Background
In 2000, David Hodge and his wife guaranteed a $504,000 commercial loan facility made by Challenger Managed Investments Ltd to their vehicle spare parts company, Mackay Spare Parts (Trading) Pty Ltd, and granted a registered mortgage over Mackay properties as security. After that company was wound up in 2004, a successor entity — Mackay Spare Parts Pty Ltd (MSP) — assumed the business and the loan obligations in what the trial judge later characterised as a classic “phoenix” arrangement. The loan was subsequently refinanced to $1 million in 2007, with the Hodges remaining as mortgagors and guarantors. MSP was itself wound up in 2014 without repaying the facility, and the loan and mortgage were assigned to Perpetual Trustee Company Ltd.
Perpetual commenced enforcement proceedings against Mr and Mrs Hodge in 2014. Following a trial in September 2017, the Supreme Court of Queensland gave judgment for Perpetual under the guarantee and ordered possession of the mortgaged properties (Perpetual Trustee Co Ltd v Hodge & Anor [2017] QSC 268). Within a month of that judgment — on 13 December 2017 — sequestration orders were made against both Mr and Mrs Hodge, rendering them undischarged bankrupts. A subsequent appeal lodged by Mrs Hodge was struck out in 2022 for want of prosecution, and the properties were sold.
On 8 December 2025, Mr Hodge filed an originating application seeking to set aside the 2017 judgment on grounds of fraud and newly discovered facts, and claiming consequential declaratory and compensatory relief against Perpetual and its former solicitors, Norton Rose Fulbright. Each respondent applied to set aside or summarily dismiss the originating application and to strike out the statement of claim filed by Mr Hodge in April 2026.
The Court’s Holding
Burns SJA set aside the originating application and ordered Mr Hodge to pay the respondents’ costs on the standard basis. The primary ground was lack of standing. Upon the making of the sequestration order in December 2017, all of Mr Hodge’s property — including any right of action in respect of the 2017 judgment — vested in his trustee in bankruptcy, Ms Moira Carter, by operation of s 58(1) of the Bankruptcy Act 1966 (Cth). Applying the High Court’s decision in Cummings v Claremont Petroleum NL (1996) 185 CLR 124, an undischarged bankrupt has no right to bring proceedings to protect or add to property of which he has been divested. Mr Hodge’s arguments — that he had been transparent about his bankruptcy, that annulment proceedings were pending in the Federal Court, and that his trustee had been notified — were insufficient to confer standing. The court noted that even discharge or annulment would not automatically revest the cause of action in Mr Hodge, and the prospect of the trustee assigning the right to him was characterised as remote and fanciful.
Although standing was dispositive, the court proceeded to assess the merits in case the trustee chose to adopt the proceeding. Both limbs of Mr Hodge’s case failed entirely. The fraud ground under UCPR r 667(2)(b) requires distinct allegation and strict proof of actual fraud that taints the judgment; the evidence Mr Hodge adduced across four affidavits was wholly inadequate. His eleven particularised “acts of fraud” were found to be either unsupported by the record, directed to post-judgment enforcement steps that could not impugn the judgment itself, or attempts to relitigate factual findings open to the trial judge. The alternative ground of newly discovered facts under UCPR r 668(1) likewise failed: nothing identified arose after judgment in a manner that could have entitled Mr Hodge to different orders, and the remaining matters were either known or discoverable with reasonable diligence during the original proceeding.
The court held that even if standing existed, the originating application would be set aside as devoid of merit, the statement of claim discloses no reasonable cause of action, and the pleading is frivolous, vexatious and an abuse of process. A separate strike-out order was unnecessary given the termination of the proceeding. The respondents were awarded costs on the standard basis; the fact of Mr Hodge’s bankruptcy was no bar to such an order.
Key Takeaways
- An undischarged bankrupt lacks standing to bring proceedings that seek to protect or recover property — including rights of action — that vested in the trustee in bankruptcy upon the sequestration order, regardless of pending annulment applications or the trustee’s notification of the proceeding.
- To set aside a perfected judgment for fraud under UCPR r 667(2)(b), a party must distinctly allege and strictly prove actual fraud by the successful party that taints the judgment itself; post-judgment conduct and unsubstantiated suspicions are insufficient.
- A claim to reopen a judgment on the basis of newly discovered facts under UCPR r 668(1) will fail where the asserted facts either could have been discovered with reasonable diligence before judgment or do not, even if true, entitle the applicant to a different outcome.
- A costs order can be made against an undischarged bankrupt who brings a hopeless proceeding: bankruptcy is not a shield from costs liability.
Why It Matters
This decision offers a clear and practical illustration of how bankruptcy law intersects with procedural standing in post-judgment collateral attacks. It confirms that once a sequestration order is made, a bankrupt cannot circumvent the vesting of rights in the trustee by simply commencing proceedings in his own name — nor can he cure the defect by pointing to pending annulment applications or trustee notification. The judgment reinforces that the only realistic pathway for a bankrupt to pursue such a claim is through the trustee or by assignment from the trustee, a prospect the court was willing to evaluate on the facts and reject as fanciful.
For practitioners, the decision is also a useful reminder of the high evidentiary threshold governing attempts to set aside a perfected judgment for fraud, and the strict limits on “newly discovered facts” applications. Courts will not permit serial collateral attacks on final judgments dressed up as fraud proceedings where the substance amounts to re-agitation of matters that were or could have been raised at trial.