FEDERAL COURT OF AUSTRALIA
Jong (Trustee) v Au, in the matter of Au [2020] FCA 585
ORDERS
JONG YAT KIT AND SO MAN CHUN (IN THEIR CAPACITY AS JOINT AND SEVERAL TRUSTEES IN BANKRUPTCY FOR THE ESTATE OF AU HO WAH) Applicants | ||
AND: | Respondent | |
DATE OF ORDER: |
THE COURT ORDERS THAT:
1. Pursuant to s 6 of the Cross-Border Insolvency Act 2008 (Cth) (the Act), Art 15 and Art 17(1) of the Model Law on Cross-Border Insolvency of the United Nations Commission on International Trade Law (the Model Law) and r 14.03 of the Federal Court (Bankruptcy) Rules 2016 (Cth) (the Rules), the proceeding of the High Court of the Hong Kong Special Administrative Region of the People’s Republic of China, Court of First Instance, Case HCB 3046/2019, Re Au Ho Wah, relating to the respondent (the Foreign Proceeding), be recognised as a foreign proceeding, within the meaning of Art 2(a) of the Model Law.
2. Pursuant to s 6 of the Act and Art 17(2)(a) of the Model Law, the Foreign Proceeding be recognised as a foreign main proceeding, within the meaning of Art 2(b) of the Model Law.
3. Pursuant to s 6 of the Act and Art 21 of the Model Law:
(a) except with the leave of the court or with the applicants’ written consent:
(i) the commencement, continuation or enforcement of any individual action or legal proceeding (including without limitation any arbitration, mediation, or any judicial, quasi-judicial, administrative action, proceeding or process whatsoever) against the respondent or any of his assets, rights and obligations, be stayed;
(ii) the enforcement or execution of any judgment, order, or award against the respondent or his assets be stayed;
(iii) the right to transfer, encumber or otherwise dispose of any of the respondent’s property be suspended;
to the same extent as would apply if each such stay or suspension arose under the Bankruptcy Act 1966 (Cth) (Bankruptcy Act);
(b) the administration and realisation of the respondent’s assets in Australia be entrusted to the applicants;
(c) the applicants may, as they deem appropriate, examine witnesses, take evidence and obtain delivery of information concerning the respondent’s assets, affairs, rights, obligations or liabilities;
(d) section 81 of the Bankruptcy Act applies to any examination as if the applicants were the respondent’s trustees in bankruptcy and the applicants were the trustees of the respondent’s bankrupt estate under the Bankruptcy Act;
(e) subject to the provisions of the Bankruptcy Act, all powers normally available to a trustee in bankruptcy appointed under the provisions of the Bankruptcy Act, be made available to the applicants; and
(f) the respondent be subject to all of the obligations that a bankrupt has under the Bankruptcy Act as if he were a bankrupt under the Bankruptcy Act and as if the applicants were the trustees of his bankrupt estate under that Act.
4. The requirement for the applicant to send a notice of the making of these orders to known creditors pursuant to r 14.07(1)(c) of the Rules is dispensed with.
5. Pursuant to r 14.07(1)(b) of the Rules, the applicants are to serve a notice of the making of these orders to the respondent by:
(a) sending hard copies of these orders by pre-paid post to Mr Au’s residential address of Flat B, 1/F, Block 5 Riverwalk, 6 Ngan Kwong Road, Mui Wo, Lantau Island, Hong Kong;
(b) sending a copy of these orders electronically to Mr Au’s email address at tiger8howard@hotmail.com; and
(c) sending a text message to Mr Au on his number, +85294673907, to the following effect:
Attention Mr Au, I am writing to inform you that pursuant to orders of the Federal Court of Australia in the matter VID 101 of 2020 made on 1 May 2020, your bankruptcy proceeding has been recognised in Australia as a foreign main proceeding and the associated relief in the form sought in the originating process has been granted. A copy of the orders has been sent to you by post and electronically to tiger8howard@hotmail.com. Best regards, James,
within 5 business days of the date these orders are made.
6. Pursuant to rr 14.06(1)(b) and 14.07(1)(d) of the Rules, the applicants are to publish a notice of the making of these orders in accordance with Annexure A once in each of The Australian and The Age within 5 business days of the date these orders are made.
7. 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.
