Aravanis v Neffati (No.3)
[2015] FCCA 3424
•18 December 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| ARAVANIS & ANOR v NEFFATI (No.3) | [2015] FCCA 3424 |
| Catchwords: BANKRUPTCY – Application for a Letter of Request to a foreign court to act in aid of an Australian bankruptcy – property outside Australia – located in external jurisdiction – power of Court to issue letter of request for vesting order – power of First Instance Court of Ben Arous to act in aid –discussion of procedure to be invoked when requesting aid in bankruptcy matters — Bankruptcy Act 1966 s.29 – application granted. |
| Legislation: Bankruptcy Act 1966, ss.27, 29 The Constitution s.77 |
| Afg Insurances [2002] NSWSC 735 Official Trustee in Bankruptcy, in the matter of Lyons [2000] FCA 1428 Pascoe; in the matter of Hudson [2005] FCA 1421 Re John Cecil Clunies-Ross Ex Parte: Geoffrey Frank Totterdell, the Trustee of the Property of John Cecil Clunies-Ross, A Bankrupt [1988] FCA 301 Re Ayres; Ex Parte Evans (1981) 51 FLR 395 Re William Henry Ayres v Francis Peter Evans (1981) 56 FLR 235 Warner, in the matter of Rivkin [2007] FCA 2020 |
| Applicant: | Andrew Aravanis & Ronil Prakash Roy THE JOINT AND SEVERAL TRUSTEES OF THE BANKRUPT ESTATE OF MONCEF NEFFATI |
| Respondent: | Moncef Neffati |
| File Number: | SYG 1254 of 2015 |
| Judgment of: | Judge Street |
| Hearing date: | 18 December 2015 |
| Date of Last Submission: | 18 December 2015 |
| Delivered at: | Sydney |
| Delivered on: | 18 December 2015 |
REPRESENTATION
| Counsel for the Applicant: | Mr S Golledge |
| Solicitors for the Applicant: | Gillis Delaney |
| The Respondent appeared in person |
ORDERS
The letter of request, in the form annexed and signed, is issued to the First Instance Court of Ben Arous, in Tunisia under s.29(4) of the Bankruptcy Act 1966 (Cth), requesting it to act in aid of and be auxiliary to the Federal Circuit Court of Australia.
If, as a result of the issue of the letter of request, any further direction or any further letter of request is required, the trustees have liberty to apply on 24 hours’ notice.
(Court Letterhead)
18 December 2015
To the Justices of the First Instance Court of Ben Arous in Tunisia
RE: Federal Circuit Court of Australia proceedings SYG1254 of 2015 In the matter of the Bankrupt Estate of Moncef Neffati
WHEREAS:
Mr Moncef Neffati is a former resident of Tunisia.
Mr Neffati now resides in, and is a citizen of, Australia.
On 14 February 2013, Mr Neffati became a bankrupt under the provisions of the Bankruptcy Act 1966 (Cth) and a trustee was appointed to administer his estate for the benefit of his creditors.
The current trustees of the bankrupt estate of Mr Neffati are Andrew Aravanis and Ronil Roy.
Under Australian law and pursuant to ss.58(1) and 116 of the Bankruptcy Act 1966 (Cth) if a person becomes bankrupt in Australia then their real and personal property vests in their trustee who is authorised to sell that property and distribute the proceeds of sale amongst the debtor's creditors.
It appears from information given to the trustees and following investigations by them that as at the date of Mr Neffati becoming a bankrupt, he may have held, directly or indirectly, an interest as owner in property (being land and other assets) situated in Tunisia. A schedule setting out those real properties in which it appears Mr Neffati may have held some interest is as follows:
Hereafter these properties in paragraph 6 referred to as the above Properties.
The trustees have presented evidence to this Court which shows that as at the date of him becoming a bankrupt, Mr Neffati owed his creditors in excess of $5.7 million Australian.
Pursuant to the provisions of the Bankruptcy Act 1966 (Cth) the trustees are authorised to take possession of the assets of the bankrupt, subject to certain limited exclusions, and to realise those assets, by sale or otherwise, for the benefit of the creditors in the bankrupt estate. A reference to assets would include all real estate property, cash at bank, shares in companies, a beneficially vested interest in a trust and any income derived from those assets.
It has been represented to this Court that it is necessary for the purposes of justice and the due administration in bankruptcy of the estate of the bankrupt under and in accordance with the bankruptcy laws of the Commonwealth of Australia, that the above Properties should be made available to the trustees of the estate of the bankrupt so that it may be dealt with by the trustees under and in accordance with those laws for the purpose of realising it for the benefit of the creditors of the Bankrupt.
