Fiacon Property Services Pty Ltd v Ashourian - [2019] FCCA 3672

FEDERAL CIRCUIT COURT OF AUSTRALIA

FIACON PROPERTY SERVICES PTY LTD v ASHOURIAN

[2019] FCCA 3672

Catchwords:
BANKRUPTCY – Application for sequestration order – whether preconditions for making sequestration order based on failure to comply with requirements of a bankruptcy notice satisfied – whether there are substantial reasons for questioning whether behind the judgment on the basis of which the bankruptcy notice was issued there is in truth and reality a debt owed to the petitioning creditor – substantial reasons for questioning debt established – whether petitioning creditor discharged burden of proving existence of debt – burden not discharged – creditor’s petition dismissed.

Legislation:

Bankruptcy Act 1966 (Cth), ss.52(1), 52(2)

Federal Circuit Court (Bankruptcy) Rules 2016 (Cth), rr.4.04(1)(a), 4.04(1)(b)

Cases cited:

Cheung v Burness (Trustee) [2016] FCA 1381
Ramsay Health Care Australia Pty Ltd v Compton [2017] HCA 28
Winks v WH Hecke & Sons Pty Ltd [1986] 1 Qd. R 226
Wren v Mahony [1972] HCA 5; (1972) 126 CLR 212
Ziman v McKellar [2018] FCCA 3401

Applicant:

FIACON PROPERTY SERVICES PTY LTD

Respondent:

RAMIL ASHOURIAN

File Number:

SYG 2455 of 2018

Judgment of:

Judge Manousaridis

Hearing dates:

24 May 2019, 2 August 2019

Date of Last Submission:

2 August 2019

Delivered at:

Sydney

Delivered on:

18 December 2019

REPRESENTATION

Counsel for the Applicant:

Mr L Katsinas on 24 May 2019
Ms P Clingan on 2 August 2019

Solicitors for the Applicant:

Simone Legal

Counsel for the Respondent:

Mr D C Eardley on 24 May 2019

Solicitors for the Respondent:

Mr R Raupach of Russo & Partners on 2 August 2019

ORDERS

The creditor’s petition is dismissed.
The respondent pay the applicant’s costs as agreed or assessed.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 2455 of 2018

FIACON PROPERTY SERVICES PTY LTD

Applicant

And

RAMIL ASHOURIAN

Respondent

REASONS FOR JUDGMENT

Before me is an application for a sequestration order against the estate of the respondent, Mr Ramil Ashourian. The act of bankruptcy on which the applicant, Fiacon Property Services Pty Ltd (Fiacon), relies is Mr Ashourian’s failure to comply with the requirements of a bankruptcy notice issued on 5 July 2018. The bankruptcy notice is based on a default judgment for $21,691.52 Fiacon recovered against Mr Ashourian in the Local Court of New South Wales on 22 January 2018 (Judgment) and interest of $726.52 on that amount.
Although raised as a ground of opposition to the making of a sequestration order, Mr Ashourian does not dispute, and I find, that the bankruptcy notice was served on him by email on 16 July 2018,[1] and that Mr Ashourian failed to comply with the requirements of the bankruptcy notice because he failed to pay on or before 7 August 2018 any part of the amount demanded by the bankruptcy notice. There is also no dispute, and I find, that Fiacon filed the creditor’s petition on 31 August 2018 and, on that day, it filed an affidavit required by r.4.04(1)(a) of the Federal Circuit Court (Bankruptcy)…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2019] FCCA 3672
Decision Date: 18 December 2019

CaseChat Overview and Summary

Fiacon Property Services Pty Ltd (the creditor) applied to the Federal Court of Australia for a sequestration order against Mr. Ashourian (the debtor) based on the debtor's alleged failure to comply with a bankruptcy notice. The bankruptcy notice was issued on the basis of a judgment obtained by the creditor against the debtor.

The central legal issue before the Court was whether the preconditions for making a sequestration order, specifically the debtor's failure to comply with the bankruptcy notice, were satisfied. This required the Court to determine if there were substantial reasons for questioning whether a debt was genuinely owed to the petitioning creditor behind the judgment upon which the bankruptcy notice was founded.

Judge Manousaridis found that the debtor had raised substantial reasons for questioning the existence of the debt. The Court concluded that the creditor had not discharged its burden of proving the existence of the debt owed to it. Consequently, the creditor's petition for a sequestration order was dismissed.

Orders