Commonwealth Bank of Australia v Nasic, in the matter of Nasic [2025] FCA 1275

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

1. On 27 May 2025, a Registrar of the Court made sequestration orders against Mrs Kerisha Nasic and Mr Admir Nasic under s 43(1) of the Bankruptcy Act 1966 (Cth), exercising the power derived from s 35A(1)(h) of the Federal Court of Australia Act 1976 (Cth).
2. On 5 August 2025, Mr and Mrs Nasic applied for review of the Registrar's orders under s 35A(5) of the Federal Court Act and r 3.11(1) of the Federal Court Rules 2011 (Cth).
3. A review under s 35A is a de novo review of the exercise of power by the Registrar, not an appeal from the Registrar's orders or decision: Bechara v Bates [2021] FCAFC 34; 286 FCR 166 at [1]-[2] and [17] (Allsop CJ, Markovic and Colvin JJ).
4. An application for a review under s 35A must, by reason of r 3.11(2) of the Rules, be made within 21 days after the day on which the power was exercised. Mr and Mrs Nasic applied outside the 21 days prescribed by r 3.11(2). They applied 70 days after the Registrar's exercise of power. They therefore seek an order under r 1.39 of the Rules to extend the time in which to bring the application.
5. It was not disputed at the hearing that Mr and Mrs Nasic committed relevant acts of bankruptcy enlivening the Court's power to make sequestration orders and I am satisfied that is the case. They failed to comply with a bankruptcy notice issued by the petitioning creditor, the Commonwealth Bank of Australia (CBA). Each of the matters in s 52(1) has been proved. Two principal questions now arise: (a) whether an extension of time should be granted in which to seek review under s 35A; and (b) whether a sequestration order should be made. As to the second question, the principal issue is whether the Court should dismiss the creditor's petition because Mr and Mrs Nasic are able to pay their debts or because they have established some other sufficient cause for dismissing the petition - see: Bankruptcy Act s 52(2). There is also an issue about the Trustees' costs if the sequestration order is set aside.
6. The petitioning creditor's debt arises from a judgment obtained in the District Court of New South Wales (proceeding number 2024/00164771) on 24 June 2024 in the amount of $136,317.80: CB829-30; RS[19].
7. CBA filed a creditor's petition on 1 October 2024 and, on 27 May 2025, the Registrar ordered that the estates of Mr and Mrs Nasic be sequestrated: CB22-24 and 832-34.
8. Mr and Mrs Nasic were unrepresented in relation to the creditor's petition at the hearing on 27 May 2025: A Nasic 1 at [12]; CB18. Mr Nasic has given evidence he did not take steps to challenge the sequestration order because he had understood that he could seek to annul the bankruptcies after proceeds of the then‑imminent sale of the assets of one of Mr and Mrs Nasic's companies, Smartfuel Pty Ltd, became available: at [13]; CB18. Mr Nasic came to understand that the bankruptcies could not be annulled using the proceeds of sale, and he then directed his efforts towards annulling them under section 153B of the Bankruptcy Act: at [25]; CB19. Mr and Mrs Nasic obtained legal representation in mid‑July 2025 and an application for an extension of time and a review of the Registrar's decision was then raised: at [26]; CB20.
9. The issue raised by s 52(2)(a) is whether Mr and Mrs Nasic are able to pay their debts when due and payable. A debtor is solvent if the debtor can pay his or her debts as and when they become due and payable: Bankruptcy Act s 5(2). Temporary illiquidity generally does not constitute insolvency (Sandell v Porter [1966] HCA 28; 115 CLR 666 at 670 (Barwick CJ); The Owners - Strata Plan No. 20347 v Saha [2021] FCA 961 at [45] (Stewart J)), but in the event a debtor's ability to pay his or her debts is contingent on the realisation of the sale of some asset, that asset must be capable of ready realisation within a reasonable period of time: Re Sanders; Knudsen and Yates (t/a The Hargreaves Practice) v Sanders [2003] FCA 1079; 1 ABC(NS) 408 at [22] (Bennett J). It is incumbent on the debtor to prove the susceptibility of his or her assets to liquidation in the event this is necessary to the debtor's argument that he or she is solvent: Esanda Finance Corp Ltd v Velissaris [1999] FCA 1359 at [15]-[17] (Weinberg J).
10. Although the solvency of Mr and Mrs Nasic cannot be tested by reference to their net asset and debt position alone, it is helpful to begin there.
11. Mr and Mrs Nasic deposed to creditors totalling $3,142,621.06, comprising: a secured admitted debt to the National Australia Bank Ltd (NAB) of $1,493,328.49; unsecured admitted debts of $878,632; and unsecured disputed debts of $770,660.05: AS[23]. They accept that a disputed debt of $56,554.98 to the ATO should be treated as due and payable for present purposes (an amount which is included in the total disputed debts of $770,660.05). In addition, they admit to having debts in unknown amounts to three further creditors, to which I will come shortly.
12. A table of debts is set out below: AS[23]; A Nasic 2 at [46]; CB193; Evans at [12] and [17(b)(iii)]; CB1174-5, 1275-1327 and 1398-9; Ralston 2.

