Ghougassian v The Trustee of the Property of Ghougassian, in the matter of Ghougassian (a bankrupt) (No 2)

[2023] FCA 513

FEDERAL COURT OF AUSTRALIA

Ghougassian v The Trustee of the Property of Ghougassian, in the matter of Ghougassian (a bankrupt) (No 2) [2023] FCA 513  

File number(s):

NSD 1136 of 2022

Judgment of:

GOODMAN J

Date of judgment:

19 May 2023

Catchwords:

BANKRUPTCY – application under s 153B(1) of the Bankruptcy Act 1966 (Cth) to annul bankruptcy – no evidence adduced capable of satisfying the Court that the sequestration order ought not to have been made – application dismissed

Legislation:

Bankruptcy Act 1966 (Cth), ss 73, 74, 153B

Cases cited:

Francis v Eggleston Mitchell Lawyers Pty Ltd [2014] FCAFC 18

McInerney, in the matter of Ghougassian v Ghougassian [2020] FCA 1230

Division:

General Division

Registry:

New South Wales

National Practice Area:

Commercial and Corporations

Sub-area:

General and Personal Insolvency

Number of paragraphs:

9

Date of hearing:

19 May 2023

Solicitor for the Applicant:

Mr R Balzola of Robert Balzola & Associates

Counsel for the Respondent:

Mr A Spencer

Solicitor for the Respondent:

Matthews Folbigg Pty Ltd

ORDERS

NSD 1136 of 2022

IN THE MATTER OF GHOUGASSIAN (A BANKRUPT)

BETWEEN:

DANIEL GHOUGASSIAN

Applicant

AND:

THE TRUSTEE OF THE PROPERTY OF DANIEL GHOUGASSIAN, A BANKRUPT

Respondent

ORDER MADE BY:	GOODMAN J
DATE OF ORDER:	19 MAY 2023

THE COURT ORDERS THAT:

1.The application is dismissed with costs.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT
(Revised from transcript)

GOODMAN J

1. This is an application by the applicant pursuant to s 153B(1) of the Bankruptcy Act 1966 (Cth) for an order annulling the applicant’s bankruptcy. That bankruptcy was a consequence of a sequestration order made by Markovic J on 27 August 2020: McInerney, in the matter of Ghougassian v Ghougassian [2020] FCA 1230.

2. The applicant relies upon the following evidence:

   (1)affidavits sworn by the applicant on 24 December 2022 and 10 April 2023; and

   (2)an affidavit sworn by the applicant’s solicitor, Mr Robert Balzola, on 14 March 2023.

3. Section 153B(1) of the Act provides:

   153B  Annulment by Court

   (1)  If the Court is satisfied that a sequestration order ought not to have been made or, in the case of a debtor’s petition, that the petition ought not to have been presented or ought not to have been accepted by the Official Receiver, the Court may make an order annulling the bankruptcy.

4. As is apparent from the text of s 153B(1), an applicant who seeks an annulment of his or her bankruptcy must persuade the Court that the sequestration order ought not to have been made. It is well-established that such an applicant carries a heavy burden: see Francis v Eggleston Mitchell Lawyers Pty Ltd [2014] FCAFC 18 at [16] (Rares, Flick and Bromberg JJ).

5. In the present case, the applicant’s evidence and submissions do not address facts as they existed at the time that the sequestration order was made. Instead, the applicant’s evidence and submissions concern a proposal or proposals, lodged or to be lodged, by the applicant with the respondent setting out the terms of a proposed composition in satisfaction of his debts, pursuant to s 73(1) of the Act. Such evidence is of no relevance to the question whether the sequestration order ought not to have been made in August 2020. It is true that if the applicant’s creditors were to accept a proposal made by the applicant this would operate as an annulment by force of s 74 the Act, however this is irrelevant to the present application.

6. Thus, I am not satisfied that the sequestration order ought not to have been made. Mr Balzola, fairly and candidly, acknowledged during submissions that the applicant’s evidence was insufficient to satisfy the Court on this question. It follows that the Court’s discretion in s 153B(1) of the Act to order an annulment of the applicant’s bankruptcy is not enlivened.

7. I note that Mr Balzola submitted that the application had become “premature” because he had anticipated that there would have been a determination of a cross-claim in proceeding NSD116/2022 but that had not occurred because of an order made by Markovic J in September 2022 splitting the hearing of that cross-claim from the hearing of other issues. However, the applicant consented in March 2023 to this matter being set down for hearing today. Moreover, the cross-claim is not in evidence before me and I am unable to determine whether it raises any facts which might be relied upon to establish that the sequestration order ought not to have been made.

8. I also note that Mr Balzola requested that the annulment application be determined today.

9. For the above reasons, the application must be dismissed with costs. I will make orders accordingly.

I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Goodman.

Associate: 

Dated:       23 May 2023