Federal Court of Australia

Maroon v Wengel (Trustee), in the matter of Maroon (Bankrupt) (Trial Judgment) [2026] FCA 1129

ORDERS

THE COURT ORDERS THAT:

1.    The proceedings be dismissed with costs, save for any party informing the Court within 7 days of the delivery of these reasons that there is a basis for any special costs order.

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

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to ss 30(1), 77(1)(e), 77(1)(g) and 129(2) of the Bankruptcy Act 1966 (Cth), within three calendar months of the date of these orders, the Respondents must:

(a)    vacate and surrender possession of the real property known as 30 Glebe Street, Parramatta in the state of New South Wales, being the whole of the land contained in certificate of title folio identifier D/337174, being Lot D in Deposited Plan 337174 (the Property);

(b)    remove from the Property, all vehicles, rubbish and chattels which have not vested in the Applicant (Personal Property); and

(c)    deliver up all keys and security codes (if any) for the buildings and improvements on the Property to the Applicant.

2.    In the event order 1(a) is not complied with, the Applicant has leave to issue a Writ of Possession.

3.    In the event order 1(b) is not complied with, the Applicant can remove and dispose of the Personal Property as he sees fit at the expiration of the period provided for in order 1.

4.    The Applicant’s costs of these proceedings and the Applicant’s remuneration, costs and expenses of attending to obtaining possession and removing and disposing of any Personal Property be paid in priority out of the bankrupt estate of the First and Second Respondents, pursuant to s 109(1) of the Bankruptcy Act.

5.    The parties have liberty to apply on 3 days’ notice.

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

REASONS FOR JUDGMENT

NEEDHAM J:

An introduction to these proceedings

1    Mr Sean Wengel was appointed the trustee of the bankrupt estate of Mrs Nadia Maroon on 16 January 2024, and of the bankrupt estates of each of three of Mrs Maroon’s sons, Allan, Michael, and Christopher Maroon, on 13 November 2023. I will refer to Mrs Maroon and these three of her sons, collectively, as the Maroons.

2    The trustee seeks an order for possession of a property owned as joint tenants by Mrs Maroon and her son, Michael, at Glebe Street, Parramatta (the Parramatta property). On 24 January 2025, the trustee issued Notices to Vacate the Parramatta property to Mrs Maroon, Michael, and all other occupants. The notices required the occupants to vacate and surrender possession of the Parramatta property by 7 March 2025. The Maroon family members occupying the property failed to comply with the notice, and the trustee now seeks vacant possession to realise the Parramatta property (in NSD567/2025, the possession proceedings). The trustee’s estimate is that the Parramatta property is worth about $2 million (between $1.8 to $2.33 million).

3    Mrs Maroon seeks to annul her bankruptcy (in NSD1136/2025, the annulment proceedings) and, if she is successful, would then move to set aside judgment (the consent judgment) in proceedings in the Supreme Court of New South Wales (proceeding number 2018/00230390) (the Aquamore Supreme Court proceedings), and to set aside a guarantee she signed in 2018, upon which her bankruptcy was founded.

4    Mr Wengel and Aquamore Credit Equity Pty Ltd, the petitioning creditor, each appeared, although jointly represented. Mr Wengel participated in the possession proceedings and provided background to the bankruptcy, and Aquamore defended the annulment proceedings.

5    The original debt in 2018 arose from two loans made by Aquamore to Waterview Developments Pty Ltd (a company formed by Allan and Christopher) totalling $3,546,640.04. Mrs Maroon’s guarantee of that debt and the mortgage of the Parramatta property now secure a sum of over $25 million. As Mr Wengel said in his affidavit of 15 April 2025:

11. At the time of commencing the Creditor’s Petitions, the Petitioning Creditor had an unsecured claim against each of the Bankrupt’s estates in the amount of $25,960,356.38 (the PC Debt) comprised as follows:

(a) judgments in the Supreme Court of New South Wales totalling $4,711,203.94, as follows:

i. $4,682,115.45, being the sum awarded in the Supreme Court of New South Wales proceeding numbered 2018/00230390, for which judgment was entered on 1 November 2018; and

ii. $29,088.49, being the sum awarded in the Supreme Court of New South Wales proceeding numbered 2020/00277631, for which judgment was entered on 29 September 2020,

(collectively, the Judgments);

(b) interest, costs and expenses totalling $21,709,752.99, associated with the Judgments and the recovery of the Petitioning Creditor’s secured debt over a property located at 3 - 5 Lynn Avenue, Point Federick NSW 2250 (the Point Federick Property); and

(c) a credit of $4,021,376.83, being the net proceeds received from the sale of the Point Frederick Property.

6    It is common ground that, unless Mrs Maroon is successful in her application to annul her bankruptcy, Mr Wengel is entitled to the orders that he seeks. If orders for possession are made, Mrs Maroon seeks time to vacate the Parramatta property.

7    Mrs Maroon contended that she is entitled to an annulment of the bankruptcy because the consent judgment, as expressed in the application filed in the annulment proceedings on 8 July 2025:

(a) … was not in truth and reality a debt due to … the petitioning creditor, because the debt was based on a guarantee procured by unconscionable conduct and/or undue influence; and

(b) was entered by consent on 1 November 2018 upon the Court being informed that it was by consent in circumstances where Nadia Maroon did not consent to the judgment.

8    The orders sought by Mrs Maroon arise under s 153B of the Bankruptcy Act 1966 (Cth). Sub-section (1) of that section provides:

If the Court is satisfied that a sequestration order ought not to have been made or, in the case of a debtor’s petition, that the petition ought not to have been presented or ought not to have been accepted by the Official Receiver, the Court may make an order annulling the bankruptcy.

9    Accordingly, Mrs Maroon must demonstrate to the Court’s satisfaction that:

(a)    the sequestration order ought not to have been made; and

(b)    the discretion of the Court to annul the bankruptcy should be exercised in her favour,

(see Rigg v Baker [2006] FCAFC 179; 155 FCR 531 at [59] per French J (then of this Court), Spender J agreeing).

10    An applicant who seeks an annulment of a bankruptcy faces a significant challenge. The words in s 153B(1) “ought not to have been made” convey more than merely an onus on the applicant to show reasons why a Court may have made an error. More onerously, it requires a demonstration that the Court would have been “bound” not to have made the sequestration order and “none of the circumstances could justify the making of an order”: Re Frank; Ex parte Piliszky (1987) 16 FCR 396; 77 ALR 511(Fisher J) at 403. In that case, the word “ought” was construed (in the substantially identical terms of s 154(1)(a) of the Bankruptcy Act as it was then) as being “of imperative significance” (at 403).

11    For the reasons set out below, I find that Mrs Maroon has failed to demonstrate that the Court should go behind the judgment debt to determine whether the sequestration order ought not to have been made, and so has failed to demonstrate that there are factors which should persuade me to exercise my discretion in her favour to annul the bankruptcy.

Who are the Maroons?

12    Mrs Maroon is the second respondent in the possession proceedings, and the applicant in the annulment proceedings. She was born in Kfarsghab, Lebanon, in 1942, and married her husband Mr Sejean (John) Maroon in 1962, the year she finished high school. She was then nineteen. She emigrated to Australia that year. She did not pursue a career but worked in the family takeaway business for short periods of time.

13    Mr and Mrs Maroon purchased the Parramatta property, which was their family home, in around 1969. Mr Maroon died on 8 February 2020.

14    Mr and Mrs Maroon had five children, to whom I will refer by their first names: Allan, Christopher, Pierre, Michael, and Melissa (Borovali). Allan was born in 1963, and Michael in 1971. Christopher appears to have been born in the mid-60s.

15    Michael is the first respondent to the possession proceedings, and the second respondent to the annulment proceedings. He is or was a trailer driver. He speaks some Arabic (although he said he could not explain a complicated document written in English to Mrs Maroon in Arabic) and can converse with his mother in a combination of Arabic and English (although he said he has to use very simple English). He has lived with his mother for most of his life, and now lives at the Parramatta property with his wife and two children. His wife moved into the Parramatta property in 2010. He is a bankrupt.

16    Christopher is an architectural draftsman and the third respondent to each of the possession proceedings and the annulment proceedings. He lives at the Parramatta property. He was instrumental in the proposal that the Parramatta property be used as security for the loan he was seeking for a development project in Point Frederick on the Central Coast of New South Wales. He is a bankrupt.

17    Allan is the fourth respondent to each of the possession proceedings and the annulment proceedings. He is a barista and café manager, and lives most of the time with his mother at the Parramatta property and some days a week with his partner. He has acted as his mother’s carer, taking her to doctors’ appointments and accompanying her to church. He is a bankrupt.

18    Michael, Christopher, and Allan were jointly represented in both proceedings and generally support their mother’s application for annulment of her bankruptcy.

19    As at early 2025, each of Mrs Maroon, Michael, his family, Christopher, and Allan lived at the Parramatta property. Pierre and Melissa are not parties to either of the proceedings. Pierre was living in the Parramatta property as at mid-2025. Melissa lives in Türkiye and holds a power of attorney for her mother.

Mrs Maroon’s credit

20    Mrs Maroon was, unsurprisingly, given her age, state of health, minimal command of English, and lack of commercial experience, not a compelling witness.

21    Although she had some limited English, she gave evidence through an Arabic interpreter and her affidavits were each interpreted to her by a NAATI-accredited interpreter.

22    From my observations of her in the witness box, she clearly understood some English, but would sometimes answer questions in cross-examination prior to them being interpreted, and then, once interpreted, would sometimes answer differently. See, for example, on the first day of hearing, Mr Koch (counsel for the trustee and for Aquamore, who appeared with Ms Maddocks) opened his cross-examination as follows:

HER HONOUR: Mr Koch, you might just explain who you are, I think.

MR KOCH: Indeed. Thank you, your Honour.

Mrs Maroon, my name is Mr Koch. I’m the barrister for your trustee in bankruptcy, and for Aquamore Credit Equity, and I’m going to ask you a few questions – probably quite a few questions, so it may take us a little time, and I’m likely to ask you to have a look at documents as well as we go through. And when I do that, if you need Madam Interpreter to interpret for you, and if you need a bit of time, feel free to take that time, there’s nothing to rush you. Could Mrs Maroon please be shown volume 1, tab 8, which is her affidavit, at page 53. So at page 53, Mrs Maroon, there’s a document with a heading of RAMS at the top left, and you understand, don’t you, that in 2015, you and your son, Michael, gave a mortgage to RAMS, being the Westpac Bank?

THE WITNESS: Yes.

MR KOCH: Yes. And because you granted that mortgage, you also took out a loan with RAMS, that’s right, isn’t it?

THE WITNESS: Yes.

MR KOCH: And do you agree with me that the money from that loan in 2015 was used to fund the purchase of a property at Point Frederick by your sons, Christopher and Allan?

THE WITNESS: Yes.

THE INTERPRETER: Yes.

MR KOCH: Thank you. And that was a property that you knew that they wanted to develop?

THE WITNESS: Yes.

MR KOCH: A[n]d am I right in saying that your arrangement with Christopher and Allan was that they would pay back the money to Westpac because they had got the benefit of the loan?

THE WITNESS: Yes.

MR KOCH: And you know, don’t you, that Westpac are asking for that money to be paid back?

THE WITNESS: Yes.

MR KOCH: And you agree, don’t you, that Westpac is entitled to be paid back that money?

THE WITNESS: Yes. Yes .....

23    Mr Moujalli, appearing with Mr Olsen for Mrs Maroon, then objected because Mrs Maroon was not waiting until the interpreter had interpreted the questions into Arabic. While of course, as Mr Moujalli noted, it is a matter for the witness if she chooses to answer in English, the questions being asked were important and it was vital that the Court could be satisfied that she understood them. The cross-examination then continued through the interpreter:

MR KOCH: So what I’m asking you, though, is you understand that you gave a loan to Westpac in 2015?

THE WITNESS: Yes.

MR KOCH: And you understand that they’ve made a claim against you for the moneys that were loaned?

THE WITNESS: I don’t remember.

MR KOCH: Okay. But when you entered into that loan in 2015, you understood, didn’t you, that if the money wasn’t paid back, they might try and take your home?

HER HONOUR: I’m sorry, was that a yes?

THE INTERPRETER: Sorry?

HER HONOUR: What was the answer?

…

THE WITNESS: I don’t remember what happened that time. I don’t remember properly what happened.

MR KOCH: So is your answer that you don’t remember what happened in 2015?

THE WITNESS: Yes.

MR KOCH: You remember that not that long ago, a few minutes ago, you agreed with me that the money from Westpac had gone to Chris and Allan’s property at Point Frederick?

THE WITNESS: I don’t – I don’t remember that.

MR KOCH: What I’m asking you, Mrs Maroon, is, you remember just a few minutes ago, I asked you a question about where the money from Westpac went in 2015, and you told me, and you told her Honour rather, that the money that you and Michael got from Westpac in 2015 went to purchase one of Chris and Allan’s properties in Point Frederick, do you remember that?

THE WITNESS: I don’t remember exactly what happened that day.

24    I set out these two passages to give the flavour of Mrs Maroon’s evidence. She later became quite distressed in the witness box. On the second day of cross-examination, while she agreed when shown a document that the signature was her signature, and agreed with some of Mr Koch’s propositions (for example, that she had told her solicitor that she understood an affidavit she had signed on 24 February 2022 and agreed with its contents), many of her answers were a variation of “I don’t remember”. This was also the case when Mr Koch asked her whether she had had a deterioration in her memory since swearing her February 2022 affidavit in the sequestration proceedings (see summary of the sequestration proceedings starting at [138] below).

25    The following exchange occurred when Mrs Maroon was asked to read an email.

MR MOUJALLI: I’m instructed that Mrs Maroon cannot read without glasses.

HER HONOUR: Right. Does she have her glasses here?

MR MOUJALLI: She doesn’t.

HER HONOUR: Right.

MR MOUJALLI: I suggest that what Mr Koch wants her to look at be translated for her.

HER HONOUR: Yes.

THE WITNESS: I don’t remember.

26    In her re-examination by Mr Moujalli, Mrs Maroon denied wearing glasses at all.

27    On the second day of the hearing, Mrs Maroon often did not engage with the question, even if (as set out above) documents she was asked to look at were translated for her. She defaulted to “I don’t remember”. This included not remembering the affidavit of which she had attested to the truth when examined in chief by her counsel the previous day. When she did answer questions with answers other than “I don’t remember”, it was generally only to agree that a signature was indeed her signature.

28    Aquamore submitted that the consequence of Mrs Maroon’s evidence in cross-examination is that the Court can give “little to no weight to the affidavit evidence [she] filed in these proceedings”.

29    I was not always able to form a view whether, while in the witness box, Mrs Maroon was actually unable to remember, or was using a lack of memory to avoid answering questions honestly, or was using a lack of memory to avoid being asked further questions. It may be a mixture of all three, and definitely an element of the third on the second day; but whichever it was, Mrs Maroon’s oral evidence does not assist her case.

30    Mrs Maroon’s affidavits were dated 20 June 2025 (first affidavit) and 4 September 2025 (second affidavit). I am not confident that the first affidavit accurately represented her state of recollection at the time of the hearing. In that affidavit, she set out positive recollections to the effect that no instructions were sought, or explanations given to her, around the consent judgment that forms the basis of Aquamore’s debt. She said, in paragraph 32, that she recalled signing the first Facility Agreement. At paragraph 37, she said that:

I do not recall receiving legal advice in relation to the facility agreement between Aquamore and Waterview. I certainly do not recall any lawyer speaking with me about the facility agreement in Arabic or speaking with me about the facility agreement with an interpreter. No lawyer explained to me that my house could be at risk if the loan was not paid back to Aquamore,

and at paragraph 39:

I signed the facility agreement with Aquamore because one of my sons asked me to. I do not recall precisely which of my children asked me to sign it. The reason I signed it is because one [of] my children asked me to. …

31    I consider it more likely that, if any such explanations or instructions were given, Mrs Maroon no longer recalled them by the time of the hearing. I am not able to accept her assertion that she did not actively give instructions or receive an explanation of the matters dealt with in her affidavit.

32    Her evidence as to recalling signing the first Facility Agreement, and recalling the reason she signed it, is contradicted to some extent by her evidence in the second affidavit, where she said she does not recall signing various other documents executed around the same time and in relation to the same overall transactions, including mortgages, a second Facility Agreement, and other documents. In relation to each, she said she does not recall signing them, or why she signed them, or talking to her sons about them.

33    In the second affidavit, she deposed that she had a fall in July 2024 and she was in hospital for several days after hitting her head at a wedding. She said that while she remembered a court case about “appealing [her] bankruptcy”, she did not recall any other details. No medical evidence was called to establish whether the fall had any impact on her memory deficits. In Maroon v Aquamore Credit Equity Pty Ltd [2024] FCA 846, Logan J discussed some of the medical records relating to this fall (at [4]-[5]) and concluded that there was no reference “to any ongoing cognitive difficulty on the part of [Mrs Maroon]”. That is, of course, not conclusive as to any medical issues which may affect or have affected her memory, but there is nothing in the evidence before me that Mrs Maroon’s memory had indeed been adversely affected by that fall.

