FEDERAL COURT OF AUSTRALIA

Abate, in the matter of Chang Rajii v Chang Rajii (No 2) [2018] FCA 241

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to r 39.05 of the Federal Court Rules 2011, order 1(c) of the orders made by Yates J in these proceedings on 5 December 2017 be varied so that the words “cgajardo@minpublico.d;” are replaced with “cgajardo@minpublico.cl;”.

2.    Pursuant to section 6 of the Cross-Border Insolvency Act 2008 (Cth) (“Act”), Article 15 and clause 1 of Article 17 of the UNCITRAL Model Law on Cross-Border Insolvency (“Model Law”) and rule 14.03 of the Federal Court (Bankruptcy) Rules 2016 (Cth) (“Rules”), the proceeding numbered C-22090-2016 of the 15th Civil Court of Santiago in Chile relating to the respondent (“Foreign Proceeding”) be recognised as a “foreign proceeding” within the meaning of Article 2(a) of the Model Law.

3.    Pursuant to section 6 of the Act and clause 2(a) of Article 17 of the Model Law, the Foreign Proceeding be recognised as a “foreign main proceeding” within the meaning of Article 2(b) of the Model Law.

4.    Pursuant to section 6 of the Act and Article 15 of the Model Law, the applicant be and is recognised as a “foreign representative” within the meaning of Article 2(d) of the Model Law in relation to the Foreign Proceeding.

5.    Pursuant to section 6 of the Act and Article 20(1) of the Model Law, the commencement or continuation of individual actions or individual proceedings concerning the assets, rights, obligations or liabilities of the debtor be stayed; execution against the debtor’s assets be stayed; and the right to transfer, encumber or otherwise dispose of any assets of the debtor be suspended.

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

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to section 6 of the Cross-Border Insolvency Act 2008 (Cth) (“Act”) and Article 21 subparagraph (1)(e) of the UNCITRAL Model Law on Cross-Border Insolvency (“Model Law”), the administration and realisation of all of the respondent’s assets located in Australia be entrusted to the applicant, other than:

(a)    the following six bank accounts which are referred to in the freezing order at tab 24 of CAPA-2 (“Bank Accounts”);

(b)    the property comprising Lot 9 of Folio Identifier SP89074 being the property known as and located at 401/141-143 Elizabeth Street Sydney NSW 2000 (“Property”).

2.    Pursuant to section 6 of the Act and Article 21(1)(g) of the Model Law, subject to the provisions of the Bankruptcy Act 1966 (Cth), in respect of the assets in Australia other than the Bank Accounts and the Property all powers normally available to a trustee in bankruptcy appointed under the provisions of the Bankruptcy Act be made available to the applicant until he ceases to be a foreign representative in relation to the “Foreign Proceeding” (as defined in order 2 of the orders made on 29 January 2018) or until the conclusion of the Foreign Proceeding (whichever is the earlier).

3.    Subject to the lifting of the freezing order at tab 24 of CAPA-2 insofar as it concerns the Property, pursuant to section 6 of the Act, Article 21(1)(g) of the Model Law, and sections 30(1) and 58(1) of the Bankruptcy Act, declare that the Property vest in the applicant.

4.    Subject to the lifting of the freezing order at tab 24 of CAPA-2 insofar as it concerns the Property, pursuant to section 6 of the Act, Article 21(1)(g) of the Model Law, and sections 129 of the Bankruptcy Act, the applicant be granted possession of the Property.

5.    Pursuant to section 6 of the Act and Article 21(g) of the Model law, to the extent necessary, the applicant be released from the implied undertaking not to use, other than for the purpose of Federal Court of Australia proceeding No. NSD 800 of 2017 (“Onix Proceedings”), any or all of the documents produced by the Australia and New Zealand Banking Group Limited and Donohoes Commercial Lawyers pursuant to Orders for Production issued by the applicant in the Onix Proceedings.

6.    Each party and each creditor or person claiming to be a creditor of the respondent, and any other person affected by these orders, has liberty to apply on 3 business days’ notice.

7.    Rule 14.07 of the Federal Court (Bankruptcy) Rules 2016 (Cth) be dispensed with and in lieu thereof the applicant is to notify:

(a)    the Superintendent by posting or delivering the orders to the Superintendente de Insolvencia y Reemprendimient, Hermanos Amunátegui N° 228, Santiago de Chile;

(b)    the respondent by emailing the orders to Alberto Samuel Chang Rajii at email address achr74@gmail.com, Alex Manuel Carocca Perez, Moneda 920, Oficina 904 Santiago, Chile at email address acaroccap@gmail.com and Ivanna Alquinta at alquinta.ivanna@gmail.com;

(c)    the respondent by posting the orders to Alberto Samuel Chang Rajii at Apartment 10, Block No 132, Vilhena, Tower Road, Sliema, Malta;

(d)    creditors by publishing a copy of the orders in the Boletín Concursal, a publication of bankruptcy-related notices in Chile;

(e)    the Chilean criminal authorities by emailing the orders to Carlos Gajardo Pinto, Head Prosecutor, Public Prosecutor’s Office for Highly Complex Matters, at email address cgajardo@minpublico.cl;

(f)    the Australia and New Zealand Banking Group Limited by posting or delivering the orders to The Proper Officer, Australia and New Zealand Banking Group Limited, ANZ Centre Melbourne, Level 9, 833 Collins Street, Docklands VIC 3008;

(g)    Donohoes Commercial Lawyers by emailing the orders to Kerry Donohoe, Managing Partner, at the email address mail@donohoes.com.au;

(h)    the occupiers of the Property by mailing or delivering the orders to The Occupier(s), 401/141-143 Elizabeth Street Sydney NSW 2000;

(i)    the Owners Corporation for Strata Plan 89074 by emailing the orders to Suzanne Lang of Kemps Petersons Legal, solicitors for the creditors, at suzanne.lang@kplg.com.au; and

(j)    creditors by publishing a notice in The Australian newspaper substantially in the form annexed to these orders.

