Owners - Strata Plan No 4393 v Roberts, in the matter of Roberts

[2024] FedCFamC2G 1074

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Owners – Strata Plan No 4393 v Roberts, in the matter of Roberts [2024] FedCFamC2G 1074

File number(s):

LNG 23 of 2024

Judgment of:

JUDGE RILEY

Date of judgment:

23 October 2024

Catchwords:

BANKRUPTCY – application to review a sequestration order made by a registrar – alleged act of bankruptcy being failure to comply with a bankruptcy notice – bankruptcy notice claiming debt of less than the statutory minimum – whether bankruptcy notice invalid – whether to go behind the judgments – whether debtor solvent.

Legislation:

Acts Interpretation Act 1901 (Cth) s.15AB;

Bankruptcy Act 1966 (Cth) ss. 40(1)(g), 41(1), 43(1);
Bankruptcy Amendment (Bankruptcy Threshold) Regulations 2020 (Cth);

Bankruptcy Regulations 2021 (Cth) rr.9, 10A;

Explanatory statement to the Bankruptcy Amendment (Bankruptcy Threshold) Regulations 2020 (Cth);

Replacement Explanatory Memorandum to the Bankruptcy Legislation Amendment Bill 2009 (Cth)

Cases cited:

Autron Pty Ltd v Benk (2011) 195 FCR 404; (2011) 280 ALR 417; [2011] FCAFC 93;

Ramsay Health Care Australia Pty Ltd v Compton (2017) 261 CLR 132; (2017) 345 ALR 534; (2017) 91 ALJR 803; (2017) 122 ACSR 115; [2017] HCA 28

Division:

Division 2 General Federal Law

Number of paragraphs:

62

Date of hearing:

30 September 2024

Date of last submissions:

23 October 2024

Place:

Melbourne

Counsel for the applicant:

Amanda Carruthers

Solicitor for the applicant: 

CCA Legal

Advocate for the respondent:

In person

Solicitor for the respondent:

None at hearing, Chen Shan Lawyers from 4 October 2024

Advocate for the trustee:

Emily Everett

Solicitor for the trustee: 

SLF Lawyers

ORDERS

LNG 23 of 2024

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

IN THE MATTER OF MEI LAN ROBERTS, BANKRUPT

BETWEEN:

THE OWNERS - STRATA PLAN NO 4393

Applicant

AND:

MEI LAN ROBERTS

Respondent

ORDER MADE BY:	JUDGE RILEY
DATE OF ORDER:	23 OCTOBER 2024

THE COURT ORDERS THAT:

1.The respondent have leave to adduce the evidence in her affidavit affirmed on 22 October 2024.

2.The application for review of the sequestration order made by Judicial Registrar Edwards on 23 May 2024, filed on 7 June 2024, be dismissed.

3.The sequestration order made by Judicial Registrar Edwards on 23 May 2024 be affirmed.

4.The applicant’s costs of and incidental to the application for review, as agreed or taxed, be paid from the respondent’s bankrupt estate pursuant to the Bankruptcy Act 1966.

5.The trustee’s costs of and incidental to the application for review, as agreed or taxed, be paid from the bankrupt estate pursuant to the Bankruptcy Act 1966.

AND THE COURT NOTES THAT:

A.The court was satisfied today that the respondent is insolvent.

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 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).

REASONS FOR JUDGMENT

JUDGE RILEY:

INTRODUCTION

1. This is an application for review of a sequestration order made by a registrar of this court on 23 May 2024. As such, the court conducted a hearing de novo.

2. The applicant for the application for a sequestration order and the respondent to the application for review is The Owners – Strata Plan No 4393 (“the applicant”). The respondent to the application for a sequestration order and the applicant for review is Mei Lan Roberts (“the respondent”).

3. On 28 March 2024, the applicant filed a consent to act as trustee signed by Brett Richard Geoffrey Harrison, who became the trustee of the respondent’s bankrupt estate. The trustee filed a notice of appearance on 2 August 2024, and participated in the hearing before this court.

4. The applicant and the trustee were both represented by counsel at the hearing of the application for review. The respondent appeared in person at the hearing of the application for review. She had been legally represented when the application for review was filed on 7 June 2024. However, her solicitor withdrew on 11 September 2024. The respondent was not legally represented before the registrar.

