Commissioner of State Revenue v Mirabella, in the matter of Mirabella
[2025] FedCFamC2G 1207
•31 July 2025
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Commissioner of State Revenue v Mirabella, in the matter of Mirabella [2025] FedCFamC2G 1207
File number(s): MLG 699 of 2025 Judgment of: JUDGE CORBETT Date of judgment: 31 July 2025 Catchwords: BANKRUPTCY - Application for review of a Registrar’s decision to make sequestration order – Hearing de novo – Discretion not to make an order – Solvency – Annulment – Application dismissed. Legislation: Bankruptcy Act 1966 (Cth) ss 40, 43(1)(b), 44(1)(b), 44(1)(c), 47, 52(1), 52(2), 109(1)(a), 153B
Evidence Act 1995 (Cth) ss 55, 136
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 190, 254(2)(l), 256(1)
Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth) rr 2.02(1), 2.02(3), 2.03, 4.06, 7.05, Sch 1, Pts 1, 4
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) r 21.04, 21.04(2)
Magistrates Court Act 1989 (Vic) ss 3, 100
Supreme Court Act 1986 (Vic) s 33
Tax Administration Act 1997 (Vic) Pt 10
Cases cited: Bechara v Bates [2021] FCAFC 34
Commissioner of State Revenue v Gas Ban Pty Ltd (in liq) [2011] VSCA 89
Harris v Caladine [1991] HCA 9; (1991) 172 CLR 84
Osborne v Schembri McCluskys Pty Ltd [2025] FCA 691
Ramsay Health Care Australia Pty Ltd v Compton (2017) 261 CLR 132
Re Sarina; Ex parte Wollondilly Shire Council (1980) 48 FLR 372
Totev v Sfar [2008] FCAFC 35
Walton v Klewer [2005] FMCA 878
Westpac Banking Corp v Hughes [2008] FCMA 424
Division: Division 2 General Federal Law Number of paragraphs: 79 Date of last submission/s: 23 July 2025 Date of hearing: 23 July 2025 Place: Melbourne Counsel for the Applicant Ms A Carruthers Solicitor for the Applicant State Revenue Office Victoria Solicitor for the Respondent The Respondent appeared via video, self-represented Solicitor for Interested Person Mr R Savage for the Trustee in Bankruptcy (Grace Lawyers Pty Ltd) ORDERS
MLG 699 of 2025 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2) IN THE MATTER OF LEO ILLUMINATO MIRABELLA
BETWEEN: COMMISSIONER OF STATE REVENUE
Applicant
AND: LEO ILLUMINATO MIRABELLA
Respondent
ORDER MADE BY:
JUDGE CORBETT
DATE OF ORDER:
31 JULY 2025
THE COURT ORDERS THAT:
1.The application for review filed 2 July 2025 be dismissed;
2.The sequestration order made by the Registrar on 11 June 2025 is affirmed; and
3.The applicant’s costs of the application for review and the Trustee’s costs of the application for review are costs reasonably incurred and are to be paid in priority from the estate of the respondent pursuant to s 109(1)(a) of the Bankruptcy Act 1966 (Cth).
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE CORBETT
The respondent has applied to review the orders made 11 June 2025 by a Registrar of the Court that the respondent’s estate be sequestrated under the Bankruptcy Act 1966 (Cth) (Act). The respondent seeks an order that the sequestration order be set aside. In the alternative the respondent seeks an order that the sequestration order be annulled pursuant to s 153B of the Act.
The power of the Court to delegate the power to make the orders under review is contained in s 254(2)(l) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (FCFCOA Act). Rule 2.02(1) and Sch 1 Pt 1 of the Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth) (Bankruptcy Rules) prescribe that a Registrar of the Court may make a sequestration order under s 52(1) of the Act.
Section 256(1) of the FCFCOA Act permits any party to proceedings in which a delegate has exercised any of the powers of the Court under s 254 of the FCFCOA Act to apply to review the exercise of the delegated power.
The application for review was filed with the Court on 2 July 2025 which was within the 21-day time limit prescribed by r 2.02(3) of the Bankruptcy Rules.
Rule 21.04 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (General Rules) provides that the review of an exercise of power by a Registrar must proceed by way of a hearing de novo (see also Harris v Caladine [1991] HCA 9; (1991) 172 CLR 84 at 164 per McHugh J and Totev v Sfar [2008] FCAFC 35 at [14] per Emmett J). Rule 21.04 also gives the Court the discretion to receive as evidence any affidavit or exhibit tendered before the Registrar and to receive further evidence.
The onus is therefore on the applicant (Commissioner) to re-prosecute the creditor’s petition and the only onus on the respondent is to prove either solvency, or any other sufficient cause, not to make a sequestration order under s 52(2) of the Act (see Bechara v Bates [2021] FCAFC 34 at [27] per Allsop CJ, Markovic and Colvin JJ) (Bechara)).
The application for review was first listed to be heard by this Court on 9 July 2025 however notice of the application was not given to the Commissioner by the respondent, or to the appointed Trustee in Bankruptcy (Ms Alice Ruhe of SMB Advisory) (Trustee) and therefore the hearing was adjourned to 23 July 2025.
The application for review was heard on 23 July 2025 at Melbourne. Ms Carruthers of counsel appeared for the Commissioner. Mr Savage, solicitor, appeared for the Trustee. The respondent appeared via video-link self-represented.
Rule 7.05 of the Bankruptcy Rules provides that:
7.05 Review of Registrar’s decision
(1) This rule applies in relation to an application under subsection 256(1) of the Act for review of a decision by a Registrar to make a sequestration order against the estate of a debtor (the bankrupt).
