Royal v Nazloomian, in the matter of Royal [2019] FCA 555

Royal v Nazloomian, in the matter of Royal [2019] FCA 555

The bankruptcy notice was set aside because its issue constituted an abuse of process based on context, repeated litigation, haste, the relatively small debt, lack of bona fide engagement by the respondent, and existence of bona fide set-off claims by the applicants, and, alternatively, because the applicants had set-off and counter-claims available under s 40(1)(g) of the Bankruptcy Act equal to or exceeding the judgment debt.

Parties
First Applicant: Peter Paul Royal; Second Applicant: Judith Louise Royal; Respondent: John Nazloomian
Jurisdiction
Australia
Judgment Date
24 April 2019
Procedural Posture
Application to Set Aside Bankruptcy Notice / Final Judgment
Outcome
Bankruptcy Notice set aside; costs orders made
Legal Topics
Abuse of Process, Set Off, Assignment of Debts, Proof of Debts in Liquidation
Bankruptcy and Insolvency Corporations Equity Abuse of Process Set Off Assignment of Debts Proof of Debts in Liquidation

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Parties

Peter Paul Royal

First Applicant

Judith Louise Royal

Second Applicant

John Nazloomian

Respondent

Procedural Posture

Application to Set Aside Bankruptcy Notice / Final Judgment

Legal Issues

  1. 1 Whether issuing the bankruptcy notice constituted an abuse of process
  2. 2 Whether the applicants had a counter-claim, set-off or cross demand under s 40(1)(g) of the Bankruptcy Act 1966 (Cth) equal to or exceeding the amount of the judgment
  3. 3 Whether set-off operated under s 553C of the Corporations Act 2001 (Cth) in respect of claims between the applicants and Easychoice Home Loans Pty Ltd as assigned to the respondent

Ratio Decidendi

The bankruptcy notice was set aside because its issue constituted an abuse of process based on context, repeated litigation, haste, the relatively small debt, lack of bona fide engagement by the respondent, and existence of bona fide set-off claims by the applicants, and, alternatively, because the applicants had set-off and counter-claims available under s 40(1)(g) of the Bankruptcy Act equal to or exceeding the judgment debt.

Court Disposition

Bankruptcy Notice set aside; costs orders made

Orders

  • Bankruptcy Notice BN225967 issued on 17 July 2018 be set aside.
  • Respondent pay the applicants' costs of these proceedings, subject to further submissions.