Commonwealth Bank of Australia Ltd v Jordanou

Commonwealth Bank of Australia Ltd (the Bank) sought to review a sequestration order made by a registrar against Mr Jordanou. The Bank was the petitioning creditor, relying on a judgment debt obtained in a state court. Mr Jordanou had declined to give evidence at the hearing before the registrar, and the Bank's debt was otherwise proved. Mr Jordanou sought to go behind the state court judgment, arguing that the merits of his counterclaim against the Bank had not been tested.

The central legal issue before Wilson J was whether Mr Jordanou could impeach the state court judgment for the purposes of bankruptcy proceedings, thereby preventing the sequestration order from being made. This required the court to consider the principles governing the impeachment of judgments, particularly in the context of bankruptcy, and the importance of the finality of litigation, especially where third parties' interests might be affected.

Wilson J dismissed the application for review. Her Honour applied the well-established principle that a judgment, particularly a final judgment of a state court, is generally considered conclusive and cannot be impeached in subsequent bankruptcy proceedings unless there are exceptional circumstances. The court noted that the merits of Mr Jordanou's counterclaim had not been tested in the state court, but this did not provide a sufficient basis to go behind the judgment, especially given the interests of third parties and the principle of finality. The relation back principle was also relevant in the context of bankruptcy.