34    In summary, I am not able to accept Mrs Maroon’s assertions as to her state of knowledge at any particular time, unless it is corroborated by surrounding circumstances, is in line with probabilities, or is assisted by primary documentation. As Goodman J said in Top Energy Holdings Pty Ltd v Liu [2026] FCA 689 at [52] and [55]:

The importance of exercising caution when assessing the veracity of a witness’s recollection of what was said or thought at an earlier time, particularly when the witness has an interest in the outcome of the proceeding, is well-established. [relying on Watson v Foxman (1995) 49 NSWLR 315 at 319]

…

Thus, the best approach to determining what has in fact occurred “is to place primary emphasis on the objective factual surrounding material and inherent commercial probabilities, together with the documentation tendered in evidence”: Effem Foods Pty Ltd (t/as Uncle Ben’s of Australia) v Lake Cumbeline Pty Ltd [1999] HCA 15; (1999) 161 ALR 599 at 603 [15] to [16] (Gleeson CJ, Gaudron, Kirby and Hayne JJ).

Credit of the other Maroon family witnesses

35    Each of Melissa, Allan, Michael, and Christopher was cross-examined at the hearing.

36    Melissa gave evidence as to her efforts to find her mother legal representation to see if she “could avoid [Mrs Maroon] becoming bankrupt”. She did not add much, it must be said, to the overall factual matrix. She did not give evidence in chief about the power of attorney signed by her mother in her favour on 15 January 2024, her role in MARCORP01 Pty Ltd (ACN 615 230 450) (a company in which she and Michael had an interest), nor her role in seeking an adjournment of the hearing before Stewart J. She was asked about those matters in cross-examination and gave, generally, fairly direct evidence, although that was somewhat undermined when she was not able to remember whether she wrote the email commencing “Dear Associate, I Melissa Borovali, write this email on behalf of my mother …” (discussed below). I am able to accept her evidence generally but in saying that, she has not given evidence of much import.

37    Christopher was cross-examined on the mortgages taken out over the Parramatta property from time to time, as well as evidence he gave in the various other proceedings. He, like Michael, gave evidence, new to these proceedings, of his mother being anxious and hesitant in signing at least the second Facility Agreement and the related tranche of documents. Christopher appeared to be the most commercially sophisticated of the three brothers who gave evidence, and indeed was the main energy behind the development of the two properties at 3 and 5 Lynn Avenue Point Frederick (Point Frederick property/properties). He was prepared to make admissions against his interest, and as noted below, I accept his evidence in relation to the reasons for Michael’s co-ownership of the Parramatta property. However, on points such as his mother’s hesitation in signing the first and second Facility Agreements, I do not accept his evidence; it was not something that appeared in his previous affidavits, including Exhibit 5, sworn in February 2022 in the Maroon Supreme Court proceedings (see summary of the Maroon Supreme Court proceedings starting from [123] below), where such evidence would have been both relevant and more contemporaneous with the events.

38    Allan’s evidence was reasonably straightforward but he tended to defer to Christopher, who he said negotiated the loans and was responsible for financing the property development project.

39    Michael was not a witness who could, or was willing to, provide much help to the Court. He did not remember any of the details of the mortgages to which he had been a party, and when asked about moneys said to be owing to him by Waterview, he responded as follows:

Are you able to shed any light at all on a position of why Waterview Developments Pty Ltd could be said to owe you $282,000?---Yes, I can shed – I can answer that.

Thank you?---I’ve got no idea.

40    He, like his mother, was often unable to remember matters. In particular, when asked about the transfer of an interest in the Parramatta property to him in 2010, he said he did not remember discussions about Allan and Christopher’s development project. The evidence generally was that, for a period after 2008 and certainly by 2018, the whole family was engaged in this development and I find it unlikely that the only reason the interest in the Parramatta property was transferred to him was “my father’s health”. His evidence in his affidavit that he did not recall ever speaking to Mr Ejaz Khan of Juris Australia Lawyers, acting for Waterview and the Maroons, or Ms Donna Moscardo, a solicitor who is now a creditor in each of the Maroons’ bankruptcies, about the legal cases was clearly not correct, as he admitted in cross-examination. His evidence – that his mother cried when being given legal advice by Ms Beltej Kaur, solicitor of Juris, “just came to [him]” in the witness box rather than being included in his affidavits – was not believable.

41    As with Mrs Maroon, Michael’s evidence should only be accepted when it is inherently probable, and should not be accepted over a contemporaneous document or a business record to a different effect.

Factual findings

42    Through the extensive documentary evidence, and aided somewhat by the oral evidence, but limited as I have said in relation to my findings as to the credit of the Maroon family witnesses, I am able to set out the largely uncontested factual matters below. Where there are disputes, I either record the nature of the disputes in this section and resolve them in the determination sections, or make findings as to those disputes in this section.

Mrs Maroon and Michael guarantee the Aquamore loans

43    I turn now to the documents and transactions which underlie the Aquamore debts.

The purchase and funding of the Point Frederick properties

44    In 2008, Christopher and Allan entered into an option agreement to purchase the Point Frederick properties. While those properties were on two titles, generally speaking, they were dealt with together in the evidence. Christopher and Allan exchanged contracts in March 2010 on one of the properties, and settled the purchase in 2013 with a loan secured by way of mortgage over that property for $690,000. They settled on the second property in August 2015, using both their own funds, and funds obtained from a mortgage from RAMS Financial Group Pty Limited (now Westpac Banking Corporation) over the Parramatta property. I will use the terms RAMS and Westpac interchangeably.

Who owns the Parramatta property?

45    As I have said, Mrs Maroon and her husband John purchased the Parramatta property in 1969. In around 2010, when his father was still alive, Michael became a joint tenant of the Parramatta property with his mother. Michael does not make any claim as to beneficial ownership of the Parramatta property. Allan said that Michael was placed on the title “on trust”, without being able to provide any further details. Michael said that this was by reason of his father’s declining health, and that his brothers, Allan and Christopher, suggested he become registered on the title “in case there was a need to borrow money for any emergencies, as my income would assist in getting a loan”. Christopher gave evidence that Michael became registered on the title of the Parramatta property “in order to facilitate the potential use of that property by [Christopher] and Allan for the purposes of [their development undertakings]”. The timing of the transfer supports this purpose.

46    There is no evidence, apart from Michael’s and Allan’s contentions, that Michael owns the property other than beneficially. There is evidence the other way, however. The application for funding from RAMS included declarations, recorded by the lender, that neither Michael nor Mrs Maroon was a trustee, and Michael accepted the RAMS offer which required a declaration that he was not a trustee “unless this [was] indicated”.

47    A number of presumptions arise on the facts. Each of the presumptions would give way to facts showing the contrary. The first is that the equitable title to the property is “at home with the legal title” (Martin v Martin [1959] HCA 62; 110 CLR 297 at 303; Currie v Hamilton [1984] 1 NSWLR 687 at 690). The legal title here is held in joint ownership by Mrs Maroon and Michael, which reflects an equality of interest. The second is that where property is held in joint names, but the joint tenants have not contributed equally to the cost of acquisition, the beneficial interests are presumed to be held between the parties upon a resulting trust in proportion to their respective contributions (see Calverley v Green [1984] HCA 81; 155 CLR 242 at 246, 258-259). Here, Michael did not contribute to the cost of acquiring the property, which tends against the equitable title being equally held. Third, that resulting trust may be rebutted by the relationship between the parties being such that the party who did not contribute is presumed to have an interest in accordance with the legal title (see Martin v Martin at 303; Trustees of Property of Cummins (a bankrupt) v Cummins [2006] HCA 6; 227 CLR 278 at [55] citing Calverley v Green). This is known as the “presumption of advancement”.

48    The relationship of parent and child creates a presumption of advancement (Buffrey v Buffrey [2006] NSWSC 1349 at [14] per Palmer J, from which the above distillation of principles is garnered). There is nothing in the evidence, except Michael’s and Allan’s contentions, which would rebut the presumption of advancement. In the light of that lack of evidence, and taking into account my assessment of each of Allan’s and Michael’s credit, I can accept Christopher’s evidence that Michael was registered on title in order to facilitate the use of the Parramatta property as security for the development of the Point Frederick properties. It would have been open to Mrs Maroon to seek declarations, in these or other proceedings, that she is, or was, the sole beneficial owner of the Parramatta property. She did not. While it was not an issue on the pleadings, it is an issue relevant as to remedy, and I find that Michael owns the property jointly with Mrs Maroon as a beneficial owner.

The RAMS/Westpac Loans

49    On 24 July 2015, Mrs Maroon and Michael were approved by RAMS for two loans totalling $1,000,000. In cross-examination, Mrs Maroon first agreed, then did not so agree, that she and Michael gave a mortgage to RAMS and the proceeds were used to fund Allan and Christopher’s purchase of the second Point Frederick property. She agreed that she knew that Allan and Christopher wanted to develop that property, and that the arrangement was that her sons would pay back the money because they had “got the benefit of the loan”. Later in her cross-examination she departed from these contentions, but they are not controversial. That loan was not repaid and the mortgage (to Westpac, as owner of RAMS) remains on the title of the Parramatta property. As set out below, Westpac has a judgment for possession of the Parramatta property as first mortgagee.

50    On 20 April 2015, Allan and Christopher formed Waterview in order to undertake the Point Frederick property development. Waterview did not become owner of either of the Point Frederick properties.

51    At the time of each of the transactions in February and April 2018, Allan and Christopher were directors of Waterview. During the same period, the shareholders of Waterview were:

(a)    Christopher as to 49%;

(b)    Allan as to 49%;

(c)    Mrs Maroon as to 1%; and

(d)    Michael as to 1%.

52    Mrs Maroon had become a shareholder of Waterview on or around 12 April 2017. The ASIC Form 484 “Change to company details” lodged by Allan shows that on 12 April 2017, 98 ordinary shares were issued, increasing Allan’s and Christopher’s respective shareholdings to 49 shares each, and that each of Michael and Mrs Maroon paid $1 for a beneficially owned share.

The first Facility Agreement

53    In November 2016, Christopher was successful in Land and Environment Court proceedings, obtaining Development Approval for “a residential flat building” on the Point Frederick properties. In February 2018, Waterview submitted a Commercial Loan Application Form as borrower to Aquamore, which cited a sum of $2,163,000 owing on the Point Frederick properties against a value of $5 million. Christopher was proposed as the guarantor for the first Facility Agreement. The Point Frederick property and the Parramatta property were offered as security. The Application Form stated the “Owner of the property: (please put all the owner’s name/s)” was “Chris Maroon” for the Parramatta property and “Waterview” for the Point Frederick properties. That was clearly inaccurate as the Point Frederick properties were owned by both Christopher and Allan, and the Parramatta property by Mrs Maroon and Michael.

54    Christopher disavowed preparation of the Application Form in his examination in chief. It may have been prepared by the finance broker, Mr Lincoln Frost, the managing director of LEVR, the broker which referred Waterview to Aquamore in February 2018, and Christopher accepted that he, Allan, and Waterview had instructed Mr Frost.

55    On 23 February 2018, Mrs Maroon and Michael each signed a “Loan Letter of Offer – Key Terms Sheet” for a loan of $1,086,746.99 (net amount $902,000) for four months for “Business - working capital”, with interest and repayments capitalised and paid in advance. The interest rate was 3.5% (lower rate) per month or 5% (higher rate). The higher rate was payable following an event of default. Interest was calculated “as compounding daily and accruing monthly on the outstanding balance (including all accrued interest and Fees)”. This was not a binding document but was “an indicative pre-approval offer of finance, subject to entry into definitive loan and security documentation”. It included the Parramatta property as security.

56    It seems that one of the documents – although apparently not the Application Form – may have incorrectly stated Waterview’s ACN. On 5 March 2018, Mr Allen Hsu, a director of Aquamore, emailed various employees including the generic loan@aquamore.com.au email (generic loan email) the following:

Please see the ASIC search attached.

The borrowers deliberately gave us an incorrect ACN. Our lawyers searched and found Waterview Developments. They are currently under administration.

Unfortunately we will not be lending to these borrowers.

57    Mr Hsu was cross-examined by Ms Mee, who appeared for Allan, Christopher and Michael for part of the hearing, and agreed that the word “deliberately” was an assumption on his part.

58    Apparently that issue was resolved, because on 1 March 2018 Aquamore had access to valuations for the Point Frederick properties, and for the Parramatta property, probably obtained by LEVR. From a title search of the Parramatta property, Aquamore was aware that there was a first mortgage (the Westpac mortgage) secured over the Parramatta property, and a caveat lodged by LTDC Pty Ltd. The LTDC Pty Ltd caveat secured a debt of $716,686.45, secured over the Parramatta property and the Point Frederick properties. The Westpac mortgage secured debts of just under $1.2 million. The receivers had been appointed to Waterview by LTDC Pty Ltd. The funds from Aquamore were intended to pay out those second-ranking mortgages, and I infer that from around the time of the application in February 2018 Aquamore was aware of the level of debt over the Parramatta and Point Frederick properties.

59    It is common ground that the funds obtained from LTDC Pty Ltd and RAMS were not used by Mrs Maroon for her own purposes. I accept Melissa’s and Michael’s evidence to that effect.

60    Mr Hsu was cross-examined as to the matters in his knowledge at the time of the entry into the first Facility Agreement. He knew that the Parramatta property was a residential property; that from the time Aquamore did a title search, Mrs Maroon, as a co-owner of the Parramatta property, was to be a guarantor of the loan; that Mrs Maroon was not a director of Waterview; that Mrs Maroon held one of the 100 shares in Waterview; that all of the shareholders of Waterview lived at the Parramatta property; that receivers had been appointed to Waterview and that could indicate that Waterview was in financial difficulty (or, as Mr Hsu preferred to frame it, “had liquidity issues”); that Waterview did not own the Point Frederick properties; and that the Parramatta property was already encumbered by a registered mortgage to Westpac.

61    On 8 March 2018, at 1.43 pm, Mr Phillip Hustler of Independent Legal, lawyers for Aquamore, sent an email to Mr Khan, attaching a letter setting out the conditions required by Aquamore to enter into a Facility Agreement with Waterview (first Facility Agreement Letter). Mr Hustler’s email was in response to an email from Mr Khan earlier that day confirming that “the subject transaction is a refinance to payout the second mortgagor” and that “[w]e have been instructed that all 4 Guarantor agreed to obtain legal advice before signing personal guarantee” (as written).

62    The first Facility Agreement Letter attached a number of documents for execution, including “1.12 Declaration and Acknowledgement of Legal Advice for Nadia Maroon”. That was immediately followed by the words in bold “Please see our comments below at paragraph 2 in relation to these documents”. Paragraph 2 dealt with then-recent changes to identification of mortgagors. It is likely that that was a typo for paragraph 3 which required that the “Guarantors obtain independent legal and financial advice” and requested that Mr Khan provide the name of the legal advisers who provided that advice. Oddly, that note in bold was not included in the request for those documents proposed for each of the relevant Maroon brothers, even Michael as a co-owner of the Parramatta property, and nothing in paragraphs 2 or 3 appears to relate specifically to Mrs Maroon.

63    At 6.19 pm on 8 March 2018, Mr Khan replied to Mr Hustler by email and attached “duly signed mortgage documents”. He copied in Christopher, the generic loan email, as well as Alex Roth (another solicitor at Independent Legal), but did not copy in Mrs Maroon. The attached documents included “Memorandum of Common Provisions Nadia & Michael.pdf”, “Verification Nadia.pdf”, “Declaration Parramatta.pdf” and “Sch 2 Nadia.pdf”.

64    Self-evidently, the execution of Mrs Maroon’s documents underpinning the guarantee and indemnity of the first Facility Agreement, and the mortgage over the Parramatta property, were signed that afternoon.

65    The first Facility Agreement is dated 8 March 2018. It is a long and complex document. Mrs Maroon is a guarantor and her signature, witnessed by Ms Kaur, appears on page 64. Ms Kaur also witnessed Michael’s signature, while Mr Khan witnessed the signatures of Christopher and Allan. The first Facility Agreement included in its definition of “Mortgage” “the unregistered second mortgage over [the Parramatta property], secured by caveat”. The definition of “Security” included “(b) the Mortgage”.

66    A further document witnessed by Ms Kaur was entitled “Declaration by Third Party Mortgagor, Guarantor, Surety Mortgagor or Indemnifier for the Borrower”. That document is in the form of a statutory declaration under the Oaths Act 1900 (NSW). It provides:

I, Nadia Maroon of 30 Glebe Street, Parramatta NSW 2150 (Declarant)

DO SOLEMNLY AND SINCERELY DECLARE AS FOLLOWS:

1. I am the Guarantor and Indemnifier named in certain loan and security documents between WATERVIEW DEVELOPMENTS PTY LTD ACN 605 374 294 (Borrower) and Aquamore Credit Equity Pty Ltd ACN 609 876 940 ATF Spring Park Unit Trust (Financier).

