Akers, Stephen John as a joint foreign representative of SAAD Investments Company Limited (in Official Liquidation) (A Company registered in the Cayman Islands) and Ors v Deputy Commissioner of Taxation

[2014] HCATrans 231

[2014] HCATrans 231

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S129 of 2014

B e t w e e n -

STEPHEN JOHN AKERS AS A JOINT FOREIGN REPRESENTATIVE OF SAAD INVESTMENTS COMPANY LTD (IN OFFICIAL LIQUIDATION) (A COMPANY REGISTERED IN THE CAYMAN ISLANDS)

First Applicant

HUGH DICKSON AS A JOINT FOREIGN REPRESENTATIVE OF SAAD INVESTMENTS COMPANY LTD (IN OFFICIAL LIQUIDATION) (A COMPANY REGISTERED IN THE CAYMAN ISLANDS)

Second Applicant

MARK BYERS AS A JOINT FOREIGN REPRESENTATIVE OF SAAD INVESTMENTS COMPANY LTD (IN OFFICIAL LIQUIDATION) (A COMPANY REGISTERED IN THE CAYMAN ISLANDS)

Third Applicant

SAAD INVESTMENTS COMPANY LTD (IN OFFICIAL LIQUIDATION) (A COMPANY REGISTERED IN THE CAYMAN ISLANDS)

Fourth Applicant

and

DEPUTY COMMISSIONER OF TAXATION

Respondent

Application for special leave to appeal

CRENNAN J
GAGELER J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 17 OCTOBER 2014, AT 10.03 AM

Copyright in the High Court of Australia

____________________

MR B.A.J. COLES, QC:   If your Honours please, I appear for the applicants together with my learned friends, MR S.W. ASPINALL and MS E.L. BEECHEY.  (instructed by Henry Davis York).

MR N.J. WILLIAMS, SC:   May it please the Court, I appear with MR M.J. O’MEARA for the respondent. (instructed by Commissioner of Taxation)

CRENNAN J:   Yes, Mr Coles.

MR COLES: May it please the Court. The case, it is submitted, raises, as the Full Court acknowledged, important questions about the proper construction and interpretation of the Model Law which with appropriate modifications has the force of law in Australia by virtue of section 6 of the Cross‑Border Insolvency Act 2008. Copies of that document are in the first tab of the bundle of documents supplied to your Honours.

The applicants contend that in withholding the remittal of assets in Australia, assets of the company in liquidation, from the administrators in the foreign main proceedings, and in granting leave to the respondent to recover its debt out of those assets to the exclusion of the general body of creditors, the Full Court failed correctly to interpret and apply the Model Law.  Two points really are involved and I will deal with each shortly.  The first relates to the question of the interest of the respondent as creditor.

CRENNAN J:   Is it fair to say that is the main point?

MR COLES:   Yes.

CRENNAN J:   Yes.

GAGELER J:   This is a construction of Article 21.2.

MR COLES:   Article 21.2.  Well, it comes up under 21.2 in connection - yes, it is, but also 22.1 because there is also the question when one is modifying an order made under 21.2, that is to say, entrusting the distribution to the foreign representative.  Your Honours see, I will come back to this if necessary ‑ ‑ ‑

CRENNAN J:   The whole notion of the adequate protection of the creditors, is it not ‑ ‑ ‑

MR COLES:   Precisely.  There is a construction question which arises between the reference to the interests of creditors in this State being adequately protected in 20.2 and the condition of modification orders in 22.1 which relates to the interests of creditors and other persons and that perhaps may have some importance to which I can come if necessary.

But the first, as I say, your Honour, relates to the question of the interest of the respondent as creditor and the adequate protection of that interest and that is a matter, of course, which particularly relates to the liquidator’s power to - having authority to realise and administer the assets in this State or this country.  It affects their power to distribute or remit those assets to the liquidation in the centre of main interest.

GAGELER J:   Accepting that it is an important question, the problem is with you persuading us that you have some significant prospect of succeeding on an appeal in having us adopt a different construction from that adopted by the Full Court.

