Ghougassian v Arnautovic, in the matter of Ghougassian

The case of Ghougassian v Arnautovic, in the matter of Ghougassian, involved the Ghougassians, who were mortgagees of St Gregory’s Armenian School Inc (in liquidation), seeking to set aside bankruptcy notices issued by Arnautovic, the liquidator of the School. The bankruptcy notices were based on judgments and orders made in the name of Arnautovic as liquidator, and a former liquidator, Mr Sutherland. The Ghougassians argued that they had counterclaims, set-offs, or cross-demands equal to or exceeding the amounts payable under the judgments and orders on which the bankruptcy notices relied. These counterclaims, set-offs, or cross-demands related to an untaxed costs order of the Supreme Court of New South Wales and the costs and expenses clause of the memorandum of mortgage.

The court had to determine several legal issues, including whether the Ghougassians had counterclaims, set-offs, or cross-demands equal to or exceeding the amounts payable under the judgments and orders on which the bankruptcy notices relied. Another issue was whether Arnautovic had failed to comply with a specific Federal Court rule by not filing another notice of grounds of opposition after the applications to set aside the bankruptcy notices were amended. The court also considered whether Arnautovic was the "creditor" as required by a section of the Bankruptcy Act, and whether judgment orders in the name of the former liquidator were valid. Additionally, the court examined whether the bankruptcy notices were an abuse of process due to an extant application to terminate the liquidation of the School.

The court found that the Ghougassians did not establish the value of the Justice Black costs order, which was central to their claim. The court considered the proposed taxable items by reference to an extract from a previous case and found that the Ghougassians had not shown they had paid the claimed debt. The court also noted that the Ghougassians had not demonstrated that they had paid the amounts they now claimed as "costs and expenses" secured by the mortgage. Furthermore, the court found Arnautovic to be a credible witness. Consequently, the court dismissed the Ghougassian’s application to set aside the bankruptcy notice and extended the time for compliance with the bankruptcy notice up to and including 30 September 2019. The applicant was ordered to pay the respondent's costs as agreed or taxed.