2. I have received independent legal advice regarding the loan and security documents referred to in paragraph 1.

3. After receiving that advice I have freely and voluntarily signed the following documents:

a.     Facility Agreement incorporating Guarantee and Indemnity dated on or about the date of this declaration from the Financier to the Borrower in relation to a facility of $1,086,746.99;

b.     Mortgage from me and Michael John Maroon over the property at 30 Glebe Street, Parramatta NSW 2150; and

c.     Authority and Undertaking.

67    Mr Hsu was cross-examined about the documents which Aquamore required to be provided by borrowers and guarantors. He agreed that the Declaration signed by Mrs Maroon was in the form provided by Aquamore’s solicitors, Independent Legal. The Declaration substantially, but not completely, conforms with the form prescribed by the Law Society of New South Wales by way of r 11 and Sch 2 of the Legal Profession Uniform Legal Practice (Solicitors) Rules 2015 (NSW) (Solicitors Rules). The documents listed in paragraph 3 would make it clear to Mrs Maroon (if the Declaration were properly explained to her) that she was being asked to sign as “Guarantor and Indemnifier”. The prescribed words at the end of paragraph 1 of Sch 2 (“relating to property (specify address or other description)”) do not appear in the Declaration; the address of the Parramatta property should have appeared in paragraph 1 of the Declaration. However, the address of the property appears in paragraph 3(b) of the Declaration in a way which should have been apparent to Mrs Maroon (if it were properly explained to her) that she was signing a mortgage over the Parramatta property.

68    Clause 4 of Sch 2 does not appear. That is optional (as designated by an asterisk) and provides:

4.* Name: (interpreter) was present at the conference.

Note: The interpreter must complete a certificate in the form of Schedule 3 before the conference concludes.

69    Whether in fact an interpreter was optional in these circumstances – in substance rather than in form – is dealt with below.

70    Rules 11.4 and 11.7 of the Solicitors Rules provide that the solicitor “must” use, in this case, the Sch 2 form. Given the substantial compliance with r 11 and Sch 2, I do not think that anything turns on the anomalies of the wording of the Declaration. In any case, the Declaration was provided by Aquamore’s solicitors, not by Juris. Rule 11.8 prohibits a solicitor in New South Wales from providing “evidence otherwise than in conformity with this rule” and the prescribed form of the declaration in Sch 2 indicates that the solicitor may not set out the advice that was given in the declaration, which is sent to the provider of the finance. The documentation of the substance of the advice to be given is found in Sch 4 Pt 2 of the Solicitors Rules – Acknowledgement of Legal Advice by Proposed Guarantor. Rule 11.6 of the Solicitors Rules requires that a copy of the Acknowledgement of Legal Advice be retained on the solicitor’s file, and is not provided by the solicitor to the lender. Paragraph 3 of the Acknowledgement of Legal Advice sets out, in clear terms, advice to be given to the prospective guarantor as to what would happen if a borrower failed to make payment on time, or if the guarantor failed to remedy such a failure. It sets out a long list of actions which the lender could take, including selling the secured property, and suing the guarantor for any deficit. At paragraph 4, the form notes that solicitors cannot give financial advice and that if any queries about the “wisdom of the transaction” arose then the guarantor should consult an accountant or other financial counsellor. Paragraph 6 provides:

After receiving the above advice I freely and voluntarily signed the loan documents.

71    No such Acknowledgement of Legal Advice appears in the Court Book. There was no evidence about whether one was signed. If one were signed, then I infer that it would have been able to be sought by the parties in these proceedings because there had already been proceedings taken by Mrs Maroon in the Supreme Court of New South Wales against Juris, Mr Khan, and Ms Kaur (to which Mr Wengel became a party) in relation to the adequacy of their advice in respect of the Declaration which would have alerted Mr Wengel to the existence of any Acknowledgement of Legal Advice.

72    Another anomaly in the certification process is that Ms Kaur’s identification certificate under s 34(1)(c) of the Oaths Act stated, in item 3, that she had known Mrs Maroon for “at least twelve months” but also, in item 4, that she had not known Mrs Maroon for that long, but, as required by item 4, had confirmed her identity by recourse to her passport, driver licence and Medicare card. I can infer that in spite of item 3 not being crossed out, Ms Kaur had not known Mrs Maroon for at least twelve months and instead had identified her by way of her identification documents. It appears that Ms Kaur did know Mrs Maroon, having witnessed her will (Exhibit A) on 1 June 2017, but I infer she had not known her for twelve months.

73    I pause here to note that Ms Kaur’s certification of the Declaration was in contravention of s 34(1) of the Oaths Act. A failure to comply with the section (which requires either items 3 or 4 to be completed) is subject to a civil penalty. Section 34(4) provides that “a failure to comply with this section does not affect the validity of any statutory declaration or affidavit”.

74    Ms Kaur did not identify herself as being the solicitor who actually provided the legal advice referred to by Mrs Maroon in her Declaration. When returning the documents to Mr Hustler, Mr Khan did not comply with the request to provide the name and firm of the lawyer who provided each guarantor with independent legal advice. Despite that, it was clear that Ms Kaur worked for Juris, because her signature appeared above a name stamp giving the name, address, and other contact details of Juris. Mr Hsu agreed that when Mr Hustler received the loan documentation on 8 March 2018, Aquamore was not provided with anything to indicate that the Maroons had seen a lawyer other than a lawyer from Juris, which was the law firm advising the borrower, Waterview.

75    Despite this, Mr Hustler provided a Solicitor’s Certificate to Mr Hsu to the effect that each of the guarantors had received legal advice. There was no reference to any of the guarantors receiving financial advice, which, it will be recalled, was one of the requirements for the granting of the facility to Waterview. Mr Hsu gave evidence that he relied on the Solicitor’s Certificate provided by Mr Hustler. He said: “I do read the certification. I don’t necessarily open the attachments … My solicitors, on an ongoing instruction … verify the identity, verify that borrowers and guarantors are not coerced, and that they have … [understood] … what the document means”.

76    As I have said the first Facility Agreement was complex. It provides for almost every contingency, and resolves them mainly in favour of Aquamore (see, for example, cl 13.6, Avoidance of Payments). The first Facility Agreement itself is written in reasonably plain English. For example, cl 13.1 provides that “The Guarantors jointly and severally and unconditionally and irrevocably guarantee on an unlimited basis to the Financier the payment of the Money Owing” (each of the capitalised terms being defined terms).

77    Mrs Maroon and Michael also signed a further statutory declaration on 8 March 2018, before Ms Kaur, inter alia that there were no impediments on the title of the Parramatta property such as adverse affectation by authorities, disputes with neighbouring owners, zoning transgressions, or pollution issues. That statutory declaration asserted that “[w]e hereby acknowledge that the Mortgagee will rely on the contents of this [statutory declaration] …”.

78    Mr Hsu agreed that, after receiving the statutory declaration from Mrs Maroon, Aquamore knew that Mrs Maroon had been born in 1942, and that Allan was on her Medicare card (her Medicare card being a document copied to Aquamore with the statutory declaration as one of her identification verification documents). He also agreed that Aquamore knew, on receiving the statutory declarations from the Maroons, that the firm which acted for Waterview provided the legal advice to each of them. He agreed that Aquamore did not ever receive any indication that the Maroons had received any financial advice in relation to the first Facility Agreement.

79    Aquamore lodged a caveat over the title of the Parramatta property on 12 March 2018, caveat number AN180787 (after a withdrawal of the LTDC Pty Ltd caveat number AN180786).

80    There is no dispute that Mrs Maroon signed the first Facility Agreement and the other accompanying documents, including the Declaration and the mortgage. Christopher’s evidence in his affidavit in these proceedings was that his mother was “unsure and hesitant” and did not want to sign the first Facility Agreement and mortgage, and Michael said that she was anxious and distressed and crying when she saw the solicitor, Ms Kaur (which evidence was led in Michael’s evidence in chief, but was not part of his affidavit evidence). As noted above when dealing with the parties’ credit, and in particular the fact that this evidence was omitted from Christopher’s 2022 evidence in the Maroon Supreme Court proceedings (as set out below from [123]), and from Michael’s affidavit evidence, both in these proceedings and in the Bankruptcy applications, I do not accept that Mrs Maroon was in fact anxious, unsure, or hesitant. Her own evidence in her first affidavit at paragraph 39 is to the following effect:

I signed the facility agreement with Aquamore because one of my sons asked me to. I do not recall precisely which of my children asked me to sign it. The reason I signed it is because one [of] my children asked me to. I understood that my sons wanted to do building work with the loan and I wanted to help them out. I did not ask anyone other than my sons as to whether I should sign the facility agreement. I did not ask anyone else because I trusted my sons and I signed the facility agreement because I trusted them.

81    Had Mrs Maroon been upset, anxious, unsure or hesitant, she would have mentioned this here or elsewhere. I find that Mrs Maroon was willing to sign the first Facility Agreement and mortgage on the basis of her trust and confidence in her sons.

The second Facility Agreement

82    On 20 March 2018, Allan and Christopher signed a further “Loan Letter of Offer – Key Terms Sheet” for a loan of $2,459,893.05 (net $2,300,000). The purpose of those funds was noted as being “Refinance/Bridging finance” and was for a term of one month. The relevant terms were substantially the same as the previous “Loan Letter of Offer – Key Terms Sheet” dated 23 February 2018, including as to the two levels of interest which were levied on a compounding basis.

83    The funds were intended to be used to discharge the first mortgage over the Point Frederick property. This was referred to in an email from Mr Hustler of 23 March 2018 which noted that the first mortgagee would be in a position to settle on 28 March 2018, and attached similar documents including blank statutory declarations for Mrs Maroon, Michael, Christopher and Allan to make. The letter from Mr Hustler to Juris dated 23 March 2018 enclosed a “first ranking, registered mortgage over the Point Frederick properties”. Clause 1.12, relating to the “Declaration and Acknowledgement of Legal Advice for Nadia Maroon”, had the same annotation as in the first Facility Agreement Letter. The letter again required “independent legal and financial advice” but the covering email did not attach any form for the certification of the provision of any financial advice. The letter required a withdrawal of the LTDC Pty Ltd caveat over the Parramatta property (which, oddly, was also a provision of the first Facility Agreement Letter and appears to have been already withdrawn in March 2018 in any event).

84    On the morning of 28 March 2018, three business days after Mr Hustler sent the documents, Mr Hustler followed up with Mr Khan and asked for an update. Mr Khan replied:

Hi Phil

The directors of the Waterview has executed documents. They were not happy about their mother and brother required to execute where as they are not directors of the company. We are instructed to hold on the documents till further instruction.

(as written)

85    Mr Hsu agreed that Aquamore knew, prior to receiving the executed documents in relation to the second Facility Agreement, that Mrs Maroon was the mother of Allan and Christopher as a result of this email.

86    Eight minutes later, at 10.20 am, Mr Hustler replied:

Ok thanks Ejaz.

I will wait to hear from you. If your client is intending to negotiate the security, please set this out to us once you have instructions – we can then liaise with the lender directly.

We have the funds in our trust account already, so can move quickly.

87    This is the only documentary evidence as to the existence of any hesitation about or unwillingness for Mrs Maroon and Michael to be part of the security arrangements for the second Facility Agreement. However – and importantly – the hesitation appears, from Mr Khan’s report, to be hesitation on the part of Allan and Christopher. Mrs Maroon said that she did not recall the second Facility Agreement but said at paragraph 40 of her first affidavit that “none of my circumstances which I have referred to in relation to the first [F]acility [A]greement had changed by 11 April 2018” – from which I infer that she was still willing to sign documents for her sons Allan and Christopher because she trusted them. She was not cross-examined about this assertion.

88    The next email was from Mr Khan, sent at 4.39 pm on 29 March 2018, which said:

Hi Phil

My off sider is outside of your office to deliver Waterview Documents

If you are in office please assist

89    When Mr Khan sent his first email on 28 March 2018, Christopher and Allan had already signed the second Facility Agreement and mortgage on behalf of Waterview and as guarantors on 26 March 2018. At some point on 28 or 29 March 2018, Mrs Maroon and Michael had signed as guarantors of the second Facility Agreement, and executed another mortgage over the Parramatta property in favour of Aquamore on 11 April 2018. Those documents formed part of the “Waterview Documents” referred to by Mr Khan as being delivered by his “off sider” on the afternoon of 29 March 2018.

90    The Declaration, which is in identical terms to that relating to the first Facility Agreement (apart from the amount of the facility, being $2,459,893.05) as to the receipt of legal advice, was signed by Mrs Maroon and witnessed this time by Mr Khan. Again, cl 4 of Sch 2 to the Solicitors Rules certifying that the legal advice was interpreted was not included.

91    Mr Khan certified under s 34(1)(c) of the Oaths Act that he identified Mrs Maroon and that he “saw the face of the person”. This time Mr Khan was able to say that he had known Mrs Maroon for a period of over twelve months.

92    Again, there was no Acknowledgement of Legal Advice setting out the content of any legal advice that was given in accordance with the prescribed Sch 4 Pt 2 form in evidence before me. No evidence of any financial advice was provided to Aquamore. Mr Hsu agreed that he was again provided with a Solicitor’s Certification by Mr Hustler as to Aquamore’s solicitors’ lack of concern about the documents provided. Aquamore was in a position to know that all four of the guarantors/indemnifiers had the same lawyer as each other and as Waterview, in Mr Khan of Juris.

93    The second Facility Agreement was dated 11 April 2018. The funds were drawn down to pay out a number of parties including the first mortgagees over the Point Frederick property, another credit company, and lawyers, and left $42,062.35 for Waterview. The mortgage signed by Mrs Maroon and Michael was a further unregistered mortgage over the Parramatta property dated 11 April 2018, and caveat number AN258064 was lodged by Aquamore in support of that mortgage.

Mrs Maroon and Michael’s mortgages of the Parramatta property

94    Prior to Aquamore’s unregistered mortgages, Mrs Maroon had granted at least eight mortgages over the Parramatta property. An historical search on the Parramatta property, undertaken in 2023, demonstrates that in the period after the certificate of title was converted to computer folio, the property was mortgaged a number of times: in 1995 (discharge of mortgages and a new mortgage), 2001 (discharge of mortgage and a new mortgage), 2004 (discharge of mortgage and a new mortgage), 2010 (discharge of mortgage and a new mortgage), and 2015 (discharge of mortgage and a new mortgage – the Westpac mortgage). In 2016 and 2017 there were caveats in support of unregistered mortgages lodged and withdrawn, and, as noted above, after the execution of each of the Facility Agreements, caveats lodged in support of the 8 March 2018 and 11 April 2018 unregistered mortgages, over the title of the Parramatta property.

95    There is little evidence around any of the transactions prior to 2015. They are not mentioned in Michael’s or Mrs Maroon’s evidence. Michael was cross-examined as to mortgages granted by him and Mrs Maroon to Barclay Finance Proprietary Limited, and Denning Group Investments Pty Ltd, each of which was the subject of a caveat, but his recollection of those was not very helpful. He had, for example, no recollection of any dealings with LTDC Pty Ltd. Christopher had better recall and gave evidence that each of those companies provided funds which were used by him, Allan, and Waterview for the purpose of the Point Frederick property development. Mrs Maroon had no recollection of any of the mortgages. Michael’s explanation for his failure to mention the previous mortgages was that they were organised by Christopher, but as Counsel for the trustee pointed out, that was also the case with the Westpac and Aquamore loans. Those, and the LTDC Pty Ltd mortgage, were relatively recent. I do not accept, as Michael seemed to suggest in cross-examination, that he and his mother had no knowledge or understanding of the use of the Parramatta property as security for loans for the Point Frederick property development. That is contrary to Christopher’s evidence, which I accept, that the property had been transferred to Michael for that very purpose, and inconsistent with the evidence that the Point Frederick property development was a matter of family interest.

96    Another company which loaned money on the security of the Parramatta property was Iron Custodian Pty Ltd. It lent $150,000, of which $90,000 went to MARCORP01 and $60,000 went to Melissa. Mrs Maroon witnessed Melissa’s signature when Melissa signed in her personal capacity as a borrower, and Melissa agreed that Mrs Maroon knew about the transaction. Mrs Maroon does not appear to have been a borrower or otherwise indebted to Iron Custodian. The fact that Michael was able to use the Parramatta property to secure this debt without his mother’s involvement (other than as a witness to Melissa’s signature) underscores his beneficial ownership of the property.

