CSM Lawyers Pty Ltd v Manzo, in the matter of Manzo [2023] FCA 236 (21 March 2023)

Last Updated: 21 March 2023

FEDERAL COURT OF AUSTRALIA

CSM Lawyers Pty Ltd v Manzo, in the matter of Manzo [2023] FCA 236

File number(s):	QUD 417 of 2021
Judgment of:	DOWNES J
Date of judgment:	21 March 2023
Catchwords:	BANKRUPTCY AND INSOLVENCY – application by respondent to set aside sequestration order made by registrar – whether s 52(1) Bankruptcy Act 1966 (Cth) satisfied – whether valid service of bankruptcy notice and creditor’s petition – where creditor’s petition not served personally – where notice of appearance entered by respondent – where respondent failed to file statement of affairs – where respondent relied upon third party support to seek to establish solvency – where evidence failed to establish that respondent is able to pay his debts as and when they fall due – where respondent failed to establish other sufficient cause to set aside sequestration order – application dismissed and decision of registrar affirmed
Legislation:	Acts Interpretation Act 1901 (Cth), s 28A Bankruptcy Act 1966 (Cth), ss 5(2), 40(1)(g), 41(1), 43, 44(1), 47, 52, 54, 306 Electronic Transactions Act 1999 (Cth), s 9(1)(d) Evidence Act 1995 (Cth), ss 59, 160 Federal Court of Australia Act 1976 (Cth), s 35A(5) Bankruptcy Regulations 2021 (Cth), reg 102 Federal Court (Bankruptcy) Rules 2016 (Cth), rr 1.04, 4.05 Federal Court Rules 2011 (Cth), rr 8.06, 10.11
Cases cited:	Ace Contractors & Staff Pty Ltd v Westgarth Development Pty Ltd [1999] FCA 728 Australian Securities and Investments Commission v Forge (2003) 133 FCR 487; [2003] FCAFC 274 Bechara v Bates (2021) 286 FCR 166; [2021] FCAFC 34 Carna Group Pty Ltd v Griffin Coal Mining Company (No 6) (2021) 157 ACSR 224; [2021] FCA 1214 Corney v Brien (1951) 84 CLR 343; [1951] HCA 31 Chan v First Strategic Development Corporation Limited (in liq) [2015] QCA 28 Culleton v Balwyn Nominees Pty Ltd (2017) 343 ALR 632; [2017] FCAFC 8 De Robillard v Carver (2007) 159 FCR 38; [2007] FCAFC 73 Francis v Eggleston Mitchell Lawyers Pty Ltd [2014] FCAFC 18 Lewis v Doran (2004) 184 FLR 454; [2004] NSWSC 608 Ling v Enrobook Pty Ltd (1997) 74 FCR 19; [1997] FCA 226 Lowbeer v De Varda (2018) 264 FCR 228; [2018] FCAFC 115 Ramsay Health Care Australia Pty Ltd v Compton (2017) 261 CLR 132; [2017] HCA 28 Shaw v Yarranova Pty Ltd (2017) 252 FCR 267; [2017] FCAFC 88 Thompson v Lane (Trustee) (No 3) [2022] FCA 128 Thompson v Lane (Trustee) [2023] FCAFC 32 Toyota Finance Australia Limited v Youssef Berro [2022] FCA 497 Whitton as Trustee of the Estate of John Emmanuel Rose v Regis Towers Real Estate Pty Ltd (In Administration) (2007) 161 FCR 20; [2007] FCAFC 125 Wren v Mahony (1972) 126 CLR 212; [1972] HCA 5
Division:	General Division
Registry:	Queensland
National Practice Area:	Commercial and Corporations
Sub-area:	General and Personal Insolvency
Number of paragraphs:	146
Date of hearing:	30 January 2023
Counsel for the Applicant:	Mr M Ziebell
Solicitor for the Applicant:	Cowen Schwarz Marschke Lawyers
Counsel for the Respondent:	The respondent appeared in person

ORDERS

		QUD 417 of 2021
IN THE MATTER OF PETER BRUCE MANZO
BETWEEN:	CSM LAWYERS PTY LTD ACN 610 321 509 T/A COWEN SCHWARZ MARSCHKE LAWYERS Applicant
AND:	PETER BRUCE MANZO Respondent

ORDER MADE BY:	DOWNES J
DATE OF ORDER:	21 MARCH 2023

THE COURT ORDERS THAT:

1. The order of Registrar Buckingham dated 4 May 2022 is affirmed.
2. The respondent’s interim application dated 24 May 2022 is dismissed.
3. The respondent pay the applicant’s costs of and incidental to the interim application, they being costs of the administration of the bankrupt estate.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

DOWNES J:

OVERVIEW

1. Mr Manzo retained the applicant, an incorporated legal practice, to represent him in proceedings in the Magistrates Court of Queensland. The other party to that proceeding was Mr John Scholz. Mr Manzo terminated the applicant’s retainer prior to the final hearing and represented himself at that hearing. The court found in favour of Mr Scholz and later ordered that Mr Manzo pay Mr Scholz’s costs on an indemnity basis.
2. When the applicant issued a bill of costs for the work it had completed prior to termination of the retainer, Mr Manzo declined to pay the full amount claimed by the applicant on the basis that he was not satisfied with the necessity of the work which had been undertaken.
3. On 11 November 2020, the applicant obtained default judgment in the Magistrates Court of Queensland against Mr Manzo in the amount of $25,399.57 (judgment debt). This figure represented the amount that was owing under the applicant’s bill of costs, plus interest and costs.
4. On 25 February 2021, a bankruptcy notice was issued by the Official Receiver in respect of the judgment debt.
5. It was common ground at the hearing that Mr Manzo received the bankruptcy notice on or prior to 16 May 2021.
6. On 2 December 2021, the applicant filed a creditor’s petition in respect of the judgment debt. On 9 March 2022, the applicant filed an amended creditor’s petition to reflect the change in the applicant’s name.
7. On 4 May 2022, a registrar of this Court ordered that the estate of Mr Manzo be sequestrated under s 43 of the Bankruptcy Act 1966 (Cth). By that order, Mr Rajendra Khatri was appointed trustee of the bankrupt estate.
8. By interim application dated 24 May 2022 (which was accepted for filing on 26 May 2022), Mr Manzo sought, amongst other things, an order that the registrar’s order be set aside under s 35A(5) of the Federal Court of Australia Act 1976 (Cth).
9. It is usual for an application for review of the making of a sequestration order to be heard and determined with expedition. However, two earlier hearing dates were vacated at the request of Mr Manzo, including for reasons associated with his ill health.
10. The interim application was finally heard on 30 January 2023. Mr Manzo acted for himself and appeared by Microsoft Teams from Adelaide.
11. Mr Manzo is a forensic accountant with “over 30 years of experience”, and has previously provided expert evidence to the Federal Court reporting upon solvency in a bankruptcy matter.
12. The orders sought by Mr Manzo in the interim application were overtaken by a draft order provided by him at the hearing.
13. The replacement orders sought by Mr Manzo (and to which the applicant had an opportunity to respond at the hearing) were as follows:
    1. That the Sequestration Order of 4 May 2022 in proceeding QUD417 of 2021 be set aside under Subsection 35A(5) of the Federal Court of Australia Act 1976 upon exercise of the Court's discretion.
    2. That the Respondent file in the Brisbane Magistrates Court within 28 days documents to progress the Respondent's claim / counterclaim M1761/2021 against the Applicant.
    3. That the hearing de novo of the Applicant's creditors petition be adjourned under Section 33 of the Bankruptcy Ac t [sic] 1966 until finalisation of the Respondent's claim / counterclaim M1761/2021 in the Brisbane Magistrates Court to a date to be determined and advised to the parties by the Court.
    4. Such other Interim Orders for the conduct of the proceeding as this Honourable Court deems suitable.
    5. There be no Order as to costs with costs reserved.
14. At the hearing, Mr Manzo read and relied upon three outlines of submissions, his grounds of opposition, his amended grounds of opposition and 12 affidavits, including two affidavits which were lodged for filing on 27 January 2023. His third outline of submissions was lodged for filing on 30 January 2023.
15. At his request, Mr Manzo was permitted to file further affidavit material after the hearing, with two further voluminous affidavits being filed on 17 February 2023.
16. Mr Khatri took no position in respect of the application. He provided an affidavit dated 25 January 2023, which included evidence of attempts made in 2022 to have Mr Manzo provide and file a statement of affairs, without success.
17. In addition to the judgment debt, Mr Khatri has received proofs of debt in the total amount of approximately $180,000 and, based on investigations conducted by him and his office, he has not been able to identify Mr Manzo as the registered owner of any assets divisible in the bankruptcy.
18. For the reasons which follow, the interim application will be dismissed and the registrar’s order will be affirmed, with costs to follow the event.

JURISDICTION ON REVIEW

19. This application was brought pursuant to s 35A(5) of the Federal Court of Australia Act, which provides:

A party to proceedings in which a Registrar has exercised any of the powers of the Court under subsection (1) may, within the time prescribed by the Rules of Court, or within any further time allowed in accordance with the Rules of Court, apply to the Court to review that exercise of power.

20. In Bechara v Bates (2021) 286 FCR 166; [2021] FCAFC 34 at [27] (Allsop CJ, Markovic and Colvin JJ), the Full Court identified the nature of a review of a registrar’s decision as follows:

    (a) The application for review leads to a hearing de novo of the creditor’s petition.

    (b) The hearing (or rehearing) of the creditor’s petition is not prosecuted by the debtor (applicant for review) but by the creditor in the proceeding in which the registrar’s order was made.

    (c) The application for review is a demand that the claim for relief (the sequestration order) be heard by a judge.

    (d) The onus is upon the creditor to prosecute its petition. The only onus of the debtor/bankrupt against whose estate a sequestration order has been made is to prove either solvency or any other sufficient cause under s 52(2) of the Bankruptcy Act 1966 (Cth).

RELEVANT LEGISLATION AND PRINCIPLES

21. Section 41(1) of the Bankruptcy Act provides that an Official Receiver may issue a bankruptcy notice on the application of a creditor who has obtained against a debtor a final judgment or final order that is of the kind described in s 40(1)(g) and is for an amount of at least the statutory minimum.
22. Section 40(1)(g) of the Bankruptcy Act provides that a debtor commits an act of bankruptcy if:

...a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not ...comply with the requirements of the notice or satisfy the Court that he or she has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order...

23. Section 43(1) of the Bankruptcy Act relevantly provides that, subject to the Act, where a debtor has committed an act of bankruptcy and otherwise meets the territorial connection requirement, the Court may “on a petition presented by a creditor” make a sequestration order against the estate of the debtor.
24. Section 44(1) of the Bankruptcy Act sets out the conditions on which a creditor may present a petition, being (relevantly to the facts of this case):

    (a) there is owing by the debtor to the petitioning creditor a debt that amounts to the statutory minimum;

    (b) that debt is a liquidated sum due at law or in equity or partly at law and partly in equity and is payable either immediately or at a certain future time; and

    (c) the act of bankruptcy on which the petition is founded was committed within 6 months before the presentation of the petition.

25. Section 52 of the Bankruptcy Act relevantly provides:

52 Proceedings and order on creditor’s petition
(1) At the hearing of a creditor’s petition, the Court shall require proof of:

(a) the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient);

(b) service of the petition; and

(c) the fact that the debt or debts on which the petitioning creditor relies is or are still owing;

and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor.
...

(2) If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor:

(a) that he or she is able to pay his or her debts; or

(b) that for other sufficient cause a sequestration order ought not be made;

it may dismiss the petition.

26. As observed by Burley J in Toyota Finance Australia Limited v Youssef Berro [2022] FCA 497 at [33]–[34]:

The petitioning creditor has a prima facie right to a sequestration order once proof of the matters required by s 52(1) has been satisfied: Cain v Whyte [1933] HCA 6; 48 CLR 639 at 646 and 648 (Rich J, Starke, Dixon, Evatt and McTiernan JJ agreeing); Rozenbes v Kronhill [1956] HCA 65; 95 CLR 407 at 414 (Dixon CJ, Webb and Fullagar JJ).
Nevertheless, the Court retains a discretion to refuse such an order if the debtor is able to pay their debts (s 52(2)(a)) or for “other sufficient cause” (s 52(2)(b)). The onus is on the debtor, Mr Berro, to establish either or both of the preconditions. The circumstances which may constitute “other sufficient cause” are variable, and it is inappropriate to catalogue or circumscribe them: Clyne v Deputy Commissioner of Taxation [1985] FCA 4; 5 FCR 1 at 5 (Fisher, Morling and Wilcox JJ); Liang v LV Property Investments Pty Ltd [2015] FCA 1057 at [52] (Beach J).
(emphasis omitted.)

27. At [37] of Toyota Finance, Burley J further stated that:

Even if “other sufficient cause” has been shown, that merely enlivens the court’s discretion to refuse to make a sequestration order. “The power in s 52(2) is permissive, not mandatory. Even if a debtor can bring himself or herself within s 52(2)(b), that does not entitle him or her to have a sequestration order refused”...
(citations omitted.)

