Barnes v Lion Finance Pty Ltd

IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 359 of 2014

ROBERT SCOTT WOODS AND DAVID JOHN FRANK LOMBE (AS TRUSTEES OF THE BANKRUPT ESTATE OF LINDSAY HAROLD BARNES)

JUDGE: BEACH J DATE: 28 august 2015 PLACE: MELBOURNE (delivered in sydney)

REASONS FOR JUDGMENT 1 The applicant (Mr Barnes) has applied under s 153B(1) of the Bankruptcy Act 1966 (Cth) to annul his bankruptcy. The first respondent, the petitioning creditor, opposes the application. The second and third respondents, the trustees of his estate (the Trustees), also oppose the application. 2 Mr Barnes has contended that the sequestration order made by the Federal Circuit Court against his estate ought not to have been made because: (a) First, he was able to pay his debts as and when they fell due at the time of the sequestration order and therefore he would have satisfied s 52(2)(a); (b) Second, there was an irregularity in the service of the creditor's petition; (c) Third, the hearing of the creditor's petition should have been adjourned to enable him to put forward evidence satisfying s 52(2)(a) including taking steps to refinance all his debts. 3 In my opinion, if the facts now known had been disclosed to the court on the hearing of the petition, at the least there would have been an adjournment such that the sequestration order would not have been made. But in the exercise of my discretion, I would not annul the bankruptcy except on the condition that: (a) the petitioning creditor's debt and all other debts be paid or compromised; (b) the Trustees' costs and expenses in the administration of the estate be paid in full.

