The Owners - Strata Plan No 11927 v Doueihi

The Owners – Strata Plan No. 11927 (the Owners Corporation) presented a creditor's petition seeking a sequestration order against the estate of Mr Doueihi. The Owners Corporation relied on Mr Doueihi's failure to comply with a bankruptcy notice issued on 25 February 2019, which demanded payment of $37,500. This sum represented the outstanding balance of a judgment entered by the Owners Corporation in the Local Court of New South Wales on 21 February 2019, pursuant to consent orders made on 21 March 2018. These consent orders stipulated that Mr Doueihi was to pay $45,000 in monthly instalments of $3,750, with the Owners Corporation entitled to enter judgment for the unpaid balance upon default. The debt arose from unpaid strata levies for two lots registered in Mr Doueihi's name.

The court was required to determine whether the preconditions for making a sequestration order under the *Bankruptcy Act 1966* (Cth) were satisfied. This involved assessing whether Mr Doueihi had committed an act of bankruptcy, whether he owed a liquidated debt of at least $5,000, and whether the creditor's petition and the underlying debt were properly established and served. Additionally, the court had to consider Mr Doueihi's grounds for opposing the sequestration order, namely the existence of an instalment order made by the Local Court in relation to the judgment debt, and whether the Owners Corporation's alleged failure to repair common property constituted "some other sufficient cause" for the sequestration order not to be made.

The court found that the Owners Corporation had established the necessary preconditions for a sequestration order. The act of bankruptcy was Mr Doueihi's failure to comply with the bankruptcy notice, which was based on a valid judgment for unpaid strata levies. The court noted that Mr Doueihi's reliance on an instalment order made after the judgment was entered did not negate the existence of the debt or the act of bankruptcy. Furthermore, the court determined that Mr Doueihi's claim regarding the Owners Corporation's failure to repair common property did not constitute "sufficient cause" to dismiss the petition, as it did not demonstrate an inability to pay debts or a sufficient reason for the court to refrain from making the order.

Consequently, the court was satisfied that the Owners Corporation had proven the matters required by sections 43(1), 44(1), and 52(1) of the *Bankruptcy Act 1966* (Cth), and that there was no sufficient cause for refusing to make the sequestration order. Accordingly, a sequestration order was made against the estate of Mr Doueihi.