consideration
50 Mr Mead's claim that the creditor's petition contains an error as he does not have a dwelling house or place of business in Australia must be rejected. First, Mr Mead was ordinarily resident in Australia at the time of bankruptcy: Re Taylor; ex parte Natwest Australia Bank Limited (1992) 37 FCR 194. I do not accept Mr Mead's submission that all of the matters in s 43(1)(b) must be satisfied. It is clear that the subsections in s 43(1)(b) are expressed in the alternative. That Mr Mead was ordinarily resident in Australia at the time of bankruptcy is sufficient to satisfy the requirement in s 43(1)(b) of the Act.
51 Second, in any event, as the BCCC submitted, relying on Fuller v Alford (2017) 252 FCR 168; [2017] FCA 782 at [45] - [48], which in turn cites Mathai v Kwee (2005) ABC(NS) 268 at [112] as follows:
To have a dwelling-house in Australia it is not necessary that a debtor has a legal or equitable estate in the property in question. A licence to occupy a dwelling-house may suffice (per Goff LJ in re Brauch at p 334).
52 As Mr Mead deposes to residing at a house which his wife owns, the Court may be satisfied that Mr Mead was ordinarily resident and had a dwelling house in Australia.
53 As to the affidavit verifying the petition, whilst making no concessions as to the personal knowledge of the deponent, the QBCC, relying on Daly v Watson (1994) 50 FCR 544 at 552, correctly submitted that the evidence as to the veracity of the material in a creditor's petition may be augmented by further evidence provided at the hearing. In this case, as well as Mr Mead's own evidence, as was referred to above, there was an affidavit of Ms Holland filed on 25 June 2024, solicitor for the QBCC, which exhibited a title search of a property, the registered owner of which is Mr Mead's wife. There is also an earlier affidavit of Ms Holland filed on 21 May 2024 exhibiting the documents from the Magistrate's Court proceedings giving rise to the judgment debt. They also prove Mr Mead's address.
54 Further, as to Mr Mead's suggestion that the evidence of Mr Paul was untruthful, the QBCC correctly submitted that Mr Paul was not cross-examined and therefore the submission cannot be relied upon.
55 With respect to the submissions made by Mr Mead about the circumstances surrounding the Magistrate's Court hearing giving rise to the judgment debt, none of those amount to a justification for the Court going behind the judgment debt. Mr Mead does not seek to impugn the validity of the QBCC'S claim for the debt: Ramsay [65]. Further, as submitted by the QBCC, the relevant judgment was entered on appearance by Mr Mead and has not been appealed from.
56 Mr Mead's submission, attempting to annex the principle in Ramsay in the sense that it contemplated that someone in the position of his wife is a third party whose interests should be protected, is misconceived. As is clear from [55] of the reasons of the plurality in Ramsay, the interests to which the High Court was directed were those of other creditors.
57 Mr Mead also maintained that he is not insolvent however there was no evidence before the Court in that regard, save for his assertions in his affidavit of 31 January 2024 to that effect. Also in that affidavit, Mr Mead deposed as follows:
27. Health of Respondent
28. I say that because of my ill health I am currently unable to work full time and my wife is the prime income producer in our family at the moment and she meets the bulk of the expenses of our family.
58 Further, while Mr Mead submitted at the hearing that his health was improving to the point where he may be able to work again, such a submission was not consistent with the evidence before the Court which included that his health was "tenuous" and sets out that he suffers from a number of serious medical conditions.
59 In the absence of any further evidence, I do not accept that Mr Mead is likely to be able to return to work.
60 Given the above, I am not satisfied that Mr Mead is not insolvent.
61 Lastly, Mr Mead relies on the hardship he and his wife may suffer should a sequestration order be made. He also submits that it is not in the public interest for them to become homeless, should a consequence of the sequestration order be that the home owned by his wife be "attacked" by the trustees.
62 It is accepted that the making of a sequestration order may lead to hardship for the debtors and perhaps others affected by his or her circumstances. Whilst that is unfortunate, there is no basis for it to be a reason for the Court not to make a sequestration order. In assisting the Court, counsel for the QBCC handed up a decision of the Federal Circuit Court of Baycorp Collections PDL (Aus) Pty Ltd v Hsia [2018] FCCA 249, being the only decision counsel had been able to identify which dealt with the question of hardship in the context of the making of a sequestration order. Whilst not binding on this Court, I endorse the observations of his Honour Judge Street at [6] as follows:
In relation to s 52(2) as to whether there is other sufficient cause why a sequestration order should not be made, the respondent has identified the hardships that he has faced in relation to the loss of his mother, and it is clear that his circumstances are one in which he has been struggling to deal with personal issues. They are not reasons why other sufficient cause has been shown that a sequestration order should not be made. They are reasons why the respondent should continue to seek and obtain professional help as and when he needs it.
