Bhnan v Micheletto & Carrafa (Trustees)

• Jurisdiction: Australia Federal only
• Judgment Date: 20 July 2022
• Neutral Citation: [2022] FCA 846
• Date: 20 July 2022
• Court: Federal Court

Federal Court of Australia

Bhnan v Micheletto & Carrafa (Trustees) [2022] FCA 846

Appeal from:	Micheletto & Carrafa as Joint and Several Trustees of the property of Aid Eshi (Bankrupt) v Bhnan [2021] FCCA 1248
File number:	NSD 648 of 2021
Judgment of:	STEWART J
Date of judgment:	20 July 2022
Catchwords:	APPEAL AND NEW TRIAL – apprehended bias – where primary judge intervened extensively in cross-examination of respondent below – where primary judge made obvious his profound disbelief in defence being advanced – where primary judge put his own case to the respondent – where primary judge decided on the case he advanced that was not advanced by the applicant – where respondent below did not apply for primary judge’s disqualification, but did object to a misleading question by the primary judge – whether respondent waived right to rely on apprehended bias as a ground of appeal ; COSTS – certificate under s 8 of the Federal Proceedings (Costs) Act 1981 (Cth) – whether there is a basis for the requisite opinion
Legislation:	Bankruptcy Act 1966 (Cth) ss 120, 121 Federal Proceedings (Costs) Act 1981 (Cth) Federal Proceedings (Costs) Regulations 2018 (Cth)
Cases cited:	Charisteas v Charisteas [2021] HCA 29; 393 ALR 389 Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd [2006] HCA 55; 229 CLR 577 Dennis v Commonwealth Bank of Australia [2019] FCAFC 236; 272 FCR 343 Ebner v Official Trustee in Bankruptcy [2000] HCA 63; 205 CLR 337 Gambaro v Mobycom Mobile Pty Ltd [2019] FCAFC 114; 271 FCR 530 Jajoo v Micheletto [2021] FCA 1238 Johnson v Johnson [2000] HCA 48; 201 CLR 488 Jorgensen v Fair Work Ombudsman [2019] FCAFC 113; 271 FCR 461 Manly Fast Ferry Pty Ltd v Wehbe [2021] NSWCA 67 Michel v The Queen [2009] UKPC 41; [2010] 1 WLR 879 Micheletto & Carrafa as Joint and Several Trustees of the property of Aid Eshi (Bankrupt) v Bhnan [2021] FCCA 1248 Navarro and Navarro [2019] FamCAFC 32 R v T, WA [2014] SASCFC 3; 118 SASR 382 Royal Guardian Mortgage Management Pty Ltd v Nguyen [2016] NSWCA 88; 332 ALR 128 Serafin v Malkiewicz [2020] UKSC 23; [2020] 1 WLR 2455 Vakauta v Kelly [1989] HCA 44; 167 CLR 568
Division:	General Division
Registry:	New South Wales
National Practice Area:	Commercial and Corporations
Sub-area:	Corporations and Corporate Insolvency
Number of paragraphs:	64
Date of hearing:	5 May 2022
Counsel for the Appellant:	D J Edney
Solicitor for the Appellant:	Sachs Gerace Lawyers
Counsel for the Respondent:	D C Harrison
Solicitor for the Respondent:	SLF Lawyers

ORDERS

		NSD 648 of 2021
BETWEEN:	STEPHANIE BHNAN Appellant
AND:	FABIAN KANE MICHELETTO & MICHAEL CARRAFA (AS JOINT AND SEVERAL TRUSTEES OF THE PROPERTY OF AID ESHI, A BANKRUPT) Respondent

order made by:	STEWART J
DATE OF ORDER:	20 July 2022

THE COURT ORDERS THAT:

1. The appeal be allowed.

2. The orders of the primary judge made on 4 June 2021 be set aside.

3. The matter be remitted to Division 2 of the Federal Circuit and Family Court of Australia for rehearing before a different judge of that Court in a new trial.

4. The respondent pay the appellant’s costs of the appeal as agreed or taxed.

5. Certificates be granted to the appellant and the respondent under s 8(1) of the Federal Proceedings (Costs) Act 1981 (Cth) in respect of any costs incurred by them in relation to the new trial.

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

REASONS FOR JUDGMENT

STEWART J:

Introduction and background

1. This is an appeal from the judgment of the Federal Circuit Court of Australia published to the parties as Micheletto & Carrafa as Joint and Several Trustees of the property of Aid Eshi (Bankrupt) v Bhnan [2021] FCCA 1248 (J). The reasons for judgment are not publicly available because the day after they were published in writing a different judge of the Circuit Court suppressed the further publication of the written reasons unless references to the name of a third party were removed, and that appears not to have been done. The suppression order was made because certain findings in the reasons and a notation in the orders were made against the third party without her having been given an opportunity to be heard.

2. The third party then brought judicial review proceedings in this Court claiming that the findings and notation were made without procedural fairness. That claim was upheld and, consequently, the notation was declared to be invalid: see Jajoo v Micheletto [2021] FCA 1238.

3. The appellant in the present proceeding, Ms Stephanie Bhnan, was the first respondent in the Circuit Court. Her counsel was Mr DeBuse. The respondent Trustees, being the applicants in the proceeding below, are the trustees in bankruptcy of Mr Aid Eshi, the second respondent below. Their counsel was Mr Harrison, as on the appeal.

4. The Trustees were appointed pursuant to an order of the Circuit Court made on 30 April 2020, by which Mr Eshi was declared bankrupt with the date of the relevant act of bankruptcy being 12 February 2020.

5. In the Circuit Court, the Trustees contended that a transfer of a property at Edensor Park from Mr Eshi to Ms Bhnan on 26 February 2020 – ie, after the act of bankruptcy – was void as against the Trustees pursuant to either ss 120 or 121 of the Bankruptcy Act 1966 (Cth).

6. Under s 120, a transfer of property by a person who later becomes a bankrupt to another person is void against the trustee in the transferor’s bankruptcy if the transfer took place in the period beginning five years before the commencement of the bankruptcy and ending on the date of the bankruptcy, and the transferee gave no consideration for the transfer or gave consideration of less value than the market value of the property. Under s 120(4), the trustee must pay to the transferee any amount equal to the value of any consideration that the transferee gave for a transfer that is void against the trustee.

7. Under s 121, a transfer of property by a person who later becomes a bankrupt to another person is void against the trustee in the transferor’s bankruptcy if the property would probably have become part of the transferor’s estate or would probably have been available to creditors if the property had not been transferred, and the transferor’s main purpose in making the transfer was to prevent the transferred property from becoming divisible among the transferor’s creditors or to hinder or delay the process of making property available for division among the transferor’s creditors. As with s 120(4), under s 120(5) the trustee must pay to the transferee any amount equal to the value of any consideration that the transferee gave for a transfer that is void against the trustee. Thus, it was an issue at trial not only whether Ms Bhnan had paid the whole purchase consideration, but also whether she had paid part of the consideration and, if so, how much.

8. It was not in dispute that Mr...