RHG Mortgage Corporation Limited v Araya - [2008] FMCA 1324

FEDERAL MAGISTRATES COURT OF AUSTRALIA

RHG MORTGAGE CORPORATION LIMITED v ARAYA

[2008] FMCA 1324

BANKRUPTCY – Contested creditors petition – whether the debtor is in law indebted to the creditor considered – Anshun estoppel – creditor claiming debts in addition to judgment debt – whether it was unreasonable not to sue for the additional debts considered – whether the debtor is solvent considered – whether the possibility of the creditor pursuing another remedy against the creditor is another sufficient cause for the Court to refrain from making a sequestration order considered.

Bankruptcy Act 1966 (Cth), ss.43, 44, 47, 52
Bankruptcy Regulations 1996 (Cth)
Civil Procedure Act 2005 (NSW), ss.101, 102, 103, 106, 112, 113, 115, 116
Evidence Act 1995 (Cth), s.160
Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth)
Interpretation Act 1987 (NSW), s.21
Real Property Act 1900 (NSW), ss.42, 57, 105, 105A, 105B, 105C
Uniform Civil Procedure Rules

Bazos v Doman [2001] NSWCA 347
Black v Garnock (2007) 237 ALR 1, [2007] HCA 31
Boles v Esanda Finance Corporation (1989) 18 NSWLR 666
Brisbane City Council v Attorney- General (Qld) [1979] AC 411
Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502
Greenhalgh v Mallard [1947] 2 All ER 255
Henderson v Henderson (1843) 3 Hare 100 (67 ER 313)
Ling v Commonwealth (1996) 68 FCR 180
Macquarie Bank Ltd v National Mutual Life Association of Australia Ltd (1996) 40 NSWLR 543
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
R&J Lyons Family Settlement Pty Ltd v 155 Macquarie Street Pty Ltd [2008] NSWSC 232
Re Goldberg; ex parte Law Society of New South Wales (1988) 82 ALR 271
Re Prestia; Australia & New Zealand Banking Group Ltd v Prestia [2001] FCA 702
Rippon v Chilcotin Pty Ltd (2001) 53 NSWLR 198
Securum Finance Ltd v Ashton [2001] Ch 21
Tsalkos v T & S Recoveries Pty Ltd (2004) 141 FCR 107
Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581

Applicant:

RHG MORTGAGE CORPORATION LIMITED

Respondent:

SANDRA ANNA ARAYA

File Number:

SYG 3780 of 2007

Judgment of:

Driver FM

Hearing date:

22 September 2008

Date of Last Submission:

24 September 2008

Delivered at:

Sydney

Delivered on:

30 September 2008

REPRESENTATION

Counsel for the Applicant:

Mr S B Docker

Solicitors for the Applicant:

Kemp Strang

Counsel for the Respondent:

Mr D Ash

Solicitors for the Respondent:

Avondale Lawyers

ORDERS

The estate of Sandra Anna Araya (also known as Sandra Calabro) be sequestrated.
The applicant creditor’s costs, including any reserved costs, be taxed and paid in accordance with the Bankruptcy Act 1966 (Cth).
The Court notes that the date of the act of bankruptcy is 2 November 2007.
The Court notes that a consent to act as trustee has been signed by Scott Darren Pascoe on 23 November 2007.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 3780 of 2007

RHG MORTGAGE CORPORATION LIMITED

Applicant

And

SANDRA ANNA ARAYA

Respondent

REASONS FOR JUDGMENT

Introduction and background

I have before me an amended creditor’s petition filed on 2 June 2008. The petition was further amended orally by leave at the commencement of the trial of this matter on 22 September 2008 to vary the name of the petitioning creditor to RHG Mortgage Corporation Limited. The petition is opposed by the respondent debtor (Mrs Araya).
The following statement of background facts is derived from an outline of submissions handed up at the trial of this matter by counsel for the petitioning creditor.
On 7 December 2007, the applicant (“RAMS”) presented a creditor’s petition against the respondent (“Mrs Araya”). On 2 June 2008, RAMS filed an amended creditor’s petition pursuant to leave of the Court. Both the creditor’s petition and the amended creditor’s petition will be referred to as “the creditor’s petition” unless it is necessary to distinguish between them.
On 27 June 2008, Mrs Araya filed an amended notice stating grounds of opposition to petition (“the notice of opposition”). The notice of opposition contains 4 grounds which are detailed at [45] below:
RAMS relies upon the following affidavits:
a)
affidavit of service of bankruptcy notice by Glen Ingle sworn

18 October 2007
;
b)affidavits of Peter Norman Miller sworn 9 April 2008 and 2 May 2008 and also to verify paragraphs 1-3 and part of 4 of the amended creditor’s petition;
c)affidavit of search of Jasmine Harrison sworn 7 December 2007;
d)affidavit of Jeremy Sutton sworn 1 May 2008;
e)affidavit of James Graham sworn 2 May 2008;
f)affidavits of Georgia Koutts sworn 2 May and 15 August 2008.
g)affidavit of search of Michael Brian Wirth sworn 22 September 2008; and
h)affidavit of debt of Kylie Hodgson sworn 22 September 2008.
Mrs Araya has served the following affidavits:
a)affidavits of Mrs Araya sworn 6 March and 22 July 2008;
b)affidavits of Michael Araya sworn 6 March and 26 June 2008; and
c)affidavit of Marco Cristi sworn 30 July 2008.
Only Mrs Araya’s affidavit made on 22 July 2008 was read. She was cross-examined on that affidavit.

