Serobian v CBA and Serobian v CBA [2011] FMCA 779 (13 September 2011)

Last Updated: 24 October 2011

FEDERAL MAGISTRATES COURT OF AUSTRALIA

SEROBIAN v CBA and SEROBIAN v CBA

[2011] FMCA 779

BANKRUPTCY – Applications by husband and wife for extension of time and review of sequestration orders or for annulment of bankruptcies – applicable principles.

Bankruptcy Act 1966 (Cth), ss.41, 44, 52, 54, 153B Federal Magistrates Act 1999 (Cth), s.104 Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth), rr.2.03, 7.02, 7.03, 7.04, 7.06

Boles v Official Trustee in Bankruptcy (2001) 183 ALR 239; [2001] FCA 639 Grundy v Wattyl Australia Proprietary Limited [2002] FCA 1480 Khan v Kerr [2007] FMCA 512 Rigg v Baker (2006) 155 FCR 531; [2006] FCAFC 179 Wren v Mahony (1972) 126 CLR 212; [1972] HCA 5

Applicant:

CHRISTINE SEROBIAN

Respondent:

COMMONWEALTH BANK OF AUSTRALIA

File Number:

SYG 429 of 2011

Applicant:

SHAHEN SEROBIAN

Respondent:

COMMONWEALTH BANK OF AUSTRALIA

File Number:

SYG 430 of 2011

Judgment of:

Barnes FM

Hearing date:

13 September 2011

Delivered at:

Sydney

Delivered on:

13 September 2011

REPRESENTATION

Applicants:

Mrs Serobian (for herself and for Mr Serobian)

Solicitors for the Respondent:

Henry Davis York

ORDERS

(1) The application of Christine Serobian of 24 August 2011 be dismissed.
(2) The costs of the respondent creditor be taxed and paid out of the bankrupt estate of Christine Serobian in accordance with the Bankruptcy Act 1966 (Cth).
(3) The application of Shahen Serobian of 24 August 2011 be dismissed.
(4) The costs of the respondent creditor be taxed and paid out of the bankrupt estate of Shahen Serobian in accordance with the Bankruptcy Act 1966 (Cth).

FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY

SYG 429 of 2011

CHRISTINE SEROBIAN

Applicant

And

COMMONWEALTH BANK OF AUSTRALIA

Respondent

SYG 430 of 2011

SHAHEN SEROBIAN

Applicant

And

COMMONWEALTH BANK OF AUSTRALIA

Respondent

REASONS FOR JUDGMENT

(Revised from Transcript)

