BENDIGO and Adelaide Bank Limited v Rawson
[2018] FCCA 2009
•31 July 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BENDIGO & ADELAIDE BANK LIMITED v RAWSON | [2018] FCCA 2009 |
| Catchwords: BANKRUPTCY – Application for request that a foreign court act in aid of, and be auxiliary to, the Federal Circuit Court of Australia in the administration of a bankrupt estate – principles relevant to the granting of application for a request considered – application granted. |
| Legislation: Bankruptcy Act 1966, ss.5, 29(4) s.58(1)(a) Evidence Act 1995 (Cth) s.144 |
| Cases cited: AFG Insurances [2002] NSWSC 735 Aravanis v Neffati (No 3) [2015] FCCA 3424 In re HIH casualty and General Insurance Ltd [2008] UKHL 21; |
| Applicant: | BENDIGO & ADELAIDE BANK LIMITED ACN 068 049 178 |
| Applicants on the Interim Application: | BRADLEY JOHN TONKS AND SIMON JOHN THORN IN THEIR CAPACITY AS JOINT TRUSTEES OF THE BANKRUPT ESTATE OF ANNABEL KATE RAWSON |
| Respondent: | ANNABEL KATE RAWSON |
| File Number: | SYG 2748 of 2017 |
| Judgment of: | Judge Manousaridis |
| Hearing date: | 24 July 2018 |
| Date of Last Submission: | 24 July 2018 |
| Delivered at: | Sydney |
| Orders Pronounced: | 24 July 2018 |
| Delivered on: | 31 July 2018 |
REPRESENTATION
| Solicitors for the Applicant: | Ms F Reynolds of TurksLegal |
| No appearance by or on behalf of the Respondent |
ORDERS
Pursuant to s.29(4) of the Bankruptcy Act 1966 (Cth) the Court make a request to the High Court of Justice, Business and Property Courts of England and Wales in the form set out in the schedule that will form part of these orders when entered, such request to be made by way of a letter addressed to the High Court of Justice, Business and Property Courts of England and Wales.
The trustees of the bankrupt estate of Annabel Kate Rawson (Trustees) have liberty to apply on such notice as the circumstances warrant.
The Trustees’ costs of the application be included in the Trustees’ costs of the administration of the bankrupt estate of Annabel Kate Rawson and be paid out of the estate of the bankrupt estate of Annabel Kate Rawson.
THE COURT NOTES THAT:
It is intended that a letter containing the request referred to in order 1 will be signed and issued by Judge Manousaridis as a Judge of this Court by 31 July 2018.
SCHEDULE
I, Judge Nicholas Manousaridis, a Judge of the Federal Circuit Court of Australia, request that the High Court of Justice, Business and Property Courts of England and Wales, assist this Federal Circuit Court of Australia in the matter of the estate of ANNABEL KATE RAWSON (the ‘Bankrupt’), and act in aid of and auxiliary to the Federal Circuit Court of Australia to:
(i)Recognise the appointment of Bradley John Tonks and Simon John Thorn as joint trustees (the ‘Trustees’) of the estate of the Bankrupt within the jurisdiction of the High Court of Justice, Business and Property Courts of England and Wales;
(ii)Vest in the Trustees the estate of the Bankrupt including the legal and beneficial interest in the leasehold land identified in title number WK244784 and known as Flat 3, Roselands, 54 Binswood Avenue, Leamington Spa and parking space and bin space, CV32 5RX (the ‘Property’), and any other real and personal property, including beneficially vested interest under any trust, cash at bank, shares in companies and any income derived from such assets of the said Bankrupt situated in or under the jurisdiction of the High Court of Justice, Business and Property Courts of England and Wales;
(iii)Direct or declare that the Trustees may exercise any powers vested in them under the bankruptcy laws of Australia in relation to the administration of the estate of the Bankrupt within the jurisdiction of High Court of Justice, Business and Property Courts of England and Wales;
(iv)Assist the said Trustees to obtain the possession and control of vested assets situated in or under the jurisdiction of the High Court of Justice, Business and Property Courts of England and Wales;
(v)Assist the Trustees to sell and receive the proceeds of such sale of the above Property and any other property of the said Bankrupt situated in or under the jurisdiction of the High Court of Justice, Business and Property Courts of England and Wales; and
(vi) Give such further assistance or relief to the Trustees as may seem just.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 2748 of 2017
| BENDIGO & ADELAIDE BANK LIMITED ACN 068 049 178 |
Applicant
| BRADLEY JOHN TONKS AND SIMON JOHN THORN IN THEIR CAPACITY AS JOINT TRUSTEES OF THE BANKRUPT ESTATE OF ANNABEL KATE RAWSON |
Applicants on the Interim Application
And
| ANNABEL KATE RAWSON |
Respondent
REASONS FOR JUDGMENT
Introduction
On the morning of 24 July 2018 I heard an application by the trustees in bankruptcy (Trustees) of the estate of Annabel Kate Rawson (Bankrupt Estate) that this Court make a request to the High Court of Justice, Business and Property Courts of England and Wales (English High Court). The application was made pursuant to s.29(4) of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act); and, in broad terms, the proposed request was that the English High Court act in aid of, and be auxiliary to, this Court in the administration of the Bankrupt Estate.