Formal matters

The creditor’s petition claims a debt of $693,628.84 is owing by

Mrs Araya to RAMS (“the debt”). The amended creditor’s petition discloses a security with an estimated value of $485,000, being a mortgage (“the security”) over the land described in Certificate of Title folio identifier 71/8029 which is also known as 6 Maple Street, Cabramatta, NSW (“the security property”), leaving an unsecured debt of $208,628.84 (“the unsecured debt”).
The amended creditor’s petition alleges an act of bankruptcy was committed on 2 November 2007 (“the act of bankruptcy”), when

Mrs Araya failed to comply with a bankruptcy notice (“the bankruptcy notice”) served on her on 12 October 2007 or to satisfy the Court she had a counter-claim, set-off or cross demand more than the sum in the bankruptcy notice which she could not have set up in District Court proceedings which resulted in a judgment debt forming part of the debt.
Section 47 of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”) requires the creditor’s petition to be verified by an affidavit of a person who knows the relevant facts. Paragraphs 1-3 and paragraph 4 in respect to compliance with the bankruptcy notice are verified by Peter Miller, who is the National Collections Manager of RAMS. The allegation in paragraph 4 of the creditor’s petition that Mrs Araya failed to satisfy the Court she had a counter-claim, set-off or cross demand more than the sum in the bankruptcy notice which she could not have set up in the District Court proceedings is verified by the affidavit of Jasmine Harrison sworn on 7 December 2007 and filed the same day.
In accordance with rule 4.02(3)(c) and 4.04(1) of the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth) (“the Rules”), the creditor’s petition was accompanied by:
a)
an affidavit which stated that no application was made to the Federal Court or the Federal Magistrates Court to set aside the bankruptcy notice, being the affidavit of Ms Harrison sworn

7 December 2007; and
b)an affidavit of service of the bankruptcy notice, being Mr Ingle’s affidavit.
Rule 4.05 of the Rules requires service of various documents on

Mrs Araya, including the creditor’s petition. On 6 February 2008, the Court made an order for substituted service of these documents, including the creditor’s petition, which provided that personal service was dispensed with and service could be effected by:
a)sending them, leaving them in the mailbox or affixing them to the front door of 34-38 Gwandalan Road, Edensor Park (“the Edensor Park Premises”) in a sealed envelope addressed to Mrs Araya; and
b)
by sending them by pre-paid ordinary post addressed to

Mrs Araya at c/- Avondale Lawyers, PO Box 2700, North Parramatta, NSW, 2150.
I am satisfied that those orders were complied with. There is no issue of service of the amended creditors petition.
Section 44 of the Bankruptcy Act imposes conditions on the presentation of the creditor’s petition. As the creditor’s petition was presented on 7 December 2007, that is the relevant date for the purposes of the section.
The first requirement is that there is a debt or debts owing by

Mrs Araya to RAMS that amount to $2,000 or more: s.44(1)(a).

By reason of s.44(2) it is the unsecured debt not the debt which is relevant because RAMS as a secured creditor is deemed to be a creditor only to the extent the debt exceeds the value of the security. The second requirement is that the debts are liquidated sums due at law or in equity and is payable either immediately or at a certain future time: s.43(1)(b).
The debt claimed in the amended creditor’s petition is made up of:
a)an amount of $326,633.59, being the judgment amount of $316,404.62 (“the judgment debt”) in proceedings in the District Court of NSW at Sydney No. 1400 of 2007 (“the District Court proceedings”) plus interest pursuant to s.101 of the Civil Procedure Act 2005 (NSW) (“the Civil Procedure Act”) on the judgment amount from 7 July 2007 to 1 November 2007, being $10,228.97;
b)an amount of $316,302.37 being the amount of principal and interest owing on 2 November 2007 under a loan agreement between RAMS and Mrs Araya on 11 January 2007 (“the second loan agreement”) less payments made pursuant to the second loan agreement on or before 2 November 2007; and
c)an amount of $50,692.88 being the amount of principal and interest owing on 2 November 2007 under a loan agreement between RAMS and Mrs Araya on 11 January 2007 (“the third loan agreement”) less payments made pursuant to the third loan agreement on or before 2 November 2007.
The judgment debt arises from judgment given in the District Court proceedings in favour of RAMS against Mrs Araya on 6 July 2007. A copy of a certificate of judgment is annexed to the bankruptcy notice. The judgment was given following the filing on that day by Mrs Araya, the first defendant, of an acknowledgement of liquidated claim (“the acknowledgement”) in which it was stated “I acknowledge the whole of the amount being claimed by the plaintiff against the first defendant”: p103 exhibit PNM1. The amount being claimed was the judgment debt, being $316,040.62, pursuant to an amended statement of claim filed by RAMS on 15 June 2007 (“the amended statement of claim”): p95 exhibit PNM1.
There is no challenge to the judgment debt, nor is there any application to go behind it. Pursuant to s.101 of the Civil Procedure Act, interest accrues on unpaid judgment debts at a prescribed rate unless the court otherwise orders. There has been no such order. The prescribed rate between 7 July and 1 November 2007 was 10% per annum: see rule 36.7 and Schedule 5 of the Uniform Civil Procedure Rules2005 (NSW). The calculation of post judgment interest of $10,228.97 is based on 118 days at 10% on the judgment debt and has not been challenged. It follows that the interest component of the debt has been established.
Neither of the debts based on the second and third loan agreements are judgment debts but s.44(1)(b)(i) of the Bankruptcy Act does not require them to be judgment debts. It requires them to be debts due at law and/or in equity: see also Re Goldberg; ex parte Law Society of New South Wales (1988) 82 ALR 271 per Wilcox J.
On 14 December 2004, Mrs Araya entered into an agreement with RAMS to borrow $312,000 to be repaid over 30 years (“the first loan agreement”), with the repayments in the first 5 years to be interest only: annexure A P Miller 9 April 2008. It was a condition of the first loan agreement that Mrs Araya give the security to RAMS: annexure A p6 of 9 P Miller 9 April 2008, clauses 2.1(a) & 3.1(a), Terms and Conditions, p12, exhibit PNM1.
The security, which is at pp32-46 of exhibit PNM1, provided, among other things:
a)Mrs Araya must ensure she is not in default and that she must carry out on time all her obligations under every agreement covered by this mortgage including the obligation to pay the amount owing: clause 1.7, p37 exhibit PNM1. An “agreement covered by this mortgage” included an agreement or other arrangement under which Mrs Araya owes obligations to RAMS or under which RAMS have rights against Mrs Araya, or each variation of it: clause 35, p45 exhibit PNM1. An “amount owing” included all money which Mrs Araya owes RAMS, or will or may owe RAMS in the future, including under the Security or an agreement covered by this mortgage: clause 35, p45 exhibit PNM1.
b)Mrs Araya would be in default if she did not pay the amount owing on time, or she did not do something she agreed to do under the Security or an agreement covered by this mortgage, or she does not carry out in full an undertaking given in connection with the Security or an agreement covered by this mortgage within the period specified or within seven days if no period is specified: clause 18.1(a), (b) & (f), p41 exhibit PNM1;
c)if Mrs Araya was in default RAMS might give her notice stating she is in default, specifying a grace period of at least 31 days. If within the grace period the default was not remedied the total amount owing would become immediately due for payment and RAMS might sue Mrs Araya for the amount owing and/or take possession of the security property: clause 19, p41-2 exhibit PNM1; and
d)communications might be signed by any employee whose job title includes “manager” or any person authorised and might be sent by post to Mrs Arraya’s postal or residential address last known to RAMS: clauses 23.2 & 23.3(c), p42-3 exhibit PNM1.
On 30 November 2006, Mrs Araya made an application through a mortgage broker, Daniel Pym, to RAMS for an internal refinance of the existing loan: p47-53 PNM1. The proposal was for Mrs Araya to have a new loan product for the amount of $560,000 with $325,000 to refinance the existing loan and for an additional $235,000 to be advanced for investment purposes. The application stated that the existing mortgage over the security property for $325,000 was not to remain after settlement but that the loan was to be secured by a mortgage over the security property: p50 exhibit PNM1. The amount sought of $560,000 was 80% of the estimated value of the security property in the application, being $700,000: p51 exhibit PNM1.
On 1 December 2006, RAMS gave conditional approval to the new loan for $560,000: p58 exhibit PNM1. One of the conditions was valuation of the security property.
On 18 December 2006, Mr Pym sent a facsimile to RAMS on behalf of Mrs Araya enclosing a written and signed explanation by her in respect of a missed payment on the existing loan and requesting RAMS to order the valuation of the security property again: p60 exhibit PNM1.
On 20 December 2006, Mr Pym on behalf of Mrs Araya sent RAMS a facsimile in which he stated:
Client still wishes to proceed with loan of 80% LVR $376,000 plus Mortgage Insurance. … Extra funds to be used to purchase shares.
It is clear from this facsimile that the new amount of the loan sought was 80% of the value of the security property pursuant to RAMS’ valuation and that Mrs Araya wished to borrow the reduced amount of $376,000.
On or about 21 December 2006, RAMS received a facsimile of a document signed by Mrs Araya (p63 exhibit PNM1) in which she wrote:
The fifty one thousand dollars $51,000 is too [sic] invested in shares.
It is clear from the reference to the amount of $51,000 in this document and the total loan amount of $376,000 and the reference to “extra funds” in the 20 December 2006 facsimile that Mrs Araya was proposing that the existing loan of $325,000 be repaid on advancement of the new loan.
On 4 January 2007, RAMS sent a letter to Mrs Araya in which it advised it had unconditionally approved Mrs Araya’s application: p64 exhibit PNM1.
The petitioning creditor says that effect of the exchange of the last two communications was that there was an agreement between RAMS and Mrs Araya that Mrs Araya was required to repay the balance of the first loan agreement on the advance of the funds under the second loan agreement and the third loan agreement. This was an agreement which created obligations owed by Mrs Araya to RAMS and rights in RAMS against Mrs Araya (“the repayment agreement”). Moreover, it allegedly effected a variation of the first loan agreement such that the loan would no be longer repayable over 30 years by instalments and would be immediately repayable upon the advances under the second and third loan agreements.
On 11 January 2007, Mrs Araya entered into the second loan agreement and the third loan agreement with RAMS: paragraph 5 and annexures B & C P Miller 9 April 2008. The second loan agreement was for $325,000 to be repaid over 30 years in monthly instalments (interest only for the first three years) and the second loan agreement was for $51,000 to be repaid over 30 years in monthly instalments (interest only for the first three years). Both loans were to be secured by a mortgage over the security property which was referred to as already taken, were interdependent and incorporated the home loan agreement general terms dated 1 March 2005 (“general terms”): see pp65-86 exhibit PNM1. The general terms provided, inter alia:
a)RAMS agreed to lend Mrs Araya the loan amount when she requested it: clause 1, p67 exhibit PNM1;
b)Mrs Araya would be in default if she did not pay any amount due under the agreement or another loan agreement or Mrs Araya was in default under the security: clause 18.1(a)&(e), p76 exhibit PNM1;
c)
if Mrs Araya was in default RAMS might give her notice stating she is in default, the total amount owing would become immediately due for payment if the default was not corrected within the grace period in the notice and RAMS might sue