97    Mrs Maroon’s chronology, handed up as an aide-memoire, records no title registration activity prior to the Aquamore mortgage. Her first affidavit (which was filed in support of an interim application) discusses the 2015 Westpac mortgage. Mrs Maroon deposed that she did not need a loan for $1,000,000 in 2015, and did not recall signing documents, or receiving any money. The RAMS approval letter dated 24 July 2015 to Michael and Mrs Maroon was for two loans (of $582,000 and $418,000) and required a discharge authority for a previous loan, and noted that RAMS would “control funding to ensure repayment of Westpac loan … on settlement”. (The reference to the Westpac loan is to a prior loan, not the mortgage currently on title).

98    It is not in dispute that Westpac has obtained judgment against Mrs Maroon and Michael for the defaults on those two loans. The trustee estimated the sum outstanding under the Westpac mortgage as being $1.37 million in his Report on Initial Findings of 22 March 2024.

99    In Mrs Maroon’s second affidavit, she disputes having legal advice or knowing why she signed the 8 March 2018 mortgage and the 11 April 2018 mortgage, but she did not contend that she did not have an understanding of the nature and effect of a mortgage. Given the absence of any evidence as to Mrs Maroon’s involvement in mortgages going back to at least 1995, except for the limited information given by Michael in cross-examination, I am able to find that she understood what a mortgage was when she came to sign the Aquamore loan documents in 2018. I cannot make that finding in relation to her knowledge of what a guarantee entailed, as nobody asked her anything about it and she did not say that she does, or does not, understand what a guarantee is.

Waterview defaults on the Aquamore Facility Agreements

100    The funds provided under the second Facility Agreement – $2,459,893.05 – were due for repayment on 11 May 2018. An email reminder was sent from Aquamore to LEVR on 10 May 2018. Mr Frost of LEVR queried what the repayment would be if the loan were paid on 24 May 2018. A prompt response, some 20 minutes later, was to the effect that the payout figure on 24 May 2018 would be $2,522,974.14 because the default rate would be charged since the due date.

101    Perhaps not surprisingly in the light of the receivership, and the high interest rates and short terms of the Facility Agreements, Waterview failed to pay the amount due by 11 May 2018 or the higher sum by 24 May 2018. On 16 May 2018, Berhero Pty Ltd lodged caveats over the titles of the Point Frederick properties which, in accordance with cl 11.1(n) of the first Facility Agreement, was deemed to be an event of default, despite the term of the first Facility Agreement not having expired. Berhero had been retained by Waterview, Allan and Christopher to procure finance for Waterview to discharge the securities under the Facility Agreements.

102    On 31 May 2018, Aquamore sent an email to Mr Frost of LEVR noting that no payment had been received, and the amount due was then $2,556,940.89 and “the repayment amount will change according to the repayment date”.

103    Throughout 2018 Christopher and Allan were seeking to refinance the Aquamore and Westpac mortgages, including seeking funds from Balanced Securities Ltd, but those attempts were not successful, and as can be seen from the next section, the parties have been in and out of litigation since mid-2018.

104    On 18 June 2018, Independent Legal sent letters of demand to Waterview as borrower, and to the Maroons as guarantors in relation to the defaults under both Facility Agreements. Unhelpfully, only the first page of each letter is in evidence in the Court Book, but no point is taken by Mrs Maroon (in this or in any other proceeding) that the demand itself was invalid. The demands were not met.

105    On 24 March 2021, Aquamore sold the Point Frederick properties for $4,100,000. While Allan and Christopher have sought interventions and made allegations about the exercise of the power of sale, nothing has been successful.

The Maroons’ and Aquamore’s journey through the courts

106    What follows is only a summary of the proceedings which preceded the possession proceedings, and does not include everything which could be included.

The Aquamore Supreme Court proceedings – Mrs Maroon consents to judgment against her

107    Aquamore commenced proceedings (number 2018/00230390) in the Supreme Court of New South Wales against Waterview, the Maroons, and Westpac on 26 July 2018. Westpac was joined by reason of it being the first registered mortgagee, and the Statement of Claim sought no relief against it, noting that Westpac had first recourse to the proceeds of sale if Aquamore succeeded on its claim for possession and sale. Attached to the Statement of Claim was a Possession of Land Coversheet (form 93, Uniform Civil Procedure Rules 2005 (NSW) r 6.8A) which contained a notice to the defendants as to the risk of a judgment against them and that “you may be evicted from your property and the lender may take action to sell your property” should no defence be filed. That notice appears first in English, then in Arabic. Ms Talysha Sabatino, a process server, gave evidence that she served this document on Mrs Maroon at her home, along with the Statement of Claim in the Aquamore Supreme Court proceedings. Mrs Maroon did not deal with the Statement of Claim or the Coversheet at all in her evidence in the current proceedings, but in the Maroon Supreme Court proceedings, she contended that she had not been served with the Aquamore Supreme Court proceedings at all.

108    Christopher said that he did not tell his mother about the Aquamore Supreme Court proceedings, because he was making arrangements to refinance. He said that he did not want to cause her stress, and he instructed Mr Khan to appear for him on 1 November 2018. He was not aware of Mr Khan ever speaking to his mother in relation to those proceedings.

109    None of the defendants filed a defence in the Aquamore Supreme Court proceedings.

110    Judgment was entered by consent on 1 November 2018 in the sum of $4,682,115.45 against Waterview and the Maroons, and for possession of the Point Frederick property. The order noted that “Mr Khan, solicitor for D1-D5, to file a Notice of Appearance today”. Mr Khan did so on 2 November 2018, including for Mrs Maroon.

111    Mrs Maroon has not sought to lodge an appeal or seek a stay of the consent judgment in the Aquamore Supreme Court proceedings. Nor has Michael.

112    In April 2019, a solicitor from Coleman Greig Lawyers, then acting for Waterview, Allan and Christopher, corresponded with Independent Legal about the judgment and the Aquamore Supreme Court proceedings. That firm, on 17 June 2019, indicated that it also acted for Mrs Maroon and Michael. Nothing came of that correspondence, which was related to offers of settlement.

113    The Aquamore Supreme Court proceedings were briefly re-opened in 2023 by Parker J of the Supreme Court of New South Wales, specifically to allow Mrs Maroon to file an application to set aside the consent judgment, but no such application was made. I deal with the circumstances of Parker J’s orders below in the section dealing with the Maroon Supreme Court proceedings.

114    On 13 February 2024, Mr Scott Freidman, of Harris Freidman Lawyers, acting for Mrs Maroon, filed a Notice of Change of Solicitor in the Aquamore Supreme Court proceedings. It is unclear why this was necessary, or what Mr Freidman did in these proceedings. However, he acted for Mrs Maroon from early 2024 until Mr Alex Rashidi, of Alexander Rashidi Lawyers, who remains on the record, was appointed as her solicitor.

115    The question of the validity of Mrs Maroon’s consent to judgment is dealt with below, as part of the discussion as to whether a sequestration order “ought not to have been made”.

Australian Financial Complaints Authority (AFCA) – complaints about Aquamore’s conduct

116    A complaint made by Christopher to AFCA against Aquamore in November 2018 was dismissed on 5 December 2018. In May 2020, Waterview sought to prevent Aquamore from marketing or selling the Point Frederick properties. The complaint was determined in Aquamore’s favour.

The Westpac proceedings – judgment for possession of the Parramatta property

117    On 2 May 2019, Westpac commenced proceedings (number 2019/00137182) in the Supreme Court of New South Wales against Mrs Maroon and Michael for possession of the Parramatta property (the Westpac proceedings). A Possession of Land Coversheet was served with the Statement of Claim.

118    A Notice of Motion (Default Judgment on Claim for Possession of Land) was filed in the Westpac proceedings on 7 August 2019. An affidavit of the Secured Recoveries Case Manager of Westpac, sworn on 2 August 2019, put the loan accounts with Westpac at $627,106.30 and $641,908.86. An order for possession was issued on 8 August 2019. As at 28 August 2025, the total debt due to Westpac was $1,175,043.42.

119    If Mrs Maroon is successful in the annulment of her bankruptcy, she intends to commence proceedings to have the consent judgment set aside.

The Aquamore costs proceedings

120    Judgment for $29,088.49 was given by the Supreme Court in proceeding number 2020/277631 (the Aquamore costs proceedings) on 29 September 2020 (although judgment was issued on 22 September 2021). This judgment has not been appealed from, or stayed. The Statement of Claim in these proceedings is not in the Court Book, but it appears that this sum represents a costs assessment in relation to the Aquamore Supreme Court proceedings certified on 19 September 2020.

121    The Aquamore costs proceedings judgment was relied on by Aquamore to ground its bankruptcy notices, and by the trustee in the sequestration proceedings (which will be explained below). Mrs Maroon did not contend in these proceedings that she would seek to set aside this judgment if she were successful in the annulment proceedings. The judgment in the Aquamore costs proceedings does not form part of the consent judgment sum.

Mrs Maroon is served with a Bankruptcy Notice

122    On 22 September 2021, Mrs Maroon was served with a Bankruptcy Notice which relied on the judgments in the Aquamore Supreme Court proceedings and the Aquamore costs proceedings. The total owing in the Bankruptcy Notice was $689,827.11, being the amount under the consent judgment and the Aquamore costs judgment, less the proceeds of sale of the Point Frederick properties. No interest or costs were apparently included in this amount.

The Maroon Supreme Court proceedings – the Maroons seek relief from the Supreme Court of New South Wales

123    On 15 October 2021, the Maroons along with Waterview (then in receivership) commenced the Maroon Supreme Court proceedings in the Supreme Court of New South Wales. The Statement of Claim sought, by prayer 2, to set aside the consent judgment in the Aquamore Supreme Court proceedings by reason that “the orders were procured in bad faith”. The Statement of Claim named both Aquamore and Berhero as defendants. The orders sought in the Statement of Claim were expansive. In summary, the plaintiffs sought orders against Aquamore arising out of the exercise of the power of sale of the Point Frederick property, and against Berhero in relation to what was alleged to be its failure to protect the interests of Waterview and the Maroons in not finding alternative finance, and by lodging a caveat which was a breach of the terms of the first Facility Agreement. The “bad faith” referred to in prayer 2 relied on “representations made to the first plaintiff [Christopher] as to the agreement made between the solicitor for the first defendant and the first plaintiff orally”. Those representations were not particularised. It appears from the context that they are alleged to have been in relation to the way in which the consent judgment would be enforced, although that is not entirely clear. In Christopher’s affidavit of 9 July 2025, he said, as to his failure to inform Mrs Maroon of the consent judgment, that “there would be a stay on the judgment of 1 month during which I could arrange refinance that would allow the Aquamore loan to be repaid”. However, the terms of the consent judgment do include provision for a stay, at paragraph 4.

124    Ms Moscardo acted for the Maroons in the Maroon Supreme Court proceedings. She later ceased to act for Christopher and Allan in those proceedings, and filed a Notice of Ceasing to Act on 11 May 2023.

125    By a complicated procedural process which is unfortunately necessary to rehearse here at some length, the Maroons reviewed their claims on a number of occasions. An Amended Statement of Claim was filed on 12 November 2021, and Waterview was removed as a plaintiff. Juris, Mr Khan, and Ms Kaur were added as the third to fifth defendants. In this iteration of the Statement of Claim, the plaintiffs sought to set aside various clauses of the Facility Agreements, and the caveats and mortgages over the Parramatta property. They also claimed (in very general terms) that their lawyers acted in breach of their duty and did not warn them of the risk of pure economic loss, or act to prevent that loss.

126    The Amended Statement of Claim particularised that there was a conflict of interest between Allan and Christopher on the one hand, and Mrs Maroon and Michael on the other, and that Mr Khan and Ms Kaur knew that Mrs Maroon, the fourth plaintiff, had limited ability to read, write and converse in English, that no Arabic interpreter was present when the documents were explained to her, and that she did not receive any proper legal advice as a result. It particularised that the lawyers did not specifically explain the default interest provisions, nor cl 13 (the guarantee and indemnity clause set out in part above). Paragraph 75 and onwards set out a Contracts Review Act 1980 (NSW) claim by each of Michael and Mrs Maroon, and referred once more to the lack of advice, a conflict of interest, and the lack of an Arabic translator. The Amended Statement of Claim also pleaded that she had not received any financial advice, nor any accounting advice. In paragraph 95(e), Mrs Maroon pleaded that she was:

… vulnerable due to:

i. Her age;

ii. Lack of English Skills in both written and oral form; and

iii. Relied on professional advisers for advice.

127    Later in the Amended Statement of Claim, Mrs Maroon asserted that she was suffering from a “special disadvantage” because of her age, her lack of understanding, that she was a widow, and that her principal place of residence was at risk. She sought to have the Facility Agreements and mortgages set aside.

128    The Maroons then sought leave to file amended pleadings, which eventually resulted in the Fourth Further Amended Statement of Claim (4FASOC) being filed on 15 July 2022. Because of the actions taken by Aquamore in this Court which are set out below, the separate question of whether the consent judgment should be set aside on the grounds that it was procured in bad faith or irregularly, and the relief in prayer 2 of the 4FASOC to that effect, was set down before Parker J on 23 February 2023.

129    Just prior to the hearing before Parker J, Mrs Maroon filed an affidavit raising matters that had not been pleaded in the 4FASOC (or in previous iterations). After the hearing on 23 February 2023, Parker J gave leave for a Fifth Further Amended Statement of Claim (5FASOC) to be served, and the amendments to plead the matters “arising from ... paragraph 44-52 of [Mrs Maroon’s] affidavit sworn on 20 February 2023”. Those matters were to be pleaded against the “third to fifth defendants”, being the lawyers. The matters in Mrs Maroon’s affidavit included an allegation that she had never been served any court documents, and that she did not consent or agree to Mr Khan entering an appearance on her behalf. The hearing before Parker J and subsequent orders following a later relisting of the matter on 28 April 2023 resulted in:

(a)    the Aquamore Supreme Court proceedings being re-opened and the Maroons being directed to file any application for relief in the nature of:

(i)    the consent judgment being set aside; and/or

(ii)    contempt applications arising out of the alleged breach by Aquamore of those orders,

within 28 days of the making of those orders (ie, by 23 March 2023), and in the absence of any such application, the “file is to be marked as closed”;

(b)    prayers for relief against Aquamore, apart from claims made by Mrs Maroon, being struck out or dismissed; and

(c)    directions that any proposed 5FASOC be served by 8 May 2023.

130    Justice Parker’s orders of 28 April 2023 resulted in the 5FASOC being filed on 18 July 2023, which sought the setting aside of the Facility Agreements and the mortgages over the Parramatta property, due to unconscionability. The relief in prayer 2 seeking to have the consent judgment set aside had been struck out. Likewise, paragraphs of the pleading contending that Mrs Maroon was “not aware of the [Aquamore Supreme Court proceedings]” and that she had not instructed Juris or Mr Khan to act for her were struck through, as was a pleading that Mrs Maroon did not consent to the consent judgment. Presumably, prayer 2 and the pleadings supporting it were struck through because they were to be raised in the Aquamore Supreme Court proceedings. However, despite her counsel making submissions on 6 April 2023 to the Federal Court in the sequestration proceedings (see below) that the Aquamore Supreme Court proceedings were still on foot, no application was filed by 23 March 2023 or indeed at all. The trustee submitted that the “application to set aside the consent judgment made in favour of Aquamore against Mrs Maroon on 1 November 2018 in the sum of $4,682,115.45” was abandoned.

131    The 5FASOC retains Allan’s and Christopher’s claims against Aquamore in relation to its exercise of the power of sale, and against Berhero regarding its breach of duty, breach of contract and contravention of Sch 2 of the Competition and Consumer Act 2010 (Cth). Mrs Maroon’s claim of special disadvantage arising out of unconscionable conduct in equity remained against Aquamore, as did the Contracts Review Act claim and the allegations against the lawyers for failing to advise her properly.

132    However, in November 2024, after Mr Wengel had been appointed in his capacity as trustee of the bankrupt estates of each of the Maroons, an outbreak of peace occurred with the Maroon Supreme Court proceedings being the subject of a settlement conference, and by 6 February 2025 consent orders were signed. Mr Wengel was a party to the Deed of Settlement and Release. Juris and Mr Khan, without admission of liability, agreed to pay $700,000 to the trustee. The orders made by Registrar Walton on 11 February 2025 were as follows:

1.     The proceedings be dismissed against the:

a.     First defendant [Aquamore];

b.     Third defendant;

c.     Fourth defendant; and

d.    Fifth defendant.

(“the Dismissal Parties”)

2.     For the purposes of section 91 of the Civil Procedure Act 2005 (NSW), the dismissal is on terms which prevent the plaintiffs from bringing fresh proceedings or claiming the same relief in fresh proceedings against the Dismissal Parties.

133    Aquamore released the trustee, but only in his personal capacity and without prejudice to “any Claims, rights or interest that Aquamore has in any way against any of [Christopher, Allan, Michael or Mrs Maroon]”.

134    Accordingly, the Maroon Supreme Court proceedings, as between Aquamore and Mrs Maroon, are no longer on foot, and because of the trustee’s release of Aquamore, Mrs Maroon is precluded from “bringing fresh proceedings or claiming the same relief in fresh proceedings” against Aquamore.

