of “whether the evidence is sufficient to reasonably ‘satisfy’ the Court that a debtor is able to pay his or her debt is fact dependent”: Mangano at [163] (Cheeseman, Shariff and Needham JJ); see also Stone at [146] (Markovic J).

105    The applicant also referred to passages from the judgment of Murphy J in Tarwala v Amirbeaggi as trustee for bankruptcy [2022] FCA 1593 at [18]‍–‍[23]:

The [cash flow] test involves an assessment of an ability to meet any debts as and when they fall due, which focuses on liquidity and the viability of the person or business. That is appropriate because the words “as and when they become due and payable” requires looking into the future beyond the day on which the question of solvency or insolvency is to be determined: New Cap Reinsurance Corp Ltd (in liq) v Westpac Banking Corp (No 9) [2008] NSWSC 1015; 68 ACSR 176 at [44].

Under the cash flow test the debtor’s solvency will depend on whether he or she can pay the debts, not on whether the relevant balance-sheet shows a surplus of assets over liabilities: Bank of Australasia v Hall (1907) 4 CLR 1514 at 1521 (Isaacs J). In general, it will be no answer for a person or company which is unable to meet its debts to say that the person or company’s assets exceed its liabilities overall, as doing so will not satisfy the test of being able to pay debts “as and when they become due and payable”: Re Cube Footwear Pty Ltd [2013] 2 QSC 398; 2 Qd R 501 at [1] (Jackson J).

It is not necessary that the relevant person be able to pay all of his or her debts from his or her own moneys. If, having regard to commercial realities, the Court is satisfied that funds can be obtained from borrowings secured on assets, or unsecured borrowings, it may be that the person has funds to pay his or her debts as they fall due and will therefore be solvent: Lewis v Doran (2004) 184 FLR 454 at [116] (Palmer J); Lewis v Doran (2005) 219 ALR 555 at [109]‍–‍[112] (Giles JA with whom Hodgson and McColl JJA agreed).

Notwithstanding the availability of assets that may be converted into cash whether by sale, mortgage or pledge, they must be able to be realised within a relatively short period of time and be of a certain class in order to establish solvency: Francis v Eggleston Mitchell Lawyers Pty Ltd [2014] FCAFC 18 at [32]‍–‍[40] (Rares, Flick and Bromberg JJ). What is a “relatively short time” is not defined, but in Hall at 1543 Isaacs J held that the cash must be realisable “in time to meet the indebtedness as the claims mature”.

It is not for the Court to guess when funds may become available. It is for the party bearing the relevant onus to adduce evidence as to the date upon which the funds are likely to become available so that the court may consider whether or not this is reasonable: Big River Group Pty Ltd v Visnic [2010] FMCA 276 at [9].

A preponderance of assets over liabilities may not be material to the question of a person’s solvency. While a person’s balance-sheet position may be a useful indicator of solvency, the balance sheet test is only useful as a “rule of thumb”: Quick v Stoland Pty Ltd [1998] FCA 1200; 87 FCR 371 at 380.

106    I respectfully accept these statements of principle.

The respondent’s submissions

107    The respondent provided no evidence in chief about his financial position. As already indicated, the respondent has not lodged a Statement of Affairs despite repeated requests or attended the office of the Trustee for an interview.

108    At the hearing, in response to questions from the Court, he indicated that he had no credit cards or unsecured loans, and that he would be able to borrow money from family to pay his debts. However, he also accepted that his argument for solvency relied exclusively on his asset position. He submitted that the Trustee Report showed that he is “demonstrably solvent” and that he has “substantial equity”.

109    During cross-examination, the respondent accepted that he last worked as a real estate agent before February 2021 and the last sales commission he received was in 2022. He stated that, because of his poor health, he has not received any other income from wages or commissions since sometime in 2022. He also accepted that he has been dependant on his wife, mother and grandmother to pay his expenses.