SATISFACTION OF S 52(1) OF BANKRUPTCY ACT

Matters stated in the creditor’s petition

28. The matters to be proved are those requirements listed in s 43(1) of the Bankruptcy Act, being, in summary:

(1) the debtor has committed an act of bankruptcy;
(2) at the time when the act of bankruptcy was committed, the debtor was, among other things, personally present or ordinarily resident in Australia, or had a dwelling house or place of business in Australia; and
(3) the creditor has presented a petition in respect of that act of bankruptcy.

29. For the reasons which follow, all of these requirements have been established.

Act of bankruptcy

30. On 25 February 2021, a bankruptcy notice was issued by the Official Receiver in respect of the judgment debt, which notice was issued in the correct form within the statutory time limit and which was then served on Mr Manzo, according to an affidavit of service of Ms Laura Astin.
31. In his submissions, Mr Manzo drew attention to an inconsistency that appears in the affidavit of service regarding the date on which the bankruptcy notice was posted: namely, Ms Astin deposed to posting the bankruptcy notice and other documents on 29 April 2021 but also referred to placing the letter and accompanying documentation in the post box “at or about 12 April 2021”.
32. As the bankruptcy notice was not issued until 25 February 2021, the letter which was posted to Mr Manzo with the documentation is dated 29 April 2021, and an email serving the same documents was sent shortly before 5.25 pm on 29 April 2021, the reference to 12 April 2021 is an obvious typographical error in Ms Astin’s affidavit. For these reasons and in the absence of any evidence to the contrary, I accept that the bankruptcy notice was both posted and emailed to Mr Manzo on 29 April 2021.
33. Mr Manzo next submitted that the bankruptcy notice was not served in accordance with the Bankruptcy Regulations 2021 (Cth).
34. Regulation 102 of the Bankruptcy Regulations (as in force at the time) provided:

102 Service of documents
(1) Unless the contrary intention appears, if a document is required or permitted by the Act or this instrument to be given or sent to, or served on, a person (other than the Inspector-General, the Official Receiver or the Official Trustee), the document may be:

(a) sent by a courier service to the person at the address of the person last known to the person serving the document; or

(b) left, in an envelope or similar packaging marked with the person’s name and any relevant document exchange number, at a document exchange where the person maintains a document exchange facility.

Note: See also section 28A of the Acts Interpretation Act 1901.

(2) In the absence of proof to the contrary, the document is taken to have been received by, or served on, the person when the document would, in the due course of business practice, be delivered to that address or document exchange.

35. As can be seen above, reg 102 referred to s 28A of the Acts Interpretation Act 1901 (Cth), which relevantly provides that a document may be served on a person by “leaving it at, or by sending it by pre-paid post to, the address of the place of residence or business of the person last known to the person serving the document”.
36. In this case, the bankruptcy notice was sent by pre-paid post to the address of Mr Manzo as recorded in the retainer agreement which he had with the applicant. The retainer agreement also recorded an email address for Mr Manzo.
37. Mr Manzo contended that, when it posted the bankruptcy notice, the applicant was aware that he was no longer residing at the address recorded in the retainer agreement because of an email which he had sent to the applicant on 20 October 2020 (from the email address recorded in the retainer agreement). However, there is no evidence that Mr Manzo provided the applicant with any other address. No alternative address is given in the email dated 20 October 2020.
38. As such, the address “last known” to the applicant was the address recorded in the retainer agreement to which the documents, including the bankruptcy notice, were posted. The bankruptcy notice was therefore served validly.
39. Further, for the following reasons, the bankruptcy notice was also validly served by email.
40. Although the Bankruptcy Regulations did not make reference to service by other means, the note to s 28A(1) of the Acts Interpretation Act directed the reader to the Electronic Transactions Act 1999 (Cth). Section 9(1)(d) of that Act relevantly permitted electronic service under laws of the Commonwealth where a party consents to electronic service (although that is no longer the case by reason of amendments to the Bankruptcy Regulations which commenced on 6 April 2022).
41. By his email dated 20 October 2020, Mr Manzo consented to electronic service when he stated the following:

I note for the record that all other documents - including correspondence, your firm’s invoices, the demand for payment, and threats to commence proceedings, have been sent via email to my known email address - that I have used throughout the entire proceedings for all communication with your firm.
At all relevant times, you have had both my email address and facsimile number to effect service ...All your firm’s correspondence in this matter has been sent via email. I have received your previous correspondences via email and am prepared to accept service by email.

42. Finally, the evidence demonstrates that, as a matter of fact, the bankruptcy notice was served on 16 May 2021. Were it needed, this rebuts the presumption which might otherwise arise under reg 102(2) of the Bankruptcy Regulations, being (relevantly) that the document is taken to have been received by, or served on, the person when the document would, in the due course of business practice, be delivered to their address (to which recourse would then be had to s 160 of the Evidence Act 1995 (Cth)).
43. Importantly, Mr Manzo did not disagree that actual service had occurred by 16 May 2021. Indeed, his evidence was that he obtained a copy of the bankruptcy notice on 15 May 2021. In oral submissions at the hearing, Mr Manzo also repeatedly stated that he had obtained the bankruptcy notice on 15 May 2021 or “a couple of days before 16 May”.
44. The position of the parties is supported by the contemporaneous documentary evidence. On 17 May 2021, Mr Manzo responded to the applicant’s email which attached the bankruptcy notice in the following terms:

I refer to your letter to me dated 29 April 2021 and enclosures, a copy of which was only obtained by me yesterday.

45. For these reasons, the bankruptcy notice was validly served on Mr Manzo either on or by no later than 16 May 2021.
46. Mr Manzo had until 6 June 2021 to comply with the bankruptcy notice or apply to set it aside. As Mr Manzo failed to do either of these things, he committed an act of bankruptcy on 6 June 2021 pursuant to s 40(1)(g) of the Bankruptcy Act.

Territorial connection

47. When the act of bankruptcy occurred, the necessary territorial connection to Australia was present in that Mr Manzo was ordinarily resident in Australia. This was not disputed by Mr Manzo.

Presentation of petition in respect of the act of bankruptcy

48. The applicant has presented a petition in respect of the act of bankruptcy. Having regard to the matters raised by Mr Manzo, the next issue is whether the conditions on which a petition may be presented have been met.

Section 44(1)(a) and 44(1)(b)

49. Sections 44(1)(a) and 44(1)(b) of the Bankruptcy Act relevantly require that there be owing by Mr Manzo to the applicant, as petitioning creditor, a debt that amounts to the statutory minimum, which debt is a liquidated sum due at law and is payable immediately.
50. As to this, Mr Manzo submitted that the applicant’s claim and statement of claim in the proceedings which gave rise to the judgment debt were not served on him properly. Mr Manzo also asserted that the applicant relied on false evidence to obtain default judgment against him, being the affidavit of service relied upon by the applicant.
51. I have construed Mr Manzo’s submission as a request for this Court to “go behind” the judgment debt.
52. Where a question is raised as to whether a judgment or order establishes the amount truly owing to the petitioning creditor, there are two separate questions: first, whether there is a proper basis to exercise the discretion to go behind the judgment, and second, if there is, whether there is in truth and reality no debt: see Ramsay Health Care Australia Pty Ltd v Compton (2017) 261 CLR 132; [2017] HCA 28 at [65]–[71] (Kiefel CJ, Keane and Nettle JJ); see also Lowbeer v De Varda (2018) 264 FCR 228; [2018] FCAFC 115 at [53] (Reeves, Farrell and Colvin JJ).
53. The discretion may be exercised where the judgment or order which comprises the debt was reached with fraud, collusion or a miscarriage of justice: Corney v Brien [1951] HCA 31; (1951) 84 CLR 343 at 348 (Dixon, Williams and Kitto JJ). The circumstances in which a court may go behind a judgment are not limited to these circumstances. A bankruptcy court should also go behind a judgment where sufficient reason is shown for questioning whether behind the judgment there is in truth and reality a debt due to the petitioning creditor: see Ramsay at [42], [55], [65].
54. The evidence adduced by Mr Manzo to support his argument was a copy of a statutory declaration of Ms Dawn Manzo, his mother, identifying the circumstances in which the claim and statement of claim had been served, which he sought to contrast and compare with the content of the impugned affidavit of service which was relied upon by the applicant to obtain default judgment. While both Mr Manzo’s mother and the process server deposed that the relevant documents had been left with her on 21 September 2020, there is a conflict in the evidence as to whether Ms Manzo informed the process server that Mr Manzo was a resident at her address (one says she did, the other says not). It is not possible to resolve that conflict on this application (and nor is it necessary that it be resolved).
55. Importantly, Ms Manzo confirmed that she brought the documents to Mr Manzo’s attention, and Mr Manzo’s evidence confirmed that he received a copy of the claim and statement of claim on 15 October 2020 (as advised by him in his email to the applicant’s solicitors on 20 October 2020). Mr Manzo did not file a defence in the proceedings and default judgment was entered on 11 November 2020, which was almost four weeks after he had received the claim and statement of claim. No application was brought by Mr Manzo to set aside the default judgment prior to the sequestration order being made on 4 May 2022.
56. These circumstances do not support an exercise of discretion to go behind the judgment debt. That is because one would expect that, if the judgment debt was the subject of a genuine challenge, Mr Manzo would have filed a defence to the applicant’s claim or, at the least, applied to set aside the default judgment, which would have required him to demonstrate that he had a viable defence to that claim.
57. Further, the evidence adduced by Mr Manzo did not establish any proper basis to challenge whether there was “in truth and reality a debt due to the petitioning creditor”: Ramsay at [42], citing Wren v Mahony [1972] HCA 5; (1972) 126 CLR 212 at 224 (Barwick CJ, with whom Windeyer and Owen JJ agreed).
58. For these reasons, I decline to exercise the discretion to go behind the judgment debt.
59. As the judgment debt exceeds the statutory minimum of $10,000, there is owing to the petitioning creditor (being the applicant) a debt that amounts to the statutory minimum, and therefore s 44(1)(a) of the Bankruptcy Act is satisfied.
60. It also follows that the judgment debt is a liquidated sum due at law and is payable immediately, and therefore s 44(1)(b) of the Bankruptcy Act is satisfied.

Section 44(1)(c)

61. Where a creditor’s petition is founded on an act of bankruptcy, the petition must be presented within six months of the act of bankruptcy: s 44(1)(c) Bankruptcy Act. The creditor’s petition was presented on 2 December 2021, and so was presented within time.

Service of the petition

62. Rule 4.05 of the Federal Court (Bankruptcy) Rules 2016 (Cth) provides:

4.05 Documents to be served

Unless the Court otherwise orders, at least 5 days before the date fixed for the hearing of a creditor’s petition, the applicant creditor must serve on the respondent debtor:

(a) the creditor’s petition; and

(b) a copy of the affidavit, or affidavits, verifying the petition required by subsection 47(1) of the Bankruptcy Act; and

(c) if applicable, a copy of the affidavits relating to the petition required by rule 4.04; and

(d) a copy of any consent to act as trustee of the debtor’s estate filed under section 156A of the Bankruptcy Act.

63. As a creditor’s petition is, in effect, an application starting a proceeding, it is an originating application within the meaning of the Federal Court Rules 2011 (Cth). As such, r 8.06 requires that a creditor’s petition be served personally.
64. This construction is consistent with earlier decisions of this Court concerning previous rules: see, eg, De Robillard v Carver (2007) 159 FCR 38; [2007] FCAFC 73 (Buchanan J, with whom Moore and Conti JJ agreed) at [79].
65. In this case, there was no dispute that Mr Manzo was not served personally with the creditor’s petition. However, for the following reasons, that is not fatal.
66. Rule 10.11 of the Federal Court Rules provides:

10.11 Deemed service of originating application

Unless an application has been made under rule 13.01, if a respondent files a notice of address for service, defence or affidavit, or appears before the Court in response to an originating application, the originating application is taken to have been served personally on the respondent:

(a) on the date on which the first of those events occurred; or

(b) if personal service on the respondent is proved on an earlier date––on the earlier date.

67. Rule 1.04 of the Federal Court (Bankruptcy) Rules effectively provides that the Federal Court Rules apply to proceedings under the Bankruptcy Act to the extent they are relevant and not inconsistent with the Federal Court (Bankruptcy) Rules. There is no inconsistency between any other rule in the Federal Court (Bankruptcy) Rules and r 10.11 of the Federal Court Rules: Culleton v Balwyn Nominees Pty Ltd (2017) 343 ALR 632; [2017] FCAFC 8 at [103] (Allsop CJ, Dowsett and Besanko JJ).
68. In this proceeding, Mr Manzo filed a Notice of Appearance and an affidavit on 1 February 2022.
69. On 7 April 2022, each of the documents listed in r 4.05 were posted to the address provided in Mr Manzo’s Notice of Appearance.
70. As such, any issue concerning personal service was overcome by operation of r 10.11 of the Federal Court Rules because, by operation of that rule, the creditor’s petition was taken to have been served personally on Mr Manzo on 1 February 2022.
71. For these reasons, the applicant complied with r 4.05 of the Federal Court (Bankruptcy) Rules.
72. Mr Manzo next submitted that the affidavit of service of the creditor’s petition was deficient because it did not “clearly [state] the form of service... [or] date of service” relied on by the applicant.
73. The applicant’s affidavit of service of the creditor’s petition refers to the method of service of the documents as being by email and post. However, as observed above, the creditor’s petition was taken to have been served under the Federal Court Rules. While this fact was not stated in the affidavit of service, this is a formal defect or irregularity within the meaning of s 306 of the Bankruptcy Act. Substantial injustice has not been caused by this defect or irregularity with the consequence that these proceedings are not invalidated.