1. The Toyota and BOQ debts both relate to guarantees Mr Nasic gave on car loans. Those loans were defaulted on, and the cars were repossessed and sold. The shortfall on the Toyota and BOQ sales were $18,000 and $40,000 respectively at the time of sale: A Nasic 2 at [79]-[80], [82]-[83]; CB197.
2. There are a number of joint assets and sources of funds.
3. The first is $647,619.09 from the sale of Smartfuel's business assets on 19 June 2025: A Nasic 2 at [90]; CB198. Those proceeds of sale are likely to be able to be used by Mr and Mrs Nasic to pay towards their debts. Mr and Mrs Nasic are the only two directors of Smartfuel: CB23 and 26. The shares in Smartfuel are held in a trust for the benefit of Mr and Mrs Nasic alone. Mr and Mrs Nasic alone have control over KAAZ Group Pty Ltd, which is the relevant trustee. The position of the KAAZ Group is explained in the affidavit of A Nasic 2 at [11]-[14].
4. Mr and Mrs Nasic also say that they are likely to receive an amount of $200,000 on 18 December 2025 on account of the Smartfuel business asset sale: A Nasic 2 at [91(a)]; CB198. The $200,000 payment is subject to a purchase price adjustment process, and it is not presently known what adjustment, if any, is likely: cl 3.2(b); CB482-3; sch 3, cll 1, 6-8; CB494-7. However, it was submitted for Mr and Mrs Nasic that the amount to be received is likely to be around $200,000.
5. Mr Nasic says that he and Mrs Nasic also anticipate receiving ongoing commission from the Smartfuel business asset sale, which could be as much as $4,423,192 over a 24‑month period, commencing September 2025: Nasic 2 at [91(b)]; CB198, 486. In the absence of any evidence of a payment on account of commission for September quarter, I am not prepared to take into account the projections of commission in relation to the question of Mr and Mrs Nasic's solvency.
6. Mr and Mrs Nasic own two units in Botany subject to the mortgage to NAB mentioned earlier: A Nasic 2 at [87], [89]; CB198, 789-90. The equity in the two Botany units is between $318,921.51 and $466,671.51: AS[34]; Evans at [18]; CB190.
7. Mr and Mrs Nasic also say that they are likely to receive $168,450 from a customer of Mrs Nasic's business, Visionpay: A Nasic 2 at [23], [91(a)]; CB190, 198. A tax invoice for that amount is in evidence, it being issued on 13 March 2025. Mr Nasic's evidence was that the amount was likely to be paid in the near term, once he could commence work: A Nasic 2 at [95]; CB199. For present purposes, I have not taken that amount into account.
8. Shortly before the hearing, on 14 October 2025, Mr and Mrs Nasic entered a loan agreement with Mr Jerry Schwartz providing them a 12‑month, $500,000 loan facility with an 18‑month term in which to repay each drawdown: A Nasic 3 at [6]. It is a condition precedent to the operation of the loan agreement that Mr and Mrs Nasic are no longer bankrupt: cl 2.
9. Addressing for the moment those debts that are admitted as due and payable, it emerges that Mr and Mrs Nasic can obtain $1,147,619.09 (proceeds of sale of business assets ($647,619.09) and the loan facility of $500,000), which is sufficient to meet the $935,187.50 in admitted debts now due and payable. That amount includes the debt to Mr Samir: AS[23]; A Nasic 2 at [57]; CB194.
10. There is also sufficient available cash to pay the reasonable remuneration and disbursements of the Trustees, which Mr and Mrs Nasic agree is payable: AS[14]. The Trustees currently quantify their remuneration and disbursements in the sum of $133,562.99: Evans at [37]-[40]; CB1178-9. The question of who should pay the reasonable remuneration and disbursements remains to be determined should the sequestration be set aside, as does the amount of the remuneration and disbursements.
11. To the extent that Mr Nasic has debts to Toyota, BOQ and Optus, I am satisfied that those debts are, on balance, likely to be capable of being met by Mr and Mrs Nasic out of the available cash to which I referred.
12. The only remaining debt is the disputed debt of $714,105.07 said to be payable to AMPL Software Pty Ltd. The apparent basis for that disputed debt is a settlement agreement between AMPL and Dataquest, a company which was owned and controlled by Mr and Mrs Nasic. Mr and Mrs Nasic are described in that agreement as "guarantors" and they are subject to clause 5.1, which provides (cl 5.1; CB1305):

5. Guarantee

5.1 Admir Nasic and Kerisha Nasic indemnify Dataquest to the fullest extent permitted by law, against all liability, loss, damage, cost or expense caused or contributed to by any Act of Default by Dataquest.