Note: For the form of the application and the time for filing the application, see rule 2.02.
(2) The application must be served on the trustee at least 7 days before the date fixed for the hearing of the application.
(3) The applicant must give notice of the application to each person known to the applicant to be a creditor of the bankrupt.
(4) The notice must be in accordance with Form B12.
(5) The applicant must serve the notice on each creditor at least 7 days before the date fixed for the hearing of the application.
There is no evidence that the creditors of the respondent, other than the Commissioner, were given proper notice of the application for review. Affidavits filed by the respondent and a Statement of Affairs given by the respondent to the Trustee dated 9 July 2025, indicate that there are other substantial creditors to whom notice should have been given but were not. The respondent submits that he has found the processes of the Court and the requirements of the Bankruptcy Rules and the General Rules to be confusing and complicated. The respondent submits that he believes that other creditors are aware of his application because he has told them of the orders made by the Registrar on 11 June 2025. The respondent has also produced evidence to the Court of mental and physical health issues that he says have hindered his ability to comprehend the procedural requirements of the Court and Bankruptcy Rules. The respondent claims that he has sought legal advice from several solicitors in the past, but that the practitioners previously retained by him to act in relation to this application and the application before the Registrar, were not prepared to act or were too expensive to retain.
The Court has power to dispense with compliance with the Bankruptcy Rules and the General Rules if it is in the interest of the administration of justice to do so. For the purpose of the application for review and the overarching purpose referred to in s 190 of the FCFCOA Act namely, to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible, the Court is prepared to dispense with compliance with r 7.05 of the Bankruptcy Rules and to entertain the application and review the exercise of power by the Registrar in the absence of other creditors. The Court also gives leave to the Trustee to be heard pursuant to r 2.03 of the Bankruptcy Rules, in particular on the costs incurred by the Trustee and reasonable remuneration payable since the making of the sequestration order on 11 June 2025.
BACKGROUND
The Registrar made a sequestration order against the estate of the respondent on 11 June 2025 after proof of the matters stated in a creditor’s petition dated 4 March 2025 presented by the Commissioner. The creditor’s petition claimed a debt due to the Commissioner of $119,806.56 (Judgment Debt) for unpaid land tax and interest payable pursuant to an order of the Magistrates’ Court of Victoria at Melbourne made on 8 December 2022. The Commissioner relied on an act of Bankruptcy on 23 October 2024 which was the failure to satisfy a Bankruptcy Notice dated 10 September 2024, which was personally served on the respondent on 2 October 2024.
The respondent appeared at the hearing of the creditor’s petition before the Registrar on 11 June 2025 and sought to rely on an affidavit sworn 22 April 2025 and a Notice Stating Grounds of Opposition to Application in Form B5 also dated 22 April 2025. Prior to the hearing, the respondent filed an Outline of Submissions dated 20 May 2025 that appeared to have been prepared by and signed by a solicitor, and a further copy of the affidavit sworn 22 April 2025 which was formally filed with the Court on 21 May 2025. A Notice of Address for Service was also filed on behalf of the respondent dated 27 May 2025 that nominated Umair Tiwana of King Lawyers as the solicitor then acting for the respondent.
The basis for opposition to the making of the sequestration order was that the Judgment Debt entered in the Magistrates’ Court was made in error and was beyond the statutory jurisdictional limit of that Court. The respondent submitted that he was unable to file an appeal from the orders of the Magistrates’ Court due to medical and other circumstances, which meant that his complaints regarding the orders made 8 December 2022 were never addressed by a competent Court. The respondent also applied for a rehearing of the proceeding in the Magistrates’ Court however the application was dismissed due to, what the respondent described as, a misunderstanding as to Court procedures and an error by his former lawyer. In the respondent’s affidavit sworn 22 April 2025 the respondent also claimed that he had been assessed with land tax on his principal place of residence and that he had been denied procedural fairness and access to justice by the Magistrates’ Court and other “Courts” regarding the validity of the Commissioner’s assessments. The Form B5 also referred to alleged defects in the Bankruptcy Notice.
The respondent also filed a further affidavit sworn on 11 June 2025 in which he referred to his continuing health issues, the correct location of his principal place of residence, his inability to secure legal representation, his ability to pay debts upon the sale of one or more of the real properties owned by him, and otherwise seeking an adjournment or stay of the proceedings for a further sixty days.
At the hearing before the Registrar, the Commissioner relied on the following documents:
(a) 4 March 2025 Creditor’s Petition;
(b) 4 March 2025 Affidavit Verifying Paragraph 4 of the Creditors Petition;
(c) 4 October 2024 Affidavit of Service of Bankruptcy Notice;
(d) 25 March 2025 Consent to Act as Trustee;
(e) 11 April 2025 Affidavit of Service of Creditor’s Petition (and associated documents);
(f) 5 June 2025 Affidavit in Reply of Ms Amy Victoria Fisher (Affidavit in Reply);
(g) 10 June 2025 Affidavit of Debt;
(h) 10 June 2025 Affidavit of Search; and
(i) 10 June 2025 an updated Schedule of Fees and Disbursements, setting out the fixed costs order sought by the Commissioner.