Pursuant to s.27 of the Bankruptcy Act 1966 (Cth) the Federal Circuit Court of Australia has jurisdiction under the said Act and under s.29 of the Bankruptcy Act 1966 (Cth) this Court can request a Court outside Australia that has jurisdiction in bankruptcy to assist it in any matter of bankruptcy.
On 4 November 2015 the current trustees applied to the Court for an order to be made by the Federal Circuit Court of Australia to issue a letter of request under s.29 of the Bankruptcy Act 1966 (Cth) to the Justices of the First Instance Court of Ben Arous, to assist in the realizing of the above Properties for the benefit of the creditors of the bankrupt.
In order that the Properties, and any other assets, may be so made available, it is necessary to request the aid of your Honourable Court.
Request for Assistance
I, Alexander Whistler Street, a Judge of the Federal Circuit Court of Australia, request that for the above reasons in paragraphs 1 to 13 above, and for the assistance of this Federal Circuit Court of Australia in the matter of the estate of the bankrupt, as the Justices of the First Instance Court of Ben Arous one or more of you provide the following the assistance of the said Tunisian Court :
(i)Vesting in Andrew Aravanis and Ronil Roy as the trustees in bankruptcy of the estate of Moncef Neffati the above Properties, and any other real and personal, including beneficially vested interest under any trust, cash at bank, shares in companies and any income derived from such assets of the said Moncef Neffati, as is situated in Tunisia.
(ii)Assist the said trustees obtain the possession and control thereof in Tunisia.
(iii)Assist the said trustees to sell and receive the proceeds of such sale of the above properties and any other property of the said Moncef Neffati situated in Tunisia for the benefit of the creditors of the bankrupt.
Judge Alexander Street
(Signed)
DATE: 18 December 2015
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT Sydney |
SYG 1254 of 2015
| Andrew Aravanis & Ronil Prakash Roy THE JOINT AND SEVERAL TRUSTEES OF THE BANKRUPT ESTATE OF MONCEF NEFFATI |
Applicant
And
| Moncef Neffati |
Respondent
REASONS FOR JUDGMENT
This is a matter within the Court’s jurisdiction under s.27 of the Bankruptcy Act 1966 (Cth). On 8 May 2015 ex parte Mareva injunctions were granted in relation to alleged property of the bankrupt in Tunisia. The reasons for those interlocutory injunctions are identified in McDonald v Neffati [2015] FCCA 1242. The trustees of the bankrupt estate have now moved the Court by an interlocutory application filed on 4 November 2015 for a letter of request under s.29(3) of the Bankruptcy Act.
The principles in relation to the grant of a letter of request have been usefully identified in Re John Cecil Clunies-Ross Ex Parte: Geoffrey Frank Totterdell, the Trustee of the Property of John Cecil Clunies-Ross, A Bankrupt [1988] FCA 301 by French J, as the Chief Justice then was. The decision in that case traces a history of requests for assistance in bankruptcy matters and identifies that there are generally three issues that arise: first, does the Court have power to issue the letter of request, second, does the Court to whom the request is made have power to act upon the proposed letter of request from the Australian Court, and, third, as a matter of discretion, should the letter of request be granted.
I have also taken into account Official Trustee in Bankruptcy, in the matter of Lyons [2000] FCA 1428 at [29] as to the underlying object of s.29 of the Act as identified in the decision of Lockhart J in Re Ayres; Ex Parte Evans (1981) 51 FLR 395 which was affirmed by the Full Court of the Federal Court in Re William Henry Ayres v Francis Peter Evans (1981) 56 FLR 235 at [240]-[241], that courts having jurisdiction in bankruptcy act in aid of and be ancillary to each other in bankruptcy matters. I note that the nature and extent and terms of the aid remains a matter for the Court in Tunisia.
Section 27 of the Bankruptcy Act, pursuant to s.77 of the Constitution, defines the jurisdiction of the Federal Circuit Court of Australia as being concurrent jurisdiction with the Federal Court of Australia “in bankruptcy”.
Given the concurrent jurisdiction of this Court with the Federal Court of Australia, for the reasons given by French J, as he then was, in Re John Cecil Clunies-Ross Ex Parte: Geoffrey Frank Totterdell, I am satisfied that this Court has power under s.29(3) of the Bankruptcy Act to make an order for the issue of a letter of request from this Court to the specified Court in Tunisia requesting aid in the matter of the bankruptcy of Moncef Neffati in respect of property of the bankrupt in Tunisia for the purpose of the trustees obtaining the same and realising that property for the benefit of the creditors of the bankrupt estate.
Tunisia is not a party to the United Nations Model Law on Cross-Border Insolvency 1997 and this is not an application under the Cross-Border Insolvency Act 2008 (Cth). It is a pity that this Court has not been included in the specification of courts in relation to art.4 of the Model Law given effect by the Cross-Border Insolvency Act 2008. Whilst that is hopefully a matter that the legislature will address, s.10 of the Cross-Border Insolvency Act 2008 does not confine this Court’s jurisdiction under the Bankruptcy Act in respect of a letter of request in relation to a country that is not a party to the United Nations Model Law on Cross-Border Insolvency.
