The Owners - Strata Plan No.6766 v Nomchong

[2018] FCCA 3402

FEDERAL CIRCUIT COURT OF AUSTRALIA

THE OWNERS - STRATA PLAN NO.6766 v NOMCHONG [2018] FCCA 3402

Catchwords:

BANKRUPTCY – PRACTICE AND PROCEDURE – Application by debtor for an adjournment of creditor’s petition – whether adequate reasons given for inability to proceed with hearing – whether there would be any utility in granting an adjournment – whether prejudice to first respondent if adjournment granted – application for adjournment dismissed.

Applicant: THE OWNERS - STRATA PLAN NO.6766

Respondent: GREGORY NOMCHONG

File Number: SYG 2481 of 2018

Judgment of: Judge Manousaridis

Hearing date: 30 October 2018

Date of Last Submission: 30 October 2018

Delivered at: Sydney

Delivered on: 30 October 2018

REPRESENTATION

Counsel for the Applicant: Mr M Rose

Solicitors for the Applicant: Bannermans Lawyers

ORDERS

1. The respondent’s application for an adjournment is dismissed.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 2481 of 2018

THE OWNERS - STRATA PLAN NO.6766

Applicant

And

GREGORY NOMCHONG

Respondent

REASONS FOR JUDGMENT

(Revised from Transcript)

1. Before me today is the hearing of two applications. One is an application for a sequestration order brought by The Owners - Strata Plan No.6766 (SP 6766) against Mr Gregory Nomchong. The creditor’s petition is founded on what is said to be an act of bankruptcy based on Mr Nomchong’s not complying with a bankruptcy notice, which is said to have been served on him on 15 May 2018. The other matter is an application that Mr Nomchong made for a review of a decision by a Registrar of this Court refusing to set aside the bankruptcy notice in response to an application for such order made by Mr Nomchong.

2. The reason the two matters are before me today is that before Mr Nomchong was in a position to deal with his application for a review of the Registrar’s decision, SP 6766 filed a creditor’s petition.  I formed the view on 28 September 2018 when the proceeding relating to the review of the Registrar’s decision was before me that the issues raised on Mr Nomchong’s application for review were relevant to the creditor’s petition.  That is so because if Mr Nomchong were correct in his contention that the bankruptcy notice should be set aside, then the basis on which the creditor’s petition proceeded would no longer be there, and the creditor’s petition would be dismissed.

3. On 28 September 2018, therefore, I made orders vacating the listing of the creditor’s petition which was then listed before a Registrar on 11 October 2018, and ordered that the hearing of the creditor’s petition be set down for hearing before me today.  I also ordered on that day that the application for review of the Registrar’s decision be set down for hearing before me today. I directed that Mr Nomchong file a notice of grounds of opposition, and that he file all affidavits on which he intends to rely.  I ordered that he do so by 19 October 2018.  Although I am not overly confident of my memory of what occurred on that day, I am reasonably confident that I informed Mr Nomchong that one available answer to the creditor’s petition was that he was solvent and I am sure, although I cannot recall exactly what it is I said, that I explained to Mr Nomchong what is meant by insolvency in this context.

4. In any event, the matter came on for hearing before me today.  In the course of Mr Nomchong reading affidavits on which he intended to rely, objection by counsel for SP 6766 was taken to an affidavit Mr Nomchong filed on 19 October 2018.  Substantive objection was taken to paragraphs 21 to 31 of Mr Nomchong’s affidavit.  Paragraph 21 of the affidavit purports to be evidence of the value of a unit, of which it is not in dispute Mr Nomchong is the registered proprietor, and that is one of the units of the strata scheme of which SP 6766 is the owners corporation.  Objection was taken that the method of proof does not comply with the rules of evidence.  Objection was also taken to paragraph 25 which baldly asserts that Mr Nomchong has a water licence valued between $180,000 and $200,000.  The objection is that it is a bald assertion with no supporting evidence.  Finally, objection is taken to paragraphs 27, 28, 29, and 30 which themselves constitute assertions of Mr Nomchong owning various vehicles, a yacht and equipment, and baldly asserting that there is a value attached to them; the objection being that they are assertions unsupported by any underlying facts.

5. Mr Nomchong, having heard these objections, indicated and applied for an adjournment of the hearing.  He said that he was unaware of what he was required to do in order to prove his assets and liabilities.  Mr Nomchong has said that from the bar table and not under oath, but even had he said it under oath, I would have some doubts about what he said to me. In any event, I will assume that Mr Nomchong did genuinely not fully understand what it is that he was supposed to do in order to prove solvency, notwithstanding the explanation I gave to him on 28 September 2018.

6. The application for an adjournment is opposed by SP 6766.  It is said that Mr Nomchong was made aware of what he was required to do and had, therefore, an opportunity to do what he was required to do.  It is also submitted that if an adjournment were granted, there would be costs incurred by SP 6766 which may not be recoverable.