In the affidavit of debt sworn 10 June 2025, an officer of the Commissioner confirmed that the debt claimed in the creditor’s petition had not been paid. Ms Fisher in her Affidavit in Reply sworn 5 June 2025, explained that she was a team leader employed by the Commissioner in the Debt Management Branch, Corporate Services Division of the Commissioner and that she had knowledge of the proceedings in the Magistrates’ Court and the attempts made by the Commissioner to recover payment from the respondent of assessed and unpaid land tax. Ms Fisher explained that the Judgment Debt was for the payment of the sum of $97,336.58 of assessed and unpaid land tax plus interest and legal costs. Judgment was entered on 8 December 2022 against the respondent in default of a Defence to the Complaint and Statement of Claim.
Ms Fisher also explained in her affidavit that in March 2023 the respondent applied for a rehearing in the Magistrates’ Court which was refused on 26 July 2023. Costs were awarded against the respondent. A Bankruptcy Notice was issued more than twelve months later on 10 September 2024 which the respondent then sought to set aside by an application filed on 23 October 2024 (exactly 21 days after it was personally served on the respondent). On 14 November 2024, a Registrar of this Court dismissed the application to set aside the Bankruptcy Notice. There was no application to review that decision. The creditor’s petition was then filed on 4 March 2025 within six months of the act of Bankruptcy. The petition was served personally on 3 April 2025 which was confirmed by the affidavit sworn 11 April 2025. The affidavit of searches and the affidavit of debt were served in compliance with r 4.06 of the Bankruptcy Rules.
Ms Fisher in her Affidavit in Reply further addressed and joined issue with various assertions made by the respondent in his affidavit sworn 22 April 2025. In particular, the assertion that the respondent informed the Commissioner in about 2004 that his principal place of residence was ‘39-41 Lincoln Road, Croydon’, and that he had been wrongly assessed for land tax on that property. Ms Fisher says on oath in her affidavit that in 2004 the respondent claimed that ‘29 Fifth Avenue, Altona North’ was his principal place of residence and that no duty was assessed on that property. In 2012, the respondent notified the Commissioner that he wished to claim ‘39-41 Lincoln Road, Croydon’ as his principal place of residence. That request was denied by the Commissioner on 9 January 2013 due to a lack of evidence and the respondent was informed in writing (Annexure AVF-1, p 52). Despite numerous emails from the Commissioner and the solicitor for the Commissioner to the respondent, no application in proper form was made to seek reassessment of the land tax payable or objecting to notices of assessment. No notice of objection to the assessments of tax payable by the respondent on ‘39-41 Lincoln Road, Croydon’ was received by the Commissioner until 13 May 2025, after the Judgment Debt in the Magistrate’s Court, and shortly before presentation of the creditor’s petition. The property at ‘39-41 Lincoln Road, Croydon’ was sold by the respondent in March 2014 (Annexure AVF-1, p 56).
The affidavit of Ms Fisher also sets out a comprehensive calculation of the land tax payable and assessed for the years 2017 to 2025 inclusive (with identification of the relevant notices of assessment by number). A total of $196,848.96 has now been assessed and not paid. The Judgment Debt related to only part of the assessed amounts due to the Commissioner.
The Commissioner also relied on an amended outline of submissions dated 10 June 2025 which submitted (amongst other things) that there was proof of the necessary elements of s 52(1) of the Act and that there was no legitimate basis to dispute the Judgment Debt.
On 11 June 2025, the Registrar refused the respondent’s request for an adjournment and a stay of proceedings and made a sequestration order. The Registrar appointed the Trustee to administer the respondent’s bankrupt estate. On 2 July 2025, the respondent filed the application for review of the Registrar’s decision which he prepared himself.
On 14 July 2025, the solicitor retained by the respondent filed notice of his intention to withdraw as lawyer. On 18 July 2025, the respondent filed a Notice of Address for Service that gave notice that he no longer had legal representation and that he was acting self-represented.
HEARING DE NOVO
At the hearing of the application for review, the Commissioner relied on and tendered the following affidavits to prosecute the creditor’s petition:
(a)4 March 2025 Creditor’s Petition;
(b)4 March 2025 Affidavit Verifying Paragraph 4;
(c)4 October 2024 Affidavit of Service of Bankruptcy Notice;
(d)25 March 2025 Consent to Act as Trustee;
(e)11 April 2025 Affidavit of Service (of the Creditor’s Petition and associated documents);
(f)5 June 2025 Affidavit in Reply of Ms Amy Victoria Fisher (Affidavit in Reply);
(g)10 June 2025 Affidavit of Service of Pamela Ana Lazareski confirming service of the affidavit of Ms Fisher sworn 5 June 2025 and the amended outline of submissions dated 10 June 2025;
(h)10 June 2025 Affidavit of Debt of Mr John Raymond Chair
(i)22 July 2025 Affidavit in Reply of Mr John Raymond Cahir (Further Affidavit in Reply);
(j)22 July 2025 Affidavit of Debt;
(k)22 July 2025 Affidavit of Search; and
(l)22 July 2025 Schedule of Fees and Disbursements.
To the extent that leave is required to rely on further evidence, in addition to the evidence relied on before the Registrar, that leave is granted (r 21.04(2) of the General Rules). The affidavits and annexures thereto were tendered as a bundle and marked as exhibit “A1”.