I listed the matter for judgment later in the day when I pronounced orders, indicating I would publish my reasons at a later time. These are my reasons.
Principles
The occasion for the Trustees making the application is the location in England of immovable and movable property (English Property) that appears to belong to Ms Rawson. (The reason I refer to the English Property belonging to Ms Rawson rather than to the Bankrupt Estate will become apparent shortly.) And the need, in these circumstances, for the making of the request to the English High Court arises from the combination of two things.
The first is the effect under s.58(1)(a) of the Bankruptcy Act of the sequestration order made by this Court on 9 October 2017: it vested the “property of” Ms Rawson in the Trustees. Section 5 of the Bankruptcy Act defines “property” to mean, among other things, “real or personal property of every description, whether situated in Australia or elsewhere”. Under the Bankruptcy Act, therefore, the English Property vested in the Trustees when the sequestration order was made; and the Trustees are liable to deal, or at least consider whether they are in a position to deal, with that property as required by the Bankruptcy Act.
The second thing that gives rise to the need to make a request to the English High Court is that, although the effect under Australian law of the sequestration order is to vest the English Property in the Trustees, whether the Trustees will be able to exercise their rights in the English Property is entirely a matter for the law of the place where the English Property is located, namely, England. And here there are two matters to note.
Under the common law of England (as under the common law of Australia) “the assignment of a bankrupt’s property to the representatives of his creditors under the law of a foreign country which has jurisdiction over the bankrupt’s person operates as an assignment of the moveables of the bankrupt wherever locally situated, but not of his immoveables”.[1] That means that the Trustees cannot, solely on the basis of the sequestration order that was made over the Bankrupt Estate, assert in any court of England the rights that came to be vested in them by the making of the sequestration order in any immoveable property located in England that Ms Rawson may own.
[1] The Australian Mutual Provident Society v Gregory (1908) 5 CLR 615, at page 623 (Griffith CJ citing Dicey’s Conflict of Laws)
Under the common law of England, however, and also, as will later appear, under the Insolvency Act 1986 (UK) (UK Insolvency Act), the English High Court has jurisdiction to make a receiving order over immoveable and movable property located in England that is the subject of a foreign bankruptcy proceeding and, once made, administer that property as ancillary to the foreign bankruptcy proceeding.[2] It is the existence of that jurisdiction of the English High Court that provided the justification for the Trustees’ present application; for, as will also appear later in these reasons, this Court’s making a request is a means by which the Trustees can seek to invoke the jurisdiction of the English High Court to make a receiving order under the insolvency laws of England over the English Property, and for it to administer that property in aid of the Trustees’ administration of the Bankrupt Estate.