8. The costs of this proceeding be costs of the bankruptcy of the respondent, and accorded the same priority as costs of proceedings incurred by a trustee in bankruptcy appointed under the Bankruptcy Act.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
ANNEXURE A
Notice of making of order under Cross-Border Insolvency Act 2008
VID 101 of 2020
Federal Court of Australia
Au Ho Wah
To all the creditors of Au Ho Wah
Take notice that:
1. On 1 May 2020, the Federal Court of Australia in Proceeding VID 101 of 2020, commenced by the applicants Jong Yat Kit and So Man Chun in their capacity as joint and several trustees in bankruptcy for the estate of Au Ho Wah, made the following orders under the Cross-Border Insolvency Act 2008 in relation to Au Ho Wah:
(a) Pursuant to s 6 of the Cross-Border Insolvency Act 2008 (Cth) (the Act), Art 15 and Art 17(1) of the Model Law on Cross-Border Insolvency of the United Nations Commission on International Trade Law (the Model Law) and r 14.03 of the Federal Court (Bankruptcy) Rules 2016 (Cth) (the Rules), the proceeding of the High Court of the Hong Kong Special Administrative Region of the People’s Republic of China, Court of First Instance, Case HCB 3046/2019, Re Au Ho Wah, relating to the respondent (the Foreign Proceeding), be recognised as a foreign proceeding, within the meaning of Art 2(a) of the Model Law.
(b) Pursuant to s 6 of the Act and Art 17(2)(a) of the Model Law, the Foreign Proceeding be recognised as a foreign main proceeding, within the meaning of Art 2(b) of the Model Law.
(c) Pursuant to s 6 of the Act and Art 21 of the Model Law:
(i) except with the leave of the court or with the applicants’ written consent:
(A) the commencement, continuation or enforcement of any individual action or legal proceeding (including without limitation any arbitration, mediation, or any judicial, quasi-judicial, administrative action, proceeding or process whatsoever) against the respondent or any of his assets, rights and obligations, be stayed;
(B) the enforcement or execution of any judgment, order, or award against the respondent or his assets be stayed;
(C) the right to transfer, encumber or otherwise dispose of any of the respondent’s property be suspended;
to the same extent as would apply if each such stay or suspension arose under the Bankruptcy Act 1966 (Cth) (Bankruptcy Act);
(ii) the administration and realisation of the respondent’s assets in Australia be entrusted to the applicants;
(iii) the applicants may, as they deem appropriate, examine witnesses, take evidence and obtain delivery of information concerning the respondent’s assets, affairs, rights, obligations or liabilities;
(iv) section 81 of the Bankruptcy Act applies to any examination as if the applicants were the respondent’s trustees in bankruptcy and the applicants were the trustees of the respondent’s bankrupt estate under the Bankruptcy Act;
(v) subject to the provisions of the Bankruptcy Act, all powers normally available to a trustee in bankruptcy appointed under the provisions of the Bankruptcy Act, be made available to the applicants; and
(vi) the respondent be subject to all of the obligations that a bankrupt has under the Bankruptcy Act as if he were a bankrupt under the Bankruptcy Act and as if the applicants were the trustees of his bankrupt estate under that Act.
2. The applicants’ address for service is King & Wood Mallesons, Level 23, Collins Arch, 447 Collins Street, Melbourne, Victoria, 3000.
3. The name and address of the foreign representative is Jong Yat Kit and So Man Chun in their capacity as joint and several trustees of the estate of Au Ho Wah, PricewaterhouseCoopers, Edinburgh Tower, Central, Hong Kong.
4. The name and address of the person entrusted with distribution of the assets is Jong Yat Kit and So Man Chun in their capacity as joint and several trustees of the estate of Au Ho Wah, PricewaterhouseCoopers, Edinburgh Tower, Central, Hong Kong.
Date: [insert date]
Name of applicant or applicant’s lawyer: Samantha Kinsey
O’CALLAGHAN J:
Introduction
1 Mr Au Ho Wah (Mr Au) was declared bankrupt by the High Court of the Hong Kong Special Administrative Region of the People’s Republic of China, Court of First Instance (Hong Kong Court) on 17 July 2019 in proceeding HCB 3046/2019 (Hong Kong Proceeding).
2 The applicants, both of whom are partners of PricewaterhouseCoopers (the Trustees), were jointly and severally appointed as the trustees in bankruptcy for the estate of Mr Au by creditors’ resolution at a general meeting of creditors on 18 October 2019.
