Décor Corporation Pty Ltd v Dart Industries Inc

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

1. The respondent is a bankrupt as a result of a sequestration order made on 27 June 2023. The applicant (the Trustee) is the trustee of the respondent's bankrupt estate.
2. The Trustee commenced this proceeding against the respondent by application filed 11 June 2024. The application was supported by an affidavit of the Trustee. The relief sought by the Trustee included an order pursuant to s 30(1) of the Bankruptcy Act 1966 (Cth) that the respondent deliver up vacant possession of a property situated at 9 Elm St Flemington (the property) and all keys to the property and any documents relating thereto.
3. On 10 July 2024, the respondent appeared to the application and was represented by a solicitor. On 28 February 2025, under threat of a self-executing order, the respondent's solicitors filed a notice stating grounds of opposition to the application supported by an affidavit of the respondent. The Trustee thereafter filed affidavits in response.
4. The respondent's grounds of opposition to the application were as follows -
   1. There is no realisable equity in 9 Elm Street, Flemington ("Property"), and therefore selling the Property will not benefit any unsecured creditors of the Bankrupt Estate of the Respondent.
   2. Realising the Property will only result in the Trustee generating remuneration and incurring legal fees to the detriment of unsecured creditors of the Bankrupt Estate of the Respondent.
   3. The Applicant has not obtained the requisite consent from all secured creditors who have an interest over the Property.
5. The respondent's affidavit of 28 February 2025 in support of the grounds of opposition referred to a registered mortgage over the property to Westpac Banking Corporation and to an unregistered second mortgage in favour of his son to secure a loan of $300,000. Annexed to the affidavit were documents purporting to be copies of a written loan agreement and a form of mortgage both dated 1 July 2007. The respondent stated the following at [11] of his affidavit -

... it is evident that if the Trustee was to realise the Property, there will be no equity available for the creditors of the Bankrupt Estate, and on that basis the Trustee should not be permitted to obtain vacant possession orders, as doing so will simply result in legal fees being incurred by the bankrupt estate for no real benefit to any unsecured creditors who rely on the Trustee.

1. A mediation in the proceeding then took place in May 2025 before a Registrar of the Court. The parties then compromised the proceeding. The Trustee and the respondent entered into a deed of settlement and forbearance dated 12 May 2024. Under the deed the parties agreed to execute consent orders that were attached to the deed. The consent orders were signed by the solicitors for the Trustee and the solicitors for the respondent and were to be filed by the Trustee on 12 August 2025. The consent orders were detailed, and amongst other things provided for the respondent to deliver up to the Trustee vacant possession of the property and all keys and documents related thereto. The consent was expressed to be irrevocable subject to provision being made for the Trustee to accept an offer by or on behalf of the respondent to purchase the property in the period until 12 August 2025.
2. On 12 August 2025, the Trustee filed the consent orders with the Court. There were email exchanges between the chambers of a judge of the Court and the solicitors for the parties the outcome of which was that the judge declined to make some of the orders relating to enforcement in the event of default, but made the substantial elements of the consent orders sought, including relevantly the order to deliver up vacant possession of the property by 12 November 2025.
3. On 27 November 2025, the Court issued a warrant of possession at the request of the Trustee on the ground that the respondent was still in possession of the property.
4. The respondent, who is now self-represented, seeks urgent relief from the Court. In his certificate of urgency in support of listing before a duty judge filed with the Court today, the respondent stated -

The Respondent has been served with a Sheriff of Victoria final notice to vacate, requiring occupants to leave 9 Elm Street, Flemington VIC 3031 by 27 February 2026, pursuant to Warrant No. W25017662714. Absent urgent interlocutory relief, enforcement is likely to occur before the Court can consider the proposed out-of-time appeal application and the stay application.