MR COLES:   I am going to suggest to your Honour how we would foreshadow - we would wish to ‑ ‑ ‑

CRENNAN J:   We would need to have an appreciation, I think, of where you say error was made in the decision below.

MR COLES:   Yes, indeed.  The second of the two questions I identify concerns the modification of the stay which it is now, I think, accepted was automatically imposed upon the making of the recognition order and that stay is ‑ ‑ ‑

GAGELER J:   That is Article 20.

MR COLES:   ‑ ‑ ‑ provided in Article 20.1 and is a stay, amongst other things, from the commencement or continuation of individual actions or individual proceedings concerning the debtor’s assets.  On the first point, the remittal point, the Full Court said at 109, that there was no basis to place any impediment on the remittal of the local assets to the central universal administration if the respondent could prove in the winding‑up in the Cayman Islands, and the court also dealt with a question that had been raised as to whether there are any public policy questions in play and their Honours said that there was really no public policy reason not to remit.

The question focused really on the adequacy of protection of the interests and that was what was said was the matter which foreclosed the remittal.  The question was, therefore, did the revenue authority’s inability to receive a dividend in the Cayman Islands foreign main proceedings supply a basis for withholding the funds ‑ ‑ ‑

GAGELER J:   Or inability to claim.

MR COLES:   Or inability, yes.

CRENNAN J:   Do you accept, Mr Coles, that in relation to the revenue debt, that absent recognition the Deputy Commissioner could have collected the debt?

MR COLES:   Not entirely, your Honour.  Absent recognition, and in a condition of affairs under the general law the foreign main representatives could have come into this country, as they traditionally did before stays were automatically imposed and the like, and at least sought the assistance of the court and then there might be an argument about whether the powers, for example, which are powers of enforcement, not powers which attend the nature of the interest which the Commissioner possesses, there would then be an argument about that topic.  So I do not say that absent recognition the Commissioner, as it were, had a free kick.  It simply would be a different controversy with different procedural ‑ ‑ ‑

CRENNAN J:   Well, given recognition, had the Commissioner expressly applied for leave, section 471B, I think, would make a difference to your argument about interest.

MR COLES:   It would.  I need to deal with this when I come to the second point.  Assuming the Commissioner had before the court a matter of separate controversy, which I do not stay to talk about at this stage, but assuming the Commissioner had regularly invoked or made an application for leave under the only power available to him to modify the stay imposed by Article 20.1, the question would be, of course, if leave were able to obtained or granted, a matter to which we return, the interest of the Commissioner for the purposes of identifying what needed to be adequately protected would be those of an ordinary unsecured creditor but who had leave to proceed.  That is a dimension we need to deal with.

A couple of short matters before I come to it, your Honours.  Plainly, of course, the difficulty of proving in the Cayman Islands is simply the consequence, we suggest, of a principle generally accepted - the courts will not enforce foreign revenue claims and the same position, of course, applies in Australia.  It is an accepted international legal principle.  Indeed, commentary relating to the Model Law suggests that the maintenance of that international legal principle does not violate any objective – or objective of equal treatment of creditors for Model Law purposes. 

But to come now to the point, your Honour, the Federal Court, of course, considered that it was necessary to retain the funds locally to ensure the respondents were protected and that requires attention, in our respectful submission, to what were the respondent’s interests.  The respondent’s interests, it is contended, were those of a creditor of an insolvent company in relation to which a winding‑up order had been made and in relation to which a recognition order had recognised the Grand Court of the Cayman as the foreign main proceedings.

When liquidation ensues shortly, creditors’ rights in relation to or against the assets of the company are stayed.  That is the case in a local liquidation and that is the case in a recognised foreign main proceeding and in their place there are…..or usually substituted or is found to be substituted a right to prove in a formal liquidation.  That is the way Justice Kitto described it in the well‑known Motor Terms Case which we have supplied for your Honours.

GAGELER J:   So what do the words “interest of creditors in this State” cover?