1. Before the court are two applications filed on 24 August 2011 for extensions of time and for review of sequestration orders or, in the alternative, for annulment of the respective bankruptcies of the applicants. The applicants are husband and wife. The first application is in matter SYG430 of 2011, Commonwealth Bank of Australia v Shahen Serobian. The second application is in matter SYG429 of 2011, Commonwealth Bank of Australia v Christine Serobian. Mr Serobian and Mrs Serobian seek review of sequestration orders made against their respective estates by a Registrar of this court on 17 June 2011. These applications raise in essence the same issues. They were heard together and this judgment relates to both matters.
2. The evidence in support of the applications for an extension of time and more generally in relation to the applications for review of the sequestration orders is in all significant relevant respects to the same effect. The dates of the bankruptcy notices and the creditor’s petitions, and the details of the debt that formed the basis for the bankruptcy notices and the creditor’s petitions are the same in each case. The evidence relied on by each applicant in relation to each review consists of two affidavits of Mrs Serobian. With leave of the court Mrs Serobian appeared both for herself and for her husband.
3. I note at the outset that orders are also sought for examination of the creditor in regards to the sale of properties. The court was not addressed on whether it could or should make such an order in proceedings seeking review of sequestration orders or annulment.
   It has not been established that such orders should be made. Nor is it necessary for orders to be made for filing of “further forms as the court may feel fit” as was also sought by the applicants.
4. The issue of filing of further forms does, however, raise a preliminary matter. Under the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth) an application for review of a sequestration order and an application for annulment must comply with the provisions of Part 7 of the Rules. Such applications must be served on the trustee of the estate of the bankrupt at least seven days before the hearing date (see r.7.02(2) and r.7.06(2)). There was no evidence from either of the Serobians as to service on the trustee. However I accept on the basis of the evidence from the respondent creditor, in particular the affidavit of Anna Simmons sworn on 5 September 2011, that the trustee in bankruptcy of the estates of each of the Serobians has been made aware of and has been served with the documents that the applicants rely on in these proceedings. There is no evidence of any notice of either application having been given to any known creditor as required under r.7.03 and r.7.06(3). There is no evidence before the court of any creditors other than the Commonwealth Bank of Australia, the petitioning creditor (the Bank).
5. If directed by the court the trustee must prepare a report in relation to the bankrupt for the assistance of the court in relation to both a review and an annulment (r.7.04 and r.7.06(6)). That has not occurred in this case. I am not inclined to require such a report in either case. Mrs Serobian has conceded from the bar table that she and her husband have not filed statements of affairs with the trustee as required under the provisions of s.54 of the Bankruptcy Act 1966 (Cth). Ms Simmons attested to the fact that the trustee had been served with the current applications and that the trustees’ office had advised her on 30 August 2011 that this was not the first contact the trustee had with the Serobians since his appointment. The trustee’s office told Ms Simmons that they had met with the Serobians a few weeks earlier, but that the Serobians had not provided statements of affairs.
6. On 31 August 2011 the trustee’s office confirmed they had met with the Serobians on 17 August 2011, that they had answered questions and provided some documents, but not statements of affairs, although they promised they would do so. That has not occurred.
7. In these circumstances and given that neither applicant sought to put before the court (other than in what could be seen as a most indirect manner) proper evidence in relation to their solvency, it is appropriate not to direct the trustee to prepare a report and also to dispense with the requirement of service of notice to creditors and of evidence.
8. An application for review of a decision of a Registrar to make a sequestration order is an application made pursuant to s.104 of the Federal Magistrates Act 1999 (Cth). Such an application must be made within the time prescribed by the rules of court or within any further time allowed in accordance with the rules. Relevantly, r.2.03 of the Federal Magistrates Court (Bankruptcy) Rules provides that such applications are to be made within 21 days after the day on which the power in question was exercised.