63 For these reasons, the claim of hardship does not amount to an "other sufficient cause" under s 52(2)(b) of the Act. I am not satisfied that the causes put by Mr Mead outweigh the public interest in avoiding unremunerative trading and the rights of creditors who are unable to have their debts paid: Cain at 646.
64 I am also satisfied that the QBCC has met the formal requirements with respect to the hearing before Judicial Registrar Schmidt and before me, for the following reasons:
The creditor's petition was presented on 3 November 2023 and complies with the form requirements: s 47(1A) of the Act; r 4.02 of the Bankruptcy Rules. It was verified by the affidavit of Mr Paul made on 2 November 2023: s 47(1) of the Act; r 4.02(2) of the Bankruptcy Rules.
The creditor's petition was presented against Mr Mead in relation to a debt exceeding $10,000 and within six months of the date of the act of bankruptcy: s 44(1)(a) and (c) of the Act; reg 10A of the 2021 (Cth).
The creditor's petition was accompanied by an affidavit of Mr Couper stating the matters required by r 4.04(1)(a) of the Bankruptcy Rules.
Mr Mead was personally served with the creditor's petition, affidavit of Mr Couper, affidavit of service of the bankruptcy notice and the trustee consent to act declaration on 26 November 2023, more than five days before the hearing of the creditor's petition. The service of such documents was deposed to in the affidavit of Mr Thach sworn on 30 November 2023.
The bankruptcy notice BN 261648 dated 19 September 2023 was in the prescribed form and related to a final judgment debt of an amount that is at least $10,000.00: ss 41(1), (2) of the Act; regs 9, 10A of the Regulations.
The bankruptcy notice was not issued after a period of more than six years since the judgment was given: s 41(3) of the Act.
The judgment was attached to the bankruptcy notice: Curtis v Singtel Optus Pty Ltd (2014) 225 FCR 458; [2014] FCAFC 144 at [35].
The bankruptcy notice was served on Mr Mead on 29 September 2023, within six months of the notice being issued as required by reg 10 of the Regulations.
Pursuant to s 40(1)(g) of the Act, Mr Mead committed an act of bankruptcy by failing to comply with the bankruptcy notice on or before 20 October 2023 which is the time fixed for compliance with the notice.
As stated above, at the time when the act of bankruptcy was committed, Mr Mead was ordinarily resident and had a dwelling house in Australia: ss 43(1)(b)(i)-(ii) of the Act.
One day prior to the hearing before Judicial Registrar Schmit on 7 February 2024, the QBCC filed an affidavit of Mr Sia affirmed on 6 February 2024 deposing that the debt was still owing, and an affidavit of search of Ms Holland affirmed on 6 February 2024: s 44(1) of the Act; r 4.06 of the Bankruptcy Rules. The QBCC filed further affidavits of debt and search one day prior to the hearing before me.
65 A creditor's petition lapses at the expiration of 12 months commencing on the date of the presentation of the petition unless before the expiration of 12 months, a sequestration order is made on the petition, or the petition is dismissed or withdrawn: s 52(4) of the Act. The creditor's petition was presented over 12 months ago. However, as stated by the Full Court of the Federal Court (Allsop CJ, Markovic and Colvin JJ) in Bechara, consistent with the reasoning of Bennett J, with which Cowdroy J agreed in Totev at [53] - [62] and [64] - [65], in circumstances where a sequestration order was made by a registrar, the application for review does not render the sequestration order "provisional or ineffective": [151]. A sequestration order has been validly made by Judicial Registrar Schmidt on 7 February 2024, before the creditor's petition had lapsed: s 52(4) of the Act.
66 Therefore, in summary, I am satisfied that Mr Mead has committed an act of bankruptcy and that at the time when the act of bankruptcy was committed, he was ordinarily resident and had a dwelling house in Australia: s 43(1) of the Act. Further, I am satisfied that the requirements of s 52(1) of the Act have been met. Specifically, I am satisfied that there is proof of the matters stated in the creditor's petition, there is proof of service of the creditor's petition and that the debt on which the QBCC relies is still owing. As the matters in s 52(1) have been satisfied, the QBCC "has a prima facie right to a sequestration order": Toyota Finance Australia Ltd v Youssef Berro [2022] FCA 497 at [33].
67 I am not satisfied that Mr Mead can pay his debts as they fall due, nor do I consider that there is other sufficient cause such that a sequestration order should not be made: 52(2) of the Act.
68 While the QBCC provided to the Court a short form bill of costs, along with draft orders which fix the sum of its costs, I do not propose to fix the costs of the QBCC.