Formal matters to be established by applicant

74. Section 43 of the Bankruptcy Act confers jurisdiction on the Court to make sequestration orders. For the reasons stated above, I am satisfied that Mr Manzo committed an act of bankruptcy on the date alleged in the amended creditor’s petition by failing to comply with the requirements of the bankruptcy notice on or before 6 June 2021.
75. For the reasons stated above, I am also satisfied that the creditor’s petition satisfies the requirements of s 44(1) of the Bankruptcy Act.
76. Furthermore, the creditor’s petition was verified by Mr Richard Cowen on 2 December 2021, a person who knows the relevant facts in accordance with s 47 of the Bankruptcy Act. This satisfies the requirements of s 52(1)(a) of the Bankruptcy Act.
77. For the reasons stated above, the creditor’s petition was served, and this was established by the evidence. This satisfies the requirements of s 52(1)(b) of the Bankruptcy Act.
78. As stated above, there is no dispute that Mr Manzo has not paid the judgment debt, and this was established by the evidence of Mr Cowen in his affidavit of 27 January 2023. This satisfies the requirements of s 52(1)(c) of the Bankruptcy Act.

WHETHER COURT SHOULD MAKE A SEQUESTRATION ORDER

79. The Court retains a discretion whether or not to make a sequestration order even when all of the jurisdictional requirements are established. This discretion is unfettered, and if Mr Manzo seeks to satisfy the Court under s 52(2) of the Bankruptcy Act that he is solvent or there is some “other sufficient cause” to dismiss the creditor’s petition, he bears the onus of satisfying the Court of those matters: Bechara at [27].

Whether Mr Manzo established solvency

80. A debtor is solvent “if, and only if, the person is able to pay all the person’s debts, as and when they become due and payable”: s 5(2) Bankruptcy Act.
81. As observed by the Full Court in Shaw v Yarranova Pty Ltd (2017) 252 FCR 267; [2017] FCAFC 88 (North, Perry and Charlesworth JJ) at [96]:

The test of ability to pay debts was stated by Barwick CJ in Sandell v Porter (1966) 115 CLR 666 at 670 as follows:

Insolvency is expressed in s 95 as an inability to pay debts as they fall due out of the debtor’s own money. But the debtor’s own moneys are not limited to his cash resources immediately available. They extend to moneys which he can procure by realization by sale or by mortgage or pledge of his assets within a relatively short time — relative to the nature and amount of the debts and to the circumstances, including the nature of the business, of the debtor. The conclusion of insolvency ought to be clear from a consideration of the debtor’s financial position in its entirety and generally speaking ought not to be drawn simply from evidence of a temporary lack of liquidity. It is the debtor’s inability, utilizing such cash resources as he has or can command through the use of his assets, to meet his debts as they fall due which indicates insolvency.

See also Francis v Eggleston Mitchell Lawyers Pty Ltd [2014] FCAFC 18 (Rares, Flick and Bromberg JJ) at [36].

82. In Australian Securities and Investments Commission v Forge (2003) 133 FCR 487; [2003] FCAFC 274, Branson and Stone JJ stated at [15] that:

...The conduct encompassed by s 40(1)(g), even where undertaken in respect of a final judgment or final order in respect of a debt not provable in bankruptcy, is an act which prima facie demonstrates insolvency. All persons are under an obligation to comply with final judgments or final orders. Failure to do so, especially after having been placed on notice that compliance is required by the party in whose favour the final judgment or final order was made, may be assumed to indicate an inability to do so; that is, to indicate insolvency.

83. Although the existence of a judgment debt is indicative, the court should still be provided the “fullest and best” evidence of the financial position of a debtor in order to determine whether he or she is solvent: Ace Contractors & Staff Pty Ltd v Westgarth Development Pty Ltd [1999] FCA 728 at [44] (Weinberg J).
84. In order to demonstrate solvency, Mr Manzo:

(1) deposed that he is solvent, that he has specialist expertise to depose to this, and that he has debtors and work in progress which exceed the amount of his debts;
(2) deposed that he has access to financial support from his mother and a family friend sufficient to repay his debts; and
(3) disputed characterising the amounts identified in the proofs of debt lodged with Mr Khatri as debts.

