In the matter of Khadem, a bankrupt; Singh v Official Trustee in Bankruptcy [2007] FCA 495

FEDERAL COURT OF AUSTRALIA

In the matter of Khadem, a bankrupt; Singh v Official Trustee in Bankruptcy [2007] FCA 495 MOTI SINGH v OFFICIAL TRUSTEE IN BANKRUPTCY AND THE FEDERAL MAGISTRATES COURT, SYDNEY REGISTRY (CONSTITUTED BY ROLF DRIVER) NSD 285 OF 2007

GRAHAM J

12 MARCH 2007

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NSD 285 OF 2007

In the matter of Shaiful Alam Khadem, a bankrupt BETWEEN: MOTI SINGH

Applicant

AND: OFFICIAL TRUSTEE IN BANKRUPTCY

First Respondent

THE FEDERAL MAGISTRATES COURT, SYDNEY REGISTRY (CONSTITUTED BY ROLF DRIVER)

Second Respondent

JUDGE: GRAHAM J DATE OF ORDER: 12 MARCH 2007

WHERE MADE: SYDNEY

THE COURT ORDERS THAT:

1. Grants leave to the applicant to file in Court his Affidavit of Service of 8 March 2007. 2. Orders that the Application for Leave to Appeal filed 28 February 2007 be dismissed. 3. Makes no order as to costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NSD 285 OF 2007

In the matter of Shaiful Alam Khadem, a bankrupt BETWEEN: MOTI SINGH

Applicant

AND: OFFICIAL TRUSTEE IN BANKRUPTCY

First Respondent

THE FEDERAL MAGISTRATES COURT, SYDNEY REGISTRY (CONSTITUTED BY ROLF DRIVER)

Second Respondent

JUDGE: GRAHAM J

DATE: 12 MARCH 2007

PLACE: SYDNEY

REASONS FOR JUDGMENT 1 On 10 November 2005 the applicant before the Court filed an Application in the Federal Magistrates Court of Australia under s 178 of the Bankruptcy Act 1966 (Cth) ('the Act'). Section 178 relevantly provides: '178(1) If the bankrupt, a creditor or any other person is affected by an act, omission or decision of the trustee, he or she may apply to the Court, and the Court may make such order in the matter as it thinks just and equitable.' 2 The applicant's case is that Shaiful Alam Khadem, an Australian citizen, became bankrupt in December 2004. Under s 58(1)(a) of the Act the property of the bankrupt, not being after-acquired property, vests forthwith in the Official Trustee where a debtor becomes a bankrupt. Under s 116(2)(a) property which vests in the Official Trustee does not extend to 'property held by the bankrupt in trust for another person'. 3 My understanding is that the applicant claims that a debenture certificate number 210711 recording a loan of $A33,000 to Provident Capital Limited related to property held by the bankrupt in trust for him. Shortly before his bankruptcy Mr Khadem transferred the debenture certificate to his wife, Parvin Akter, but in proceedings SYG 1289 of 2005 in the Federal Magistrates Court of Australia that transfer was set aside and declared to be void. 4 The applicant presently before the Court contends that the amount of $A33,000 plus interest recovered by the Official Trustee in Bankruptcy in respect of Mr Khadem's bankrupt estate is held in trust for him. On 14 February 2007 Federal Magistrate Driver ordered the Official Trustee in Bankruptcy as the trustee of the bankrupt estate of Mr Khadem to pay the funds the subject of proceedings No. (P)ADG 296/2005 instituted in the Federal Magistrates Court of Australia by the applicant into an interest-bearing trust account and to retain same pending further orders of the Federal Magistrates Court. 5 Those proceedings were commenced by the applicant on 10 November 2005 in Adelaide. They have subsequently been transferred to Sydney. The applicant had hoped that his matter would be heard by the Federal Magistrates Court on 14 February 2007. Instead, Federal Magistrate Driver adjourned it until 17 May next. Apart from quarantining the funds claimed by the applicant, Federal Magistrate Driver on 14 February 2007 granted leave to the parties to file and serve any amended application and any Affidavit evidence they may wish to rely upon in those proceedings no later than 11 May 2007. 6 I will not go into the facts in great detail beyond saying that the applicant is himself a New Zealand citizen who now has permanent residency in Australia. He had a friend in New Zealand known as Humayon Kabir who was also a New Zealand citizen. The applicant contends that Mr Kabir lent the applicant approximately $NZ40,000. Instead of paying the money directly to the applicant, Mr Kabir is said to have paid it into a bank account at a National Australia Bank Limited branch in Sydney in the name of Mr Khadem who is an Australian citizen. Mr Khadem was previously the brother-in-law of the applicant, he having been married to the applicant's sister. Subsequently he became divorced from the applicant's sister and proceeded to marry Parvin Akter who as I understand it is living in Bangladesh. 7 The applicant's case is that when he moved to Australia he married under an arranged marriage. He says that rather than have the money lent to him directly by Mr Kabir, he requested that it be provided to Mr Khadem with a view to it being invested in his name and held in trust for the applicant. My understanding is that the applicant has made a claim on the trustee of Mr Khadem's bankrupt estate for the moneys and that that application was refused, it being suggested that there was insufficient evidence to support the claim to the moneys the subject of the debenture certificate on the applicant's behalf. 8 It is against the decision of the Official Trustee in Bankruptcy in that regard that the appeal presently before the Federal Magistrates Court has been brought. When the applicant did not secure a final hearing of his appeal in the Federal Magistrates Court on 14 February 2007 he proceeded to file an Application in this Court for leave to appeal from the Federal Magistrate's decision. Whilst his Application for leave to appeal relates to the whole of the judgment of Federal Magistrate Driver of 14 February 2007, he has informed the Court today that he has no concerns with orders (2) and (3) of 14 February 2007. Indeed, he is grateful that those orders are in place. One order allows him to put on additional evidence which he tells me he wishes to do in the form of an extra Affidavit from Mr Kabir. The other order protects the funds in relation to which he claims an interest as a beneficiary and he does not wish to disturb that order. 9 The main reason why he wants leave to appeal is to allow his appeal under s 178 of the Act to come before the Federal Magistrates Court more expeditiously than 17 May 2007. There has been no appearance before the Court by either of the named respondents to the Application for leave to appeal, namely the Official Trustee in Bankruptcy as the trustee of the bankrupt estate of Mr Khadem and the Federal Magistrates Court. After I discussed the Application and its consequences with the applicant it became clear to him that securing leave to appeal from the deferral of the hearing of his matter until 17 May 2007 is not going to advance his cause since an appeal itself may not be able to proceed before 17 May and even if it were and he was to succeed, the Federal Magistrates Court may not be able to practically give his matter any relevant hearing date before 17 May 2007. 10 In the circumstances the applicant has asked that his Application for leave to appeal be withdrawn. It seems to me that this is a very wise and sensible decision on the applicant's part. 11 I note that the Application is withdrawn. 12 I formally order that the Application for leave to appeal filed 28 February 2007 be dismissed and I make no order as to costs. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham.