Federal Court of Australia

Tucker v Mongbwalu Goldfields Investments Limited [2021] FCA 135

File number:

WAD 29 of 2021

Judgment of:


Date of judgment:

24 February 2021


CORPORATIONS – external administration of company – moratorium on enforcement of security interests under s 440B of the Corporations Act 2001 (Cth) – where the relevant security interest is held by foreign companies over property located outside Australia – extra-territorial application of s 440B

PRIVATE INTERNATIONAL LAW – whether the court has jurisdiction over foreign companies who hold security interests over property located outside Australia but owned by an Australian company – where the defendants did not appear and purported not to submit to the court’s jurisdiction – whether the first defendant submitted to the court’s jurisdiction by lodging a proof of debt in the administration of the Australian company – in circumstances where injunctive relief would be unenforceable – in circumstances where declaratory relief will likely have utility


Corporations Act 2001 (Cth) ss 5(4), 440B

Personal Property Securities Act 2009 (Cth) s 267

Cases cited:

Akers v Deputy Commissioner of Taxation (2014) 223 FCR 8; [2014] FCAFC 57

New Cap Reinsurance Corporation Ltd v Grant [2009] NSWSC 662

Rubin v Eurofinance SA; In re New Cap Reinsurance Corpn Ltd (in liquidation) [2012] UKSC 46

Stemcor (A/sia) Pty Ltd v Oceanwave Line SA [2004] FCA 391

Tucker, in the matter of Vector Resources Limited [2021] FCA 112

Waller v Freehills (2009) 177 FCR 507; [2009] FCAFC 89


General Division


Western Australia

National Practice Area:

Commercial and Corporations


Commercial Contracts, Banking, Finance and Insurance

Number of paragraphs:


Date of last submission:

24 February 2021

Date of hearing:

23 February 2021

Counsel for the Plaintiffs:

Mr CK Pearce

Solicitor for the Plaintiffs:

Blackwall Legal LLP

Counsel for the Defendants:

The Defendants did not appear


WAD 29 of 2021



First Plaintiff


Second Plaintiff


Third Plaintiff



First Defendant


Second Defendant


Third Defendant

order made by:



24 FEBRUARY 2021


1.    The Escrow Deed entered into on 3 September 2018 created, as between the Third Plaintiff and the First Defendant, an interest in favour of the First Defendant over the property of the Third Plaintiff, being a 69.5% shareholding in the Second Defendant, that is a security interest as that term is defined in the Corporations Act 2001 (Cth) and the Personal Property Securities Act 2009 (Cth).

2.    During the administration of the Third Plaintiff, s 440B of the Corporations Act 2001 (Cth) precludes the First Defendant from enforcing its security interest against the Third Plaintiff, such that the First Defendant cannot take any steps under the Escrow Deed to effect a transfer of the Third Plaintiffs shares in the Second Defendant to the First Defendant.


3.    The Plaintiffs have leave to amend the originating process filed in this proceeding on 17 February 2021 as follows:


(b)    the name of the First Defendant be substituted with MONGBWALU GOLDFIELDS INVESTMENT LTD (REGISTERED NO. 133304);

(c)    the name of the Second Defendant be substituted with MONGBWALU GOLDFIELDS INVESTMENT HOLDINGS 6 LIMITED (REGISTERED NO. 1571486).

4.    The need for compliance with r 8.25 of the Federal Court Rules 2011 (Cth) is dispensed with for the purpose of the amendments identified in Order 3.

5.    The Plaintiffs costs of this application be paid from the assets of the Third Plaintiff as costs in its administration.

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



1    Yesterday, I heard urgent argument for the Administrators of the third plaintiff (Company) in support of relief sought concerning their disputes involving the defendants (MGI, MGIH6 and Harneys). Last week on 17 February 2021, I granted leave on an urgent basis for the Administrators to effect service out on the defendants who are companies registered in the Republic of Seychelles and the British Virgin Islands in relation to the claim heard yesterday: Tucker, in the matter of Vector Resources Limited [2021] FCA 112 (Tucker (No 1)). It is important that these reasons be read against the background of the reasons and definitions in Tucker (No 1) as I do not propose repeating, in view of the urgent circumstances, all the material in those reasons.

2    Several affidavits were read and correspondence was tendered into evidence. It is unnecessary to go into the detail of that evidence, save to observe that the Administrators have put before the Court all communications which have been raised on behalf of the defendants and it appears to me that they intended to do that at all times in discharge of their obligations, appearing ex parte.