   MATERIALS RELIED UPON

5. The applicant relied upon:

   (a)the creditor’s petition filed on 28 March 2023;

   (b)the affidavit affirmed by Renae Barnett on 27 March 2024 verifying paragraphs 1, 2 and 3 of the creditor’s petition;

   (c)the affidavit of service of the bankruptcy notice affirmed by Stephen Ecob on 4 April 2024;

   (d)the affidavit of service of the creditor’s petition affirmed by Elizabeth Elters on 26 April 2024;

   (e)the affidavit sworn or affirmed by Lauren Ikin on 21 May 2024;

   (f)the affidavit of search affirmed by Stephen Ecob on 27 September 2024; and

   (g)the affidavit of debt affirmed by Stephen Ecob on 27 September 2024.

6. The respondent relied upon:

   (a)her application for review of the sequestration order filed on 7 June 2024;

   (b)her affidavit sworn on 14 May 2024;

   (c)the notice to creditors of her application for review of the registrar’s decision to make a sequestration order, filed on 6 August 2024; and

   (d)various affidavits of service of the notice to creditors.

7. The trustee relied upon:

   (a)his affidavit sworn on 31 July 2024;

   (b)his affidavit sworn on 1 August 2024; and

   (c)his affidavit sworn on 27 September 2024.

8. Significantly, the respondent did not file a notice of opposition to the sequestration order, either in the proceedings before the registrar, or in the proceedings on review, despite the registrar making an order on 2 May 2024 regarding the respondent filing a notice of opposition and despite me making an order on 5 August 2024 requiring her to file such a notice.

   THE BANKRUPTCY NOTICE

9. The creditor’s petition alleged that the act of bankruptcy consisted of the respondent’s failure to comply with a bankruptcy notice. Subsection 41(1) of the Bankruptcy Act 1966 (“the Act”) provides that:

   An Official Receiver may issue a bankruptcy notice on the application of a creditor who has obtained against a debtor:

   (a)      a final judgment or final order that:

   (i) is of the kind described in paragraph 40(1)(g); and

   (ii)       is for an amount of at least the statutory minimum; or

   (b)       2 or more final judgments or final orders that:

   (i) are of the kind described in paragraph 40(1)(g); and

   (ii)       taken together are for an amount of at least the statutory minimum.

10. Paragraph 40(1)(g) of the Act provides that:

    (1)A debtor commits an act of bankruptcy in each of the following cases:

    …

    (g) if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor … a bankruptcy notice under this Act and the debtor does not:

    (i)       … within the time fixed for compliance with the notice; …

    …

    comply with the requirements of the notice or satisfy the Court that he or she has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter-claim, set-off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained …

11. The Official Receiver issued a bankruptcy notice to the respondent on 27 February 2024. It said that the applicant:

    claim/s that you owe the following debt

1.   Amount as per the accompanying final judgment/s or final order/s (note A)	$14,849.45
2.   Add legal costs (note B)	$0.00
3.   Add interest accrued since date of judgment/s or order/s (note C)	$0.00
4.   Sub total (1+ 2 + 3)	$14,849.45
5.   Less payments made and/or credit allowed since judgment/s or order/s	$5,974.89
6.    TOTAL DEBT AMOUNT (4 + 5)	$8, 874.56

1. The statutory minimum referred to in s.41(1)(a)(ii) and (b)(ii) of the Act was $10,000: reg.10A of the Bankruptcy Regulations 2021, which came into effect on 1 January 2021.

2. The judgments which accompanied the bankruptcy notice were:

   (a)a judgment of the Local Court of New South Wales, Small Claims Division, with case number 2022/00366572 made on 14 August 2023 for $6,381.45, inclusive of costs; and

   (b)a judgment of the Local Court of New South Wales with case number 2024/00061064 made on 16 February 2024 for $8,468.

3. Those two judgments, taken together, were for $14,849.45. That figure exceeded the statutory minimum of $10,000. However, as stated by Ms Ikin at paragraph 2 of her affidavit, before the bankruptcy notice was issued, the respondent had paid $5,974.89 in reduction of the judgment for $6,381.45, leaving an amount outstanding for that judgment of $406.56. That amount, together with the $8,468 owing under the judgment made on 16 February 2024, totalled $8,874.56. That was the amount claimed in the bankruptcy notice, which was less than the statutory minimum.