The applicant’s submissions

110    The applicant submitted that the respondent had not discharged his onus of establishing he was solvent. In written submissions, the applicant contended that the respondent had not put on any evidence of his income, expenses or liabilities, and had failed to lodge his Statement of Affairs or attend the Trustee’s office for an interview. Additionally, the respondent’s onus had not been discharged because of:

(1)    The amounts owing to the applicant;

(2)    The multiple defaults leading to possession of three of his properties;

(3)    The Costs Order and the balance of debts underlying the First and Second Judgments; and

(4)    The paucity of evidence as to the respondent’s day to day expenses and liabilities.

111    At the hearing, counsel for the applicant further submitted that, because the respondent has not provided information about his financial position, it could not be said that the respondent has a surplus of assets over liabilities. However, the applicant submitted that in any event a surplus of assets would not be sufficient to demonstrate the respondent’s solvency. There was insufficient evidence to support the conclusion that the respondent would be able to convert his assets into a liquid position to pay his debts as and when they fell due. Counsel for the applicant also pointed to the following matters:

(1)    The respondent’s evidence in cross-examination shows that he has not received wages or commissions since 2022 and that he has been dependant on his family to meet his financial liabilities (including the payment by his mother of some of his debt to the applicant);

(2)    The mortgage debts and levies and charges owing to the applicant have continued to grow; and

(3)    There are other debts identified in the Equifax report.

The applicant submitted that this evidence demonstrates that, despite his assets, the respondent was falling behind in meeting his debts including his mortgage payments.

Conclusion on solvency

112    If I had extended time, I would not have been satisfied that the respondent had discharged his onus to establish that, at the time of the hearing of the review application, the respondent was able to pay his debts.

113    First, other than what was revealed at the hearing following questions from the Court and under cross-examination, the respondent has not provided any information about his financial position. He has not lodged a Statement of Affairs or attended the Trustee’s office for an interview. Instead, he relied on the statement of his assets by the Trustee. As a consequence, the Court does not have a full picture of the respondent’s financial position.

114    Secondly, the test for solvency is not a balance-sheet test; it is a cash-flow test. That is, the respondent must demonstrate an ability to pay his debts as and when they fall due. Three of the respondent’s properties are now in the possession of the mortgagee. The fourth property, the Campsie property, is held as security for the Canterbury property. It cannot be said that the respondent is in a position to convert those assets into cash within a relatively short period of time in order to pay the debts that have become due or as they fall due.

115    Thirdly, to compound the difficulty, the respondent’s evidence under cross-examination is that he has not received any wages or commissions since 2022 and has been dependant on his family to meet his expenses.

116    Fourthly, while the respondent mentioned that he can borrow from family to pay his debts, and his mother has paid an amount to the applicant in the past, the evidence shows that, as at December 2023, the respondent had substantial debts and there is no evidence that those debts have been discharged. If anything, they are likely to have increased.

Section 52(2)(b): is there a sufficient cause for which a sequestration order ought not to be made?

117    Across his affidavits and submissions, the respondent advanced a range of allegations that might be understood as related to whether a sufficient cause exists for why a sequestration order ought not to be made. If I had extended time, I would not have been satisfied that any of these matters constituted a sufficient cause for which a sequestration order ought not to be made.

(1)    Alleged vexatious and repeated filings: The respondent argued that the applicant had filed multiple creditor’s petitions against the respondent and that the repeated and failed pursuit of the same alleged debt strongly suggests vexatious conduct. There is no foundation for this claim. The applicant has filed two creditor’s petitions in relation to the respondent. As referred to earlier in these reasons, the first was dismissed with a costs order against the respondent, most likely because an amount was paid to reduce the outstanding debt below the statutory minimum. The second is the current Creditor’s Petition. The other application referred to by the respondent was for substituted service of the bankruptcy notice upon which the first creditor’s petition relied.