1. The nature of the urgent relief sought by the respondent is a stay of the orders for possession of 4 September 2025 in aid of an application for leave to file a notice of appeal against those orders out of time. The respondent has prepared a draft notice of appeal which sets out the following proposed grounds -

1. Material Change of Circumstances

2. Disproportionate Administration

1. In oral submissions before the Court today, the respondent explained that the reference to "disproportionate administration" included a lack of clarity which the respondent claimed existed in relation to the administration of the estate. The respondent referred to potential claims for compensation, the question of equitable security interests and the accounting of rental income. The respondent emphasised the fact that if the order for possession was executed and the action proposed by the sheriff proceeds, he will lose his residence of 48 years.
2. The orders sought by the respondent in the draft notice of appeal are -
   1. That the orders made by Justice Bennett on 4 September 2025 in VID515/2014 be set aside, and in lieu therefore there be orders that the proceedings be dismissed.
3. The urgent application is supported by two affidavits of the respondent: a brief affidavit as to urgency made 26 February 2026; and a second affidavit made 27 February 2026.
4. The Trustee read to the Court an affidavit of the Trustee's solicitor, affirmed today, which deposed to the mediation of the proceeding, the compromise, the deed of settlement, and the making of the consent orders.
5. In the affidavit of 27 February 2026, the respondent deposes that he attended a mediation and agreed to a moratorium period during which enforcement action was suspended which has expired. The respondent makes no reference to the fact that he agreed to the consent orders. The respondent then makes the following claims -

(a) the property is subject to a mortgage to Westpac Banking Corporation securing an indebtedness of approximately $450,000;

(b) in addition, his son advanced $500,000 to him in 2013 which is the subject of a written loan agreement and is secured by an unregistered mortgage;

(c) the sum secured against the property under the registered mortgage substantially absorbs any equity, and his son's interest may exhaust any remaining value;

(d) the above matters "were not fully analysed or determined prior to enforcement steps now being taken";

(e) if the property is realised in circumstances where secured liabilities absorb proceeds, creditors may receive no dividend;

(f) possession and sale would nevertheless permanently deprive the respondent of occupation and alter the estate's position before the Court has examined whether realisation advances creditor interests; and

(g) a short supervisory pause would allow proper consideration of whether enforcement is economically beneficial to the estate.

1. The claims about the available equity in the property appear to be substantially the same as those advanced by the respondent's notice stating his grounds of opposition to the application. There is an unexplained discrepancy in that the respondent's affidavit made today refers to a loan from his son in 2013 of $500,000 secured by an unregistered mortgage, whereas his affidavit of 28 February 2025 referred to a loan of $300,000 advanced in 2007 and secured by an unregistered mortgage.
2. Under s 24(1D)(a) of the Federal Court of Australia Act 1976 (Cth), a judgment by consent is taken to be interlocutory, and therefore any appeal lies only with leave. An application for leave to appeal must be brought within 14 days of the judgment or order: Federal Court Rules 2011 (Cth), r 35.13(a). The principles governing the grant of leave to appeal from an interlocutory judgment are well established. Although each case must be considered on its merits, generally an applicant for grant of leave must establish -

(a) that, in all the circumstances of the case, the decision is attended by sufficient doubt to warrant its being reconsidered; and

(b) that substantial injustice would result if leave were refused, supposing the decision to be wrong: Décor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 655; (1991) 33 FCR 397 at [2].

1. The respondent's proposed appeal from the orders for possession made 4 September 2025 has no merit. The current application appears to be no more than an attempt to relitigate arguments originally raised by the respondent in his notice of grounds of opposition. There are no grounds revealed by the material that would suggest any tenable basis for an appeal against the orders. The orders made on 4 September 2025 were the subject of an agreement recorded in the settlement deed and the minute of consent orders was signed by the solicitors for the parties. There is no claim that the respondent's solicitors lacked actual or implied authority to sign the consent orders, and indeed the respondent's execution of the settlement deed would suggest that such a claim would be fanciful. Nor is there any claim or basis to suggest fraud. The circumstances in which final orders made by consent that give effect to a compromise may be set aside by a court are exceptional: see Harvey v Phillips [1956] HCA 27; 95 CLR 235; Paino v Hofbauer (1988) 13 NSWLR 193 at 198 (McHugh J). Indeed, there is authority that an application to set aside a judgment obtained by consent which has been entered and which gives effect to a compromise should be brought by a separate action: Spies v Commonwealth Bank of Australia (1991) 24 NSWLR 691 at 697. But the outcome of this application does not rest on a procedural point. At its heart, the substance of the respondent's application has no merit.
2. The respondent's application to stay the orders of 4 September 2025 is dismissed.

I certify that the preceding 19 (nineteen) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Wheelahan.