MR COLES:   Depending on the nature and interest they cover – they firstly require recognition that they are – creditors may have different interests.  Some, for example, may be secured.  Some may be ‑ ‑ ‑

GAGELER J:   Well, let us assume an unsecured creditor.

MR COLES:   An unsecured creditor.  Well, ultimately the interests of an unsecured creditor, one who has no security, one who has no treaty rights to stand outside of the Model Law, one who has no other claims that were put in the path of a general body of creditors ‑ ‑ ‑

GAGELER J:   I am really waiting for this answer.

MR COLES:   Yes.  His right is to participate in the external administration to – and ultimately to prove, and that is the submission - that is the right.  That is what the effect of a winding‑up order ‑ ‑ ‑

GAGELER J:   So the court in Australia must make some assessment of the local creditor’s standing in the liquidation proceedings, in the main liquidation proceedings?

MR COLES:   Perhaps that is the word, but what is the quantum of its interest is legal interests as a creditor, an unsecured creditor in an insolvent winding‑up.

CRENNAN J:   Well, in your summary of argument in the application book, 115 - I think it is paragraphs 20, 21 and 22, I think that is the nub of it on this point - the contention is that the interest of creditors referred to in those articles must fall within one of those exceptions.

MR COLES:   Yes, in short, otherwise you are – you still have an interest as a creditor, but it is an interest which is ultimately – which is no more than the right to prove in common with all of your fellow unsecured creditors in the winding‑up.  Of course it follows from that of course that as an ordinary unsecured creditor the Deputy Commissioner’s only interest was to prove in the only available winding‑up, which was in the Caymans, there being, of course, no local winding‑up, and bluntly, if that produced, for whatever reason, a nil dividend, that was simply a measure of the value of the interest or the right which the claimant had.  It may have been of little value, but that was the only interest relevantly capable of protection.

GAGELER J:   Mr Coles, on that view of Article 21.2, what is the assessment that has to be made by the local court in determining whether those interests are adequately protected?

MR COLES:   Well, we would of course say, your Honour, that the first thing to do is to identify the interest and then see what it is that the liquidators want to do with respect to the distribution or emission abroad of the local assets for the central administration and see how that affects the interests of the creditors entitled to some protection in relation to those assets. 

So an obvious example will be a creditor who says in relation to – or perhaps any other claimant for that matter, it may not necessarily be a creditor, because the effect of the stay, for example, in order 20 is not simply against creditors, it is probably against others as well - but if one identifies, for example, a person with proprietary interest in the particular asset in question in the case of a creditor, a secured creditor, who does not want the asset going abroad because that would impair or deny the efficacy of the local security.

They are examples, I am not endeavouring to be exhaustive or exclusive, but they are examples of the sorts of interests which are worthy of, and are doubtless in contemplation as interests that would be the subject of a need to adequately protect that creditor from the consequences of an unfettered right of overseas remittal which would otherwise be available if an order were made under 21.2.

CRENNAN J:   Does Chief Justice Allsop – is there any passage in his judgment which could be said to deal in terms with the point that is made at paragraph 22 of your summary of argument?

MR COLES:   I think the answer in terms and with an analysis or – I think his Honour simply says it may be accepted that principles such as those appearing in Motor Terms and the like are part of the law, but does not go on, with respect, to analyse how we would say that analysis would produce, by way of impact on the ‑ ‑ ‑

CRENNAN J:   What is your position on the Model Law and the relationship between the prior law, the Model Law and the prior principles which were applied?  There seems to be this debate touched upon that once it was modified universalism, that sort of thing.

MR COLES:   Well, we would say that the principal issues arising in this case turn on construction of the provisions of the Model Law, but the importance and relevance of the anterior law, which was quite detailed as your Honours know, is itself important because, firstly, and perhaps at the risk of stating the obvious, it does not seem to have been the intention of the framers of the Model Law or of the legislature in adopting it or making it the law here to reduce or displace matters that would have been quite respectable or quite demonstrably available as a protection for foreign creditors, even without the Model Law.