On this application, the Court has had the benefit of the tender of an expert report from Mr Rachid Gaied, being an attorney and counsel at law and admitted to the Tunisian Bar Association. The expert report identifies the qualifications of the expert and the expert identifies the proposed Court the subject of the request as having jurisdiction in bankruptcy. The expert report also identifies that the proposed Court has the right to take measures to avoid future property transfers by the bankrupt and may take action against previous transfers to declare them void.
In response to the question of whether the first instance Court of Ben Arous is likely to respond to the receipt of the letter of request, the expert said:
This letter of request will not have the same value as a judgment but it will justify the demand to take all conservative measures and procedures to avoid new property transfers.
For the reasons identified by Gyles J in Warner, in the matter of Rivkin [2007] FCA 2020, it is not necessary for the Court to be satisfied that the foreign Court will allow the request before the Court should act under s.29(4). The evidence before this Court establishes that the First Instance Court of Ben Arous will permit the taking of measures and procedures in relation to the recovery of property of the bankrupt. I am satisfied that the First Instance Court of Ben Arous has power to act on the proposed letter of request from the Court if it decides to do so.
The third matter is a general discretionary consideration of whether the Court should make an order issuing a request under s.29(4) of the Bankruptcy Act. This is a case where there has been an earlier trustee and there were clearly negotiations that had taken place between that earlier trustee and the bankrupt that did not resolve the question of what assets are vested in the trustee as a result of the bankruptcy that are situated in Tunisia.
The new trustees were appointed by an order of this Court on 6 November 2015. An affidavit has been read by one of the new trustees identifying a belief that there are assets of the bankrupt situated in Tunisia including the properties that may have been alienated prior to or during the period of the bankruptcy and that such assets if recovered could form part of the estate of the bankrupt and as such available for distribution to the benefit of the creditors.
One of the trustees has deposed that he believes it would be of considerable utility in the investigations being carried out in Tunisia and the steps being taken to recover assets for the benefit of the creditors of the bankrupt estate if a letter of request by this Court were to be issued to the First Instance Court of Ben Arous. The affidavit identifies that the co-trustee is of the same position and that the trustees may then be able to instruct lawyers in Tunisia to make appropriate applications to take control of the property of the bankrupt situated in that country.
Mr Neffati, who appears in person, has opposed the making of the order, and maintains that he does not own any property in Tunisia. On 10 December 2015, this Court made orders providing the respondent with an opportunity to file and serve any affidavit evidence in answer to the application on or before 16 December 2015. No such affidavit has been filed.
The bankrupt made reference to an earlier affidavit that he had filed that is still the subject of an order by this Court preserving privilege against self-incrimination and which has not been formally read before the Court.
Mr Neffati did not take steps to seek to waive his privilege against self-incrimination for the purpose of having the affidavit read. In the circumstances, I am satisfied that there is a prima facie case that there is property of the bankrupt situated in Tunisia. An updated schedule of that property has been identified by the trustees and I am satisfied in the present case that there is a prima facie case that those properties or an interest therein remains in the ownership or control of Mr Moncef Neffati.
Mr Neffati has told the Court from the bar table that there is one property that is owned by a family company. Mr Neffati has also identified that some of the properties were owned by his father and grandfather. Mr Neffati has further asserted that there is a property in the ownership of his children. The assertions by Mr Neffati as to title and ownership in other persons or entities are inconsistent.
I do not regard what Mr Neffati has said from the bar table as displacing the prima facie case on the evidence before the Court. Nor do I regard the denials of owning any property in Tunisia by Mr Neffati as outweighing the interests of the creditors in the estate who may be assisted by the making of the order by the Court.
I am satisfied as a matter of discretion that this is an appropriate matter in which the Court should make an order under s.29(4) of the Bankruptcy Act. I have taken into account the helpful observations by Barrett J in Afg Insurances [2002] NSWSC 735 to ensure that the form of the request is appropriately focused and directed.
In this regard, the Court has also taken into account the principles identified by Lindgren J in Pascoe; in the matter of Hudson [2005] FCA 1421 to provide an opportunity before the trustees to have liberty to apply including liberty to apply for a further request insofar as that may be necessary.
The Court has also given careful consideration both to the reasons for the request identified in the letter of request to ensure appropriate clarity to the foreign court as to the reasons for the request as well as ensuring sufficient certainty in the nature of the aid being requested by the Australian Court consistent with s.29(4).
I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of Judge Street
Associate:
Date: 21 December 2015
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