Mrs Araya for that amount or enforce the security or both: clause 19.1, p76 exhibit PNM1;
d)if RAMS did not exercise a right or remedy fully or at a given time, it could still exercise it later: clause 28.2, exhibit PNM1;
e)communications might be signed by any employee whose job title includes “manager” or any person authorised and might be sent by post to Mrs Araya’s postal or residential address last known to RAMS: clauses 32.2 & 32.3(c), p79 exhibit PNM1.
On or about 11 January 2007, Mrs Araya directed RAMS to credit surplus funds from the second loan agreement and the third loan agreement to the account of Araya Calabro Pty Ltd (“the Company”) at Westpac in Fairfield: p87-8 exhibit PNM1.
On 17 January 2007, the second loan agreement and the third loan agreement settled and the loan funds advanced by RAMS. RAMS mistakenly paid the amount of $320,295.32 to the Company’s bank account: p89-90 exhibit PNM1, paragraph 16 P Miller 2 May 2008.
In consequence, Mrs Araya failed to pay the balance of the amount owing under the first loan agreement on the settlement of the second and third loan agreements. This is said to be a breach of the repayment agreement.
The alleged effect of the default in the repayment agreement was:
a)there was a default in the first loan agreement as varied by the repayment agreement; and
b)there was a default in the security (clause 18(a), (b) and (f)).
On or about 7 March 2007, RAMS’ solicitors, Kemp Strang, sent a letter to Mrs Araya advising of the default in repaying the balance of the first loan agreement (called the Low Doc Loan) and demanding the default be remedied by payment of the whole amount within seven days: p91-2 exhibit PNM1, J Graham paragraph 3 and annexure B. Jim Graham of Kemp Strang had been authorised by RAMS to send the demand: J Graham paragraph 3 and annexure B. The last known residential address of Mrs Araya to RAMS was the Edensor Park premises: paragraphs 2, 3, 5 and 6 P Miller 9 April 2008.

