Thompson v Lane

Counsel for the Second Respondent: Mr B Strangman

Solicitor for the Second Respondent: Grace Lawyers

Solicitor for the Interested Person: Mahoneys Solicitors

BETWEEN: EMMA NARELLE CATHRYN THOMPSON Applicant

AND: MORGAN LANE AS TRUSTEE OF THE BANKRUPT ESTATE OF EMMA NARELLE CATHRYN THOMPSON First Respondent

BODY CORPORATE FOR ARILA LODGE CTS 14237 Second Respondent

order made by: LOGAN J DATE OF ORDER: 18 FEBRUARY 2022

1. The applicant's annulment application be dismissed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

LOGAN J: 1 Pursuant to s 55(4A) of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act), Ms Emma Narelle Cathryn Thompson became a bankrupt on 1 July 2020 upon the acceptance (and endorsement accordingly) by the Official Receiver of a debtor's petition presented by her on 26 June 2020. She has applied, pursuant to s 153B(1) and (2) of the Bankruptcy Act, for an order that her bankruptcy be annulled. 2 Ms Thompson acted on her own behalf on the hearing of her application, albeit with the support in court of a McKenzie friend. 3 The grounds of Ms Thompson's application are that her "Debtor's Petition ought not to have been presented and ought not to have been accepted by the Official Receiver, and that the Sequestration Order made on 1 July 2020 should not have been made". 4 The last mentioned of these grounds may be disposed of shortly. Ms Thompson became a bankrupt not by virtue of the making of a sequestration order but rather, as mentioned, pursuant to statute upon the acceptance (and related endorsement) of her debtor's petition. At the time when this occurred, a creditor's petition presented by the Body Corporate Arila Lodge CTS 14237 (BCAL) was then pending hearing in the then Federal Circuit Court of Australia. Section 153B of the Bankruptcy Act does permit the annulment of a bankruptcy in circumstances where a sequestration order ought not to have been made. However, no such order was made in her case on the creditor's petition. Rather, what occurred was that, on 2 (not 1) July 2020, the Federal Circuit ordered that BCAL's petition be dismissed and that its costs of those proceedings (including reserved costs) as agreed or taxed be paid from Ms Thompson's by then bankrupt estate in accordance with the Bankruptcy Act with the same priority as if a sequestration order had been made pursuant to its petition. The fate of BCAL's creditor's petition was dictated by Ms Thompson's prior presentation and the related acceptance of her debtor's petition. 5 The trustee of Ms Thompson's bankrupt estate is Mr Morgan Lane of the insolvency firm Worrells. Mr Lane has not opposed the making of an annulment order but rather adopted the stance of abiding such order as the Court may make. He has furnished a report to the Court concerning his administration of Ms Thompson's estate and expressed an opinion as to her solvency (of which more below). Two creditors, BCAL and Mahoneys, a law firm, have opposed the making of an annulment order. Mahoneys adopted the submissions made on behalf of BCAL. 6 Perhaps as a reflection of an inherent likelihood that a person would not present a debtor's petition against himself or herself without having reached the settled, personal view that they were unable to pay their debts as they fell due, confirmed by a position disclosed in an accompanying statement of affairs signed by them, there is little authority concerning the annulment of a bankruptcy grounded in the acceptance of a debtor's petition. Most annulment cases concern a bankruptcy which has resulted from a sequestration order made on a creditor's petition. However, it is readily possible to derive relevant considerations by reference to the terms of s 153B itself, as well as the provision in the Bankruptcy Act governing the presentation and acceptance of a debtor's petition, s 55. 7 Flowing from s 153B of the Bankruptcy Act, in its application to a bankruptcy which is a sequel to acceptance of a debtor's petition, an application to annul a resultant bankruptcy entails the proof of these elements: (a) either or each that the debtor's petition ought not to have been: (i) presented; or (ii) accepted; and (b) that the Court should, in the exercise of a discretion, annul the bankruptcy. 8 The onus of proving that her bankruptcy should be annulled falls on Ms Thompson. 9 It is important that cases concerning the annulment of a bankruptcy created by a sequestration order not be uncritically applied in cases of the present kind. One reason for that will already be evident in that, obviously, element (a) of those listed above has no equivalent in relation to a bankruptcy created by a sequestration order. Another reason flows from s 153B(2) of the Bankruptcy Act, which expressly provides: (2) In the case of a debtor's petition, the order may be made whether or not the bankrupt was insolvent when the petition was presented. 10 Subsection 153B(2) is facultative. It permits but does not mandate the making of an annulment order whether or not the bankrupt was insolvent when the petition was presented. The Court retains a discretion. As to the exercise of that discretion, but always bearing in mind s 153B(2), cases concerning whether or not to annul a bankruptcy created by a sequestration order may offer some assistance about considerations which have proved influential in the exercise of that discretion. Even so, it is essential that considerations so derived not be applied mechanically in some sort of "checklist" way to the detriment of a consideration of the overall circumstances of an individual case. 11 In Zaghloul v Jewellery & Gift Buying Service Pty Ltd t/as Nationwide Jewellers [2020] FCA 1045, which was annulment case where the bankruptcy had resulted from a sequestration order, Banks-Smith J, at [12], offered, by reference to earlier authority, a helpful summary of discretionary factors. Based on that summary but taking into account the differences arising from a bankruptcy sourced in the acceptance of a debtor's petition, factors relevant to the exercise of a discretion to annul such a bankruptcy are, without being exhaustive: (a) whether the applicant is presently solvent; (b) whether the applicant has made full disclosure of his or her financial affairs; (c) unexplained delay in any application; (d) the reason why the bankrupt presented the debtor's petition, including whether the bankrupt had earlier been served with a bankruptcy notice, whether the bankrupt had failed to comply with any such notice and whether there was then pending a creditor's petition; (e) why it was that the bankrupt lodged with the debtor's petition a statement of affairs apparently disclosing insolvency and what the true position then was as to his or her ability to pay their debts as and when they fell due; and (f) whether the applicant has made any proposal for the payment of the fees and disbursements of his or her trustee in bankruptcy and, if not, why not. 12 In the context of sequestration order based bankruptcies, it has been stated that an applicant carries a heavy burden to make full disclosure of his or her financial affairs: Re Papps; Ex parte Tapp (1987) 78 FCR 524, at 531. This does not, of course, mean that the standard of proof applicable to facts in an annulment application is anything other than the ordinary, civil standard of proof on the balance of probabilities: s 34A, Bankruptcy Act. What it does mean is that an applicant must be completely candid. An apparent absence of candour, especially where it suggests that an applicant's true present financial position may not be one of solvency, or may be much worse than asserted, may well offer a basis upon which to exercise a discretion so as not to annul a subsisting bankruptcy. 13 In respect of a bankruptcy the result of a sequestration order, it is settled that an application may be brought under s 153B(1) by a discharged bankrupt: Re Oates; Ex parte Deputy Commissioner of Taxation (1987) 17 FCR 402, at 404 - 405. There is nothing in s 153B of the Act which would suggest that the position is any different in respect of a bankruptcy occasioned by the acceptance of a debtor's petition. 