4. In Autron Pty Ltd v Benk (2011) 195 FCR 404; (2011) 280 ALR 417; [2011] FCAFC 93, the Full Court of the Federal Court addressed the effect on a bankruptcy notice of payments made after judgment which reduced the outstanding amount to below the statutory minimum, which at that time was $2,000. The Full Court said at paragraph 37 that:

   In the course of submissions counsel appearing as amicus curiae sought to argue that s 41(1) should not be construed literally, but given a meaning or operation that would accommodate payments made by the debtor or credits allowed by the creditor. Counsel submitted that “it is unlikely that Parliament intended that a creditor may issue a bankruptcy notice in respect of a judgment debt of $2,000 in circumstances where it had been paid $1,999”. However, to so construe s 41(1) would be to radically alter the words chosen by the legislature. Expressed in its simplest terms, the legislature has chosen to condition the issue of a bankruptcy notice on the amount of the “final judgment” or “final order”, not on the amount of the total debt (after allowing for payments and credits) for which the creditor seeks to have the notice issued. No doubt, as a matter of policy, the legislature could have chosen to adopt the latter course. The plain words of s 41(1) show that that was not its intention.

5. However, that issue did not actually arise in Autron. The issue in Autron was that the amount claimed in the bankruptcy notice only exceeded the statutory minimum because of the inclusion of an amount of post-judgment interest. The quantum of interest was not included in a final judgment or final order. It followed that the bankruptcy notice did not claim an amount of a final judgment or order that exceeded the statutory minimum. The Full Court said at paragraph 38:

   In the present case, the bankruptcy notice did not satisfy the requirements of s 41(1)(b)(ii) of the Bankruptcy Act. It was not, therefore, a “bankruptcy notice under this Act” for the purposes of s 40(1)(g). A bankruptcy notice is a nullity if it fails to meet a requirement made essential by the Bankruptcy Act: Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71 at 79. There can be no doubt that the attainment of the minimum amount prescribed by s 41(1) of the Bankruptcy Act is an essential requirement for the issue of a bankruptcy notice under that section. Accordingly, the failure of the respondent to comply with the bankruptcy notice issued in the present case could not constitute an act of bankruptcy under s 40(1)(g). It follows that, absent the act of bankruptcy on which the appellant relied, the conditions required by s 44 of the Bankruptcy Act, on which its petition was to be presented, could not be met.

6. Because the issue in Autron was post-judgment interest in addition to the amount of a final judgment, and not post-judgment payments in reduction of the amount of a final judgment, paragraph 37 of Autron is obiter dicta. As such, it is not binding on this court, although, of course, it is highly persuasive.

7. In Autron, the Full Court referred to the Parliament’s intention. That question does not appear to have been explored in great detail in Autron.

8. Because there is there is arguably a manifest absurdity or unreasonableness in a creditor using the bankruptcy procedure to recover judgment debts that, following payments or credits, are less than the statutory minimum, the court may consider extrinsic materials pursuant to s.15AB of the Acts Interpretation Act 1901. That section relevantly provides that:

   (1) Subject to subsection (3), in the interpretation of a provision of an Act, if any material not forming part of the Act is capable of assisting in the ascertainment of the meaning of the provision, consideration may be given to that material:

   …

   (b)       to determine the meaning of the provision when:

   …

   (ii) the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act leads to a result that is manifestly absurd or is unreasonable.

   (2) Without limiting the generality of subsection (1), the material that may be considered in accordance with that subsection in the interpretation of a provision of an Act includes:

   …

   (e) any explanatory memorandum relating to the Bill containing the provision, or any other relevant document, that was laid before, or furnished to the members of, either House of the Parliament by a Minister before the time when the provision was enacted;

   …

   (3) In determining whether consideration should be given to any material in accordance with subsection (1), or in considering the weight to be given to any such material, regard shall be had, in addition to any other relevant matters, to:

   (a)the desirability of persons being able to rely on the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act; and

   (b)the need to avoid prolonging legal or other proceedings without compensating advantage.

9. In the replacement explanatory memorandum for the Bankruptcy Amendment Bill 2009, paragraph 133 has the heading, “Increasing the minimum debt for a creditor’s petition to $10,000” and begins:

   Currently under the Act a creditor can petition for bankruptcy where the debtor owes at least $2,000. Similarly, a creditor can request that the Official Receiver issue a bankruptcy notice where the debtor owes at least $2,000… (emphasis added)

10. That is, it was explained to the Parliament that the issue in relation to bankruptcy notices was how much was owing, not how much a creditor had a judgment for. Based on the replacement explanatory memorandum, a payment or credit after judgment and before the bankruptcy notice was issued, where the debt was reduced to below the statutory minimum, would make the bankruptcy notice invalid.

