Mayart Pty Ltd v Knight

procedural history 8 At all times, Mr Knight has been unrepresented in this proceeding. However, Mr Knight's legal qualifications were noted in the Court of Appeal judgment (at [7]): Mr Knight informed the Court that he holds the degree of Bachelor of Laws with First Class Honours, together with a bachelor's degree of business and property, and that he is also studying for a master's degree in construction law at the University of Melbourne. He appeared for himself before the judge at trial and before the Court on this application, although he was given leave to be assisted by an administrative assistant, Ms Philippe, who sat with him at the bar table. Mr Knight presented as articulate and capable. 9 Mr Knight likewise presented as articulate and capable during the hearing of the present application. 10 As noted above, the creditor's petition was originally filed on 11 April 2022. It was supported by an affidavit of the solicitor for Mayart, Darren John Noble, sworn 11 April 2022. 11 On 30 June 2022, orders were made dispensing with personal service of the creditor's petition and providing for substituted service by posting the relevant documents to a specified address and emailing the relevant documents to a specified email address, with service deemed to be effective on 28 July 2022. 12 On 11 August 2022, orders were made for Mr Knight to file and serve any notice of opposition, any affidavit in support and any short submissions by 31 August 2022. 13 On 8 September 2022, orders were made giving Mr Knight further time, to 26 September 2022, in which to file and serve any notice of opposition, any affidavit in support and any submissions. The orders also required Mayart to file and serve any affidavit material in reply and any submission by 3 October 2022. The hearing of the petition was adjourned to 6 October 2022. 14 On 30 September 2022, Mr Knight filed and served a notice of opposition and an affidavit sworn by him that day. 15 On 3 October 2022, Mayart filed and served an outline submission. 16 On 6 October 2022, orders were made pursuant to s 35A(7)(b) of the Federal Court of Australia Act 1976 (Cth) referring the proceeding to a Judge of the Court for hearing. 17 On 26 October 2022, the following further orders were made: (a) Mr Knight was required to file and serve any written submissions in response to Mayart's submissions by 23 November 2022; (b) Mayart was required to file and serve any submissions in reply to Mr Knight's submissions by 2 December 2022; and (c) the matter was listed for hearing on 14 March 2023. 18 Mr Knight did not file and serve any written submissions before 23 November 2022. 19 On 9 March 2023, being two working days before the hearing on 14 March 2023, Mr Knight filed a further notice of opposition, a further submission and a further affidavit sworn by him that day. Not only was the submission more than 3 months late, it was not responsive to Mayart's submissions but sought to state again matters by way of opposition to the creditor's petition. So too, Mr Knight's further affidavit sought to state again matters by way of opposition to the creditor's petition. 20 Mr Knight sought leave to rely on this further material at the hearing of the creditor's petition on 14 March 2023. His explanation for the late filing of the material was the extent of work required to review the file of the County Court proceeding and to prepare his opposition. 21 Ultimately, Mayart did not press any objection to Mr Knight relying on this further material. I gave leave to Mr Knight to rely upon the further material at the hearing. I did not find Mr Knight's explanation for the late filing of the further submissions and affidavit persuasive. The further materials sought to be relied upon by Mr Knight were in relatively short compass, and they related to the same issues that were raised by his original affidavit and submissions. With due attention to the proceeding, I consider that Mr Knight could have, and should have, filed the material at a much earlier point in time. The late filing of such material causes inconvenience to Mayart and the Court, and increases the costs of the proceeding. Nevertheless, as the further material was directed to the same issue as the earlier material, it was apparent at the hearing that Mayart was in a position to address the material and I therefore received the material in opposition to the application.

statutory requirements 22 Section 43 of the Bankruptcy Act empowers the Court to make a sequestration order against the estate of a debtor where: (a) a petition is presented by a creditor; (b) the debtor has committed an act of bankruptcy; and (c) at the time he or she did so the debtor was, among other things, personally present or ordinarily resident in Australia.