8.    The costs of this proceeding be costs of the liquidation of the respondent.

9.    Liberty to apply on 3 days’ notice.

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

ANNEXURE “A”

Form B21

Rule 14.07

Notice of making of order under Cross-Border Insolvency Act 2008 (Cth)

No.    NSD 2118 of 2017

Federal Court of Australia

Alberto Samuel Chang Rajii

To all the creditors of Alberto Samuel Chang Rajii

Take notice that:

1    On 29 and 30 January 2018, the Federal Court of Australia in Proceeding No. NSD 2118 of 2017, commenced by the applicant Carlos Antonio Parada Abate in his capacity as Liquidator of Alberto Samuel Chang Rajii, made the orders set out below under the Cross-Border Insolvency Act 2008 in relation to Alberto Samuel Chang Rajii:

2    The applicant’s address for service is c/o Arnold Bloch Leibler, Level 24, Chifley Tower, 2 Chifley Square, Sydney NSW Australia 2000.

3    The name and address of the foreign representative is Carlos Antonio Parada Abate in his capacity as Liquidator of Alberto Samuel Chang Rajii , Calle Alonso de Monroy 2555, Oficina 42, Vitacura, Santiago, Chile.

Orders:

1    Pursuant to r 39.05 of the Federal Court Rules 2011, order 1(c) of the orders made by Yates J in these proceedings on 5 December 2017 be varied so that the words “cgajardo@minpublico.d;” are replaced with “cgajardo@minpublico.cl;”.

2    Pursuant to section 6 of the Cross-Border Insolvency Act 2008 (Cth) (Act), Article 15 and clause 1 of Article 17 of the UNCITRAL Model Law on Cross-Border Insolvency (Model Law) and Rule 14.03 of the Federal Court (Bankruptcy) Rules 2016 (Cth) (Rules), the proceeding numbered C-22090-2016 of the 15th Civil Court of Santiago in Chile relating to the respondent (the Foreign Proceeding) be recognised as a “foreign proceeding” within the meaning of Article 2(a) of the Model Law.

3    Pursuant to section 6 of the Act and clause 2(a) of Article 17 of the Model Law, the Foreign Proceeding be recognised as a “foreign main proceeding” within the meaning of Article 2(b) of the Model Law.

4    Pursuant to section 6 of the Act and Article 15 of the Model Law, the applicant be and is recognised as a “foreign representative” within the meaning of Article 2(d) of the Model Law in relation to the Foreign Proceeding.

5    Pursuant to section 6 of the Act and Article 20(1) of the Model Law, the commencement or continuation of individual actions or individual proceedings concerning the assets, rights, obligations or liabilities of the debtor be stayed; execution against the debtor’s assets be stayed; and the right to transfer, encumber or otherwise dispose of any assets of the debtor be suspended.

6    Pursuant to section 6 of the Act and Article 21 subparagraphs (1)(e) and (2) of the Model Law, the administration and realisation of all of the respondent’s assets located in Australia be entrusted to the applicant, other than:

a.    the following six bank accounts which are referred to in the freezing order at tab 24 of CAPA-2 (Bank Accounts);

b.    the property comprising Lot 9 of Folio Identifier SP89074 being the property known as and located at 401/141-143 Elizabeth Street Sydney NSW 2000 (Property).

7    Pursuant to section 6 of the Act and Article 21(1)(g) of the Model Law, subject to the provisions of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act), in respect of the assets in Australia other than the Bank Accounts and the Property all powers normally available to a trustee in bankruptcy appointed under the provisions of the Bankruptcy Act be made available to the applicant until he ceases to be a foreign representative in relation to the Foreign Proceeding or until the conclusion of the Foreign Proceeding (whichever is the earlier).

8    Subject to the lifting of the freezing order at tab 24 of CAPA-2 insofar as it concerns the Property, pursuant to section 6 of the Act, Article 21(1)(g) of the Model Law, and sections 30(1) and 58(1) of the Bankruptcy Act, declare that the Property vest in the applicant.

9    Subject to the lifting of the freezing order at tab 24 of CAPA-2 insofar as it concerns the Property, pursuant to section 6 of the Act, Article 21(1)(g) of the Model Law, and sections 129 of the Bankruptcy Act, the applicant be granted possession of the Property.

10    Pursuant to section 6 of the Act and Article 21(g) of the Model law, to the extent necessary, the applicant be released from the implied undertaking not to use, other than for the purpose of Federal Court of Australia proceeding No. NSD 800 of 2017 (Onix Proceedings), any or all of the documents produced by the Australia and New Zealand Banking Group Limited and Donohoes Commercial Lawyers pursuant to Orders for Production issued by the applicant in the Onix Proceedings.

