Homebuilding Pty Ltd v Cappello

In the Federal Circuit and Family Court of Australia, Homebuilding Pty Ltd brought proceedings against Mr and Mrs Cappello seeking a declaration of insolvency and a sequestration order against their estate. The case centered on the respondents’ ability to satisfy their outstanding judgment debt and whether the statutory requirements for a sequestration order had been met. The court had to determine whether the failure to provide the "fullest and best" evidence of solvency by the respondents, coupled with their act of bankruptcy, justified a sequestration order despite their solvency.

The primary legal issue before the court was whether the respondents had discharged their onus to provide the "fullest and best" evidence of their solvency. The court examined whether the respondents’ failure to mention the National Australia Bank (NAB) loans in their early affidavits, and the inaccuracies in their later affidavits, constituted a breach of their evidentiary obligations. Another issue was whether the tender of a bank cheque for $55,000, which was rejected by Homebuilding, had any bearing on the substantive part of the proceeding.

The court found that the respondents had not discharged their onus to provide the "fullest and best" evidence of solvency. The omission of the NAB loans in the 8 December 2021 affidavits was a mistake caused by inattention, but this did not undermine the court's conclusion that the respondents had not provided the necessary evidence. The rejected tender of the bank cheque had no practical significance unless coupled with an actual payment into court, a condition that was not met. The court concluded that the statutory requirements for a sequestration order had been satisfied but dismissed the creditor's petition on the grounds that the respondents were solvent and had the means to satisfy their debts.

The court dismissed the creditor’s petition in each matter and made no order as to costs, subject to any application for costs.