Axess Debt Management Pty Ltd v Haykal, in the matter of Haykal

[2017] FCA 599

FEDERAL COURT OF AUSTRALIA

Axess Debt Management Pty Ltd v Haykal, in the matter of Haykal [2017] FCA 599

File number:

SAD 132 of 2017

Judge:

WHITE J

Date of judgment:

25 May 2017

Catchwords:

BANKRUPTCY AND INSOLVENCY- ex parte application to appoint a trustee to take control of the respondents’ property pursuant to s 50 of the Bankruptcy Act 1066 (Cth) and to restrain a related non‑party from dealing with property.

Legislation:

Bankruptcy Act 1966 (Cth) ss 50, 120, 121

Bankruptcy Regulations 1996 (Cth) Reg 16.01

Cases cited:

Deputy Commissioner of Taxation v Clyne (1983) 50 ALR 118

Date of hearing:

25 May 2017

Registry:

South Australia

Division:

General Division

National Practice Area:

Commercial and Corporations

Sub-area:

General and Personal Insolvency

Category:

Catchwords

Number of paragraphs:

16

Counsel for the Applicant:

Mr S Sankey

Solicitor for the Applicant:

Wallmans Lawyers

Counsel for the Respondents:

The Respondents did not appear

ORDERS

SAD 132 of 2017

IN THE MATTER OF ELVIS JOHN HAYKAL AND RABAH ZAKARIE AKA ROBERT ZAKARIA

BETWEEN:

AXESS DEBT MANAGEMENT PTY LTD (ACN 061 791 786)

Applicant

AND:

ELVIS JOHN HAYKAL

First Respondent

RABAH ZAKARIE AKA ROBERT ZAKARIA

Second Respondent

JUDGE:	WHITE J
DATE OF ORDER:	25 MAY 2017

PENAL NOTICE

TO: Lucia Danielle Haykal

IF YOU (being the person bound by this order):

(A)Refuse or neglect to do any act within the time specified in this order for the doing of the act; or

(B)      Disobey the Order by doing an act which the order requires you not to do,

You will be liable to imprisonment, sequestration of property or other punishment.

Any other person who knows of this order and does anything which helps or permits you to breach the terms of this order may be similarly punished.

THE COURT ORDERS THAT:

1.The Applicant have leave to proceed today ex parte.

2.Pursuant to s 50 of the Bankruptcy Act 1966 (Cth) Colin Louis Ambrose be appointed to take control of the property of the First and Second Respondents with such control to continue until 31 August 2017 or such earlier date as the Court may otherwise order.

3.The Applicant have leave to amend the originating application so as to join Lucia Danielle Haykal as a Respondent and to seek relief against her.

4.Noting the usual undertaking as to damages proffered by the Applicant, Lucia Danielle Haykal be restrained and an order is hereby granted restraining her, whether by herself or by her servants or agents, until 30 June 2017 without the prior approval of this Court, from selling, transferring mortgaging or encumbering any of the interest in the property at 4 Brees Road Keilor East in the State of Victoria, being the property comprised in Register Book Vol 8974 Folio 97 which she acquired from Elvis John Haykal on 23 March 2017.

5.The Applicant is to effect service of a sealed copy of the orders made today on the two respondents and Lucia Danielle Haykal by 5 pm on 26 May 2017.

6.All other aspects of the Applicant’s application are adjourned for further consideration at 2 pm on Tuesday 27 June 2017.

7.There be liberty to the parties including Lucia Danielle Haykal to apply generally and in relation to the orders made today.

8.The costs of today be reserved.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

EX TEMPORE REASONS FOR JUDGMENT

WHITE J

1. The applicant applies, ex parte, for an order pursuant to s 50 of the Bankruptcy Act 1966 (Cth), appointing Mr Colin Ambrose to take control of the property of the respondents, Elvis John Haykal and Rabah Zakarie. 

2. Section 50 of the Bankruptcy Act provides (relevantly):

   (1)At any time after a bankruptcy notice is issued, or a creditor’s petition is presented, in relation to a debtor, but before the debtor becomes a bankrupt, the Court may:

   (a)direct the Official Trustee or a specified registered trustee to take control of the debtor’s property; and

   (b)       make any other orders in relation to the property.

   (1A)     The Court may give a direction or make an order only if:

   (a)       a creditor has applied for the Court to make a direction; and

   (b)the Court is satisfied that it is in the interests of the creditors to do so; and

   (c)       the debtor has not complied with the bankruptcy notice.

   (1B)If the Court directs a trustee to take control of the debtor’s property, the Court must specify when the control is to end.

   …

3. Mr Sankey, the applicant’s solicitor deposes, in an affidavit made on 24 May 2017, that:

   (a) the applicant obtained judgment by default in the County Court of Victoria, against the two respondents on 11 April 2017 for the sum of $150,042.89;

   (b)a bankruptcy notice to the two respondents was issued by the Official Receiver on 26 April 2017 in respect of the debt of $150,042.89;

   (c)the respondents were served with the bankruptcy notice in the matter contemplated by Reg 16.01 of the Bankruptcy Regulations 1996 (Cth), namely, by it having been sent to their respective home addresses by ordinary pre‑paid post (priority service) mail on 28 April 2017.

