Sherrin Rentals Pty Ltd, in the matter of Herbert v Herbert [2023] FCA 1323

Federal Court of Australia

Sherrin Rentals Pty Ltd, in the matter of Herbert v Herbert [2023] FCA 1323 File number: QUD 90 of 2023

Judgment of: LOGAN J

Date of judgment: 25 July 2023

Catchwords: BANKRUPTCY – where a judgment debtor seeks review of a sequestration order of a registrar of the Federal Court of Australia – where the review is de novo on evidence and law – where it is for the petitioning creditor to discharge the onus of proof in respect of matters stated in the petition Bechara v Bates (2021) 286 FCR 166 and Totev v Sfar (2008) 167 FCR 193 applied – where credit petitioner must prove service of petition and debt owing – where court retains discretion whether to make sequestration order – where the court is satisfied the debt is owing and the bankruptcy notice was served on debtor – where the court is satisfied the debtor failed to comply with bankruptcy notice and the petition was served as required – whether debtor can prove solvency for the court to exercise discretion to dismiss petition or alternatively to stay operation of sequestration order under s 52(3) of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act) – where the test of solvency is found in s 5(2) and s 5(3) of the Bankruptcy Act – cash flow rather than balance sheet test – where the focus is on liquidity Tarwala v Amirbeaggi as trustee for bankruptcy [2022] FCA 1593 cited – where the proof of solvency need only occur on the balance of probabilities under s 140(1) of the Evidence Act 1995 (Cth) – where court is not satisfied that debtor is solvent based on lack of evidence – where a loan facility from an associated entity is insufficient to meet total debt – where debtor not likely to meet loan repayments if facility drawn down in full – where source of funds which form basis of the loan facility not in evidence – where there is no supporting documentation of the financial position of the associated entity in evidence – where the debtor has not lodged tax returns since 2019 – where the court finds the debtor is hopelessly insolvent – application for review of sequestration order dismissed – sequestration order affirmed