[2] See generally In re HIH casualty and General Insurance Ltd [2008] UKHL 21; Singularis Holdings Ltd v PriceWaterhouseCoopers [2014] UKPC 36
The Bankruptcy Act recognises that, although a sequestration order purports to vest in a trustee property that is located outside Australia, the trustee nevertheless may need the assistance of a foreign court to give effect to the vesting of property provided for under the Bankruptcy Act. That recognition is to be found in s.29(4) of the Bankruptcy Act which provides as follows:
The Court may request a court of an external of an external Territory, or of a country other than Australia, that has jurisdiction in bankruptcy to act in aid of and be auxiliary to it in any matter of bankruptcy.
Whether or not in any given case the Court will make a request under s.29(4) of the Bankruptcy Act is a matter for the discretion of the Court. That discretion, however, is to be exercised according to principles that have been formulated and applied in a numbers of cases. The basic principles were stated by French J in 1988 when sitting as a judge of the Federal Court of Australia in Re John Cecil Clunies-Ross Ex Parte: Geoffrey Frank Totterdell, the Trustee of the Property of John Cecil Clunies-Ross, A Bankrupt.[3] His Honour held that when considering whether to make a request under s.29(4) of the Bankruptcy Act the Court should address three questions: first, whether the Court has power to make the request; second, whether the court to which the request is proposed to be addressed has the power to act on the request; and, third, whether as a matter of discretion the request should be made. Here French J said that the Court’s “discretion will be exercised with regard to considerations of utility and comity”.
[3] [1988] FCA 301
There are also three matters of practice that are relevant to the Court making a request under s.29(4) of the Bankruptcy Act. First, at least in most cases, it will be necessary to give notice to the bankrupt that the trustee intends to apply to the Court for the making of a request under s.29(4) of the Bankruptcy Act.[4]
[4] Warner, in the matter of Rivkin [2007] FCA 2020, at [7]
The second matter relates to the form in which the request to the foreign court should be made. Gyles J gave brief attention to that question in Warner, in the matter of Rivkin.[5] His Honour noted he was satisfied that the form of the request was “appropriately specific in accordance with” Re Mann,[6] although his Honour said he would leave for another day the question whether Re Mann should continue to be applied to s.29(4) of the Bankruptcy Act. His Honour said it was not clear to him “that a request should not be general in form, the “matter” being the administration of the particular bankrupt estate, leaving it to the foreign court to decide precisely how the assistance might be afforded”.[7]
[5] [2007] FCA 2020, at [6]
[6] [1887] VicLawRp 112
[7] [2007] FCA 2020, at [6]
The question of the form of a request was considered in more detail by Barrett J in AFG Insurances.[8] Although the question arose in the different context of an administration under Part 5.3A of the Corporations Act 2001 (Cth), his Honour relied on forms of request that had been made in bankruptcy proceedings; and what his Honour said about those requests, therefore, is relevant to the form in which a request under s.29(4) of the Bankruptcy Act should be made. His Honour said:[9]
This makes me think that, in the administration context (much more, perhaps, than in the case of a winding up ordered by the court), a foreign court can be regarded as acting in aid of or as auxiliary to this court only where this court has become seised of a particular proceeding relevant to the administration and the full and effective exercise of this court's jurisdiction will be assisted by some ancillary order of a foreign court.
Examples in the analogous bankruptcy field involve requests by one court to another for the appointment of a receiver by the recipient court to collect property of the bankrupt in the recipient jurisdiction (eg, Dick v McIntosh [2001] FCA 1008); or that an official of the recipient court exercise an examination power under local law in respect of persons in the recipient jurisdiction able to give information relevant to the bankruptcy ordered by the requesting court (eg, Official Trustee in Bankruptcy v Lyons (2000) 104 FCR 486). These are particular exercises of jurisdiction by the recipient court in aid of and auxiliary to the initiating court's function vis-a-vis the particular bankruptcy.
[8] [2002] NSWSC 735
[9] [2002] NSWSC 735, at [16], [17]
A third matter of practice to note is that if the Court decides to make a request under s.29(4) of the Bankruptcy Act it would be prudent to include in the orders it makes to give effect to that decision liberty to the trustee in bankruptcy to apply for a further request should that be necessary.[10]
[10] Pascoe; in the matter of Hudson [2005] FCA 1421, at [20]
Facts
I now turn to the facts out of which the application before me arose. The relevant evidence is contained in the affidavit of Mr Thorn, one of the Trustees; and I accepted as true the matters of fact to which Mr Thorn deposes in his affidavit. The relevant facts are as follows.