Creditor's petition 23 Section 44 stipulates certain conditions on which a creditor may petition. Relevantly, it provides as follows: 44 Conditions on which creditor may petition (1) A creditor's petition shall not be presented against a debtor unless: (a) there is owing by the debtor to the petitioning creditor a debt that amounts to the statutory minimum or 2 or more debts that amount in the aggregate to the statutory minimum, or, where 2 or more creditors join in the petition, there is owing by the debtor to the several petitioning creditors debts that amount in the aggregate to the statutory minimum; (b) that debt, or each of those debts, as the case may be: (i) is a liquidated sum due at law or in equity or partly at law and partly in equity; and (ii) is payable either immediately or at a certain future time; and (c) the act of bankruptcy on which the petition is founded was committed within 6 months before the presentation of the petition. … 24 By s 5, the statutory minimum is $5,000. 25 Section 47 stipulates certain requirements as to a creditor's petition. It provides as follows: 47 Requirements as to creditor's petition (1) A creditor's petition must be verified by an affidavit of a person who knows the relevant facts. (1A) If the rules of court prescribe a form for the purposes of this subsection, the petition must be in the form prescribed. (2) Except with the leave of the Court, a creditor's petition shall not be withdrawn after presentation.

Acts of bankruptcy 26 Section 40 of the Bankruptcy Act defines when a debtor commits an act of bankruptcy. It relevantly provides: 40 Acts of bankruptcy (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 in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not: (i) where the notice was served in Australia - within the time fixed for compliance with the notice; or (ii) where the notice was served elsewhere - within the time specified by the order giving leave to effect the service; 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; …

Hearing a creditor's petition 27 Section 52 contains stipulations with respect to the hearing of a creditor's petition, including the period in which a creditor's petition remains current. It relevantly provides as follows: (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. … (4) A creditor's petition lapses at the expiration of: (a) subject to paragraph (b), the period of 12 months commencing on the date of presentation of the petition; or (b) if the Court makes an order under subsection (5) in relation to the petition - the period fixed by the order; unless, before the expiration of whichever of those periods is applicable, a sequestration order is made on the petition or the petition is dismissed or withdrawn. (5) The Court may, at any time before the expiration of the period of 12 months commencing on the date of presentation of a creditor's petition, if it considers it just and equitable to do so, upon such terms and conditions as it thinks fit, order that the period at the expiration of which the petition will lapse be such period, being a period exceeding 12 months and not exceeding 24 months, commencing on the date of presentation of the petition as is specified in the order.

Mayart's evidence in chief 28 The creditor's petition of Mayart was verified by an affidavit of the solicitor for Mayart, Darren John Noble, sworn 11 April 2022. By that affidavit, Mr Noble deposed to the following matters: (a) On 2 July 2021, the Official Receiver issued the Bankruptcy Notice (bankruptcy notice 253515). A copy of the Bankruptcy Notice was annexed. The Bankruptcy Notice was based upon the final judgment and orders of Judge Macnamara of the County Court of Victoria made on 19 February 2021 in the County Court proceeding. A copy of the order of the Country Court was annexed. (b) Mr Knight applied for leave to appeal from the judgment and orders of the County Court. On 23 March 2022, the Court of Appeal refused leave to appeal. A copy of the order of the Court of Appeal was annexed. (c) Between 4 and 10 August 2021, Mayart sought to serve the Bankruptcy Notice on Mr Knight by the following methods: (i) by personal service effected at residential addresses notified by Mr Knight in the County Court and Court of Appeal proceedings and a business address appearing on an email sent by Mr Knight; (ii) by post to those same addresses; and (iii) by email to an email address notified by Mr Knight on documents filed in this proceeding and in the County Court and Court of Appeal proceedings. (d) On or about 17 August 2021, Mr Knight applied for orders setting aside the Bankruptcy Notice in Federal Circuit and Family Court of