The bankruptcy proceedings

135    On 18 October 2021, the Maroons commenced proceedings in this Court to set aside the Bankruptcy Notice (the bankruptcy proceedings). Ms Moscardo acted for Mrs Maroon, as the fourth applicant, and her three sons. The grounds of the bankruptcy proceedings were that the Bankruptcy Notice was defective, and that the applicants had:

… a counter-claim, set-off or cross-demand under ss.40(1)(g) and 41(7) of the Bankruptcy Act 1966 (Cth) and rule 3.02(3) of the Bankruptcy Rules against the respondent insofar as the applicants intend to commence proceedings against the respondent for the hearing of this matter.

136    This was apparently a reference to the Maroon Supreme Court proceedings, although those proceedings had already been commenced.

137    The bankruptcy proceedings were dismissed on 17 December 2021.

The sequestration proceedings

138    On 14 January 2022, Aquamore presented a creditor’s petition in the Federal Court against Allan and Christopher (NSD23/2022), and, on 18 January 2022, a creditor’s petition against Michael and Mrs Maroon (NSD31/2022) (together, the sequestration proceedings). The sum claimed in the sequestration proceedings was $25,960,356.38 including $21,709,752.99 of accrued interest.

139    On 7 October 2022, after Kunc J had stayed the relief sought in the Maroon Supreme Court proceedings against Aquamore to the effect that it had breached its duties in exercising its power of sale, the creditor’s petitions came before Markovic J of this Court. Her Honour ordered in each of the sequestration proceedings that the period at the expiration of which the creditor’s petitions would lapse be extended to 14 January 2024 and 18 January 2024, each being 24 months after its respective presentation.

140    The issue of the status and orders in the Maroon Supreme Court proceedings was dealt with before Markovic J on 20 April 2023, where her Honour ordered Aquamore to “file and serve any further evidence upon which it intends to rely, limited to evidence in relation to the status of and orders made in proceedings in the Supreme Court of New South Wales concerning the respondents to this proceeding [and Allan and Christopher Maroon]”.

141    The sequestration proceedings were docketed to Stewart J of this Court. At a hearing on 28 September 2023, Aquamore sought to proceed against Allan, Christopher (each of whom appeared in person) and Michael (who was represented). The petition against Mrs Maroon was not pressed on that day, it appears because of the Maroon Supreme Court proceedings which were then still on foot. The 5FASOC was tendered before Stewart J.

142    Mr Eardley of counsel, who appeared before Stewart J for Michael, characterised Mrs Maroon’s resistance to the creditor’s petition as being based on her allegations in the Supreme Court against her former solicitors. He relied on the allegation that Juris and its lawyers “represented to the court that they were consent orders on behalf of [Mrs Maroon] and Michael, and that they weren’t”. Mr Eardley characterised this claim as “not a problem for the lender, per se. The lender didn’t know about this”. The lack of consent alleged in relation to Mrs Maroon and Michael was “an error, some negligent error … misunderstanding” on the part of the lawyers. Mr Eardley asked rhetorically, in relation to Mrs Maroon’s consent, whether Aquamore:

… [did] anything wrong? Probably not, in the scheme of how this all arose … [w]ere they irregular? Probably not. They relied on what the solicitors did advise them of loan documents. They relied on the solicitors representing at the court that they were acting for Nadia and Michael Maroon when they weren’t. Can’t put any fault to them on that issue.

143    Justice Stewart reserved his decision. On 13 November 2023, his Honour delivered judgment in Aquamore Credit Equity Pty Ltd v Maroon [2023] FCA 1399 (Maroon (No 1)) and made orders sequestrating the estates of each of Allan and Christopher in NSD23/2022 and of Michael in NSD31/2022. On 4 December 2023, Stewart J listed for hearing on 16 and 17 January 2024 the remaining part of NSD31/2022, being Aquamore’s presentation of the creditor’s petition against Mrs Maroon.

144    On 30 December 2023, Ms Moscardo filed a Notice of Ceasing to Act for Mrs Maroon. A Notice of Intention to Cease to Act had been provided, dated 13 December 2023.

145    On 15 January 2024, Stewart J’s associate emailed Mr Lewis Seelenmeyer, the solicitor for Aquamore, and Mrs Maroon (and copying Michael and Ms Moscardo), noting that “neither party has filed submissions as required per his Honour’s orders of 4.12.23”. Mr Seelenmeyer responded by attaching his submissions and noting that he had not heard from Mrs Maroon. On that same day, Mr Seelenmeyer served his submissions on Mrs Maroon (copying Michael) and gave links to the two Court Books.

146    At 4.04 pm on 15 January 2024, Melissa emailed the Associate to Stewart J under Mrs Maroon’s email address. The email said:

Dear Associate,

I Melissa Borovali, write this email on behalf of my mother, Nadia Maroon.

Nadia's representatives ceased to act on 3 January 2024. It has been impossible to arrange alternative representation in the first two weeks of January for obvious reasons.

Nadia has received documents today that she simply cannot understand and cannot proceed without the advice of a lawyer.

In addition to this, Nadia is very ill at this moment and there is no way that she could attend Court tomorrow.

I kindly ask the court to please adjourn the hearing set for 16 and 17 January 2024 so that Nadia can arrange further legal advice and representation.

Regards

Melissa Borovali

147    The response from Stewart J’s chambers was that “[a]ny application for an adjournment should be made at the hearing tomorrow, supported by evidence. Also, all communications with Chambers must be copied to the applicant’s lawyers”. That email copied in Mr Seelenmeyer and Ms Moscardo.

148    An email purporting to be from Mrs Maroon, attaching the Notice of Ceasing to Act and a letter from Mrs Maroon, was emailed to the Associate to Stewart J at 9.58 am (and Mr Seelenmeyer at 10.03 am) on the day of the hearing, 16 January 2024.

149    The letter from Mrs Maroon was dated 15 December 2024 (semble, January 2024). It said,

I, Nadia maroon of 30 Glebe street Parramatta, say on oath,

On 6 January 2024 (10 days ago) I received an email from my lawyers informing me that they had now ceased to act for me in the Federal Court proceedings. (attached is a copy of the Notice of Ceasing to Act).

There has been no opportunity for me to engage further legal advice and representation given that this has occurred during the holiday period.

It was only after receiving an email from the court at around 10am on 15 January 2024 (yesterday), that I became aware that the matter was previously before the court on 4 December 2023. I had no knowledge of that day and what occurred on that day until receiving the transcripts yesterday from the Court. I had no knowledge of the orders made that day which included submissions to be filed by me (the respondent) by 8 December 2024.

I am currently ill with symptoms of Pneumonia and unable to attend Court on the 16 and 17 of January 2024.

I kindly ask the court to Adjourn the matter on 16 and 17 January 2024 so that I can arrange further legal assistance and attend to my health.

150    Two comments can be made about this letter. First, it was not witnessed as a statutory declaration or affidavit despite being expressed as being “on oath”; and second, as per Aquamore Credit Equity Pty Ltd v Maroon (No 2) [2024] FCA 14 at [5], Mr Eardley had been acting for Mrs Maroon on 4 December 2023 (instructed by Ms Moscardo) and Stewart J was able to infer that he and Ms Moscardo “met with Mrs Maroon shortly after the case management hearing on 4 December 2023 and, amongst other things, advised Mrs Maroon of the listing of the matter for final hearing” (Maroon (No 2) at [7]).

151    As to Mrs Maroon’s ill health on 16 January 2024, the trustee relied on the fact that Mrs Maroon executed an Enduring Power of Attorney on 15 January 2024, appointing her daughter Melissa and her grandson Jonathan Maroon as her joint and several attorneys. She did this in the office of Ms Leona Chen, solicitor, with Allan present, who was able to assist with Ms Chen’s explanation of the documents to Mrs Maroon. The trustee submitted that she was “well enough to attend Ms Chen’s office” while asserting to the Court, through Melissa, that there was “no way that she could attend Court”.

152    There was no appearance by Mrs Maroon at the hearing on 16 January 2024, and Stewart J considered that “the basis presented for the requested adjournment is particularly weak” (Maroon (No 2) at [17]). His Honour refused to grant the adjournment (at [14]-[19]).

153    Justice Stewart made orders sequestrating the estate of Mrs Maroon on 16 January 2024. His Honour gave his reasons in Maroon (No 2). His Honour relied not only on the non-appearance of Mrs Maroon, but his view that “for the reasons set out in [Aquamore’s] submissions dated 15 January 2024 I am satisfied that the grounds of opposition would have no merit” (at [32]). Those Aquamore submissions were before me and set out the opposition to each of the grounds raised by Mrs Maroon in support of the Court’s exercise of its discretion under s 52(1) of the Bankruptcy Act being solvency, an offsetting claim in the Supreme Court, and a claim that, going behind the consent judgment, there was no debt in reality owed to Aquamore. Only the third is relevant to these proceedings. Mrs Maroon’s solvency was only faintly argued before me, and the “offsetting claim” was the breach of duty claim in the Maroon Supreme Court proceedings, being brought only by Allan and Christopher, not by Mrs Maroon – see Maroon (No 1) (at [38]).

154    The Aquamore submissions set out that there was no contest that Mrs Maroon had entered into the Facility Agreements, that the moneys loaned remained unpaid, and that she received a benefit from the transactions (in having an indebtedness over the Parramatta property, in relation to which receivers had been appointed, discharged). The Aquamore submissions relied on the consent judgment in 2018.

Mrs Maroon’s appeal

155    Mrs Maroon, now represented by Mr Freidman, filed proceedings in the Federal Court in NSD118/2024 which was an appeal against Stewart J’s orders. She sought orders setting aside the sequestration order dated 16 January 2024, and staying the sequestration order until the appeal was heard and determined.

156    Mrs Maroon did not make any application under r 36.52(1) of the Federal Court Rules 2011 (Cth) for assistance with the preparation of an index, nor did she comply with orders by a Registrar of this Court that she submit to the Registrar the index to Part A and Part B of the Appeal Book by 11 March 2024. After some correspondence, Besanko J made orders on 2 April 2024 that Mrs Maroon comply with the Rules as to the submission of an index, and bring any application for a stay of the sequestration order by 9 April 2024. No further evidence was filed, and on 7 June 2024, the Registrar made timetabling orders with a hearing date before a Full Court scheduled for 15 August 2024. Mrs Maroon did not file and serve Part A of the Appeal Book, and on 9 July 2024 Mr Freidman ceased to act for her. A case management hearing was convened before Logan J, the presiding judge, who made orders that she show cause by affidavit why the appeal should not be dismissed. There was no appearance by Mrs Maroon on the appointed day, and Logan J dismissed the Appeal for want of prosecution and the hearing was vacated – see Maroon v Aquamore Credit Equity at [20].

These proceedings

157    The trustee then sought orders for possession by way of the possession proceedings on 15 April 2025, and Mrs Maroon’s application in the annulment proceedings was accepted for filing on 8 July 2025. The proceedings were heard in September and December 2025 over four days.

Principles relating to annulment of bankruptcy

158    In Mehajer v Weston in his Capacity as Trustee of the Bankrupt Estate of Mehajer [2019] FCA 1713 at [15] Lee J helpfully set out the five principles which were relevant in that case and which also have particular relevance to Mrs Maroon’s application. They are:

(1) An applicant who seeks an annulment of his 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 full facts and the actual circumstances of the applicant”: Re Papps; ex parte Tapp (1997) 78 FCR 524 at 531.

(2) In addressing the question of whether or not a sequestration order “ought not to have been made”, the inquiry is a broad one and 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 is to take account of the facts, known at the time the sequestration order was made and also other facts, which are evident, at the time of the hearing of the annulment application, even if those facts were not before the Court at the time the sequestration order was made: see Boles v Official Trustee in Bankruptcy [2001] FCA 639; (2001) 183 ALR 239 at 243 [16]; as Mansfield J described it Re Almassy [1999] FCA 1004; (1999) 92 FCR 597 at 599-600 [15]:

The expression “ought not to have been made” in s 153B in respect of a sequestration order being cancelled requires there to be shown that there was some matter upon which the order was made which was not in fact correct, although that might be shown not just from the facts as disclosed at the time, but as they would have been disclosed had all the true facts been disclosed at the time of the making of the order…

(3) A sequestration order “ought not to have been made” if the Court would have been bound not to make the sequestration order: see Re Frank; Ex parte Piliszky (1987) 16 FCR 396; this means that if it was open to the judge to make an order in the exercise of discretion, it can only be said that the judge ought not to have made the order if none of the circumstances could justify the making of the order; or, alternatively, if it can be established that an order ought not to have been made because subsequent evidence discloses that all of the true facts were not before the Court when the order was made: Re Cook (1946) 13 ABC 245.

(4) 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, under appropriate circumstances, decline to annul the bankruptcy: Boles v Official Trustee in Bankruptcy at 243 [16]; as Logan J in Crocker v Infa-Secure Pty Ltd [2018] FCA 84 at [7] explained:

The Court retains a discretion as to whether to annul a bankruptcy, even if persuaded that a sequestration order ought not to have been made… In Francis v Eggleston Mitchell Lawyers Pty Ltd [2013] FCA 564 at [26] Marshall J offered a necessarily non-exhaustive summary of circumstances which, in earlier cases, had been regarded as warranting an adverse exercise of that discretion. Factors such as whether the issue put forward as a basis for being satisfied the sequestration order ought not to have been made were capable of being raised at the time of the hearing of the petition, whether the bankrupt was legally represented then, the bankrupt’s conduct over the course of the bankruptcy and the commercial morality of the bankrupt’s conduct prior to bankruptcy are some which, in the past, have been regarded as relevant to the exercise of the court’s discretion.

(5) Considerations which may have a bearing on the exercise of discretion include delay, whether or not the applicant for annulment at the time of the hearing of the application is solvent, whether or not the applicant has made full disclosure of his financial affairs and also whether there was 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; also see Hassall, D A, “Annulment of Bankruptcy and Review of Sequestration Orders” (1993) 67 ALJ 761 at 766.

159    In relation to the first factor, the trustee contended that Mrs Maroon has not put before the Court her full financial affairs and relies on a “concession” from Mr Moujalli in opening that he did not, in these proceedings, lead evidence of her income. However, her Bankruptcy Form reveals that her income was a government pension and her only debt was to Aquamore (in the sum of $25,960,356.00). She had $340 in the bank, and $20 in cash. She has, essentially, her interest in her home, encumbered as it is. She had no superannuation, car, shares, or other assets apart from the Parramatta property. She did not disclose her 1% shareholding in Waterview in the Bankruptcy Form but, doubtless, that was explicable by the company’s financial troubles. Nor did she disclose the judgment debt to Westpac or the security granted over the Parramatta property to Iron Custodian, although, of course, the trustee was aware of those.

160    The trustee submitted that in relation to solvency, Mrs Maroon not having provided the “fullest and best” evidence of her financial position is a “matter tending heavily against the Court exercising any discretion to annul her bankruptcy”. I have noted above that her solvency was only faintly argued. Mr Moujalli put to me that, were the consent judgment to be set aside, that left Mrs Maroon with the Parramatta property subject to the Westpac debt of $1,175,043.42 the Iron Custodian debt of $154,200.90, and a claim for legal fees made by Ms Moscardo (incorporating Mr Eardley’s fees) of $433,033.55 (Moscardo legal fees). Mr Moujalli noted that the Iron Custodian debt was not her debt, and that the Moscardo legal fees may not have been assessed for their fairness and reasonableness. When added to the $700,000 which was received from the lawyers in settlement of the Maroon Supreme Court proceedings, Mr Moujalli submitted that the claims were less than the value of the house, the trustee had recourse to the settlement funds for his costs, and Mrs Maroon had her pension (of which, as noted, there was very little objective evidence although I am prepared to accept that she has a pension and no other income).

161    Mr Moujalli accepted that the test of solvency was that a debtor be able to pay her debts as they become due (see Bank of Australasia v Hall [1907] HCA 78; 4 CLR 1514 at 1543 per Isaacs J), but relied on the statement that that “does not mean that [she] is always bound to keep by [her] in cash a sum sufficient to meet all [her] outstanding indebtedness however distant the date of payment may be”. It was sufficient, Isaacs J said, that the debtor have assets which “if realised would produce sufficient money to pay all [her] indebtedness”.

162    Mr Moujalli argued that as Westpac was not – and had not for some time – sought to enforce its judgment for possession, that should be taken into account in assessing Mrs Maroon’s solvency “in regard to a course of dealing” between the parties.

163    Westpac’s position, as noted to the Court in its solicitors’ letter of 5 September 2025, is as follows:

Separately, we understand that the trustee of Ms Maroon's bankrupt estate is seeking an order for possession of the Property. As Westpac has previously advised the trustee, at this stage, Westpac is content for such an order to be made and for the trustee to sell the Property and discharge Westpac's first ranking mortgage. Should there be delay in that occurring, Westpac may proceed to enforce its rights including the Possession Order.