11. As it happened, the statutory minimum was only increased to $5,000 at that time. The increase to $10,000 occurred with the Bankruptcy Amendment (Bankruptcy Threshold) Regulations 2020. The explanatory statement for those regulations said:

    Section 5 of the Act prescribes a statutory minimum bankruptcy threshold of $5000 unless a greater amount is prescribed. The statutory minimum bankruptcy threshold is the amount of debt required to be owed to a creditor, before that creditor can initiate involuntary bankruptcy proceedings against a debtor. (emphasis added)

12. The replacement explanatory memorandum and the explanatory statement indicate that the Parliamentary intention was that the statutory minimum applied to the amount owing under a final judgment at the time the bankruptcy notice was issued, not the amount of the final judgment.

13. That intention is reflected in the form of the bankruptcy notice itself, which is a prescribed form under r.9 of the Bankruptcy Regulations 2021. As shown in the portion of the form extracted above, it requires the creditor to state the amount claimed to be owed, not merely the amount for which judgment has been obtained.

14. It may be that, if asked whether they meant the statutory minimum to be the amount owing under a final judgment, the legislators would have said, “Of course.”

15. This reading of s.41(1) of the Act means that it would say something like:

    An Official Receiver may issue a bankruptcy notice on the application of a creditor who has obtained against a debtor:

    (a)      a final judgment or final order that:

    (i) is of the kind described in paragraph 40(1)(g); and

    (ii) is for an amount, of the unpaid portion of which, is for at least the statutory minimum; or

    (b)       2 or more final judgments or final orders that:

    (i) are of the kind described in paragraph 40(1)(g); and

    (ii) taken together are for an amount, of the unpaid portion of which, is for at least the statutory minimum.

16. That reading would avoid the arguably manifest absurdity or unreasonableness of the legislature creating a statutory minimum for bankruptcy proceedings to be brought, but for that statutory minimum to be irrelevant in circumstances where there were post-judgment payments or credits that reduced the debt to below the statutory minimum. If a creditor could launch bankruptcy proceedings in such circumstances, it would arguably defeat the very purpose of having a statutory minimum, and would arguably be contrary to many of the policy considerations that underlie the Act.

17. When this issue was raised at the hearing of the application to review, the applicant said that, as a matter of fact, at the time that the bankruptcy notice was issued, the applicant had a third final judgment against the respondent. That was a judgment of the Local Court of New South Wales in proceeding number 2023/00266107 entered against the respondent on 10 January 2024 for $14,364.74: see the last page of Ms Ikin’s affidavit. It will be recalled that the bankruptcy notice was issued on 27 February 2024.

18. The judgment made on 10 January 2024 stated that the amount was payable within 28 days. The respondent did not pay that sum within 28 days, or at all. However, on 30 January 2024, she did file an appeal in the District Court of New South Wales against the judgment made on 10 January 2024. That appeal had not been heard and determined by the time of the hearing of the application for review.

19. An appeal does not operate as a stay of judgment. When asked why the judgment entered on 10 January 2024 was not included in the bankruptcy notice, counsel for the applicant was not able to explain it. The exclusion of the judgment of 10 January 2024 from the bankruptcy notice cannot be regarded as an error in the bankruptcy notice.

20. It seems to me that the bankruptcy notice in the present case has to be assessed at face value. The bankruptcy notice only claimed that $8,874.56 was owing by the respondent to the applicant. That amount is less than the statutory minimum, as it would be understood applying the reasoning above.

21. However, it is a very serious thing to read into an Act of Parliament words that it does not contain. It is also a serious thing to depart from the conclusions of the Full Federal Court, even where they are obiter dicta.

22. In my view, it would not be appropriate, in the circumstances of this case, to depart from Autron. That is because the reasoning in Autron has stood for 13 years since the judgment in that matter was handed down in 2011. The Parliament must be taken to have understood what Autron means. The fact that the Parliament has not amended s.41(1) of the Act in the ensuing 13 years indicates that Autron correctly identified the Parliament’s intention.

1. Consequently, I accept that the bankruptcy notice in this case valid, although it claims an amount less that the statutory minimum. The respondent committed an act of bankruptcy by not complying with the bankruptcy notice.