11    Each party and each creditor or person claiming to be a creditor of the respondent, and any other person affected by these orders, has liberty to apply on 3 business days’ notice.

12    Rule 14.07 of the Rules be dispensed with and in lieu thereof the applicant is to notify:

a.    the Superintendent by posting or delivering the orders to the Superintendente de Insolvencia y Reemprendimient, Hermanos Amunátegui N° 228, Santiago de Chile;

b.    the respondent by emailing the orders to Alberto Samuel Chang Rajii at email address achr74@gmail.com, Alex Manuel Carocca Perez, Moneda 920, Oficina 904 Santiago, Chile at email address acaroccap@gmail.com and Ivanna Alquinta at alquinta.ivanna@gmail.com;

c.    the respondent by posting the orders to Alberto Samuel Chang Rajii at Apartment 10, Block No 132, Vilhena, Tower Road, Sliema, Malta;

d.    creditors by publishing a copy of the orders in the Boletín Concursal, a publication of bankruptcy-related notices in Chile;

e.    the Chilean criminal authorities by emailing the orders to Carlos Gajardo Pinto, Head Prosecutor, Public Prosecutor’s Office for Highly Complex Matters, at email address cgajardo@minpublico.cl;

f.    the Australia and New Zealand Banking Group Limited by posting or delivering the orders to The Proper Officer, Australia and New Zealand Banking Group Limited, ANZ Centre Melbourne, Level 9, 833 Collins Street, Docklands VIC 3008;

g.    Donohoes Commercial Lawyers by emailing the orders to Kerry Donohoe, Managing Partner, at the email address mail@donohoes.com.au;

h.    the occupiers of the Property by mailing or delivering the orders to The Occupier(s), 401/141-143 Elizabeth Street Sydney NSW 2000;

i.    the Owners Corporation for Strata Plan 89074 by emailing the orders to Suzanne Lang of Kemps Petersons Legal, solicitors for the creditors, at suzanne.lang@kplg.com.au; and

j.    creditors by publishing a notice in The Australian newspaper substantially in the form annexed to these orders.

13    An order that the costs of this proceeding be costs of the liquidation of the respondent.

14    Liberty to apply on 3 days’ notice.

Date: 2 February 2018

Name of applicant or applicant’s lawyer: John Mitchell, Arnold Bloch Leibler

REASONS FOR JUDGMENT

GLEESON J:

1    This judgment concerns an application for recognition of a foreign proceeding pursuant to the Cross-Border Insolvency Act 2008 (Cth) (“CBI Act”) and consequential relief. By s 6 of the CBI Act, subject to that Act, the Model Law on Cross-Border Insolvency of the United Nations Commission on International Trade Law (“Model Law”) has the force of law in Australia.

2    The applicant (“Mr Abate”) is a Chilean attorney at law who is registered on Chile’s Trustee List appointed by the Superintendente de Insolvencia y Reemprendimiento or the Superintendent of Insolvency and Entrepreneurship (“Superintendent”).

3    On 23 May 2017, the 15th Civil Court of Santiago, Chile (“Chilean Civil Court”), issued an order placing the respondent, Alberto Samuel Chang Rajii, referred to as “Mr Chang” by Mr Abate, into compulsory insolvency and appointing Mr Abate as the liquidator in Mr Chang’s insolvency proceeding.

4    The proceeding for which recognition was sought is the liquidation declared by the Chilean Civil Court on 23 May 2017 in proceeding numbered C-22090-2016 (“Chilean bankruptcy proceeding”).

5    In summary, Mr Abate sought orders to the following effect:

(1)    recognising the Chilean bankruptcy proceeding as a “foreign proceeding” under Art 2(a) of the Model Law and a “foreign main proceeding” under Art 2(b) of the Model Law;

(2)    recognising Mr Abate as the “foreign representative” under Art 2(d) of the Model Law; and

(3)    conferring on Mr Abate relevant powers under the Bankruptcy Act 1966 (Cth) (“Bankruptcy Act”) and other associated relief to assist his investigations and recovery of assets in Australia.

6    After hearing submissions, I made the orders sought on 29 and 30 January 2018. These are my reasons for making the orders.

Background to recognition application

7    Mr Chang is a Chilean national who is described by Mr Abate as “the author of what is being reported in the media as Chile’s largest Ponzi scheme”. According to Mr Abate, Mr Chang was the founder and principal shareholder of a Chilean-incorporated company called Onix Capital SA (“Onix”) which Mr Chang used to capture funds invested by his victims. Mr Chang has been charged in Chile with fraud but, as far as Mr Abate is aware, has fled to Malta. Mr Chang’s assets have been frozen by an order of the Fourth Criminal Court of Santiago (“Santiago Criminal Court”) on 29 September 2016, which order extends to assets in Australia. Proceedings have been commenced to seek Mr Chang’s extradition from Malta to Chile. An appellate hearing in the extradition case was scheduled for 24 January 2018 and is to continue on 20 April 2018.

8    The Chilean bankruptcy proceeding has already been recognised in Switzerland, England, the United States of America and the Isle of Man. In England, Mr Abate is in the process of auctioning real and personal property in his capacity as Mr Chang’s liquidator.

9    Mr Abate is also the liquidator of Onix. In 2017, orders were made under the CBI Act recognising the liquidation of that company as a “foreign proceeding” and a “foreign main proceeding” within the meaning of the Model Law: Abate, in his capacity as Liquidator of Onix Capital SA [2017] FCA 751. The Onix liquidation has also been recognised in other foreign countries including England and the United States of America.

