Charan v Gleeson

Case [2012] FCA 236

FEDERAL COURT OF AUSTRALIA

Charan v Gleeson [2012] FCA 236

Citation: Charan v Gleeson [2012] FCA 236
Appeal from: Gleeson v Charan & Anor [2011] FMCA 729
Parties: USHA WATI CHARAN and PRABHAKAR CHARAN v BRUCE GLEESON
File number: NSD 1761 of 2011
Judge: MCKERRACHER J
Date of judgment: 16 March 2012
Catchwords:

BANKRUPTCY – appeal against Federal Magistrate’s decision that transfer of property from son to his parents was void against the Trustee – held that Federal Magistrate entitled to reasonably infer from circumstances that the son was or was about to become insolvent and that the main purpose of the transfer was to defeat creditors – insufficient evidence from parents to rebut presumption of advancement or rely on defence of an equity of exoneration

PRACTICE AND PROCEDURE – whether it was appropriate for affidavit evidence of Trustee to be taken without his being available for cross-examination – reasonable explanation for why Trustee was unavailable – held that appellate courts must exercise caution in interfering with discretionary exercises of a primary judge’s discretionary rulings on matters of practice and procedure

Legislation: Bankruptcy Act 1966 (Cth) ss 120, 121
Cases cited: Adam P Brown Male Fashions Pty Limited v Philip Morris Inc (1981) 148 CLR 170
Charan v Gleeson [2010] FMCA 703
Nelson v Nelson (1995) 184 CLR 538
Re Will of FB Gilbert (Dec’d) (1946) 46 SR (NSW) 318
Date of hearing: 16 February 2012
Date of last submissions: 28 February 2012
Place: Sydney (via Video Link to Perth)
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 45
Counsel for the Appellant: CR de Robillard
Solicitor for the Appellant: Kent Attorneys
Counsel for the Respondent: J O'Connor
Solicitor for the Respondent: Gillis Delaney Lawyers

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 1761 of 2011
ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
BETWEEN:

USHA WATI CHARAN
PRABHAKAR CHARAN
Appellants
AND:

BRUCE GLEESON
Respondent

JUDGE:

MCKERRACHER J

DATE OF ORDER:

16 MARCH 2012

WHERE MADE:

SYDNEY (VIA VIDEO LINK TO PERTH)

THE COURT ORDERS THAT:

1.The appeal be dismissed. 

2.The appellants are to pay the costs of the respondent to be taxed if not agreed.

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


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 1761 of 2011
ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
BETWEEN:

USHA WATI CHARAN
PRABHAKAR CHARAN
Appellants
AND:

BRUCE GLEESON
Respondent

JUDGE:

MCKERRACHER J

DATE:

16 MARCH 2012

PLACE:

SYDNEY (VIA VIDEO LINK TO PERTH)

REASONS FOR JUDGMENT

INTRODUCTION

  1. The appellants, Mr and Mrs Charan are the parents (the parents) of a bankrupt, Prashant Prashikar Charan (the son).  A sequestration order was made against the son’s estate on 16 November 2006 on the basis of his failure to repay to the Office of State Revenue in New South Wales some 3 years earlier a sum slightly in excess of $14,000 which…

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AGLC
Charan v Gleeson [2012] FCA 236
Case
[2012] FCA 236
Decision Date

CaseChat Overview and Summary

The case of Charan v Gleeson involved an appeal against the Federal Magistrate’s decision that a transfer of property from the son, Charan, to his parents was void against the Trustee in bankruptcy. The parents contested the decision, arguing that the transfer was not made with the intent to defraud creditors. The primary legal issue before the court was whether the Federal Magistrate was entitled to reasonably infer from the circumstances that the son was or was about to become insolvent and that the main purpose of the transfer was to defeat creditors. The parents also argued that they had an equity of exoneration which should have been recognised.

The court held that the Federal Magistrate was entitled to infer from the circumstances that the son was or was about to become insolvent and that the main purpose of the transfer was to defeat creditors. The court found that the parents had not provided sufficient evidence to rebut the presumption of advancement or to rely on the defence of an equity of exoneration. The court further held that it was reasonable for the affidavit evidence of the Trustee to be taken without his being available for cross-examination, given the reasonable explanation provided for his unavailability. The court exercised caution in interfering with the discretionary rulings of the primary judge on matters of practice and procedure.

The appeal was dismissed, and the parents were ordered to pay the costs of the respondent to be taxed if not agreed. The court emphasised the regrettable consequences of the protracted litigation, which had severe long-term financial implications for the parents. The court concluded that had the parents acted sensibly at the outset, arrangements could have been reached to ensure repayment of the sum due, avoiding the significant costs of litigation.

Orders

Orders of the court

1. The appeal be dismissed.

2. The appellants are to pay the costs of the respondent to be taxed if not agreed.

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

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

In argument, counsel for the parents suggested that ‘for all we know the son may have taken the $14,000 to the casino and gambled it away’. I reject this submission. There was a powerful uncontradicted inference that the funds were received for the purpose for which they were supplied and were invested in the property. The entire proceeds after payment out of secured creditors was then passed to the parents. There was no hint of evidence before his Honour that the funds were misused for some other theoretical purpose. CONCLUSION For those reasons, the appeal will be dismissed. It is a most regrettable state of affairs that the parents have been embroiled in such bitter disputation with the Trustee for so long. The costs of the litigation will dramatically exceed the $14,000 which was clearly due and payable by the son. Had sense prevailed at the outset, arrangements could have been reached to ensure repayment of that sum. As a result of the intransigence of the parents the costs to them of their disputation and that of the son over this relatively small amount will have severe consequences in the long term. The following orders are made:1.The appeal be dismissed. 2.The appellants are to pay the costs of the respondent to be taxed if not agreed.

Ratio Decidendi

Legal Principle Established

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