Does someone owe you money? Prima Facie Rights to a Sequestration Order.

Monday , 29, February 2016 Leave a comment

CASE :  Baycorp Collections PDL (Australia) Pty Ltd v Ghosh (No. 2) [2016] FCCA 240.

You can apply to a Court for a sequestration (Sequestration (in law) is the act of removing, separating, or seizing anything) order to get a Court Order to Seize property from the guy who owes you money.

In order for a successful sequestration order you need to file the correct  affidavits as per the rules under the Bankruptcy Act before the hearing.

In particular you will need to have all required documents served upon the debtor, perform the required searches of the National Personal and Insolvency Index and show that the debt was still owed.[1]

As a result if you can show the Court that you have met the above requirement, you would be deemed to have proved the matters required under section 52(1) of the Bankruptcy Act 1966 and ipso facto a prima facie right to the sequestration order.

The person who owes you money can object to the Court asking the Court to decline to issue the Sequestration order,  if the debtor can show that he is able to pay the debts and there is sufficient cause that the order should not be made, failing which the Court will grant the order.[2]

This case rearrirmed the decision of Sanders v Sanders in that  when you have a prima facie right to a sequestration order,  the Court will grant that order unless the person you are seeking the order against can show good cause why the Court should not issue the order.[3]

CASE: Shaw v Yarranova Pty Ltd [2016] FCA 88

In Yarranova the Court heard an application to annul bankruptcy and sequestration order.[4]

In doing so they considered whether the applicant was indemnified from paying debts set out in bankruptcy notice and creditor’s petition.  The Court also considered whether Yarranova lacked legal standing to be named as creditor and whether Shaw was solvent (as indicated above this is a basis of an objection).

The Court also looked at its ability to exercise discretion in looking behind the judgment upon which sequestration order based and whether solicitors for Yarranova had authority to act.

Unfortunately once more it was decided in favor of the  sequestration order proving what a powerful legal remedy it can be.


[1] Qantas Airways Limited v Gama [2008] FCAFC 69 (2 May 2008).

[2] Bankruptcy Act 1966, s52(2).

[3] Knudsen & Yates trading as The Hargreaves Practice, inthe matter of Sanders v Sanders [2003] FCA 1079 (9 October 2003)

[4] Shaw v Yarranova Pty Ltd [2016] FCA 88


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