Sarina v O'Shannassy (No 3)

This matter came before Manousaridis J of the Federal Circuit Court of Australia concerning an application by the applicant to set aside a bankruptcy notice issued by the respondent. The proceedings had been subject to numerous adjournments, some of which were necessitated by the applicant's requests for extensions of time to comply with the bankruptcy notice. The respondent argued that these adjournments were not due to any fault on their part, but rather the applicant's actions.

The central legal issues before the court were what had occasioned the numerous adjournments of the proceedings and whether the applicant's costs in successfully prosecuting the application to set aside the bankruptcy notice were justified. Specifically, the court had to consider whether the applicant's claim in a separate defamation proceeding constituted a counter-claim, set-off, or cross-demand that could be relied upon to set aside the bankruptcy notice, and whether the respondent's intention to amend the bankruptcy notice had caused further delays.

Manousaridis J reasoned that the ultimate cause of the adjournments was the respondent's issuance of the bankruptcy notice and their subsequent resistance to the applicant's application to set it aside. The court noted that the respondent had even opposed an application for an extension of time, leading to a substantive interlocutory hearing and a prior judgment. The adjournments were also explained by the need to await the determination of the defamation proceeding, as one of the grounds for setting aside the bankruptcy notice relied on the applicant's defamation claim. Furthermore, the respondent's intention to amend the bankruptcy notice after the defamation judgment also contributed to the delays. The court found that the applicant's request to amend the application to include a "post box ground" did not occasion any adjournment or wasted costs. Ultimately, the court was satisfied that the applicant's costs in setting aside the bankruptcy notice were a direct consequence of the respondent's resistance to the application.