4. Mr Sankey’s affidavit also indicates that both the respondents have, in the recent past, disposed of assets, and that the second respondent is seeking to dispose of a further asset. In the case of the first respondent, on 23 March 2017, he transferred to Lucia Haykal, his interest in the property at 4 Brees Road, Keilor East, Victoria. It can be inferred that Lucia Haykal is married to the first respondent. Landata from Victoria indicates that the first respondent, and Lucia Haykal, owned the Keilor East property jointly from 31 March 2008 to 23 March 2017, and that the consideration for the transfer on 23 March 2017 was “natural love and affection”. The applicant contends that, upon the bankruptcy of the first respondent, this transaction would be voidable as against the trustee pursuant to ss 120 and 121 of the Bankruptcy Act.

5. The second respondent and Rania Zakarie, owned the property at 50 Damask Drive, Tarneit, Victoria from 4 November 2004.  This property was transferred to a Mr and Mrs Pramod, on 21 January 2017, for a consideration of $600,000 by a Memorandum of Transfer dated 25 October 2016. 

6. The second respondent owned a second property, at 2 Laurina Avenue, Tarneit, in Victoria, from 7 November 2008.  This property was transferred to a Mr Singh, on 15 May 2017 for a consideration of $490,000. 

7. The second respondent is the sole proprietor of a third property at 1/113 Esplanade, Williamstown, in Victoria.  This property is presently on the market and is listed for auction on 3 June 2017, with an indicative price range of $1.65‑1.75 million.  The second respondent has owned this property since 7 April 2014.

8. The applicant’s concern is that the respondents are disposing of assets so as to put them beyond the reach of an appointed trustee in bankruptcy. The applicant is also concerned that Lucia Haykal may transfer her entire interest in the Keilor East property before a trustee of the first respondent’s bankrupt estate can take steps to caveat the Keilor East property, in order to protect any claim the trustee may prosecute, under s 120 and/or s 121 of the Bankruptcy Act. On the materials before me, those concerns appear to be well justified.

9. A second affidavit from Mr Sankey indicates that the respondents have not complied with the bankruptcy notice, nor have they sought to set it aside or to seek any other relief with respect to the bankruptcy notice served on each of them.

10. The applicant submits that it is appropriate for the Court to proceed ex parte given the urgency of the situation in view of the foreshadowed sale of the Williamstown property.  They also contend that it is almost inevitable that a sequestration order will be made against each of the two respondents in the relatively near future.  I consider that each of those submissions is fairly made. 

11. The purpose of s 50 is well‑known. In Deputy Commissioner of Taxation v Clyne (1983) 50 ALR 118, Neaves J, at 123, described s 50 as follows:

    The section is clearly a provision in aid of the creditors of a debtor who has already committed an action of bankruptcy and has a creditor’s petition pending against him.  It is a necessary and ancillary provision designed to enable appropriate steps to be taken to preserve and protect the property of a debtor so that, in the event of a sequestration order being made, that property will be available for distribution equitably amongst them in accordance with the statutory provisions contained elsewhere in the Bankruptcy Act 1966. 

12. Section 50(1A)(b) requires that the Court be satisfied that it is in the interests of the creditors to make the order and subs(1A)(c) requires the Court to be satisfied that the debtor has not complied with the bankruptcy notice. For the reasons I have already given, I am satisfied on each of those matters.

13. I am persuaded that it is appropriate to proceed ex parte given the apparent imminence of the foreshadowed sale of the Williamstown property and the potential for Lucia Haykal to dispose of, or to encumber, the interest which she has obtained from the first respondent in the Keilor East property.

14. I have said that I am persuaded that this is so, because it is apparent that the applicant has known for some weeks at least some of the information upon which it now relies.  Accordingly, it is arguable that it was open to the applicant to have brought this application sooner and on notice to the respondents.  However, it is also apparent that the applicant has learned some pertinent information only recently.  This includes the evidence concerning the imminent sale of the Williamstown property by the second respondent; the Landata material concerning the transfer of the first respondent’s interest in the Keilor East property to Lucia Haykal on 23 May 2017; and the sale by the second respondent and Rania Zakarie of the property at Damask Street, Tarneit, which occurred on 21 January 2017. 

15. In all the circumstances, I am satisfied that it is appropriate to make the order pursuant to s 50(1) sought by the applicant.

16. The applicant has also sought, today, an injunction restraining any action by Lucia Haykal by way of transfer or encumbering of the interest which she has acquired from her husband in the Keilor East property. That application is unusual in that the applicant has not named Lucia Haykal as a respondent to the proceedings. However, I am satisfied that the proposed injunction is intrinsically linked to a preservation of the property for the benefit of the creditors, this being the matter which has justified the order pursuant to s 50(1) of the Bankruptcy Act. The applicant has proffered the usual undertaking as to damages, and so I am satisfied that it is appropriate to issue an interim injunction operating until such time as the Court can conveniently hear both the applicant and the respondents further.

I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice White.

Associate:

Dated:        29 May 2017