SEQUENCE OF EVENTS 4 This matter has had a chequered history. 5 Mr Barnes incurred various credit card debts which had been assigned to the petitioning creditor. The petitioning creditor then obtained various judgments on these debts which were then used to provide the subject matter for a bankruptcy notice dated 23 April 2013 which was served on 28 May 2013. This notice was not complied with by the relevant date. None of the existence of these debts, the validity of the bankruptcy notice or its non-compliance has been the subject of any real contest before me. Indeed, subsequent to the making of the sequestration order, Mr Barnes completed a statement of affairs disclosing that he was indebted to the petitioning creditor in the amount of $112,768.51. All that Mr Barnes has deposed to concerning the petitioning creditor's debt is that he has been unable to verify the calculation thereof to his satisfaction. 6 Six judgment debts were obtained against Mr Barnes between the period 10 October 2012 and 3 April 2013, and all related to debts purchased by the petitioning creditor from various financial institutions. According to the petitioning creditor, numerous letters were sent to Mr Barnes from time to time by the petitioning creditor and its agents asserting the existence of the various debts and making demand for the repayment thereof. Mr Barnes did not respond to such demands and, from the perspective of the petitioning creditor, chose to ignore them. As I say, a bankruptcy notice was then issued and served but not complied with. 7 On 2 July 2013, the petitioning creditor filed its petition in the Federal Circuit Court relying upon non-compliance with the bankruptcy notice as constituting the act of bankruptcy. The creditor's petition was served on Mr Barnes at his Doncaster East, Victoria address (the Property) in accordance with a substituted service order of the Federal Circuit Court made on 20 August 2013. There has been no challenge to the validity or appropriateness of such an order. 8 In compliance with the substituted service order: (a) On 22 August 2013, the petitioning creditor by ordinary pre-paid post sent to Mr Barnes at the Property a letter dated 22 August 2013, a copy of the court's orders dated 20 August 2013, the creditor's petition, affidavits verifying paragraphs 1 to 4 inclusive of the creditor's petition, and a consent to act as trustee; and (b) On 27 August 2013 a representative of the petitioning creditor attended at the Property and placed into the letterbox a letter from the petitioning creditor's solicitors dated 22 August 2013, a copy of the court's orders dated 20 August 2013, a copy of the creditor's petition, affidavits verifying paragraphs 1 to 4 inclusive of the creditor's petition, and a consent to act as trustee. 9 In relation to the posted documents served in compliance with the substituted service order, at no stage were such documents returned undelivered to the petitioning creditor's solicitors. In relation to the documents placed in the letterbox at the Property on 27 August 2013, at no stage were such documents returned to the petitioning creditor's solicitors. There is no suggestion that the substituted service order was not complied with. 10 On 22 October 2013 a sequestration order was made by a Registrar of the Federal Circuit Court. 11 On 1 July 2014, Mr Barnes filed an application to annul his bankruptcy. 12 Mr Barnes has offered the following explanation for the delay. He says that he first became aware of the sequestration order on or about 20 November 2013 when, as he was exiting the Property, he met two representatives of the Trustees' firm. In early December 2013, Mr Barnes engaged Brett Samuel (Mr Samuel) of Rosendorff Lawyers to assist him with his bankruptcy and to advise him whether he would be able to challenge the making of the sequestration order. Mr Barnes instructed Mr Samuel to investigate what attempts had been made to serve him with the creditor's petition, the nature of the debts being claimed against his estate and whether it would be appropriate for him to make an application to annul his bankruptcy. Mr Barnes has said that he did not make the application to annul immediately as he first needed to conduct an investigation to understand why he had been made bankrupt and the nature of the debts that the creditor's petition had been based on. 13 On 12 March 2015, Mr Barnes' application to annul was heard by another judge of this Court. Various submissions were made and some evidence was taken; I have treated such evidence as being evidence before me. The matter was then stood down to enable the parties to resolve the matter. The parties then entered into terms of settlement to resolve the application. Part of the terms of settlement involved an adjournment of the hearing of the application to enable Mr Barnes to obtain approval for finance in an amount sufficient to discharge his debts and to pay the costs and expenses of the Trustees. But if Mr Barnes failed to obtain unconditional finance, he consented to orders that his application to annul be dismissed. 14 In May 2015 and after it became apparent that the terms of settlement were not being complied with, Mr Barnes made various assertions that he was pressured into entering the terms of settlement and that he had signed them under duress. He variously asserted that: He had taken a high dosage of oxycontin on the day of the hearing on 12 March 2015 and was "in no state to be evaluating information and to be making important decisions"; He had been at a disadvantage at the hearing before the previous judge because he was unrepresented; He had felt under pressure to settle because of statements made by the previous judge. 15 He sought to set aside the terms of settlement, alternatively to argue that they were unenforceable. It was in those circumstances that the matter was re-listed before me to deal with such allegations and to hear and determine his application to annul. 16 Initially the petitioning creditor and the Trustees sought to enforce the terms of settlement. But ultimately they did not persist with that position given my indication that such terms could not operate against the statutory functions and powers I had to perform under s 153B and that engaging in a collateral enquiry as to the enforceability of the terms of settlement was a fruitless exercise. I have put the question of the terms of settlement, how they came to be entered into and their enforceability to one side. I would say, however, that Mr Barnes' assertions about the manner in which the previous judge conducted the hearing on 12 March 2015 have no substance. 17 The creditors admitted to proof in respect of the estate total $243,259.00 as at 13 July 2015. 18 The Trustees have stated that as at 13 July 2015, the amount required to finalise the bankrupt estate is $411,847.44, calculated as follows: Liabilities Unsecured creditors $243,259.00 Est. interest on unsecured creditors $46,922.74 Est. petitioning creditor's costs $7,219.27 Trustees' costs and remuneration to 10 July 2015 $39,548.31 GST on remuneration and disbursements $3,954.83 Trustees' est. fees to finalisation $5,500.00 Trustees' est. legal fees including GST $38,500.00 Est. realisation charge $26,943.29 Total $411,847.44

I should say that the interest claim may be problematic in the light of s 82(3B) if the bankruptcy was not annulled, although I do not need to comment further.