Australia proceeding MLG2095/2021. In that proceeding: (i) Registrar Bird made orders dated 19 August 2021 which, amongst other things, extended the time for compliance with the Bankruptcy Notice to 4:30pm on 16 September 2021; (ii) Registrar Gitsham made orders dated 16 September 2021 which, amongst other things, extended the time for compliance with the Bankruptcy Notice to 4:30pm on 23 September 2021; (iii) Registrar Gitsham made orders dated 23 September 2021 which, amongst other things, extended the time for compliance with the bankruptcy notice to 4:30pm on 7 October 2021; (iv) Registrar Gitsham made orders dated 7 October 2021 which, amongst other things, extended the time for compliance with the bankruptcy notice to 4:30pm on 15 October 2021; and (v) Registrar Gitsham made orders dated 15 October 2021 which dismissed the application. Copies of those orders were annexed. (e) On 11 April 2022, a solicitor employed by Noble Lawyers conducted a search of the records of the Federal Court and Federal Circuit and Family Court (the federal law search) to determine whether any further applications had been made by Mr Knight relative to the Bankruptcy Notice. The federal law search revealed that, as of 11 April 2022, Mr Knight had only been a party to the application to set aside the Bankruptcy Notice (which was dismissed on 15 October 2021) and an inactive proceeding commenced in 2014 by Brighton Grammar School against Mr Knight. A copy of the federal law search was annexed. 29 Mayart also relied on the following further affidavits for the purposes of r 4.06 of the Federal Court (Bankruptcy) Rules 2016 (Cth) (Bankruptcy Rules): (a) affidavits of Matthew Salvatore Widmaier sworn 3 August 2022 and Tina Wang sworn 3 August 2022 deposing to the service of the documents required to be served under r 4.05, as required by r 4.06(2); (b) affidavits of Matthew Salvatore Widmaier sworn 10 August 2022, 2 September 2022 and 10 March 2023 deposing to the results of searches of the National Personal Insolvency on those dates in accordance with r 4.06(3); and (c) an affidavit of Donald William Cox, a director of Mayart, sworn 9 March 2023 deposing that the Judgment Debt is still owing, as required by r 4.06(4).

Respondent's evidence in support of his objection 30 At the hearing, Mr Knight did not seek to rely on his first affidavit sworn by him on 30 September 2022, but read his second affidavit sworn 9 March 2023 (and tendered the exhibits to that affidavit). As Mayart submitted, parts of Mr Knight's second affidavit were objectionable as containing submissions and the expression of opinions. Mayart did not press formal objections to the affidavit and I indicated to the parties that I would receive all such material as submissions of Mr Knight. 31 Mr Knight's affidavit largely concerned the County Court proceeding which gave rise to the Judgment Debt. The affidavit exhibited a copy of the various iterations of the statement of claim in that proceeding, certain commercial documents that were the subject of the proceeding and extracts of the trial transcript. Those documents will be referred to later in these reasons when considering Mr Knight's opposition to the creditor's petition.

Mayart's evidence in reply 32 In reply to Mr Knight's opposition, Mayart tendered two documents. 33 The first document was a lengthier extract of the trial transcript in the County Court proceeding, which was Exhibit MK06 to Mr Knight's first affidavit. That document was marked as exhibit A. 34 The second document was Mr Knight's written submissions in his application in the Court of Appeal seeking leave to appeal from the County Court judgment. Mayart sought to tender that document to demonstrate that the argument now advanced by Mr Knight in this proceeding had been abandoned by him in the application for leave to appeal. Mr Knight objected to the tender of that document, arguing that he had not had an opportunity to consider its relevance. During the hearing, I informed the parties that I would rule on the tender after hearing argument on the application. I have concluded that the document should be admitted as evidence and it will be marked as exhibit B. It provides a basis for Mayart's submission that the argument now advanced by Mr Knight in this proceeding had been abandoned by him in the Court of Appeal. I consider that there is no prejudice to Mr Knight from the tender of the document. While Mr Knight complained that he had not been given prior notice of the document before the hearing, the document is Mr Knight's own written submissions to the Court of Appeal, and Mr Knight was able to respond to the document during the hearing.