(2)    Timing of proceedings against a vulnerable litigant: The respondent alleged that the proceedings were pursued with knowledge that he was suffering from medical conditions and, thereby, constituted an abuse of process. There is no evidence to support this contention. During the hearing, I asked the respondent whether there was any evidence of the applicant’s knowledge of his medical conditions. He responded that a camera was installed outside his apartment and that “they” (presumably Netstrata) could see that he returned home from hospital in patient clothing and with his injured legs wrapped. This evidence falls well short of establishing that the applicant instituted proceedings with knowledge that the respondent was vulnerable.

(3)    Alleged concerted collusion: The respondent alleged that there has been collusion between the applicant and the Supporting Creditor and that they have engaged in a coordinated scheme of financial predation and vexatious and repeated filing thereby giving rise to double recovery and double profiting. The respondent sought to support this contention by referring to an application by the Supporting Creditor in October 2023 for an order for substituted service of a bankruptcy notice. There is no basis for these claims. It is not permissible for multiple sequestration orders to be made by the Court. Nor is it permissible for the applicant and the Supporting Creditor to double claim from the respondent’s estate. Neither has occurred.

(4)    Systemic exploitation by Netstrata: The respondent sought to rely on a report by McGrathNichol Advisory dated 25 February 2025. The report stated that McGrathNichol was engaged by New South Wales Fair Trading to undertake an independent review of Netstrata’s operations. The respondent submitted that the alleged exploitation of his position was consistent with what he claimed were wider systemic issues within Netstrata’s operations as identified in the independent McGrathNichol report. There was no suggestion that the report dealt with Netstrata’s dealings with the respondent. Counsel for the applicant submitted during the hearing that the report was not relevant to this proceeding because it does not address any of the particular amounts that have been charged to the respondent. It was further submitted that, insofar as the respondent submits that Netstrata has conducted itself in a particular manner that has no relevance to the levies and charges for which the applicant seeks payment, the report is not relevant to the proceeding. I agree with those submissions. Accordingly, the report cannot provide sufficient reason to believe a sequestration order ought not to be made.

118    In summary, if I had extended time, I would not have been satisfied that a sequestration order ought not to be made.

Conclusion on review application

119    If I had extended time for the filing of the review application, I would have been satisfied that the applicant had established the preconditions for a sequestration order. Further, I would not have been satisfied that there was a basis in s 52(2) for me not to make that order.

ANNULMENT APPLICATION UNDER S 153B OF THE BANKRUPTCY ACT

120    The respondent also seeks an order under s 153B of the Bankruptcy Act annulling the bankruptcy. That section relevantly provides that, in the case of a creditor’s petition:

(1)    If the Court is satisfied that a sequestration order ought not to have been made … the Court may make an order annulling the bankruptcy.

Relevant principles

121    In Bulic v Commonwealth Bank of Australia Limited [2007] FCA 307 at [12], Tracey J summarised the relevant principles:

Section 153B(1) and its predecessors have been considered in many decisions of this and other Courts. These authorities establish a number of relevant propositions. They are:

…

(2)    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”: Re Papps; Ex parte Tapp [1997] FCA 1031; (1997) 78 FCR 524 at 531.

(3)    In determining whether or not a sequestration order “ought not to have been made” the Court is not confined to a consideration of whether the order should have been made on the facts known to the Court at the time at which it was made. The Court must take account of facts, known at the time at which the sequestration order was made and at which it determines an annulment application, even if those facts were not before the Court at the time at which the sequestration order was made: Boles v Official Trustee in Bankruptcy [2001] FCA 639; (2001) 183 ALR 239 at 243; Re Raymond; ex parte Raymond (1992) 36 FCR 424 at 426.

(4)    A sequestration order “ought not to have been made” if, on the facts known at the time of the annulment application, the Court would have been bound not to make the sequestration order: Re Frank; ex parte Piliszky (1987) 16 FCR 396.

...

(6)    If the Court is so satisfied, it is not precluded from annulling the bankruptcy because the bankrupt had not sought to have the default judgment set aside or failed to oppose the creditor’s petition or failed to seek a review of the sequestration order: Re Raymond … at 426.