APPLICABLE PRINCIPLES 19 I have set out the applicable principles in Yang v L & H Group (a limited partnership) [2015] FCA 932. 20 Section 153B(1) 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. 21 The trigger for the exercise of discretion under s 153B(1) is that the Court is "satisfied that a sequestration order ought not to have been made". If that condition is satisfied then the Court's power is enlivened and its discretion may be exercised to annul. 22 The principles applicable to s 153B(1) are not in doubt. First, the applicant carries a heavy burden. He is required to place before the Court all relevant material concerning his financial affairs. Second, in determining whether "a sequestration order ought not to have been made", the Court should not confine its attention only to whether the order should have been made on the facts then known to the court making the earlier order. The Court must consider other facts existing at the earlier time, even if those facts were not placed before the court making the sequestration order. Those facts and whether they were known at the earlier time are to be ascertained by the Court in considering the annulment application. But facts that have occurred since the sequestration order was made should be excluded in considering the condition, although they are relevant to the exercise of the discretion to annul if the condition is otherwise satisfied. Third, as to the phrase "ought not to have been made", the question is whether on the facts at the time, now known to have existed at the time, the court making the sequestration order would have been bound not to make the sequestration order. The test is not whether such a court might not have made the order or that it was likely that the court would not have made the order. The question is whether that court was bound not to make the order. Fourth, even if the condition is satisfied, nevertheless the Court may still refuse to exercise its discretion to annul. In the exercise of its discretion, the Court may consider: whether the applicant is solvent at the time of the annulment application; whether the applicant has made full disclosure of his financial affairs; any failure by the applicant to attend the hearing concerning the making of the sequestration order or to oppose such an order, and the explanation for such conduct; any failure by the applicant to put before the earlier court facts then known to the applicant and the explanation for that failure; whether the applicant has delayed in making the annulment application and the time that has elapsed since the making of the sequestration order; the preparedness of the applicant to pay the costs thrown away by reason of the annulment application and the trustee's costs and expenses of the bankruptcy to the extent that they have not otherwise been recovered from the bankrupt's estate; the rights and interests of the creditors, including the applicant's preparedness to pay any outstanding debts as an alternative arrangement to the continuation of the bankruptcy; the conduct of the applicant during the period of the bankruptcy, including the applicant's co-operation with the trustee and also whether there has been any conduct that may give rise to bankruptcy offences; the steps taken by the trustee to investigate and realise the estate and whether there has been any impediment due to the conduct of the applicant or a third party; whether it is fair or just to the applicant or the creditors to grant the annulment; the public interest, (see Bulic v Commonwealth Bank of Australia Ltd (2007) 5 ABC(NS) 122 at [12] per Tracey J, Francis v Eggleston Mitchell Lawyers Pty Ltd (2014) 12 ABC(NS) 25 at [16] per Rares, Flick and Bromberg JJ, Boles v Official Trustee in Bankruptcy (2001) 183 ALR 239 at [16] per Emmett J, Re Raymond; Ex parte Raymond (1992) 36 FCR 424 at 426 per Spender J, Re Frank; Ex parte Piliszky (1987) 16 FCR 396 at 402 and 403 per Fisher J, Hudson v Whalan [1999] FCA 189 at [7] to [14] per Sackville, North and Hely JJ, Rigg v Baker (2006) 155 FCR 531 at [62] per French J and at [109] per Cowdroy J and Heinrich v Commonwealth Bank of Australia [2003] FCAFC 315 at [20] per Carr, Finn and Sundberg JJ). 23 In granting an annulment application, the Court may do so on terms, including that: the trustee's costs and expenses to the date of the annulment be paid or secured; any outstanding debt be paid or secured.

SHOULD THE SEQUESTRATION ORDER HAVE BEEN MADE? 24 There are three arguments in support of the proposition that the sequestration order ought not to have been made that arise from the material, namely: (a) First, Mr Barnes was able at the time of the sequestration order to pay his debts as and when they fell due; accordingly s 52(2)(a) of the Act was satisfied; (b) Second, there was no valid service of the creditor's petition; (c) Third, the hearing of the petition ought to have been adjourned. On that analysis, the sequestration order would not have been made. 25 I reject the first and second bases, but uphold the third basis in the unusual circumstances of the case.

