Lo Pilato (Trustee), in the matter of Ghougassian (Bankrupt) v Ghougassian (No 2)
[2022] FCA 1531
•6 December 2022
FEDERAL COURT OF AUSTRALIA
Lo Pilato (Trustee), in the matter of Ghougassian (Bankrupt) v Ghougassian (No 2) [2022] FCA 1531
File numbers: NSD 116 of 2022
NSD 117 of 2022Judgment of: MARKOVIC J Date of judgment: 6 December 2022 Catchwords: PRACTICE AND PROCEDURE – application for adjournment – whether the applicant’s late filing of material caused prejudice to the respondent – whether late provision of a court book caused prejudice to the respondent – whether provision of an electronic court book caused prejudice to the respondent – whether delay in obtaining subpoenaed material caused prejudice to the respondent – application dismissed
PRACTICE AND PROCEDURE – application for adjournment – where court book contains material which had not previously been notified to the respondents – where the proceeding had been set down for hearing with an estimate of half a day and a significant amount of that time was used to hear the adjournment application – application granted
Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 19 Date of hearing: 6 December 2022 Counsel for the Applicant: Mr A Spencer Solicitor for the Applicant: Matthews Folbigg Lawyers Counsel for the Respondent: Mr P.E King Solicitor for the Respondent: Robert Balzola And Associates ORDERS
NSD 116 of 2022 BETWEEN: THE TRUSTEE OF THE PROPERTY OF DANIEL GHOUGASSIAN, A BANKRUPT
Applicant
AND: DANIEL GHOUGASSIAN
Respondent
ORDER MADE BY:
MARKOVIC J
DATE OF ORDER:
6 DECEMBER 2022
THE COURT ORDERS THAT:
1.The respondent’s application for an adjournment of the hearing of the amended summons is refused.
2.The respondent is to pay the applicant’s costs of the application for adjournment.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
ORDERS
NSD 117 of 2022 BETWEEN: THE TRUSTEE OF THE PROPERTY OF MICHAEL GHOUGASSIAN, A BANKRUPT
Applicant
AND: KATRIN GHOUGASSIAN
Respondent
MICHAEL GHOUGASSIAN
Second Respondent
ORDER MADE BY:
MARKOVIC J
DATE OF ORDER:
6 DECEMBER 2022
THE COURT ORDERS THAT:
1.The hearing of the amended summons is to be adjourned to a date to be determined in discussion with Counsel appearing for the parties.
2.The respondents are to pay the applicant’s costs thrown away by reason of the adjournment.
3.The respondents are to file and serve any further material on which they intend to rely going to the matter raised by the applicant in his submissions in reply as to “relevant financial history” and the material at item 19 of the court book filed for the purposes of the hearing of the amended summons by 30 January 2023.
4.The proceeding be listed for case management hearing on 1 February 2023 at 9.30 am AEDT with such case management hearing to take place via Microsoft Teams.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
(REVISED FROM TRANSCRIPT)MARKOVIC J:
On 4 October 2022 I made orders setting these matters down for hearing with an estimate of two hours. Those orders were made after I had resolved an application brought by the applicant in each case, who is the Trustee of the property of the bankrupt estates of each of Daniel Ghougassian on the one hand and Michael Ghougassian on the other, that his amended summonses be heard and determined prior to the hearing of the respondents’ amended cross-claim filed in each case. At the time, orders were made for the filing of further evidence by the respondents and the filing and service of submissions and a court book, among other things. Those orders were subsequently amended by extending the time for the parties to do certain things in each case.
This morning, when the matters were called on for hearing, Mr King, counsel for the respondents in each case, made an application for an adjournment. Argument on the adjournment applications commenced at 10.15 am this morning. Regrettably, those applications have taken up most of the morning.
I propose to deal with the applications for adjournment separately. That is, to deal with the application made by Daniel Ghougassian (who I will refer to, without intending any disrespect and for ease, as Daniel) and the application made by Michael Ghougassian and his wife Katrin Ghougassian (who again I will refer to, without intending any disrespect and for ease, as Michael and Katrin), separately. Katrin is the joint holder of the property the subject of the relief sought in the amended summons filed in proceeding NSD 117 of 2022.
DANIEL’S APPLICATION
I will turn first to the application for adjournment made by Daniel.
A number of submissions were made on behalf of Daniel as to why the matter should be adjourned. In summary, they were because of the late filing of material by the Trustee and because of an issue that has arisen as set out in an affidavit sworn by Robert Balzola, who is the solicitor for each of Daniel and Michael and Katrin in relation to material produced by the Commonwealth Director of Public Prosecutions (DPP) in answer to a subpoena.
The material which was said to have been filed late was, first, the Trustee’s submissions in-chief. They were required to be filed five weeks prior to the hearing. They were filed and served on 7 November 2022, which I was informed was three days late. However, it was conceded by Daniel that no prejudice was suffered by reason of that material being provided three days late.
The other matter about which complaint was made was the court book. By Orders made on 4 October 2022, the parties in the proceeding between the Trustee and Daniel were to file and serve a court book one week before the hearing, i.e. by 29 November 2022. The court book was provided late and in electronic format on the evening of 5 December 2022. As I understand it, it may have been provided well after the Court registry was closed and late into the night. No hard copy of the court book was provided.