The Court is satisfied that the affidavits relied on by the Commissioner at the hearing of the application for review satisfy the necessary proof required in s 52(1) of the Act. The Commissioner has complied with the Bankruptcy Rules (in particular, Pt 4 of the Bankruptcy Rules) and therefore the Commissioner is prima facie entitled to a sequestration order. The affidavits establish proof of the following:
•The debtor has committed an act of Bankruptcy in accordance with s 40 of the Act;
•At the time that the act of Bankruptcy was committed, the debtor had a territorial connection to Australia of the type prescribed (s 43(1)(b) of the Act);
•The creditor who seeks to petition the Court for a sequestration order has presented a Petition within the period of six months of the commission of the act of Bankruptcy (s 44(1)(c) of the Act);
•The creditor is owed a liquidated sum of $5,000.00 or more which is payable immediately or at a certain future time (s 44(1)(b) of the Act);
•The Petition is verified by a person who knows the relevant facts relied on (s 47 of the Act);
•Prior to the hearing, the applicant creditor has complied with r 4.06 of the Bankruptcy Rules; and
•At the hearing of the Petition, the Court has proof of the matters stated in the Petition, service of the Petition, and the fact that the debt or debts on which the Petition relies are still owing (s 52(1) of the Act).
The affidavits relied on by the Commissioner cumulatively satisfy the necessary requirements of the Act, both at the date of the sequestration order made 11 June 2025, and the date of the hearing of the review application on 23 July 2025 (Bechara at [88] and [89]).
Therefore, the onus shifts to the respondent to establish either that he is able to pay his debts or that for other sufficient cause, a sequestration order ought not to be made (s 52(2) of the Act). Alternatively, that the Bankruptcy should be annulled pursuant to s 153B of the Act.
RESPONDENT’S EVIDENCE
The respondent sought to rely on two further affidavits in addition to the two affidavits sworn before and tendered at the hearing before the Registrar. To the extent that leave to do so is required, it is also granted to the respondent to rely on the two further affidavits (r 21.04(2) of the General Rules).
The further affidavits were sworn 18 and 22 July 2025. The affidavit sworn 18 July 2025 included an image of an undated letter allegedly sent to the Commissioner in which the respondent claimed that his principal place of residence was ‘39-41 Lincoln Road, Croydon’. The Commissioner claims that there is no record of receipt of this letter. That affidavit also contained an image of a facsimile transmission with a date stamp of 1 October 2004 in which, the respondent notified the Commissioner that his principal place of residence for the period 26 November 1999 to 6 July 2003 was ‘7 McGuire Crescent, Williamstown’ and from 7 July 2003 to 1 October 2004 was ‘29 Fifth Street, North Altona’. Ms Fisher’s affidavit confirms that the facsmile transmission was received by the Commissioner and thereafter ‘29 Fifth Street, North Altona’ was recorded as the respondent’s principal place of residence. The respondent claimed that he sent the second of these letters under “coercion and emotional pressure” from his estranged wife.
The affidavit sworn 18 July 2025 also contain many assertions, the relevance of which is not apparent and were generally objected to by counsel for the Commissioner as irrelevant and inadmissible. As the respondent was self-represented, the Court was prepared to allow the respondent to rely on the affidavits as relevant to the probability of the existence of the facts required to discharge the debtor’s burden of proof under s 52(2)(a) and (b) of the Act but not to establish the truth of the hearsay, uncorroborated assertions and opinions expressed therein (ss 55 and 136 of the Evidence Act 1995 (Cth)).
The affidavit sworn 18 July 2025 contained many admissions by the respondent that were against his interests and did not assist to establish his personal solvency. Those admissions included that the respondent is engaged in other proceedings in the County Court of Victoria at Melbourne, in which the Commonwealth Bank is seeking to recover a line of credit secured against his current home at ‘37 Lincoln Road, Croydon’ and another property owned by the respondent at ‘33 Lincoln Road, Croydon’. The affidavit also revealed a complex personal history of disputes and misfortune resulting in liabilities which were said to have been caused by the failings and negligence of various individuals, institutions and authorities.
In the affidavit sworn 18 July 2025 there is a table described as ‘Assets v Liabilities + Income Appendix A’ (p 10). The source of the information contained in the table was footnoted but not reliably corroborated by any documentary evidence. The table contained the assertion that the respondent owned assets comprising six real properties valued at $6,687,933.33 and a total income (presumably annual gross income before tax) of $150,926.14. The only document that was attached to corroborate the income figures, was a copy letter dated 23 June 2025 from the Commonwealth Superannuation Corporation that confirmed that the respondent has a current pension entitlement of $74,271.34 gross per year (p 15). No tax returns or other income statements were produced by the respondent.
The table also identified ‘long term liabilities’ to the Commonwealth Bank on various loan accounts that total $2,148,902.06. The table further contained a list of ‘Miscellaneous Liabilities’ that included unpaid land tax ($226,906.44), council rates ($50,012.60), water rates ($16,260.21) ‘Other TBA Enforcements’ ($57,379.97) and utilities Electricity and Gas ($17,830.27) (p 11). None of these liabilities were corroborated or confirmed, save for the implied admission of liability by including them as liabilities in the respondent’s affidavit. When asked by the Court to explain the ‘Other TBA Enforcements’ described in the table, the respondent said that they related to various infringement’s prosecuted by local authorities and which were currently unpaid and awaiting enforcement by the Sherriff’s office.
Appendix C to the affidavit sworn 18 July 2025 comprised two tables (p 13). Table No. 1 related to ‘37 Lincoln Road, Croydon’ and listed amounts claimed to have been overpaid for land tax. The total amount claimed to have been over paid was $53,109.72. However, there was no proof of payment produced in the affidavit and the assessment years identified include the years for which the Commissioner claimed land tax had been assessed and not paid. There was simply no proof of payment of the sums claimed in the Table. Table No. 2 related to ‘39-41 Lincoln Road, Croydon’ and also referred to amounts overpaid for land tax assessments. The respondent referred to assessments dating back to the year 2000, until the property was sold in 2014 and claimed the same sum each year of $38,036.62 resulting in a grand total of overpayments of $570,549.30. Again, the basis upon which this was calculated and the source of the figures used was unverified, confusing and unreliable.