Westpac reserves all of its rights under its facilities, securities, and the Possession Order made on 8 August 2019.

164    I do not accept that Westpac is prepared to wait indefinitely. Rather, it seems content to let Aquamore take the running on possession of the property as it is, as was accepted by Mr Moujalli, protected as to its first ranking mortgage. While the amount of the debt on its own is less than the value of the house, I do not regard the letter as indicative of a position that it will never move on its judgment. The reference to enforcement in the circumstances of a delay in Aquamore taking possession would indicate to the contrary. While it is true that the Iron Custodian debt is not Mrs Maroon’s debt, it is secured over the Parramatta property, and there was no indication that Michael, Melissa and MARCORP01 would seek to discharge that debt in the near future. Nor are there any indications that they are seeking to release the Parramatta property from that security.

165    While assets available to meet debts may be taken into account in assessing solvency, there is no basis to remove the Westpac debt from my consideration of solvency when assessing discretionary factors as to whether the bankruptcy should be annulled. Mrs Maroon is, in any event, a joint owner of the property, and her co-owner Michael is also bankrupt. Neither Michael nor Mrs Maroon has sought declarations as to the nature of Michael’s interest in the property, and on my analysis at [47] to [48] above, the presumptions as to ownership mean that Michael is a beneficial owner as joint tenant with his mother.

166    I am able to find that, on the facts before me, Mrs Maroon is insolvent, even leaving aside the Aquamore debt, as she is not able to meet her debts as and when they fall due. This is a factor which weighs against making an order to annul her bankruptcy.

Is the Court satisfied that a sequestration order ought not to have been made?

167    The legal test here is found in s 153B of the Bankruptcy Act in the words “ought not to have been made”. The meaning of this term is, as noted by Fisher J in Re Frank at 403 (as set out above at [10]), to be construed as meaning that the Court would have been “bound” not to have made the sequestration order and “none of the circumstances could justify the making of an order”. This was described by Charlesworth J in Thompson v Lane (Trustee) [2023] FCAFC 32; 410 ALR 439 as a “two-step process” and her Honour noted that the onus of proving that the bankruptcy should be annulled fell on the applicant (at [25]).

168    It was not in dispute that, as Barwick CJ said in Wren v Mahoney [1972] HCA 5; 126 CLR 212 at 224, a Court may go behind a judgment to ascertain for itself whether that debt was properly due. The Chief Justice found at [224]:

… the Bankruptcy Court may accept the judgment as satisfactory proof of the petitioning creditor's debt. In that sense that court has a discretion. It may or may not so accept the judgment. But it has been made quite clear by the decisions of the past that where reason is shown for questioning whether behind the judgment or as it is said, as the consideration for it, there was in truth and reality a debt due to the petitioning creditor, the Court of Bankruptcy can no longer accept the judgment as such satisfactory proof. It must then exercise its power, or if you will, its discretion to look at what is behind the judgment: to what is its consideration. It is not the law, in my opinion, that whether in any case the Court of Bankruptcy will consider whether there is satisfactory proof of the petitioning creditor's debt is a mere matter of its own discretion. Nothing in Corney v. Brien lends support for such a view. Rather the emphasis is upon the paramount need to have satisfactory proof of the petitioning creditor's debt. The Court's discretion in my opinion is a discretion to accept the judgment as satisfactory proof of that debt.

169    At [141] of Thompson, Downes J cited with approval the primary judge’s observation in the judgment under appeal, Thompson v Lane (Trustee) (No 3) [2022] FCA 128 (Logan J) at [73] that “[t]he existence of such a power [to go behind a judgment] is one thing, occasion for its exercise is quite another”.

170    The Aquamore submissions described Mrs Maroon’s task as “Herculean”.

171    The first stage of determining whether to go behind a judgment itself has two stages: whether there is a proper basis to exercise the discretion to go behind a judgment, and if there is, whether there is in truth and reality no debt; see Ramsay Health Care Australia Pty Ltd v Compton [2017] HCA 28; 261 CLR 132 at [16], [37]-[38] (Kiefel CJ, Keane and Nettle JJ), cited by Downes J at [145] of Thompson. I will look at both of these issues but deal with the fact-heavy issue of the debt first.

Consideration of whether there was a debt, in truth and reality, owing by Mrs Maroon to Aquamore

172    Mrs Maroon contended that the sequestration order ought not to have been made because there was not in truth and reality any debt owed by her to Aquamore. She relies on undue influence and unconscionable conduct and contended that she was in a position of special disadvantage, of which Aquamore knew, or ought to have known, and of which it unconscientiously took advantage; see Thorne v Kennedy [2017] HCA 49; 263 CLR 85 at [38] per Kiefel CJ, Bell, Gageler, Keane and Edelman JJ. She contended that, had the full facts been before Stewart J, the Court would have been bound not to make the sequestration order.

Undue influence – Principles

173    The relationship between mother and son is not a relationship which gives rise to a presumption of undue influence by the son over the mother; see Johnson v Buttress [1936] HCA 41; 56 CLR 113 at 119 per Latham CJ. A presumption arises when one person stands in a relationship with another which gives rise to a presumption of undue influence; a child to its parent, or a client to a solicitor. But here, it is not asserted that Mrs Maroon has the benefit of that particular presumption. Instead, she seeks to prove, as Mr Moujalli put it in opening:

[I]t is a relationship of trust and reliance, and that then gives rise to a presumption of undue influence, and Aquamore has the onus to rebut the presumption. … we need to establish, your Honour, that Aquamore was on constructive notice of that relationship.

174    In other words, if Aquamore had notice of the elements which made up undue influence, then there may be a ground to argue that the Facility Agreements could be vitiated. Mr Moujalli relied on Bank of New South Wales v Rogers [1941] HCA 9; 65 CLR 42 at 55 (Starke J) (Bank of NSW v Rogers). The facts of that case were that Miss Rogers’ uncle, Mr Gardiner, was in financial difficulties and asked the Bank to prepare transfer documents, then a lien and charge, for Miss Rogers to provide security for Mr Gardiner’s overdraft. The bank knew that they lived at the same address, but did not know she was his niece, albeit an adult niece. Starke J said that:

… the bank knew that some special relationship existed … some relationship that was not merely one of business but of confidence and trust, which enabled Gardiner to exercise influence over her. And if this is so, then it was for the bank to establish that the security given to it by the respondent was free from any undue influence and was the voluntary and well-understood act of her mind.

175    Miss Gardiner was successful in the High Court as, while the bank manager explained to her the nature of the charges and that her shares stood as “full security for any overdraft Mr Gardiner might have with the bank”, it was not explained to her that:

Gardiner’s position was hopeless and that her securities would be engulfed in his ruin, or warned against the folly of parting with her whole fortune to discharge Gardiner’s overdraft.

176    In Bank of NSW v Rogers, the bank was not presumed to have obtained the shares by undue influence (see McTiernan J at 60). However, if it had notice of fraud on the part of Mr Gardiner, then (at 60-61):

… it is liable to the same equity and stands in the same place as Gardiner would if he, instead of inducing the respondent to give the securities directly to the bank, had procured them to be transferred to himself in order to deposit them with the bank.

177    On it being demonstrated that Aquamore had notice that Mrs Maroon was providing her guarantee and mortgage in the context of a relationship of trust and confidence (Thorne v Kennedy at [34]) then it has the onus to show that she in fact gave her consent freely and as a well-understood act of her mind; see Yerkey v Jones [1939] HCA 3; 63 CLR 649 at 683, 684; Bank of NSW v Rogers at 55. The quality of the notice, as set out in Bank of NSW v Rogers at [51] per Starke J, is “notice of the circumstances from which the court infers the equity”; see also Booth v Zhou (No 2) [2024] WASCA 128.

Unconscionable conduct and special disadvantage – principles

178    A claim of unconscionable conduct requires that the applicant show that “one party by reason of some condition or circumstance is placed at a special disadvantage vis-à-vis another and unfair or unconscientious advantage is then taken of the opportunity thereby created” (Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; 151 CLR 447 per Mason J at 462, cited with approval by Gaudron, Gummow, and Kirby JJ in Bridgewater v Leahy [1998] HCA 66; 194 CLR 457 at [75]).

179    The knowledge of the stronger party is generally required to be actual knowledge of the weaker party’s vulnerability. This has been expressed in Stubbings v Jams 2 Pty Ltd [2022] HCA 6; 276 CLR 1 as having “sufficient appreciation of [the weaker party’s] vulnerability” (at [46]). However, in Louth v Diprose [1992] HCA 61; 175 CLR 621, the required knowledge was expressed by Deane J at 637 to be “sufficiently evident to the other party to make it prima facie unfair or ‘unconscionable’ that the other party … accept or retain the benefit of, the disadvantaged party’s assent”.

180    Again, once a party’s knowledge of the special disadvantage has been established to the appropriate standard, then there is an evidentiary onus on the stronger party to demonstrate that the transaction was fair, and that no advantage had been taken; see Nitopi v Nitopi [2022] NSWCA 162; 109 NSWLR 390 at [147] (Ward P).

Can Mrs Maroon establish a relationship of trust and confidence, or a special disadvantage?

181    Mrs Maroon’s case is based on the principles in the well-known cases such as Blomley v Ryan [1956] HCA 81; 99 CLR 362, Amadio, and Thorne v Kennedy. While recognising that the facts of one case do not provide a blueprint for others, she relied at paragraph 4.5 of her opening submissions on her:

•    age: Blomley at 405; Amadio at 464-465 (Mason J) and 476-477 (Deane J);

•    limited command of the English language: Amadio at 464-465 (Mason J) and 476-477 (Deane J);

•    lack of assistance or explanation where explanation or assistance is necessary: Blomley at 405; Amadio at 476 (Deane J);

•    reliance on or confidence placed in a family member: Amadio at 464, 466 (Mason J) and 477 (Deane J); or “strong emotional dependence or attachment” to a family member: Bridgewater at [115] (Gaudron, Gummow and Kirby JJ); and

•    a propensity to enter into an improvident transaction which may itself evidence vulnerability: Stubbings at [41].

182    Mrs Maroon relied on the evidence of her sons and her dependence on them, including for translations, arranging payment of household bills and administrative tasks.

183    It is not substantially in contest that Mrs Maroon is elderly, does not speak much English, did not have the benefit of a legal explanation in Arabic, and relied on and trusted her sons. I can accept that she had a “propensity to enter into an improvident transaction” because quite clearly, each of the Facility Agreements was, for an elderly widow living in her family home and receiving the Age Pension, demonstrably improvident. While there is very little evidence about the circumstances of the prior mortgages entered into by Mrs Maroon (with either her husband or Michael), it seems that at least those entered into after the purchase of the first Point Frederick property had been for Allan’s and Christopher’s benefit, and not hers. Mrs Maroon clearly had a close relationship with her sons, most of whom lived with her for many years. Her evidence was that she trusted her sons, and that she would sign what she was asked to sign (see her evidence as set out in [80] above).

184    Mrs Maroon was also dependent upon her son Christopher for arranging her legal representation, which duty he seems to have not properly fulfilled if, as he contended, he did not tell her of the Aquamore Supreme Court proceedings.

185    Mrs Maroon’s evidence that she trusted her sons was not challenged in her cross-examination. She contended that it should be accepted. While I have doubts about the reliability of her evidence given before me, this characterisation of Mrs Maroon is one I have no difficulty accepting. She had signed mortgages on a number of occasions which did not directly benefit her, and it fits with her delegation of management of her affairs to her various children. She and Michael, Christopher and Allan were all living together at the Parramatta property as at March 2018 (as demonstrated by the addresses given on the verification of identity certificates).

186    In order for conduct to be designated as unconscionable, the stronger party (here, Allan and Christopher) had to have actual knowledge of the factors relating to their mother’s special disadvantage. I find that they could not have failed to have known of her age, lack of commercial experience and lack of English, and her willingness to assist them by signing large, commercially unviable mortgages. The relationship of reliance by Mrs Maroon on her three sons, Allan, Christopher and Michael, means that she was in a relationship of trust and confidence with them.

187    The combination of these factors leads me to accept that Mrs Maroon was in a position of special disadvantage as it related to her sons Allan and Christopher, and that they had sufficient appreciation of her vulnerability (cf Stubbings at [46]). While I do not accept the evidence that she was upset, anxious and crying while signing one or other of the Facility Agreements, or that she communicated her unhappiness to her sons prompting the email from Mr Khan to Mr Hustler, I find that she was not in a position to exercise her own free will when it came to signing the Facility Agreements.

Did Aquamore have knowledge of the relationship of trust and confidence, or special disadvantage?

188    In order to establish her claims in undue influence, Mrs Maroon needs to show that Aquamore had at least constructive notice of the matters giving rise to the remedy. A finding against Aquamore in unconscionable conduct may require actual notice, or at least the matters must have been “sufficiently evident” to Aquamore to make its acceptance of Mrs Maroon’s guarantees unconscionable.

189    In his submissions, Mr Moujalli relied on the following contentions of fact to establish that the special disadvantage was known to Aquamore:

(a)    Aquamore knew, when providing finance to Waterview, that:

(i)    the same firm that was acting for Waterview provided certifications as to legal advice for each of the guarantors, including Mrs Maroon, and in fact the same solicitor in that firm provided certifications for both Mrs Maroon and Waterview in relation to the second Facility Agreement;

(ii)    the Parramatta property was a residential property and was Mrs Maroon’s home (which Aquamore would have known when it received the identification documents provided when signing the first Facility Agreement);

(iii)    Mrs Maroon was elderly and the other guarantors were family members (she submitted that this can be inferred from the parties having the same name and address, but in relation to the second Facility Agreement, Aquamore knew that she was their mother);

(iv)    Mrs Maroon was not a director or officer of Waterview;

(v)    Mrs Maroon held only 1 share of the 100 issued shares in Waterview;

(vi)    Waterview had liquidity issues, with receivers appointed, and owned no property; and

(vii)    Allan and Christopher were “not happy about their mother” being required to execute documents (in relation to the second Facility Agreement).

(b)    There were issues with the conditions of the loan approvals required by Aquamore, including the lack of:

(i)    any certification of financial advice to the guarantors;

(ii)    any specification of the name and firm of the lawyer who provided independent legal advice to the guarantors; and

(iii)    evidence of any steps taken by Aquamore to satisfy itself that Mrs Maroon understood how the Facility Agreements, and in particular default interest clauses, operated under the loans to Waterview.

190    Mrs Maroon pointed to the lack of an interpreter being present during the explanations of the Facility Agreements. Michael attended the meeting with Ms Kaur and Mrs Maroon at the signing of the Declaration for the first Facility Agreement, and said that Ms Kaur asked for his ID, and said to him that “your mother needs to sign and I need her ID”. I find – from the lack of any interpretation clause in that Declaration – that no interpreter was present. Michael said that the interview took less than 10 minutes. Michael was not challenged on these factors. There is less information about the second Facility Agreement, but there is no evidence that Mr Khan spoke Arabic, or that he took any significant amount of time to explain the second Facility Agreement, the mortgage, and the guarantee to Mrs Maroon. As stated by Williams J in Bank of NSW v Rogers at 87, “the giving of a guarantee is usually a complicated matter”. This was a complicated set of documents and doubly so for someone who needed her sons to assist her to do such things as to register her car and vote.

191    Neither Mr Khan nor Ms Kaur gave evidence, nor is there any indication of the content of the advice that was given (which would likely have been available to Aquamore by way of a subpoena to Juris; see [71] above). What is clear from the absence of the certification by an interpreter, however, is that no Arabic interpreter was present, and Michael said that Ms Kaur did not speak Arabic, and he did not recall Mr Khan speaking to his mother. I am able to find from all of the evidence that Mrs Maroon did not have the benefit of an explanation that she could understand.

192    From my observations of Mrs Maroon in the witness box, I do not accept that a non-Arabic-speaking solicitor could adequately explain to her the impact and risks of the mortgage over her home, let alone either of the Facility Agreements, including the avaricious interest clauses and the expansive guarantees and indemnities. I have said that the language in the first Facility Agreement was reasonably clear, but having viewed Mrs Maroon giving her oral evidence, and attempting to answer questions asked of her in English, even this relatively clear language would have been beyond her.

193    Without any indication that any of the security documents were interpreted to Mrs Maroon or explained to her in Arabic, I can easily find that any advice given to Mrs Maroon would not have been comprehensible to her. Without any evidence at all as to the content of the advice, it is difficult to say that she was properly advised, and without an interpreter, it is impossible to so find.

194    In relation to the above factors, Aquamore submitted that it became aware of Mrs Maroon’s age only after receiving the Declaration from Juris, including her passport and thus her birthdate. It submitted that age alone is not enough to create suspicion. Nor did it say that the fact that her sons resided with her was an indication of anything suspicious; Aquamore said that the Parramatta property was the registered office and principal place of business of Waterview, so it could not have been on notice from that fact alone. On the face of the documents provided in relation to each Facility Agreement, there was nothing, Aquamore submitted, to indicate that the Facility Agreements were “not entered into by [Mrs Maroon] based on rational consideration or of her own pure volition”.