Satisfaction of the statutory requirements 35 Based on the evidence relied on by Mayart, I am satisfied of the matters set out in ss 43 and 52(1) of the Bankruptcy Act and other related statutory requirements. 36 First, for the purposes of s 43(1)(a), I am satisfied that Mr Knight has committed an act of bankruptcy as described in s 40(1)(g). In that regard, I am satisfied that: (a) Mayart obtained against Mr Knight a final judgment in the County Court proceeding; (b) the Bankruptcy Notice has been served on Mr Knight; (c) Mr Knight has failed to comply with the requirements of the Bankruptcy Notice within the time fixed for compliance which, by orders made in Federal Circuit and Family Court of Australia proceeding MLG2095/2021, was extended to 15 October 2021. 37 Second, for the purposes of s 43(1)(b), I am satisfied that at the time when the act of bankruptcy was committed, Mr Knight was personally present or ordinarily resident in Australia. 38 Third, for the purposes of s 44(1), I am satisfied that the debt exceeds the statutory minimum, the debt is a liquidated sum due at law and the act of bankruptcy on which the petition is founded was committed within 6 months before the presentation of the petition. 39 Fourth, for the purposes of s 47(1), I am satisfied that the creditor's petition is verified by an affidavit of a person who knows the relevant facts, being the affidavit of Mr Noble sworn 11 April 2022. 40 Fifth, for the purposes of s 47(1A), I am satisfied that the creditor's petition is in the proper form. 41 Sixth, for the purposes of s 52(1), I am satisfied that: (a) the matters stated in the creditor's petition have been proved by the affidavits relied upon by Mayart in this proceeding; (b) the creditor's petition has been served on Mr Knight as required by r 4.05 of the Bankruptcy Rules; and (c) subject to the matter considered below, that the debt on which the applicant relies is still owing. 42 Upon proof of the matters stated in s 52(1), the Court will ordinarily proceed to make a sequestration order; it is for the debtor to put material before the Court to establish either of the matters set out in s 52(2) of the Bankruptcy Act: see Cain v Whyte (1933) 48 CLR 639 at 646 and 648 and Rozenbes v Kronhill (1956) 95 CLR 407 at 414 per Dixon CJ and Webb and Fullagar JJ.

Section 52(2) of the Bankruptcy Act 43 By his notice of opposition, Mr Knight does not contend that he is able to pay his debts as per s 52(2)(a). Rather, Mr Knight contends that for "other sufficient cause a sequestration order ought not to be made" as per s 52(2)(b). 44 While Mr Knight's notice of opposition states six grounds of opposition, it was apparent from his written and oral submissions that there is a single ground: that the debt claimed by Mayart "is not in reality due and payable to it". As the debt claimed by Mayart is the Judgment Debt arising under a final judgment of the County Court, Mr Knight requests this Court to go behind the judgment "to ascertain the reality of the debt being owed to the petitioning creditor". 45 The applicable legal principles were not in dispute between the parties. In Ramsay Health Care Australia Pty Ltd v Compton (2017) 261 CLR 132 (Ramsay), the High Court majority (Kiefel CJ, Keane and Nettle JJ) affirmed the following principles: (a) First, by reason of s 52 of the Act, a Bankruptcy Court must be satisfied with the proof of "the fact that the debt … on which the petitioning creditor relies is … still owing", if the court's power to make a sequestration order is to be enlivened (at [39]). (b) Second, a Bankruptcy Court is not obligated to treat a judgment as satisfactory proof of the petitioning creditor's debt. A Bankruptcy Court exercising jurisdiction under s 52 of the Act may, in some circumstances, "go behind" a judgment in order to be satisfied that the debt relied upon by the petitioning creditor is truly owing. The Bankruptcy Court may take this course in order to satisfy itself that there is an extant petitioning creditor's debt as a necessary foundation for the making of a sequestration order (at [1]). (c) Third, the circumstances in which a Bankruptcy Court may go behind a judgment are not limited to cases involving default judgments or cases involving fraud, collusion or miscarriage of justice (at [33], [39], [43]). A Bankruptcy Court may go behind a judgment, notwithstanding that the judgment was obtained after a contested hearing (at [44]). (d) Fourth, scrutiny by a Bankruptcy Court of the debt propounded by a judgment creditor seeking a sequestration order does not involve an attempt to impeach the judgment; nor is a Bankruptcy Court concerned to prevent the judgment creditor from invoking the ordinary processes of execution available under the general law. Rather, a Bankruptcy Court is concerned only with the question whether the debt