14 Regard to s 55 of the Bankruptcy Act discloses a number of bases upon which a debtor's petition ought not to be presented: (a) flowing from s 55(2)(b), if it is not accompanied by a statement of affairs completed by the debtor; (b) flowing from s 55(2A), the debtor has no relevant connection with Australia at the time when the petition was presented, the relevant connections being that the debtor: (i) was personally present or ordinarily resident in Australia; or (ii) had a dwelling-house or place of business in Australia; or (iii) was carrying on business in Australia, either personally or by means of an agent or manager; or (iv) was a member of a firm or partnership carrying on business in Australia by means of a partner or partners or of an agent or manager. (c) flowing from s 55(5A), the debtor is a party (as debtor) to a debt agreement and has not been given permission by the Court to present a debtor's petition; (d) flowing from s 55(6), the debtor has executed a personal insolvency agreement and has not received the leave of the Court to present a petition against himself or herself unless: (i) the agreement has been set aside; or (ii) the agreement has been terminated; or (iii) all the obligations that the agreement created have been discharged. (e) flowing from s 55(6A), a stay under a proclaimed law is applicable to the debtor and the debtor has not received the leave of the Court to present a petition against himself or herself. 15 Regard to s 55 of the Bankruptcy Act also discloses a number of bases upon which the Official Receiver is empowered not to accept a debtor's petition: (a) flowing from s 55(2), the debtor has no relevant Australian connection (as detailed above); (b) flowing from s 55(3): (i) the petition does not comply substantially with the approved form; or (ii) the petition is not accompanied by a statement of affairs; or (iii) the Official Receiver thinks that the statement of affairs accompanying the petition is inadequate. (c) flowing from s 55(3AA), it appears to the Official Receiver from the information in the statement of affairs (and any additional information supplied by the debtor) that, if the debtor did not become a bankrupt, the debtor would be likely (either immediately or within a reasonable time) to be able to pay all the debts specified in the statement of affairs and either or each of the following is applicable: (i) it appears from the information in the statement of affairs (and any additional information supplied by the debtor) that the debtor is unwilling to pay one or more debts to a particular creditor or creditors, or is unwilling to pay creditors in general; (ii) before the current petition was presented, the debtor previously became a bankrupt on a debtor's petition at least 3 times, or at least once in the period of 5 years before presentation of the current petition. 16 I have deliberately used the description "empowered" in relation to the rejection of a debtor's petition by the Official Receiver because, as will be seen, the difference between when the Official Receiver must, as opposed to may, reject a debtor's petition is important in this case. 17 In modern times, the Australian Financial Security Authority (AFSA) has evolved the debtor's petition and the related statement affairs contemplated by s 55 of the Bankruptcy Act into a composite document termed the "Bankruptcy Form". The AFSA is, by s 13 of the Bankruptcy Act a "listed entity" within the meaning of that term in the Public Governance, Performance and Accountability Act 2013 (Cth). That listed entity comprises the Inspector-General in Bankruptcy and persons engaged under the Public Service Act 1999 (Cth) to assist the Inspector-General. 18 There is no particular reason why, in terms of s 55, a statement of affairs might not "accompany" a debtor's petition by being found in the same document. That is not to say that the current "Bankruptcy Form" is without its faults. The form of debtor's petition (Form 9) adopted on the commencement of the Bankruptcy Act and in use for many years thereafter did at least contain a statement by the debtor, "I, (full name of debtor), who reside at and whose occupation is petition the Registrar in Bankruptcy for the abovementioned Bankruptcy District for the purpose of becoming a bankrupt by force of section 55 of the Bankruptcy Act 1966." The present "Bankruptcy Form" does not contain an equivalent request, adjusted to take account of the role now undertaken by the Official Receiver in relation to deciding whether to accept a debtor's petition. Instead, the current from contains the presumptuous statement, "I am voluntarily becoming bankrupt". Yet further, it contains a presumptuous question, "What do you believe is / are the cause(s) of your insolvency?" without eliciting a prior admission of insolvency by reference to the position disclosed on the "statement of affairs" portion of the form. However, Ms Thompson's claim that her petition ought not to have been accepted did not centre upon such deficiencies. Her claim was that she was not then insolvent. 19 As already noted, in the case of a debtor's petition occasioned bankruptcy, an annulment order may be made whether or not the bankrupt was insolvent when the petition was presented: s 153B(2). So it is not obligatory that Ms Thompson demonstrate that she was then solvent. Which is not to say it is irrelevant to consider her then position. 20 As to the meaning of "solvent" and "insolvent" for the purposes of the Bankruptcy Act, s 5(2) and s 5(3) provide: (2) A person is solvent if, and only if, the person is able to pay all the person's debts, as and when they become due and payable. (3) A person who is not solvent is insolvent. [emphasis in original] 21 The current statutory prescription in the Bankruptcy Act in respect of when a person is solvent or, as the case may be, insolvent, as with an equivalent provision s 95A in the Corporations Act 2001 (Cth) (Corporations Act), omits "out of the debtor's own money" from the test for solvency. Observations made by Barwick CJ in Sandell v Porter (1966) 115 CLR 666, at 670, in relation to determination of solvency at a time when this qualification was present in the statutory definition must be read with the present omission in mind. This change was noted by Buchanan J in Whitton as Trustee of the Estate of Rose v Regis Towers Real Estate Pty Ltd (in administration) (2007) 161 FCR 20 who, with the concurrence of Marshall and Tracey JJ, cited with approval for the purposes of the Bankruptcy Act observations about the like change in the Corporations Act provision in Lewis v Doran (2004) 184 FLR 454 (Lewis v Doran); 208 ALR 385, at [116] and, on appeal, in Lewis v Doran (2005) 219 ALR 555. In the original jurisdiction in Lewis v Doran, Palmer J, at [116], stated: For those reasons I conclude that s 95A [Corporations Act] has changed the pre-existing law as to the definition of insolvency as stated in cases such as Sandell v Porter, and that it is no longer necessary in order to assess solvency to ascertain whether the company is able to pay all of its debts "from its own monies", in the sense discussed in those cases. In my opinion, s 95A requires the Court to decide whether the company is able, as at the alleged date of insolvency, to pay all its debts as they become payable by reference to the commercial realities. If the Court is satisfied that as a matter of commercial reality the company has a resource available to pay all its debts as they become payable then it will not matter that the resource is an unsecured borrowing or a voluntary extension of credit by another party. 22 On appeal, Giles JA, with whom Hodgson and McColl JJA agreed, stated, at [109] - [112]: [109] Particularly when the limiting words are no longer part of the test, there is no compelling reason to exclude from consideration funds which can be gained from borrowings secured on assets of third parties, or even unsecured borrowings. If the company can borrow without security, it will have funds to pay its debts as they fall due and will be solvent, provided of course that the borrowing is on deferred payment terms or otherwise such that the lender itself is not a creditor whose debt can not be repaid as and when it becomes due and payable. It comes down to a question of fact, in which the key concept is ability to pay the company's debts as and when they become due and payable. [110] Even before the wording of s 95A, in re RHD Power Services Pty Ltd (1991) 9 ACLC 27 McPherson SPJ was prepared to pay regard to ability to borrow without security. Kearney J in re Adnot Pty Ltd (1982) 1 ACLC 307 [7 ACLR 212] took into account that the company "instead of having to resort to some outside lender, is in the fortunate position of having its fellow member of the group of companies to which it belongs, available in effect as banker to provide funds required to meet any shortfall" (at 311; the shortfall was until completion and sale of a shopping centre). In re a company (1986) BCLC 261 [[1986] BCLC 261] Nourse J declined to find that a company was unable to pay its debts as they fell due although it was being "propped up by loans made to it by associated companies and possibly by others" (at 262; his Lordship noted at 263 that he had evidence from a director to the