Mariconte v Nobarani

Case [2020] FCA 1485

FEDERAL COURT OF AUSTRALIA

Mariconte v Nobarani [2020] FCA 1485

File number: NSD 327 of 2020
Judgment of: MARKOVIC J
Date of judgment: 15 October 2020
Catchwords: BANKRUPTCY – application to set aside bankruptcy notice – whether issue of the bankruptcy notice was an abuse of process – solvency – application allowed
Legislation: Bankruptcy Act 1966 (Cth)
Cases cited:

Barnes v Addy (1874) LR 9 Ch App 244

Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256

Brunninghausen v Glavanics [1998] FCA 230

Killoran v Duncan, in the matter of Killoran [1999] FCA 1574

Reaper v Baycorp Collections PDL (Australia) Pty Ltd [2014] FCA 13

Re Sterling; Ex parte Esanda Ltd (1980) 30 ALR 77

Sandell v Porter (1966) 115 CLR 666

Switz Pty Ltd v Glowbind Pty Ltd [2000] NSWSC 222

Yarranova Pty Ltd v Shaw (No 2) [2014] FCA 616
Division: General Division
Registry: New South Wales
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Number of paragraphs: 100
Date of hearing: 20 August 2020
Counsel for the Applicant: Mr A Martin (Pro Bono)
Solicitor for the Applicant: The Law Society of New South Wales (Pro Bono)
Counsel for the Respondent: Mr N Condylis
Solicitor for the Respondent: McDonnell Schroder Solicitors

ORDERS

NSD 327 of 2020
BETWEEN:

TERESA ANNE MARICONTE

Applicant
AND:

HOMAYOUN NOBARANI

Respondent

ORDER MADE BY:

MARKOVIC J

DATE OF ORDER:

15 OCTOBER 2020

THE COURT ORDERS THAT:

1.Bankruptcy notice BN 248686 issued on 5 February 2020 be set aside.

2.The respondent pay the applicant’s costs of this application.

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


REASONS FOR JUDGMENT

MARKOVIC J

  1. The applicant, Teresa Mariconte, seeks an order setting aside bankruptcy notice BN 248686 issued on 5 February 2020 (Bankruptcy Notice) on the basis that it is an abuse of process. 

  2. By the Bankruptcy Notice the respondent, Homayoun Nobarani, seeks payment of $142,892.75.

  3. The Bankruptcy Notice is founded on a judgment issued on 5 February 2020 by the Supreme Court of New South Wales (Supreme Court) in proceeding 2014/8282 (Probate Proceeding) in favour of the respondent in the sum of $141,471.21 (Restitution Judgment) plus interest of $1,421.54.

  4. The background to entry of the Restitution Judgment and the issue of the Bankruptcy Notice is set out below.

    BACKGROUND

    Ms McLaren’s wills and the litigation between Ms Mariconte and Mr Nobarani

  5. There has been a long history of litigation between Ms Mariconte and Mr Nobarani dating back some six years.  The genesis of that litigation is the will of the late Iris McLaren who passed away in 2013.  In her will made on 5 December 2013 (December 2013 Will) Ms McLaren named Ms Mariconte as executor and gave the whole of her estate to Ms Mariconte.

  6. In the Probate Proceeding Ms Mariconte sought orders for admission of the December 2013 Will to probate.  Mr Nobarani challenged the December 2013 Will…

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Details
AGLC
Mariconte v Nobarani [2020] FCA 1485
Case
[2020] FCA 1485
Decision Date

CaseChat Overview and Summary

The case of Mariconte v Nobarani involves a dispute over the issuance of a bankruptcy notice and the subsequent application to set it aside. The parties, Ms Mariconte and Mr Nobarani, have a long-standing history of litigation stemming from the will of the late Iris McLaren, with Mr Nobarani challenging Ms Mariconte's entitlement to the estate. The matter reached the Federal Court where the central issue was whether the issuance of the bankruptcy notice constituted an abuse of process. The court had to determine if the debtor, Ms Mariconte, could successfully argue that the notice was issued for an improper purpose rather than to invoke the court's jurisdiction regarding insolvency.