9. Neither application was filed within 21 days from the making of the sequestration orders on 17 June 2011. The applications were filed on 24 August 2011. Any explanation given by the applicants for this delay is relevant not only to whether or not an extension of time should be granted but also more generally to the discretionary considerations that arise in relation to an application for annulment.
10. Neither of Mr or Mrs Serobian attended the hearing of the creditor’s petitions on 17 June 2011. Mrs Serobian gave evidence in both her and her husband’s applications. There is no evidence from Mr Serobian before the court, either in relation to his absence from the hearing on 17 June 2011, the delay in seeking review of the sequestration order or otherwise.
11. Mrs Serobian was not required for cross-examination. Her evidence is that she had “not been aware” that their case was in court on 17 June 2011, that she had been “very ill in the last few months” and had been “bed bound”, that she could not “fulfil [her] duties in regards to court or paperwork as [she had] been acting for [her] husband and [herself]”. Mrs Serobian also attested that “I believe my husband...has also been very sick and incapable” and that she was under pressure and suffering stress in the circumstances that have occurred in relation to the loss of their assets.
12. Annexed to her identically worded affidavits in each matter are copies of Centrelink medical certificates provided in relation to fitness for work or study. These medical certificates do not address the fitness of either Mr or Mrs Serobian to attend court on 17 June 2011 or whether their medical conditions provide an explanation for their delay in seeking review of the sequestration orders. As discussed below each of the Serobians was served with the creditor’s petition and accompanying documents and notified of the hearing date.
13. Even if Mrs Serobian was not “aware” of the fact that their case was in court on 17 June 2011 (a matter discussed further below) there is no explanation for the length of time that passed before the applications for review were filed. The evidence is that there was a meeting between the Serobians and their trustee in bankruptcy as at 17 August 2011. They were clearly aware that they were bankrupt some time prior to instituting these proceedings.
14. I have borne in mind in relation to the applications for an extension of time that it is also appropriate to take into account all of the circumstances of the case (see Khan v Kerr [2007] FMCA 512).
15. The prima facie rule is that where such proceedings are commenced outside a prescribed period they will not be entertained, because bankruptcy administration must begin promptly. If bankruptcy administrations are to be at risk of termination months after they have begun then, as Downes J stated in Grundy v Wattyl Australia Proprietary Limited [2002] FCA 1480 at [10], issues would arise as to how intervening costs incurred by the trustees were to be met and problems could arise with respect to the proper administration of bankrupt estates.
16. In any event, in this case the main issue of significance is the merits of the grounds on which the applicants seek to rely in relation to the application for review. These are, in effect, the same matters raised in relation to the applications for annulment.
17. The annulment applications are not subject to the same time limit and need for an extension of time. In this case it is convenient to return to the applications for an extension of time within which to seek review of the sequestration orders after considering first the merits of the applications for annulment.
18. The applications for annulment are made pursuant to s.153B of the Bankruptcy Act which relevantly provides that “If the Court is satisfied that a sequestration order ought not to have been made...the Court may make an order annulling the bankruptcy”. The authorities in relation to when a sequestration order “ought not to have been made” were not addressed in submissions, either by the applicants who are self-represented or by the respondent. However it is well-established that a judge, or in this case a registrar, ought not to have made a sequestration order only if that judicial officer was in the circumstances bound not to make the order. There is no power to annul a valid sequestration order without observing the very careful provisions applicable in an application for an annulment. If it was open for the judicial officer to make an order in the exercise of discretion, it can only be said that the order ought not to have been made if none of the circumstances could justify the making of a sequestration order (see Boles v Official Trustee in Bankruptcy (2001) 183 ALR 239; [2001] FCA 639 at [16]).