On 3 April 2007, Georgia Koutts of Kemp Strang issued and signed a default notice (which was also a notice pursuant to s.57(2)(b) of the Real Property Act1900 (NSW) (“the Real Property Act”)) to

Mrs Araya under the first loan agreement as varied and the security:

G Koutts 2 May 2008 annexure B. The default was the failure to pay the balance of the first loan agreement and 31 days was allowed to remedy the default. The notice was sent by express post that day to the Edensor Park Premises: paras 4-6 and annexure A J Sutton 1 May 2008.
The default notice dated 3 April 2007 is taken to have been served on 12 April 2007, being the fourth working day after posting (3 April 2007 was a Tuesday, 6 April was Good Friday and 10 April was Easter Monday): s.160 Evidence Act 1995 (Cth) (“the Evidence Act”). The default was not remedied by 13 May 2007 (or at all) and, the petitioning creditor asserts that accordingly, RAMS was then able to sue Mrs Araya for the whole of the amount owing under the mortgage, being the amounts owing under the repayment agreement/varied first loan agreement, the second loan agreement and the third loan agreement, and take possession of the security: see clauses 18 and 19, p41 exhibit PNM1.
On 19 April 2007, Mr Graham issued and signed a default notice (which was also a notice pursuant to s.57(2)(b) of the Real Property Act) to Mrs Araya under the second and third loan agreement and the security: J Graham 2 May 2008 annexure C. The default identified was the failure of Mrs Araya to pay the amount owing under the repayment agreement/varied first loan agreement and the security. The notice allowed 31 days for the default to be remedied and advised of the total amounts outstanding under the second and third loan agreements. The notice was sent by ordinary post that day to the Edensor Park premises: paras 7-9 and annexure B, J Sutton 1 May 2008.
The default notice dated 19 April 2007 is deemed to have been served on 26 April 2007, being the fourth working day after posting (19 April was a Thursday and 25 April a public holiday): s.160 Evidence Act. The default was not remedied by 27 May 2007 (or at all) and, the petitioning creditor asserts that accordingly, RAMS was then able to sue Mrs Araya for the whole of the amount owing under the second loan agreement and the third loan agreement: clauses 18 and 19 general terms, p76 exhibit PNM1.
The petitioning creditor asserts that, accordingly, the whole of the balances on the second and third loan agreements became due and payable on 28 May 2007. The accounts for those loans received payments after that date and interest was charged to the loans. Statements of the transactions on each account are at annexures E and F of P Miller 9 April 2008.
I accept from the foregoing that the first and second requirements are complied with subject to consideration of the grounds of opposition to the petition.
The third requirement of s.44 of the Bankruptcy Act is that an act of bankruptcy was committed within six months before the presentation of the petition: s.44(1)(c). The act of bankruptcy occurred on

2 November 2007
because that was the twenty-first day after the service of the bankruptcy notice on 12 October 2007: Mr Ingle’s affidavit. The creditor’s petition was presented on 7 December 2007, which is within six months of 2 November 2007.
The fourth requirement is that RAMS sets out particulars of the security. RAMS has complied with this requirement in the amended creditor’s petition. The security is identified, its value is estimated, the value of the security property is estimated and the unsecured debt is estimated.