For example, when we are talking about remittal of assets, it was clearly established and was clearly seen to be part of the general law without contribution by the Model Law that there was no difficulty, no restraint in the circumstances or no reason to withhold distribution of assets in one jurisdiction, and in the particular case in question, in England, to the primary liquidation in, in that case, Australia, notwithstanding the creditors in England were much worse off because of priority provisions under the insurance legislation and the corporations legislation under local law.  That is the HIH Casualty decision which we have given to your Honours, I think, behind tab 4.

CRENNAN J:   Just going back to Chief Justice Allsop then, the application book 78 and 79, I would apprehend paragraphs 111 and 114, which you somehow take issue with that his Honour says that it can be accepted:

That the Model Law reflects a universalist approach –

then he goes on to say that nevertheless, a court, a local recognising court making the recognition orders and the stay orders still may be faced with the position of a creditor who has an enforceable right.  Is your main point procedural that ‑ ‑ ‑ 

MR COLES:   No, it is quite substantive.  The main point is – just to pick up on 114, for example, his Honour refers to stripping all of “the benefit of those rights if assets are sent” - that is at line 30 - “to the foreign main proceeding”.  There is a – and perhaps this is the ‑ ‑ ‑

CRENNAN J:   Well, he is referring, is he not, to the position of a revenue creditor in the Cayman Islands?

MR COLES:   Yes, but when one is considering the important point of construction raised by expressions such as “interests of the creditors are adequately protected” one needs to be cautious, in our respectful submission, in recognising that one is looking at the interests of creditors in the events that have now occurred, namely a liquidation, not, we emphasise, the interests of creditors which would have been readily available if liquidation had never ensued.  The premise of the Model Law, of course, is that the company is insolvent and in liquidation.

So that to be speaking simply of the preservation of anterior or pre‑liquidation creditors’ rights is something of a – arguably, and this we would contend – misconception when one is identifying the interests of that creditor in common with other creditors in the now insolvent winding‑up.  In other words, the assessment of adequacy of protection for the interests of creditors is the interests of creditors in terms of that winding‑up and how ‑ ‑ ‑

CRENNAN J:   So the landscape is a winding‑up?

MR COLES:   Yes.  I mean, his Honour, for example, is concerned to say that the important statutory rights vested in the Commissioner in this country to, in effect, access by various processes of attachment or garnishee and the like – the Commissioner’s interests, by the way, as your Honours will have recollected from the judgment, have not been identified in the case.  Indeed, you will see from application book 17 in the primary judge, the interests were expressly not identified and have never been defined.

But speaking therefore generally about that and on the assumption that there are some interests somewhere there would necessarily be no reason at all to suppose that – I will not say “mere powers of enforcement” because they are significant powers of enforcement, but they – powers of enforcement do not elevate, for example, an ordinary creditor into a secured creditor, or of themselves ordinarily convey rights in rem against assets.  They are simply mechanisms for getting one’s unsecured debt paid.

Now, there will be a lively question - there has been in this country - how many of these thus far unidentified or unspecified powers under, for example, a Taxation Administration Act, necessarily survive a winding‑up and a recognition order under the Commonwealth – under the Cross‑Border Insolvency Act?  We know in local law it is been held by this Court that some of, at least, the Commissioner’s powers are unavailing when winding‑up ensues and, in effect - I think the case was Bruton Holdings v The Commissioner. 

CRENNAN J:   Yes.

MR COLES:   It was only where the Commissioner could point to an express one that survived liquidation.

CRENNAN J:   Well, this is a critical point of difference between yourself and the respondent.

MR COLES:   Exactly, yes.  But, in our respectful submission, I have perhaps not developed it as comprehensively as I – I am sorry, I see the light, your Honour.  Your Honours understand our – if I am going to have a second – your Honours understand our second point focuses on the – well, putting procedural complaints to one side about modifying the stay ‑ ‑ ‑

CRENNAN J:   The 20.2 point?

