A. Hartrodt Australia v Tan

In the Federal Circuit Court of Australia, Judge A. Kelly considered an application by A. Hartrodt Australia (the applicant) seeking an order for the sequestration of the estate of Ms. Tan (the respondent) under section 43 of the *Bankruptcy Act 1996* (Cth). The application was founded on a judgment debt of $8,833.95, plus interest, obtained in a Magistrates Court on 6 March 2019. The alleged act of bankruptcy was the respondent's failure to comply with a bankruptcy notice served on 22 November 2019. The respondent sought to resist the sequestration order by asserting a counterclaim, set-off, or cross-demand equal to or exceeding the judgment debt, which could not have been raised in the original Magistrates Court proceedings.

The court was required to determine whether the respondent had established a sufficient counterclaim, set-off, or cross-demand to prevent the sequestration of her estate. Additionally, the court had to consider the respondent's application to set aside the sequestration order, which had been made in her absence. This application was based on two grounds: firstly, that the order was made without her appearance, pursuant to rule 16.05(2)(a) of the *Federal Circuit Court Rules 2001*, and secondly, that an application to set aside the underlying judgment was pending in another court.

The court noted the unsatisfactory procedural history of the matter, including an initial dismissal of the respondent's application to set aside the sequestration order due to her absence, which was subsequently set aside by consent. Following a directions hearing, an order was made for the application for review of the Registrar's decision to be heard, with the respondent being afforded an extended opportunity to file substantive affidavits and submissions. The court emphasised the need for the respondent to actively engage with her application, particularly given that her existing affidavit lacked a substantial basis for the relief sought. The ultimate determination of the sequestration application would depend on whether the respondent could demonstrate a valid counterclaim, set-off, or cross-demand.