on which the application for a sequestration order is based is truly a basis for the making of the order (at [54]). (e) Fifth, the scrutiny required by s 52 of the Act as to whether there is, in truth and reality, a debt owing to the petitioning creditor serves to protect the interests of third parties, particularly other creditors of the debtor. Their interest in being paid their debts in full should not be prejudiced by the making of a sequestration order in reliance on a judgment debt which does not reflect the true indebtedness of the debtor to the petitioning creditor (at [55]). (f) Sixth, the principle that a party is bound by the conduct of their case at trial is not a sufficient reason for a Bankruptcy Court not to look behind a judgment. That is because a Bankruptcy Court is concerned, not to discipline litigants or to protect finality in the administration of justice as between parties to litigation, but to protect the interests of third parties who were not participants in the litigation which led to the judgment in question (at [67]). 46 As observed by the Full Federal Court in Doggett v Commonwealth Bank of Australia [2019] FCAFC 19 at [34], it is not the case that a debtor is entitled simply to re-litigate the judgment upon which the debt is founded. Sufficient reason must be shown to question the debt. As Lockhart J (with whom Fisher J agreed) stated in Simon v Vincent J O'Gorman Pty Ltd [1979] FCA 75; 41 FLR 95 at 111 (in a passage cited with apparent approval by the majority in Ramsay at [48]): The courts are reluctant to exercise this jurisdiction where the judgment was entered after a full investigation of the issues at a trial where both parties appeared and had ample opportunity to put their case to the court. 47 In Ramsay, the majority explained (at [68], citations omitted): For the purposes of s 52 of the Act, a judgment may usually be taken to be sufficient evidence of a debt in that a judgment against a debtor in favour of a creditor obtained after a trial is, generally speaking, a reliable indication of the true state of indebtedness as between creditor and debtor. Indeed, such a judgment can usually be expected to provide the most reliable statement of the debt humanly attainable because the ordinary processes of the adversarial system provide a practical guarantee of reliability. The testing of the relative merits of a claim and counterclaim under the rigours of adversarial litigation will usually establish the true state of accounts as between the parties to the proceedings. Accordingly, a Bankruptcy Court will usually have no occasion to investigate whether the judgment debt is a true reflection of the real debt. But where the merits of a claim and counterclaim have not been tested in adversarial litigation, a judgment debt will not have this practical guarantee of reliability. 48 To understand Mr Knight's contentions on this application, it is necessary to traverse the issues and findings in the County Court proceeding. In that proceeding, there were four plaintiffs at the time of trial: Mayart, Lincoln Daley, Leanne Daley and Dalle Australia Pty Ltd. There were originally three defendants: Mr Knight's then wife, Philippa Knight, Residential Villages (Aust) Pty Ltd and Mr Knight. However, prior to trial Mrs Knight became bankrupt and the proceeding was dismissed as against Residential Villages (Aust) Pty Ltd, leaving Mr Knight as the only defendant. 49 Judge Macnamara made the following factual findings: (a) On 16 April 2009, Mr Knight's then wife, Philippa Knight, became the sole registered proprietor of a property at 39 Parkers Road, Parkdale, Victoria which was to be a development site (at [2]). (b) Mr Knight arranged for the preparation of plans for a 12-apartment development on the Parkers Road property and a planning permit issued around 2012 (at [3]). (c) Mrs Knight entered into a building contract with J G King Projects Pty Ltd (at [4]). However, the parties fell into dispute with the builder claiming payment of some $491,000. The builder sued for that amount and Mrs Knight consented to judgment in that amount. The judgment remained unsatisfied and by August 2014 Mrs Knight had been served with a bankruptcy notice. J G King presented a bankruptcy creditor's petition, the hearing of which had been adjourned a number of times. It became essential to raise money to settle the bankruptcy proceeding, failing which the Knights would lose control of 39 Parkers Road and the development (at [5]). (d) A proposal was developed for two of the apartments in the proposed development to be sold to raise funds to satisfy the debt due to J G King. The two apartments were numbered 10 and 11. The proposed purchaser of apartment 11 were Lincoln and Leanne Daley (whose family trustee company was Dalle Australia Pty Ltd) and the proposed purchaser of apartment 