3    MGI and Harneys (including as agent for MGIH6) have indicated that they do not intend to participate in the proceedings, but they have sought to make submissions to the Court, albeit through communications principally with solicitors for the Administrators. Those submissions are directed first to a rejection, albeit a respectful one, of the jurisdiction of this Court over the defendants in the absence of any submission to jurisdiction by them. Second, they challenge the Administrators vesting argument which relies on s 267 of the Personal Property Securities Act 2009 (Cth) (PPSA). No submissions were directed to the Administrators’ moratorium argument pursuant to s 440B of the Corporations Act 2001 (Cth).

4    In Tucker (No 1), I explained why I was satisfied at a prima facie level, that the Court had jurisdiction on the moratorium issue as there described (at [16-[39]). I remain satisfied and for the same reasons which need only be briefly repeated here:

(a)    section 440B of the Corporations Act restricts a secured party from enforcing a security interest against the Company during its administration;

(b)    the Escrow Deed entered into on 3 September 2018 created a security interest over property of the Company in favour of MGI: Tucker (No 1) (at [19]-[29]); and

(c)    the actions proposed to be taken by MGI is enforcement for the purpose of s 440B, specifically Item 1 of the table: Tucker (No 1) (at [30]-[33]).

5    I accept, for the reasons given in Tucker (No 1) (at [34]-[39]), the Administrators contention that this Court has jurisdiction in the present case by reason of s 5(4) of the Corporations Act which provides that each provision of that Act applies according to its tenor in relation to acts and omissions outside the jurisdiction. To the reasoning in Tucker (No 1) need only be added the following short passage from Waller v Freehills (2009) 177 FCR 507; [2009] FCAFC 89 per Finn, Dowsett and Siopis JJ (at [53]):

In our view, s 5 of the Corporations Act comprises a clear expression of Parliaments intention that the provisions of the Corporations Act are, according to their tenor, to operate extraterritorially. This expression of Parliamentary intention operates to displace the presumption that the Corporations Act is to operate only territorially.

6    As I made clear to the Administrators however, the grant of relief is a discretionary matter for the Court and the particular circumstances of the case and the positions of the defendants bear upon the specific nature of the relief that should be granted.

7    All defendants have received notice of these proceedings and have effectively been served with all appropriate documentation which, in turn, has enabled them to make submissions to the effect that the Court does not have jurisdiction, but that even if it does, it should not make the orders sought by the Administrators because the orders would not be enforceable in the British Virgin Islands. MGI and Harneys are in slightly different positions but they are both represented by competent commercial law advisers.

8    These proceedings were instituted in this Court only late last week. Tomorrow, 25 February 2021 is the deadline by which interim injunctive relief granted in favour of the Company by the Eastern Caribbean Supreme Court expires. Part of the reason for the tight time frame was the Administrators unsuccessful attempts to obtain service out orders from the Supreme Court of Western Australia as explained in Tucker (No 1) (at [73]-[75]).

9    The Administrators seek injunctive relief restraining MGI from carrying out any act which will result in the transfer of the Companys Shares in MGIH6 back to MGI as described in Tucker (No 1) (at [2]-[3]). It is Harneys as escrow agent which will transfer those Shares (in MGIH6) pursuant to its perceived contractual obligations with MGI under the Escrow Deed.

10    I am not prepared to grant injunctive relief. The primary reason is that I know of no Australian decision which stands as precedent for an Australian court restraining foreign corporations from dealing with foreign property in a foreign jurisdiction. Nor have the Administrators been able to refer me to such authority. Even if there were precedent for such a restraint, I would be disinclined in the exercise of a discretion to grant it in circumstances where it does not lie within the jurisdiction or power of this Court to deal with any potential breach of such restraint. As Allsop J (as his Honour then was) observed in Stemcor (A/sia) Pty Ltd v Oceanwave Line SA [2004] FCA 391 in relation to an application to subpoena a party in Germany (at [12]):

Such a subpoena, if served, even using the methods contemplated by the Convention, is not capable of enforcement. Without other steps being taken to enlist German governmental assistance (whether executive or judicial), Australian courts cannot enforce compliance on pain of punishment. In the absence of enforcement procedures the order is an empty threat, or the equivalent of a mere request couched in imperative terms. The Court should not be seen to be engaged in such conduct. A similar view was expressed by Giles J in Aetna Pacific Securities v Hong Kong Bank of Australia Ltd (29 April 1993, NSWSC, unreported).

