Owners Corporation PS 419697V v Iannella

Case [2025] FedCFamC2G 1395

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Owners Corporation PS 419697V v Iannella [2025] FedCFamC2G 1395

File number(s): MLG 1426 of 2025
Judgment of: JUDGE FARY
Date of judgment: 26 August 2025
Catchwords: BANKRUPTCY – review of registrar’s decision – dispute arose between the applicant and the respondent concerning a Final Fee Notice – where applicant does not seek to prosecute creditor’s petition – circumstances where there is evidence that there are no other Creditors of the respondent – creditors petition dismissed – sequestration order set aside.  
Legislation:

Bankruptcy Act 1966 (Cth) s 52.2

Owners Corporations Act 2006 (Victoria) s 32   
Cases cited: Pattison v Hadjimouratis (2006) 155 FCR 226
Division: Division 2 General Federal Law
Number of paragraphs: 11
Date of last submission/s: 22 August 2025
Date of hearing: 26 August 2025
Counsel for the Applicant: Ms Chiang
Solicitor for the Applicant: Ms Xu, James Au and Associates
Solicitor for the Respondent: Mr Haddad, Marshalls+Dent+Wilmoth Lawyers

ORDERS

MLG 1426 of 2025

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

IN THE MATTER OF TERESA INANELLA
BETWEEN:

OWNERS CORPORATION PS 419697V

Applicant
AND:

TERESA INANELLA

Respondent

ORDER MADE BY:

JUDGE FARY

DATE OF ORDER:

26 AUGUST 2025

THE COURT ORDERS THAT:

1.The sequestration order made by Registrar Wilson on 31 July 2025 be set aside.

2.The respondent debtor pay to the applicant creditor its costs of and incidental to the proceedings fixed in the amount of $13,269.74. Payment be stayed for a period of 28 days.

3.That the further hearing of the matter in relation to Order 2 of orders made by me on 22 August 2025 be adjourned to a date to be fixed.

4.The Creditors Petition presented on 7 May be dismissed.

Note: The form of the order is subject to the entry in the Court’s records.

Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 24.04(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2025 (Cth)), or to record a variation to the order pursuant to r 24.04 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2025 (Cth).

EX TEMPORE REASONS FOR JUDGMENT
Revised from transcript

JUDGE FARY:

BACKGROUND

  1. This is an application for review of a sequestration order made by Registrar Wilson on 31 July 2025 (Sequestration Order) against the estate of the respondent, Teresa Iannella (Respondent), who was made a bankrupt on a creditors petition presented and prosecuted by the applicant creditor (Applicant), Owners Corporation PS 419697V.

  2. The Respondent is the applicant for review. 

  3. The nature of the hearing before me is a hearing de novo of the creditor’s petition (Creditor’s Petition). 

    REASONS

  4. These proceedings arise out of a dispute between the Respondent and the Applicant, concerning levies rendered against Unit 3609, 488 Swanston Street, Carlton (Property).

  5. A dispute arose between the Applicant and the Respondent concerning a Final Fee Notice issued on 18 May 2024, pursuant to section 32 of the Owners Corporations Act 2006 (Victoria) (OC Act) demanding a sum of $39,160.31 (Fee).

  6. Section 52(2) of the Bankruptcy Act 1966 (Cth) provides that if the Court is satisfied with proof of the following matters, it may make a sequestration order against the estate of the debtor:

    (a)the matter stated in the petition;

    (b)the service of the petition; and

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

  7. When the matter was called on for hearing today, I was informed that the Applicant did not intend to prosecute the Creditor’s Petition on the basis that payment of most of the debt owing by the respondent debtor has been paid.

  8. According to the affidavit of Teresa Iannella, sworn 19 August 2025, on 10 August 2025, the Applicant made a payment to the Respondent in the sum of $47,454.43 in full satisfaction of the bankruptcy notice dated 28 November 2024. I am informed that that payment was made using funds that were advanced for that purpose by a third party. 

  9. In circumstances where the Applicant does not seek to prosecute the Creditor’s Petition and in circumstances where there is evidence before me that there are no other Creditors of the Respondent, it is appropriate that I dismiss the Creditor’s Petition and set aside the sequestration order. 