10 was Mr Daley's father in law, Mr Cox, through his family trustee company Mayart) (at [5] to [8]). (e) In pursuance of those arrangements, a number of documents were executed (at [9]). Two loan agreements were entered into on 18 August 2014. Under each agreement, the borrower was Mrs Knight and the guarantor of the borrowing was Mr Knight. The first loan agreement was for an amount of $225,000 and the lender was stated to be Lincoln and Leanne Daley (at [10]). The second loan agreement was for an amount of $400,000 and the lender was stated to be Mayart (at [17]). The provisions of the loans were otherwise identical (at [18]). The purpose of each loan was stated to be "To assist in the discharge of existing debts in relation to the Property and develop the Property" (at [11]). The "Property" was stated to be the Parkers Road property. Each loan obliged the borrower to enter into a contract of sale in respect of apartment 10 (for Mayart) and 11 (for the Daleys) (at [11]). Each loan also provided that the loan would be deemed to have been repaid upon settlement of the contracts of sale of the apartments (at [12]). However, the loans also become due and payable at specified times, including if the contracts of sale were rescinded (at [10]). (f) Also executed were two contracts of sale for apartments 10 and 11 respectively. The purchaser in respect of apartment 10 was Mayart and the purchaser in respect of apartment 11 was the Daleys (at [19]). The contract of sale for apartment 10 was executed by Mayart's solicitor on 20 August 2014 and had a purchase price of $400,000 (at [19] and [21]). The contract of sale for apartment 11 was executed on 18 August 2014 and had a purchase price of $225,000 (at [20] and [21]). (g) On or about 20 September 2018, the contracts of sale were rescinded (at [28]). 50 Judge Macnamara recorded that, in the proceeding, the plaintiffs sought recovery against Mr Knight as guarantor of his former wife's obligations under the two loan agreements (at [35]). His Honour noted that counsel for the plaintiffs opened the case in that manner, which were claims by Mayart on the one hand and by the Daleys on the other. Given that, it was unclear why Dalle Australia Pty Ltd had been joined as fourth plaintiff (at [35]). His Honour also noted that the last version of the statement of claim alleged that the loan agreement between Mayart and the Knights had been entered into by Mayart "as nominee or transferee of the Fourth Plaintiff" (ie Dalle Australia Pty Ltd) (see at [38]). Despite the joinder of Dalle Australia Pty Ltd and the aforementioned allegations, Judge Macnamara concluded as follows: 40 … Despite seeking and obtaining leave to amend the prayer for relief in the course of his opening statement, Dr Wolff presented the plaintiffs' case entirely according to the two loan agreements as they appear on their face, without reference to the fourth plaintiff or any transfer at all. 41 This seemed to me to be an appropriate mode of proceeding, so far as I could apprehend the evidence which was to be given and which was ultimately given. A transfer assignment or nomination would, as I understand the law, presuppose the existence, before the alleged nomination, transfer, or assignment, of some bundle of rights which could be, in the case of an assignment or transfer, made over from one natural or legal person to another, or an existing bundle of rights which could be made over in favour of some party other than their initial holder by the exercise of a power of nomination by an identified party, presumably such power being of the same character as a power of appointment under a trustee. 42 The evidence which was placed before the court indicated to me that the documents sued upon were the source of all relevant rights and obligations, whatever they might be. They did not purport to act upon, dispose of, or otherwise modify any pre-existing contractual rights. This was the basis upon which the trial was conducted. Accordingly, I propose disregarding the references in the Statement of Claim to nomination and assignment. 43 From there, the Statement of Claim alleged a failure on the part of Mrs Knight as borrower and Mr Knight as guarantor to repay the loans made under the two loan agreements, followed by a claim as against Mr Knight as guarantor for default interest at the rate specified in the loan agreements. Ultimately, these were the only operative provisions of the 81-paragraph document which call for consideration in the court's determination. 51 Judge Macnamara made the following further findings based on the case that was conducted at trial: (a) Mr Knight admitted signing the two loan agreements (at [50]). (b) While Mrs Knight did not distinctly admit signing, his Honour inferred that she signed the loan agreements (at [50]-[53]). (c) Relevantly, the execution of the Mayart loan agreement by Mayart was established (at [54]). (d) The plaintiffs' primary case was established (ie, the loan amounts were owing under the loan agreements) (at [61]). 