19. The test will not be satisfied, and this is relevant to some of the contentions that may be intended to be raised by the applicants, by merely showing that some alternative course could have been taken, such as some other action by a creditor. Moreover if, as in this case, a bankrupt did not appear at the hearing at which the sequestration order was made then this absence needs to be explained. As French J pointed out in Rigg v Baker (2006) 155 FCR 531; [2006] FCAFC 179, where a party does not appear at the hearing of a creditor’s petition and does not take any step to oppose the making of the sequestration order, there is a significant, if not insuperable, obstacle raised to the proposition that a registrar or judge was bound not to make the sequestration order.
20. Regard can be had to evidence that goes beyond what was before the registrar at the time of making of the sequestration order. I have considered whether there is anything in the material before the court that is such as to warrant an annulment on any of the bases sought by Mr and Mrs Serobian in relation to either of their applications.
21. First, the applicants appear to take issue with the fact that the creditor’s petitions in their original form each bore a hearing date of 15 April 2011. That is so. However it is also apparent from the material before the court that by that time the petitioning creditor had not been able to serve either of Mr or Mrs Serobian and sought orders for substituted service. There is evidence of affidavits of attempted service relied on in the application for substituted service of the creditor’s petition on each of the Serobians.
22. The orders for substituted service made by Registrar Hannigan on 5 May 2011 in each matter dispensed with personal service of each creditor’s petition and copies of the accompanying documentation. Orders were made that in place of personal service a copy of the creditor’s petition and accompanying documentation and a sealed copy of the order be served by the applicant creditor by prepaid ordinary post addressed to each respondent debtor at specified addresses in Cranebrook and Ermington; by email to a specified email address; and, in the case of Mr Serobian, attaching a letter to his wife asking her to bring the documents to his attention, and also by sending text messages, including specified messages to Mrs Serobian at the specified mobile telephone number in relation to the whereabouts of documentation including the creditor’s petition both for her and separately for her husband.
23. Those orders provided that each creditor’s petition should be deemed to be served on each respondent seven days after service in compliance with the orders. Relevantly, the hearing date for each petition was amended to 9.45 am on 17 June 2011 at John Maddison Tower, 88 Goulburn Street, Sydney 2000.
24. I am satisfied on the basis of the affidavit evidence before me (in particular the affidavit of Ms Simmons sworn on 17 June 2011) that each creditor’s petition, accompanying documentation, and copies of the orders for substituted service were served on each of Mr and Mrs Serobian in accordance with the orders for substituted service.
25. It is the case that the initial attempt to comply with the orders for substituted service by the solicitor for the petitioning creditor omitted service of a copy of the service order. However, when the solicitor for the creditor received a copy of the service orders and noted that the service orders also needed to be served, there was fresh service on each of the debtors in accordance with the orders for substituted service including by causing the petition, specified accompanying documents and the service orders to be sent by post to each of the addresses provided for together with accompanying letters. Copies of the letters are in evidence. They state clearly the date, time and place for hearing of each creditor’s petition. In addition, in accordance with the orders, emails and text messages were sent to Mrs Serobian.
26. Mrs Serobian sought to put before the court a copy of an email which she said she sent to the solicitor for the Bank on 16 May 2011 seeking that mail not be sent to the Ermington address. That was an address required for service by the orders for substituted service. The documents had already been sent by that time. Moreover what this email makes clear is that Mrs Serobian had received an email from the Bank’s solicitor to which she responded. It does not go to show that there was a failure to comply with the orders for substituted service.
27. The fact that Mrs Serobian would have preferred service in some other way does not change what is in issue, which is whether there was any defect in service of the creditor’s petitions and supporting documentation such as to warrant either an annulment or such as to mean that I would not be satisfied that the requirements of s.52(1) of the Bankruptcy Act were met. The Serobians’ concerns in that respect do not establish either of those propositions.
28. Mrs Serobian also sought to put before the court a handwritten note which she said was the full content of a text message she had sent to the solicitor for the Bank on 11 May 2011. There is some difficulty with the form of this document. In any event, taken at its highest all that it would do of relevance is to indicate that Mrs Serobian was in receipt of a text message that had been sent to her in partial compliance with the orders for substituted service.