(7)    The power conferred on the Court by s 153B(1) is discretionary in nature. Even if persuaded that the sequestration order ought not to have been made, the Court can, in appropriate circumstances, decline to annul the bankruptcy: Boles … at 243.

(8)    Considerations which may have a bearing on the exercise of discretion include unexplained delay in the making of the application, whether or not the applicant is solvent, whether or not the applicant has made full disclosure of his or her financial affairs and a failure by the bankrupt to oppose the creditor’s petition and attend the hearing at which the sequestration order was made: Re Williams (1968) 13 FLR 10 at 24–5; Boles at 247; Re Papps … at 531; Rigg v Baker [2006] FCAFC 179; (2006) 155 FCR 531 at 548 [79] (per French J); Cottrell v Wilcox [2002] FCA 1115 at [7]. Additional considerations are collected in D. A. Hassall, “Annulment of Bankruptcy and Review of Sequestration Orders” (1993) 67 ALJ 761 at 766.

These principles were approved by a Full Court in Francis at [16] (Rares, Flick and Bromberg JJ).

122    As Hill J has recently said in Phillips v Carrafa, in the matter of Phillips (Bankrupt) [2025] FCA 870 at [60]:

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.

See also Re Williams at 184 (Gibbs J).

Submissions

The respondent’s submissions

123    In his submissions, the respondent did not differentiate between the review application and the annulment application. Those arguments have been identified earlier in these reasons.

The applicant’s submissions

124    The applicant opposed annulment under s 153B for the following reasons:

(1)    There is an unexplained delay of nearly one year in bringing the application;

(2)    The interests of creditors are best served by the realisation of the respondent’s assets;

(3)    The respondent has repeatedly failed or refused to file a Statement of Affairs despite multiple requests from the Trustee;

(4)    The respondent has not made full disclosure of his financial position;

(5)    No arrangements have been proposed to pay the debt owing to the applicant;

(6)    The respondent’s conduct since his bankruptcy is capable of being characterised as dilatory at best and recalcitrant at worst;

(7)    The respondent was indebted to the applicant at the time of the Sequestration Order; and

(8)    The respondent had substantial debts at the time of the Sequestration Order and those debts continue to grow.

Disposition of annulment application

125    For the following reasons, the respondent has not discharged his heavy burden for an order annulling the bankruptcy.

126    First, I do not accept that the Sequestration Order ought not to have been made. The respondent has not placed before the Court all relevant material with respect to his financial affairs so that the Court may be properly informed and may make a judgement that is based on his actual circumstances. The respondent has not provided a Statement of Affairs nor attended an interview with the Trustee. Other than the evidence given under cross-examination about his dependency on his family since 2022, he has not provided any further evidence going to his capacity to meet his debts. Neither at the time of making the Sequestration Order, nor at the time of hearing the annulment application, has the Court had the benefit of a complete and current picture of the respondent’s financial position. On that basis alone, he has failed to discharge his burden of establishing that the bankruptcy should be annulled.

127    Furthermore, on the facts now known, the Court would not have been bound not to make the Sequestration Order. While it appears that the Registrar was not aware of the respondent’s net asset position, as has been explained, the respondent’s solvency is not to be assessed by a balance-sheet approach. While the respondent was still in possession of his properties at the time that the Sequestration Order was made, it could not be said with any confidence that he was able to meet his debts at that time. As has been explained, the evidence shows that, at that time: he was dependant on his family; he had significant arrears in his mortgage repayments; and he had other sizeable debts. The evidence does not establish that he would have been able to realise his assets within a relatively short time to meet his existing debts. On a cash-flow approach, it could not be said that the Court was bound not to make the Sequestration Order.

128    Secondly, there are a range of discretionary factors that, in any event, would militate against an order annulling the bankruptcy:

(1)    I have dealt already with the delay in bringing the application. For the reasons given earlier, I am not satisfied that the delay has been sufficiently explained.

