Nobarani v Mariconte

In the case of Nobarani v Mariconte, the appellant, Mr Homayoun Nobarani, appealed against the orders of the Federal Circuit Court of Australia, which had set aside a bankruptcy notice issued to the respondent, Ms Teresa Anne Mariconte. The bankruptcy notice was issued in relation to an unpaid debt of approximately $121,000, which arose from costs orders made in probate proceedings concerning the estate of the late Ms Iris McLaren. The primary judge had concluded that the bankruptcy notice was issued for an improper purpose and set it aside, which led Mr Nobarani to appeal to the Federal Court of Australia.

The key legal issues before the court were whether the bankruptcy notice was issued for an improper purpose and whether it constituted an abuse of process. The primary judge had found that the bankruptcy notice was issued for an improper purpose, based on several factors, including the fact that Mr Nobarani did not take any other enforcement steps before issuing the notice, he had an alternative method available to satisfy the debt, and the timing of the notice issuance was questionable. The court had to determine if these findings were legally sound and if the bankruptcy notice issuance indeed constituted an abuse of process.

The Federal Court of Australia, in allowing the appeal, held that the primary judge's judgment could not stand as the alleged improper purpose was not put to Mr Nobarani nor raised prior to the hearing. The court emphasised that for a bankruptcy notice to be deemed an abuse of process, there must be a clear and proven overriding improper purpose. Here, it could not be said that Mr Nobarani did not intend to invoke the bankruptcy processes if his debt was not paid, nor that it was objectively apparent that Ms Mariconte was solvent. The court concluded that it would be rare for the issuance of a bankruptcy notice in such circumstances to amount to an abuse of process. The existence of an improper purpose must be squarely put to the creditor and established by sufficient proof to deprive them of recourse to the bankruptcy process.

The final orders of the court were that the appeal be allowed, the orders made by the Court on 15 October 2020 be set aside, the application to set aside the bankruptcy notice be dismissed, and Ms Mariconte pay Mr Nobarani's costs of the appeal. Additionally, the time for compliance with the bankruptcy notice was extended for 28 days from the date of the judgment to 5 July 2021.