The respondent also attached to the affidavit of 18 July 2025, a bank statement from the Commonwealth Bank that showed a running account of transactions for the period 25 March 2025 to 13 June 2025 (p 18-27). The relevance of the statement was not explained in the affidavit. Many of the entries on the statement appeared to be for the payment of day-to-day personal expenses. The only apparent relevance of this bank statement was to the question of solvency and the statement showed that on 13 June 2025, the credit balance of the account was $4,380.63, which would not be sufficient to pay any of the debts identified by the respondent as due and owing.
The affidavit also contained an undertaking to enter into a ‘variable repayment plan of $101,999.62 plus interest and legal costs’ for payment ‘within seven days’ (p 6 [5.5]). However, the source of funds to pay that sum (or any other sum) was not identified nor was it apparent how that sum could be raised other than by the sale of real estate that is mortgaged to the Commonwealth Bank and which is the subject of proceedings in the County Court of Victoria.
The affidavit of 22 July 2025 was even more perplexing. The affidavit contained copies of documents which were described as screen captures or scanned documents ‘from my personal and electronic files’ (p 2 [3]). In the body of the affidavit, the respondent asserted that he experienced significant complications involving real estate agents, contractors and the sales process when he made previous attempts to begin the process of ‘liquidating assets’. He also asserted that he intended to seek judicial review by the Supreme Court of Victoria of the land tax assessment which he claimed were erroneous dating back to 2004. The respondent claimed that these overpayments should be ‘credited against the bankrupt estate’. The respondent asserted ‘Notwithstanding the above, I reaffirm that I am solvent’ (Affidavit of 22 July 2025 [7]). Annexed as exhibits to the affidavit were the order of the Registrar made 11 June 2025, the appointment of the Trustee, medical reports, copies of various certificates of title (all of which recorded mortgages to the Commonwealth Bank), market appraisal letters for six properties, loan account statements from the Commonwealth Bank including statements for a line of credit the unpaid loan balance of which was $825,001.39 as at 1 May 2025, and a table which purported to be a summary of valuations obtained by the respondent’s former solicitor and supplemented in part by the appraisal letters. The affidavit concluded by referring to:
[9] …ongoing matters in other court jurisdictions which I am actively pursuing and intend to continue pursuing. These matters are relevant to my broader legal position and may intersect with the issues raised in this proceeding. If I have not yet fully disclosed those matters to the Court, I do so now in the interest of full transparency and good faith.
These ‘ongoing matters’ were not identified nor was the ‘broader legal position’. The affidavits relied on by the respondent did not assist in persuading the Court to exercise the discretion to not make a sequestration order.
COMMISSIONER’S EVIDENCE IN RESPONSE
The Commissioner sought to rely on the Affidavit in Reply of Ms Fisher sworn 5 June 2025 in response to the respondent’s evidence. The affidavit of Ms Fisher clarified some of the confusion created by the respondent’s affidavits and the history of proceedings in the Magistrates’ Court, in circumstances where the respondent’s recollection of events was confused and unreliable.
The Commissioner also sought to rely on an affidavit of John Raymond Cahir sworn 22 July 2025, that sought to respond to the respondent’s affidavit sworn 18 July 2025. Mr Cahir confirmed that the debt now due by the respondent for land tax unpaid to the Commissioner was $243,601.01 and produced all of the assessment notices confirming that sum. The affidavit also annexed a report obtained from the County Court of Victoria that indicated that on 17 July 2023, the Commonwealth Bank obtained a default judgment against the respondent for a total sum of $652,676.81 inclusive of costs and interest and that orders for possession had been made for the land situated at 37 and ‘33 Lincoln Road, Croydon’ (Annexure JRC-2). A warrant for possession was issued by the Court on 22 October 2024 but remains unexecuted. The third exhibit to the affidavit of Mr Cahir is a Statement of Affairs prepared by the respondent and sent to the Trustee and the solicitor for the Commissioner dated 9 July 2025 (Annexure JRC-3). In that Statement of Affairs, the respondent said that he first experienced financial difficulty in October 1999. The respondent disclosed credit card debts of $57,000.00 and penalties and fines owing of $60,000.00. Liabilities to banks were recorded at $1,704,587.00. The respondent did not identify any available assets or personal assets, save that he indicated that he had personal assets of undisclosed value and undisclosed interests in real estate. He also claimed that monies were owed to him but did not disclose the sum owed.
RESPONDENT’S SUBMISSIONS
The Court invited the respondent to explain why he claimed to be able to pay his debts and why a sequestration order ought not be made.
The respondent’s submissions as to how he was able to pay his debts and why an order should not be made were confusing and convoluted. The respondent claimed that he had overpaid land tax to the Commissioner for his principal place of residence and therefore no debt was owed in respect of other properties that were assessable for land tax and that in fact no debt was due. This was not raised before the Magistrates’ Court in a Defence to the Commissioner’s Complaint or before judgment was entered against him on 8 December 2022. Ms Fisher’s affidavit of 5 June 2025 annexed a copy of the respondent’s application for a rehearing filed with the Magistrates’ Court at Melbourne. In that application, the respondent claimed that he did not appear or file a Defence due to medical disability and trauma.