(a) Whether Mr Barnes was solvent 26 As to the first basis, it is said that Mr Barnes was solvent at the time of the sequestration order and that, accordingly, the sequestration order ought not to have been made. But there is a difficulty with this conclusion, even if one was to accept the premise. The question of solvency arises under s 52(2)(a). But that provision provides that if that limb is satisfied, the court may dismiss the petition. The dismissal is not mandated. Satisfaction of s 52(2)(a) does not establish that the court was bound not to make the sequestration order. In other words, even if the premise was established, I am not satisfied that the conclusion for establishing the condition required by s 153B(1) would be made good. 27 But this first basis is problematic on the facts in any event. The issue to be considered is whether Mr Barnes at the time of the sequestration order had sufficient assets that could be readily realised or drawn upon by sale, mortgage or pledge, to meet his liabilities or generally an ability to pay his debts as and when they fell due (see Sandell v Porter (1966) 115 CLR 666 at 670 per Barwick CJ but taking into account the extended scope of the debtor's "resources" to be considered as discussed in Eykamp v Deputy Commissioner of Taxation [2010] FCA 797 at [7] per Buchanan J and Rigg v Baker at [104] and [106] per Cowdroy J and the flexibility inherent in the concept of readily realisable). 28 Mr Barnes has said that as at 22 October 2013 he was in a position to pay his debts. In his statement of affairs he disclosed that he had unsecured debtors in the amount of $234,553.63 and a secured debt of $50,000. The Trustees have stated that as at the date of the sequestration order Mr Barnes' total unsecured debts were $238,765. 29 Mr Barnes' assets as at 22 October 2013 that could be drawn upon were largely represented by the equity in the Property. He is the sole owner of the Property. The Property is a 3 bedroom residence. The Trustees have estimated the value of the Property at $685,000 with the amount owed to the Commonwealth Bank as mortgagee of $46,746.45 as at 30 October 2013. 30 It appears that the amount for which Mr Barnes would have had to refinance as at 22 October 2013 would have been in excess of $280,000, including the amount owed to the mortgagee. There was more than sufficient equity in the Property to enable this to occur. 31 Mr Barnes has also now deposed that as at 22 October 2013 he had $67,490.09 standing to the credit of his account with Credit Union Australia Ltd, although this account and amount seem to have been available for and used by Mr Barnes for other expenses from time to time. 32 The difficulty for Mr Barnes has been in showing that he could service any new loan arising from the refinancing required. If he could not service such a loan, he was unlikely to obtain refinancing. Moreover, it is clear on the material that Mr Barnes has not at any stage had any appetite or willingness to sell the Property if refinancing could not be obtained. 33 Mr Barnes had previously been employed as a tax audit specialist, but had retired from that position. He has not been employed on a full time basis since 2010. For a number of years he has also experienced medical problems with his back and consequent nerve damage. 34 At the time of the proceeding before me, Mr Barnes gave evidence that his current annual income was in excess of $65,000 per annum derived from: a non-taxable indexed government pension of $35,633 per annum; $9,000 per annum from his part time job delivering newspapers; $20,800 per annum from his part time work with Epilepsy Australia. At the time of the sequestration order, his income was less. 35 Following the making of the sequestration order, Mr Barnes made enquiries with a finance broker as to whether as at October 2013 he would have been able to refinance his home loan and obtain a loan of $281,741.42 secured by the Property. On 11 February 2014 Mr Samuel sent a letter on Mr Barnes' behalf to Mr Scott Vine of Business Broking Solutions making an enquiry as to that prospect. On 12 February 2014, Mr Vine responded and stated that, based on Mr Barnes' income as disclosed in his statement of affairs, he would have been able to obtain a loan of $250,000 at 6.99% interest in October 2013 with monthly repayment amounts of $1,662 and that such funds would have been made available four weeks after the application. Mr Vine further stated that in order for Mr Barnes to have qualified for a loan of $281,741.42, he would have only had to increase his paper round income from $7,000 per annum to $10,000 per annum, an increase of $57.69 per week. Mr Barnes says that he could readily have increased his income to this extent and had in fact done so after the sequestration order was made. His current monthly income from delivering papers shortly thereafter was approximately $720 per month. But Mr Vine stated that as Mr Barnes was a bankrupt, he would not be able to get a loan approved for him. However, Mr Vine stated that if his bankruptcy was annulled, he would be able to apply for finance immediately. Mr Vine apparently believed that funds would be available four weeks following the application. 36 On 13 February 2014, Mr Samuel wrote to Mr Vine and asked whether Mr Barnes would be able to borrow the amount of $281,741.42 secured against the Property if an order was made to annul the bankruptcy. On 14 February 2014, Mr Vine responded to Mr Samuel, stating that subject to lenders being satisfied that Mr Barnes had increased his income to $10,000 per annum, he would qualify for a loan in the amount of $284,000 on the same terms as outlined in Mr Vine's letter to Mr Samuel dated 12 February 2014. 