The grounds of opposition

In an amended notice of opposition filed on 27 June 2008, Mrs Araya opposes the petition on the following grounds:
1. The debtor has committed no act of bankruptcy such as to ground the petition.
Particulars
a) The act of bankruptcy upon which the petition is founded is the debtor’s alleged failure to comply with Bankruptcy Notice number NN3678/07.
b) The notice was served neither in person nor pursuant to Bankruptcy regulation 16.01.
2.     The petitioner is not a creditor entitled to petition.
Particulars
a)At the date of filing the petition, 7 December 2007, the petitioner alleged to the effect:
i.      that is was a creditor to the amount of $316,842.10; and
ii.      that it did not hold security over the property of the debtor for the debt.
b) The allegation, at least to paragraph 2, is wrong.
c) At the date of the filing of the amended petition, the petitioner alleged to the effect:
i.      that it was a creditor to the amount of (a) $326,633.59 (being the principal component of the above debt together with recalculated interest); (b) $316,302.37 (“the second debt”); and (c) $50,692.88 (“the third debt”) (a total amount of $693,628.84);
ii.      that it held security over the property to the value of $485,000.00; with the result
iii.     that it was a creditor entitled to petition on the difference, an amount of $208,628.84.
d) The allegation, at least to paragraphs (i)(b), (i)(c) and (iii) is wrong, by virtue of the matters further particularised, below.
e) In 2007, the petitioner commenced proceedings against the debtor, being proceedings number 1400 of 2007 in the District Court of New South Wales in Sydney.
f) In its original claim, the petitioner appears to have alleged that the debtor was indebted in respect of each of the three debts (although for reasons unknown to the debtor, it appears to have only sued on the first debt).
g) In its amended claim filed on 15 June 2007, the petitioner appears to have dropped any allegation of indebtedness by the debtor in respect of the second and third debts, and replaced it with an alternative allegation that a company was the person indebted to it in respect of the second debt. (For reasons unknown to the debtor, the third debt was not pressed against either the debtor or the company.)
h) The debtor and the company acknowledged their indebtedness for the first and second debt respectively, by duly filing forms pursuant to rule 20.34 of the Uniform Civil Procedure Rules 2005 (NSW).
i) The petitioner by its amended petition alleges to the effect that the debtor is a debtor to it in respect of the second and third debts.
j) However, the facts relied upon to allege the debts were so relevant to the subject matter of the District Court proceedings – and were, indeed, alleged in the proceedings – that it was unreasonable for the petitioner not to have pleaded them there, with the result that the petitioner is estopped from now alleging any indebtedness.
k) Further and alternatively, the allegation now of indebtedness in respect of the second and third debts is in the circumstances an abuse of process.
l) In the premises, the security alleged by the petitioner exceeds any debt owed by the debtor, and the petitioner is a creditor neither within the meaning of section 44(2) of the Bankruptcy Act nor within the meaning of section 52(1)(c).
3.The debtor is able to pay her debts within the meaning of section 52(2)(a).
Particulars (relied upon each and together)
a) Grounds 1-3.
b) The petitioner’s failure to promptly sell the property the subject of its security, despite the request of the debtor and despite being offered and amount in excess of the debt alleged at the filing of the petition.
i.      By letter dated 11 April 2007, the petitioner by its solicitor advised the debtor to the effect that it had taken possession of the property.
ii.      On or about 9 February 2008, the petitioner arranged for the property to be auctioned.
iii.     The highest bid was a bid for $380,000.00, an amount in excess of the $316,842.10 referred to in paragraph 2(a).
iv.      The petitioner refused to accept the bid.
v.      The property remains unsold.
4. By virtue of grounds 1-3 (each and together), there is other sufficient cause why an order ought not be made, within the meaning of section 52(2)(b).
The first ground (service of the bankruptcy notice) was not withdrawn but was not seriously pressed. I accept that the bankruptcy notice was served. I accept in that regard the affidavit evidence of Mr Ingle.
Mr Ingle’s evidence is that on 12 October 2007 he placed the bankruptcy notice in a sealed envelope addressed to Mrs Araya and placed the envelope in the mailbox of the Edensor Park Premises: paragraph 1, Mr Ingle’s affidavit. This was the last known address of Mrs Araya to RAMS: paragraphs 2, 3, 5, and 6 of the affidavit of P Miller 9 April 2008. Service in this manner is permitted by regulation 16.01(1)(c) of the Bankruptcy Regulations 1996 (Cth) (“the Regulations”) and service is taken to have occurred on the date the document is left by reason of regulation 16.01(2)(b). Bankruptcy notices may be served pursuant to the regulation 16.01 of the Regulations and evidence of non-receipt, as opposed to non-delivery, is inadmissible: Tsalkos v T & S Recoveries Pty Ltd (2004) 141 FCR 107 at [25].
Under Ground 2 of the notice of opposition, Mrs Araya asserts that the petitioning creditor is precluded from claiming the amounts owing under the second and third loan agreements because it failed to sue for those amounts in the District Court proceedings and the failure gives rise to Anshun estoppel. Counsel for Mrs Araya submitted as follows:
Mrs Araya does not question on this hearing, the efficacy of the first debt.
However, as to the other debts, the orthodox approach for the Court is to ask, in relation to each, (1) has the creditor presented evidence in conventional form as to the debt’s existence? and (2) if yes, has the debtor established that there is a triable issue as to her indebtedness which would justify the dismissal of the petition? See Re Prestia; Australia & New Zealand Banking Group Ltd v Prestia [2001] FCA 702 (Hely J) at [18]-[19].
As to the first question, it is for the creditor to show prima facie a breach of contract or a claim in restitution or some other basis.
as to the second question, ie assuming that the first question is answered in the creditor’s favour, the question is, is there a triable issue as to whether the creditor may be Anshun estopped?
The question, it will be noted, is not whether Mrs Araya will succeed, but merely whether she has established a triable issue.
The current position in NSW as to Anshun estoppel was summed up in R&J Lyons Family Settlement Pty Ltd v 155 Macquarie Street Pty Ltd [2008] NSWSC 232 (Bryson AJ):
19 The principle stated in Henderson v Henderson by Wigram VC (1843) 3 Hare 100 at 114-115, 67 ER 313 at 319 is applied in Australia not directly according to the terms stated by Wigram VC but in accordance with the authority of Port of Melbourne Authority v Anshun Pty Ltd [No.1] (1981) 147 CLR 589 at 602-3 (Gibbs CJ, Mason and Aickin JJ). See also Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502. The effect of the decisions was restated in Zavodyix v Alex Constructions Pty Ltd [2005] NSWCA 438 by Handley JA at [34].
34 It is also appropriate to consider the proprietors’ alternative case based on an Anshun estoppel. In Anshun the Authority was held estopped from enforcing a contractual indemnity against a co-tortfeasor by the existence of cross-judgments for contribution given in earlier proceedings. The majority (Gibbs CJ, Mason, Aickin JJ) stated the principle in terms quoted below which I have adjusted for the facts of this case (147 CLR at 602-3):
“... there will be no estoppel unless it appears that the matter relied upon ... was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it. Generally speaking it would be unreasonable not to plead [an alternative claim] ... if, having regard to the nature of the plaintiff’s claim, and its subject matter it would be expected that the [plaintiff] would raise the [claim] and thereby enable the relevant issues to be determined in the one proceeding. In this respect we need to recall that there are a variety of circumstances, some referred to in the earlier cases, why a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings eg expense, importance of the particular issue, motives extraneous to the actual litigation, to mention but a few.”
20 The principle operates with respect to settlements of claims; see Johnson v Gore Wood & Co. [2002] 2 AC 1 at 59 (Lord Millett).
Mrs Araya says that there is a triable issue as to whether there would, were the creditor to sue a second time, be an estoppel by virtue of an unreasonableness in the creditor’s failure to sue the first time, arising from the following circumstances:
·    The advantages of convenience, importance, economy of time and expense favoured the creditor including (or, more properly, keeping and not deleting) a claim for Debts B and C against Mrs Araya as well as the company.
·    And – lest it not already be sufficiently stressed – this is not a case where for some reason or another there was no good opportunity Mrs Araya for the second and third debts. To the contrary, it is inexplicable having regard to the wording of the original claim in the first proceedings, as to why she was not!
·    There was an almost total overlap in the facts underlying claim on the first debt and on the second and third debts: see eg paragraph 6 of the original claim (Ms Koutts, filed 18 August 2008).
Mrs Araya does not say that she will succeed on that defence.
Rather, she says that the requisite quality of a triable issue is well and truly reached. The creditor brings nothing to counter that.
Counsel for the petitioning creditor made detailed submissions on this point and his survey of the relevant legal principles I respectfully adopt.
The doctrine known commonly as the “Anshun doctrine” or “Anshun estoppel” was recognised in Australia in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. In that case, the doctrine was stated as follows in the context of a second action for indemnity against a party which had already succeeded in obtaining an order for contribution, at 602-603:
In this situation we would prefer to say that there will be no estoppel unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it. Generally speaking, it would be unreasonable not to plead a defence if, having regard to the nature of the plaintiff's claim, and its subject matter it would be expected that the defendant would raise the defence and thereby enable the relevant issues to be determined in the one proceeding. In this respect, we need to recall that there are a variety of circumstances, some referred to in the earlier cases, why a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings e.g. expense, importance of the particular issue, motives extraneous to the actual litigation, to mention but a few.
In the Anshun case at 604, it was found that the doctrine did apply because success in the second action for indemnity would necessarily have been inconsistent with the judgment for contribution in the first.
In formulating the test referred to above, the High Court:
a)at 601-602 said in respect to Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581:
However in Yat Tung [1975] AC 581 the adoption of the principle in Henderson v Henderson (1843) 3 Hare 100 (67 ER 313) was taken too far. Lord Kilbrandon spoke of it becoming "an abuse of process to raise in subsequent proceedings matters which could and therefore should have been litigated in earlier proceedings" (1975) AC, at p 590 . As we have seen, this statement is not supported by authority.
b)at 602 acknowledged the difference between cases where the plaintiff in the second action was also a plaintiff in the first action and cases where the plaintiff in the second action was the defendant in the first action. The Anshun case was in the second category. The decisions in Greenhalgh v Mallard [1947] 2 All ER 255 and Brisbane City Council v Attorney- General (Qld) [1979] AC 411 are in the first category where it was argued that the dismissal of the first action prevented the plaintiff from bringing the second. Although the High Court commented that the abuse of process test is not one of great utility it cited both cases with approval, including the following passage from Greenhalgh v Mallard which was approved in Brisbane City Council v Attorney- General (Qld):
res judicata for this purpose is not confined to the issues which the court is actually asked to decide, but . . . it covers issues or facts which are so clearly part of the subject-matter of the litigation and so clearly could have been raised that it would be an abuse of the process of the court to allow a new proceeding to be started in respect of them..
The Anshun doctrine is derived from the decision in Henderson v Henderson (1843) 3 Hare 100 (67 ER 313), where it was described as part of res judicata. However, in Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502, the High Court at 509 and 512 explained that where it applies it does not operate automatically like a res judicata, where the cause of action merges in the judgment. Moreover, it is not a species of estoppel: Meagher, Gummow & Lehane’s Equity Doctrines & Remedies, 4^th edition at [17-020]. It is a rule of public policy: Boles v Esanda Finance Corporation Ltd (1989) 18 NSWLR 666 at 674.
The Anshun doctrine does not operate automatically and does not affect the existence of the underlying cause of action. The principles in Anshun are applied on a case by case basis to prevent the abuse of the court’s process by the court ordering a stay of a second set of proceedings: Macquarie Bank Ltd v National Mutual Life Association of Australia Ltd (1996) 40 NSWLR 543 at 588. It should be noted that the result in the Anshun case itself was that an appeal against a stay of proceedings was dismissed.
Although the High Court in the Anshun case considered the “abuse of process a test” to be not of “great utility”, it is has been described as a discretionary remedy guarding against abuse of process: see Macquarie Bank v National Mutual Life Association of Australia Ltd (1996) 40 NSWLR 543 at 556 per Clarke JA with whom Priestley JA agreed. In Brisbane City Council v Attorney-General (Qld) at 425 the Privy Council stated:
Their reference to ‘abuse of process’ had previously been made in Greenhalgh v Mallard [1947] 2 All ER 255 per Somervell LJ and their Lordships endorse it. This is the true basis of the doctrine and it ought only to be applied when the facts are such as to amount to an abuse: otherwise there is a danger of a party being shut out from brining forward a genuine subject of litigation.
In Ling v Commonwealth (1996) 68 FCR 180 at 182, Wilcox J (with whom Whitlam J agreed) said that the Anshun doctrine was designed to minimise the burden of litigation but these benefits come at a price which is to shut out a claim or defence a party wishes to raise without determination of its intrinsic merit. His Honour went on to say this is a serious step which should not be taken except after scrupulous examination of all the circumstances and:
If the Anshun principle is too readily applied, there is a possibility of serious injustices
At 184, his Honour, noted that the fundamental issue is reasonableness and this required consideration to be given to all aspects of the case, including overlap between the facts and difficulties which may have existed in raising the claim in the second action in the first.
The point about the Court not being too ready to apply the Anshun doctrine was made by Bryson AJ in R&J Lyons Family Settlement Pty Ltd v 155 Macquarie Street Pty Ltd [2008] NSWSC 232 at [23] in the following terms:
[23] In my opinion a finding that it was unreasonable not to bring a claim in some earlier litigation is not a finding to be made lightly. In this context unreasonableness is a severe test, to be distinguished from a test of inconvenience, even severe inconvenience. Consideration starts at the point that there is free access to courts and that it is not compulsory to bring forward all claims on related subjects at the same time. This is well illustrated by the outcome in Cromwell v County of Sac (1876) 94 US 351 cited in Anshun at 599.