85. I will address these matters in turn.

Evidence relied upon in support of claimed solvency

86. For the following reasons, Mr Manzo failed to provide cogent evidence in support of his claimed solvency, being a matter on which he bears the onus.
87. First, Mr Manzo has failed to comply with his statutory obligation to make out and file with the Official Receiver a statement of affairs, and to furnish a copy of the statement to Mr Khatri, as required by s 54 of the Bankruptcy Act. Mr Manzo’s failure to comply with this obligation is a relevant factor in determining his solvency: see, eg, Toyota Finance at [84]–[86], [89]. This failure has hindered Mr Khatri’s investigations into Mr Manzo’s affairs. It also has the consequence that I cannot be satisfied that complete information about Mr Manzo’s debts is before the Court.
88. Second, by his affidavit material, Mr Manzo repeatedly deposed that he is solvent, but without exposing all of the facts on which his opinion is based, or the reasoning process which was engaged in for the purposes of reaching the stated opinion (which has the necessary consequence that his opinions can be given no weight). This is so irrespective of Mr Manzo’s qualifications to provide any such opinion.
89. Bald statements of solvency are insufficient to satisfy this Court as to solvency, “even if made by qualified accountants”: Ace Contractors at [44].
90. Third, Mr Khatri’s evidence was that he is unaware of any assets divisible in bankruptcy held by Mr Manzo.
91. Fourth, Mr Manzo did not provide detailed evidence of the type and current value of his assets, and the basis on which any value has been calculated. Further, although Mr Manzo challenges the amounts claimed in proofs of debt lodged with Mr Khatri (as referred to below), he does not depose that he has no other debts which are not the subject of proofs of debt.
92. Fifth, and leaving aside the judgment debt, Mr Khatri deposed to the receipt by him of two proofs of debt totalling $180,790.26.
93. The onus of showing that a proof of debt is excessive, and by how much, falls upon the debtor as part of demonstrating solvency: Thompson v Lane (Trustee) (No 3) [2022] FCA 128 at [80] (Logan J) approved in Thompson v Lane (Trustee) [2023] FCAFC 32 at [161] (Downes J).
94. The first proof of debt is in the amount of $150,842.26 (Scholz debt), of which the amount of $136,908.26 was the subject of final orders made in the court proceedings against Mr Scholz, which included costs orders. These final orders were the subject of an unsuccessful appeal to the Queensland District Court, at which further costs orders were made by the District Court against Mr Manzo. A portion of the Scholz debt is the subject of other bankruptcy proceedings in the South Australian Registry of this Court, in which yet further costs orders were made against Mr Manzo.
95. The majority of the Scholz debt is comprised of legal costs. For various reason, Mr Manzo asserted that these costs were unreasonable and should not be paid.
96. As to a portion of these costs ($21,688.65), Mr Manzo attested that he had “paid a qualified costs assessor” who reduced the costs by approximately 90%. However, such evidence carries no weight. That is because, not only is the costs assessor not identified but the opinion itself, the facts behind this opinion, and the reasoning process engaged in by the unidentified costs assessor were not established by the evidence.
97. As to the remaining legal costs, Mr Manzo complains that the legal costs are unassessed but has not adduced any evidence to demonstrate the amount by which the costs would be reduced if an assessment was undertaken. Further, Mr Manzo has never sought an assessment of these legal costs.
98. Mr Manzo also attested that the “judgement [sic] portion of only $36,893.50 is still subject to further appeal” but there is no documentary support for this assertion and, in any event, this relates to only part of the Scholz debt.
99. Finally, Mr Manzo asserts that the balance of the Scholz debt forms part of his damages claim against the applicant, but that does not lead to the result that the Scholz debt is not due and payable.
100. The second proof of debt is for the amount of $29,948.00, and is related to a dispute over racehorses owned by Mr Manzo which had been agisted on the property of Mr and Mrs Scarff (Scarff debt).
101. As to the Scarff debt, the amount claimed in the proof of debt appears to be comprised of agistment fees, plus interest and legal costs. In addressing the Scarff debt, Mr Manzo gave evidence that, “I ceased paying agistment fees given the fraudulent service and feed not being provided”. In truth, Mr Manzo’s argument in respect of this debt is, for the most part, directed to the existence of his counterclaim against Mr and Mrs Scarff. However, the existence of any such counterclaim does not establish that the Scarff debt is excessive or by how much.

Third party support

102. Mr Manzo submitted that he is solvent by virtue of his ability to access funds from his mother and a family friend.
103. The test of solvency is not adjudged exclusively by reference to the debtor’s own money and assets. In this regard, it is of assistance to have regard to authorities which address the issue of corporate solvency by reference to the ability of the corporation to obtain financial assistance from third parties. If, in the bankruptcy context, a debtor seeks to rely on proof of such financial assistance to establish solvency, this is a question to be answered by reference to “commercial realities”: Whitton as Trustee of the Estate of John Emmanuel Rose v Regis Towers Real Estate Pty Ltd (In Administration) (2007) 161 FCR 20; [2007] FCAFC 125 at [34]–[38] (Buchanan J, with whom Marshall and Tracey JJ agreed) approving Lewis v Doran (2004) 184 FLR 454; [2004] NSWSC 608 at [109]–[112], [116] (Palmer J).
104. The willingness of a third party to advance unsecured funds on a deferred payment arrangement must be “cogently demonstrated, if not as a matter of legal obligation, then as a matter of commercial reality”: Lewis at [113]. Where the financial support is provided by a source which cannot be compelled by legal arrangement, there should also be a degree of assuredness that the financial support is a commitment that will be forthcoming: Carna Group Pty Ltd v Griffin Coal Mining Company (No 6) (2021) 157 ACSR 224; [2021] FCA 1214 at [168] (McKerracher J) citing Chan v First Strategic Development Corporation Limited (in liq) [2015] QCA 28 at [43] (Morrison JA, with whom Gotterson and Boddice JJA agreed). The Court will generally be sceptical of a third party’s mere assertion of willingness to provide financial support: Lewis at [113].
105. In her affidavit, Ms Manzo stated:
     3. In particular, my Affidavit is to evidence that my son, Peter Bruce Manzo, has immediate access to sufficient cash funds to pay all debts, should he desire to do so, including the amount of the Default Judgment of $25,399.57 obtained by the Applicant, CSM Lawyers Pty Ltd (formerly TCS Solicitors Pty Ltd), as set out in their creditors petition.

...

5. I own my house at 178 Thomas Mitchell Road, Killarney Vale, New South Wales...
6. I have an existing ‘Equity Unlock Load for Seniors’ facility (ie. reverse mortgage) with the Commonwealth Bank of Australia which is only drawn down to less than approximately 25% of the value of my property, which has an amount exceeding $100,000 available in that facility upon my age-based draw down ratio.
7. I also have a Pensioner Security Account in my name with the Commonwealth Bank of Australia with a positive cash balance currently exceeding $20,000 available.

ACCESS TO IMMEDIATELY AVAILABLE FUNDS TO MEET DEBTS

8. My son has access to immediately available funds from me to meet all liabilities and I am willing to provide the funds required to meet any liabilities if he requests them.