effect that there was no question of the loans being withdrawn, the loans not being repayable for some eighteen months). [111] The Liquidator's emphasis on voluntary assistance from other companies in the group was rather off the point. Provision of funds by a third party on the security of the company's assets is voluntary - the third party can decline. Voluntariness is material to whether the company is able to acquire funds, as part of ability to pay its debts as and when they become due and payable, but if the evidence establishes that the company is able to obtain funds, albeit they are voluntarily provided, that can suffice. [112] This approach is consistent with the acceptance that creditors may voluntarily defer payment whereby solvency is promoted. An illustration is re Kerisbeck Pty Ltd (1992) 10 ACLC 619. An unsecured debt was payable on demand to the company's director. The director gave evidence that he did not intend to demand repayment in the immediate future. The debt was therefore not regarded as due and payable. This was determinative of solvency. In substance, voluntary continuance of an unsecured borrowing brought solvency; it is difficult to see why the result would have been different if there had been acceptable evidence of voluntary provision of an unsecured borrowing. [emphasis in original] 23 The approach revealed in Lewis v Doran is therefore that which I am bound to follow in determining any question of solvency. 24 In relation to solvency as at 26 June 2020, the position revealed on the face of Ms Thompson's Bankruptcy Form raises as many questions as it answers. She stated that she had been unemployed for 7 years. Her sole source of income over the preceding 12 months, and as anticipated for the then forthcoming 12 months is expressed to be government pensions and allowances of an estimated $1,100 per fortnight. 25 Ms Thompson listed her unsecured creditors and related amounts owed as being: Mastercard $500 - estimate BCAL $400,000 - estimate (disputed) Robinson Locke $50,000 - estimate (disputed) Jessica Cannon, Cannon & Co Law $50,000 - estimate (disputed) Mahoneys $5,000 - estimate (disputed)

26 Ms Thompson specified her current assets to be $50 in cash and $2,700 in a bank account, together with a car worth less than $5,000 and 51 shares in the Bank of Queensland of unspecified value. She also stated that she had funds in an amount to be advised in a superannuation account ("Mercer"). 27 Ms Thompson also stated that she had an interest of unspecified value in her late father's estate. 28 As to real property, Ms Thompson stated that she owned: (a) a house at Hawthorne (Hawthorne Property); and (b) a unit at Toowong (in the complex of which BCAL is the body corporate) (Toowong Unit). She did not assign individual values to these properties but estimated that the combined value was $3.5 million. As to the Hawthorne Property, Ms Thompson disclosed that it was encumbered by a mortgage to Suncorp Bank in respect of an estimated debt of $2 million, the amount of which was disputed. 29 Mr Lane witnessed Ms Thompson's signature on the Bankruptcy Form. However, and contrary to a submission made by Ms Thompson, it was not for him to decide whether or not to accept her application to become bankrupt. Pursuant to s 55 of the Bankruptcy Act, that task fell to an Official Receiver. 30 The Bankruptcy Form specified that it be sent to the office of the AFSA in Adelaide, South Australia. Exactly what happened upon its receipt there is, on the evidence, something of a mystery. Section 55 of the Bankruptcy Act contemplates that a debtor's petition will be considered by an Official Receiver, not the Inspector-General. For a very long time in the administration of s 55 of the Bankruptcy Act, that consideration occurred locally, in the then Bankruptcy Districts, not by Official Receivers but rather by a Bankruptcy Registrar appointed to that District. That office was held by a registrar of this court or, before this court's establishment, by a registrar of a court exercising bankruptcy jurisdiction. That decentralisation made for a much more direct relationship between a debtor wishing to become bankrupt and the official who would decide whether to accept that debtor's petition and, in turn, between that official and the Court exercising bankruptcy jurisdiction. For some reason, centralisation and related remoteness of association has latterly commended itself to parliament and to those charged with the administration of the Bankruptcy Act. 31 All that can be determined on the evidence as to the fate of the Bankruptcy Form submitted to the AFSA is that, inferentially, it was accepted by an Official Receiver, because on 1 July 2021, Mr Lane was appointed by an Official Receiver as the trustee of Ms Thompson's bankrupt estate. 32 This case illustrates a difficulty that can attend the present system. Although by the end of the 20th century bankruptcy law had evolved to provision for automatic discharge from a position whereby a person had the status for life of a bankrupt with a discretion on the part of a court to order discharge from bankruptcy, bankruptcy nonetheless still involves a change in status and particular restrictions, the breach of which may be attended with penal consequences. Ms Thompson's expressed volunteering to become bankrupt and even her attributing the cause of her insolvency to "legal action", while relevant, offered no reason in itself to accept her petition. Her declared income and non-realty assets were, with respect, modest but so, too, was her only undisputed debt. Further, even allowing for a dispute as to the amount of the estimated secured debt, there was an apparent surplus of more than $1 million in her net realty asset position. In turn, that surplus was more than enough, if realised, to meet the declared disputed debts. On the face of the "Bankruptcy Form", Ms Thompson may well have been insolvent but that position was not clear. Given what was declared, Ms Thompson's case may just possibly have been one where, within a reasonable time she could have paid her debts and where she was unwilling to pay debts to particular creditors. Potentially then, the case was one where it may have been possible for an Official Receiver, pursuant to s 55(3AA) and as a matter of discretion, to reject Ms Thompson's petition. 33 However, by s 55(3AB), the Bankruptcy Act expressly provides that an "Official Receiver is not required to consider in each case whether there is a discretion to reject under subsection (3AA)". Further, s 55(4) provides that the "Official Receiver must accept a debtor's petition, unless the Official Receiver rejects it under this section or is directed by the Court to reject it". There were no features of the "Bankruptcy Form" which obliged an Official Receiver not to accept it, only some features which, as a matter of discretion, might have warranted rejection as a matter of discretion, or at least the seeking of further particulars from Ms Thompson. Given s 55(3AB) and however much there may be cause for dismay in relation to what this case has revealed in relation to contemporary debtor's petition law and practice, I do not consider this to be a case where a debtor's petition "ought not to have been accepted" in terms of s 153B. The standard posited by that section is not met where, as a matter of discretion, a petition might not be accepted by an Official Receiver but where there is no obligation to exercise that discretion. 34 There are no features of the Bankruptcy Form which precluded Ms Thompson from presenting the debtor's petition nor which obliged the Official Receiver not to accept it. It was apparent on the face of the Bankruptcy Form that Ms Thompson had the requisite Australian association. There was an accompanying statement of affairs. 35 Ms Thompson submitted that the acceptance of her debtor's petition was precluded by s 54B of the Bankruptcy Act. The apparent basis for this submission was that, at the time when she presented that petition on 26 June 2020 (by signing the Bankruptcy Form and transmitting it to the AFSA) she had already been served with a creditor's petition. However, the effect of s 54B(b) is to prevent a debtor who has been served with a creditor's petition (and before certain consequential events) from giving under s 54A of a notice of intention to present a debtor's petition, not from presenting of a debtor's petition. Section 54B did not operate to preclude Ms Thompson from presenting her debtor's petition. 36 Although raised as issues by Ms Thompson in her application, the case is not therefore one which turns on whether or not her debtor's petition ought not to have been presented or accepted. The real issue is whether or not, as a matter of discretion, her bankruptcy should be annulled? In this regard, an important question to answer is whether or not she is, having regard to the test as explained above, solvent? 