In examining the circumstances leading up to the bankruptcy notice, the court noted that Mr Nobarani had not taken any steps to enforce the Restitution Judgment that was made in his favour. Despite having the Caringbah Property as Ms Mariconte's only significant asset, Mr Nobarani did not pursue any application for a writ of execution or issue a demand for payment. The court concluded that the bankruptcy notice was issued for an improper purpose, distinct from invoking the court's jurisdiction concerning insolvency. As a result, the court found that the bankruptcy notice was an abuse of process and granted the application to set it aside. The court also ordered that Mr Nobarani pay Ms Mariconte's costs of the application.

Orders

Orders of the court

1. Bankruptcy notice BN 248686 issued on 5 February 2020 be set aside.

2. The respondent pay the applicant’s costs of this application.

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

Background

Background to the litigation

The background to entry of the Restitution Judgment and the issue of the Bankruptcy Notice is set out below. BACKGROUNDMs McLaren’s wills and the litigation between Ms Mariconte and Mr Nobarani There has been a long history of litigation between Ms Mariconte and Mr Nobarani dating back some six years. The genesis of that litigation is the will of the late Iris McLaren who passed away in 2013. In her will made on 5 December 2013 (December 2013 Will) Ms McLaren named Ms Mariconte as executor and gave the whole of her estate to Ms Mariconte. In the Probate Proceeding Ms Mariconte sought orders for admission of the December 2013 Will to probate. Mr Nobarani challenged the December 2013 Will on the basis of a number of earlier wills he said had been made by Ms McLaren. Ms McLaren had made earlier wills. One of those, made on 12 August 2004 (2004 Will), mentions both Ms Mariconte and Mr Nobarani and, under its terms, Ms Mariconte was to receive a named piece of jewellery and $10,000 and was to share with Mr Nobarani and five other named persons in equal shares in the balance of Ms McLaren’s jewellery. In the 2004 Will, the real property owned by Ms McLaren was to go to the Animal Welfare League. Mr Nobarani contended that in late August or early September 2013 Ms McLaren made a will under which he and the Animal Welfare League were to benefit (September 2013 Will). Searches for that will were undertaken at Ms McLaren’s home but it was never located: see ReEstate of McLaren; Mariconte v Nobarani [2015] NSWSC 667 (Estate of McLaren) at [17]-[20]. The hearing of the Probate Proceeding took place on 20 and 21 May 2015 in the Supreme Court before Slattery J. At that hearing, Mr Nobarani was self-represented. His Honour delivered judgment on 22 May 2015. Having noted that the search for the September 2013 Will had failed to locate that will or a copy of it, Slattery J identified that the primary issue before the court was the validity of the December 2013 Will, given the revocation clause contained in it. His Honour also noted that, as Mr Nobarani had an interest under the 2004 Will, he had standing to contest the December 2013 Will and that any further interest that there might be in the September 2013 Will was dependent upon whether a challenge could be made to the December 2013 Will: Estate of McLaren at [28]. The question of the validity of the December 2013 Will was then considered. Based on the evidence before him, Slattery J concluded that no doubt had been thrown on Ms McLaren’s execution and other mental elements required for validity of the December 2013 Will and was satisfied as to its validity: Estate of McLaren at [87]. Accordingly, his Honour made orders granting probate of the December 2013 Will to Ms Mariconte and requiring Mr Nobarani to pay Ms Mariconte’s costs of the Probate Proceeding (May 2015 Orders). Mr Nobarani appealed from the May 2015 Orders on the ground that the primary judge denied him procedural fairness at the hearing in particular ways he identified. By a majority, the New South Wales Court of Appeal dismissed the appeal: see Nobarani v Mariconte (No 2) [2017] NSWCA 124.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

