CostaExchange Limited v Shephard

CostaExchange Limited and several other applicants sought a sequestration order against Derek George Shephard based on his non-payment of a debt amounting to $48,797.98. The respondents had been engaged in protracted litigation with Shephard regarding a blueberry venture in the Coffs Harbour region. After Shephard's application to set aside a bankruptcy notice was dismissed, a sequestration order was sought against him. Shephard filed a notice of grounds of opposition, asserting that he had assets sufficient to meet the demands, and that he was a net creditor of the applicants. The court examined Shephard's assertions regarding his beneficial interest in a property at Sapphire Beach, but found them insufficient to establish that he was able to pay his debts within a reasonable timeframe.

The court found that Shephard's evidence did not show that he had the ability to pay his debt, and therefore, the grounds of opposition were not made out. The court granted a sequestration order against Shephard's estate, and stayed the operation of the sequestration order for 21 days, on the condition that Shephard paid $19,000 into the trustee's bank account before 5pm on the day of the hearing. The creditors' costs, including all reserved costs, were to be taxed and paid from Shephard's estate in accordance with the Bankruptcy Act 1966 (Cth). The date of the act of bankruptcy was 26 May 2010, and Phillip Kenneth Aggs had signed a consent to act as trustee. The applicants were required to give a copy of the order to the Official Receiver within 2 working days.