The respondent claimed that he was given conflicting legal advice about how to challenge the assessments relied on by the Commissioner, but all attempts to vindicate his position had failed due to poor advice, illness, mishap or other distractions. The Commissioner had also misrepresented the sum due and payable to the Magistrates’ Court and therefore the Judgment Debt was entered in error and was beyond jurisdiction. This also meant that no debt was due. The respondent claimed that the Commissioner refused to consider his previous requests for reassessment of the land tax assessed, and previous attempts to sell properties to repay debts were frustrated by misrepresentations or negligence by real estate agents. The Commonwealth Bank had been complicit in frauds perpetrated by his estranged wife, and she had incurred debts without his consent.
The respondent did concede that he had other debts owed to local councils and Fines Victoria of about $60,000 and volunteered that he had not completed or lodged an Income Tax Return with the Australian Taxation Office since 2001. This was due to depression and other mental health issues from which he now believes he is recovering. He received income from a pension from the Commonwealth Superannuation Corporation and also income from rent from properties in his portfolio, although recently that rent was nominal because the properties had fallen into disrepair. He owed the Commonwealth Bank approximately $850,000 on the line of credit which he used to pay for maintenance and other expenses for his property portfolio and the Commonwealth Bank were also paying rates on some of the properties mortgaged to him, but he did not know why.
The respondent believed he had good claims for judicial review by the Supreme Court of Victoria of the Commissioner’s misfeasance and this he claimed was conceded by the Trustee, in a note of an email sent to the Trustee by his former solicitor on 19 June 2025, where his solicitor notified of a potential claim of abuse of process. He referred to and relied on the affidavit sworn by the Trustee on 22 July 2025 and filed in relation to this application, which recorded various tasks undertaken and time spent by the Trustee and her staff since the sequestration order made 11 June 2025. This affidavit he submitted confirmed the validity of his claims against the Commissioner.
The respondent conceded that he was prepared to allow the Trustee to sell two residential units he owned at ‘21 Haig Street, Croydon’ but only if the Trustee agreed to pursue the Commissioner to reassess the land tax payable on his former and current principal place of residence. No proposal was made as to when this sale would be permitted to occur.
The respondent’s primary submission as to why a sequestration order ought not be made was because the Commissioner incorrectly calculated the debt due for land tax claimed in the Magistrates Court by assessing the respondent’s principal place of residence as assessable with land tax. The respondent submitted that the overpayments of land tax for that property exceeded the other amounts claimed as due by the Commissioner, and that the respondent was in fact owed money by the Commissioner that exceeded the amount of any other sum due. The respondent referred to Table No. 2 in Appendix C to his affidavit sworn 18 July 2025 as proof that, the debts owed to him by the Commissioner, far exceeded any liability he had to pay land tax on his property portfolio.
The respondent’s submissions were not coherently linked to any reliable evidence and often circular. On the issue of personal solvency his position appeared to be that the value of real property assets owned by him and his estranged wife, exceeded the value of his asserted liabilities and therefore he was able but unwilling to pay his debts when they fell due.
COMMISSIONER’S SUBMISSIONS IN RESPONSE
The Commissioner submitted that the respondent’s grounds of opposition to the making of a sequestration order were “opaque”.
Insofar as the respondent relied on solvency, the evidence relied on was very limited and without “any independent corroborating evidence”.
In relation to the overpayment of land tax, the Commissioner submitted that there was no independent corroborating or contemporaneous evidence supporting the assertion of payment or overpayment of any land tax.
The liability to pay land tax for which the Judgment Debt was obtained was a liability in relation to eight separate properties of which the respondent is recorded as registered proprietor for the period from 2017 to 2022, interest and legal costs. No payment had been made for the sum claimed nor had the respondent paid any of the legal costs ordered to be paid following his attempt to set aside the Judgment Debt and the unsuccessful application to set aside the Bankruptcy Notice. Two further years of assessment for land tax were also claimed without objection or an application from the respondent to reassess the sums claimed.
The Commissioner submitted that there was no legitimate basis to dispute the Judgment Debt and no genuine attempt by the respondent to seek to exercise any right to object to notices of assessment directed to him. The time to seek to object has long passed, but it is open to the respondent to seek an extension of time on proper materials, which the respondent has refused to do.
The assessments relied on by the Commissioner are conclusive and are a debt due unless and until the taxpayer succeeds in proceedings for review or appeal (see Commissioner of State Revenue v Gas Ban Pty Ltd (in liq) [2011] VSCA 89 at [47]-[48] per Nettle, Mandie JJA and Hargrave AJA (Gas Ban)). There was no legitimate basis to go behind the judgment entered in the Magistrates’ Court and there were no appropriate circumstances identified by the respondent to justify such an inquiry by this Court (see Ramsay Health Care Australia Pty Ltd v Compton (2017) 261 CLR 132 at [37]-[38] and [108]-[109] (Ramsay)). Sufficient reasons must be shown as to why the Judgment Debt is not payable and the Court should be extremely cautious before going behind primary judgments.
In relation to the application to annul the sequestration order, the Commissioner submitted that there was no basis to annul the Bankruptcy identified by the respondent in his submissions or affidavit materials. The only basis to do so would be solvency which the respondent did not establish from the evidence relied on. The Commissioner identified the numerous inadequacies and inconsistencies in the respondent’s evidence, and which are referred to in these reasons above.
The Commissioner submitted that the application for review should be dismissed with costs.
CONSIDERATION
The Court is satisfied with the proof of the matters required to make a sequestration order pursuant to s 52(1) of the Act.
The respondent has not satisfied the Court that he is able to pay his debts within the meaning of s 52(2)(a) of the Act.