   THE CREDITOR’S PETITION

2. On 28 March 2024, the applicant filed the creditor’s petition, which set out the respondent’s debt to the applicant as follows:

   1. The respondent debtor owes the applicant creditor as at the 21st March 2024 the amount of $31,103.26 (as outlined below):

   Total Judgments $29,214.19

   a. $6,381.45 for unpaid strata levies for which sum judgment was obtained in the Local Court of NSW at Sydney proceedings number 2022/00366572 on the 14th August 2023

   b. $8,468.00 for unpaid NCAT Order (case number 2022/00421772) made 2nd January 2024 and registered in the Local Court of NSW at Sydney as proceedings number 2024/00061064 on the 16th February 2024

   c. $14,364.74 for unpaid strata levies for which sum judgment was obtained in the Local Court of NSW at Sydney proceedings number 2023/00266107 on the 10th January 2024

   Total Costs $4,790.30

   [costs are set out]

   Total Interest $492.66

   [interest calculations are set out]

   Total Levies $2,581.00

   [levies are set out]

   Total Credits $5,974.89

   [credits are set out]

3. Subsection 43(1) of the Act relevantly provides that:

   Subject to this Act, where:

   (a)       a debtor has committed an act of bankruptcy; and

   (b)       at the time when the act of bankruptcy was committed, the debtor:

   …

   (ii)       had a dwelling-house or place of business in Australia;

   …

   the Court may, on a petition presented by a creditor, make a sequestration order against the estate of the debtor.

4. At the time of the alleged act of bankruptcy, the respondent had a dwelling house in Australia.

5. Section 52 of the Act relevantly provides that:

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

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

   (b)       service of the petition; and

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

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

   …

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

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

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

   it may dismiss the petition.

6. There were affidavits before the court:

   (a)verifying the petition;

   (b)proving service of the petition;

   (c)proving that the claimed debts were still outstanding; and

   (d)proving that the respondent was not bankrupt prior to the registrar making the sequestration order on 23 May 2024.

   WHETHER TO GO BEHIND THE JUDGMENTS

7. When appropriate, in bankruptcy proceedings, the court can and should go behind the judgment to see if there is in truth and reality a debt owed by the debtor to the creditor: Ramsay Health Care Australia Pty Ltd v Compton (2017) 261 CLR 132; (2017) 345 ALR 534; (2017) 91 ALJR 803; (2017) 122 ACSR 115; [2017] HCA 28.

8. As mentioned above, the respondent did not file a notice of opposition to the petition, either in the proceedings before the registrar or in the application for review. She did file an affidavit in the proceedings before the registrar. The affidavit contained a lot of submissions. The gist was that she was a victim of racial discrimination, abuse of position, and fraud by the applicant.  The respondent did not file a further affidavit for the application to review. 

9. I raised at the hearing of the review application the question of whether it would be appropriate in the present case to go behind the judgments. However, the respondent did not pursue that question. Moreover, the respondent has not put forward a proper basis to go behind the judgments in this case.

10. The first judgment, entered on 14 August 2023, was entered by default. However, the respondent was initially represented by a solicitor, who filed a motion for further and better particulars and for the matter to be transferred to the New South Wales Civil and Administrative Tribunal. A registrar heard the motion twice, then transferred it to an assessor for determination. On 21 July 2023, the assessor ordered that the respondent file and serve a defence by 4 August 2023, failing which, the applicant could apply for default judgment. The respondent did not file a defence by 4 August 2023, but her solicitor did file on that date a notice of ceasing to act. The applicant then obtained a default judgment.

11. This is not the classic default judgment where a respondent was perhaps not properly served or did not engage at all with the proceeding. On the contrary, the respondent in the present case engaged with the proceeding, and had lawyers acting for her. All she had to do to avoid a default judgment, to which she had been alerted, was a file a defence. The fact that she did not do so strongly suggests that she well knew that she did not have a viable defence.

12. That suggestion is strengthened by the fact that the respondent paid $5,974.89 of the judgment debt of $6,381.45 (inclusive of costs) leaving an outstanding balance of $406.56.

13. These circumstances do not warrant going behind the first judgment.

14. The second judgment, entered on 2 January 2024, was for penalties following multiple breaches of stop work orders. It was not a default judgment. The penalties were ordered following a hearing in which the respondent participated and written reasons for judgment extending to 25 pages were provided to the parties. While a court should not decline to go behind a judgment simply because it followed a hearing, the respondent has not pointed to any reason why the court should go behind this judgment. I do not consider that the court should do so.