1. There is no evidence of a debt owed by Mr and Mrs Nasic to Dataquest pursuant to clause 5.1. There is an unadmitted proof of debt lodged by AMPL in relation to the settlement agreement, but it is not clear how AMPL could be entitled to claim against Mr and Mrs Nasic.
2. Absent an obvious reason why AMPL would have a claim against Mr and Mrs Nasic under clause 5.1, I am not persuaded that I should have regard to the alleged debt in my assessment of their solvency for the purposes of s 52(2)(a). AMPL was represented at this hearing and made no submission as to how a debt on the part of Mr and Mrs Nasic to AMPL could arise under clause 5.1 or otherwise. I also note that AMPL have stated in their proof of debt that the asserted debt is not secured.
3. In view of the conclusion reached in respect of the AMPL debt, it is unnecessary to decide whether the equity in the Botany units is sufficiently realisable to be relevant to Mr and Mrs Nasic's liquidity: Sandell at 670 (Barwick CJ). It is also unnecessary to reach a firm view about the amount of further proceeds of sale that might be received on 18 December 2025 as proceeds of the Smartfuel business asset sale. Lastly, it is also unnecessary to reach a conclusion about the possible receipt of $168,450 in relation to Mrs Nasic's business, Visionpay: A Nasic 2 at [23], [91(a)]; CB190, 198.
4. There are sufficient presently or shortly available funds to meet Mr and Mrs Nasic's current debts.
5. In my view, the explanation for delay given by Mr and Mrs Nasic is sufficient for present purposes. I consider the prejudice to the trustee can be remedied by an appropriately framed order for costs.
6. I gave consideration to the question of whether that order should be made on the basis of an undertaking concerning drawdown of the loan from Mr Schwartz but ultimately consider that no such undertaking should be made. One of the difficulties is that Mr and Mrs Nasic may obtain a payment plan for the debt to the ATO and it is otherwise complicated to frame the undertaking in a way which would not require Mr and Mrs Nasic to draw down an amount that they might otherwise not need. It would operate to their prejudice to require them to draw down the full amount of $500,000 if they did not presently need that amount given that interest would accrue on the whole amount drawn down. For those reasons, I do not require an undertaking from Mr and Mrs Nasic concerning drawdown of the loan in setting aside the sequestration order.

1. The next issue is who should bear the costs of the trustee.
2. In ordinary circumstances, in the absence of special considerations pertaining to the conduct of the debtor, the petitioning creditor, as the unsuccessful moving party, should generally be responsible for the remuneration costs and expenses reasonably incurred by the trustee in the conduct of the administration - see: Porter v Ghasemi [2021] FCAFC 144; 286 FCR 556 at [48(3)].
3. In this case, the petitioning creditor has at all times sought sequestration and opposed this review and, indeed, during the conduct of the case, opposed the making of nearly every single direction that the applicants or interested persons proposed.
4. As against that, the debtors are also partly responsible for the making of the sequestration order, in the sense that, on the evidence which was before the Registrar at the time, the making of the sequestration order was entirely appropriate. In many ways, the success enjoyed by Mr and Mrs Nasic on this application arises by reason of the loan that Mr Schwartz was prepared to provide to them. In those circumstances, in my view, the costs of the trustees in the amount of $110,000 should be borne equally by the CBA and Mr and Mrs Nasic.
5. I took a broad‑brush approach to quantification of the trustees' remuneration and disbursements, having regard to the evidence provided by Ms Evans, which revealed work had been undertaken and provided the hourly rates which were charged. It seemed to me that taking a broad‑brush approach was conducive to the expeditious and cheaper resolution of these proceedings - otherwise, the quantification of remuneration and disbursements would have required referral to a Registrar and the incurring of significant further costs by the parties. I indicated that the amount of $110,000 was something that I saw as provisionally appropriate having regard to Ms Evans' evidence, and the trustees did not wish to say anything against that.

1. The final issue that requires determination is the question of costs of the application brought by Mr and Mrs Nasic for review. On the one hand, Mr and Mrs Nasic had to bring the application and incur substantial costs. On the other hand, I consider that, in a way which is difficult to determine with precision, the manner in which the CBA has conducted the proceedings has unreasonably added to the costs of the application.
2. Mr and Mrs Nasic relied on a letter dated 12 September 2025 in which they sought to resolve issues with the CBA, in substance, by pointing out that they had available cash which would be able to discharge the amount owing to the CBA. There is nothing to suggest that the CBA sought to engage with Mr and Mrs Nasic in a way which would seek to resolve the issues between them or to narrow the issues in dispute in the proceedings.
3. Balancing the fact that these review proceedings had to be brought in any event, Mr and Mrs Nasic's success, and the attitude that the CBA has brought to the conduct of the proceedings, my view is that each party should bear its own costs of this application.
4. For these reasons, the following orders should be made:
   1. Mr and Mrs Nasic are granted an extension of time within which to file their application for review under s 35A(5) of the Federal Court of Australia Act 1976 (Cth) of the orders made by the Registrar on 27 May 2025.

2. The orders made by the Registrar on 27 May 2025 are set aside.

1. The creditor's petition is dismissed.

2. The costs of Mr and Mrs Nasic's trustees in bankruptcy, set at the fixed sum of $110,000 are to be borne equally by the Commonwealth Bank of Australia (50%) and Mr and Mrs Nasic (50%).

5. The parties are to bear their own costs of these proceedings.

I certify that the preceding thirty‑nine (39) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Thawley.