37 Mr Barnes has also said that if necessary he would have also been able to obtain bridging finance from a family friend of his, Ms Sharman Louise Feinberg (Ms Feinberg), who he had borrowed money from in the past. On 13 February 2014 Mr Samuel wrote to Ms Feinberg and asked whether in October 2013 she would have been prepared to gift or loan Mr Barnes an amount of $31,741.42 (being the difference between the amount he could have obtained via the refinance and the total amount of his debts at that time) and, if so, the terms of the gift or loan as well as the amount of time it would have taken for those funds to be made available. On 14 February 2014 Ms Feinberg responded and stated that she would have been willing to provide Mr Barnes with a loan of $31,741.42, secured by a second mortgage over the Property. Such a loan would have covered the anticipated difference between what he would have received via the refinance application and the total amount of his debts. On 14 February 2014, Mr Samuel wrote to Ms Feinberg explaining to Ms Feinberg that Mr Barnes' unsecured creditors could be more than the amounts disclosed in the statement of affairs and requesting that Ms Feinberg indicate whether she would have been prepared to lend Mr Barnes more than $31,741.42 in October 2013 and, if so, the maximum amount she would have been willing to lend to him. On 17 February 2014, Ms Feinberg wrote to Mr Samuel advising that she would have been prepared to lend Mr Barnes up to $55,000 in October 2013 on the same loan terms as set out in her letter dated 14 February 2014, but subject to him increasing his newspaper deliveries income and seeking employment in addition to delivering newspapers. 38 In summary, Mr Barnes says that if the creditor's petition had been brought to his attention prior to the making of the sequestration order, he would have taken steps to refinance his home loan to obtain funds on the terms set out in the letter from Mr Vine to Mr Samuel dated 12 February 2014. He would have used these funds to pay his debts so that the making of the sequestration order would have been avoided. Further, to the extent that the funds obtained pursuant to the refinance application were insufficient to meet his debts, he would have sought additional funds from Ms Feinberg and used those funds to pay his debts. 39 The quality of this evidence adduced by Mr Barnes is questionable. 40 Mr Vine of Business Broking Solutions has not sworn an affidavit in the proceeding. An indicative letter, and then only from a broker, is insufficient to demonstrate Mr Barnes' capacity to obtain finance to pay the debts owed. Mr Barnes' alleged ability to borrow funds to discharge his debts ought to have been supported by sworn evidence from a lender, not assertions in a letter from a broker. 41 There is a further difficulty. Mr Barnes has contended that he would have qualified for a loan of $284,000 if his paper round income was slightly increased. Mr Barnes has said that his income increased to a sufficient level after the sequestration order was made. 42 Further, no sworn evidence has been adduced from Ms Feinberg. Ms Feinberg's letter of 17 February 2014 states that she would have advanced up to $55,000 to Mr Barnes in October 2013 on the following conditions: Mr Barnes increasing his income from $7,000 to at least $15,000; and Mr Barnes using his best endeavours to find a second part time job or a full time job. 43 Given that the two conditions imposed by Ms Feinberg were not met by Mr Barnes at the time the sequestration order was made (or seemingly even after given that the income only increased to $10,000 and not $15,000), the finance from Ms Feinberg cannot be said to have been a resource available to Mr Barnes for the purposes of proving solvency as at the date of the sequestration order. 44 Finally on this topic, Mr Barnes put forward a further affidavit sworn on 29 July 2015 exhibiting an email from David Cranna, lending manager of "Fox Symes Financial". Mr Barnes described this entity as "one of the biggest non-conforming loan brokers". The email stated: • "As discussed, unfortunately I cannot assist you with a debt consolidation loan currently due to your bankruptcy. • If you were not bankrupt I could potentially provide you with a debt consolidation loan based on the rest of the information we discussed today". 45 This email is not probative as to whether Mr Barnes was solvent at the time of the sequestration order. It is nebulous, unsubstantiated and hearsay and could not establish the s 153B(1) condition. However, it is relevant to the exercise of my discretion and any conditions I might impose. I should say that Mr Barnes made other assertions concerning what this individual said to him, but they lacked probative value and were hearsay. 46 If the current material had been placed before the court at the time of the sequestration order, I am not satisfied that s 52(2)(a) would have then been satisfied. 47 It also follows that on that same material, Mr Barnes is not now solvent. That would be a basis for refusing to exercise my discretion to annul the bankruptcy even if the s 153B(1) condition was satisfied. But I am able to deal with any question of a lack of solvency established by the present material by imposing a condition, as I will, that the annulment will only be effective upon the discharge or compromise of all debts which are still due and payable. If Mr Barnes cannot discharge the condition, there will be no annulment. If he can, the solvency question becomes relevantly moot at least so far as present creditors of Mr Barnes are concerned.