Securum Finance Ltd v Ashton [2001] Ch 291 is a case where the Anshun doctrine was discussed in the context of banking. In 1989, Securum Finance had commenced proceedings against a debtor for repayment of a loan and against two guarantors of the loan, who had given a legal charge over their property, for the debt but not possession of the property. In 1997, the proceedings were struck out for delay. In 1998, the assignee of Securum Finance commenced proceedings against the guarantors for the debt and possession of the property. At 301-302, Chadwick LJ rejected the argument that the principle in Henderson v Henderson applied to prevent Securum Finance suing on the covenant to pay and its property rights in the legal charge in the second proceedings. At 301, his Lordship said:
And it is, to my mind, bizarre to suggest that, in the earlier proceedings, it would have been appropriate to rely both on the cause of action founded on the guarantee alone and on a (theoretically distinct but, in the circumstances as they then were, indistinguishable) cause of action founded on the covenant in the legal charge.
At 302, his Lordship went on to state that it cannot be argued that a secured creditor who sues first for the debt is thereafter precluded from enforcing the security in a separate action.
In Bazos v Doman [2001] NSWCA 347, Stein JA (with whom Priestley and Beazley JJA agreed said:
[44] There are further obstacles in the appellants' way on the Anshun argument. As Clarke JA said in Macquarie Bank Ltd v National Mutual Life Association (1996) 40 NSWLR 543 at 558, a strict approach is necessary to the inquiry whether there exists the requisite identity between the proceedings. The mere fact that the proceedings are closely related is insufficient (Securum Finance Ltd v Ashton [2001] Ch 291). Many authorities have emphasised that a technical approach is not helpful and that the doctrine is concerned with substance and not form. See, for example, Clarke JA in Macquarie Bank at 558 - 559, Giles J (as he then was) in Onerati v Phillips Constructions Pty Ltd (1989) 16 NSWLR 730 at 738 and Gummow J in Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd (1992) 108 ALR 335 at 347.
[45] In Ling v Commonwealth (1996) 139 ALR 159 at 160 Wilcox J referred to the application of the Anshun principle as a serious step and a power not to be exercised except 'after a scrupulous examination of all the circumstances', (Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581 (PC) at 590). It has been said that the doctrine does not apply where the court has never gone into the merits, Jelson (Estates) Ltd v Harvey [1983] 1 WLR 1401.
[46] In Macquarie Bank it was found that there was more than one breach, issues raised in the second action were not litigated in the first, the relief claimed differed, different factual issues arose and different omissions were relied upon. Accordingly, Clarke JA concluded that in substance it could not be said that Macquarie was endeavouring to again litigate the same cause of action. Most of the factors referred to by Clarke JA (at 561) are present here.
The abuse of process point has probably been included because Mrs Araya also relies on the circumstance that the Company was sued in the District Court proceedings and there is doubt whether the Anshun doctrine applies except where there is an identity of parties. Cases such as Rippon v Chilcotin Pty Ltd (2001) 53 NSWLR 198 demonstrate that a plaintiff may be prevented from bringing proceedings against a person who was not a party to the original proceedings on the basis of abuse of process where success in the second proceedings would necessarily involve a finding which is inconsistent with a finding in an earlier proceeding. Here, of course, Mrs Araya was a party in respect of the proceedings over the first debt, and would have been the only respondent to proceedings over the second and third debts if instituted.
In the present case, while it would have been theoretically possible for RAMS to sue on the second and third loan agreements in the District Court proceedings, it was not unreasonable for it to fail to do so; first, because at the time when those proceedings were commenced on