15. The third judgment, entered on 10 January 2024, followed a small claims hearing lasting a little under two hours, in which the respondent participated. The respondent has not pointed to any reason that the court should go behind this judgment. Having said that, the respondent has filed an appeal. It is stayed by virtue of s.60 of the Act. The applicant does not appear to have been represented in the appeal. The grounds of appeal are that:

    (a)the property manager has violated equality law;

    (b)the owner of the property and the strata management company are in a relationship; and

    (c)the strata management company violated the law by not providing a stamp for her renovations.

16. On the material before me, I do not consider that these grounds have a sufficient prospect of success to warrant going behind the judgment.

    OTHER MATTERS

17. At the hearing of the review application, the respondent said, firstly, that she was not aware that she had judgments that she had to pay. That is not a viable argument. She either participated in the relevant proceedings or has been served with the various judgments relied on in this proceeding.

18. Secondly, the respondent said that she had depression, she was separated from her husband, her English is not good, and she had no one to help her understand the documents. That is all unfortunate, but it does not alter the basic situation relating to the respondent’s financial position.

19. When asked by the court if she was able to pay her debts within a reasonable time of them falling due, the respondent said that she has two factories in China that she could use to pay her debts. However, the factories were not disclosed in her statement of affairs or referred to in her affidavit filed in this court. Nor were they referred to in the respondent’s application for family law consent orders filed in this court last year. In such applications, it is imperative that parties disclose all of their assets. In these circumstances, I am not persuaded that the respondent has two factories in China that she can draw upon to pay her debts.

20. The respondent’s statement of affairs indicates that:

    (a)she has a gross income of about $80,000 per year;

    (b)she has debts to unsecured creditors of about $1.7 million dollars, consisting of:

    (i)legal costs of about $30,000;

    (ii)about $31,000 owing to the petitioning creditor; and

    (iii)loans from friends and family; and

    (c)she has assets of about $1.36 million, consisting of:

    (i)about $350,000 equity in one property;

    (ii)about $930,000 equity in another property;

    (iii)about $30,000 in shares;

    (iv)about $44,000 in superannuation;

    (v)about $8,000 cash in the bank.

21. The application for the consent orders filed last year disclosed various mortgages but no unsecured creditors. The respondent’s statement of affairs indicates that she acquired unsecured debts to friends and relations as follows:

    (a)in 2014, $50,000;

    (b)in October 2015, $62,500;

    (c)in June 2021, $1,460,000; and

    (d)in December 2021, $100,000.

22. If these unsecured debts were real, the respondent should have disclosed them in her application for consent orders filed on or about 26 April 2024. The fact that the respondent did not disclose them causes me to have grave doubts about her honesty, and whether anything she has said to this court about her financial position is true.

23. In all the circumstances, I am not satisfied that the respondent is solvent.

    CONCLUSION

24. For these reasons, the decision of the registrar will be affirmed, and the usual orders will be made as to costs.

    SUBSEQUENT EVENTS

25. Following the preparation of the above reasons, and following the notification to the parties that judgment would be delivered at 10am on 23 October 2024, the respondent attempted to file an application in a proceeding and affidavit at about 1pm on 22 October 2024. For various reasons, that application was not accepted for filing until about 9.30am on 23 October 2024, when it was served on the other parties. A solicitor filed a notice of address for service on behalf of the respondent on 4 October 2024.

26. The application in a proceeding asks the court to give leave to the respondent to adduce the evidence in her affidavit. That evidence is to the effect that, on 15 October 2024, she paid the applicant $8,876.56.

27. When the matter was called on, the respondent was represented by counsel. I explained that the payment did not discharge the respondent’s entire debt to the applicant, and did not cover the trustee’s fees and charges, so it was not sufficient to secure an annulment. Counsel did not press the point, just saying, “It is what it is.”

28. I am not satisfied that the payment alters the basic position that the court cannot be satisfied that the respondent is solvent. Indeed, if she were solvent, I daresay she would have used the time between the hearing and the delivery of judgment to pay out all of her debts, including to the trustee, or negotiate an arrangement. 

29. However, for what it is worth, I will give the applicant leave to adduce the evidence in her affidavit affirmed on 22 October 2024.

I certify that the preceding sixty-two (62) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Riley.

Associate:

Dated:       23 October2024