Daniel submitted that the late service of the court book caused him prejudice, as did the fact that it was not provided in hard copy. As to the latter submission, there was no express requirement for the provision of a court book in hard copy. In recent years, the practice has been to provide material electronically, including court books. There was no evidence that a request was made by Daniel’s solicitor for the court book to be provided in hard copy. In any event, all parties have access to an electronic copy of the court book.
As to the late provision of the court book, namely, that it was provided late into the night on 5 December 2022, I do not accept that could cause any prejudice to Daniel. The court book simply comprises material of which Daniel and those acting for him are aware, that is, it comprises:
(1)the pleadings;
(2)the affidavits upon which the Trustee intends to rely and which, I assume and have not been told otherwise, were filed and served on Daniel’s solicitors and reliance on which was notified to Daniel in the Trustee’s submissions filed on 7 November 2022;
(3)the affidavits on which Daniel intends to rely;
(4)the parties’ submissions, which have been filed and served; and
(5)lists of objections.
The other matter which Daniel says causes him prejudice is the production of material by the Commonwealth DPP in answer to a subpoena served at Daniel’s request. According to Mr Balzola, the Commonwealth DPP was slow in producing documents in response to the subpoena. Mr Balzola deposes to the following in his affidavit which he relied on in support of the adjournment applications:
When I finally received the documents, as explained in my affidavit of 5 12 2022, I read through the large number of documents. However, I did not have the opportunity to do so thoroughly myself or give the clients any opportunity to see them. As soon as possible I prepared an affidavit of the important material as I see it to assist the court, ie dated 5 12 2022. I say that the trial is affected by the later production of this material adversely to the Respondents in circumstances where the Applicant claims this material is merely “some sort of claim”. The respondents contend that the fraudulent wrongdoing for which the creditor is responsible and which may give rise to a substantial credit in favour of the Respondents unless addressed by this Honourable Court will prejudice their case in the Court.
As I understand it, it is in particular the latter sentence which Daniel says demonstrates a connection between the material produced by the Commonwealth DPP and, ultimately, the exercise of the discretion by the Court in relation to the making of the orders sought by the Trustee on his amended summons. It seems to me that that material goes to matters raised in Daniel’s amended cross-claim, which will be dealt with by the Court at a later date and which, pursuant to the Orders I made on 20 September 2022, is to be heard and determined separately from the Trustee’s amended summons.
But in any event, assuming that Daniel can demonstrate a connection between that material and the alleged wrongdoing for which “the creditor is responsible”, that is a matter which it is open to him to raise on the hearing of the amended summons as currently made ready for hearing. Although I note it is difficult to see what relationship any misconduct by an employee of the former liquidator of St Gregory’s Armenian School, with which Daniel was connected and which was put into liquidation, can affect the orders currently being sought by the Trustee for possession of the property registered in Daniel’s name.
For those reasons I do not accept that there is any prejudice occasioned to Daniel by either the contended for late service of the court book or because of the difficulties Mr Balzola has encountered in reviewing material produced by the Commonwealth DPP. I would refuse the adjournment application made on his behalf. The hearing of the Trustee’s amended summons naming Daniel as a respondent should proceed.
MICHAEL AND KATRIN’S APPLICATION
I have come to a different view in relation to the hearing of the Trustee’s amended summons naming Michael and Katrin as respondents. I only intend to explain why that is so in a summary way. However, the issues that arise in relation to those respondents are quite different.
As I presently understand the case, Katrin, who is a joint tenant of the property the subject of the claims in the amended summons, contends that she is entitled to a greater than 50% interest, and up to a 70% interest, in that property.
While the question of the percentage entitlement of the net proceeds of any sale of that property is a matter that could be determined on another day and separately to the question of whether an order for possession and an order under s 66G of the Conveyancing Act 1919 (NSW) should be made to appoint trustees for sale of the property, given some of the issues that arise, the fact that the court book includes material which had not been previously notified, and that it is not possible that the hearing of both matters could be dealt with and resolved today, and indeed this morning, being the time allocated by me in a busy list for the hearing of these matters, I propose to grant a short adjournment.
I do so somewhat reluctantly and am most concerned that a party would come to this Court on the morning of a hearing and make the application that was made, and indeed, having made it, taken up most of the Court’s allocated hearing time in doing so. I stress that this is a busy Court with a number of litigants vying for time before the judges of the Court, and applications of this such nature ought not to be made at the last minute.
I will accede to the request for an adjournment of the hearing of the Trustee’s amended summons naming Michael and Katrin as respondents and discuss with counsel the date to which that application should be adjourned.
Michael and Katrin sought an order for their costs of the adjournment, and the Trustee sought an order for his costs occasioned by the adjournment application. Mr King raised a number of matters, based on which he said costs should be ordered in his client’s favour. However, the application for an adjournment has been granted on a very narrow basis, namely because of the inclusion of some material in the court book which was not previously notified and which the respondents ought to have an opportunity to deal with. However, as I have also said, the application was made extremely late, and there was no other basis upon which I sought to grant it. The adjournment was also acceded to because of the time I apprehend it will take to hear the amended summons. Accordingly, I propose to make the usual order on an application for an adjournment, namely that the party seeking the adjournment ought to bear the costs thrown away by reason of the adjournment.
I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Markovic. Associate:
Dated: 20 December 2022
0
0
0