The affidavit evidence relied on by the respondent does not establish, in a credible or coherent way, that the respondent is able to pay his debts from any source, nor did the affidavits show that the respondent had genuinely taken or was prepared to take any genuine steps to realise any available assets to meet any of his admitted liabilities. Further, the respondent does not have any available cash, assets or other resources available to meet his debts when due. If anything, rather than establish that the respondent was able to pay his debts within the meaning of s 52(2) of the Act, the affidavits established that the respondent appears hopelessly insolvent and unable to manage his affairs in a way that will meet the substantial and increasing liabilities to known creditors.
In Walton v Klewer [2005] FMCA 878, Federal Magistrate Driver considered whether a debtor’s ability to access equity in real estate could be used to demonstrate solvency for the purpose of s 52 of the Act. At [30]–[32] his Honour said:
[30] The solvency of a debtor is determined by the answer to the question to whether she can pay her debts as they fall due from her own resources. The resources of the debtor include a capacity to sell assets or borrow funds within a relatively short time: Sandell v Porter (1966) 115 CLR 666. Mr See referred me to the observations by Katz J in International Alpaca Management Pty Ltd v Ensor [1999] FCA 72 at [13]–[19]. At paras [15] and [16] of his judgment His Honour referred with approval to the following statement by the Australian Law Reform Commission in its report Insolvency: the Regular Payment of Debts ALRC 6, 1997 at [161]:
In determining whether a non-business debtor is insolvent, regard should not be had to the possibility of realising assets which are usually regarded as necessary to a reasonably comfortable and dignified existence, nor to those which cannot be realised without significant loss and consequent disruption. On this basis, a [non-business] debtor would be insolvent if his only means of paying his debts were by selling household goods, motor vehicle or his home.
[31] With all due respect to His Honour and the ALRC there is a degree of unreality to this proposition to the extent that it relates to the home of a debtor. The unreality arises because commonly the only asset which can satisfy claims against a debtor is a home. Where a sequestration order is made and a trustee in bankruptcy appointed, it is very common for the trustee to require the sale of the debtor’s home in order to satisfy claims upon the bankrupt estate. If it is reasonable and proper for a trustee in bankruptcy to sell a debtor’s home, it is surely reasonable and proper for a debtor to pay his or her debts by selling his or her home or borrowing against it in order to avoid bankruptcy. The value of real estate has increased dramatically in recent years and it is common for the owners of real estate to use that equity to refinance debts. In my view, the capacity of a debtor to pay debts by accessing equity in real estate needs to be taken into account in assessing solvency.
[32] However, if the ability to access equity in real estate is to be used to demonstrate solvency, it needs to be real, not merely theoretical. Ms Klewer has enquired about refinancing her home, but has not yet done so. Ms Klewer’s enquiry was initiated six months ago. Ms Klewer’s plan was to purchase a cheaper house to live in and to let out her existing home, in order to increase her income. The mere existence of that plan does not prove solvency. The plan has not been put into effect.
…
Here, there has been no attempt by the respondent to realise or liquidate any of his real property holdings and it can be readily inferred from his affidavit that he has been reluctant to do so and will not do so, unless and until, he has exhausted attempts to relitigate proceedings in which he has been repeatedly unsuccessful. A debtor need not be “willing to pay” his debts to establish solvency (see Re Sarina; Ex parte Wollondilly Shire Council (1980) 48 FLR 372 per Bowen CJ, Sweeney and Lockhart JJ at 375 (Re Sarina)) and the respondent is certainly unwilling to pay the Judgment Debt obtained by the Commissioner or any other sum assessed as payable or ordered to be paid by him relating to land tax. However, there is no reliable evidence that the real property assets available to the respondent have sufficient equity to satisfy the debt claimed by the Commissioner, or other known creditors. The undertaking to pay the Judgment Debt is not supported by any genuine or “real” proposal by the respondent to liquidate assets and is merely theoretical and unreliable.
The power not to make a sequestration order under s 52 of the Act is wholly discretionary (Re Sarina and Westpac Banking Corp v Hughes [2008] FCMA 424 at [20] per Burchardt FM (Westpac Banking Corp v Hughes)) but there is nothing in the affidavits relied on by the respondent or his submissions to convince this Court to exercise the discretion in the respondent’s favour. The respondent’s position is not enhanced by the evidence relied on by the Commissioner in the affidavits of Ms Fisher and Mr Cahir, or the Statement of Affairs prepared by the respondent and submitted to the Trustee. The Statement of Affairs does not establish solvency or identify any assets capable of meeting the respondent’s current liabilities if those assets were to be realised in a reasonable or timely way.
LOOKING BEHIND THE JUDGMENT DEBT
In Ramsay at [54]–[55] Kiefel CJ, Keane and Nettle JJ explained the power of the Court to go behind a judgment debt for the purposes of s 52(2)(b) of the Act. Their Honours said:
[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.
This passage was also cited by Hespe J in the recent decision of Osborne v Schembri McCluskys Pty Ltd [2025] FCA 691 at [25]. In that case, her Honour held that the principles of issue estoppel and res judicata, are not engaged when considering s 52(2) of the Act. Instead, the Court has the power to look behind the judgment debt to satisfy itself of the existence of the debt of the petitioning creditor as a necessary foundation for making a sequestration order.
In this case, the Judgment Debt is a genuine debt for an amount that is due and payable by operation of Part 10 of the Tax Administration Act 1997 (Vic) pursuant to assessments that have not been set aside or formally objected to. In Gas Ban the Court said at [48]–[49] (omitting citations):
[48] Assessment is a process with the consequence that a specified amount will become due and payable as the proper tax. It is definitive in character in that it assumes that, so far as can then be seen, a fixed and certain sum is definitely due. The Act expressly contemplates, however, that an assessment may be amended or reassessed if the Commissioner, whether acting unilaterally in exercise of his powers or as the result of an objection or review or appeal, later comes to a different view as to the tax which is due.
