Jaafar v Gleeson in His Capacity as Bankruptcy Trustee of the Bankrupt Estate of Mohamad Jaafar

The applicant, Mohamad Jaafar, sought to set aside a sequestration order made against his estate by the Federal Court of Australia. The respondent was the trustee of the bankrupt estate. The application was brought under the court's inherent jurisdiction, alternatively by way of an annulment application pursuant to section 153B of the *Bankruptcy Act 1966* (Cth).

The primary legal issues before the court were whether the sequestration order ought not to have been made, and if so, whether it should be set aside. This involved determining whether substituted service of the creditor's petition, effected when the debtor was outside Australia, was valid. Further, the court considered whether a reference in the creditor's petition to an incorrect jurisdictional basis under section 43(1)(b) of the *Bankruptcy Act* rendered the petition fatally defective, and if amendment of the petition was available or appropriate. The debtor also asserted that the debt underpinning the creditor's judgment was not his debt.

Judge Barnes considered the principles governing the exercise of the court's inherent jurisdiction to set aside a sequestration order, including whether the order ought not to have been made. The court found that the creditor's petition contained a material defect by referencing an incorrect jurisdictional basis under section 43(1)(b) of the *Bankruptcy Act*. While amendments to such petitions are generally permissible, the court determined that in this instance, the defect was significant and the circumstances surrounding the substituted service and the debtor's assertion regarding the debt weighed against allowing an amendment. The court concluded that the sequestration order ought not to have been made.

Consequently, the court ordered that the sequestration order made on 15 March 2023 be annulled and set aside.