106. Ms Manzo’s affidavit did not annex any documentary evidence to support the existence or value of her assets. Nor did she identify her debts or expose her general financial position such that her ability to provide financial support to Mr Manzo attained a “degree of assuredness”. This is especially having regard to events which have occurred subsequent to Ms Manzo having sworn her affidavit on 29 June 2022 (which are referred to below).
107. Mr Manzo’s affidavits of 17 February 2023 reiterate that Ms Manzo is willing to offer financial assistance to Mr Manzo, including by reference to “the reverse mortgage facility over her residential property”. In relation to the value of this facility, Mr Manzo asserts that the property is worth $900,000 and that the current balance of the drawdown facility is $230,000. Mr Manzo stated that the available funds from this facility “easily exceed $100,000”. In support of this, Mr Manzo annexed a screen capture of a “property value search” from domain.com, which is a residential and commercial real estate portal.
108. However, this evidence is insufficient to establish the value of any assets held by Ms Manzo. There is no evidence of the balance of Ms Manzo’s bank accounts. The property valuation provided in the screen capture annexed to Mr Manzo’s affidavit is not a formal valuation, and is of limited utility insofar as it only provides a range of possible values, with no identification of the facts on which the valuation is based or the identity of the person or persons who entered the valuation information (let alone their qualifications). Mr Manzo and Ms Manzo’s bald assertions as to the property’s value cannot be given any weight for similar reasons.
109. Mr Manzo appeared to acknowledge this deficiency in his evidence, stating that he was unable to obtain “an updated formal written valuation from an independent valuer or bank appointed valuer, or confirmation letter from [Ms Manzo’s] bank of the available cash balance”. Mr Manzo submitted that his inability to obtain this evidence was caused by his mother’s mobility, hearing and communication issues. Mr Manzo stated that these challenges make it difficult for Ms Manzo to communicate with her bank. Mr Manzo also noted that he does not have power of attorney or authority over Ms Manzo’s bank account. On 11 January 2023, Ms Manzo, who turns 89 this year, was admitted to a nursing home. All of these facts tend to indicate that timely access to or realisation of Ms Manzo’s assets so as to provide financial assistance to Mr Manzo would be problematic, assuming that it could be achieved at all. It also casts doubt on Ms Manzo’s ability to provide financial assistance to Mr Manzo in circumstances where her financial position is likely to have altered due to recent events.
110. For these reasons, I am not satisfied that Mr Manzo is solvent by reason of Ms Manzo’s offer of financial assistance.
111. Mr Manzo also deposed that his family friend, Ms Lynette Guglielmo, has arranged a bank account specifically for the purpose of providing him with financial support.
112. Mr Manzo annexed a copy of a letter from Ms Guglielmo dated 16 February 2023 which itself purported to attach a copy of a bank statement and copies of screen shots taken from a bank website. That letter stated:

Previously, I have offered to provide Peter Manzo with funds in the amount of $25,399.57, by way of gift or loan, to settle the judgment debt in the [judgment debt proceedings]...
Peter has requested me to provide evidence to include in his Affidavit to be filed 17 February 2023 that those funds are immediately available. Accordingly, I have set up a separate bank account styled “Financial Support for Peter Manzo” and transferred the full amount of $25,399.57 to establish that account.
...
The source of those funds is from my SMSF superannuation account, which currently has a minor portion of my superannuation invested as cash, with my available cash balance exceeding $300,000, and which I am able to draw upon whenever required having reached entitlement age and with my SMSF in retirement / pension mode.
Should my previous offer, or further financial support, be requested by Peter, I am in a financial position and willing to do so and to assist with immediately available cash funds.

113. The copy of the attached bank statement showed that, as at 15 February 2023, the amount of $25,399.57 was the balance of an account bearing the name “Financial Sup P Manzo”. One of the screenshots showed an unidentified account containing in excess of $360,000.
114. However, Ms Guglielmo did not provide an affidavit which deposed to the truth of the content of her letter, including the balance of her superannuation account (or, indeed, that the screenshot was of her superannuation account). It follows that the letter and its attachments fall foul of the hearsay rule within the meaning of s 59 of the Evidence Act , and so will not be admitted.
115. In any event, even if the evidence had established that Ms Guglielmo has provided financial support to Mr Manzo in the amount of $25,399.57, Mr Manzo’s debts are not confined to this amount. Although the extent of his debts are not known, including because of his failure to submit a statement of affairs, two proofs of debt have been submitted to Mr Khatri which total more than $180,000 and which have not been shown to be excessive by Mr Manzo.
116. Further, although Ms Guglielmo’s letter stated that she is willing and able to provide further funds, a mere assertion of a willingness to provide further funds is insufficient: Lewis at [113].
117. For these reasons, I am not satisfied that Mr Manzo is solvent by reason of Ms Guglielmo’s offer of financial assistance.

Contingent assets

118. Mr Manzo asserted that he has claims and counterclaims which qualify as “assets” for the purposes of assessing his solvency.

Counterclaim against Mr and Mrs Scarff

119. In relation to the proceedings which gave rise to the Scarff debt, Mr Manzo paid security of $12,715.00 into the District Court of Queensland. Mr Manzo submits that, as no steps have been taken by Mr and Mrs Scarff for three years, this proceeding should be treated as an “asset” comprised of his security deposit and the value of his counterclaim against Mr and Mrs Scarff.
120. However, while I accept that the amount paid into court by Mr Manzo might be an asset, the terms on which it was paid into court are not in evidence. In addition, this submission assumes that the amount paid into court is able to be accessed by and paid out to Mr Manzo, which assumption I am not prepared to make.
121. Further, I am unable to treat the counterclaim as an asset of any particular value. That is because there is, quite simply, inadequate evidence before me to make such a determination. Nor has Mr Manzo demonstrated that he has the financial ability to prosecute the counterclaim (including what those costs would be), when that counterclaim would be likely to result in a judgment, or that Mr and Mrs Scarff are likely to have any ability to pay any judgment entered against them on that counterclaim.
122. In any event, even if Mr Manzo had jumped all of these hurdles, it cannot be said that the funds resulting from the successful pursuit of the counterclaim are readily available such that Mr Manzo is able to pay his debts as and when they become due and payable: s 5(2) Bankruptcy Act.

Claim against applicant

123. Mr Manzo has brought a claim against the applicant in the Brisbane Magistrate’s Court, which, in addition to seeking approximately $108,000 as damages for negligence and breach of contract in connection with the legal services provided by the applicant, seeks “compensation” in two separate amounts of $150,000 under the “Australian Consumer Law (Qld)” and the “Competition and Consumer Act 2010 (Qld)”.
124. However, the statement of claim filed in the Magistrates Court does not plead the basis on which this quantum of compensation is being claimed. Indeed, the statement of claim does not plead, as a material fact, that loss or damage have been sustained by Mr Manzo as a consequence of the alleged “misleading and deceptive conduct” and “unconscionable conduct”, being loss which is in addition to the alleged loss associated with the claimed negligence and breach of contract.
125. Mr Manzo submitted to the effect that he had claimed these amounts because $150,000 was the maximum amount able to be claimed in the Magistrates Court. No submission was made by him that he had claimed this amount because it represented loss and damage sustained by him, or why that was the case. Pursuit of these claims is therefore tantamount to an abuse of process, and would be liable to be summarily dismissed or struck out if the proceeding was not already stayed. For that reason, the claim for “compensation” in two separate amounts of $150,000 in the claim against the applicant has no value and cannot be treated as an asset.
126. Otherwise, the value of Mr Manzo’s remaining claims against the applicant for negligence and breach of contract are, at best for him, a highly contingent asset which will be incapable of realisation for some months or years.
127. For these reasons, the existence of the claim against the applicant does not assist in demonstrating that Mr Manzo can pay his debts as and when they fall due, especially where the total amount of the proofs of debt received by Mr Khatri (other than the judgment debt) far exceeds $108,000.00 (being the value of the only arguably viable claim against the applicant).
128. Further and for the same reasons, I am not prepared to adjourn the hearing of this application, or of the hearing de novo of the creditor’s petition, until finalisation of Mr Manzo’s claim against the applicant (being one of the orders sought by Mr Manzo in the draft order handed up at the hearing).
129. In addition, I would not have granted an adjournment in circumstances where Mr Manzo has failed to demonstrate solvency and the matters required by s 52(1) of the Bankruptcy Act have been satisfied. Such a course would be against the public interest.

Whether other sufficient cause to dismiss creditor’s petition

130. Mr Manzo also advanced a number of disparate arguments which amounted to a contention that, for other sufficient cause, a sequestration order ought not be made and the creditor’s petition should be dismissed.
131. For the following reasons, Mr Manzo has failed to demonstrate “other sufficient cause” within the meaning of s 52(2)(b) of the Bankruptcy Act.

Invalidity of bankruptcy notice

132. Mr Manzo contended that the bankruptcy notice was invalid because the applicant’s conduct misled him to believe that the date of service of the bankruptcy notice was earlier than it was and this caused him to not file a valid application to set aside the bankruptcy notice. Mr Manzo described the applicant’s conduct as “deceitful”.
133. In support of these matters, Mr Manzo relied upon an email exchange with the applicant which commenced with an email from him dated 17 May 2021 in which he requested that the applicant withdraw its bankruptcy notice and consent in writing to an extension of time so that he could apply to set it aside. Relevantly, Mr Manzo stated in his email that he would have to file his application “within several days”, but the email did not specify the date by which he believed that it needed to be filed.
134. The applicant responded to Mr Manzo’s email on 18 May 2021 in the following terms:

We do not propose to engage in litigation by correspondence, save to say that we do not accept the legal or factual matters you raise [in your email]. Our position is that the Bankruptcy Notice has been properly served having regard to the Bankruptcy Regulations 2021 (Cth) and Acts Interpretation Act 1901 (Cth).
Accordingly, we intend to act on the Bankruptcy Notice in due course. For clarity, we do not consent to the extension you seek and will not withdraw the Bankruptcy Notice.

135. The thrust of Mr Manzo’s argument is that the applicant ought to have informed him that it would be relying on his email seeking an extension of time (dated 17 May 2021 but referring to receipt of the relevant documents on 16 May 2021) to establish the date of actual service of the bankruptcy notice (16 May 2021) rather than an earlier (deemed) date of service that he assumed applied instead. Mr Manzo also submitted that the applicant was aware that he had made an error, and that its failure to correct him should invalidate the notice.
136. However, this submission must be rejected. The contention that the applicant’s conduct was misleading or deceitful is baseless. There is no evidence to support an inference that the applicant was aware that Mr Manzo had made an error, and it was under no obligation to provide him with legal advice generally.
137. Further, the applicant’s email did no more than observe that the bankruptcy notice had been served in compliance with the relevant legislation (which was true) and advise Mr Manzo that it did not consent to the extension of time sought by him (which it was entitled to do).
138. It follows that the bankruptcy notice was not “invalid” as claimed and nor does this series of events demonstrate a proper basis to refuse to make a sequestration order.

Claim brought against the applicant

139. The existence of a claim that has not yet been determined may provide a basis upon which a judgment debtor may demonstrate that there is “other sufficient cause” as to why a sequestration order ought not be made and the petition dismissed, but it will depend on the circumstances. In Ling v Enrobook Pty Ltd [1997] FCA 226; (1997) 74 FCR 19 (Davies, Wilcox and Branson JJ), the Full Court observed at 25–26:

A review of the authorities discloses that in certain circumstances, but not in all circumstances, the fact that the debtor has pending before a court a legitimate claim to funds sufficient to satisfy the petitioning creditor’s debt will amount to “other sufficient cause” not to make a sequestration order. The circumstance that the legitimate claim of the debtor is one against the judgment creditor is likely to be a significant circumstance for the purposes of s 52(2)(b).
...
The authorities also show that satisfaction that the debtor is well advanced with litigation likely to result in the debtor being in a position to pay his or her debts may well provide a basis for a finding that there is a “sufficient cause” for a sequestration order not to be made. But the authorities do not suggest that it is in the public interest to allow insolvent debtors to prosecute litigation generally. They only recognise that it is not in the public interest for a debtor to be forced into bankruptcy by reason of a state of insolvency likely to be of only short duration.
(citations omitted, emphasis original.)

140. The claim brought by Mr Manzo against the applicant cannot be described as well advanced. Indeed, it does not appear to have proceeded beyond the pleading stage.
141. Further and for the reasons already given, aspects of the claim brought by Mr Manzo against the applicant and which form the basis for the claim for the bulk of the damages sought by him are liable to be dismissed summarily or struck out as being an abuse of process. They are, in short, untenable and embarrassing.
142. Tied to reliance on the existence of the claim itself is an argument by Mr Manzo that the petition is an abuse of process because it is designed to impede Mr Manzo advancing his claim. However, there is no substance to this argument, which rises no higher than Mr Manzo’s assertion. Further, in circumstances where the bankruptcy notice was served on Mr Manzo on 16 May 2021, and he commenced his claim against the applicant some three days later on 19 May 2021, I infer that Mr Manzo commenced his claim against the applicant to attempt to thwart the making of a sequestration order against his estate. If anything, this supports a conclusion that the claim brought by Mr Manzo is an abuse of process rather than the other way around.
143. For these reasons, the existence of the claim commenced by Mr Manzo against the applicant does not demonstrate other sufficient cause as to why a sequestration order ought not be made.

Misconduct of the applicant and Mr Khatri

144. Mr Manzo accused the applicant and Mr Khatri of misconduct, telling lies in the affidavit material filed by them, failing to comply with Notices to Produce, and unlawfully working in concert to Mr Manzo’s detriment.
145. None of these contentions were established by the evidence, and appear to be no more than assertion and speculation by Mr Manzo. For this reason, I am not persuaded that they demonstrate other sufficient cause as to why a sequestration order ought not be made.

CONCLUSION AND DISPOSITION

146. For these reasons, the registrar’s decision to make a sequestration order against the estate of Mr Manzo should be affirmed and the creditor’s petition should not be dismissed. Costs should follow the event and be treated as costs of the administration of the bankrupt estate.

I certify that the preceding one hundred and forty-six (146) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Downes.

Associate:

Dated: 21 March 2023