37 Ms Thompson's trustee, Mr Lane, who is qualified to express an opinion on the subject and whose opinion is relevant, has expressed the opinion that Ms Thompson is not solvent. That is because, in his view, the claims of creditors as reflected in proofs of debt received by him exceed the likely recoveries in the administration of Ms Thompson's bankrupt estate. He disclosed in detail in his evidence the basis for holding this opinion. 38 Mr Lane has received proofs of debt from the persons and in the amounts as follows: • BCAL c/- Grace Lawyers $820,479 • Cannon & Co Law $70,699 • HLMB Law Pty Ltd $52,318 • Julene Francis Cyati, Executor of the Estate of Francis Thompson $186,221 • Londy Lawyers $72,247 • Lynette Mavis McClelland $4,898 • Mahoneys $6,804 • Mitchells Solicitors $40,000 • Panthera C/- Bravure Pty Ltd $205 • RACQ Insurance $23,100 • Robinson Locke Litigation Lawyers Pty Ltd $54,995 • SGR Prop Invest 01 Pty Ltd $468 • Westpac $500 (based on the statement of affairs) Total $1,332,934 (including the Westpac debt disclosed in the statement of affairs) 39 To date, the only recovery made by Mr Lane in his administration of the estate is the receipt of a refund of $930 which, but for her bankruptcy, would have been payable to Ms Thompson. Save for this, Ms Thompson's bankrupt estate is presently without funds. 40 Another recovery is in prospect. Suncorp Bank as mortgagee had entered into possession of the Hawthorne Property, prior to Mr Lane's appointment. The bank sold the Hawthorne Property by public auction on 19 December 2020 with settlement occurring on 18 January 2021. Mr Lane has been in communication with Suncorp Bank's solicitors Mills Oakley Lawyers, since settlement seeking a full accounting of the proceeds from sale. As at the date of trial he had not received any funds from Suncorp Bank in response. Mr Lane's estimate was that at least $348,750 was payable to Ms Thompson's estate by way of a surplus from the discharge of the debt secured by the mortgage and related recovery costs. 41 The settlement statement in respect of the sale of the Hawthorne Property at auction is in evidence. This discloses that the sale price was $2,790,000. It also discloses that the sum paid out to Suncorp Bank as the secured creditor was $2,241,071.85. That was about 10% more than the amount of her debt to Suncorp Bank as estimated by Ms Thompson in her statement of affairs lodged some six months beforehand. 42 The disbursement of that sale price and adjustments at settlement were as follows: Amount ($) CONTRACT PRICE 2,790,000.00 LESS DEPOSIT 139,500.00 2,650,500.00 PLUS COUNCIL RATES $2,812.75 paid for the quarter 01 January 2021 to 31 March 2021 Proportion being 72/90 days 2,250.20 2,652,750.20 PLUS WATER & SEWERAGE ACCESS FEE $168.09 paid for the quarter 01 January 2021 to 31 March 2021 Proportion being 72/90 days Water Access Charge - $58.14; Sewerage Service Charge - $139.95; Less pensioner Subsidy of $30.00 134.47 2,652,884.67 LESS WATER USAGE 20/10/2020 - 18/01/2021 90 days x 0.671kl per day x $3.915 236.43 BALANCE ON SETTLEMENT $2,652,648.24 Payee Amount ($) 1. Brisbane City Council 2,812.79 2. Queensland Urban Utilities 1,001.59 3. Commissioner of Taxation 348,750.00 4. RRE Sales Pty Ltd 59,012.01 5. Suncorp-Metway Ltd 2,241,071.85 TOTAL $2,652,648.24 43 It would appear that the amount of $348,750 regarded by Mr Lane as recoverable corresponds with the amount of the sum shown in the settlement statement as payable to the Commissioner of Taxation. Ms Thompson did not offer in evidence any insight into the occasion for this surplus being regarded on sale as payable to the Commissioner of Taxation. One might have expected that, as the hitherto owner of the Hawthorne Property, she might have been able to offer some such assistance in evidence and, beforehand, to her bankruptcy trustee. However that may be, the Commissioner of Taxation has not lodged a proof of debt as a creditor. For present purposes, given Mr Lane's opinion that this sum is recoverable as asset of Ms Thompson's bankrupt estate, I am prepared to assume in her favour, and perhaps generously, that it should be taken into account in determining her solvency. 44 Ms Thompson believes that the surplus should be more than this. Included in her evidence was a State Government land valuation in respect of the Hawthorne Property, which placed its unimproved value as at 1 October 2016 at $3,500,000. 45 Sub-section 85(1) of the Property Law Act 1974 (Qld) (Property Law Act) imposes on a mortgagee exercising a power of sale a duty to take reasonable care to ensure that the property is sold at market value. Statute apart, a mortgagee exercising a power of sale is under a duty to act in good faith. This duty has been said to entail not "…recklessly or wilfully sacrifice the interests of the mortgagor" such as not taking "…obvious precautions to ensure a fair price": Pendlebury v Colonial Mutual Life Assurance Society Ltd (1912) 13 CLR 676, at 680. 46 The State Government land valuation does raise an interrogative note about the price for which the Hawthorne Property was sold in terms of whether Suncorp Bank discharged its duties as mortgagor in possession. However, the evidence presented by Ms Thompson does nothing more than that. The evidence does not establish that, as at 26 June 2020, she might have realised that property within a reasonable time so as to pay all then outstanding debts. She was not even then in possession of that property, Suncorp Bank having by then entered into possession. Inferentially, she was then in default in respect of the borrowing secured by the mortgage over the Hawthorne Property. 47 However, the remedy of a mortgagor such as Ms Thompson for a breach of the provision is in damages. That is because the effect of s 85(3) of the Property Law Act is that the title of a purchaser is unimpeachable. In this regard, "title" is comprehensive, not just legal or registered title: McKean v Maloney [1988] 1 Qd R 628, at 635. Further, the Hawthorne Property having been sold, any remedy in respect of a general law breach of the duties of a mortgagee exercising a power of sale would also now lie just in damages. Any such causes of action would now vest in Mr Lane as the trustee of Ms Thompson's bankrupt estate. 48 The evidence adduced by Ms Thompson, while, as I have mentioned, sounding an interrogative note, falls a long way short of establishing, even prima facie, any breach of a mortgagee's duties either under statute or the general law by Suncorp Bank in the sale of the Hawthorne Property. These duties did not extend to Suncorp Bank waiting for some indeterminate time in order to obtain the very best possible price. The means adopted by Suncorp Bank for the sale of the Hawthorne Property, sale by public auction, was not, in itself, indicative of a breach of these duties, rather the reverse. Further, and again prima facie, a price obtained a public auction on the open market might be regarded as a reliable indication of market value. 49 HSBC Bank Australia Ltd v Wang [2021] QSC 58 offers a recent example of a failed attempt by a mortgagor to prevent a sale by a mortgagee in possession on the basis of an assertion that the sale of the secured property ought to have been postponed pending a re-opening of the Queensland border so as to achieve wider interest in the property. Suncorp Bank likewise entered into possession of the Hawthorne Property at a time when the COVID-19 pandemic was prevailing and with all of the attendant border and other restrictions. In HSBC Bank Australia Ltd v Wang neither the bank's statutory nor general law duties as mortgagee in possession were regarded as obliging it to wait indefinitely for better times to sell the property. After taking valuation advice, the bank just sold the property on the market under the conditions of the market as they then stood. On the evidence, there is nothing to indicate that Suncorp Bank did otherwise. The Queensland Government land valuation tendered by Ms Thompson, it might be noted, was given prior to the onset in March 2020 of the present COVID-19 pandemic (being a fact of which I consider I can take judicial notice). 50 For these reasons, I do not consider that realisation of the Hawthorne Property should be regarded, as offering, beyond the prospective $348,750 recovery, anything which might support a conclusion that Ms Thompson was solvent either at 26 June 2020 or at present. 