MR COLES:   The 20.2 point.  We say very shortly - I will do this in a second or two, if I can - we say very shortly, your Honour, assuming there was error there because 471B of the Corporations Act – if your Honours could look at tab 2 you will see the definitions.  On the next page of the section itself the Full Court erred by holding that 471B, as picked up by Article 20.2, gave power to make an order giving the Commissioner leave to exercise rights to recover from SAAD assets in Australia, because on recognition the respondent’s rights to commence individual actions had been stayed and the exception or modification of that stay, which is supplied via the mechanism of a picking up of section 471B, that only allows a court – you can see that from the terms of the section – to grant leave to a party to execute a judgment, that is what execution is, or to take enforcement action through a court or sheriff, and that, in short, is not what the modification order, which the court upheld, gave the respondent leave to do.

In other words, having recognised the foreign main proceeding the Australian court, we say, did not have the power to allow these non‑curial administrative processes to proceed.  I do apologise, your Honour, but if your Honour looks at 471B, a person cannot begin or proceed with enforcement process except with leave of the court.  That does not mean any enforcement process.  Perhaps the court erroneously thought it did because if you go back one page you will see enforcement process is defined, and conformably with the first part of 471B, about leave to proceed in court:

enforcement process, in relation to property, means:

(a)execution against that property –

Execution, of course, is a process following a judgment and, over the page –

(b)any other enforcement process in relation to that property that involves a court or a sheriff. 

Looking at the modification orders that the court made, in effect, setting aside the stay neither of those enforcement processes were engaged or availed of or available.

CRENNAN J:   Would you accept there is less general public importance in that sort of issue than in your interests issue?

MR COLES:   They are very related.  I think I would be reluctant to, I am sorry to say, your Honour, because the two are so interrelated.  If I get to the

point where, for example, there is no power to – as we say there is not – no power to cut into the automatic stay ‑ ‑ ‑

CRENNAN J:   It feeds into the interest point.

MR COLES:   Then what is the point ‑ ‑ ‑

CRENNAN J:   Yes.

MR COLES:   ‑ ‑ ‑ of not allowing the assets to be remitted overseas.  So they are tied in.  May it please the Court.

CRENNAN J:   Thank you.  Yes, Mr Williams.

MR WILLIAMS:   Thank you, your Honour.  Could I invite the Court to page 62 of the book where Article 21.2 is set out?  The first point to be made about it is that the Commissioner is undoubtedly a creditor in Australian law, indeed, conclusively so outside Part IVC proceedings.  It is important to note that the article refers to the “interests of creditors” in the ordinary sense and not to “an interest of creditors” in a legal or equitable sense.

The applicant’s proposition in terms of Article 21.2 is that an Australian court in deciding whether it is satisfied that the interests of creditors in Australia are adequately protected must apply Cayman Islands law to decide who is a creditor.  In our submission, that is a very unlikely construction, both as to text and statutory purpose and context. 

First, it involves the proposition dealt with by Chief Justice Allsop at page 56 of the book, in paragraph 35 – correctly rejected, with respect – to the effect that the Model Law was to make – the effect of the Model Law was to make an Australian tax debt unenforceable in Australia, not just in the event of a liquidation but also in the event of a reorganisation. 

Now, if this is correct, an insolvency base – this is a point that his Honour makes at 35 – if this is correct an insolvency base reorganisation will be sufficient for a company to shed all foreign tax debts in countries that have adopted the Model Law.  Reorganisations under insolvency laws are quite common in many countries.  One only has to think of the American airlines over the course of the last couple of decades. 

If the applicants are correct in their construction about the Model Law, companies that are insolvent by reason of the magnitude of their foreign tax debts will, by reorganisation, simply be able to shed those debts upon recognition in Model Law countries and thereupon immediately walk out of insolvency.  That is in terms of purpose of the Model Law, a most improbable outcome.

CRENNAN J:   What about the argument in the applicant’s summary of argument to which I directed his attention.  That is the argument – paragraphs 20 to 22 which relate to interests only being those which are covered by the exceptions.  What do you say about that in this context?  I understand the point you make that it is improbable that recognition would automatically exclude the debt of a revenue creditor.

MR WILLIAMS:   In terms of the article itself – in terms of Article 21.2 – it is unlimited in its terms.  There is nothing - when it speaks of the interests of creditors it is speaking generally.

