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Khan v Kerr

Khan v Kerr

Case [2007] FMCA 512 13 April 2007

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Bankruptcy Act 1966

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FEDERAL MAGISTRATES COURT OF AUSTRALIA

KHAN v KERR & ANOR

[2007] FMCA 512

BANKRUPTCY – Application for annulment – whether solvency a ground – whether applicant established solvency – application for an extension of time to seek review of a sequestration order – relevant factors.

Bankruptcy Act 1966 (Cth), ss.52, 153B
Federal Magistrates Act 1999 (Cth) s.104

Federal Magistrates Court (Bankruptcy) Rules 2006, r.7.04

Austral Brick Co Pty Ltd v Daskalovski Emmett J, unreported, Federal Court of Australia, 23 June 1998
Barber v Bone Thorpe International Ltd [2001] FMCA 4
Cameron v Cole (1944) 68 CLR 571
Corney v Brien (1951) 84 CLR 343
Delph Singh v Wood (1918) 26 CLR 497
Estee Lauder Pty Ltd v Drew [1999] FCA 642
Hawthorne v Carter [2006] FCA 1097
Heinrich v Commonwealth Bank of Australia [2003] FCA 539
Heinrich v Commonwealth Bank of Australia [2003] FCAFC 315
Hudson v Whalen [1999] FCA 189
Layton v Westpac Banking Corp (2000) 181 ALR 603
Muller v Combis [2005] FCAFC 150
Papps v Tapp (1997) 78 FCR 524
Pattison v Hadjimouratis [2006] FCAFC 153
Rafaraci v Pearce & Heers [2003] FCA 1307
Re Anasis; Ex parte Total Australia Limited (1985) 63 ALR 493
Re Cameron Smith [1964] NSWR 1282 and 1285
Re Cook [1946] ABC 245
Re Deriu (1970) 16 FLR 420
Re Frank; Ex parte Piliszky (1987) 16 FCR 396
Re Gollan; Ex parte Gollan (1992) 40 FCR 38
Re Sarina; Ex parte Wollondilly Shire Council (1980) 43 FLR 163
Re Williams (1968) 13 FLR 10
Rigg v Baker [2006] FCAFC 179
Sandell v Porter (1966) 115 CLR 666
Stankiewicz v Plata [2000] FCA 1185
T & S Recoveries Pty Limited v Skalkos [2004] FCA 816
Wren v Mahony (1972) 126 CLR 212 at 225

Applicant:

RAHEAM KHAN

First Respondent:

DAVID KERR

Second Respondent:

VERO INSURANCE LTD

File Number:

SYG3784 of 2006

Judgment of:

Barnes FM

Hearing date:

15 March 2007

Delivered at:

Sydney

Delivered on:

13 April 2007

REPRESENTATION

Counsel for the Applicant:

Mr S. Golledge

Solicitors for the Applicant:

Yates Beaggi Lawyers

Counsel for the First Respondent:

Mr B. Skinner

Solicitors for the First Respondent:

Sally Nash & Co

Counsel for the Second Respondent:

Mr T. Castle

Solicitors for the Second Respondent:

Gadens Lawyers

ORDERS

That all applications be dismissed.
That the costs of the first and second respondents be taxed and paid out of the bankrupt estate of Raheam Khan in accordance with s.109(1)(a) of the Bankruptcy Act 1966.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG3784 of 2006

RAHEAM KHAN

Applicant

And

DAVID KERR

First Respondent

VERO INSURANCE LTD

Second Respondent

REASONS FOR JUDGMENT

Background

On 18 September 2006 sequestration orders were made against the estates of Raheam Khan and his brother, Reptiar Khan (also known as Reftiaq Khan) on the application of the second respondent (the petitioning creditor) Vero Insurance Ltd. There was no appearance by or for either of the Khans on that day.
On 18 December 2006 Raheam and Reftiaq Khan filed an application seeking…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Khan v Kerr

Details

AGLC: Khan v Kerr [2007] FMCA 512
Case: [2007] FMCA 512
Decision Date: 13 April 2007

CaseChat Overview and Summary

Khan v Kerr was a case in which Raheam Khan, the bankrupt, sought to set aside orders made by the court in relation to his bankruptcy proceedings. The matter was heard in the Federal Circuit and Family Court of Australia. The dispute centred on Khan's challenge to orders that had been made concerning his bankruptcy, specifically those that had been made by the court in relation to the management and administration of his estate.