As I have already observed, the evidence before me as to Ms Mariconte’s financial position does not permit me to reach a conclusion about her solvency. Although her financial situation may be finely balanced, given that she is the registered proprietor of an asset which is significantly greater in value than the sum of those debts that are currently due and payable I could not presently conclude that Ms Mariconte is insolvent.CONCLUSION For the reasons set out above, I am satisfied that the Bankruptcy Notice should be set aside as an abuse of process. As Ms Mariconte has been successful, it follows that Mr Nobarani should pay her costs of this application. I will make orders accordingly.

Ratio Decidendi

Legal Principle Established

It is for the debtor to establish that the issue of a bankruptcy notice is an abuse of process. In Yarranova Pty Ltd v Shaw (No 2) [2014] FCA 616 at [90] Gordon J relevantly said:There is a heavy onus on the person alleging the abuse of process. In any particular case, whether there is a use of the process or an abuse of it depends upon the purpose rather than the result: Re Excel Finance Corporation (Receiver and Manager Appointed); Worthley v Australian Securities Commission (1993) 41 FCR 346. To establish abuse of process, more than mere assertion is required: Davidova v Murphy [2009] FCA 601 at [91] citing Watts v Adelaide Bank Limited [2009] FCA 420.Consideration Having regard to the circumstances of this case, I am satisfied that the Bankruptcy Notice was issued for an improper purpose rather than to invoke the Court’s jurisdiction in relation to insolvency and, as such, is liable to be set aside as an abuse of process. My reasons for reaching that conclusion follow. The sequence of events that led to the issue of the Bankruptcy Notice and its subsequent service was, in summary, as follows:(1)on 18 December 2019 Parker J informed Ms Mariconte and Mr Nobarani of the conclusions his Honour had reached in relation to the Third Cross-Claim, which resulted in the Restitution Judgment;(2)also on 18 December 2019, after learning of the result of the Third Cross-Claim and that the resulting judgment would not be stayed, Mr Nobarani, through his counsel at the time, informed the court that he did not wish to press any application seeking to enforce the Restitution Judgment by applying for the issue of a writ for the levy of property in relation to the Caringbah Property. Given that, Ms Mariconte did not make her foreshadowed application for Mareva style relief in relation to any proceeds of sale of the Caringbah Property paid to Mr Nobarani;(3)on 5 February 2020 the Bankruptcy Notice was issued;(4)service of the Bankruptcy Notice on Ms Mariconte was attempted on 11 and 20 February 2020 and the morning of 28 February 2020;(5)on 28 February 2020 Ms Mariconte and Mr Nobarani attended a mediation of the Probate Proceeding, which was unsuccessful; and(6)on the afternoon of 28 February 2020, shortly after the conclusion of the mediation, the Bankruptcy Notice was served on Ms Mariconte in the circumstances described at [30]-[35] above. Based on this sequence of events the following findings can be made and/or inferences drawn. At the time of issue of the Bankruptcy Notice Mr Nobarani had taken no steps to attempt to enforce the Restitution Judgment. Most notably, he did not pursue his foreshadowed application to apply for a writ of execution in relation to the Caringbah Property after Parker J informed the parties of his decision on the Third Cross-Claim. Nor did Mr Nobarani take any other step by way of enforcement. Based on the evidence before me he did not even issue a demand to Ms Mariconte for payment of the amount of the Restitution Judgment. The evidence establishes that the Caringbah Property is Ms Mariconte’s only asset of value. Justice Parker’s observation, recorded in the transcript of the hearing which took place on 18 December 2019, that the only way that Mr Nobarani was “going to be paid is if money is either raised on the property or the property is sold” is apt. Despite that being so, Mr Nobarani provides no explanation as to why he did not take the steps available to him, and which he had foreshadowed, to enforce the Restitution Judgment.