Ghougassian v The Trustee of the Property of Ghougassian, in the matter of Ghougassian

1. The applicant's application for an adjournment of the hearing is refused. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

GOODMAN J 1 This proceeding concerns an application by the applicant pursuant to s 153B(1) of the Bankruptcy Act 1966 (Cth) for an order annulling the applicant's bankruptcy. That bankruptcy was a consequence of a sequestration order made by Markovic J on 27 August 2020: McInerney, in the matter of Ghougassian v Ghougassian [2020] FCA 1230. 2 The application for an annulment was filed on 21 December 2022. That application was set down, on 21 March 2023, for hearing today. 3 At the commencement of the hearing this morning, the applicant moved on an interim application filed in Court in which he sought an adjournment for a period of 21 days to allow for consideration of an amended proposal to his creditors for the composition of his debts. 4 The Court's power to grant an adjournment is to be exercised in a manner which best promotes the overarching purpose of facilitating the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible: s 37M of the Federal Court of Australia Act 1976 (Cth). As the Full Court of this Court explained in Dahdah v Platinum Distributors Australia Pty Ltd [2023] FCAFC 65 at [166] (Rangiah, Goodman and McElwaine JJ): (1) the overarching purpose includes as objectives: the just determination of all proceedings before the Court; the efficient use of the judicial and administrative resources available for the purposes of the Court; the efficient disposal of the Court's overall caseload; the disposal of all proceedings in a timely manner; and the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute; (2) no litigant has an entitlement to an adjournment for the obvious reason that the business of the Court must be managed with the objective of efficient organisation in the interests of all litigants that come before the Court: see Alhalek v Quintiliani trading as Kells Lawyers [2021] FCAFC 139 at [26] (Katzmann, Derrington and Anastassiou JJ); (3) when matters are set down for hearing on a particular day there is an expectation that they will be heard on the day on which they are set down: see Gabrielle v Abood (No 2) [2023] NSWCA 28, Bell CJ (Kirk and Adamson JJA agreeing) at [6]; and (4) adjournment applications are typically only granted where there are cogent reasons for doing so. 5 In considering whether there are cogent reasons sufficient to support an order for the adjournment of a hearing date the well-known factors discussed in AON Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 at [5], [24] and [30] (French J) and [93], [95], [100], [102], [105], [108], [112] and [114] (Gummow, Hayne, Crennan, Kiefel and Bell JJ) are relevant considerations. The factors of particular moment in the present application are as follows. 6 First, the explanation provided for seeking the adjournment. 7 The applicant relied upon an affidavit of his solicitor, Mr Robert Balzola, sworn 18 May 2023 in which he gives evidence that: (1) on 24 February 2023, Markovic J referred proceeding NSD117/2022 for mediation; (2) on 23 March 2023, the applicant lodged a proposal to his creditors for a composition in satisfaction of his debts (as per s 73 of the Act) with the respondent; (3) on 6 April 2023, the respondent replied to the letter setting out the proposal. The reply comprised 31 pages, in which the respondent set out a series of concerns and questions; (4) on 11 April 2023, the applicant paid $15,000.00 to the respondent in consideration of further consideration of the proposal; (5) order 1(c) made by Raper J on 12 April 2023 - which required the applicant to provide any response to the respondent's 6 April 2023 letter by 5:00pm on 19 April 2023 - was partly complied with in that a partial response was sent; (6) on 12 May 2023, the applicant received costs assessment certificates in a proceeding in the Supreme Court of New South Wales. One of those cost certificates was in an amount of $35,920.06, which the applicant suggests is: (1) relevant to a cross-claim (apparently in proceeding NSD116/2022); and (2) relevant to the proposal for a composition; (7) the mediation was held on 12 May 2023 and no settlement was reached; (8) the proposal for a composition could not be completed prior to the mediation held on 12 May 2023 as monies available for settlement and the cost assessment were and remain relevant factors in the presentation of an amended proposal; (9) he estimates that the time required to complete an amended proposal to the satisfaction of the respondent is 21 days; and (10) the mediation "made any attempt to file an interim application outside 7 days for today's hearing date impossible". 8 Thus, the explanation for seeking the adjournment is that the applicant wishes to have further time to lodge with the respondent an amended proposal to his creditors for a composition. 9 However, a proposal for a composition is not of any particular relevance to the issues to be decided on the annulment application. In this regard, s 153B(1) of the Act provides: (1) If the Court is satisfied that a sequestration order ought not to have been made or, in the case of a debtor's petition, that the petition ought not to have been presented or ought not to have been accepted by the Official Receiver, the Court may make an order annulling the bankruptcy. 10 Thus the central question for determination on the annulment application is whether the sequestration order made by Markovic J on 27 August 2022 ought not to have been made. Whilst a proposal for a composition, if accepted, would provide a basis for annulment by force of s 74 of the Act, that procedure is independent and self-contained and has no relevance to the question of whether the sequestration order ought not to have been made in August 2020. 11 Secondly, the delay in seeking the adjournment. The adjournment was sought at the start of the hearing. There is no explanation of when the applicant became aware that he would, on his version of events, require an adjournment. For example, when he formed the view that preparation of the amended proposal for a composition would require further time. Further, the evidence that the mediation "made any attempt to file an interim application outside 7 days for today's hearing date impossible" is conclusionary and I do not accept that it was not possible to have filed the interim application earlier. In any event, there is no explanation as to why no application for an adjournment was made between 12 May 2023 and today. 12 Thirdly, the impact of an adjournment on the respondent. As noted above, the application was set down on 21 March 2023 for hearing today. The respondent has prepared for that hearing, including by filing submissions in advance of the hearing in accordance with the timetable set by the Court, and is ready to proceed. The respondent has obviously incurred costs of counsel and solicitors in preparing for and appearing today. It must be remembered that the respondent is the applicant's trustee in bankruptcy and the incurring of further costs that would necessarily be caused by an adjournment would have a direct effect upon the funds available for distribution to creditors. 13 Fourthly, the absence of prejudice to the applicant. The applicant may lose the opportunity to have his bankruptcy annulled under s 74 of the Act prior to a determination of his s 153B application, but I do not regard that as a relevant prejudice, particularly in circumstances where he has had ample time since August 2020 to pursue a proposal for a composition. Further, the determination of the s 153B application: (1) favourably to him would make the proposal for a composition otiose; and (2) adversely to him would not prevent his pursuit of a proposal for a composition. 14 Finally, granting the adjournment would have prejudicial consequences for the Court and for other litigants, whose interests must also be considered: see Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd [2013] HCA 46; (2013) 250 CLR 303 at 321 [51] (French CJ, Kiefel, Bell, Gageler and Keane JJ); Alhalek at [26]; Gabrielle at [6]). In particular, the prejudice to other litigants awaiting hearing dates which would flow from the vacation of the hearing and the allocation of a fresh date.