Going behind a judgement debt in bankruptcy proceedings

Often, bankruptcy proceedings will be based on a judgement debt. In such proceedings, the Bankruptcy Court must satisfy itself that the debt being claimed by the petitioning creditor is truly owing, and often the petitioning creditor will rely on the judgement debt as proof of this.

The High Court of Australia recently confirmed that a Bankruptcy Court is not bound to accept a judgement debt as conclusive, and has discretion to "go behind" a judgement debt, even if the judgment debt was obtained after a contested hearing.

In Ramsay Health Care Australia Pty Ltd v Compton [2017] HCA 28, the High Court discussed the Bankruptcy Court's obligation to satisfy itself that a judgement debt being relied upon by the petitioning creditor in a bankruptcy hearing, is in fact truly owing.