3 By originating application filed on 20 February 2020, the Trustees seek:
(a) recognition of the Hong Kong Proceeding as a “foreign main proceeding” pursuant to Art 17 of the Model Law on Cross-Border Insolvency of the United Nations Commission on International Trade Law (Model Law), which has been enacted as Australian law pursuant to s 6 and Sch 1 of the Cross-Border Insolvency Act 2008 (Cth) (CBI Act); and
(b) relief under the Model Law consequent upon recognition of the Hong Kong Proceeding.
4 On 26 March 2020, I made orders (26 March Orders), among others, enabling the applicants to serve the respondent by pre-paid post, email and text message and requiring the applicants to publish a notice of the filing of the application in The Australian and The Age newspapers by 3 April 2020.
5 Those orders were complied with.
6 Neither the respondent nor any other person has appeared.
7 The Trustees rely on:
(a) an affidavit of Mr Jong Yat Kit (one of the Trustees) affirmed 19 February 2020 which:
(i) exhibits a copy of the bankruptcy order made in the Hong Kong Proceeding; and
(ii) deposes to matters relevant to the question of whether Hong Kong is Mr Au’s centre of main interest and the location of his assets in Australia;
(b) affidavits of Ms Wai Man Natalie Ng, a solicitor at King & Wood Mallesons’ Hong Kong office, affirmed 28 April 2020, and Mr Thomas Monotti, a solicitor at King & Wood Mallesons’ Melbourne office, affirmed today, which prove aspects of service in accordance with the 26 March Orders; and
(c) an affidavit of Mr James Cleeve, a Manager at PricewaterhouseCoopers, affirmed 28 April 2020, which proves additional aspects of service in accordance with the 26 March Orders and deposes as to the collective nature of the Hong Kong Proceeding.
Other Parties
8 In a Statement of Affairs affirmed by Mr Au on 3 October 2019, he identified one secured, and four unsecured, creditors. Save for one unsecured creditor situated in the United States of America, each of the creditors is situated in Hong Kong.
9 The creditors situated in Hong Kong and the United States of America have not been served with a copy of the originating process and supporting affidavit filed in this proceeding because they will not be adversely affected by the recognition of the Hong Kong Proceeding in Australia.
10 The 26 March Orders included an order dispensing with the need to serve Mr Au’s creditors.
Standing
11 Article 15(1) of the Model Law provides that a “foreign representative” may apply to “the court” for recognition of the “foreign proceeding” in which the foreign representative has been appointed.
12 “Foreign representative” is defined in Art 2 of the Model Law as “a person or body … 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”.
13 “Foreign proceeding” is defined in Art 2 of the Model Law as “a collective judicial or administrative proceeding in a foreign State … 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”.
14 “Court” for the purposes of Art 15(1) of the Model Law includes the Federal Court of Australia: see Art 4 of the Model Law and s 10 of the CBI Act.
15 The evidence upon which the Trustees rely, including in particular the relevant provisions of the Bankruptcy Ordinance (Hong Kong), proves that the Hong Kong Proceeding is:
(1) a “collective proceeding” because it is a process undertaken for the benefit of all of the bankrupt’s creditors;
(2) a “judicial proceeding”;
(3) “pursuant to a law relating to insolvency”, because the Bankruptcy Ordinance (Hong Kong) Cap 6 and its subsidiary legislation concern insolvent individual debtors; and
(4) one in which “the assets and affairs of the debtor are subject to control or supervision by a foreign court, for the purpose of reorganization or liquidation”, because bankruptcy trustees in Hong Kong are required to account to the court and pay over all moneys and deal with all securities in such a manner as the court from time to time directs.
16 The Hong Kong Proceeding is a therefore a “foreign proceeding” for the purposes of the Model Law.
17 Accordingly, the Trustees have standing to seek recognition under Art 15 of the Model Law.
Procedural requirements
18 Pursuant to Art 15(2) of the Model Law and r 14.03(2) of the Federal Court (Bankruptcy) Rules 2016 (Cth) (Rules), an application for recognition of a foreign proceeding must be accompanied by at least one of the following:
(1) a certified copy of the decision commencing the foreign proceeding and appointing the foreign representative; or
(2) a certificate from the foreign court affirming the existence of the foreign proceeding and of the appointment of the foreign representative; or
(3) in the absence of (1) and (2), any other evidence acceptable to the court of the existence of the foreign proceeding and of the appointment of the foreign representative.