195    Aquamore submitted that, as the LTDC Pty Ltd loan (of $716,686.45) was repaid by the funds secured by the first Facility Agreement, Mrs Maroon received a “very substantial benefit”. It said that even if Mrs Maroon were found to be vulnerable, then that “very real and substantial benefit” that brought about the retirement of the receivers must be taken into account. It is not the case, it was submitted, that by entering into the mortgages and Facility Agreements she “put at risk the family home”, because it was always at risk, because of the Westpac mortgage and LTDC Pty Ltd caveat on title.

196    While that may be so, there is no evidence that Mrs Maroon knew of the extent of the mortgages nor of the defaults, nor of the appointment of the receivers as Christopher said that he did not keep his mother informed. The debt, prior to the first Facility Agreement, was less than the value of the Parramatta property. The Aquamore funds secured over the Parramatta property in 2018 did not relieve the property of the first mortgage to Westpac, nor of the security granted to Michael and Melissa through MARCORP01 over the property; rather, the Facility Agreements added a further $4 million or so to the funds secured over Mrs Maroon’s home. I do not regard the first Facility Agreement as providing Mrs Maroon with a benefit, rather the converse.

197    The second Facility Agreement was accompanied by similar, if not identical, security documents to the first, apart from the shorter term and the larger loan. Aquamore submitted that the concern expressed by Mr Khan to Mr Hustler on 28 March 2018 appeared to have abated as the Declaration as to her independent legal advice and as to her voluntary signature of the documents was delivered by Mr Khan’s firm the following day.

198    Aquamore contended that its insistence on independent legal advice prior to the signature of the guarantee and mortgage absolved it of any concerns it may have had, despite its knowledge of any factors going to Mrs Maroon’s relationship of confidence and trust with her three sons. There was no explanation of the words in bold which appeared next to the requirements for Mrs Maroon’s independent legal advice, which did not appear in relation to the requirements for her sons (see [62] above where this inclusion is dealt with). I infer that the inclusion of the bolded note next to Mrs Maroon’s name, but not in relation to her sons, was a recognition by Aquamore that Mrs Maroon was in a different category from them. I am not able to take that inference any further as there was no cross-examination about that inclusion.

199    Aquamore submitted that Mrs Maroon’s will, signed on 1 June 2017, less than a year before the Facility Agreements, was made before Mr Khan and Ms Kaur, which demonstrated that Mrs Maroon would get independent legal advice – independent at least from Aquamore. I am not able to find that the mere drafting (Mr Khan) or witnessing (Mr Khan and Ms Kaur) of a will should give rise to that expression of confidence, nor was that information available to Aquamore at the time the Facility Agreements were signed.

200    Aquamore relied on the fact that neither Mr Khan nor Ms Kaur were called as witnesses to the present proceedings. It said that their absence leads to a Jones v Dunkel [1959] HCA 8; 101 CLR 29 inference that their evidence – which would include the content of the advice given, if any, on how the interest clauses operated – could not assist Mrs Maroon’s case. Mrs Maroon has the onus to make out her case, and Aquamore submitted that the onus had not shifted to it to establish that Mrs Maroon was “free from any undue influence”. Without going into the question of who could have called Mr Khan or Ms Kaur – and my view is that Aquamore equally would have wished to call them to show that they could rely on the statutory declarations by reference to the solicitors’ respective recollections, notes, or the required Acknowledgement of Legal Advice – the absence of the solicitors in this case does not assist Mrs Maroon. Mr Khan and Ms Kaur may not have been “in her camp” as, despite being her solicitors, they were also defendants to the Maroon Supreme Court proceedings. Their absence is, to that extent, only partly explained. Mrs Maroon has the onus to show that the bankruptcy ought to be annulled, and their absence does not assist her case.

201    Aquamore took the position that the advice needed to be independent of it, and considered that the provision of advice by a lawyer Aquamore did not engage was sufficient, and would allow them to rely upon that solicitor’s professional judgment. Mr Koch referred to McIvor v Westpac Banking Corporation [2012] QSC 404 at [96] where Applegarth J said:

It is not the law that independent legal advice can only be given by a person with no connection to the borrower. The fact that the solicitor may have acted in the past for the borrower, or has some connection with the borrower, does not mean that the bank is not entitled to assume that the solicitor is telling the truth in a certificate, particularly where it is well-known that to fail to tell the truth on a material matter would be an act of professional misconduct imperilling the solicitor’s professional future.

202    Mrs Maroon’s position was that the advice needed to be independent, not of Aquamore, but of Waterview. I agree with the position of Mrs Maroon. I note that Applegarth J said as much in McIvor v Westpac Banking Corporation in the following paragraph (at [97]) where his Honour noted that that case was not one where “any of the solicitors who gave a certificate were acting for the borrower”. Mrs Maroon’s advice needed to be independent, in particular, of Waterview, but also of Christopher, and Allan. Powell v Powell [1900] 1 Ch 243 (Farwell J) at 246 establishes that the advice must be independent of the disponee which in this case would be the borrowers, (see [15-145] of Meagher Gummow & Lehane; Equity: Doctrines and Remedies (5th edition) Lexis Nexis Butterworths). In circumstances where Mrs Maroon was a guarantor of Allan and Christopher’s, and Waterview’s debts, any advice which was provided by a solicitor acting for them was not independent advice for her.

203    In Garcia v National Australia Bank Ltd [1998] HCA 48; 194 CLR 395, the High Court said (at [33], per Gaudron, McHugh, Gummow and Hayne JJ) that unconscionability:

… depends upon the surety being a volunteer and mistaken about the purport and effect of the transaction, and the creditor being taken to have appreciated that because of the trust and confidence between surety and debtor the surety may well receive from the debtor no sufficient explanation of the transaction's purport and effect. To enforce the transaction against a mistaken volunteer when the creditor, the party that seeks to take the benefit of the transaction, has not itself explained the transaction, and does not know that a third party has done so, would be unconscionable.

204    Each party put its submissions at a very high level. Aquamore said that it was entitled to rely on the statutory declarations as legal advice given by a lawyer independent of it. Mr Moujalli submitted that “the process of attending at [Juris’] offices appears to have been no more than a ritualised farce”.

205    Mrs Maroon’s special disadvantage must have been known to Aquamore, either from a series of inferences from the various factors known to Mr Hsu (at [60], [78] and [189] above) or at the very latest, from the email from Allan and Christopher pointing out that their “mother and brother” were not beneficiaries of the loan (see [84] above). The short time between that email expressing concern, and the provision of signed documents including the Declaration signed by the very same solicitor who witnessed Allan’s and Christopher’s statutory declarations and who acted for Waterview, must have indicated to a person who was not looking the other way that Mrs Maroon was in a relationship of trust and confidence, ripe for the exploitation.

206    I find that Aquamore was aware of that relationship, for some time prior to – but definitely just before – accepting the second Facility Agreement tranche of documents. In the context of the personal factors known to it, Aquamore knew that:

(a)    the advice given by Ms Kaur in relation to the first Facility Agreement and mortgage was not given by way of an interpreter and was not independent of the advice given by Mr Khan to Allan and Christopher, who were the directors and officers of Waterview;

(b)    the advice given by Mr Khan to Mrs Maroon in relation to the second Facility Agreement was not given by way of an interpreter and was even less independent, as he personally gave advice to Michael, Allan and Christopher; and

(c)    Mrs Maroon was in a different category from Allan, Christopher and Michael as she was their mother, elderly, and was encumbering her family home.

207    I accept Mrs Maroon’s submissions that the improvidence of the transaction must have been obvious to Aquamore. For one, Waterview had no assets; the Point Frederick properties were owned by Allan and Christopher. She was a co-owner of the Parramatta property, and the Westpac mortgage was sitting at around $1,175,000 and the LTDC Pty Ltd debt at around $717,000. The Parramatta property was worth only around $1,500,000 at that point. The Point Frederick properties were encumbered. There is no evidence at all that Mrs Maroon received any advice as to the financial risks of guaranteeing the Facility Agreements and entering into the mortgages. If the solicitors had provided the advice on the Facility Agreements as required by the Acknowledgement of Legal Advice, she would not have received financial advice from them in any event. Despite Aquamore requiring financial advice, Mr Hsu accepted that “Aquamore did not receive anything from the Maroons or from their lawyer to indicate that Mrs Maroon had received financial advice” in relation to each of the loans.

208    As to unconscionable conduct: while the law may be in “a state of development” (see Wakim v Senworth Capital Pty Ltd [2024] NSWCA 102 at [63] per Griffiths AJA), including as to the quality of the required knowledge of special disadvantage, where a lender has access to the kind of knowledge that would put the lender on notice that the relationship was such that impropriety might occur, and is not able to rely on any proper explanation, then it could be found to have sufficient notice (see Equity: Doctrines and Remedies at [15.155]; see also the review of the various authorities in Wakim v Senworth Capital from [50]-[68]).

209    I return here to Deane J in Louth at 637 where his Honour said that the question is whether the special disadvantage is:

… sufficiently evident to the other party to make it prima facie unfair or “unconscionable” that that other party procure, accept or retain the benefit of, the disadvantaged party’s assent to the impugned transaction in the circumstances in which he or she procured or accepted it.

210    Here, I am able to find that the conduct of Aquamore in accepting Mrs Maroon’s guarantee and indemnity of the Facility Agreements and the mortgage over the Parramatta property, in the circumstances outlined above, was a failure to act on the circumstances known to it relating to Mrs Maroon’s vulnerability. The lender must have known of the significant potential of the loans spiralling out of control quickly in the event of a default, so, as Starke J put it in Bank of NSW v Rogers, Mrs Maroon would be “engulfed in [their] ruin.”

211    I find that Aquamore was on notice of Mrs Maroon’s special disadvantage, in that it was “sufficiently evident” on the information known to it and through Mr Hsu and Mr Hustler. Aquamore knew that Mrs Maroon was in a different category from her sons, that she was in a relationship of trust and confidence with them, that the legal advice was not independent of her sons or Waterview, and that there were elements of Amadio disadvantage in her age and the improvidence of the transaction.

Was the Court “bound” not to make the sequestration order in all the circumstances?

212    The test is whether the Court would have been “bound” not to make the order and that “none of the circumstances could justify the making of an order” (Re Frank at [403]). Stewart J’s assessment of her case was that it was “weak”. This is of course understandable given that no affidavits, or written submissions, were before Stewart J on behalf of Mrs Maroon, notwithstanding that she was represented until shortly before the timetable for her submissions expired.

213    Had the material set out above been raised before his Honour, in accordance with the orders as to evidence and submissions, by competent counsel, and properly argued, as it was before me, the sequestration order may not have been made. An important factor which weighs heavily in this finding is that the documents were never explained to Mrs Maroon in Arabic, which virtually guaranteed that she would not understand them. In a case where the interest provisions on default are so wide-ranging, and where the guarantees and indemnities so broad, it is not enough to say that she knew what a mortgage was. The Facility Agreements were of an entirely different flavour. It is also well arguable that Mrs Maroon did not consent to the consent judgment, or instruct Mr Khan to appear for her. Taking into account the warning signals that must have been recognised by Aquamore, and the important factor that Mrs Maroon did not consent to the consent judgment, I am inclined to the view that the Court may not have made the sequestration order.

214    I am not able to find that the Court would have been bound not to make the order because of the difficulties with her recollections and those of Christopher, possible credit difficulties arising with Michael’s evidence, the fact of (despite my concerns with) the independent certification of her obtaining legal advice, and the inconsistency of her failing to follow through with multiple opportunities to put her case before the various courts prior to the hearing before Stewart J.

215    A finding that the Court may not have made the sequestration order is somewhat below the required level of satisfaction that the sequestration order “ought not” to have been made. That is sufficient to dispose of Mrs Maroon’s case before me on the annulment proceedings. If I am wrong in this, and so as to give proper attention to the arguments as to the discretionary factors, I will now deal with whether the Court should, in any event, go behind the judgment to determine the validity of the debt in the first place.

Discretionary factors to be considered

216    Any finding as to undue influence and unconscionability, or the quality of her consent to the consent judgment, is not the only matter which I (or the Court which determined the sequestration proceedings) must consider. However, as Downes J said in Thompson at [148]:

Consistently with the observations of the Full Court in Shaw at [13], this appeal is not an occasion for the appellant to re-agitate arguments that were rejected in other proceedings in which she has been unsuccessful against the body corporate, so as to have this Court determine the issues afresh in her favour.

217    Mrs Maroon has had many chances to raise the issues upon which she relies in support of her annulment proceedings. I will deal with the discretionary factors as if I had found that the Court was bound not to make the sequestration order.

Transparency in the annulment proceedings, and solvency

218    The Court may decline to make an annulment order even if satisfied that the sequestration order ought not to have been made, “at least in some circumstances”; see Boles v Official Trustee in Bankruptcy [2001] FCA 639; 183 ALR 239 at [16] per Emmett J (Katz and Conti JJ agreeing). In Boles, the bankrupt left Australia some eight days after judgment was entered against him (at [32]) with the intent to defeat or delay his creditors (at [35]). He was entirely unhelpful in both the administration of his estate (by denying he was bankrupt), and remaining outside of Australia and giving “no information about how he had managed to live in the United States for in excess of eight years without funds” (at [39]).

219    Mrs Maroon has not been so derelict in her duties as was Mr Boles. She has, it seems, co-operated with the trustee (although not in giving up possession of the Parramatta property) and has not sought to escape the jurisdiction. The trustee pointed to other matters which it said go against the exercise of the discretion; that Mrs Maroon is insolvent, that she has not frankly declared her financial circumstances, and that her submission that the trustee’s legal costs, and that Ms Moscardo’s (as yet to be discounted) claim could be satisfied from the settlement with Mr Khan and Juris is not a tenable outcome.

220    Mrs Maroon has not been as transparent as she might have been in declaring her financial position, but that, in all the circumstances, is the least of her problems. I have said above that she is insolvent and would most likely still be insolvent were the consent judgment set aside (as that would not resolve the Westpac debt, the Aquamore costs judgment, the Iron Custodian debt, or the claim for legal fees). Mr Wengel has a right to be paid which would not go away on any annulment of her bankruptcy.

Mrs Maroon’s absence from the sequestration proceedings

221    The question of her absence from the sequestration proceedings is relevant to whether the Court should exercise its discretion to go behind the consent judgment.

222    Mrs Maroon relied on the principles set out by Gordon J in Yarranova Pty Ltd v Shaw (No 2) [2014] FCA 616 at [69], where her Honour (then of this Court) said that an appropriate case to go behind a judgment to see if a debt were in truth and reality due is one where “a judgment debt that has been obtained by fraud or collusion or where there has been some miscarriage of justice” (see Corney v Brien [1951] HCA 31; 84 CLR 343 at 347-348). In particular, Mrs Maroon distinguished her case from that in point 3 of [69] of Yarranova which says:

If the judgment in question followed a full investigation at a trial on which both parties appeared, the court will not reopen the matter unless a prima facie case of fraud or collusion or miscarriage of justice is made out: Corney at 356,

and relied on both her absence at the hearing, and on the “miscarriage of justice” ground.

223    The circumstances in which a court of bankruptcy may go behind a judgment are not limited to the grounds enumerated in the above extract from Gordon J in Yarranova (at [69]); see also Corney; and Ramsay Health Care. At [57] of Ramsay Health Care, Kiefel CJ, Keane and Nettle JJ said that “the protean character of the concept ‘miscarriage of justice’ suggests that it is not limited to cases where the judgment is so tainted that it may be set aside”.

224    Aquamore submitted that the sequestration order was made by Stewart J at “the listing of a contested hearing in respect of which both parties exchanged evidence”. To support the submission that that was enough, Mr Koch relied on the statement of Hill J in Hudson v Whalan [1998] FCA 1064 that it would be “invidious to ask one single judge to effectively double-guess another single judge in this way”. That case involved a sequestration order being made after full argument by a legally represented debtor, with no underlying question of a judgment being obtained by fraud. Here, of course, Mrs Maroon was not represented at the hearing (although she had been until recently prior to the hearing), and did not appear.

225    In Shaw v Yarranova Pty Ltd [2017] FCAFC 88; 252 FCR 267 at [22], the Full Court (North, Perry and Charlesworth JJ) referred to a “significant hurdle” being faced by the bankrupt when “the judge hearing the creditor’s petition determined not to go behind the judgment and that determination has been unsuccessfully challenged on an appeal”.