The Trustees were appointed trustees of the Bankrupt Estate on the making of a sequestration order on 9 October 2017. On or shortly after 13 November 2017 Ms Rawson provided a statement of affairs. The statement disclosed that Ms Rawson had secured creditors of £89,000, and unsecured creditors of $268,406. The statement also disclosed Ms Rawson owns a flat at Warwickshire in the United Kingdom (Warwickshire flat), and 1,303 shares in a company called Diageo PLC. That company is listed on the London Stock Exchange, and is based in London. There is a mortgage over the Warwickshire flat. The mortgagee informed the Trustees that, as at 27 April 2018, there is £89,102 secured by the mortgage.
The Trustees obtained a marketing report dated 19 February 2018 from Jen Molloy of RA Bennett & Partners, who I assumed is a firm of real estate agents. Ms Molloy informed the Trustees she would market the Warwickshire flat for £120,000. Based on that opinion Mr Thorn estimates that the potential available equity in the Warwickshire flat is £30,000.
Should a request be made?
I now turn to the matters I considered in concluding that the Court should make the request.
Notice given?
The application for the making of a request was made by an interim application filed on 26 June 2018. A sealed copy of the application and the affidavit of Mr Thorn to which I have referred, together with the exhibit referred to in that affidavit, were served personally on Ms Rawson on 27 June 2018. With those documents there was served a covering letter addressed to Ms Rawson stating that the matter was listed for directions at Court 8.2, Level 8 at 9.30 am on 4 July 2018. The matter was adjourned for further directions before Judge Nicholls on 11 July 2018. Ms Rawson did not attend that hearing. The matter was subsequently set down for hearing before me at 10.15 on 24 July 2018.
By that stage Ms Tamzin Mercier communicated with the Trustees’ solicitors on behalf of Ms Rawson, and the Trustees’ solicitors communicated with Ms Mercier. There was in evidence what I found to be a true copy of document dated 10 July 2018 signed by Ms Rawson authorising Ms Mercier to act on Ms Rawson’s behalf with the Trustee’s lawyers. At 11.27 am on 11 July 2018 Ms Reynolds, the lawyer for the Trustees, sent an email to Ms Mercier attaching a letter addressed to Ms Rawson which stated as follows (emphasis in original):
I refer to the above proceedings and confirm that I act on behalf of your bankruptcy trustees Mr Simon Thorn and Mr Bradley Tonks.
The Trustees’ application was listed this morning in the Federal Circuit Court of Australia. I note that you did not appear at the hearing.
The proceedings have been adjourned to 10.15am on 24 July 2018 and will be heard in Court 8.1, 80 William Street, Sydney.
Please find enclosed a copy of the orders that were made today.
If you wish to be heard regarding the relief sought by the Trustees in their application, you must appear in person or by a solicitor on 24 July 2018 to place such submissions before the Court as you consider to be relevant.
If you do not appear the hearing will proceed and orders will be made that affect your bankrupt estate in your absence.
Should you have any questions, please do not hesitate to contact our office.
At the hearing on 24 July 2018 the matter was called, but there was no appearance by or on behalf of Ms Rawson.
In these circumstances I was satisfied Ms Rawson had been given adequate notice of the Trustees’ application that the Court make a request under s.29(4) of the Bankruptcy Act.
Power to make request
There is no question the Court has power to make a request under s.29(4) of the Bankruptcy Act. The expression “the Court” is defined in s.5 of the Bankruptcy Act to mean a Court having jurisdiction in bankruptcy under the Bankruptcy Act; and under s.27(1) of the Bankruptcy Act this Court and the Federal Court of Australia have concurrent jurisdiction in bankruptcy.
