Marotta v Reg

The applicant, Marotta, sought leave to appeal against a decision of the Full Federal Court. The dispute concerned the interpretation of section 160 of the *Bankruptcy Act 1966* (Cth) (the Act), which deals with the annulment of a bankruptcy where a debtor has paid their debts in full. The respondent was the trustee in bankruptcy.

The primary legal issue before Callinan J was whether the Full Federal Court had erred in its construction of section 160 of the Act. Specifically, the question was whether the trustee's discretion under section 160(1)(a) to be satisfied that all bankrupt's debts provable in the bankruptcy had been paid in full was a subjective or an objective one.

Callinan J held that the Full Federal Court had correctly determined that the trustee's satisfaction under section 160(1)(a) was not a subjective one, but rather an objective one. His Honour reasoned that the trustee must act reasonably and that the standard of proof required for the debts to be considered paid in full was an objective one, not dependent on the trustee's personal opinion. The trustee's discretion was therefore constrained by the objective reality of whether the debts had indeed been paid in full.

Leave to appeal was refused.