(2)    Despite repeated requests, the respondent did not lodge a Statement of Affairs or attend an interview with the Trustee. That refusal to do so has continued even after the respondent filed his annulment application and despite being an active participant in this proceeding, filing multiple submissions and affidavits, and attending a case management hearing and final hearing. He also communicated with the Trustee on multiple occasions over the period from October to December 2024, including his offer to assist the Trustee to pursue claims against the applicant.

(3)    As already explained, the respondent has not established that he is currently able to pay his debts. The most current evidence shows that he has substantial debts; there is no evidence of income or prospect of income; and the mortgagee is in possession of three of his four properties, and the fourth is collateral for one of the mortgages. There is a real prospect, if not a likelihood, that an annulment would be futile.

129    For these reasons, the annulment application must be dismissed.

NOTICE OF A CONSTITUTIONAL MATTER UNDER S 78B OF THE JUDICIARY ACT

130    Following the hearing on 30 May 2025, the respondent filed a notice of a constitutional matter under s 78B of the Judiciary Act 1903 (Cth). The respondent gave notice to the Attorneys-General of the Commonwealth and States as contemplated by s 78B(1). The Court has received responses indicating that there is no intention by any of the Attorneys to intervene in this proceeding.

131    The respondent identified the constitutional issues in the following way (footnotes omitted, emphasis in original):

Whether conduct by a party (the Applicant, Netstrata Pty Ltd) in Federal Court proceedings, specifically the alleged deliberate deceptive procurement of default judgments and a sequestration order under the Bankruptcy Act 1966 (Cth) through service of process known by the Applicant to be DEFECTIVE and effected in a manner contravening r 4.05 of the [Bankruptcy Rules], and subsequent alleged concealment of this conduct, constitutes an abuse of the Court’s process and a contempt of court that subverts the judicial power if the Commonwealth vested by Chapter III of the Constitution.

Whether such conduct, by effectively nullifying the Respondent’s statutory right to be heard and participate in the proceedings (particularly during a period of the Respondent’s significant medical incapacity and disability), and allegedly exploiting the Respondent’s known disabilities, amounts to a denial of procedural fairness (natural justice and due process) and a fair hearing, contrary to the requirements implicit in the exercise of federal judicial power under Chapter III of the Constitution.

Whether the making of default orders by the Court, including the sequestration order, in circumstances where its process has allegedly been abused and manipulated by a party through deception and concealment, is consistent with the integrity and impartiality essential to the exercise of federal judicial power under Chapter III of the Constitution.

Whether the alleged conduct, including deliberate discrimination relating to the Respondent's disabilities, compromises the essential elements of federal judicial power, including procedural rights, due process, fair hearing, and judicial impartiality.

132    The respondent sought to deploy these new arguments in support of an extension of time to review the Sequestration Order and as a ground for annulment. Subject to the orders made for further evidence and submissions relating to the respondent’s medical conditions, the proceeding was reserved for judgment at the end of the hearing. In those circumstances, the respondent would need leave to re-open his case: see Frigger v Trenfield (No 7) [2020] FCA 1740 at [20]‍–‍[26] (Jackson J); Sampson (Trustee) v Zaki, in the matter of Van Vlijmen (No 2) [2024] FCA 1175 at [33] (Goodman J); AAI20 v Minister for Immigration, Citizenship and Multicultural Affairs [2024] FCA 707 at [4] (Feutrill J).

133    It is not in the interests of justice to give leave. There is no factual or legal basis for the constitutional arguments. For the reasons already given, the respondent has not established defective service or abuse of process. Nor does the evidence establish discrimination relating to the respondent’s medical conditions. Other than the respondent’s assertions, there is no evidence that the applicant had knowledge of the respondent’s medical conditions. Even if there were such evidence, it would not raise questions about the constitutional validity of any of the statutory provisions.

CONCLUSIONS

134    For the foregoing reasons, time is not extended for the review application, and the annulment application is dismissed. The respondent is to pay the applicant’s costs to be assessed by a Registrar failing agreement.

Associate:

Dated:    4 September 2025