Behman

[2019] FCCA 1021

FEDERAL CIRCUIT COURT OF AUSTRALIA

BEHMAN & ANOR [2019] FCCA 1021

Catchwords:
BANKRUPTCY – application under s.58(3) of the Bankruptcy Act 1966 (Cth) for leave to commence and take fresh steps in a matter in the Equity Division of the Supreme Court of New South Wales and a separate matter in the Federal Court of Australia – relief sought by the applicants entirely appropriate – leave granted.

Legislation:

Bankruptcy Act 1966 (Cth), ss.58, 120, 121

Conveyancing Act 1919 (NSW) s.37A

Cases cited:

Re McMaster; Ex Parte McMaster (1991) 33 FCR 70

Stoker (Trustee), in the matter of Starr (Bankrupt) v Starr [2011] FCA 746

First Applicant: ANDREW BEHMAN

Second Applicant: MARK BEHMAN

File Number: SYG 1591 of 2018

Judgment of: Judge Dowdy

Hearing date: 1 March 2019

Delivered at: Sydney

Delivered on: 1 March 2019

REPRESENTATION

Counsel for the Applicant: Mr F. Salama of Counsel

Solicitors for the Applicant: Miller & Prince Lawyers

THE ORDERS OF THE COURT ARE AS FOLLOWS:

1. Pursuant to s.58(3)(b) of the Bankruptcy Act 1966, grant leave if and insofar as it is necessary to the Applicants, Andrew Behman and Mark Behman, to file a Cross-Claim (including any amendment of the same) and to take fresh steps propounding any Cross-Claim in:

   (a)Supreme Court of New South Wales Equity Division proceeding no. 316442 of 2017, commenced by Daniel Terry Behman against themselves and others; and

   (b)Federal Court of Australia proceeding no. 1509 of 2018, commenced by Adam Shepard as Trustee of the bankrupt estate of Terry (Tarek) Behman, against themselves.

2. It is a condition of the leave granted by Order (1) above that the Applicants do not take any step to enforce any money judgment or any money order against any party to the said Supreme Court and Federal Court proceedings without the prior leave of this Court first had and obtained.

3. The parties have liberty to apply on three days' notice.

4. The Applicants' costs of this Application be dealt with and fall under their costs in the Federal Court proceeding.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 1591 of 2018

ANDREW BEHMAN

Applicant

MARK BEHMAN

Second Applicant

REASONS FOR JUDGMENT

EX TEMPORE

(Revised from Transcript)

1. By Amended Application filed on 21 September 2018 the Applicants, who are two brothers, seek leave to proceed under s.58(3) of the Bankruptcy Act 1966 (Cth) (the Act) in relation to filing two Cross-Claims in two different extant legal proceedings.  The Applicants are the sons of the bankrupt, Terry Behman (also known as Tarek Behman) and the brothers of another son of the bankrupt, one Daniel Terry Behman.

2. The bankrupt became bankrupt on 28 February 2018 upon the acceptance of his own debtor’s petition by the Official Receiver.  There had been dealings by the bankrupt prior to his bankruptcy in connection with his property at 46 Oliver Street, Bexley North (Bexley North property) in the State of New South Wales which have excited the interest of the trustee of the bankrupt’s property, Mr Adam Shepard, who does not, I record, although being on notice, oppose or consent to the present Application.

3. The two proceedings in which the Applicants wish to file Cross-Claims are:

   a)Proceeding no. 316442 of 2017 in the Equity Division of the Supreme Court of New South Wales, in which their brother Daniel is plaintiff and the bankrupt, Macquarie Bank Limited and themselves are defendants (Supreme Court proceeding); and

   b)Federal Court proceeding no. 1509 of 2018 in which Mr Shepard is applicant and the Applicants in the present Application are the first and second respondents.

4. Both the Supreme Court and Federal Court proceedings involve the consideration of transactions prior to the bankruptcy of Terry Behman in relation to the Bexley North property and the conventional relief in such cases is there sought, namely, relief under s.37A of the Conveyancing Act 1919 (NSW) and s.120 and s.121 of the Act.

5. The relevant factual background is sufficiently set forth in the affidavits, which Mr Salama of Counsel who appears for the Applicants, has relied upon and which have been admitted into evidence in support of the Application. I consider that in all the circumstances set out in the affidavits that have been read before me that it is appropriate to grant leave under s.58(3) of the Act.

6. Section 58(3) has the purpose of protecting a bankrupt and the property of the bankrupt against the enforcement of actions against him or her and enables the Court to control proceedings in respect of provable debts. The purpose of the Act and in particular s.58 was stated by Hill J in Re McMaster; Ex Parte McMaster (1991) 33 FCR 70. There is from the materials obviously a degree of complexity involved in the two proceedings. Mr Salama of Counsel has now informed me from the Bar Table that they are about to be, or are likely to be, joined together because by a recent order of Darke J the Supreme Court proceeding has been sent to the Federal Court and it is inevitable that both proceedings will be in some way joined up and ultimately heard together.

7. It is clear to me from the material that it is not possible to come to a final and concluded view on whether any of the relief which is likely to be sought in either proposed Cross-Claim is or will be, in respect of a provable debt. However, that is not a bar to an order being made under s.58(3) because, as Jacobson J explained in Stoker (Trustee), in the matter of Starr (Bankrupt) v Starr (2011) FCA 746, a Court hearing a s.58(3) application may make an order granting leave insofar as is necessary.

8. I further consider that it is preferable that the facts which form the background and subject matter of both proceedings be heard and determined in a Court of law with all the added avenues for the exploration of contested facts, rather than by any proof of debt procedure.  I therefore consider overall that it is in the interests of justice that leave should be granted as sought and I shall so order.

I certify that the preceding eight (8) paragraphs are a true copy of the reasons for judgment of Judge Dowdy

Date: 15 April 2019