[49] An assessment is not tentative or provisional in the sense which may deny it the status of a valid assessment unless it appears ex facie or from surrounding documentation that it is conditional or subject to revision or if it appears aliunde that the assessment has been issued by the Commissioner knowing that it does not reflect any rational assessment of the taxpayer’s liability to tax, or with reckless indifference to whether it does or does not reflect any such assessment, or otherwise in bad faith (in the sense of a “conscious maladministration of the assessment process”). Nothing of that kind is suggested in this case.
The respondent was unsuccessful in his attempt to reinstate the proceedings in the Magistrates’ Court, where the Commissioner established that the Judgment Debt was due. The Judgment Debt has not been set aside and no step was taken before the Judgment Debt was entered to review or object to the assessments. There is also no convincing evidence that the respondent could challenge the assessments or that the assessments were erroneous or made in bad faith or with reckless indifference. There is also no evidence of ‘overpayment’ of tax assessed as due. To the contrary there is no proof of payment of any kind by the respondent in respect of the land tax claimed and therefore his claim to be able to set off ‘overpayments’ against tax assessed has not been established.
There is also no evidence that the Commissioner ‘misrepresented the sum due’ to the Magistrates’ Court or that the Magistrates’ Court made an order that exceeded the jurisdictional limit of the Court. The claim made in the Magistrates Court was for the sum of $97,336.58 plus interest ($1,835.96) and costs. That was the sum due for the notices of assessment for the years ending 31 December 2017 to 31 December 2022 plus interest pursuant to statute. The claim and interest was within the jurisdictional limit of that Court of $100,000.00 (ss 3 and 100 of the Magistrates Court Act 1989 (Vic) and s 33 of the Supreme Court Act 1986 (Vic)) and the respondent did not seek to appeal from the dismissal of the respondent’s application for re-hearing (Ms Fisher’s affidavit sworn 5 June 2025 at [21] and [22]). The respondent was also unsuccessful in seeking to have the Bankruptcy Notice set aside (Ms Fisher affidavit sworn 5 June 2025 at [25] and [28]).
The respondent has not established with credible evidence that there has been any abuse of process, misfeasance, fraud, negligence or reckless indifference by the Commissioner in seeking to obtain or enforce the Judgment Debt. There is no basis established to exercise the discretion not to make a sequestration order and the Court is not prepared to do so in this case.
APPLICATION TO ANNUL THE BANKRUPTCY
The basis upon which the respondent seeks to annul the Bankruptcy pursuant to s 153B of the Act are unclear, and the respondent did not advance any reasons in his submissions to the Court. Presumably, the basis on which annulment was sought was because the respondent asserts that he is solvent (see for example Westpac Banking Corp v Hughes where Burchardt FM annulled the Bankruptcy of Mrs Hughes because his Honour found her to be solvent). Alternatively, that the Court should be satisfied that the sequestration order ought not to have been made.
This Court is not satisfied on the evidence relied on by the respondent that he is able to pay his debts or that he has any genuine or real strategy to liquidate real property soon to do so. Further, the Court is not satisfied that the respondent has identified all of the liabilities and creditors known to him.
The respondent has offered to repay the debt by an ‘instalment plan of $101,999.62 plus interest and legal costs’ and has offered two properties up for sale by the Trustee. The Court has no confidence that this will occur without complication or further conditions. That is not a satisfactory basis upon which to exercise the power to annul the Bankruptcy pursuant to s 153B of the Act. Especially so, in circumstances where other creditors have not been identified or given notice of this application. The source of the funds to pay the sum offered has also not been identified. There is no evidence that the respondent has funds available to him from loan facilities with the Commonwealth Bank and the judgment obtained in the County Court of Victoria suggests that recourse to borrowing from the Bank is unlikely to be available.
The Court is not satisfied that the respondent is able to pay his debts or that the sequestration order made by the Registrar on 11 June 2025 ought not to have been made. The Court will not make an order annulling the Bankruptcy pursuant to s 153B of the Act.
DISPOSITION
The application for review filed 2 July 2025 is dismissed. The orders of the Registrar made 11 July 2025 are affirmed.
OTHER MATTERS
The Trustee filed and served an affidavit sworn 22 July 2025 in which she deposed to the steps taken and work performed to administer the respondent’s bankrupt estate since 11 June 2025. The purpose of that affidavit was explained by Mr Savage, the solicitor for the Trustee, to seek payment of the reasonable remuneration for the work performed after the date of the Registrar’s orders. As the orders of the Registrar are not to be set aside and the sequestration order is affirmed, the remuneration of the Trustee need not be determined or assessed at this stage, save to say that the work performed appears reasonable and proportionate in the circumstances, including in circumstances where notice of the application for review was not formally given to the Trustee until 9 July 2025.
COSTS
The costs of the application for review should follow the event and be paid to the Commissioner and the Trustee (who was a necessary party) from the respondent’s bankrupt estate in priority to other creditors.
ORDERS
The application for review filed 2 July 2025 be dismissed.
The sequestration order made by the Registrar on 11 June 2025 is affirmed.
The applicant’s costs of the application for review and the Trustee’s costs of the application for review are costs reasonably incurred and are to be paid in priority from the estate of the respondent pursuant to s 109(1)(a) of the Bankruptcy Act 1966 (Cth).
I certify that the preceding seventy-nine (79) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Corbett. Associate:
Dated: 31 July 2025
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