19 Article 15(3) of the Model Law and r 14.03(2) of the Rules also require an application for recognition to be accompanied by a statement identifying all foreign proceedings in respect of the debtor that are known to the foreign representative.
20 Section 13 of the CBI Act relevantly requires an application for recognition to be accompanied by a statement identifying “such of the following as are known to the applicant foreign representative”, including “all proceedings under the Bankruptcy Act 1966 in respect of the debtor”.
21 The evidence discloses that it is impossible to obtain a certificate from the Hong Kong Court “affirming the existence” of the Hong Kong Proceeding.
22 Further, no decision in the form of reasons was published.
23 It follows that in order to satisfy the requirements of r 14.03(2), I must be satisfied that the application is accompanied by acceptable evidence of the existence of the foreign proceeding and of the appointment of the Trustees as foreign representatives.
24 The Trustees adduced plentiful evidence on that question, including about the commencement of the Hong Kong Proceeding and of their appointment as trustees of Mr Au’s estate, together with:
(1) copies of documents filed in the creditor’s petition for the bankruptcy of Mr Au;
(2) a stamped copy of an order made by Master Hui of the Hong Kong Court dated 17 July 2019 adjudging Mr Au bankrupt;
(3) a copy of a memorandum to the Hong Kong Court of resolutions passed at the general meeting of creditors, filed with the Hong Kong Court on 4 November 2019;
(4) a copy of a Certificate of Appointment of Trustees issued by the Official Receiver’s Office of Hong Kong dated 21 April 2020, certifying that a bankruptcy order had been made by the Hong Kong Court against Mr Au on 17 July 2019 and that the Trustees had been duly appointed joint and several trustees of the property of Mr Au with effect from 18 October 2019;
(5) a copy of Mr Au’s signed “summary of statement of affairs”.
(Article 16(2) of the Model Law provides that the court is entitled to presume that documents submitted in support of the application for recognition are authentic, whether or not they have been legalised.)
25 It follows that the requirements of Art 15(2) of the Model Law and r 14.03(2) of the Rules are met.
26 Mr Jong deposed that the Hong Kong Proceeding is the only foreign proceeding of which he is aware in relation to Mr Au.
27 Litigation searches of proceedings in this court and the Supreme Court of New South Wales obtained by the Trustees have not disclosed any proceedings in respect of Mr Au. Further, Mr Jong has deposed that he has not identified, and otherwise has no knowledge of, any proceedings in respect of Mr Au under the Bankruptcy Act.
28 Accordingly, the relevant requirement of s 13 of the CBI Act (see [20] above]) has also been met.
Service
29 The 26 March 2020 Orders required the applicants to:
(1) serve the originating application, supporting affidavit of Jong Yat Kit affirmed 19 January 2020 and a copy of the 26 March 2020 Orders (the Documents) to the respondent by:
(a) sending hard copies of the Documents by pre-paid post to Mr Au’s residential address of Flat B, 1/F, Block 5 Riverwalk, 6 Ngan Kwong Road, Mui Wo, Lantau Island, Hong Kong;
(b) sending the Documents electronically to Mr Au’s email address at tiger8howard@hotmail.com; and
(c) sending a text message to Mr Au on his number, +85294673907, to the following effect:
Attention Mr Au, I am writing to inform you that pursuant to orders of the Federal Court of Australia in the matter VID 101 of 2020 made on 20 March 2020, an Originating Process, Interim Application and the Affidavit of Mr Jong Yat Kit have been sent by prepaid post (receipt no. [to be inserted]) to your residence at Flat B, 1/F, Block 5 Riverwalk, 6 Ngan Kwong Road, Mui Wo, Lantau Island, Hong Kong, and by email to tiger8howard@hotmail.com. Details for filing a Notice of Appearance are contained within those Documents. Best regards, James,
before 3 April 2020; and
(2) publish a notice of the filing of the application in the form in Annexure A of the 26 March 2020 Orders in each of The Australian and The Age by 3 April 2020.
30 In his affidavit Mr Monotti deposed that he:
(1) sent an email to Mr Au at tiger8howard@hotmail.com serving a copy of the 26 March 2020 Orders, the originating process, the interim application filed in this proceeding on 20 February 2020, and the affidavit of Jong Yat Kit affirmed 19 February 2020, at 9 am on 30 March 2020; and
(2) caused a notice of the filing of the application for recognition to be published in each of The Australian and The Age on 3 April 2020.