51 There was nothing in the evidence which would indicate that whatever interest Ms Thompson had in her late father's estate was of any worth. It appears that her interest was via a family provision claim but that the estate was already fully administered. Further, the executor of that estate (Julene Francis Cyati) has lodged a proof of debt claiming a debt of $186,221 owed to the estate by Ms Thompson. Ms Thompson's evidence did not demonstrate that the amount claimed in this proof was either in whole or in part excessive. 52 As to the Toowong Unit, Mr Lane's evidence establishes that, although Ms Thompson was not, as at the time her debtor's petition was accepted, the registered proprietor, she was then the beneficial owner of that property and entitled to be registered as its owner pursuant to a contract for its purchase and related memorandum of transfer signed by the registered proprietor (Mr Mark Peacock) as far distant in time as 2014. The Toowong Unit has passed to Mr Lane as part of Ms Thompson's bankrupt estate. 53 There are no formal valuations of the Toowong Unit in evidence. However, Mr Lane has obtained "desktop appraisals" of that property from Ray White (Toowong) and from Bell Property. These are in evidence. They are admissible as a species of opinion evidence. While they do not carry the same weight as would a formal valuation, they are the best evidence available. They are based on comparable sales. They indicate that the value of the Toowong Unit is between $645,000 and $760,000. Ms Thompson tendered some searches obtained from the website, realestate.com, of sales of other units in the complex where the Toowong Unit is located. These units sold for higher amounts than the range I have mentioned. However, neither is a considered opinion by a person qualified to express an opinion as to the value of the Toowong Unit. I prefer the range derived from the market appraisals obtained by Mr Lane. 54 There are outstanding levies and other amounts payable to BCAL. These fall into three broad categories: (a) body corporate debts owing in respect of the Toowong Unit, being outstanding contributions, penalty interest and recovery costs; (b) fixed costs orders made against Ms Thompson by various courts and tribunals; (c) orders for costs to be assessed made by various courts. The proof of debt lodged by BCAL with Mr Lane is the total of these categories of debt. 55 Of these, the category (a) debt is one to which reg 166 of the Body Corporate and Community Management (Standard Module) Regulation 2020 (Qld), made pursuant to the Body Corporate and Community Management Act 1997 (Qld) (BCCM Act) is applicable. The effect of reg 166(3) is that the body corporate debts are enforceable not just against Ms Thompson as an owner but also against any person who becomes an owner of the Toowong Unit. In practice therefore, any person who purchased the Toowong Unit would only do so on terms that the body corporate debts were paid in full beforehand or discharged at settlement. Inferentially, the very existence of such a debt might well make (and might as at 26 June 2020 well have made) the Toowong Unit difficult to sell. 56 According to Mr Lane, his preliminary assessment, having regard to the proof of debt, of the amount of these category (a) body corporate debts is $412,605.97. According to BCAL's proof of debt, the amount is $593,249.40. What might be the occasion for the difference was not explored in evidence or submissions. Mr Lane has not yet finally adjudicated upon BCAL's proof of debt. For present purposes, I shall assume that the outstanding body corporate debts are at least $412,605.97 and that this is the amount that any prospective purchaser would expect to be paid at settlement or deducted from what would otherwise be the purchase price. 57 Taking into account outstanding these category (a) body corporate debts and even allowing for the higher appraised value, the net equity in the Toowong Unit is $347,394.03. That is before any allowance for the costs of selling that property. I do not have any evidence as to the estimated realisation cost of selling the Toowong Unit. There is evidence, expressed in the settlement statement in respect of the Hawthorne Property, as what was its realisation cost. That was based on a much higher sale price. BCAL submitted that, having regard to this, I should allow for a realisation cost of $15,000 in respect of the Toowong Unit. This is about one quarter of the like cost for the Hawthorne Property, the sale price for which is, in turn, about four times the estimated value range of the Toowong Unit. Plainly enough, there would have to be a realisation cost. In the circumstances, it seems reasonable to make an allowance of $15,000 for that cost. So doing yields a theoretical surplus on sale of $332,394.03, before any adjustments on settlement for rates and utilities. 58 Thus, taking into account both a generously assumed surplus in the Hawthorne Property of $348,750 and the theoretical surplus on any sale of the Toowong Unit of $332,394.03, the net value of Ms Thompson's real property assets was, and is, at most, $681,144.03. That net real property amount does exceed the category (a) body corporate debts of $412,605.97, by $268,538.06 but that surplus falls dramatically short of other debts, even based on Mr Lane's preliminary assessment thereof, let alone the trustee's costs of the administration of the bankrupt estate. 59 Yet further, even to 30 April 2021 (the reference in Mr Lane's affidavit to 30 April 2020 is an obvious, unintended error) Mr Lane's incurred time costs in the administration of the estate totalled $81,088.05 with outlays of $173.66. Those outlays did not include legal expenses yet to be billed by lawyers acting for Mr Lane. In his more recent affidavit (that of 27 August 2021), Mr Lane deposed that the total costs and outlays he had incurred administering the bankrupt estate were $192,455.71. While, at first blush, the trustee's expenses might seem high, it is quite apparent from Mr Lane's evidence (in his affidavit of 27 August 2021, under the heading Updated Administration Costs), which I accept, that there have been extensive dealings as between the trustee and his staff and Ms Thompson and vice versa, as well as dealings with the Australian Taxation Office in relation to the Hawthorn Property and general administration duties. Having regard to her conduct of the present application, I do not doubt that Ms Thompson has been a demanding, time consuming person with whom to deal. And time carries a monetary cost in a bankruptcy administration. Ms Thompson has made no proposal, as part of her annulment application, as to how the trustee's expenses might be settled, either in whole or in part. Instead, without, as far as I can see, any evidenced warrant, she seems to think that Mr Lane has been derelict in his duties as trustee to the extent that he is entitled to no remuneration whatsoever. Yet further, the costs of administration are also a reflection of the lapse of time between when Ms Thompson became bankrupt on her petition and when on 14 April 2021 she filed her application for annulment, a delay of over nine months. 60 The costs orders, fixed and otherwise, as set out in BCAL's proof of debt, comprise the following: Fixed Costs Orders Date Description Amount Amount Claimed 26/02/2018 QCAT proceedinqs APL 315/17 $365.48 $365.48 23/08/2018 Magistrates Court proceedings MAG128042/17(2) $6,288.00 $6,288.00 26/07/2019 QCAT proceedings APL441/16 $40,208.20 $40,208.20 26/07/2019 QCAT proceedings APL075/17 $33,468.00 $33,468.00 4/10/2019 Magistrates Court proceedings MAG128042/17(2) $1,250.00 $1,250.00 17/01/2020 Supreme Court proceedings 2976/19 $16,192.07 $16,192.07 12/06/2020 District Court proceedings 3960/19 $600.00 $600.00 Sub totals $98,371.75 $98,371.75 Cost Orders to be assessed 11/09/2019 Federal Circuit Court BRG 769-2019 (taxed on scale) $16,218.09 $9,700.00* 9/10/2019 Federal Circuit Court BRG 769-2019 (taxed on indemnity basis) $10,739.30 $10,739.90 2/07/2020 Federal Circuit Court BRG 769-2019 (taxed on scale) $14,481.74 $8,700.00* 2/07/2020 Federal Circuit Court BRG 892-2019 (taxed on scale) $36,684.61 $22,010.00* 13/12/2019 Court of Appeal proceedings 9215/19 (indemnity basis) $63,462.82 $59,875.19** 29/04/2020 Supreme Court proceedings 4126/20 (indemnity basis) $16,653.36 $16,033.25** N/A District Court proceedings 3960/19 (costs reserved) $1,800.00*** Sub totals $158,239.90 $128,858.30