CRENNAN J:   Yes.

MR WILLIAMS:   Article 22.1 is to the same effect.  It is speaking to an Australian court in the current context and in our submission there is nothing in textual context to suggest a limitation of the kind for which the applicants contend in paragraphs 20 to 22 of their submissions.  It is general, manifestly intended to be general, and no such limitation can be implied.

Can I say something briefly about the scheme of Australia’s adoption of the Model Law?  That scheme recognises the general rule that courts do not enforce the sovereign acts of foreign sovereigns for well‑recognised reasons.  It leaves in place the legal structures by which revenue authorities here and around the world ensure that foreigners pay tax within their borders in circumstances where they cannot take action overseas to enforce that, mechanisms such as dividend and interest‑withholding taxes and, indeed, supported by some of the statutory provisions that allow the Commissioner to require payment of funds.

GAGELER J:   You mean that the Model Law is simply silent on the topic, on those topics?

MR WILLIAMS:   Yes, just as the Commissioner could not, prior to liquidation, go to the Cayman Islands and sue for his tax debt, but was dependent upon enforcing it through the statutory means available to him in Australia, comparable means being available in other countries, so after liquidation he has those same means available to him.  There is nothing to indicate an intention to abrogate those means in the adoption of the foreign law.

GAGELER J:   Mention was made by Mr Coles of HIH.  Does that have any bearing on the construction of the Model Law in your submission?

MR WILLIAMS:   Well, it does in the general sense that Chief Justice Allsop has deployed it, to say that this was enacted within a particular statutory context.  This is relatively early in the Chief Justice’s reasons.  I will turn up a reference to it – perhaps not early in the reasons - page 76.  In HIH of course, the essential point made at the outset by Lord Hoffmann – and this is behind tab 4 – was that the rule of so‑called universalism – it is behind tab 4 and it is on page 856 in paragraph 7 at about line E, is not a rule, but rather, a principle, and:

It is heavily qualified by exceptions on pragmatic grounds –

So the position that pertained, page 856 about line E, the position that pertained under the general law, prior to the enactment of the Model Law in Australian law was, in substance, no different.  There were differences between the Law Lords in HIH, but they were differences as to degree, and not of kind.

CRENNAN J:   His Honour, the Chief Justice, deals with this at paragraph 136, application book 87.

MR WILLIAMS:   Yes, and this is indeed consistent with the approach that Chief Justice French took in the Travelstead case that is referred to, in which his Honour, while acknowledging that there was a general principle, nonetheless permitted Mr Chapman to take action here, notwithstanding the American bankruptcy. 

The second point, essentially, is that the applicant’s construction would really empty the notion of adequate protection of content.  If domestic courts assess the adequacy of protection for domestic creditors by confining their interests to those that are recognised as such in the foreign main proceeding, the answer to the question of adequacy will almost always be yes.  The point of the protection afforded to local creditors will be denied.  The only basis, essentially, for concluding that they will not be adequately protected, would be an assessment of whether a Cayman’s court will properly apply Cayman law. 

Thirdly, in our submission, and this might be again answering the question your Honour Justice Gageler put to me a moment ago – it is not to the point to assert the Model Law’s universalism in seeking to read down the notion of adequate protection because this is a respect in which that universalism is expressly qualified or modified, and that is consistent with the common law as it stood prior to the enactment of this legislation.

Your Honours, the question that Mr Coles has put – moving onto the second question, if there are no further matters your Honours wish to raise

about the first – about 471B is not one that we see as raised by the special leave submissions or grounds, and as far as I can recall, was not debated in those terms below.  There were much more general points put about 471B below.

CRENNAN J:   Yes, I see.

MR WILLIAMS:   But in any event, it is a matter that does not give rise to a question of general or public importance and the case would be an inappropriate vehicle in those circumstances in any event.  The position ‑ Chief Justice Allsop made the point in paragraph 91 and in paragraphs, it is really – in paragraph 89, about line 40 on page 72, that 471B provides for leave to begin with or proceed with proceedings – in this particular case, no doubt in general it might be the case that quite specific orders are made about the terms upon which a party can commence – but in this particular case, for the reasons given in paragraph 91, the orders in their general terms were entirely appropriate.