226    Aquamore submitted that, prior to commencing these proceedings, Mrs Maroon had three other opportunities, in separate proceedings, to make the argument that there was, in truth and reality, no debt to Aquamore. These were:

(a)    the Maroon Supreme Court proceedings, where she sought to set aside the consent judgment and the Facility Agreements on the basis of unconscionability and a Contracts Review Act claim. (It will be recalled she was given leave to re-open the Aquamore Supreme Court proceedings in order to raise a lack of knowledge and failure to instruct Juris to act for her, but did not do so);

(b)    the bankruptcy proceedings;

(c)    the sequestration proceedings; and

(d)    the appeal from Stewart J’s order sequestrating her estate.

227    Aquamore submitted that Mrs Maroon’s failure to prosecute the Maroon Supreme Court proceedings (noting that the trustee was the party who settled that part of the proceedings relating to Aquamore and Mrs Maroon by entering into a Deed on the basis that her estate cannot bring fresh proceedings against Aquamore), her failure to appear on the sequestration proceedings, and her failure to prosecute the appeal means that the principles in Shaw at [22] apply. Mrs Maroon contended that her failure to appear takes her outside Gordon J’s limitation in Yarranova at [69(3)]. I agree with Mrs Maroon that the sequestration proceedings were not “a full investigation at trial”, because of her failure to appear, but also with Aquamore that the bringing of, and failing to appear at the appeal, is a “significant hurdle” in having her arguments revisited now.

228    As said by French J in Rigg v Baker at [71]:

… where a party voluntarily absents himself or herself from a hearing of a petition and does not take any other step to oppose the order sought, there is a significant, if not insuperable, obstacle raised to the proposition that the registrar or a judge hearing the petition was bound not to make a sequestration order.

229    I take into consideration the significance of the obstacle referred to by French J, which was caused by Mrs Maroon’s failure to attend the hearing. That obstacle is made more impassable by her failure to appear before Logan J, and the subsequent dismissal of the appeal.

230    The authorities are clear that I am able to take into account matters which were not before his Honour in the sequestration proceedings (see Mehajer at [15(3)]).

231    Mrs Maroon’s position, had it been pleaded and argued in the Aquamore Supreme Court proceedings as a defence and cross-claim, may have resulted in the Supreme Court determining that there was a case of undue influence which could be cast by way of Aquamore having constructive or actual notice of the relationship of trust and confidence between Mrs Maroon and her sons, or that her position of special disadvantage was “sufficiently evident” to Aquamore, so that the onus then shifted to Aquamore to demonstrate that she in fact gave her consent freely and understood the transaction (as a defence to undue influence) and that the transaction was fair, and that no advantage had been taken of her (as a defence to unconscionability). Given that the Facility Agreements were not the subject of independent legal advice, or the subject of any legal advice in Arabic, Aquamore may not have been able to meet that onus.

232    Alternatively, if Mrs Maroon did not consent to the consent judgment because – as Christopher said – she had not been told about the proceedings and no solicitor, in truth, had instructions from her to consent, Aquamore again may not have been able to hold the consent judgment in the Maroon Supreme Court proceedings.

233    Each of these grounds may have been, if brought before Stewart J in the sequestration proceedings, a ground not to make the orders.

234    The fact is that Mrs Maroon chose not to appear at the final hearing of the sequestration proceedings in January 2024. One can infer – both from the Notice of Ceasing to Act and the fact that Ms Moscardo has a lien over the fruits of the action for her unpaid costs – that Mrs Maroon failed to pay her legal representatives. The matter had been listed for some time, and presumably at a time then convenient to her. Justice Stewart found that Mr Eardley and Ms Moscardo would have discussed the hearing date with her, prior to their representation ceasing. At the very least, Melissa, who was assisting Mrs Maroon at the time, was on notice of the fact that Stewart J required an application and evidence on which to base any adjournment application. Even though no such application was filed, his Honour determined the matter as if one had been, taking into account Mrs Maroon’s letter to the Court.

235    This is not an appeal against Stewart J’s orders which were, on the circumstances before him, the inevitable outcome. The absence of Mrs Maroon on that occasion meant that his Honour acted in the only way open to him. Her absence is a significant obstacle to the exercise of my discretion.

A miscarriage of justice?

236    Mrs Maroon characterises her lack of knowledge of the Aquamore Supreme Court proceedings as a miscarriage of justice in the sense used by Gordon J in Yarranova at point 2 of [69]. She said that she did not consent to the judgment either herself or through Mr Khan.

237    However, in the Maroon Supreme Court proceedings, by the 4FASOC, she had sought orders setting aside the mortgages and the Facility Agreements, and pleaded that the “Consent Orders [of 1 November 2018] were procured in bad faith and / or irregularly”. A previous iteration of the Statement of Claim had pleaded that she had not been served with the Statement of Claim in the Aquamore Supreme Court proceedings, she was not aware of the proceedings, did not retain Juris on her behalf, and no solicitors had instructions to consent to the consent judgment. In the later version of the Statement of Claim, she raised – albeit in a Contracts Review Act context – the very factors upon which she contends the undue influence and unconscionability causes of action arise in these proceedings. I consider that the prior raising on multiple occasions of the very issues sought to be taken to the Supreme Court if the bankruptcy were annulled tends against the exercise of my discretion to annul.

238    As explained above, she was granted leave by Parker J to re-open the Aquamore Supreme Court proceedings to plead that she had not been served with the Statement of Claim in those proceedings and that she did not instruct Mr Khan to consent to the judgment. Mrs Maroon’s affidavit of 20 February 2022 (in the Maroon Supreme Court proceedings) was not before me, so it is not possible to say exactly what the leave to re-plead entailed.

239    There is a suggestion in the evidence – albeit but a whispered one – that the Aquamore Supreme Court proceedings were not re-opened because of a forensic decision to concentrate on the settlement of the proceedings against Juris in the Maroon Supreme Court proceedings (see paragraph 80 of the affidavit of Mr Seelenmeyer of 28 August 2025, noting that Mr Eardley’s comments were not read). The fact, however, that Mrs Maroon was represented during the period of the leave to re-open the Aquamore Supreme Court proceedings, and did not do so, is a more powerful argument against allowing her to revisit that very issue now, after the Maroon Supreme Court proceedings were settled and no efforts then made to have the consent judgment set aside.

Prior pleading of the lack of independent advice and of special disadvantage

240    The 5FASOC pleaded (noting again that Mrs Maroon was the fourth plaintiff, and Aquamore the first defendant):

Fourth Plaintiff

92.115 Paragraphs [90 92 71] to [112 110 91] are repeated and relied on as if set out in full.

93.116 At all relevant times in relation to the Facility Agreement, the First Mortgage, the Second Facility Agreement and the Third Mortgage, the fourth plaintiff was suffering from a special disadvantage because of:

a) Her age;

b) Her limited understanding of written and spoken English and that an Arabic translator was required to explain documents to her;

c) That she was a widow;

d) That she relied on professional advisors and that the first defendant failed to ensure that she received independent legal advice; and

e) Her principal place of residence was at risk of loss (Special Disadvantage/ Disability).

94. 117 The first defendant knew, or ought reasonably have known, of the Special Disadvantage and in procuring the Facility Agreement, the First Mortgage, the Second Facility Agreement, and the Third Mortgage the first defendant exploited the Special Disadvantage in a manner to benefit itself and without regard to the effect that such conduct would have on the fourth plaintiff.

95. 118 The Facility Agreement, the First Mortgage, Second Facility Agreement and the Third Mortgage ought be set aside.

241    This part of the proceeding was dismissed by the Court. Mr Wengel, acting as trustee of (inter alia) Mrs Maroon’s bankrupt estate, agreed to a Deed which precluded her from seeking the same relief in fresh proceedings against Aquamore.

242    In the Deed, “Claim” is defined as:

… any present or future claim including any action, suit, cause of action or demand, complaint, loss, liability, damage, proceeding, order, judgment, costs or expense, whether known or unknown to a Party as at the date of this Deed …

243    “Proceedings” were defined as the Maroon Supreme Court proceedings.

244    Clause 7.1 of the Deed provides:

Without admission and subject to clause 7.5, the Trustee (on his own behalf and on behalf of the bankrupt estates of the Plaintiffs) releases and forever discharges Aquamore, Mr Khan, Baltej Kaur, Juris and all Juris Personnel from all Claims which he may have or may have had but for this Deed against them in respect of or arising out of (directly or indirectly):

(a)     all allegations in the Proceedings;

(b)    the facts and circumstances giving rise to the Proceedings;

(c)     anything referred to in the pleadings or evidence filed or served in the Proceedings, including all earlier versions of the statement of claim that the Plaintiffs have filed in the Proceedings; or

(d)     any loss giving rise to or resulting from the Proceedings.

245    Clause 7.5 relates to the time of the release in 7.1 coming into force, which condition has been fulfilled (the payment of the moneys from Mr Khan and Juris to the trustee).

246    Section 154(1)(a) of the Bankruptcy Act provides that “all acts done, by the trustee … before the annulment are taken to have been validly made or done …”. This section would preserve the Deed entered into by the trustee on behalf of the bankrupt estate of Mrs Maroon. Each of Aquamore, Mr Khan, Ms Kaur, and Juris have been released and have since presumably managed their affairs on the basis of that release. The claims released were, of course, the matters pleaded in the various iterations of the Statements of Claim which included allegations of special disadvantage and undue influence, and sought that the mortgages and Facility Agreements be set aside. There is a good argument – as Aquamore contended – that Mrs Maroon is estopped by the Deed from commencing proceedings against Aquamore seeking the relief which she foreshadows. Untangling that Deed, under which the solicitors paid a substantial amount to the trustee, would be a significant undertaking. Additionally, there would be prejudice to Aquamore (as well as to Juris) in having that Deed set aside; Aquamore was, in 2023, considering bringing cross-claims against Juris and Mr Khan were Mrs Maroon to be successful. It did not do so because of the settlement of the proceedings.

247    Even if Mrs Maroon were to seek to have the Deed set aside, which was not a matter that was fully argued before me, Aquamore would be likely to resist this and to raise prejudice as a defence to her claim, engulfing the parties in yet further significant litigation.

Delay in bringing proceedings

248    Mrs Maroon has not acted swiftly in this sad tale. As can be seen from the section of these reasons tracing the odyssey through the various court proceedings, Mrs Maroon has tended to delay and react only when things become urgent. For example, there is a delay of some 17 months between Stewart J’s sequestration order, and the making of her application in the annulment proceedings, but also her failure to engage with or appear in other court processes (including the sequestration proceedings and the appeal from the sequestration order, which was dismissed for want of prosecution). Aquamore relied on the fact that the Deed in the proceedings against Juris, Mr Khan and Ms Kaur, which resulted in a payment by Juris and Mr Khan of $700,000 without admission, gives rise to a prejudice. Aquamore’s claim against the lawyers for breach of warranty of authority was settled and dismissed on the payment of the settlement sum to the trustee. The Deed prevents Aquamore from bringing any claims against the lawyers. Mrs Maroon’s assertion that “no prejudice” has been suffered by Aquamore is, Aquamore submitted, incorrect. I agree. The Deed was entered into over a year after Mrs Maroon’s estate was sequestrated. It may be inferred that the parties entered into the Deed in reliance on that fact, which is the subject of recital J in the Deed.

Inconsistent statements in prior proceedings

249    I noted above (at [142]) Mr Eardley’s statement in the sequestration proceedings against Allan, Christopher and Michael (at which time he was also briefed for Mrs Maroon by the same solicitor, Ms Moscardo) that no wrongdoing was alleged against Aquamore in entering into the Facility Agreements on the strength of inter alia the statutory declarations. Additionally, Mrs Maroon’s pleadings in other matters have not always been consistent with the case now put. I point, in particular, to the failure to raise in the Aquamore Supreme Court proceedings, when re-opened by Parker J, the claims that the Statement of Claim in those proceedings had not been served on her, and that she had not retained Juris nor instructed Mr Khan. Mrs Maroon now seeks to raise those arguments in further proceedings in the Supreme Court as a basis for having the consent judgment set aside. It appears very much that she has had that opportunity, and did not take it.

The ultimate futility of annulling the bankruptcy

250    Finally, the question of what effect annulling the bankruptcy would have must be considered. Mrs Maroon seeks to set aside the consent judgment on the basis that she was not served the Statement of Claim and did not instruct Mr Khan in the Aquamore Supreme Court proceedings. There is evidence of service in those proceedings, and while Christopher said Mr Khan did not have contact with Mrs Maroon, in any event he must have felt he had sufficient instructions to enter an appearance for her (as he had sufficient instructions to say to Aquamore that Mrs Maroon had received independent legal advice). It may have been that Christopher had some authority from his mother to act as her agent (even if she does not now recollect and he does not now put that before the Court). But the fact remains that, on its face, the consent judgment was routinely entered. Mrs Maroon would need to satisfy the Supreme Court that no consent or instructions were given by her. That is something she had the opportunity to re-open the Aquamore Supreme Court proceedings to do, and which she did not take.

251    Additionally, there is an issue that, even if Mrs Maroon were successful in annulling the bankruptcy and setting aside the consent judgment, she still faces the prospect of the sale of the Parramatta property by Westpac. She is a joint tenant. I have found above that Michael is a beneficial owner of the Parramatta property and it has not been established that he holds his interest on trust for her. As I noted above, that was not an issue which was fully argued in these proceedings, and so another Court may view the facts and presumptions differently. However, Michael is a bankrupt, and Westpac and Aquamore each have orders for possession against him. Mrs Maroon has not sought, in any of the proceedings, declarations as to her interest in the Parramatta property. Accordingly, even were she to be successful in setting aside the Facility Agreements and mortgages in relation to her own liabilities, the Parramatta property is still encumbered both by the secured mortgage in favour of Westpac, and the second unregistered mortgage secured by caveat in favour of Aquamore as they relate to Michael. No challenge whatsoever has been raised in relation to the Westpac mortgage – indeed, in these proceedings, Mr Moujalli recognised, as noted above, that Westpac’s interests as a first-ranking mortgagee are protected.

252    The likely outcome would be that, were it clear that a sale of the property were to be further delayed, Westpac may make an application under s 66G of the Conveyancing Act 1919 (NSW) and sell the property (if Westpac had not already done so) so as to obtain some small satisfaction of its debt owed by Michael (as co-owner of the Parramatta property) to it.

253    Mrs Maroon’s intent, as noted at the outset, is to set aside the consent judgment and the guarantee. That course does not include any expressed intention to set aside the costs judgment or the mortgages, or to seek to remove the caveats by other lenders. While those may be seen as side issues, Mrs Maroon must come to this Court with a practical and attainable basis for the Court to exercise its discretion in her favour.

Determination of the exercise of discretion

254    In determining this matter, I take into account the following barriers to an exercise of my discretion in Mrs Maroon’s favour:

(a)    Mrs Maroon’s multiple opportunities, of which she failed to take advantage, to make and continue with the arguments now brought in relation to undue influence and unconscionability in relation to the loans, the lack of independent or intelligible legal advice, and the lack of her consent to the consent judgment;

(b)    her failure to appear on multiple occasions but most significantly on the sequestration proceedings and the appeal from those proceedings;

(c)    her likely insolvency; and

(d)    the Deed entered into by Mr Wengel as trustee of her bankrupt estate which may act as an estoppel against her taking fresh proceedings against Aquamore and which would require significant untangling of a number of parties’ positions now to set aside,

and determine that, were I of the view that the Court ought not to have made the sequestration order, I should not exercise my discretion to set aside the sequestration order in order to allow Mrs Maroon to seek to go behind the judgment debt.

255    I have made observations above as to the futility of Mrs Maroon having an ultimate success should she succeed in annulling her bankruptcy. I observe that it may also be seen as futile for Aquamore to have taken these proceedings given the very slim pickings that will be left for it after the payment to Westpac and for the trustee’s costs, and of other claims in the bankruptcy, but that is not a factor which would incline me to take a different view of Mrs Maroon’s position.

Determination of the annulment proceedings

256    The annulment proceedings will be dismissed with costs, unless any party informs the Court within a week of the delivery of these reasons that there is a basis for any special costs order.

Determination of the possession proceedings

257    The parties are agreed that, should Mrs Maroon not be successful, there is no reason not to make an order for possession of the property. Section 30 of the Bankruptcy Act allows the Court to make orders for vacation of property, issuing a warrant of possession, and for sale of a property.

258    The trustee seeks orders consistent with those made by O’Callaghan J in Ruhe (Trustee) v Australian Securities and Investments Commission [2022] FCA 354.

259    I agree with Mrs Maroon that some time should be allowed for vacating and surrendering possession of the property. I am content – despite the long period she has been in the property following the consent judgment – to give her the three months as sought in her submissions in reply to the trustee’s application to vacate the property. The Parramatta property has been her home for some decades and a number of her family live with her. Moving will not be a simple exercise, and she is elderly and infirm.

260    I make the orders annexed to the trustee’s submissions save for the insertion of “three calendar months” for the words “28 days” wherever they appear. Those orders provide for a costs order in favour of the trustee.

Associate:

Dated:    14 August 2026

SCHEDULE OF PARTIES