(b) Whether there was valid service of the petition 48 In my view there was valid service of the creditor's petition pursuant to the substituted service order. 49 Mr Barnes has said that he never attempted to avoid service of the creditor's petition. He gave the following explanation as to why he may not have seen the relevant documents. There are two entrances to the Property, one at the front and one at the side. Mr Barnes enters by the side entrance at all times and as there is a large wheelie bin and other items that block the front door entrance, the front door is not used for entering or exiting the Property. If anybody leaves a card on the front door and it falls behind the bin he would not be able to see it. Additionally, behind the front door is a draft stopper. If someone places a card underneath the front door, the draft stopper would prevent him from seeing it. He normally resides at the rear of the Property and on some occasions he will not hear when a person rings his doorknocker as that sound can be drowned out by the noise of the television. He normally has the television volume set loudly as he has deafness in high frequencies. 50 He does not recall receiving any messages on his answering machine from a person or persons identifying themselves as process servers and advising him that they had attended the Property to contact him or serve him with court documents. 51 He has had an ongoing dispute with one of his neighbours over the boundary fence and damage to a tree on the Property. In early 2013, the letterbox at the Property was pulled off its support and thrown away into bushes. During the latter part of 2013, the letterbox at the Property was damaged again and he had trouble collecting the mail. Whenever he repaired the letterbox, it was torn out soon afterwards. During this period, a lot of the mail that he regularly receives was not coming to the Property, including bills from service providers and requests for donations to organisations that he regularly contributes to. 52 Accordingly, he says that it may be that the creditor's petition and any calling cards said to have been left by the process servers were removed from his post box or destroyed. 53 In my view, all of this evidence does not establish that the relevant documents were not delivered. In my view, the relevant documents were delivered and served in accordance with the order for substituted service. 54 Regulation 16.01 of the Bankruptcy Regulations 1996 (Cth) allows service of bankruptcy documents by post. Personal service is not required. Moreover, orders for substituted service can be made (see s 309(2) of the Act and r 6.14 of the Federal Circuit Court Rules 2001 (Cth)). 55 Where documents are served by post, s 29(1) of the Acts Interpretation Act 1901 (Cth) deems service to have been effected unless the contrary is proved. To displace the presumption in s 29 it is not enough for Mr Barnes to prove non-receipt. What is required is evidence of non-delivery. The evidence of Mr Barnes does not amount to evidence of non-delivery. Any assertion that Mr Barnes did not receive mail (once it was delivered) because someone regularly removed his letterbox does not displace the presumption of delivery, and therefore deemed service. 56 In summary, the evidence adduced by Mr Barnes is insufficient to prove non-delivery and therefore that there was not due service of the creditor's petition.