5 April 2007, the balances under the second and third loan agreements were not then payable as the requisite notice of default under the loan agreements had not been given. On the basis of the notices of default that were issued, those balances did not become payable until at least 28 May 2007. Secondly, RAMS enjoyed security exceeding the value of the second and third loans (although not the combined value of all three of the loans). Initially, payments were made pursuant to the second and third loans. It was perfectly reasonable for RAMS to receive what payments Mrs Araya made on those loans and to rely on its security in respect of the balance of those loans. There was no reason for RAMS to sue on the second and third loan agreements when it had ample security and some expectation, at least initially, of receiving payments.
Further, the circumstances of the District Court proceedings were unusual. The funds due to be paid to RAMS were mistakenly paid to the Company, of which Mrs Araya was a director. The action against the Company was one for restitution for that windfall gain. The action against Mrs Araya was for breach of the first loan agreement as varied by the second and third loan agreements. Provided that RAMS was able to recover the funds mistakenly paid to the Company, there was no immediate reason for RAMS to require repayment in full for the second and third loans. I find that there is no substance to the assertion that RAMS would be precluded from suing on the second and third loan agreements now on the basis of the principle of Anshun estoppel and, accordingly, I reject Ground Two of the notice of opposition.
As to the question of solvency, Mrs Araya bears the onus of proof. In her affidavit she deposes as to assets of $1,641,881 and liabilities of $744,083. The assets include a 2002 Mercedes motor vehicle which Mrs Araya values at $50,000. Under cross-examination she was not able to say what that valuation was based on. For all intents and purposes, it appears to be a figure plucked out of the air. The assets also include superannuation valued at $49,615.49 but there is no evidence that Mrs Araya is able to gain access to those funds.
The assets also include a valuation of the secured property at 6 Maple Street, Cabramatta at $520,000. RAMS has entered into possession of that property and I was told at the trial of the matter on 22 September 2008 that contracts had been exchanged on 12 September 2008 for the sale of that property for $435,000. Plainly, the property has sold for a sum substantially less than the value placed on it by Mrs Araya. Consequently, I treat with caution Mrs Araya’s valuation of two additional pieces of real estate. One of those is the property at

12 Attillio Place
, Edensor Park which she values at $400,000 but discloses a mortgage to the Bank of Adelaide of $330,000. Viewed in a cautionary light, I am not satisfied that that property has a value which exceeds the mortgage value.
Mrs Araya and her husband live in another property at 34 Gwandalan Road, Edensor Park, in which she has a one third interest. She values that interest at $666,666. While that valuation may also be inflated, even if her interest is worth half that asserted, she would, if she could realise that value, be able to discharge the unsecured debt due to RAMS as well as the other unsecured debts disclosed in her affidavit. However, it is not sufficient for Mrs Araya to establish that she has an asset of greater value than her liabilities. The asset must be capable of being realised within a reasonable time. Mrs Araya only has a minority interest in the property and, in view of that fact, I am not satisfied that she would be able to liquidate her interest within a reasonable time. She has not given any evidence of either the intention or the capacity to do so. She might hypothetically borrow against her interest in the property but, again, she has not given any evidence of either an inclination or a capacity to borrow. She has not, for example, disclosed any income which would be available to service any loan she might obtain. A further complicating factor in relation to her capacity to borrow against her interest in the property is that on 21 September 2007 RAMS notified on the Certificate of Title a writ of execution in support of the judgment debt[1]. I am not satisfied that Mrs Araya is solvent. I reject Ground Three in the notice of opposition.
[1] Exhibit D2
The fourth ground in the notice of opposition relies upon s.52(2)(b) of the Bankruptcy Act. To the extent that this ground is based upon the first three grounds I reject it. Further, Mrs Araya complains about the failure of RAMS to sell the Maple Street property promptly. The facts are that in February this year the property was passed in at auction with a losing bid of $380,000. I am satisfied, however, that the losing bid did not represent fair value for the property (in that regard it is contradictory for Mrs Araya to complain about the failure of RAMS to accept a low bid when she herself places an inflated value on the property) and RAMS was entitled to seek to sell the secured property for the higher sum it ultimately obtained.
The more substantial question is whether the Court should refrain from making a sequestration order on the basis that RAMS has an alternative remedy available to it. That remedy would be to attempt to force the sale of the unencumbered Gwandalan Road property in which