The explanatory annotations to this table, as per BCAL's proof of debt are: *calculated on basis that 60% will be allowed on taxation. The Body Corporate reserves its right to claim over the amount estimated or have the costs taxed by the Federal Circuit Court. ** based on cost statements prepared by Paul Cameron, registered approved costs assessor *** based on scale under Justices Act 61 Behind the proceedings in which these costs orders have been made and the category (a) body corporate debts is a saga which began with a leakage of water from the Toowong Unit, which is situated on the third floor of the complex of which BCAL is the body corporate down into units on the two floors below the Toowong Unit. 62 The question of the extent to which Ms Thompson should be liable for the consequences of the leak was initially the subject of an adjudicator's decision under the BCCM Act. Much litigation ensued thereafter, culminating in a failed endeavour by Ms Thompson in the Court of Appeal to challenge a decision adverse to her by the Queensland Civil and Administrative Tribunal (QCAT). The history of that litigation, and related, collateral proceedings to which Ms Thompson was a party, is conveniently summarised by Sofronoff P in refusing applications by Ms Thompson for an extension of time within which to apply for leave to appeal against QCAT's Appeal Tribunal: Thompson v Body Corporate for Arila Lodge & Ors [2019] QCA 267. The summary below reproduces that offered in that case by Sofronoff P, at [2] to [13]: [2] Ms Lyn McClelland, is the owner of a unit on the first floor of Arila Lodge, a block of units in Toowong. SGR Prop Invest 01 Pty Ltd is the owner of a unit on the second floor of the same block of units. Mr Steven Reid is its sole director. They are, together, the second respondents to this application. The first respondent is the body corporate. The applicant, Ms Emma Thompson, is the owner of a unit on the third floor. These three units are directly above each other. On 8 December 2016 an adjudicator appointed under the Body Corporate and Community Management Act 1997 (Qld) made orders that required Ms Thompson to cause repairs to be made to stop water leaking from her unit into the other two units and to effect certain repairs to damage caused by the leak. [3] Ms Thompson appealed against the adjudicator's orders, in relation to each unit, to QCAT. The Queensland Civil and Administrative Tribunal Act 2009 (Qld) ("QCAT Act") permits such appeals only on questions of law. The learned member, Mr Roney QC, dismissed both appeals. He concluded, in relation to the first appeal: "(a) Ground 1, which had not been advanced before the adjudicator, was without substance. (b) Grounds 2 and 3, which were also not raised before the adjudicator, raised questions of fact and were, therefore, incompetent. (c) Grounds 4 and 8 raised a purported failure on the part of the adjudicator to give adequate reasons; Mr Roney found that the reasons (which are lengthy and detailed) were adequate. In addition, Ground 8 sought to agitate factual questions. (d) Grounds 1, 2, 3, 4 and 8 in the first appeal had corresponding, and equally bad, grounds in the second appeal. (e) Ground 6 was incompetent because it raised a factual question. This ground was the same as ground 10 in the second appeal. (f) Grounds 7 (the same as ground 6 in the second appeal) and 9 (the same as 8 in the second appeal), raised matters that were not raised before the adjudicator and these were questions of fact and so the ground was incompetent. (g) Ground 10(b) (ground 9(b) in the second appeal) raised a baseless factual complaint. (h) Ground 11 was wrong in law and, in any event, the asserted error was immaterial." [4] Accordingly, on 26 April 2018, Mr Roney dismissed both appeals and, insofar as an extension of time to appeal was required in one of the appeals, he refused the extension. Subsequently, on 6 September 2018, Mr Roney made three orders pursuant to which Ms Thompson was ordered to pay the costs of each of the three respondents. The order concerning the body corporate required her to pay its costs to be assessed. The orders concerning the other two respondents required Ms Thompson to pay costs in sums fixed by Mr Roney. In due course, on 20 June 2019, a cost assessor gave a certificate stating the amount of costs due to the body corporate and on 26 July 2019 that certificate was made an order of the Tribunal. [5] Although her appeals were dismissed, Ms Thompson did not comply with the adjudicator's orders. A failure to comply with such orders is made an offence by s 288 of the Body Corporate and Community Management Act. On 23 August 2018 Ms Thompson was found guilty of three offences against that section due to her failure to comply. She was released on her own recognisance and upon the condition that she pay compensation, within six months of the date of the orders in the Magistrates' Court, to the respective complainants in the sums of $578.50, $15,823.10 and $19,315.57. She was also ordered to pay court costs in the sum of $6,288. Convictions were not recorded. [6] Ms Thompson has not obeyed any of these orders, although she has paid a relatively small sum towards costs. [7] On 28 August 2019 the applicant filed a notice of appeal against Mr Roney's orders. On 23 October 2019 that appeal was dismissed by me at the invitation of the appellant. On 16 September 2019 the applicant filed an application "for leave to appeal" against the order dismissing the appeals to QCAT, the two fixed costs orders and the order made on 26 July 2019 in relation to the costs assessment. [8] The application sought the following orders: "That Orders and Declarations be made as follows: a. That this Appeal be allowed under s 153 of the QCAT Act with costs; b. That time be extended to the extent necessary and under s 151(3)(a) (b) or (c) of the QCAT Act. c. That the directions and orders in APL441 of 2016 and APL075 of 2017 and [2018] QCATA 56, 26 April 2018; (No 2) [2018] QCATA 133, 6 September 2018 and decision 26 July 2019 be set aside; d. That the order [2016] QBCCM Cmr 563 (Lot 1) made 8 December 2016 and the order [2016] QBCCM Cmr 562, made 8 December 2016 (Lot 2) be set aside and purported proceedings under the Justices Act 1886 upon said orders under s 288 of the Body Corporate and Community Management Act 1997 (:the BCCM Act") be quashed as resulted in orders, 23 August 2018, under s 19(1) and (3) of the Penalties and Sentences Act 1992 on the Complaints of the First Respondent that the Appellant should pay $15,823.10 to McClelland (MAG00128060/17(1)) and $19,315.57 to the owner of Lot 2 Prop Invest 01 Pty Ltd A.C.N. 153 375 378 (MAG00128057/17(0)) and costs to the First Respondent; e. That M 1417/19 (McCelland) and M 5261/18 (SGR Prop Invest 01 Pty Ltd A.C.N. 153 375 378) be stayed under s 152(2) of the QCAT Act until the Appeal is finally decided. f. That Writ no 719598484 lodged over C/T 50206737, 16 Aaron Avenue Hawthorne be removed on this appeal being allowed." [9] The QCAT Act permits a party to appeal against an order of an appeal tribunal but only upon a question of law and only with the leave of the Court of Appeal. An application for leave to appeal must be made within 28 days of the order. [10] In her affidavit sworn on 16 September 2019, the applicant states that she received a copy of the order of 26 July 2019 (which was about the body corporate's costs) from her solicitor on 24 August 2019. Ms Brogan, the solicitor for the body corporate, deposed in an affidavit that she sent a copy of that order to Mr Robinson, who was acting for Ms Thompson in the matter, on 2 August 2019. Otherwise, an email dated 31 July 2019 shows that that order was sent to Ms Thompson by QCAT on that date. That evidence was not challenged. It follows that the application in relation to that order is out of time. There is no evidence that any applications for leave to appeal any other order are within time. [11] Consequently, the applications for leave to appeal the other orders are all out of time. Not that the basis of the applications matter in this case. Whether it is an extension of time that the applicant is seeking or leave to appeal, these applications must be dismissed as entirely without merit. Indeed, Mr Reid, the sole director of SGR Prop Invest 01 Pty Ltd, submitted on its behalf that these proceedings are an abuse of process because they are vexatious. [12] The appeal against the costs order of 26 July 2019 can be dealt with briefly. Section 150 allows an appeal against an order of the appeal tribunal if it is a "cost-amount decision" or it is a "final decision". A "cost-amount" decision is one that is made under s 107(1). Mr Roney made such orders in relation to Ms McClelland and SGR Prop Invest 01 Pty Ltd. In relation to the body corporate, he made an order for costs to be assessed. The order of 26 July 2019 was made as a consequence of the process of assessment. It is not, therefore, a "cost-amount" order. Nor is it a "final decision" as defined in the Act. Consequently, the application in relation to that order is incompetent and should be dismissed. [13] The other two costs orders made under s 107 and were "cost-amount" orders. The orders dismissing the appeals were final decisions. Accordingly, leave to appeal had to be sought within 28 days of their being received. Time to apply for leave to appeal has lapsed. In the case of the two decisions of 26 April 2018, time lapsed about 16 months ago. In the case of the costs orders made on 6 September 2018 time lapsed about 11 months ago. 63 In a later, consequential judgment, Thompson v Body Corporate for Arila Lodge & Ors [2019] QCA 296, Sofronoff P ordered that Ms Thompson pay BCAL's costs of and incidental to the notice of appeal filed on 28 August 2019, the application filed on 16 September 2019 and the application filed on 7 November 2019 (each filed in the Court of Appeal) on an indemnity basis. 