7. When an application is made for an adjournment, the Court ultimately asks itself whether it is in the interests of the administration of justice that the adjournment be granted.  When that question is considered, the Court looks into a number of factors.  One is why the person seeking the adjournment was not in a position to proceed with the matter on the day appointed for the hearing.  The second matter is weighing the respective prejudice to the parties if an adjournment is not, or is granted.  In the case of potential prejudice to an applicant applying for an adjournment, if an adjournment is not granted, the Court looks at, among other things, what it is that the applicant expects will occur if an adjournment is granted.  Another way of stating that factor is that the Court must look into whether there would be any utility in the granting of an adjournment. If there is no utility in granting the adjournment, that is usually a significant factor against the adjournment being granted. On the other hand, the Court asks what prejudice the party opposing the application for an adjournment will suffer if it is granted.  Usually, at the very least, that is the throwing away of the costs of the day of the hearing.  That may, in many cases, be compensated by an appropriate order for costs, but if there is no real prospect of a costs order being met, such prejudice remains. And, of course, regard should be handed to matters dealing with the efficient running of a Court.  The granting of adjournments for no great reason disrupts the orderly progress of litigation and ultimately affects the interests of litigants who are not parties to the proceeding in which the application for an adjournment is sought.

8. I then turn to apply these considerations to the circumstances before me.  The explanation Mr Nomchong has given, assuming that it is, as I do, a genuine explanation that he did not understand what he had to do, is not an acceptable reason.  The fact that in his affidavit he makes some attempt to identify the assets, the attempt is a very weak one.  By asserting ownership of various assets and asserting facts as to the value of those assets, it would have been reasonable to expect Mr Nomchong to give more information than he did.  In any event, that factor is not an important factor in the circumstances of this case. What is more important is whether there would be any utility in granting the adjournment.

9. I explored that question in the course of Mr Nomchong’s application for an adjournment by asking him what it is he expected he would be able to prove by way of income, expenses, assets, and liabilities if I were to grant him an adjournment.  What was revealed was the following:  the only regular income Mr Nomchong says he has is an aged pension.  Although he could not be certain, he believes the pension is in the amount of $940 per fortnight. He referred to earning between $6,000 and $10,000 a year from film work, however, he said he had no present engagement whereby he would receive any income from that activity.  Mr Nomchong also referred to his being a photographer and his having provided wedding photography services.  He referred to having done two over the last year or so, but he provided that service “in kind”, as he put it; in other words, not for money.  He said, on the other hand, that he holds a mortgage which is in the amount of $270,000.  He says that the amount that has to be paid per month to service interest (and principal I take it) on that mortgage is $2,300.  Mr Nomchong has expenses, he says, of around $150 per week. That does not include things like strata levies.  He believes that is around $700 a quarter, although it is common ground that Mr Nomchong has not paid any strata levies since 2016.  The reason he gave me from the bar table for not making those payments is, not that he is unable to do so, but because it is a means by which he protests the injuries he claims he has suffered at the hands of those running SP 6766.

10. I asked Mr Nomchong, how it is that he can service a debt, since it appears that his income was less than what he was required to pay the bank. As I understood him, he said he has an arrangement where a shortfall is added to principal and the expectation is that Mr Nomchong will be selling assets to meet future payments.  Mr Nomchong referred to having a water licence. He says it is worth between $180,000 and $200,000. He said that it is a licence which was once attached to land he owned but now is detached from that land, and he claims it is an item of property which is separately tradable.  He says that he is in a position to pay his debts as and when they fall due by simply applying to his bank for a loan.  When I asked him how it is that he expected to service such loan, he said it would be done by way of sale of assets.

11. Now, I say I have noted these things, not as evidence of the truth of what Mr Nomchong has said to me, but as matters he says that he will be able to prove by adducing evidence if I were to give him an extension of time. In my opinion, even if I were to grant Mr Nomchong the time that he requests, which is four weeks, and he puts in evidence in admissible form to prove the matters which he has asserted, that would still not be sufficient to show that he is in a position to pay his debts as and when they fall due. It is important to note that I am not saying Mr Nomchong is not in a position to pay his debts as and when they fall due, but what I am saying is the matters he expects to prove would not satisfy me that he is in a position to pay his debts as and when they fall due.  The most significant factor in that assessment is the fact that it appears that the only way Mr Nomchong will be able to service his debt to the bank, is by the bank adding to principal the shortfalls in the amounts that he is able to pay the bank.

12. In those circumstances, I am not satisfied that there would be utility in my granting Mr Nomchong the adjournment that he seeks.

I certify that the preceding twelve (12) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis

Associate: 

Date:  27 November 2018