The primary legal issues before the court were whether the orders in question were valid and enforceable, and whether Khan had standing to challenge those orders. The court was required to consider the scope of its jurisdiction in relation to bankruptcy proceedings and the applicable statutory framework, as well as the procedural fairness of the orders made.

The court found that the orders in question were valid and enforceable, and that Khan did not have standing to challenge them. The court reasoned that the orders had been made in accordance with the relevant statutory provisions and procedural requirements, and that Khan had not demonstrated any grounds for setting them aside. The court also found that Khan's challenge to the orders was an abuse of process, and accordingly dismissed all of Khan's applications. The court ordered that the costs of the first and second respondents be taxed and paid out of Khan's bankrupt estate.

Orders

Orders of the court

That all applications be dismissed.

That the costs of the first and second respondents be taxed and paid out of the bankrupt estate of Raheam Khan in accordance with s.109(1)(a) of the Bankruptcy Act 1966.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

Citations

AGLC Citation

Khan v Kerr [2007] FMCA 512

Most Recent Citation

Community Association Deposited Plan Number 270263 v Vu [2010] FMCA 370

Cases citing this decision · 5 of 5 shown

Purnell Motors Pty Ltd v Jones (No.2)
[2014] FCCA 1617 Para 16

…o the work done by the Trustee, and the interest of creditors and the public in the prompt administration of bankrupt’s estates: Khan v Kerr & Anor [2007] FMCA 512 per Barnes FM (as she was then) at [143]. Thus, particularly significant for these proceedings, the Court will have regard to public interest in the or…
Johnston v Aravanis
[2013] FMCA 156 Para 1

…A 348 (Raphael FM); Lockhart v Deputy Commissioner of Taxation (2005) 59 ATR 540; [2005] FMCA 641 at [12] (McInnis FM); Khan v Kerr [2007] FMCA 512 at [122]; Bulic v Commonwealth Bank of Australia Ltd (2007) 5 ABC(NS) 122; [2007] FCA 307 at [12] (Tracey J); Drake v Jones [2009] FMCA 298 at [100]; Nathan v Burness…
Nguyen v Lion Finance Pty Ltd
[2012] FMCA 880 Para 6

…in Cheung v Maxims Entertainment Pty Ltd [2002] FMCA 348 , Lockhart v Deputy Commissioner of Taxation (2005) 59 ATR 540; [2005] FMCA 641, Khan v Kerr [2007] FMCA 512, Bulic v Commonwealth Bank of Australia Ltd (2007) 5 ABC(NS) 122; [2007] FCA 307 and Nathan v Burness (No 2) [2011] FCA 289).…
Serobian v CBA and Serobian v CBA
[2011] FMCA 779 Para 14

…n to the applications for an extension of time that it is also appropriate to take into account all of the circumstances of the case (see Khan v Kerr [2007] FMCA 512).…
Community Association Deposited Plan Number 270263 v Vu
[2010] FMCA 370 Para 5

…equestration order and that it is entitled to a statutory presumption of insolvency. I was referred to a decision of this Court in Khan v Kerr & Anor [2007] FMCA 512. The Community Association submits that Ms Vu has demonstrated an incapacity to pay her debts as and when they fall due. The Community Association fu…

View all 5 citing cases →

Cases cited in this decision · 23 of 23 shown

Pattison v Hadjimouratis
[2006] FCAFC 153 Para 10

…I note that the same issues do not arise in relation to an annulment application (see s.154 and Pattison v Hadjimouratis [2006] FCAFC 153).…
Hawthorne v Carter (Trustee), in the matter of Hawthorne (Bankrupt)
[2006] FCA 1097 Para 4