29. The material before the court does not establish that there was a failure to comply with the orders for substituted service. I am satisfied that service was effected in accordance with such orders. Nor does the evidence establish that the Serobians had not actually received the documents that were served on them (in particular the creditor’s petitions) by substituted service.
30. Even accepting that for some reason Mrs Serobian was confused and in this sense was not “aware” that the case was in court on 17 June 2011 (given that she was not cross-examined and that is her affidavit evidence), her non-appearance and that of Mr Serobian is not of itself or in conjunction with all the other circumstances a reason for being satisfied that either sequestration order ought not to have been made. There is no evidence from her husband in relation to his absence from court.
31. Further, the evidence before the court in relation to the financial position of Mr and Mrs Serobian is not such as to establish that either of them are or were solvent. The applicants have not adduced evidence that they were solvent other than to claim that had the Bank sold their properties at higher prices it would have owed them money.
32. The applicant bears the onus of proof to establish solvency in the context of an annulment application (just as the applicant bears the onus in the context of a review of the sequestration order to establish that he or she is able to pay her debts within the sense provided for in s.52(2)(a) of the Bankruptcy Act). It is relevant to have regard to whether all the facts and circumstances are before the court in relation to either applicant’s financial position. In this case it cannot be said that all the facts are before the court in relation to either applicant’s financial position. As indicated above, neither of them have filed statements of affairs and the affidavit evidence does not sufficiently address matters others than their indebtedness to the Bank and general claims about Mrs Serobian’s belief about the total value of their assets and their approximate debt to the Bank. Hence it is not possible to be satisfied that either sequestration order ought not to have been made on the ground of solvency (see Khan v Kerr [2007] FMCA 512).
33. The main contention made by Mrs Serobian appears to take issue with the conduct of the Bank, which had security over a number of properties which she and her husband owned (although it appears from the material before the court that some of these may have been properties in a corporate name). Mrs Serobian takes issue with the fact that these properties were sold for amounts that were less than, in some cases significantly less than the valuations which Mrs Serobian says were obtained by the Bank in or around March 2007 and which formed the basis on which loans were made to Mr and Mrs Serobian.
34. It is relevant first that the debt on which each bankruptcy notice was based and which formed the basis for each creditor’s petition was a debt based on a judgment of the Supreme Court of New South Wales made on 1 May 2009 and entered on 13 May 2009 in proceedings between the Bank and the Serobians. That judgment gave the Bank possession of the property known as 30A Addison Road, Manly and in addition ordered judgment for the Bank against each of Mr and Mrs Serobian jointly and severally in the amount of $8,197,738.30.
35. Bankruptcy notices were issued on 19 August 2010 on the basis of that judgment. Each annexed a copy of the judgment, but gave credit in the calculation of the debt sought to be relied on for an amount of $4,151,813.83 received by the Bank on sale of the Addison Road property (leaving a debt of $4,045,924.47). The bankruptcy notices were served personally on each of the Serobians on 30 August 2011.
36. In March 2007 a valuation report prepared for the Bank in relation to the property at 30A Addison Road, Manly provided a valuation of $7,900,000. However that property was sold on 5 December 2009 for $4,265,000. As the bank advised the Serobians in a letter of 10 October 2010, following payment of costs and sale expenses the net proceeds of sale were $4,151,813.83 (the amount “credited” in the bankruptcy notices).
37. Mr and Mrs Serobian had obtained a marketing proposal from a real estate agent in relation to the possible sale of that property in September 2009 (notwithstanding the May 2009 order giving the Bank possession of the property). Reliance appears to be based on the 2007 valuation and fact that in that marketing proposal the estate agent, LJ Hooker Manly, stated:
    • We see a likely achievement around $6 million. At this level it is difficult to be more precise, but the market activity at this level has increased significantly in recent weeks, the price achieved in the properties listed below reflects that activity.