There were well‑understood powers in the Commissioner, including powers to bring court proceedings and to seek court enforcement through a sheriff.  But the apparent breadth of the language of the orders, as his Honour said in paragraph 91, must be understood in that context, and in also the factual circumstances here, where there was no Australian liquidator, one fund in Australia, one creditor – apparently, so far as the evidence showed, and there had been extensive, the liquidation was significantly advanced in the Caymans – and no basis for his Honour, the primary judge, to do anything other than what he in substance did, which was to tell the parties to, in effect, get on with it.  Your Honours, unless there are matters you wish to raise, those are our submissions.

CRENNAN J:   Thank you, Mr Williams.  Yes, Mr Coles.

MR COLES:   Just a few matters in reply, if your Honours please.  It is certainly not the applicant’s contention that the case involves the application of Cayman Island law.  That is not the function of the Cross‑Border Insolvency Act to pick up some other body of law and apply it ‑ ‑ ‑

CRENNAN J:   I think Mr Williams was referring to the logical result of the argument about interest.

MR COLES:   Well, one question, of course there, your Honour – what the court did to find adequate protection for the relative interest is really to, in effect, disapply Cayman Island’s law and say that even though that is the law that governs the administration it does not matter, you can do it under the essence.  But that is doubtless an argumentative matter. 

Secondly, your Honour, we do not think any question of – although there is no quarrel with what Justice Allsop said in paragraph 35, for example, about reorganisation – that is a separate matter your Honour, and one would not, with respect, slip back into the argument of the issues in this case, the very same type of public policy considerations which the Full Court said were not applicable as a mechanism for disabling the remittal of the assets.

One needs to bear in mind, of course, in our respectful submission, adequacy of protection may – an interests being – need adequacy of protection is an expression used in the Model Law, doubtless in the knowledge that it may vary from country to country or state to state, and if, in the case of ordinary unsecured creditors in this country, there is not much to protect, because apart from their rights in the winding‑up, then that is no deficiency in the matter, your Honour. 

Finally, your Honour, we would put in two things.  We do say, your Honour, that the limitation of 471B, leave was limited to court process while certainly put to the Full Court.  Now, it is notable that his Honour did not deal with it.  In fact, what his Honour did – and your Honours will see also in the same tab as the statute ‑ his Honour referred, without any distinction between them to the definition of “enforcement” and seemed to see that the – if I can just show your Honours behind tab 2 – “enforce” is a defined expression, and his Honour seemed to think that enforcement of the kind referred to in that paragraph played its part in the idea of enforcement under 471B, which, for reasons I have already said, it does not, and of course the definition of “enforce” is limited to, specifically, to enforce in relation to security interests.

Finally, your Honour, we wish to point out that consideration of the issues in this case does, we have contended, really involve a question whether or not the sort of relief granted in this case, enabling in effect, an individual local creditor to do something which ordinarily only secured creditors or persons with a right in rem in relation to assets can do – namely, take them for themselves by processes of enforcement – really does, in our respectful submission, amount to what the American court described as “a grab” – that is not meaning that pejoratively – and ultimately, as the written submissions indicate, tends to undermine the proper operation of the Model Law entirely. 

We submit, your Honours, that whether your Honours are immediately persuaded as to the cogency of any one or more of the arguments or the necessary probability of their ultimate success, their consideration by this Court is of sufficient importance to justify a grant of special leave.  May it please the Court.

CRENNAN J:   This application concerns cross‑border insolvency legislation.  We accept that the application of that legislation may well give rise to questions of public importance.  However, we are not persuaded that there are sufficient reasons to doubt the correctness of the decision of the Full Court of the Federal Court of Australia to warrant a grant of special leave to appeal.  Accordingly, special leave to appeal is refused with costs.

AT 10.45 AM THE MATTER WAS CONCLUDED