(c) Whether an adjournment should have been granted 57 As to the third basis, on balance on the material now known, if it had been placed before the court at the time of the hearing of the petition, an adjournment ought to have been granted. A high threshold applies to show that a discretionary decision to adjourn should have been differently exercised, but I am satisfied that such a threshold has been established in the idiosyncratic circumstances of the present case. If all of the relevant background and detail of Mr Barnes' assertions had been before the court, the court ought at the least to have adjourned the petition. If that had occurred, the sequestration order would not have been made; the s 153B(1) condition is satisfied. 58 If Mr Barnes had advanced the following matters to the court at the time of the hearing of the creditor's petition, then an adjournment ought to have been given: (a) First, he needed more time to obtain evidence showing his capacity to refinance so that he could attempt to establish the matters required by s 52(2)(a), alternatively pay out the petitioning creditor and other debts in order to resolve the petition by agreement. Moreover, such an adjournment would not have been self-evidently futile given his significant equity in the Property at the time. What was problematic was his capacity to refinance given his status and income levels and whether he could service the relevant debt. (b) Second, his medical condition and his personal circumstances necessitated an adjournment. 59 In my view and given the unusual circumstances of this case, an adjournment of the petition ought to have been granted. If it had, the sequestration order would not have been made, at least at that time.

THE DISCRETION 60 I am inclined to exercise my discretion in favour of annulling the bankruptcy. 61 First, although there was some delay in making the application, it has been partly explained as I have discussed earlier. 62 Second, although it has been some time since the sequestration order was made, that is partly explained by the circumstances attending and consequent upon the hearing in March 2015. 63 Third, although the petitioning creditor established in cross-examination that Mr Barnes had failed to disclose certain matters in his statement of affairs, I do not consider that such non-disclosure is relevantly disqualifying. 64 Fourth, Mr Barnes has provided some explanation as to why he did not attend on the hearing of the petition. He had a reasonable explanation as to why documents, albeit duly served, may not have come to his attention and accordingly why he did not attend on the hearing of the petition (cf the different scenario of a debtor voluntarily absenting himself from the hearing of the petition discussed in Rigg v Baker at [71]). 65 Fifth, the rights of creditors and the Trustees will be protected by the condition that I intend to impose as part of the order to be made under s 153B(1); whether the imposition of such a condition has the effect of moving closer to a s 153A type scenario is not to the point. 66 It is appropriate to observe the following concerning the condition that I intend to impose: (a) First, if the condition was not imposed, I would not have granted the application. (b) Second, the condition is designed to enable Mr Barnes to do what he says he would have done at the time if the sequestration order had not been made. He will now be given that opportunity. (c) Third, Mr Barnes has said that his bankruptcy needs to be annulled first before he can proceed to obtain refinancing. But given his prior conduct, I have no confidence that if I imposed a condition subsequent rather than a condition precedent, that any condition subsequent would be complied with. Further, he has the capacity, with the assistance of the Trustees, to approach a lender, if there is one available, and put forward information explaining his capacity to service a loan and the available equity in the Property. If he is an attractive lending prospect to a financier, it could be arranged that funding would flow contemporaneously with the annulment so that the lender would not be advancing money to a bankrupt. I will direct that the Trustees provide such reasonable assistance as is necessary to facilitate this. I will also reserve liberty to apply to vary the condition, if it is necessary to do so and I consider it to be appropriate, to accord with any reasonable requirements of a prospective lender. If the condition cannot be satisfied by refinancing, then the Property will need to be sold to satisfy the condition. Undoubtedly that is not what Mr Barnes would wish, but it may be the unpalatable consequence.

CONCLUSION 67 I propose to exercise my discretion to make the order for annulment in the following terms: 1. Upon the second and third respondents filing with the Court a notice in the form annexed by no later than 60 days from the date of this order confirming that the following events have occurred: (a) The petitioning creditor's debt has been paid or compromised; (b) The applicant's other debts known to the second and third respondents as at the date of this order have been paid or compromised; (c) The second and third respondents have been paid their reasonable remuneration and expenses incurred in their capacity as trustees of the applicant's estate, the bankruptcy of the applicant is annulled pursuant to s 153B of the Bankruptcy Act 1966 (Cth). 2. The second and third respondents shall provide to the applicant such reasonable assistance as they consider necessary in order to facilitate the events referred to in order 1 being effected. I certify that the preceding sixty-seven (67) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Beach.