Re Khadem, Hassan Ex Parte Deputy Commissioner of Taxation v Khadem, Maha Nadim El

[1996] FCA 592

IN THE FEDERAL COURT OF AUSTRALIA                  ) 
  )  
GENERAL DIVISION  )
  )          NO NP 813 of 1995
BANKRUPTCY DISTRICT OF THE STATE  )
  )
OF NEW SOUTH WALES  )     

RE:  HASSAN KHADEM

Debtor

EX PARTE:  DEPUTY COMMISSIONER OF TAXATION

Applicant

AND:  MAHA NADIM EL KHADEM

First Respondent

Coram:           Davies J.
Date:              3 July 1996
Place:              Sydney

REASONS FOR JUDGMENT

This application by the Deputy Commissioner of Taxation seeks an order that a receiver be appointed over real estate owned by the debtor, Mr Hassan Khadem.  Such an order has already been made on an interlocutory basis. 

There are reasonable grounds for bringing the application.  The grounds are founded on matters of doubt, of course, and not on any proof which may link Mr Khadem with an actual disposition of his assets.  They are matters which raise issues which may, or may not, ever have to be investigated. 

A demand was made by Mr Khadem for a further $70,000 for legal costs, to be secured over the real estate.  When the Commissioner looked into that, he found that there had been some bank drafts taken out of the country, taken out, he fears, by members of the Khadem family which may be connected in some way with Mr Khadem's assets.

I think, in the circumstances, the order that has been made appointing a receiver to take control of the real estate is a proper order to make.  It should not interfere in any way with Mr Khadem's activities and should have no practical effect except that the asset is protected. 

We come then to the question of legal costs, which is said to be the basis of the request to borrow $70,000.  It now seems to be alleged that a sum of $10,800 and a sum of $44,500, a total of approximately $55,000, is needed for legal costs.  I am not satisfied on the material before me that all those costs would be properly incurred, however, or that any order ought to be made in Mr Khadem's favour with respect to them.

For example, I note that counsel's fees for these proceedings is said to be $4,500.  However, these are interlocutory matters.  Furthermore, on the first appearance there was no affidavit at all, and on this particular occasion, although there is an affidavit, it does not say a word about any need to borrow money or from whom the money is going to be borrowed.  So the affidavit itself is really quite inadequate.  Therefore, I do not think that this is a matter to which a lot of consideration has been given. 

It is also said that there will be fees for the further hearing before the
Administrative Appeals Tribunal and that that will involve one week's preparation and one week's hearing.  However, as the matter is part heard, it is not abundantly clear why there need be one week's preparation. 

So, it is not clear to me that all these costs are necessary, although I have no particular view about them.  I think the sensible approach would be to choose a figure.  As there was an arrangement on foot for the proceedings in the Administrative Appeals Tribunal, and a figure of $30,000 was earlier agreed on, and there is now to be a continuation of the proceedings, I think a further figure of $25,000 should be allowed.  The order sought will therefore be made subject to the right of Mr Khadem to charge the property to secure a borrowing of $25,000, to be used for the purpose of the legal costs incurred in these proceedings and in the continuation of the proceedings before the Administrative Appeals Tribunal. 

In making this order, I recognise that there is, in fact, nothing said in the affidavit of any need to borrow money.  There is no supporting material from Mr Khadem's sons to say that they cannot produce the money, and there is no material dealing with the matters which are causing the Commissioner some concern.  However, I think that as this is only an interlocutory matter we need not go into it in any more detail. 

I think that justice would be done if I were to make the order as sought, but give leave to Mr Khadem to charge the property for a further $25,000 for legal costs.

I will make the costs on both sides costs in the petition.

I certify that this and the 3 preceding pages
are a true copy of the reasons for judgment herein of
the Honourable Justice Davies.

Associate:

Date:  3 July 1996

Counsel for the applicant:  D.B. McGovern

Solicitor for the applicant:  Australian Government Solicitor       

Counsel for the debtor:  R.L. Hamilton

Solicitors for the debtor:  John Sarroff & Co.

Date of hearing:  3 July 1996

Date of judgment:  3 July 1996