Sherman v Lamb

The respondent, Siobhan Patricia Lamb, was the subject of a creditor’s petition for sequestration by the appellant, the petitioner, who claimed that Lamb had committed an act of bankruptcy. The Federal Court of Australia was called upon to determine whether a sequestration order should be made against Lamb's estate. The petitioner argued that Lamb had failed to comply with a bankruptcy notice, thus committing an act of bankruptcy, and that Lamb was not solvent. Lamb contested the petitioner's claims, asserting her solvency and challenging the validity of the debt upon which the petitioner based their petition.

The primary legal issues the Court had to address were whether Lamb had indeed committed an act of bankruptcy by failing to comply with the bankruptcy notice, and if she was solvent within the meaning of the Bankruptcy Act 1966. The Court also considered the petitioner's right to seek a sequestration order despite an unresolved claim against the petitioner with the Australian Human Rights Commission. The Court examined the nature of the solvency test and whether it had the power to disregard the prima facie existence of a debt in this context. The Court found that the petitioner had proved the necessary formal elements for a sequestration order under section 52(1) of the Bankruptcy Act 1966 and that Lamb had failed to evidence her solvency on the balance of probabilities. The Court held that there was no reason to question the judgment of the Queensland Court of Appeal concerning the judgment debtor.

Having considered the evidence and arguments, the Court determined that the petitioner had established that Lamb had committed an act of bankruptcy and that Lamb was not solvent. Consequently, the Court made a sequestration order against Lamb's estate. The Court also ordered that the costs of the petition be fixed by the Registrar if not agreed and paid in accordance with the Bankruptcy Act 1966. The Court acknowledged the consent of Mr Christopher Baskerville, a registered trustee, to act as trustee.