10    According to Mr Abate’s investigations, Mr Chang has assets in Australia. These comprise:

(1)    an apartment at 401/141-143 Elizabeth Street Sydney (“Sydney apartment”);

(2)    two bank accounts held in Mr Chang’s name with the Australia & New Zealand Banking Group (“ANZ”) at its Pitt Street, Sydney branch; and

(3)    four bank accounts in the name of companies associated with Mr Chang, held with ANZ at its Pitt Street, Sydney branch.

11    Mr Abate’s evidence is that the majority of the victims of Mr Chang’s fraud reside in Chile. However, there is at least one potential creditor in Australia. The Owners of Strata Plan No. 89074 assert that Mr Chang is indebted to them for unpaid levies in respect of the Sydney apartment.

12    On 5 December 2017, Yates J made orders for service of the application in this proceeding and supporting affidavits on Mr Chang, the relevant Chilean insolvency and criminal authorities, ANZ, and the occupier and Owners Corporation for the Sydney apartment: see Abate, in the matter of Rajii v Rajii [2017] FCA 1583 (“Yates judgment”).

13    The application and affidavits were served in accordance with the orders of Yates J.

14    In support of the application, Mr Abate relied on the following evidence:

(1)    his affidavit sworn 14 November 2017, other than the second sentence of para 50 and the entirety of para 87, together with exhibit CAPA-2 to the affidavit;

(2)    his affidavit sworn 29 January 2018;

(3)    affidavits of John Mitchell affirmed 5 December 2017, 25 January 2018 and 29 January 2018;

(4)    affidavit of Frank Hoare sworn 25 January 2018; and

(5)    affidavit of Melanie Cavanough sworn 14 June 2016.

Model Law on Cross-border insolvency

15    The Model Law is contained in Sch 1 to the CBI Act.

16    Relevantly, and subject to the CBI Act, the Model Law applies where assistance is sought in this State by a foreign representative in connection with a foreign proceeding: Art 1(a).

17    Article 2 of the Model Law contains the following relevant definitions:

(a)    “Foreign proceeding” means a collective judicial or administrative proceeding in a foreign State, including an interim proceeding, pursuant to a law relating to insolvency in which proceeding the assets and affairs of the debtor are subject to control or supervision by a foreign court, for the purpose of reorganization or liquidation;

(b)    “Foreign main proceeding” means a foreign proceeding taking place in the State where the debtor has the centre of its main interests;

(c)    …

(d)    “Foreign representative” means a person or body, including one appointed on an interim basis, authorized in a foreign proceeding to administer the reorganization or the liquidation of the debtor’s assets or affairs or to act as a representative of the foreign proceeding.

18    Article 4 of the Model Law provides that the functions referred to in the Model Law relating to recognition of foreign proceedings and cooperation with foreign courts shall be performed by a specified court or courts or other authority. Section 10(a) of the CBI act provides relevantly that, if the functions relate to a proceeding involving a debtor who is an individual, the Federal Court of Australia is taken to be specified in Art 4 as a court competent to perform the functions referred to in the Model Law relating to recognition of foreign proceedings.

19    Article 6 provides:

Nothing in this present Law prevents the court from refusing to take an action governed by the present Law if the action would be manifestly contrary to the public policy of this State.

20    Article 15 of the Model Law provides:

1.    A foreign representative may apply to the court for recognition of the foreign proceeding in which the foreign representative has been appointed.

2.    An application for recognition shall be accompanied by:

(a)    A certified copy of the decision commencing the foreign proceeding and appointing the foreign representative; or

(b)    A certificate from the foreign court affirming the existence of the foreign proceeding and of the appointment of the foreign representative; or

(c)    In the absence of evidence referred to in subparagraphs (a) and (b), any other evidence acceptable to the court of the existence of the foreign proceeding and of the appointment of the foreign representative.

3.    An application for recognition shall also be accompanied by a statement identifying all foreign proceedings in respect of the debtor that are known to the foreign representative.

4.    The court may require a translation of documents supplied in support of the application for recognition into an official language of this State.

21    Section 13 of the CBI Act provides:

In addition to the requirement in paragraph 3 of Article 15 of the Model Law (as it has the force of law in Australia) that an application for recognition be accompanied by a statement identifying all foreign proceedings in respect of the debtor that are known to the foreign representative, the application must be accompanied by a statement identifying:

(a)    all proceedings under the Bankruptcy Act 1966 in respect of the debtor; and

(b)    any appointment of a receiver (within the meaning of section 416 of the Corporations Act 2001), or a controller or a managing controller (both within the meaning of section 9 of that Act), in relation to the property of the debtor; and

(c)    all proceedings under Chapter 5, or section 601CL, of the Corporations Act 2001 in respect of the debtor;

that are known to the foreign representative.

22    Article 16 of the Model Law provides:

1.    If the decision or certificate referred to in paragraph 2 of article 15 indicates that the foreign proceeding is a proceeding within the meaning of subparagraph (a) of article 2 and that the foreign representative is a person or body within the meaning of subparagraph (d) of article 2, the court is entitled to so presume.

2.    The court is entitled to presume that documents submitted in support of the application for recognition are authentic, whether or not they have been legalized.