64 Ms Thompson devoted considerable effort, both in evidence and submissions, to an endeavour to re-agitate in this Court issues arising from the long ago water leakage, which had already been determined to finality within the system of adjudication and consequential appeals for which the laws of Queensland, starting with the BCCM Act, provide for resolution of body corporate disputes. 65 Ms Thompson also contended that the various legal proceedings and hence related costs orders which had been taken against her by BCAL were invalid, because of an absence of prior body corporate authorisation in accordance with s 312 of the BCCM Act. A further submission, based on s 153 of the BCCM Act, was that, because cost to the body corporate of the engagement of lawyers had exceeded a prescribed expenditure limit, two quotations ought to have been obtained and in the absence thereof, the engagements were invalid, such that she could not be made liable for the cost thereof. 66 Each of these were arguments which either were, or could have been, raised within the State court system as reasons why proceedings were incompetent or no costs order ought to be made. 67 BCAL accepted that a court exercising bankruptcy jurisdiction could go behind judgments which grounded proofs of debt in a bankruptcy but submitted that the present was not a case in which the Court would do so, referring in this regard to Ramsay Health Care Australia Pty Ltd v Compton (2017) 261 CLR 132 (Ramsay Health Care v Compton). 68 Ramsay Health Care v Compton concerned the power of a court exercising bankruptcy jurisdiction so as to decide, pursuant to s 52 of the Bankruptcy Act, whether or not to make a sequestration order on a creditor's petition, to go behind a judgment debt upon which a petitioning creditor relied so as to determine whether the court was satisfied that where was in truth a debt still owed by the respondent debtor. Earlier, in Wren v Mahoney (1972) 126 CLR 212, at 224 - 225, Barwick CJ had affirmed that there was such a jurisdiction, stating: The Court's discretion in my opinion is a discretion to accept the judgment as satisfactory proof of [the petitioning creditor's] debt. That discretion is not well exercised where substantial reasons are given for questioning whether behind that judgment there was in truth and reality a debt due to the petitioner. Earlier yet, in Corney v Brien (1951) 84 CLR 343, the High Court had held that circumstances in which such a jurisdiction might be exercised were where there was fraud, collusion or miscarriage of justice. 69 In Ramsay Health Care v Compton, the High Court confirmed that in deciding whether to make a sequestration order, the circumstances in which a court might go behind a judgement creditor's debt were not limited to fraud, collusion or miscarriage of justice. 70 The present case does not entail whether to make a sequestration order but, given the consequences for creditors of annulment for which s 154 of the Bankruptcy Act provides, the policy rationale for this power to go behind a judgment, offered by Kiefel CJ, Keane and Nettle JJ in Ramsay Health Care v Compton, at [54] - [55], is, in my view, relevant by analogy in deciding whether, as a matter of discretion, to annul a bankruptcy. Their Honours stated: 54. In point of principle, scrutiny by a Bankruptcy Court of the debt propounded by a judgment creditor seeking a sequestration order in no sense involves an attempt to impeach the judgment. A Bankruptcy Court is not concerned with whether the judgment should be set aside as upon an appeal, or even as a default judgment or a judgment obtained by fraud may be set aside; nor is a Bankruptcy Court concerned to deny the effect of the judgment as "res judicata" between the parties to it. A Bankruptcy Court is not concerned to prevent the judgment creditor from invoking the ordinary processes of execution available under the general law. Rather, a Bankruptcy Court is concerned with whether the debt on which it is based is truly a basis for the making of a sequestration order. A Bankruptcy Court has a statutory duty to be "satisfied" as to the existence of the petitioning creditor's debt; a creditor should not be able to make a person bankrupt on a debt which is not provable. 55. The scrutiny required by s 52 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. It is of critical importance to appreciate that such persons were not parties to the proceedings that resulted in the judgment debt. It has long been recognised that 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. In In re Fraser; Ex parte Central Bank of London, Lord Esher MR said: "The decision is based upon the highest ground - viz, that in making a receiving order, the Court is not dealing simply between the petitioning creditor and the debtor, but it is interfering with the rights of his other creditors, who, if the order is made, will not be able to sue the debtor for their debts, and that the Court ought not to exercise this extraordinary power unless it is satisfied that there is a good debt due to the petitioning creditor. The existence of the judgment is no doubt prima facie evidence of a debt; but still the Court of Bankruptcy is entitled to inquire whether there really is a debt due to the petitioning creditor." [Footnote references omitted] 71 Annulment does not affect sales and dispositions of property and payments duly made and acts done, by the bankrupt's trustee, or any person acting under the authority of the trustee or the Court, before the annulment: s 154(1)(a) of the Bankruptcy Act. Further, a trustee is entitled to be reimbursed in respect of costs of administration out of property which on bankruptcy vested in the trustee: s 154(1)(b) and s 154(2). Subject to this and to other exceptions in s 154 not presently relevant, the effect of annulment is that the remainder (if any) of the property of the former bankrupt still vested in the trustee reverts to the bankrupt: s 154(1)(c) of the Bankruptcy Act. 72 Thus, deciding whether or not to annul a bankruptcy may also affect the rights and interests of each of a bankrupt's creditors in being paid their debts in full. If a person remains in bankruptcy, the rights of unsecured creditors (or secured creditors with a deficiency) become rights to prove in the bankruptcy and to receive such distribution as may be payable to them from the property of the bankrupt in accordance with the Bankruptcy Act. Annulment could therefore bring with it for creditors a right to have payment in full. One reason for annulment might be that in truth and reality there is no particular debt or debts such that a person is not presently and never was insolvent. 73 For these reasons, I accept that, on an annulment application, a court of bankruptcy does have power to go behind particular judgment debts. The existence of such a power is one thing, occasion for its exercise is quite another. 74 The place for the agitation of Ms Thompson's grievances about the sequel to the water leakage was in the various forums for which State law makes provision. Ms Thompson has exercised rights so conferred and there have been resultant determinations made on the merits. Her subjective appreciation apart, Ms Thompson has not by evidence established that the several outcomes adverse to her in the State system, as detailed in the summary offered by Sofronoff P, were the result of fraud, collusion or miscarriage of justice. Especially that is so when it is recalled that these are grave allegations attracting commensurate care in deciding whether they are proved: Briginshaw v Briginshaw (1938) 60 CLR 336. 75 Fraud, collusion or miscarriage of justice do not, as I have mentioned, delineate the limits of the bases upon which a court of bankruptcy might go behind any judgment. But there is a singular public interest in the determination to finality of factual controversies in the usual forums appointed for the determination of those controversies. There are also the legitimate private interests of other unit owners in the complex in which the Toowong Unit is situated, and the body corporate for that complex, BCAL, in such finality. 