Bankruptcy – reviewing a sequestration order

A sequestration order is an order made by a court which makes a person bankrupt. This factsheet sets out the process for applying for a review of a sequestration order made by a Registrar of the Federal Circuit Court.

Before you decide whether to challenge a sequestration order by seeking a review, we suggest you consider the consequences of bankruptcy (see the Australian Financial Security Authority’s website).

In this factsheet:

  • “creditor” means the person who is owed money and brought the initial creditor’s petition.
  • “court” means the Federal Circuit Court.

Review

Most creditors petitions filed in the court are heard by a Registrar. The decision of a Registrar can be reviewed by a judge of the court if either party asks for this to happen. Where a Judge makes a sequestration order, that order can only be challenged via an appeal. That process is not covered by this fact sheet. Further information about appealing a decision of a Federal Circuit Judge can be found here: Appeals – Federal Circuit Court of Australia

An application for review is heard by way of a hearing de novo. This means that the judge will listen to the matter again from the beginning. The judge will then decide whether all the requirements for the making of a sequestration order are met. This means that to be successful in a review application you will need to have grounds to oppose the creditor’s petition. See our factsheet Bankruptcy – Opposing a creditors petition for more information on possible grounds.

Time limits

An application for review of a sequestration order must be made within 21 days from the date of the initial order. While you can ask the court for an extension of time, there is no guarantee that one will be given. If you are out of time to make an application to review a sequestration order, you may like to think about whether you have grounds to apply for an annulment of your bankruptcy (see LawRight’s factsheet Bankruptcy – Applying for annulment).

Costs

Even if you are successful in your application for review of the sequestration order, you may still be required to pay the legal costs of the other party, particularly if the creditor can show that the grounds on which you opposed the creditors petition during the application for review could have been raised when the creditors petition was originally heard by the Registrar.

How to apply

You can apply for a review of a sequestration order orally at the hearing where the order is made by asking the Registrar for a review. Alternatively, you can make a written application for a review after the hearing.

To make a written application you will need to complete the following forms:

Application

When you are preparing the Application for Review, you will be the Applicant and the creditor who brought the original creditors petition will be the Respondent. Under the ‘Orders sought’ section of the form, you will need to set out the orders you would like the Judge to make. For example:

  1. The orders made by Registrar Smith on 1 January 2015 in proceeding BRG00/2015 be set aside under the Federal Circuit Court of Australia Act 1999 (Cth) section 104(3).
  2. The creditors petition be dismissed.
  3. There be no order as to costs.

Notice to creditors

You will also need to prepare a Form 12 – Notice to creditors. This notifies your creditors that you are applying for a review of the sequestration order. You must give a copy of this Notice to every person/company you owe money to, not just the creditor who brought the original creditors petition.

Affidavit

You should also file an affidavit which sets out the grounds for review. The grounds for review can be any of the grounds that can be raised to oppose a creditor’s petition. For more information about these grounds, see LawRight’s factsheet Opposing a creditor’s petition.

An affidavit is a sworn statement of your evidence that supports your application for review. Affidavits must be sworn or affirmed before a qualified witness (such as Justice of the Peace or lawyer) before filing. See LawRight’s factsheet Drafting an affidavit.

Filing

Filing is the process of lodging your forms with the court and getting them stamped. You will need to do this once you have completed them. You can file your documents online or in person at the Federal Circuit Court Registry.

There will be a filing fee payable to lodge your application, though in certain circumstances you can apply for the fee to be waived. See our factsheet Fee waiver guide – Federal Circuit Court for more information.

Serving your documents

You will need to serve (give) a stamped copy of your Application for Review, and any other documents you file, on the original creditor. This needs to be done within 7 days before the date the court has scheduled for the hearing.

You will also need to give a copy to your trustee in bankruptcy and make sure to give a copy of the Notice to all of your creditors. Your trustee and creditors need to be served with these documents at least 7 days before the hearing of the application.

Other documents & evidence

As stated above, you will need grounds to oppose the creditors petition to be successful in your application for review. If you filed documents to oppose the petition in the first instance you should review these documents to make sure they are sufficient to show that a sequestration should not be made against you (see our factsheet Bankruptcy – Opposing a creditors petition for further information about the documents you should have filed).

If you did not file any documents, or filed insufficient documents, for the original hearing of the creditor’s petition you will need to do so before the hearing of your Application for Review. If you wish to file additional evidence that was not before the Registrar who made the original decision, you will need permission of the court to file new evidence by way of affidavit in the review proceedings. You should prepare all the necessary documents, including a comprehensive affidavit and take the completed documents to the first hearing and ask the judge for permission to ‘read and file’ them during the hearing

Financial advice

For free financial counselling you can contact:


Disclaimer

The information in this resource is for general information purposes only and should not be relied on as legal advice. If you need legal advice, please contact LawRight or another lawyer. LawRight can only give advice to people who are eligible for our services.