3.    In the absence of proof to the contrary, the debtor’s registered office, or habitual residence in the case of an individual, is presumed to be the centre of the debtor’s main interests.

23     Article 17 of the Model Law provides:

1.    Subject to article 6, a foreign proceeding shall be recognized if:

(a)    the foreign proceeding is a proceeding within the meaning of subparagraph (a) of article 2;

(b)    the foreign representative applying for recognition is a person or body within the meaning of subparagraph (d) of article 2;

(c)    the application meets the requirements of paragraph 2 of article 15;

(d)    the application has been submitted to the court referred to in article 4.

2.    The foreign proceeding shall be recognized:

(a)    As a foreign main proceeding if it is taking place in the State where the debtor has the centre of its main interests; or

(b)    As a foreign non-main proceeding if the debtor has an establishment within the meaning of subparagraph (f) of article 2 in the foreign State.

3.    An application for recognition of a foreign proceeding shall be decided upon at the earliest possible time.

4.    The provisions of articles 15, 16, 17 and 18 do not prevent modification or termination of recognition if it is shown that the grounds for granting it were fully or partially lacking or have ceased to exist.

24    Thus, if certain matters are established, the foreign proceeding must be recognised, unless recognition would be manifestly contrary to the public policy of Australia: Kapila, in the matter of Edelsten [2014] FCA 1112; (2014) 320 ALR 506 (“Re Edelsten”) at [22].

25    Rule 14.03 of the Federal Court (Bankruptcy) Rules 2016 (Cth) (“Rules”) states:

(1)    An application by a foreign representative for recognition of a foreign proceeding under article 15 of the Model Law must be made by filing an application in accordance with Form B2.

(2)    The application must:

(a)    be accompanied by the statements mentioned in article 15 of the Model Law and in section 13 of the Cross-Border Insolvency Act; and

(b)    name the foreign representative as the applicant and the debtor as the respondent; and

(c)    be accompanied by an affidavit verifying the matters mentioned in paragraphs 2 and 3 of article 15 of the Model Law and in section 13 of the Cross Border Insolvency Act.

(3)    When filing the application, the foreign representative must file, but need not serve, an interim application seeking directions as to service, and the Court may give any directions about service, and make any incidental orders, that it thinks just.

(4)    The applicant must serve a copy of the application and the other documents mentioned in subrule (2):

(a)    unless the Court otherwise orders—on each respondent (if any) to the proceeding as soon as practicable after filing an application and, in any case, at least 5 days before the date fixed for hearing; and

(b)    on any other persons the Court may direct at the hearing of the interim application.

(5)    A person who intends to appear before the Court at the hearing of an application for recognition must file and serve the documents mentioned in rule 2.04.

26    By Art 20, and subject to s 16 of the CBI Act, upon recognition of a foreign main proceeding:

(a)    Commencement or continuation of individual actions or individual proceedings concerning the debtor’s assets, rights, obligations or liabilities is stayed;

(b)    Execution against the debtor’s assets is stayed;

(c)    The right to transfer, encumber or otherwise dispose of any assets of the debtor is suspended.

27    Section 16 of the CBI Act provides:

For the purposes of paragraph 2 of Article 20 of the Model Law (as it has the force of law in Australia), the scope and the modification or termination of the stay or suspension referred to in paragraph 1 of that Article, are the same as would apply if the stay or suspension arose under:

(a) the Bankruptcy Act 1966 ; or

(b) Chapter 5 (other than Parts 5.2 and 5.4A) of the Corporations Act 2001;

as the case requires.

28    Article 21(1) of the Model Law provides relevantly that, upon recognition of a foreign proceeding, whether main or non-main, where necessary to protect the assets of the debtor or the interests of the creditors, the court may, at the request of the foreign representative, grant any appropriate relief, including:

(e)    entrusting the administration or realization of all or part of the debtor’s assets located in this State to the foreign representative or another person designated by the court;

…

[and]

(g)    granting any additional relief that may be available to [a trustee in bankruptcy] under the [Bankruptcy Act].

“Centre of main interests”

29    By Art 17(2)(a), a “foreign proceedings” must be recognised as a “foreign main proceeding” if it is taking place in the State where the debtor has the “centre of its main interests”.

30    In Re Edelsten at [53], Beach J said:

In terms of principle, the centre of main interests is where the debtor conducts the administration of the debtor’s interests on a regular basis. In making a determination, the court must have regard to the need for the centre of main interests to be ascertainable by third parties, creditors and potential creditors. It is important, therefore, to have regard not only to what the debtor is doing but also to what the debtor will be perceived to be doing by an objective observer. It is important also to have regard to the need, if the centre of main interests is to be ascertainable via third parties, for an element of permanency.

31    By Art 16(3), an individual’s habitual residence is presumed to be the centre of the debtor’s main interests. “Habitual residence” is not defined in the Model Law. However, in Re Edelsten, Beach J said this at [46] to [48]:

The concept ‘habitual residence’ has been used in many international conventions and other instruments. To treat it as presenting just a question of fact is attractive, but wrong. First, its use and content must be read in the light of the specific convention being considered and its context. Second, objective criteria derived from or implicit in such a context may need to be identified so that the conclusionary composite phrase can be applied to the facts. Third, the composite phrase may usefully be divided in the first instance, although ultimately the whole phrase must be construed and applied. Where does the insolvent reside? A wide variety of circumstances may bear upon that question. Is that residence habitual? Again, a wide variety of circumstances may bear upon that question. Past and present intentions of the insolvent may bear on such questions. Such intentions may manifest themselves in terms of the duration of connection or residence with a particular place. But intention is not to be given controlling weight (see LK v Director- General, Department of Community Services [2009] HCA 9; (2009) 237 CLR 582 (LK) at [28]). Moreover, an insolvent’s intentions may be ambiguous.

It is also possible that a transnational insolvent may lead such a nomadic life so as not to have a habitual residence (see LK at [25]).

One useful practical test may be to identify the centre of a person’s personal and family life (as disclosed by the individual’s activities) and to align that centre with the concept of habitual residence (cf LK at [25]), but care needs to be taken.

32    Mr Abate submitted, and I accept, that in addition to habitual residence, other factors which may be relevant to determining an individual debtor’s centre of main interests are:

(1)    the location where the central administration of the debtor takes place, and which is readily ascertainable by creditors;

(2)    the location of the debtor’s books and records;

(3)    the location where financing was organised;

(4)    the location of the debtor’s principal assets or operations;

(5)    the location of the debtor’s principal bank or other principal lender;

(6)    the location of the debtor’s employees or agents;

(7)    the location of any administration, payroll, accounts payable or cash management activity relating to the debtor’s business;

(8)    the location of any taxation authority relevant to the debtor’s income from personal exertion and taxation thereon; and

(9)    the location of the majority of creditors, having due regard to the relative significance and weighting of variables such as number, value, whether secured or not, and whether present or future, certain or contingent in comparing the relative differences in two or more jurisdictions.

Consideration

Recognition of “foreign proceeding” and “foreign representative”

Status-based requirements for recognition

33    The status-based conditions precedent to recognition specified by Art 17(1) of the Model Law are:

(1)    the Chilean bankruptcy proceeding is a “foreign proceeding” within the meaning of Art 2(a);

(2)    Mr Abate is a “foreign representative” within the meaning of Art 2(d); and

(3)    the application has been submitted to the court referred to in Art 4.

34    The third condition precedent is satisfied by submission of the application to this Court.

The Chilean bankruptcy proceeding is a “foreign proceeding”

35    Mr Abate was appointed liquidator by the Chilean Civil Court. The proceedings were commenced by creditors who filed a petition with the Chilean Civil Court on 1 September 2016, requesting that Mr Chang be placed into compulsory insolvency because Onix and the guarantors of promissory notes issued by Onix and guaranteed by Mr Chang were in default. In May 2017, Mr Chang put forward a proposal for the reorganisation of his affairs, which was rejected by his creditors. A revised proposal was also rejected. The consequence of that rejection was the formal commencement of liquidation proceedings against Mr Chang.

36    The order by the Chilean Civil Court, placing Mr Chang into compulsory liquidation and appointing Mr Abate as liquidator, was made under Art 120 of Chilean Law No. 20.720, which governs insolvency proceedings in Chile. Mr Abate’s evidence was that, under this law, the liquidation of a natural person is a court-controlled process, whereby the debtor’s assets are collected and realised by a liquidador before being distributed among his or her unsecured and non-preferential creditors. Creditors, both from Chile and abroad, rank equally amongst themselves on a pari passu basis.

37    After the Chilean Civil Court granted the petition for compulsory liquidation, and appointed Mr Abate as liquidator of Mr Chang, it authorised and instructed Mr Abate to seize all the assets and documents of Mr Chang, and to take an inventory of them with the aid of law enforcement authorities.

38    On this evidence, I was satisfied that the Chilean bankruptcy proceeding constitutes a “foreign proceeding” for the purposes of the Model Law.

Mr Abate is a “foreign representative”

39    On the evidence above, I was also satisfied that Mr Abate is a “foreign representative” for the purposes of the Model Law, being a person authorised in the “foreign proceeding” that is the Chilean bankruptcy proceeding to administer the liquidation of Mr Chang’s assets or affairs.

Procedural requirements for recognition

40    The procedural requirements for recognition specified by Art 17(1) of the Model Law are set out in Arts 15(2), 15(3) and 17(1)(c) of the Model Law, s 13 of the CBI Act and r 14.07 of the Rules.

Articles 15(2) and 17(1)(c)

41    There was no evidence of the kind referred to in Art 15(2)(a) and (b), the application for recognition having been accompanied by neither a certified copy of the decision of the Chilean Civil Court that commenced the foreign proceeding and appointed Mr Abate as liquidator nor a certificate from the Chilean Civil Court affirming the proceeding’s existence. However, in accordance with Art 15(2)(c), I was nevertheless satisfied of the existence of the foreign proceeding and of the appointment of the foreign representative by the sworn evidence of Mr Abate and a certified translation of a document entitled “Record of hearing law 20.720 creditors’ meeting on the reorganization agreement of the debtor company”, which identifies the “debtor company” as Mr Chang and records the appointment of Mr Abate as liquidator.

Article 15(3)

42    In compliance with Art 15(3), Mr Abate set out all foreign proceedings in respect of Mr Chang that are known to him in paras 61 to 65 of his November 2017 affidavit, which accompanied the originating application.

Section 13 of CBI Act

43    Paragraph 66 of Mr Abate’s November 2017 affidavit addresses the requirements of s 13 of the Act, by stating that he is not aware of any proceedings under Australian insolvency laws, proceedings under the Bankruptcy Act or the appointment of a receiver relating to Mr Chang.

Rule 14.03

44    The requirements of rr 14.03(1) and 14.03(2) were satisfied by the form of the application and Mr Abate’s November 2017 affidavit.

45    As noted earlier, orders were made in relation to service on 5 December 2017 dispensing with the requirements of r 14.03(4).

46    Thus, r 14.03 was satisfied.

Potential conflict of interest

47    On behalf of Mr Abate, the following submissions were made, which I accepted:

As noted above, Mr Abate has been appointed liquidator of both Mr Chang and Onix. This creates the potential for a conflict of interest in certain scenarios. For example, Onix might seek to recover assets held in Mr Chang’s name, giving rise to a question as to whether the assets are held by Mr Chang personally or as trustee for Onix. Further, although the vast majority of creditors are the same for Mr Chang and Onix, the two groups are not identical. For example, Mr Mitchell deposes to the existence of at least one Australian creditor of Mr Chang, who appears to have no claim against Onix.

Mr Abate’s appointment as Mr Chang’s liquidator in these circumstances is not contrary to Australian public policy – let alone manifestly so – such that would warrant his non- recognition under Art 6 of the Model Law.

First, the Chilean Civil Court of Santiago was aware of Mr Abate’s position as the liquidator of Onix, and in this knowledge, specifically appointed him liquidator of Mr Chang and authorised him to seek recognition abroad of the Chang Liquidation. It can be inferred that the Court considered the potential for conflict and was satisfied that it was appropriate and expedient for Mr Abate to be appointed as Mr Chang’s liquidator. This is consistent with the position in Australia, where the appointment of a liquidator to multiple related entities is not precluded by the existence of a potential conflict: ASIC v Bilkurra Investments Pty Ltd [2016] FCA 371 at [115]-[117]. Both authorities cited involved the appointment of a single liquidator to related companies, but the reasoning applies equally to a situation such as this where the related parties are a company and a director.

Secondly, the similarity of facts and commonality of interests between the creditor groups means that the appointment of a single liquidator will result in costs savings for creditors and procedural efficiency. Both creditor groups share the common interest of recovering dissipated funds, and ensuring that funds still held by Mr Chang are not further dissipated. There is also significant overlap of identify and causes of action between the two groups, with Mr Chang guaranteeing sums due to many Orix creditors. Questions of advantage and efficiency are precisely the circumstances under which Australian law may support the appointment of a liquidator to related entities: Bilkurra Investments at [116].

Thirdly, Mr Abate is already acting as liquidator of both Onix and Mr Chang in jurisdictions around the world including Chile, the United States and England. Requiring separate liquidators for Mr Chang and Onix in Australia would be inconsistent with Art 8 of the Model Law, which promotes uniformity in the application of the Model Law. It would also be inconsistent with the Court’s overarching purpose to facilitate the just resolution of disputes as quickly, inexpensively and efficiently as possible.

Conclusion as to “foreign proceeding”

48    Accordingly, and in the absence of any matter giving rise to the operation of Art 6, the Chilean bankruptcy proceeding was required to be recognised as a foreign proceeding in accordance with Art 17(1).

Recognition of “foreign main proceeding” and stay pursuant to Art 20

49    By Art 17(2), the Chilean bankruptcy proceeding was required to be recognised as a “foreign main proceeding” if it is taking place in the state where Mr Chang has the centre of his main interests.

50    I was satisfied that Mr Chang’s centre of main interests is Chile, for the following reasons given on Mr Abate’s behalf:

(1)    Mr Chang holds a Chilean passport and habitually resided in Chile and conducted the administration of his business interests on a regular basis in Chile until April 2016 when the fraud was uncovered and he fled to Malta. Mr Chang continues to own nine vehicles and six apartments in Chile, one of which Mr Abate believes to be Mr Chang’s residence. Mr Chang listed this apartment as his home when opening a new bank account in 2015, and requested that mail be sent there once a year. Mr Abate has inspected Mr Chang’s residence and gives evidence that Mr Chang’s personal effects, personal documents, furniture, decor and electronics all remain there.

(2)    Mr Abate also believes that Mr Chang’s residence has remained unoccupied during his absence in Malta. Mr Abate’s evidence is that he believes that the only reason Mr Chang has not returned to Chile is because Mr Chang fears arrest there.

(3)    These circumstances indicate that Mr Chang’s activities in Malta are not permanent or the centre of his personal or family life; they are instead temporary, transitory, and solely or primarily for the purpose of evading justice.

(4)    The majority of Mr Chang’s economic interests are in Chile, including Onix and the sums owed by him under the personal guarantees given by him to investors.

(5)    Most of the victims of Mr Chang’s alleged fraud (and as such his creditors) are in Chile.

(6)    Mr Chang is the subject of criminal proceedings in Chile, in relation to the same matters the subject of this application.

(7)    Mr Chang’s mother is a Chilean national, is ordinarily resident in Chile and is a co- defendant in the criminal proceedings involving Mr Chang in Chile.

51    I accepted Mr Abate’s submission that, while Mr Chang owns real estate and bank accounts in places other than Chile, the mere presence of these assets in jurisdictions other than Chile does not displace the overwhelming inference, based on the matters set out above, that his centre of main interests is Chile.