31 Mr Cleeve has also deposed that he sent a text message to Mr Au using the telephone number identified in the 26 March Orders, and in the form set out in those orders, at 4.16pm on 30 March 2020.
32 Ms Ng has deposed that the Business Services team at King & Wood Mallesons in Hong Kong caused a copy of the 26 March 2020 Orders, the originating process, the interim application and the affidavit of Mr Jong to be hand delivered to the registered post counter of the General Post Office in Hong Kong at approximately 3.00pm on 30 March 2020. A copy of the postage receipt containing the tracking number is also exhibited to Ms Ng’s affidavit.
Recognition
33 I turn now to the Trustees’ application for an order that the Hong Kong Proceeding be recognised as a foreign main proceeding.
34 Pursuant to Art 17(1) of the Model Law, a foreign proceeding must be recognised (subject to Art 6) if:
(1) the foreign proceeding is a “foreign proceeding” under Art 2(a) of the Model Law;
(2) the foreign representative applying for recognition is a person or body within the meaning of the expression “foreign representative” within Art 2(d) of the Model Law;
(3) the application satisfies the requirements of Art 15(2) of the Model Law; and
(4) the application has been submitted to the court referred to in Art 4 of the Model Law.
35 As each of the requirements in Art 17(1) of the Model Law is satisfied, it follows that the Hong Kong Proceeding must be recognised as a foreign proceeding.
36 As to whether the proceeding ought to be recognised as a “main” or “non-main” proceeding, Art 17(2) of the Model Law provides that the foreign proceeding shall be recognised:
(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 of the foreign state.
37 In the absence of proof to the contrary, the debtor’s habitual residence in the case, like this, of an individual, is presumed to be the centre of the debtor’s main interests: see Art 16(3) of the Model Law.
38 In Kapila, in the matter of Edelsten [2014] FCA 1112; 320 ALR 506 at 516 [44], Beach J observed that the purpose of that presumption “is to facilitate deciding recognition at the earliest possible time in accordance with Art 17, cl 3”.
39 The notion of “habitual residence” is not defined in the Model Law. As the High Court explained in LK v Director-General, Department of Community Services (2009) 237 CLR 582 at 591 [21] (French CJ, Gummow, Hayne, Heydon and Kiefel JJ) (LK), “the expression … and its cognate forms, have long been used in international conventions”. It has “repeatedly been presented as a notion of fact rather than law, as something to which no technical legal definition is attached so that judges from any legal system can address themselves directly to the facts”: at 592 [21], quoting JD McClean, Recognition of Family Judgments in the Commonwealth (Butterworths, 1983) at 28 [1.38].
40 The High Court further explained the term as follows (LK at 592-593 [22]-[25]):
To approach the term only from a standpoint which describes it as presenting a question of fact has evident limitations. The identification of what is or may be relevant to the inquiry is not to be masked by stopping at the point of describing the inquiry as one of fact. If the term ‘habitual residence’ is to be given meaning, some criteria must be engaged at some point in the inquiry and they are to be found in the ordinary meaning of the composite expression. The search must be for where a person resides and whether residence at that place can be described as habitual.
Having regard, however, to the stated determination to eschew definition of the expression in its use in the Abduction Convention, and other instruments derived from the work of the Hague Conference, it would be wrong to attempt in these reasons to devise some further definition of the term intended to be capable of universal application. Rather, it is sufficient for present purposes to make two points. First, application of the expression ‘habitual residence’ permits consideration of a wide variety of circumstances that bear upon where a person is said to reside and whether that residence is to be described as habitual. Secondly, the past and present intentions of the person under consideration will often bear upon the significance that is to be attached to particular circumstances like the duration of a person’s connections with a particular place of residence.