76 Ms Thompson made particular reference in evidence and submissions to events in her personal and wider family life which had intruded upon her ability to cope with the stresses of dealing with the water leakage, its consequences and defaults in loan and body corporate levy payments and related litigation, as well as intruding on her decision to present her debtor's petition. Such stresses, real though they may be, are not, in themselves, a basis for annulling a bankruptcy in circumstances where her debts as proved in the bankruptcy are not shown to be other than real. 77 I am just not satisfied on the evidence that there is any reason to go behind the various judgment debts. Ms Thompson's complaints about the sequel to the water incursion incident have been dealt with in the appointed fora. All of her evidence and submissions either were or could have been advanced there. 78 Further and in any event, the taking of legal action against Ms Thompson by BCAL, to the extent that it required approval by body corporate resolution, has been ratified by various resolutions passed by the body corporate on 6 April 2020, as meeting minutes annexed to an affidavit of Mr Schoch, solicitor, of Grace Lawyers attest. That ratification was, in my view, effective retrospectively to authorise, insofar as the same may have been necessary, the institution of proceedings against Ms Thompson by BCAL and the response by BCAL to proceedings instituted by her and related retainers of lawyers. It was within the power of BCAL to institute recovery proceedings and to defend proceedings brought by Ms Thompson. The authorisation was a matter for internal management, to be decided by the majority at a general meeting. The requisite ratifying special resolution has been passed. The position is analogous to that which prevails in respect of the ratification by resolution of actions within the power of a corporation to undertake: see Grant v United Kingdom Switchback Railways Company (1888) 40 Ch D 135, at 139 - 140 and a local application of this by Cussen J in Colhoun v Green [1919] VLR 196, at 203. 79 As to the submission based on s 153 of the BCCM Act, it could not have been known in advance that legal costs would exceed any statutory threshold. I doubt that this section has any application. In my view, the authorisation given at general meeting was sufficient approval. 80 Mr Lane has engaged a costs assessor to advise him in relation to so much of the legal costs in BCAL's proof of debt as are not the subject of fixed costs orders. As at the time of trial, he had yet to receive a report. That is a responsible, prudent act by Mr Lane as trustee. Ms Thompson offered no evidence from a costs assessor in relation to this component of the BCAL proof of debt. The onus of proving that the proof was excessive and by how much, as part of demonstrating solvency, was upon her. 81 Ms Thompson stated in evidence that, on 5 December 2019 she had received an email from a Mr Gregory Perfrement of CPA Home Loans "confirming approval for a loan of $95,000". This, she submitted, was approximately $15,000 more than the sum of $80,266.85 specified in Bankruptcy Notice BN245469, with which she had failed to comply. It was the act of bankruptcy constituted by her failure to comply with this notice upon which BCAL, as petitioning creditor had relied in presenting the creditor's petition ultimately dismissed as a sequel to the acceptance of Ms Thompson's debtor's petition. 82 Of course, in terms of determining solvency, monies which a debtor might readily command by way of loan funds in order to meet debts are to be taken into account. However, regard to the email concerned from Mr Perfrement discloses that it is a long way short of an unconditional offer of loan funds. Further, this is a subject which has not passed without investigation by Mr Lane. Mr Lane deposed in his affidavit and without objection that he had spoken with Mr Perfrement, who had advised him that no loan approval had been given, rather that a loan may have been possible subject to Ms Thompson's providing further information for submission to potential financiers, and that no further information was provided by Ms Thompson. Yet further, it would not be sufficient, in order for Ms Thompson to demonstrate present solvency, that she prove (and she has not) that she would have been able, had she chosen, to pay the sum demanded in the bankruptcy notice from borrowed funds readily at her command. 83 Ms Thompson also sought, after judgment had been reserved, to re-open proceedings so as to lead further evidence, notably evidence of superannuation balances in respect of superannuation funds not listed by her in her Bankruptcy Form and not earlier disclosed to Mr Lane. All of this evidence could have been adduced by her at trial with ordinary diligence and attention to the responsibilities of a party to proceedings in this Court. For reasons separately delivered, I dismissed this application. 84 On the evidence, by the time when she signed her Bankruptcy Form on 26 June 2020 and when, shortly thereafter, the debtor's petition portion thereof was accepted by an Official Receiver, Ms Thompson had already defaulted on borrowings from Suncorp Bank such that it had entered into possession of the Hawthorne Property. She was by then subject to multiple costs orders even the fixed components of which were, in the main, unpaid and she was greatly in arrears in amounts owed to BCAL. Her income was insufficient to meet even those debts. She was unable within any reasonable time, or even on the evidence at all, to borrow funds even to meet the amount specified in the bankruptcy notice. Even on a generous assessment of the equity she had in the Hawthorne Property and even assuming, also generously, that each of that property and the Toowong Unit might then have been sold within a reasonable time thereafter, the proceeds of sale would have been insufficient to meet her debts. She has certainly not proved otherwise. Even accepting, in light of s 153B(2) that an annulment order might be made even though she was insolvent when her debtor's petition was presented, neither has she proved that the position is any better at present. Ms Thompson has not proved that she is presently solvent. The evidence before the Court, such as it is, confirms Mr Lane's opinion that she is not solvent. Given this, I am not persuaded that her bankruptcy should be annulled. 85 The case appears to me to be one where, faced with the imminent prospect of a sequestration order on a creditor's petition and being of the belief that she was not then solvent, Ms Thompson just chose voluntarily to become a bankrupt on her own petition. Neither then nor, even more importantly, now was or is she solvent. 86 Although Ms Thompson's failure to prove present solvency, and her failure to make any proposal for the payment of any part of Mr Lane's costs of administration, provide reasons in themselves not to annul her bankruptcy, I have also taken into account other factors. One is the lapse of time (over nine months) between when Ms Thompson became bankrupt and when she filed her annulment application. Her application is not one which was made promptly. Another factor is Mr Lane's report in his affidavit that, despite numerous requests of her by him to comply with s 77 of the Bankruptcy Act regarding the provision of her books and records, Ms Thompson has failed to do so, though acknowledging that she holds books and records. I accept Mr Lane's evidence on this subject. Ms Thompson's stance, evident in her evidence and submissions, has been to request that Mr Lane advise her as to what documents "we require her to provide". This inverts the requirements of the Bankruptcy Act and, in any event, Mr Lane has made it plain enough what he requires of her. In my view, this is an additional reason why her bankruptcy ought not to be annulled. There is a public interest, given this conduct, in her remaining subject to the restrictions and duties imposed on a bankrupt by the Bankruptcy Act. Her case is one were her estate should continue to be administered in insolvency. There is no public interest, and certainly no interest of creditors, served by the annulment of her bankruptcy. 87 For these reasons, the annulment application should be dismissed. It will be necessary to hear from the parties in respect of costs. I certify that the preceding eighty-seven (87) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Logan.