52 Judge Macnamara rejected all of the defences raised by Mr Knight (see at [65], [84], [97], and [104]). Relevantly, Mr Knight sought to raise as a further defence the issue now agitated on this application. Relying (as a factual premise) on the plaintiffs' allegations in the statement of claim that there had been an assignment or transfer of the loan from Dalle Australia Pty Ltd to (relevantly) Mayart, Mr Knight argued that the requirements of s 134 of the Property Law Act 1958 (Vic) (Property Law Act) had not been complied with. It followed, on Mr Knight's submission, that Mayart had no right to sue upon the loan obligations (see at [105]). Judge Macnamara also rejected that defence fundamentally on the basis that "the case pressed at trial did not depend upon any finding of assignment at all" (at [106]). 53 As noted earlier, Mr Knight's application to the Victorian Court of Appeal for leave to appeal from the County Court judgment was refused. It is significant that, by his proposed appeal ground 2, Mr Knight sought to re-agitate his argument concerning the application of s 134 of the Property Law Act. The basis of the argument was materially the same as advanced before the County Court and took as its factual premise the plaintiffs' pleading of an assignment or transfer of the loan from Dalle Australia Pty Ltd to (relevantly) Mayart. The judgment of the Court of Appeal records (at footnote 3) that Mr Knight did not pursue appeal ground 2 on the application for leave to appeal. 54 On this application, Mr Knight sought to go behind the County Court judgment and advance the same contention. Mr Knight submitted that the evidence shows that the first loan agreement for $400,000 was entered into between Dalle Australia Pty Ltd as lender and Mrs Knight as borrower and Mr Knight as guarantor, and that that loan agreement was subsequently assigned to Mayart. Mr Knight submitted that the assignment was necessary because Mayart had entered into the contract of sale to purchase apartment 10 and the parties wished to ensure that the lender under the loan agreement was the same entity as the purchaser under the contract of sale. 55 The primary evidence relied upon by Mr Knight was a document which purported to be a loan agreement dated 18 August 2014 between Dalle Australia Pty Ltd as lender and Mrs Knight as borrower and Mr Knight as guarantor in the amount of $400,000. Mr Knight also relied on the allegations made by the plaintiffs in the County Court proceeding to the effect that there was an assignment or transfer of such a loan to Mayart. 56 I am not satisfied by those matters that there is a sufficient reason for questioning whether in truth and reality there is a debt due to the petitioning creditor. The evidence adduced on this application also showed that: (a) a loan agreement was entered into on 18 August 2014 between Mayart as lender and Mrs Knight as borrower and Mr Knight as guarantor in the amount of $400,000; and (b) a contract of sale was entered into on 20 August 2014 between Mayart as purchaser and Mrs Knight as seller of apartment 10 for a sale price of $400,000. 57 Mr Knight's argument that the loan agreement was originally entered into by Dalle Australia Pty Ltd, and then assigned to Mayart because Mayart was the purchaser of apartment 10, does not accord with the above documents that were in evidence. First, there was no instrument of assignment in evidence. Second, the loan document with Mayart as lender was entered into on the same day as the loan document with Dalle Australia Pty Ltd as lender. Third, the contract of sale with Mayart as purchaser post-dates both documents. 58 Given the state of the evidence, I am unable to make any finding about the validity or purpose of the loan document with Dalle Australia Pty Ltd as lender. It is clear from the County Court judgment that the Mayart loan agreement and contract of sale were tendered in evidence and accepted as valid documents by his Honour. On the evidence before me, there is insufficient reason to doubt the judgment reached by the County Court. That view is strengthened by the fact that Mr Knight abandoned any reliance on his argument under s 134 of the Property Law Act in his application for leave to appeal to the Court of Appeal.

Conclusion 59 Mr Knight has failed to make out his grounds of opposition. I am satisfied of proof of the matters required by s 52(1) of the Bankruptcy Act. In those circumstances I am satisfied that I should exercise my discretion to make a sequestration order against the estate of Mr Knight. I certify that the preceding fifty-nine (59) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice O'Bryan.