The applicants sought to make much of the fact that the sale prices achieved for certain properties listed in that marketing proposal were higher than the amount actually achieved for 30A Addison Road, Manly as well as the discrepancy between the 2007 valuation and the 2009 sale price. There is, however, no 2009 valuation evidence before the court. However as discussed further below this evidence does not establish a basis for annulment or other sufficient cause for a sequestration order not to be made.

38. Mrs Serobian also suggested that “allowance” ought to have been made for amounts received by the Bank on the sale of other properties owned by herself and her husband. It has not been established that the debt on which the petitioning creditor relies was not owing on this basis. I accept the evidence of Ms Simmons and Ms Milivojevic about the current amounts owing in respect of the debt that formed the basis for the bankruptcy notices. The total indebtedness of the Serobians to the Bank and the manner in which this was calculated is set out in Ms Simmons’ affidavit and was advised to the Serobians.
39. The Serobians were directors and shareholders of Schypsl Pty Ltd (in liquidation). From December 2004 on the Bank advanced over $11 million to the Serobians and to Schypsl secured by mortgages over a number of properties. On default the Bank took possession of the properties which it or receivers sold. The proceeds of each sale were applied against the amount owing to the Bank under the facilities.
    As at 5 September 2011 the total amount owing by the Serobians to the Bank was more than $6,387,000 as evidenced by account statements. Properties in Cranebrook and The Entrance were sold before the judgment of Hammerschlag J which formed the basis for the bankruptcy notice, which in any event related to the Addison Road property. It has not been established that any net proceeds of such sales had to be deducted from the debt that formed the basis for the bankruptcy notices.
40. An Ermington property sold thereafter was a property of Schypsl. There is no evidence to establish that allowance should be made for any net proceeds of sale of this property in the creditor’s petition or bankruptcy notices. In any event, if it is intended to take issue with the bankruptcy notices, there is no suggestion of any notice of overstatement having been given under s.41(5) of the Bankruptcy Act.
41. The evidence is not such as to satisfy me that there is not an indebtedness to the Bank sufficient to satisfy the requirement of s.44 of the Bankruptcy Act that there be owed by each debtor to the petitioning creditor a debt that amounts to $5,000.
42. More generally, the applicants’ claims that the Bank sold properties at less than their earlier valuations does not establish that the applicants do not owe money to the Bank or that the Bank owes them money. Neither does it amount to other sufficient cause not to make the sequestration orders or is such as to warrant an annulment.
43. It may be that the applicants are asking the court to go behind the judgment which formed the basis for the bankruptcy notice. It seemed to be submitted that Hammerschlag J did not have adequate or sufficient evidence before him in relation to the precise allocation of receipts by the bank to the indebtedness of Mr and Mrs Serobian and that this in some way affected the accuracy of the calculation of the debt due in the judgment of 1 May 2009.
44. The court has power on the hearing of a creditor’s petition (or on review) to accept the evidence before it as evidence of the existence of a debt and to be satisfied on the basis of the creditor’s evidence, including the final affidavit of debt, that the debtor owes it a debt.
    A final affidavit of debt was filed today in court in each of the matters.
45. Whether the court should accept a creditor’s judgment as proof of the debt relied on to ground the creditor’s petition is a matter of discretion. The court’s discretion to accept a judgment as satisfactory proof of the debt is not well exercised where substantial reasons are given for questioning whether behind that judgment there was in truth and reality a debt due, as Barwick CJ stated in Wren v Mahony (1972) 126 CLR 212; [1972] HCA 5. However, going behind a judgment will not be done as a matter of course. There must be substantial reasons for doubting whether there is really a debt due to the creditor that exceeds the amount provided for in s.44 of the Act. It is only appropriate to go behind the judgment if there are substantial reasons for doubting whether there is in fact any debt due.
46. The judgment in question was not a default judgment. There is no suggestion of any fresh evidence or impropriety. There has been a trial of all the issues. Insofar as there appears to be some suggestion of fraud (an issue to which I will return), it is not established on the evidence before the court.
47. Moreover Mr and Mrs Serobian had and took the opportunity to appeal from the judgment that is the basis for the debt on which the petitioning creditor relies. What occurred in that respect is set out in the affidavit of Ms Simmons sworn on 5 September 2011 and the accompanying documentation before the court.
48. In the proceedings in question there was a hearing over 11 days. The NSW Supreme Court found the Bank was entitled to judgment. Judgment was given on 1 May 2009.
49. On 10 August 2010 the Court of Appeal dismissed an appeal brought by the Serobians in respect of that decision. On 23 August 2010 the Serobians filed a notice of motion in the Court of Appeal seeking, among other things, to set aside the appeal judgment. On 7 September 2010 they filed an application for special leave to appeal to the High Court of Australia. Thereafter the bankruptcy notices were served, although the creditor informed the debtors by letter of 10 September 2010 that no action would be taken until the outstanding matter of the notice of motion was resolved.
50. On 9 February 2011 the High Court dismissed the application for special leave to appeal. The motion in the Court of Appeal was heard on 10 March 2011 before three judges. It was dismissed.
51. In other words, the applicants have had ample opportunity to raise any issues in relation to the judgment that forms the basis for the creditor’s petitions. I am not satisfied that the arguments that are now raised by the applicants that might be seen to be taking issue with the basis for the judgment or the calculation of the debt due warrant going behind the judgment.