Mrs Araya has a one third interest. RAMS already took steps towards that end in September 2007 by placing a writ of execution on the Certificate of Title. A sale of that property should easily provide funds sufficient to discharge all known unsecured debts owed by Mrs Araya. If a sequestration order is made, there is little doubt that a trustee in bankruptcy would seek to realise the value of Mrs Araya’s interest in that property. Additional costs of administration would be incurred. RAMS has apparently not taken any additional steps on its writ of execution on the property in the 12 months since the writ was placed on the title. There is no evidence, however, of anything preventing RAMS from taking such further steps as it may wish.
Counsel for RAMS provided the following additional submissions on this point on 23 September 2008:
A useful summary of how the writ of execution against land provisions in the Civil Procedure Act 2005 (NSW) and the Real Property Act 1900 (NSW) restrict dealing in the land by the judgment debtor and allow for sale of the land by the Sheriff is found in the judgment of Gummow and Hayne JJ in Black v Garnock (2007) 237 ALR 1, [2007] HCA 31 at [18]-[30].
Section 103 of the Civil Procedure Act provides that, subject to Part 8, the procedure for enforcing a judgment or order is prescribed by the rules, being the Uniform Civil Procedure Rules 2005. A judgment debt may be enforced by a writ for the levy of property: s.106(1)(a) Civil Procedure Act. Property includes both real and personal property: s.21 Interpretation Act 1987 (NSW). A writ for levy of property is a species of writ of execution: s.102 Civil Procedure Act. A writ of execution has effect for 12 months but may be renewed by the court subject to the rules: rule 39.20 Uniform Civil Procedure Rules.
A writ of execution binds the land from the time the writ is delivered to the Sheriff: s.112(1) Civil Procedure Act 2005. However, a writ of execution does not create an interest in land which is under the Real Property Act: s.105(1) Real Property Act, see also Black v Garnock at [19]-[21]. The Registrar-General may record a writ in the Register pursuant to an application in approved form which complies with s.105(2) Real Property Act.
During the period beginning on the registration of the writ and ending on its expiry or 6 months after registration, whichever first occurs, the land the subject of the writ may not be sold or mortgaged by the judgment debtor otherwise than in accordance with s.113 of the Civil Procedure Act. This section effectively requires consent of the judgment creditor and that the Sheriff’s costs be paid before the judgment debtor may mortgage or sell the land: s.113(3)&(6).
Moreover, the Registrar-General may not register a dealing affecting the land (other than those listed in ss.(1)) within the protected period: s.105A(2) Real Property Act. The protected period is the period beginning on the registration of the writ and ending on its expiry or 6 months after registration, whichever first occurs: s.105A(9) Real Property Act. Dealings not affected by s.105A(2) include a transfer giving effect to a sale under the writ (ss(1)(a)), a dealing endorsed with consent under s.113(6)(b) of the Civil Procedure Act (ss.(1)(b)), a dealing by a mortgagee or chargee exercising powers under the mortgage or charge recorded on the Register before the writ was recorded (ss.(1)(f)) and a dealing by the Official Trustee In Bankruptcy (ss.(1)(o)).
The effect of the provisions in paragraphs 4 and 5 above is that for 6 months following registration or the period of the writ the judgment debtor may not deal with the land. However, after the expiry of the protected period dealings which are lodged for registration may be registered if they were lodged before the writ is executed by sale of the land: s.105A(6) Real Property Act. Upon the registration of a transfer or other dealing that for valuable consideration disposes of an estate or interest in land affected by the recording of a writ (but not a transfer pursuant to a sale under the writ) the writ lapses: s.105C Real Property Act.
Accordingly, Mrs Araya could have dealt with the Edensor Park Property at any time after the writ was recorded, with RAMS’ consent. On the earlier of 6 months after the recording of the writ on the Register or the expiry of the writ Mrs Araya could have dealt with the Edensor Park Property without RAMS’ consent as long as the dealing was lodged for registration before the writ was executed against the land.
There is also an active aspect to a writ of execution from the judgment creditor’s perspective. Subject to the rules, a writ for levy of property is sufficient authority for the Sheriff to do various acts in respect of property of the judgment debtor, including to enter possession of and sell land to which the judgment debtor is entitled or may dispose of: s.106(2) Civil Procedure Act. Land includes any interest in land: s.21 Interpretation Act 1987 (NSW). The procedure for the sale of land under a writ of execution against land is set out in rules 39.21 to 39.28 Uniform Civil Procedure Rules 2005 (NSW).
Although a writ for levy of property may be recorded on the Register immediately after it is issued, land of a judgment debtor must not be sold pursuant to a writ before any other property unless the judgment debtor requests it or the Sheriff is satisfied that the land should be sold before the other property to minimise hardship to the judgment debtor or some other person: rule 39.6(3) Uniform Civil Procedure Rules. Before proceeding to execute a writ of execution against land a judgment creditor must file an affidavit verifying the receipt by the judgment creditor of advice from the Sheriff to the effect that the Sheriff cannot obtain satisfaction of the writ by proceeding further against the goods of the judgment debtor: rule 39.21(1)(b) Uniform Civil Procedure Rules.
Although the Sheriff must execute the writ before it expires, the expiry of the writ does not affect any agreement made under its authority before that expiry and any action necessary to complete the transaction may be taken as if it were still in force: s.116 Civil Procedure Act. A sale of property by the Sheriff is as valid and effective as if the property had been sold to the purchaser by the judgment debtor: s.115(1) Civil Procedure Act.
A transfer pursuant to a sale under a writ is registered when it is recorded: s.105B(1) Real Property Act. Upon registration the transferee holds the land free from all estates and interests except those recorded on the Register and those preserved by s.42: s.105B(2) Real Property Act. In the case of the Edensor Park Property the interests of the other tenants in common would not have been affected by the sale of Mrs Araya’s share pursuant to the execution of the writ.
Accordingly, the writ of execution could have been executed against the Edensor Park Property on or before 21 September 2008 but only if it had first been enforced against Mrs Araya’s other property. Only Mrs Araya’s one third interest in the Edensor Park Property as a tenant in common could have been sold under the writ. On 21 September 2008 the writ expired and the Sheriff was no longer able to sell Mrs Araya’s interest in the Edensor Park Property pursuant to the writ.
Counsel for Mrs Araya also provided additional submissions on this issue on 24 September 2008. Those submissions note that the writ was, necessarily, only in respect of the judgment debt. However, it was open to RAMS to apply the proceeds from the sale of the secured property at Cabramatta to the debts arising from the second and third loan agreements, leaving the judgment debt substantially intact. Counsel concurs substantially with the legal effect of the writ.
I accept the petitioning creditor’s submissions. The enforced sale of Mrs Araya’s minority interest in the Edensor Park property, while possible during the life of the writ of execution, would have been problematic and the amount that could have been raised from such a sale is speculative. The writ has now expired and is of no further use. The existence of that writ (and the hypothetical possibility of obtaining another one) does not provide sufficient cause for the Court to refrain from making a sequestration order.
I am satisfied that Mrs Araya committed the act of bankruptcy alleged in the petition.
I am satisfied with the proof of the other matters of which s.52(1) of the Bankruptcy Act requires proof.
I make a sequestration order against the estate of Sandra Anna Araya.
I order that the applicant creditor’s costs (including reserved costs, if any) be taxed and paid in accordance with the Bankruptcy Act.
The Court notes that the date of the act of bankruptcy is 2 November 2007.
I note that consent to act as a trustee has been signed by Scott Darren Pascoe on 23 November 2007.

I certify that the preceding seventy-eight (78) paragraphs are a true copy of the reasons for judgment of Driver FM

Associate:

Date: 30 September 2008