NSW (Khalsa) Midwife sentenced for bankruptcy offences

Monday, November 19, 2018

On 5 October 2018, Ms Akal Kaur Khalsa was sentenced in the Downing Centre District Court to an aggregate sentence of 12 months imprisonment to be served by way of an Intensive Corrections order for eight offences involving:

  • disposing of property with intent to defraud her creditors
  • removing property valued at $20 or more within 12 months of becoming a bankrupt
  • attempting to leave Australia without the written consent of her trustee
  • making a false declaration on her Statement of Affairs.

The charges stemmed from legal action taken against Ms Khalsa, following a home birth on 21 October 2006 where Ms Khalsa was engaged as an independent midwife. During the birth the baby suffered hypoxia that left him with cerebral palsy—a permanent lifelong condition.

Negligence proceedings started against Ms Khalsa in the Supreme Court of NSW on 20 October 2009. She was found guilty of negligence and, on 27 September 2013, ordered to pay $6,606,583.00 in damages for the lifelong care of the child.

On 4 February 2014, Ms Khalsa was arrested at Sydney International Airport on an outstanding NSW arrest warrant, issued by the Supreme Court when she failed to comply with a freezing order on her assets. She was attempting to depart on a business class, one-way flight from Sydney to Wellington, New Zealand, using an Italian passport issued in her former name.

After she was released, and after knowing she would become bankrupt in the immediate future, Ms Khalsa disposed of a number of assets in a bid to defeat the child’s claim to the payout. These assets included her investment shares, a valuable original oil painting, a car and a caravan.

Ms Khalsa intended to use the money she raised from selling these assets to support a new life in New Zealand. She also gave her daughter a car.

Ms Khalsa gave her bankruptcy trustee false information on numerous occasions to conceal her true financial position and hinder investigations into her assets.

She also attempted to leave Australia for a second time, using a first class, one-way ticket to New Zealand with an Australian passport issued in her current name. She was detected before boarding and denied entry onto the aircraft.

On 30 July 2017, Ms Khalsa was discharged from bankruptcy meaning she is no longer liable for payment of the $6.6 million in damages. Ultimately, the child received $407,942.90 in damages. If Ms Khalsa had not offloaded the assets she did, he would have received a further $74,275.62.

Ms Khalsa was 73-years-old at the time of sentence. She had no criminal history and the court heard that she was suffering from depression as a result of the unexpected death of her son in 2011 and “the destruction of the life she had been living, both professionally and personally”.

In passing sentence, His Honour Judge Sutherland noted that “There is no doubt the defrauding of creditors is a very substantial contributing factor to what might be described as the angst, properly felt, by the boy’s mother”.

Ms Khalsa had pleaded not guilty to all but two of the offences on the basis that she denied having the intention to defeat the child’s claim to her assets. The jury found her guilty of the offences.

The Commonwealth Director of Public Prosecutions prosecuted the matter on behalf of the Australian Financial Security Authority.

Key points

  • On 5 October 2018, Ms Akal Kaur Khalsa was sentenced in the Downing Centre District Court to an aggregate sentence of 12 months imprisonment to be served by way of an Intensive Corrections order for eight offences involving:
    • disposing of property with intent to defraud her creditors
    • removing property valued at $20 or more within 12 months of becoming a bankrupt
    • attempting to leave Australia without the written consent of her trustee
    • making a false declaration on her Statement of Affairs.
  • On 21 October 2006 Ms Khalsa was engaged as an independent midwife to assist with the birth of a baby boy, which resulted in his suffering hypoxia during birth and which left him with cerebral palsy.
  • On 20 October 2009 negligence proceedings were commenced against Ms Khalsa in the Supreme Court of NSW.
  • On 1 May 2013 a series of orders were made against Ms Khalsa during these proceedings, including a freeze on her assets.
  • On 27 September 2013 a judgement order was made against Ms Khalsa and she was ordered to pay damages in the order of $6,606,583.00 to Mr Patterson.
  • Between 28 October 2013 and 30 June 2014 Ms Khalsa disposed of various assets namely two (2) parcels of shares worth in excess of $21,000.00, monies totalling $33,134.23 and a caravan with intent to defraud her creditors.
  • On or about 28 January 2014 Ms Khalsa arranged for an original oil painting worth approximately $10,000.00 to be removed and shipped overseas to New Zealand thus putting it out of reach of her creditors.
  • On 24 July 2014 Ms Khalsa made a declaration on her Statement of Affairs that she knew to be false, in that she failed to disclose numerous particulars including the sale of shares; the sale of the caravan; her ownership of another motor vehicle held in New Zealand; and her ownership of the painting.
  • On 29 July 2014 Ms Khalsa became bankrupt by way of a Debtor’s Petition.
  • On 4 October 2014 Ms Khalsa attempted to leave Australia for New Zealand without the written consent of her trustee, despite having been advised on numerous occasions that her requests to travel had been denied by her trustee and that it was an offence to travel outside Australia without her trustee’s permission.
  • On 20 October 2014 Ms Khalsa disposed of a 2013 Toyota RAV 4 motor vehicle which she had purchased in January 2014 for NZ$43,095.00 and which was situated in New Zealand with the intent to defraud her creditors.
  • Ms Khalsa was sentenced in the Downing Centre District Court to an aggregate sentence of 12 months imprisonment to be served by way of an Intensive Corrections Order.
  • Ms Khalsa was 73-years-old at the time of sentence. She had no criminal history and the court heard that she was suffering from depression as a result of the unexpected death of her son in 2011 and “the destruction of the life she had been living, both professionally and personally”.
  • In passing sentence, His Honour Judge Sutherland noted that “There is no doubt the defrauding of creditors is a very substantial contributing factor to what might be described as the angst, properly felt, by the boy’s mother”.
  • Ms Khalsa had pleaded not guilty to all but two of the offences on the basis that she denied having the intention to defeat the child’s claim to her assets. The jury found her guilty of the offences.
  • The Commonwealth Director of Public Prosecutions prosecuted the matter on behalf of the Australian Financial Security Authority.