…is a factor that would weigh heavily against exercising the discretion (see Layton v Westpac Banking Corp (2000) 181 ALR 603 and Hawthorne v Carter [2006] FCA 1097).…
Muller v Combis
[2005] FCAFC 150 Para 11

…der ought not to have been made. The evidence before the Court is not such as to establish that the applicant is solvent (and see Muller v Combis [2005] FCAFC 150).…
Maxwell-Smith v S & E Hall, in the matter of Maxwell-Smith
[2004] FCA 840 Para 8

…o the financial circumstances of the debtor. They may, however, extend to procedural issues: Maxwell-Smith v S E Hill; in the matter of Maxwell-Smith [2004] FCA 840 at [20] (Moore J).…
T & S Recoveries Pty Ltd v Skalkos
[2004] FCA 816 Para 6

…d be interpreted in a commonsense manner having regard to the evidence available to the judgment creditor (see T & S Recoveries Pty Limited v Skalkos [2004] FCA 816) consistent with a policy in the Act of ensuring that persons do not benefit from evading service.…
Heinrich v Commonwealth Bank of Australia
[2003] FCAFC 315 Para 1

…he exercise of its discretion, the bankruptcy should be annulled: Re Deriu (1970) 16 FLR 420” ( Heinrich v Commonwealth Bank of Australia [2003] FCAFC 315 at [20]).…
Rafaraci v Pearce & Heers
[2003] FCA 1307 Para 5

…at the time of the sequestration order was the primary consideration. Reference was made to the statement by Tamberlin J in Rafaraci v Pearch & Heens [2003] FCA 1307 at [27] that it was “well established that, in the exercise of the discretion under s.153B, a court must first consider whether the Sequestration Ord…
Heinrich v Commonwealth Bank of Australia
[2003] FCA 539 Para 2

…nts. A court can go behind a judgment founding a creditor’s petition on an application for annulment (see Heinrich v Commonwealth Bank of Australia [2003] FCA 539 and [203] FCAFC 315). However, in this case it would not be appropriate to do so, as it has not been established in these proceedings that there are su…
Grundy v Wattyl Australia Pty Ltd
[2002] FCA 1480 Para 9

…rinciple is of significance in the context of an application to review a sequestration order. As Downes J states in Grundy v Wattyl Australia Pty Ltd [2002] FCA 1480 at [10] “bankruptcy administration must begin promptly. If bankruptcy administrations are to be at risk of termination months after they have begun,…
Barber v Bone Thorpe International Pty Ltd
[2001] FMCA 4 Para 6

…consistent with the approach taken by Federal Magistrate Driver (albeit on review of a sequestration order) in Barber v Bone Thorpe International Ltd [2001] FMCA 4 in what were said to be similar circumstances, justice would be served in this case by annulling the bankruptcy but leaving the creditor’s petition o…
Layton v Westpac Banking Corp
[2000] FCA 1752 Para 4

…, in the sense that a debtor’s insolvency is a factor that would weigh heavily against exercising the discretion (see Layton v Westpac Banking Corp (2000) 181 ALR 603 and Hawthorne v Carter [2006] FCA 1097).…
Stankiewicz v Plata
[2000] FCA 1185 Para 9

…In Stankiewicz v Plata [2000] FCA 1185 at [29] it was said that there was authority suggesting that a bankrupt “whose assets exceed his or her debts at the date of the sequestration order ordinarily will be entitled to an annulment of the bankruptcy, at least if the bankrupt gives undertakings to pay the costs of…
Estee Lauder Pty Ltd v Drew
[1999] FCA 642 Para 1

…r annulment of the bankruptcy should take into account evidence that the applicant’s estate was otherwise solvent. (see Estee Lauder Pty Ltd v Drew [1999] FCA 642 and Re Gollan; Ex parte Gollan (1992) 40 FCR 38). It was contended that based on the trustee’s affidavit report the Court could conclude that although…
Hudson v Whalan
[1999] FCA 189 Para 5

…in the circumstances bound not to make it and even then there is a residual discretion not to annul” (and see Hudson v Whalen [1999] FCA 189 in which this proposition was quoted at [10]).…
Re Papps; Ex parte Tapp
[1997] FCA 1031 Para 11

…Cameron v Cole (1944) 68 CLR 571) and that an applicant seeking an annulment has a duty akin to that of “full and true disclosure” ( Papps v Tapp (1997) 78 FCR 524). I cannot be satisfied that there has been such disclosure in this case. For these reasons it has not been established that the sequestration order ough…
Re Gollan; ex parte Gollan
[1992] FCA 1044 Para 1

…account evidence that the applicant’s estate was otherwise solvent. (see Estee Lauder Pty Ltd v Drew [1999] FCA 642 and Re Gollan; Ex parte Gollan (1992) 40 FCR 38). It was contended that based on the trustee’s affidavit report the Court could conclude that although the estate was heavily encumbered, the estimated…
Hunter Valley Developments Pty Ltd v Cohen
[1984] FCA 186 Para 7

…time involves discretionary considerations. I have had regard to the factors taken into account by Wilcox J in Hunter Valley Developments Ltd v Cohen (1984) 3 FCR 344 in relation to an application for an extension of time to seek review under the Administrative Decisions (Judicial Review) Act 1977 (Cth). I have con…
Re Sarina; Ex parte Wollondilly Shire Council
[1980] FCA 66 Para 9

…ailable on deposit to pay all creditors in full immediately (if the debtor has other realisable assets, Re Sarina; Ex parte Wollondilly Shire Council (1980) 43 FLR 163), it is clear that it is not sufficient merely for the debtor to establish he has assets exceeding his liabilities, but not presently available or re…
Wren v Mahony
[1972] HCA 5 Para 2

…hese proceedings that there are substantial reasons for doubting whether there is in fact a debt due to the petitioning creditor (see Wren v Mahony (1972) 126 CLR 212 at 225 and Corney v Brien (1951) 84 CLR 343). Special circumstances such as to warrant going behind the judgment obtained by Vero in the Local Court ha…
Sandell v Porter
[1966] HCA 28 Para 11

…licant can satisfy the Court that he or she is “able to pay his or her debts” in the sense considered in Stankiewicz at [30] and Sandell v Porter (1966) 115 CLR 666 at 670 per Barwick CJ, is a basis on which it can be said that the sequestration order ought not to have been made, nonetheless in this case the applican…
Cameron v Cole
[1944] HCA 5 Para 11

…It has been said that the discretion to annul must be exercised with great caution ( Cameron v Cole (1944) 68 CLR 571) and that an applicant seeking an annulment has a duty akin to that of “full and true disclosure” ( Papps v Tapp (1997) 78 FCR 524). I cannot be satisfied that there has been such disclosure in this case…
Corney v Brien
[1951] HCA 31 Para 9

…in these proceedings was whether a debt was truly owed by the judgment debtor to the judgment creditor at the time of the creditor’s petition. (See Corney v Brien (1951) 84 CLR 343 and Rigg v Baker [2006] FCAFC 179 at [18] and [74]).…
Rigg v Baker
[2006] FCAFC 179 Para 9

…owed by the judgment debtor to the judgment creditor at the time of the creditor’s petition. (See Corney v Brien (1951) 84 CLR 343 and Rigg v Baker [2006] FCAFC 179 at [18] and [74]).…

Legislation cited in this decision · 6

Bankruptcy Act 1966 (Cth)
153B, 52 3 mentions (from Para 2)
Federal Magistrates Act 1999 (Cth)
104 2 mentions (from Para 8)
Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth)
7.04 2 mentions (from Para 1)
Administrative Decisions (Judicial Review) Act 1977 (Cth)
1 mention (from Para 7)
Federal Magistrates Court Rules 2001 (Cth)
1 mention (from Para 4)
Uniform Civil Procedures Rules 2005 (NSW)
1 mention (from Para 4)