11    Declaratory relief, however, is in a different category. A declaration is, of course, final relief and in the exercise of discretion to grant that final relief, I have taken into account the matters which the defendants solicitors have raised in correspondence with the Administrators’ solicitors (although not submitting to jurisdiction) as to why the relief should not be granted. I have also raised some other discretionary matters with counsel for the Administrators.

12    The first practical consideration is what value, if any, a declaration on the moratorium issue, either in the terms sought by the Administrators or otherwise, could have. The Administrators have adduced evidence from solicitors who acted for the Company in the Eastern Caribbean Supreme Court that, armed with a declaration, they may be able to obtain a stop order preventing the transfer of the Shares in the British Virgin Islands on a temporary or permanent basis. It is then deposed that, should the defendants proceed to take steps to transfer the Shares, injunctive relief in the British Virgin Islands could be sought. I will not speculate as to the prospects of that happening, save to observe that it seems that there may be some utility in declaratory relief being granted if it is otherwise appropriate to do so.

13    This is an appropriate case for declaratory relief. The Administrators are entitled to vindication as to their position on this hotly disputed issue, even if it is only by way of a declaration, rather than an injunction as primarily sought. They are right to seek the intervention of the Court for the benefit of all creditors in the administration of the Company. As to the approach that might be taken in the British Virgin Islands, the only evidence before the Court is that a court may see fit to give effect to the declaration but that is entirely a matter for that court. Courts in this country have followed attempts to achieve judicial comity in the international insolvency area. See for example the discussion by Barret J in New Cap Reinsurance Corporation Ltd v Grant [2009] NSWSC 662 (at [111]-[122]); and Allsop CJs discussion of universalism (with whom Robertson and Griffiths JJ concurred) in Akers v Deputy Commissioner of Taxation (2014) 223 FCR 8; [2014] FCAFC 57 (at [104], [108]-[120]).

14    I will deal with some other practical issues relevant to the exercise of discretion. None of the plaintiffs have provided an undertaking as to damages. The Company itself being under administration, would not be in a position to do so and the Administrators should not be expected to provide personal undertakings as to damages. Undertakings as to damages are not generally relevant to declaratory relief but it is necessary to consider what effect (if any) such relief may potentially have. Given that the Administrators have explained they will seek a stop order, to the extent there is short term economic disadvantage if any to any of the defendants, pending consideration of the issues raised by such an order, such damage would appear to be minimal, if it transpires that such an order or similar order, if made, should be extinguished. Again, that is entirely a matter for others.

15    The Administrators have attempted to preserve the status quo pending further debate with the defendants, but the defendants have chosen not to submit to jurisdiction and not to offer any undertaking not to transfer the Shares. This is relevant given that the defendants have not raised any substantive argument in relation to the fairly straightforward moratorium issue itself as distinct from more complex vesting arguments in relation to s 267 of the PPSA. Those arguments are not addressed in these reasons but may be relevant at a later time after termination one way or another of the Company’s administration.

16    The defendants have raised the question as to why the Administrators have brought proceedings in an Australian court when the relevant contractual agreement between the parties (the SSPA) provides for the settling of disputes by arbitration and further, that in obtaining the interim injunction in the Eastern Caribbean Supreme Court, the Company undertook to invoke the arbitration proceedings in accordance with the dispute resolution clauses of the SSPA. The arbitration proceedings were not expressly referred to in Tucker (No 1) but the arbitration documentation was in evidence. Those proceedings are, I am told by counsel, still on foot. There is certainly no evidence that the arbitration proceedings which were evidenced, have been abandoned or discontinued. But those proceedings, as with the injunction proceedings in the Eastern Caribbean Supreme Court were of quite a different character. Each of those proceedings was directed specifically to resolution of disputes concerning the agreement between the relevant parties (the SSPA). Those proceedings were not directed to the moratorium issue which raises statutory questions involving all creditors of the Company and only arises upon the administration of the Company. This proceeding has nothing or very little to do with the SSPA. It is a proceeding upon a statutory cause of action maintainable by the Administrators of one of the contracting parties. The cause of action is not available to the contracting party itself. The Administrators, when suing upon the statutory cause of action, do not attempt to enforce some right of the contracting party.