52    I also accepted that the decisions of courts of the United States and England recognising the Chang bankruptcy proceeding as a “foreign main proceeding” support Mr Abate’s submission. I accepted that Art 8 of the Model Law, which provides that when interpreting the Model Law regard is to be had to the need to promote uniformity in its application, justifies having regard to these conclusions of foreign courts.

53    Accordingly, the Chilean bankruptcy proceeding was required to be recognised as a foreign main proceeding in accordance with Art 17(2)(a).

54    Further, I was satisfied that it was appropriate to make an order confirming the effect of Art 20(1) in relation to Mr Chang, staying the commencement or continuation of individual actions or individual proceedings concerning the assets, rights, obligations or liabilities of Mr Chang; staying execution against his assets; and suspending the right to transfer, encumber or otherwise dispose of any of his assets.

Relief pursuant to Art 21

55    Mr Abate sought relief in accordance with Art 21(1)(e) and (g) so that he may be entrusted with the identification, administration and realisation of all of Mr Chang’s assets located in the jurisdiction. Mr Abate wishes to investigate Mr Chang’s assets and affairs, both in Chile and worldwide, and to realise his assets as far as possible, as this is an important aspect of his duties under Chilean insolvency law. Mr Abate stated that he needs to investigate the nature and extent of any activities undertaken in Australia that could be attributed (directly or indirectly) either to Mr Chang or his assets. He submitted that the proposed relief would adequately protect the interests of Mr Chang’s creditors and that Mr Chang would be adequately protected by and not prejudiced by the proposed relief.

56    As noted earlier, Mr Chang’s assets have been frozen by an order of the Santiago Criminal Court dated 29 September 2016. The order affects the six bank accounts identified at [10] above. The order also prohibits entry into transactions and contracts with respect to the Sydney apartment which is identified in the order as the property of Mr Chang.

57    Mr Abate has since discovered a further bank account in Mr Chang’s name, held with ANZ. Bank statements show a substantial credit balance in the account as at 31 August 2017. The statements show a mailing address for Mr Chang in Malta.

58    Mr Abate’s evidence included a Land and Property Information search for the Sydney apartment which shows Mr Chang as the registered proprietor, and does not disclose any registered mortgage or any unregistered dealings. There is hearsay evidence that the Australian Federal Police (“AFP”) are trying to obtain possession of the apartment as proceeds of crime. It is not known whether the AFP’s interest in the Sydney apartment is because of a request for assistance from the Chilean authorities, or whether it arises independently.

59    Mr Abate also gave evidence of his understanding that Chilean authorities have issued requests for mutual assistance to Australia (as well as Switzerland and the Isle of Man) to freeze bank accounts, although he is not sure of what assets are covered by the requests.

60    Mr Abate recognised that the freezing order made by the Santiago Criminal Court encompasses the same assets in Australia which Mr Abate, as liquidator of Mr Chang, seeks to obtain, administer, realise and ultimately distribute to creditors of Mr Chang. Mr Abate proposed that the Court make orders conditional on the lifting of the freezing order to ensure that the orders made by this Court do not conflict with the orders of the Santiago Criminal Court. Mr Abate also expressed the belief that obtaining recognition orders from this Court will assist him to persuade the Chilean criminal authorities to lift the freezing order to enable him to realise and ultimately distribute the Australian assets for the benefit of Mr Chang’s creditors.

61    On the basis of the evidence and considerations set out above, I was satisfied that it was appropriate to make orders 1 to 4 on 30 January 2018.

Relief from implied undertaking

62    In the Onix liquidation, Mr Abate obtained leave to issue orders for production to ANZ and Donohoes Commercial Lawyers, who acted for Mr Chang on the purchase of the Sydney apartment. ANZ and Donohoes both produced documents in response to those notices.

63    Mr Abate sought an order releasing him from any implied “Harman undertaking” in relation to the documents produced by ANZ and Donohoes, to allow him to fulfil his obligations under Chilean insolvency law as liquidator of Mr Chang: see Hearne v Street (2008) 235 CLR 125 at [96].

64    Mr Abate’s evidence was that there is no provision under the Chilean law preventing him, as liquidator for both Mr Chang and Onix, from sharing information between the two liquidation processes. To the contrary, insolvency proceedings are public in Chile and he has a duty to post notices about all of his actions in both liquidations on the Boletin Concursal, a place where liquidation-notices are posted. It is also Mr Abate’s duty to make use of all the information at his disposal to fulfil his duties.

65    I accepted that the material obtained from ANZ and Donohoes is likely to be directly relevant to the Chilean bankruptcy proceeding. I also accepted that releasing Mr Abate from any applicable Harman undertaking (to the extent necessary) would save the time and cost to Mr Abate (and ultimately Mr Chang’s creditors) of seeking substantively identical orders for production in this proceeding. Further, such a release will also enable Mr Abate to fulfil his obligation under Chilean law to make use of all information at his disposal in the Chang bankruptcy proceeding. I was therefore satisfied that it was appropriate to make order 5 on 30 January 2018.

Dispensing with r 14.07

66    For the reasons given in the Yates judgment, I made an order for the notification of the orders made on 29 and 30 January 2018 substantially in accordance with the orders made on 5 December 2018 and dispensing with compliance with r 14.07 of the Rules. The order also provides for service of notification of the orders by post to Mr Chang’s Malta address as it appears on ANZ bank statements.

Associate:

Dated:    6 March 2018