Use of the term ‘habitual residence’ to identify the required connection between a person and a particular municipal system of law amounts to a rejection of other possible connecting factors such as domicile or nationality. In particular, it may be accepted that ‘habitual residence’ has been used in the Abduction Convention (as it has been used in other instruments) ‘[t]o avoid the distasteful problems of the English concept [of domicile] and the uncertainties of meaning and proof of subjective intent’. It was said in the nineteenth century that the notion that lies at the root of the English concept of domicile is that of permanent home. But it was soon recognised that domicile, in English law, is ‘an idea of law’. Thus, in considering acquisition of a domicile of choice, questions of intention loomed large, and the relevant intention had to have a particular temporal quality (an intention to reside permanently or at least indefinitely). Use of ‘habitual residence’ in the Abduction Convention rather than domicile as the relevant connecting factor entails discarding notions like the revival of domicile of origin and the dependent domicile of a married woman which marked the English law of domicile. More importantly for present purposes, use of ‘habitual residence’ in preference to domicile entails discarding the approach of the English law of domicile which gave questions of intention a decisive importance in determining whether a new domicile of choice had been acquired.
It may well be said of the term ‘habitual residence’, as it was of the expression ‘domicile’, that ‘if you do not understand your permanent home ... no illustration drawn from foreign writers or foreign languages will very much help you to it’. Yet it may be accepted that ‘[h]abitual residence, consistent with the purpose of its use, identifies the center of a person’s personal and family life as disclosed by the facts of the individual’s activities’. Accordingly, it is unlikely, although it is not necessary to exclude the possibility, that a person will be found to be habitually resident in more than one place at the one time. But even if place of habitual residence is necessarily singular, that does not entail that a person must always be so connected with one place that it is to be identified as that person’s place of habitual residence. So, for example, a person may abandon a place as the place of that person’s habitual residence without at once becoming habitually resident in some other place; a person may lead such a nomadic life as not to have a place of habitual residence.
(Citations omitted.)
41 LK was a case that arose under the Convention on the Civil Aspects of International Child Abduction, but, in respect of individual debtors, the ascertainment of “habitual residence” is to be ascertained in the same way: see Gainsford v Tannenbaum (2012) 216 FCR 543 at 554 [42] (Logan J); Williams v Simpson [2011] 2 NZLR 380 (Heath J).
42 In this case the evidence is clear that Mr Au habitually resides in Hong Kong: he presently resides in Hong Kong, on Lantau Island; he does not visit Australia very often and does not hold an Australian passport; he holds five bank accounts in Hong Kong; he has been a director of at least five companies registered in Hong Kong and one in the People’s Republic of China; and he co-owns a residential property in Hong Kong as tenants-in-common with his wife.
43 Accordingly, the Hong Kong Proceeding is to be recognised as a foreign main proceeding.
Article 21 relief
44 The applicants seek the following orders pursuant to s 6 of the CBI Act and Art 21 of the Model Law:
(a) except with the leave of the Court or with the Applicants’ written consent:
(i) the commencement, continuation or enforcement of any individual action or legal proceeding (including without limitation any arbitration, mediation, or any judicial, quasi-judicial, administrative action, proceeding or process whatsoever) against the respondent or any of his assets, rights and obligations, be stayed;
(ii) the enforcement or execution of any judgment, order, or award against the respondent or his assets be stayed;
(iii) the right to transfer, encumber or otherwise dispose of any of the respondent’s property be suspended;
to the same extent as would apply if each such stay or suspension arose under the [Bankruptcy Act];
(b) the administration and realisation of the respondent’s assets in Australia be entrusted to the applicants;
(c) the applicants may, as they deem appropriate, examine witnesses, take evidence and obtain delivery of information concerning the respondent’s assets, affairs, rights, obligations or liabilities;
(d) related to (c), an order that section 81 of the Bankruptcy Act apply to any such examination as if the applicants were the respondent’s trustees in bankruptcy and the applicants were the trustees of the respondent’s bankrupt estate under the Bankruptcy Act;
(e) orders permitting the applicants to exercise all powers available to a trustee in bankruptcy under the Bankruptcy Act;
(f) an order that the respondent has all of the obligations that a bankrupt has under the Bankruptcy Act as if he were a bankrupt under the Bankruptcy Act and as if the applicants were the trustees of his bankrupt estate under that Act.
45 Upon recognition of a proceeding as a foreign main proceeding, the various moratoria contained in Art 20 of the Model Law, including a stay on the commencement or continuation of proceedings concerning the debtor’s assets, rights, obligations or liabilities and execution against the debtor’s assets, are invoked in relation to the debtor and his estate.