17    Although the Company had sought and obtained the interim injunction in the Eastern Caribbean Supreme Court before its administration, the Administrators had been appointed by the time that that Court ruled to discharge the injunction, with such discharge coming into effect on 25 February 2021. In ex tempore reasons given in chambers proceedings in the Eastern Caribbean Supreme Court in the High Court of Justice Virgin Islands Commercial Division on 22 January 2021, the Hon Mr Justice Adrian Jack, in noting that development, made the following observations: (at 15-16):

     Firstly, on the 10th of December 2020, Vector has gone into voluntary administration. This is an Australian insolvency procedure similar to an English administration.

     Secondly, on the 18th of December 2020, the dispute between Vector and MGI has been referred to arbitration before the ICC International Court of Arbitration in Paris.

     Thirdly, on the 19th of December 2020, MGI served a notice purporting to terminate the SSPA.

     Benjamin Carruthers, one of the administrators, deposes that as a matter of Australian law Vector is protected (a) from enforcement of any security against it, and (b), from having contracts, such as the SSPA, terminated. against it.

     My judgment, these points are irrelevant.

     The SSPA is governed by English law.

     It was established in Fibria Celulose SA and Pan Ocean Co. Ltd. and Another [2014] EWHC 2124 Chancery 2014 Business Law Reports 1041, that provisions of a foreign insolvency law, in that case South Korean law, would not be applied to provisions purporting to prevent termination of contracts. Equally restrictions on the enforcement of security will not be recognise even supposing the agreement is a form of security, a point on which I did not hear full argument.

     It is against that background that I granted the injunction.

18    I raised with counsel for the Administrators (as MGI and Harneys had also done in correspondence) that the Administrators had not sought to appeal the judgment from the Eastern Caribbean Supreme Court and the time to do so had now passed. Counsel accepted this, but stressed that the essential dispute being engaged in that jurisdiction, as with the arbitration proceedings, was a dispute about the terms and effect of the agreement between the parties (the SSPA). On a reading of the ex tempore judgment, that is clearly so. The observations referred to above respond to a different issue from that which is raised in the moratorium argument. The issue addressed in the extract above was the effect of the Company’s administration on the ability of counterparties to terminate a contract by the operation of ipso facto clauses. Indeed, this appears to be the primary focus of the case which the Court cited.

19    So far as this Court is concerned, I do not consider that the Administrators should be regarded as having waived their rights to seek relief in this Court under the specific moratorium issue addressed in Tucker (No 1). There might be something to be said for the proposition that they could have more directly relied upon the specific moratorium question in those proceedings and did not do so, but that point has not been raised in the tendered correspondence of the defendants which does address other matters beyond the strict question of jurisdiction.

20    There is a question which I do not need to decide as to whether MGI has indeed already submitted to jurisdiction. I do not need to decide the question because it is clear from all the communications that all defendants have had an adequate opportunity in the circumstances to be heard on the particular issues and have expressly declined to submit to jurisdiction. That does not mean I should not grant relief if I consider it appropriate to do so in circumstances where I am satisfied that s 440B of the Corporations Act applies with extra-territorial effect.

21    I should record however, that it is argued for the Administrators that MGI has submitted to the jurisdiction of this Court by lodging a proof of debt in the administration of the Company. The Administrators rely on the decision of the United Kingdom Supreme Court in Rubin v Eurofinance SA; In re New Cap Reinsurance Corpn Ltd (in liquidation) [2012] UKSC 46 where Lord Collins (with whom Lord Walker and Lord Sumption agreed) said (at [165]-[167]):

165.    In English law there is no doubt that orders may be made against a foreign creditor who proves in an English liquidation or bankruptcy on the footing that by proving the foreign creditor submits to the jurisdiction of the English court. In Ex p Robertson, In re Morton (1875) LR 20 Eq 733 trustees were appointed over the property of bankrupt potato merchants in a liquidation by arrangement. A Scots merchant received payment of £120 after the liquidation petition was presented, and proved for a balance of £247 and received a dividend of what is now 20p in the pound. The trustees served a notice of motion, seeking repayment of the £120 paid out of the insolvent estate, out of the jurisdiction. The respondent objected to the jurisdiction of the English court on the ground that he was a domiciled Scotsman. On appeal from the county court, Sir James Bacon CJ held that the court had jurisdiction. He said, at pp 737-738:

… what is the consequence of creditors coming in under a liquidation or bankruptcy? They come in under what is as much a compact as if each of them had signed and sealed and sworn to the terms of it that the bankrupts estate shall be duly administered among the creditors. That being so, the administration of the estate is cast upon the court, and the court has jurisdiction to decide all questions of whatever kind, whether of law, fact, or whatever else the court may think necessary in order to effect complete distribution of the bankrupts estate. … [C]an there be any doubt that the Appellant in this case has agreed that, as far as he is concerned, the law of bankruptcy shall take effect as to him, and under this jurisdiction, to which he is not only subjected, but under which he has become an active party, and of which he has taken the benefit ... [The Appellant] is as much bound to perform the conditions of the compact, and to submit to the jurisdiction of the court, as if he had never been out of the limits of England.

166.    The Syndicate objected to the jurisdiction of the Australian court. Barrett J in his judgment of 14 July 2009 accepted that it had made it clear that it was not submitting to its jurisdiction, and he also accepted that as a result the judgment of the Australian court would not be enforceable in England. His judgment is concerned exclusively with the preference claims, and he did not deal with the question of submission by reference to the Syndicates participation in the liquidation by way of proof and receipt of dividends. He decided that the court had jurisdiction because the New South Wales rules justified service out of the jurisdiction on the basis that the cause of action arose in New South Wales.

167.    I would therefore accept the liquidators submission that, having chosen to submit to New Caps Australian insolvency proceeding, the Syndicate should be taken to have submitted to the jurisdiction of the Australian court responsible for the supervision of that proceeding. It should not be allowed to benefit from the insolvency proceeding without the burden of complying with the orders made in that proceeding.

(Emphasis added.)

22    Similarly in Akers, Allsop CJ (with whom Robertson and Griffiths JJ concurred), said (at [165]):

…. I am prepared to accept that formal submission of a proof of debt to the insolvency administration will generally be adequate to support a conclusion that the court supervising the administration thereafter has jurisdiction to make orders in matters connected with the administration against the creditor who has proved. Such a conclusion does not, however, answer the question whether, as a matter of law and discretion, a court should not make orders under Arts 20.3 and 22.3 to protect local creditors in circumstances where the local creditor has lodged a proof of debt in the foreign main proceeding. There is no evident principle that, by the minimum act of submission to the foreign court supervising the foreign main proceeding, such as by the submission of a proof of debt, exclusive jurisdiction is placed in the hands of that court in respect of all possible issues concerning the insolvency, or that the local creditor becomes disentitled to make an application of the kind with which the Court is concerned. The Model Law assumes complementary authority of the local court and the court supervising the foreign main proceeding. No provision of the Model Law denies that complementary authority by reason only of lodgment of a proof in the Cayman Islands.

(Emphasis added.)

23    The Administrators correctly observe that the Chief Justice expressly distinguished between the enlivening of jurisdiction upon proving in an administration, and a situation where a single forum assumes exclusive jurisdiction over such matters. This case would be in the former category and the Administrators do not suggest the jurisdiction of this Court to be exclusive in the present case. Rather, they submit that a decision of an Australian court on an application of Australian law is likely to be useful for the purpose of the parties determining the correct position in the British Virgin Islands.

24    The position in New Cap apparently approved in the United Kingdom Supreme Court in Rubin was almost identical: see New Cap (at [22]-[25]). I note that in light of these arguments MGI has now purported to withdraw its proof of debt in the administration, but whether that would overcome the purported submission to jurisdiction is another interesting question which does not need to be decided now.

25    I consider it unnecessary to determine at this stage the question of whether there has been a submission to this Court’s jurisdiction by MGIs lodging of the proof of debt and participation in the insolvency, although the argument to that effect has force. I am satisfied independently that I have jurisdiction and that MGI has had adequate opportunity to be heard in relation to the question of whether or not relief should be granted. The parties in this proceeding are represented by capable commercial legal advisors who, albeit acting under an urgent time imperative, have chosen to persist with that time imperative rather than offering any form of undertaking which might ameliorate the urgency.

26    The views expressed in Tucker (No 1) explain why I consider that the Administrators had a prima facie case on the moratorium issue to warrant service out. No reason to the contrary on that specific point has been advanced. The Administrators have established their case. I consider it is appropriate to make a declaration effectively in terms sought by the Administrators. Some minor procedural orders will also be made to regularise the names of the defendants.

I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice McKerracher.


Dated:    24 February 2021