52. In particular, insofar as the applicants take issue with the valuations obtained by the Bank and the subsequent sale of properties at a lesser amount then the amount in the valuation (in particular the Addison Road property), the fact that a valuation was obtained in 2007 and that two years later the property was sold for a lesser amount does not of itself establish that there has been some conduct on the part of the creditor such as to amount to other sufficient cause or a basis on which a bankruptcy should be annulled. The nature and extent of the evidence before the court is simply not enough to establish the contentions that the applicants make in that respect. They submitted that in some way they should be seen as not owing a debt to the Bank because if the properties had been sold at the valuations obtained at the time of loans, then on balance they would not owe the Bank money. Even if that mathematical calculation is correct it does not mean that the Serobians do not in fact owe the debt that forms the basis for the bankruptcy notices.
53. It has not been established either that the court should go behind the judgment or that any action, fraud or other impropriety on the part of the Bank is such as to warrant annulling either bankruptcy. It has not been established that the fact of sales at lesser values is a basis on which the sequestration order ought not to have been made had that information been available at the time at which the sequestration order was made. It is understandable that debtors may feel upset by the fact that properties have been sold for less than valuations on which loans were made to them, but that fact (and the emotional impact on the applicants of the consequences of such circumstances) is not such as to satisfy me, either alone or in conjunction with all the other material before the court, that the sequestration orders ought not to be made.
54. Mrs Serobian appeared to claim that she had not received adequate documentation from the Bank in relation to the precise amount received on sale of all their properties. That is of peripheral, if any, relevance in these proceedings. In any event I note that it appears that a statement to that effect was provided to her in October 2010 in the course of Supreme Court proceedings by Mr and Mrs Serobian described in the affidavit of Ms Simmons as the “fraud proceedings” commenced by the Serobians on 9 October 2009 making various allegations concerning the conduct of the Bank.
55. Those proceedings are relevant insofar as the applicants also appear to seek to raise in these proceedings some allegation of fraud on the part of the Bank. In those proceedings the Bank applied on three occasions for the statement of claim to be struck out as an abuse of process.
    On the first two occasions the Serobians were given the opportunity to replead, but ultimately on 8 November 2010 the Supreme Court dismissed the statement of claim and made orders preventing the Serobians from filing another statement of claim seeking the same relief, or relief based on the same material facts, without the leave of the court or unless the statement of claim was endorsed by a legal practitioner.
56. If there was any substance in the claims that the applicants seek to make in relation to an asserted fraud on the part of the Bank, they have had the opportunity to take proceedings in which to air such grievances. The material that is before this court is not such as to establish an abuse of process or some other basis on which the ground that a sequestration order ought not to have been made would be established. It was generally contended that the Bank was careless as well as fraudulent. The fact of the sales below earlier valuations is not of itself such as to establish either fraud or negligence or anything analogous on the part of the Bank such as to warrant that the sequestration orders ought not to have been made or, indeed, other sufficient cause within s.52(2) of the Act.
57. Mrs Serobian contended that the affidavit of Ms Simmons did not address all of the specific issues raised by her in the affidavit she filed in support of her application for review and annulment. However the applicant bears the onus in relation to an annulment application and in relation to s.52(2) matters. It is for the creditor to put before the court the matters referred to in s.52(1) of the Act. That has been done and the concerns that Mrs Serobian raises do not satisfy me that the sequestration order ought not to have been made. Rather, they appear to reflect something of a misunderstanding about the nature of the proceedings that are presently before this court.
58. I have borne in mind that an annulment under s.153B of the Act is discretionary, but in this case the applicants have not established any basis on which I can be satisfied that the sequestration order ought not to have been made. It is therefore not necessary for me to consider as a matter of discretion whether it is appropriate to make an annulment order. The applications for annulment should be dismissed.
59. As to the application for an extension of time and review of the sequestration orders, Mrs Serobian’s affidavit evidence about her lack of awareness of the time of the hearing, notwithstanding the evidence of service of the creditor’s petition in accordance with orders for substituted service, is unchallenged. It must be said however that her explanation for the delay thereafter is in very vague and general terms, referring generally to her illness in the last few months and having been bed-bound and also suggesting that her husband has been sick and incapable. There is no evidence from Mr Serobian in that respect. The Centrelink medical certificates addressing fitness for work are difficult to read and do not address the ability or fitness of either of the applicants to make an application for review of the sequestration orders.
60. There is not full evidence in relation to solvency before the court and such evidence as there is does not establish that either applicant is able to pay his or her debts within s.52(2)(a) of the Act. As set out above this is not a case in which I can be satisfied on the evidence before the court that for other sufficient cause a sequestration order ought not to be made.
61. I have borne in mind that the making of a sequestration order is a serious step altering the status of an individual and that prima facie if such an order is to be challenged it should be made in a timely and prompt manner as well as the fact that there is no substance in the grounds on which the applicants seek to challenge the sequestration order.
62. In all the circumstances I am not persuaded that any purpose would be served or that it is in the interests of the administration of justice that an extension of time within which to make a review application should be granted to either applicant. Hence the applications should be dismissed.

I certify that the preceding sixty-two (62) paragraphs are a true copy of the reasons for judgment of Barnes FM

Associate:

Date: 7 October 2011