Power of English High Court to act on request
The next question was whether the English High Court would have the power to act in response to a request if made under s.29(4) of the Bankruptcy Act. The Trustees provided me with a copy of s.373 of the UK Insolvency Act. According to the introductory text to that Act the UK Insolvency Act is an Act to consolidate, among other things, “enactments relating to the insolvency and bankruptcy of individuals”. Section 373 of the UK Insolvency Act provides that the English High Court and the county courts have jurisdiction throughout England for the purposes of “the Parts in this Group”. “This Group” is a reference to “The Second group of Parts Insolvency of Individual: Bankruptcy”.
It was not apparent to me that any of these parts confer jurisdiction on the English High Court to deal with a request from a foreign court. That express power, however, is contained in ss.426(4) and s.426(5) of the UK Insolvency Act, which provide as follows:
(4)The courts having jurisdiction in relation to insolvency law in any part of the United Kingdom shall assist the courts having the corresponding jurisdiction in any other part of the United Kingdom or any relevant country or territory.
(5)For the purposes of subsection (4) a request made to a court in any part of the United Kingdom by a court in any other part of the United Kingdom or in a relevant country or territory is authority for the court to which the request is made to apply, in relation to any matters specified in the request, the insolvency law which is applicable by either court in relation to comparable matters falling within its jurisdiction.
The expression “insolvency law” in s.426(4) of the UK Insolvency Act, when used in relation to England and Wales, is defined in s.426(10)(a) to mean, among other things, provision extending to England of Wales made by or under the UK Insolvency Act. The expression “relevant country or territory” is defined in s.426(11) of the UK Insolvency Act to mean, among other things, “any country or territory designated for the purposes of this section by the Secretary of State by order made by statutory instrument”.
The Trustees did not tender evidence that Australia has been designated for the purposes of s.426 of the UK Insolvency Act. At the time I made the orders, however, I was of the opinion that it was not reasonably open to doubt that Australia has been so designated.[11] I then relied on In re HIH casualty and General Insurance Ltd where it was noted that the “Australian court made its request pursuant to section 426(4) of the Insolvency Act 1986”.[12] After I pronounced my orders I accessed the Co-operation of Insolvency Courts (Designation of Relevant Countries and Territories) Order 1986 (SI 1986/2123) (UK), being the statutory instrument by means of which Australia was designated for the purposes of s.426(4) of the UK Insolvency Act.[13]
[11] And, for that reason, no proof of the designation was required – see s.144 of the Evidence Act 1995 (Cth).
[12] [2008] UKHL 21, at [3]
[13] accessed 28 July 2018
At the time I pronounced my orders I was satisfied that the request that was the subject of the orders I made was one that would fall within the scope of s.426 of the UK Insolvency Act. I am now more particularly satisfied that this Court has in relation to the Bankrupt Estate jurisdiction corresponding to jurisdiction the English High Court has in relation to provision extending to England and Wales made by or under the UK Insolvency Act; that this Court is a court of a “relevant country” for the purposes of s.426(4) of the UK Insolvency Act; and that a request made by this Court is one which it will reasonably be open to the High Court of England to treat as a request to apply, in relation to any of the matters specified in the request, the insolvency law which is applicable by either this Court or by the English High Court in relation to comparable matters falling with the jurisdiction of the English High Court.
Discretionary considerations
There were no matters before me that suggested I should not exercise my discretion in favour of making a request; and there was evidence that satisfies me it was appropriate to exercise my discretion in favour of this Court making the request. I was satisfied there is a reasonable basis for the Trustees to form the view that the English Property has sufficient equity to warrant the Trustees’ seeking the assistance of the English High Court; and there was nothing to suggest the English High Court would not act on the request, given that I am satisfied it has power to do so.
Form of request
The interim application has attached to it a form of request that is adapted from the form of request approved by Judge Street in Aravanis v Neffati (No 3).[14] I was satisfied the form of the request is sufficiently clear about the nature of the aid that it was proposed would be requested of the English High Court.
[14] [2015] FCCA 3424
Costs
Given I had found it was appropriate for the Trustees to apply for the request, I also considered it appropriate that I should order that the Trustees’ costs of the application be included in the Trustees’ costs of the administration of the Bankrupt Estate, and that those costs be paid out of the Bankrupt Estate.
Conclusion
It was for these reasons that I made the orders on 24 July 2018.
I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis
Date: 31 July 2018
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