  10. I note that this was the course followed in the decision in Pattison v Hadjimouratis[1] at first instance.

  11. Accordingly, I will make orders.

I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Fary.

Associate:

Dated:       26 August 2025


Details
AGLC
Owners Corporation PS 419697V v Iannella [2025] FedCFamC2G 1395
Case
[2025] FedCFamC2G 1395
Decision Date

CaseChat Overview and Summary

In the matter of Owners Corporation PS 419697V v Iannella, the applicant, Owners Corporation PS 419697V, had previously obtained a sequestration order against the respondent, Teresa Iannella. The dispute originated from a disagreement over a Final Fee Notice issued under the Owners Corporations Act 2006 (Victoria), which demanded a payment of $39,160.31. The respondent was declared bankrupt following the creditors' petition, which was prosecuted by the applicant. The matter before the court was an application for review of the sequestration order by the respondent.

The primary legal issue was whether the court should dismiss the creditors' petition and set aside the sequestration order given that the applicant did not intend to prosecute the petition, and there was evidence that no other creditors were present. The court had to consider the implications of the payment made by the applicant to the respondent, using funds from a third party, in full satisfaction of a bankruptcy notice. This payment was made after the sequestration order was issued but before the hearing for review. The court also had to determine if the circumstances warranted setting aside the sequestration order based on the evidence presented.

The court reasoned that, as the applicant did not intend to prosecute the creditors' petition and there was evidence of no other creditors, it was appropriate to dismiss the petition and set aside the sequestration order. The court referenced the case of Pattison v Hadjimouratis, where a similar outcome was reached. The payment made by the applicant, covering the debt in question, further supported the decision to dismiss the petition. The court was satisfied that the conditions for setting aside the sequestration order were met, and thus, it dismissed the creditors' petition and set aside the sequestration order against Teresa Iannella.

The court made orders accordingly to dismiss the creditors' petition and set aside the sequestration order, reflecting the circumstances presented and the evidence provided during the hearing.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

This is an application for review of a sequestration order made by Registrar Wilson on 31 July 2025 (Sequestration Order) against the estate of the respondent, Teresa Iannella (Respondent), who was made a bankrupt on a creditors petition presented and prosecuted by the applicant creditor (Applicant), Owners Corporation PS 419697V. The Respondent is the applicant for review. The nature of the hearing before me is a hearing de novo of the creditor’s petition (Creditor’s Petition). REASONS These proceedings arise out of a dispute between the Respondent and the Applicant, concerning levies rendered against Unit 3609, 488 Swanston Street, Carlton (Property). A dispute arose between the Applicant and the Respondent concerning a Final Fee Notice issued on 18 May 2024, pursuant to section 32 of the Owners Corporations Act 2006 (Victoria) (OC Act) demanding a sum of $39,160.31 (Fee). Section 52(2) of the Bankruptcy Act 1966 (Cth) provides that if the Court is satisfied with proof of the following matters, it may make a sequestration order against the estate of the debtor: (a)the matter stated in the petition;(b)the service of the petition; and(c)the fact that the debt or debts on which the petitioning creditor relies is or are still owing. When the matter was called on for hearing today, I was informed that the Applicant did not intend to prosecute the Creditor’s Petition on the basis that payment of most of the debt owing by the respondent debtor has been paid. According to the affidavit of Teresa Iannella, sworn 19 August 2025, on 10 August 2025, the Applicant made a payment to the Respondent in the sum of $47,454.43 in full satisfaction of the bankruptcy notice dated 28 November 2024. I am informed that that payment was made using funds that were advanced for that purpose by a third party. In circumstances where the Applicant does not seek to prosecute the Creditor’s Petition and in circumstances where there is evidence before me that there are no other Creditors of the Respondent, it is appropriate that I dismiss the Creditor’s Petition and set aside the sequestration order. I note that this was the course followed in the decision in Pattison v Hadjimouratis[1] at first instance.[1] Pattison v Hadjimouratis (2006) 155 FCR 226 Accordingly, I will make orders.