46 Article 21 of the Model Law allows the court to grant additional relief as a matter of discretion upon recognition of a foreign proceeding. It provides:
Relief that may be granted upon recognition of a foreign proceeding
1. 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:
(a) Staying the commencement or continuation of individual actions or individual proceedings concerning the debtor’s assets, rights, obligations or liabilities, to the extent they have not been stayed under paragraph 1 (a) of article 20;
(b) Staying execution against the debtor’s assets to the extent it has not been stayed under paragraph 1 (b) of article 20;
(c) Suspending the right to transfer, encumber or otherwise dispose of any assets of the debtor to the extent this right has not been suspended under paragraph 1 (c) of article 20;
(d) Providing for the examination of witnesses, the taking of evidence or the delivery of information concerning the debtor’s assets, affairs, rights, obligations or liabilities;
(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;
(f) Extending relief granted under paragraph 1 of article 19;
(g) Granting any additional relief that may be available to [insert the title of a person or body administering a reorganization or liquidation under the law of the enacting State] under the laws of this State.
2. Upon recognition of a foreign proceeding, whether main or non-main, the court may, at the request of the foreign representative, entrust the distribution of all or part of the debtor’s assets located in this State to the foreign representative or another person designated by the court, provided that the court is satisfied that the interests of creditors in this State are adequately protected.
3. In granting relief under the present article to a representative of a foreign non-main proceeding, the court must be satisfied that the relief relates to assets that, under the law of this State, should be administered in the foreign non-main proceeding or concerns information required in that proceeding.
(Italicisation in original.)
47 As Norris J said in Larsen (Foreign Representatives of Atlas Bulk Shipping AS) v Navios International Inc [2011] EWHC 878 (Ch) at [25], “it must be a rare case in which the court forms the view that the grant of relief is necessary to protect the assets of the debtor or the interests of the creditors but yet as a matter of discretion withholds relief. Circumstances equivalent to those recognised by the equitable doctrine of laches may perhaps be one such case”.
48 No circumstances here remotely resemble such a “rare case”: see generally Kapila, in the matter of Edelsten [2014] FCA 1112; 320 ALR 506; Palmer (Trustee), in the matter of Slater (Bankrupt) [2016] FCA 780 (Gleeson J); Official Assignee in Bankruptcy of the Property of McCormick v McCormick [2018] FCA 410 (Rangiah J); Aquino (Trustee), in the matter of McGowan (Bankrupt) v McGowan [2020] FCA 221 (Markovic J).
49 I am satisfied that each of the orders sought and set out at [44] above is necessary to enable the applicants efficiently and effectively to administer and realise Mr Au’s assets located in Australia (which, according to Mr Jong’s evidence, constitute the majority of his total assets) and otherwise to carry out their duties as trustees of the estate of Mr Au for the benefit of his creditors.
Publication
50 I will also make orders for the publication and notification of the orders described above, in the following form:
(1) The requirement for the applicant to send a notice of the making of the orders to known creditors pursuant to r 14.07(1)(c) of the Rules is dispensed with.
(2) Pursuant to r 14.07(1)(b) of the Rules, the applicants are to serve notice of the making of the orders to the respondent by:
(a) sending hard copies of the orders by pre-paid post to Mr Au’s residential address of Flat B, 1/F, Block 5 Riverwalk, 6 Ngan Kwong Road, Mui Wo, Lantau Island, Hong Kong;
(b) sending a copy of the orders electronically to Mr Au’s email address at tiger8howard@hotmail.com; and
(c) sending a text message to Mr Au on his number, +85294673907, to the following effect:
Attention Mr Au, I am writing to inform you that pursuant to orders of the Federal Court of Australia in the matter VID 101 of 2020 made on 1 May 2020, your bankruptcy proceeding has been recognised in Australia as a foreign main proceeding and the associated relief in the form sought in the originating process has been granted. A copy of the orders has been sent to you by post and electronically to tiger8howard@hotmail.com. Best regards, James,
within 5 business days of the date the orders are made.
(3) Pursuant to 14.06(1)(b) and 14.07(1)(d) of the Rules, the applicants are to publish a notice of the making of the orders once in each of The Australian and The Age within 5 business days of the date the orders are made.
51 I should not complete these reasons without noting the quality of the written submissions prepared by Ms V Bell of the Victorian Bar, who appeared for the Trustees at the hearing of the application today. They were a model of clarity and succinctness.
I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice O'Callaghan. |
Associate:
