Cadence (90) Investments Pty Ltd v Cheah, in the matter of Cheah
[2021] FCCA 30
•20 January 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Cadence (90) Investments Pty Ltd v Cheah, in the matter of Cheah [2021] FCCA 30
File number(s): SYG 693 of 2020 Judgment of: JUDGE MANOUSARIDIS Date of judgment: 20 January 2021 Catchwords: BANKRUPTCY – application for sequestration order based on debtor’s failure to comply with requirements of bankruptcy notice – whether as at the day of the act of bankruptcy the debtor was carrying on business in Australia either personally or by means of an agent or manager – whether as at the day of the act of bankruptcy the debtor was ordinarily resident in Australia – sequestration order made. Legislation: Australian Consumer Law, s 18
Bankruptcy Act 1966 (Cth), ss 40(1), 43, 47(1), 52(1), 156A
Federal Circuit Court (Bankruptcy) Rules 2016 (Cth), rr 4.02(1), 4.02(2), 4.04(1)(a)(i), 4.05, 4.06(3), 4.06(4)
Cases cited: Alan Turner v Ronald William Trevorrow and R and P Trevorrow Pty Ltd [1994] FCA 1091
Cadence (90) Investments Pty Ltd as trustee of the GDC Discretionary Trust v Simon Dougal Chalmers [2019] NSWSC 1168
Cadence (90) Investments Pty Ltd (Trustee) v Chalmers & Anor [2019] FCCA 3066
Ferguson v Federal Commissioner of Taxation [1979] FCA 29
In Re Bird v Inland Revenue Commissioners; Ex parte the Debtor [1962] 1 WLR 686
PP Consultants Pty Ltd v Finance Sector Union [2000] HCA 59
Re Australian Industrial Relations Commission; Ex Parte Australian Transport Officers Federation [1990] HCA 52
Re Brauch; Ex parte Britannic Securities and Investments Ltd [1978] Ch 316
Re Mendonca; Ex parte Commissioner of Taxation (1969) 15 FLR 256
Theophile v Solicitor-General [1950] AC 186
Number of paragraphs: 63 Date of hearing: 27 November 2020 Place: Sydney Counsel for the Applicant: Mr M Rose, by video Solicitor for the Applicant: Johnson Winter & Slattery Counsel for the Respondent: Mr J Foley, by video Solicitor for the Respondent: Pryor Tzannes & Wallis ORDERS
SYG 693 of 2020 IN THE MATTER OF BIANCA CHEAH
BETWEEN: CADENCE (90) INVESTMENTS PTY LTD AS TRUSTEE OF THE GDC DISCRETIONARY TRUST
Applicant
AND: BIANCA CHEAH
Respondent
ORDER MADE BY:
JUDGE MANOUSARIDIS
DATE OF ORDER:
20 JANUARY 2021
THE COURT ORDERS THAT:
1.The estate of Bianca May Cheah is sequestrated under the Bankruptcy Act 1966 (Cth) (Act).
2.The applicant creditor’s costs set in the amount of $18,363.75 be paid from the estate of Bianca May Cheah.
THE COURT NOTES THAT:
3.The date of the act of bankruptcy is 9 March 2020.
4.A consent to act as trustee signed by Mr Bradley John Tonks has been filed under s 156A of the Act.
5.A copy of these orders is to be provided to the Official Receiver in Sydney within two business days.
REASONS FOR JUDGMENT
INTRODUCTION
Before the Court is a creditor’s petition presented by the applicant (Cadence) against the respondent, Ms Cheah. The principal question for determination is whether on 9 March 2020, being the last day by which Ms Cheah could have complied with the requirements of a bankruptcy notice that had been served on her in the United States of America (USA), Ms Cheah “was carrying on business in Australia, either personally or by means of an agent or manager” within the meaning of s 43(1)(b)(iii) of the Bankruptcy Act 1966 (Cth) (Act).
BACKGROUND
Ms Cheah is an Australian citizen by birth. In around 2006 she commenced work in Sydney as a model. In 2012 Ms Cheah started an online business known as “Sporteluxe” promoting health and fitness;[1] and she became a digital influencer and blogger.[2] From at least 1 May 2016 to 5 May 2017 Ms Cheah and her partner, Mr Chalmers, were directors of a company called Sporteluxe Pty Ltd (SPL).[3]
[1] Affidavit of B Cheah 26.06.2020, [5]. The IMG Agreement commences at page 1 of exhibit JCB-2
[2] “Influencers are social media personalities paid to leverage their popularity to market products and shape consumer preferences. . . . Anyone who receives payment, commission, free goods or services, or any other benefit that might affect the weight consumers give their endorsements in exchange for posting on social media or elsewhere online is engaged in influencer marketing, as are the brand supplying the benefit and the agency acting as a go-between.” - Alexandra J Roberts “False Influencing” (2020) 109 Geo L J 81, at pages 89-90
[3] Cadence (90) Investments Pty Ltd as trustee of the GDC Discretionary Trust v Simon Dougal Chalmers [2019] NSWSC 1168, at [66]
IMG Agreement
In 2014 Ms Cheah entered into a written agreement (IMG Agreement) with International Management Group of America Pty Ltd (IMG).[4] The recitals to that agreement described IMG as a “management representative for television, film, media, fashion, sporting and other personalities”, and noted that Ms Cheah wished to retain the services of IMG on the terms set out in that agreement. Those terms included the following:
(a)Ms Cheah entrusted exclusively to IMG the development, negotiation, and organisation of all of Ms Cheah’s income producing activities and career development opportunities that are or may become available worldwide to Ms Cheah “arising from [her] activities and business as a digital influencer, blogger, model, actress, musician, designer, consultant, presenter, creative director, media personality and other services”.[5]
(b)The period of representation was to commence on the day by which both parties signed the agreement and expire three years after the date of execution (initial term), but would automatically continue for successive periods of 24 consecutive calendar months (renewed term) unless terminated according to the terms of the agreement.[6]
(c)Either party could terminate the IMG Agreement by giving not less than 30 days’ notice before the initial term, or not less than 30 days’ notice before the end of a renewed term.[7]
(d)Ms Cheah agreed to pay IMG a commission of 20% plus GST on all “Commissionable Income”.[8]
[4] Affidavit of B Cheah 26.06.2020, [4]; exhibit JCB-2, pages 1-10
[5] Clause 4.1
[6] Clause 1
[7] Clause 2
[8] Clause 7
Under cl 8.1 of the IMG Agreement, Ms Cheah (who is referred to as “the TALENT”) was entitled to assign certain rights as follows (emphasis added):
If during the Representation Period, the TALENT assigns the TALENT’s endorsement rights and/or any other rights including the TALENT’s services and businesses, arising from but not limited to the TALENT’s media and/or endorsement activities to a company or other entity, IMG shall continue to represent the TALENT upon the same terms and conditions of this agreement through such company or entity and the terms and conditions of this agreement shall remain in force and shall be binding upon such company or entity as if it were a party to this agreement or as modified by the parties in writing such that (but not so as to limit the foregoing) the commissions set out in clause 7 shall be payable to IMG from all Commissionable Income received by such company or entity.
According to Ms Cheah, as her website and digital media platforms grew she was offered commercial opportunities overseas, and in particular in the USA.[9] On 25 November 2016 Ms Cheah was granted a visa to enter and work in the USA; and in December 2016 Ms Cheah moved to Los Angeles.[10]
[9] Affidavit of B Cheah 26.06.2020, [5]
[10] Affidavit of B Cheah 26.06.2020, [6]
Events leading to issue of bankruptcy notice
Throughout 2017 and “for some time into 2018” Ms Cheah returned to Australia to work as a model “through IMG”, and “to explore and undertake work for [her] employer, Sporteluxe”.[11] Some of the activities Ms Cheah undertook while in Australia in 2017 and 2018 are identified in the judgment of Hammerschlag J in Cadence (90) Investments Pty Ltd as trustee of the GDC Discretionary Trust v Simon Dougal Chalmers.[12] These included Ms Cheah dealing with an investment inquiry from a Ms Cronin which resulted in Ms Cheah and Mr Chalmers providing information to Ms Cronin about SPL’s business.[13] That, in turn, led SPL in November 2017 transferring its business to a company called Sporteluxe Group Pty Ltd (SGL), and to Cadence and a Mr Stevens each entering into a share subscription agreement with SGL under which Cadence subscribed for 49,015 shares in SGL for $1,066,649.73, and Mr Stevens subscribed for 2,297 shares in SGL for $49,986.63.[14]
[11] Affidavit of B Cheah 26.06.2020, [7]
[12] Cadence (90) Investments Pty Ltd as trustee of the GDC Discretionary Trust v Simon Dougal Chalmers [2019] NSWSC 1168
[13] Cadence (90) Investments Pty Ltd as trustee of the GDC Discretionary Trust v Simon Dougal Chalmers [2019] NSWSC 1168, at [69]-[83]
[14] Cadence (90) Investments Pty Ltd as trustee of the GDC Discretionary Trust v Simon Dougal Chalmers [2019] NSWSC 1168, at [91], [92]
SGL went into liquidation on 18 November 2018,[15] and Cadence and Mr Stevens lost their money.[16] In March 2018 Cadence and Mr Stevens commenced proceedings in the Supreme Court of New South Wales (SC proceeding) against Ms Cheah and Mr Chalmers for damages for the money they lost. Ms Cheah and Mr Chalmers did not appear at the hearing on 2 September 2019. On 6 September 2019 Hammerschlag J held that Cadence and Mr Stevens lost their money because Ms Cheah and Mr Chalmers engaged in misleading or deceptive conduct in contravention of s 18 of the Australian Consumer Law.[17] On 9 September 2019 judgment for $1,174,162.18 was entered against Ms Cheah and Mr Chalmers in favour of Cadence, and judgment for $54,972.28 against Ms Cheah and Mr Chalmers in favour of Mr Stevens.
[15] Affidavit of B Cheah 26.06.2020, [11]; annexure “D”
[16] Cadence (90) Investments Pty Ltd as trustee of the GDC Discretionary Trust v Simon Dougal Chalmers [2019] NSWSC 1168, at [97]
[17] Cadence (90) Investments Pty Ltd as trustee of the GDC Discretionary Trust v Simon Dougal Chalmers [2019] NSWSC 1168
In the meantime, in late 2018 Ms Cheah became pregnant; and in July 2019 she gave birth to her son. Ms Cheah says that her “modelling activities through” IMG decreased.[18]
[18] Affidavit of B Cheah 26.06.2020, [8]
Issue and failure to comply with requirements of bankruptcy notice
On 30 September 2019, on the application of Cadence, a bankruptcy notice was issued against Ms Cheah demanding that she pay $1,174,162.18 to Cadence, being the amount of the judgment Cadence recovered against Ms Cheah and Mr Chalmers in the SC proceeding. On 15 October 2019 I granted Cadence leave under s 40(1)(g) of the Act to serve the bankruptcy notice on Ms Cheah in the USA, and I ordered that the time for compliance with the requirements of the bankruptcy notice be fixed to require compliance within 21 days after personal service of the bankruptcy notice on Ms Cheah.[19]
[19] Cadence (90) Investments Pty Ltd (Trustee) v Chalmers & Anor [2019] FCCA 3066
The bankruptcy notice was served on Ms Cheah on 16 February 2020 Pacific Daylight Time, being 17 February 2020 Australian Eastern Standard Time (AEST), in Culver City, Los Angeles.[20] It required Ms Cheah to pay to Cadence the judgment debt of $1,174,162.18, or to make arrangements to the satisfaction of Cadence for settlement of the debt, within 21 days after service of the bankruptcy notice, being 9 March 2020 AEST.
[20] Affidavit of K Redin 05.03.2020
On about 19 February 2020 Ms Cheah travelled to Australia with her six month old son to visit her family. Ms Cheah says she had intended to remain in Australia until 5 March 2020 but she delayed her departure to 9 March 2020 because her son was not well.[21] Ms Cheah departed Australia in the morning of 9 March 2020.
[21] Affidavit of B Cheah 18.11.2020, [5]
Ms Cheah did not comply with the requirements of the bankruptcy notice. That means Ms Cheah committed an act of bankruptcy on 9 March 2020, being the last day by which she could have complied with the requirements of the bankruptcy notice.
“Employment” with The Wylde Group Inc
In her affidavit of 26 June 2020 Ms Cheah deposes that “Sporteluxe is now operated by a corporation in the USA known as The Wylde Group Inc” (TWG), that Ms Cheah is “currently employed by” that company, and that TWG “is allowed to use my image and likeness on the website and on all digital media platforms”.[22] Ms Cheah did not in that affidavit refer to any documents or other evidence that are reasonably capable of supporting these assertions. In her affidavit of 18 November 2020, however, Ms Cheah annexes a document she describes as a “copy of my employment contract with The Wylde Group dated on or about 31 December 2018”,[23] and also a copy of what she describes as a “new agreement with The Wylde Group” which, Ms Cheah says, she signed on 1 January 2020.[24] Ms Cheah deposes as follows:[25]
As I deposed to in my First Affidavit, by about November 2018, The Wylde Group Inc took over the running of the Sporteluxe website and brand and I allowed The Wylde Group to use my image and likeness (brand). . . .
Initially, my agreement with The Wylde Group granted it exclusivity in respect of brands based in the United States for one year. On 1 January 2020, I signed a new agreement with The Wylde Group . . . extending those rights to the whole of my social media profile.
[22] Affidavit of B Cheah 26.06.2020, [9]
[23] Affidavit of B Cheah 18.11.2020, [11]; annexure “B”
[24] Affidavit of B Cheah 18.11.2020, [12]; annexure “C”
[25] Affidavit of B Cheah 18.11.2020, [11], [12]
The documents Ms Cheah annexed to her affidavit of 18 November 2020 are both titled “Employment Contract Agreement”. Both documents purport to bear the seal of TWG, but there is no signature by any person who purports to be an officer of TWG. Nor is there a signature under the word “Employee”. The first of the documents titled “Employment Contract Agreement” includes the following terms:
(a)The agreement is made effective “as of January 1 2019 for a period of 12 months”.
(b)The employee shall be given the title of “Brand ambassador” “which shall involve conducting everyday tasks as needed by the Employer” (cl II).
(c)The “Employee” “shall be expected to work on a full-time basis with the Employee being required to work at least 20 hours in a standard week” (cl II).
(d)The “Employee” shall be paid $26,000 “part time salary on an annual basis” (cl IV).
(e)The “Employee” shall have the full capacity to act in the name of the “Employer” including making verbal and written agreements with any customer or vendor (cl XIII).
The terms of the second document titled “Employment Contract Agreement” (Second TWG employment contract) are similar to the first document, except the agreement is said to be effective “as of January 1, 2020 for a period of 12 months”, the “Employee shall be paid” $31,200 “part time salary on an annual bases”, and cl II is different (emphasis added):
Responsibilities. The Employee shall be given the job title of Brand ambassador (“Position”) which shall involve grant of rights of @biancamaycheah. Whereby @biancamaycheah grants to the Company and its affiliates, the exclusive right and licence to unlimited use, reuse, post, repost, share, link, reproduce, and exhibit Influencer’s name, signature, likeness, photograph, biography, statements, and endorsements of the Products in connection with the advertising, promotion, distribution and sale of the Products through any means and media from and after the date of this Agreement through the date of expiration or termination.
The Second TWG employment contract does not define “Products”; and Ms Cheah has given no evidence relevant to identifying “the Products”.
TWG was incorporated in the State of Delaware on 13 July 2016, and Mr Chalmers is the officer and director of TWG.[26] The only other information concerning TWG that is before me is contained in the following passage from the reasons for judgment of Hammerschlag J in Cadence (90):[27]
In their statutory report, dated 14 January 2019, the liquidators of SGL say that at the current time there is not expected to be sufficient funds to pay a dividend to any creditors.
The report makes somewhat interesting reading. The liquidators say that based on their investigations to date it appears that of the $1,116,636.36 raised from Cadence and Stevens:
•$699,381.41 was paid to The Wylde Group Inc (TWG) (a Delaware corporation associated with Chalmers and Cheah which carried on the Sporteluxe business in the USA and by which Chalmers was employed under the role and title of President and Cheah was employed under the role and title of Chief Executive Officer) [Fn.1: The shares, in this entity were apparently transferred to SGL as part of the transaction.],
•$209,911.00 was paid to SPL, including $92,612.30 on paid to TYK,
•the remainder appears, on initial review, to have been used to pay business related expenses.
The liquidators’ record that they are not satisfied that the payments to TWG have been adequately explained and substantiated. . . .
[26] Exhibit EFB-1, page 27
[27] Cadence (90) Investments Pty Ltd as trustee of the GDC Discretionary Trust v Simon Dougal Chalmers [2019] NSWSC 1168, at [98], [99]. I heard at the same time an application for a sequestration order of the estate of Mr Chalmers, and Mr Chalmers had given evidence about TWG. Counsel for the parties, however, agreed that evidence given in that proceeding is not to be treated as evidence in this proceeding; and evidence in this proceeding is not to be treated as evidence in the other proceeding.
New IMG Agreement
There is in evidence a number of emails between Ms Cheah, and a Mr Jason Parlett, who in his emails describes himself as “IMG Australia Talent Manager”, and between Ms Cheah and other employees or officers of IMG. I begin with an email Ms Cheah sent to Ms Ragulova on 10 January 2020 in which Ms Cheah requested that IMG “change my bank account details for all future payments to: [account name] The Wylde group, Inc”.[28] Ms Ragulova responded by email on the same day. Ms Ragulova said IMG recorded three entities in its system, one for Ms Cheah (with no bank account), one for TWG with a bank account number that is different from the bank account number for TWG Ms Cheah identified in her email, and TYK Holdings Pty Ltd (TYK), with a bank account number. Ms Ragulova asked whether Ms Cheah wanted IMG to set up the new bank account for all three entities.
[28] Affidavit of E F Barrett 26.11.2020, annexure “B” (pages 6-7)
On 5 February 2020 Ms Cheah sent the following email to Mr Parlett:[29]
Just wanted to send you the new details going forward.
All agreements are to be made using:
Name: The Wylde Group DBA [that is, “doing business as”] Bianca Cheah if we can back date this in any way that would also be helpful.
Aussie Bank account: The Wylde Group Inc Account:
[29] Exhibit EFB-1, page 11
Mr Parlett responded on the same day, stating he will “shoot this over to Dave & legal, and let you know how we go”.[30] On 27 February 2020 Mr Parlett sent the following email to Ms Cheah.[31]
Just getting back to you on the change of details you had requested.
A question and some comments from legal about this, can you clarify the below:
•what is the full corporate name, where is the company incorporated, etc.
•We currently have The Wylde Group Inc LLC, EIN 35-2568073 set up in the system, I believe that this is your US company? Is the The Wylde Group DBA Bianca Cheah the same company or an Australian company?
Will be no problem to change the bank details once we have clarity on the above and all future agreements can be done in this company name, however Legal have advised we cannot backdate any agreements to this new company.
Let me know if there is anything else you need from me, or also happy to organize a call with legal while you are here to chat further.
[30] Exhibit EFB-1, page 11
[31] Exhibit EFB-1, page 12
By email sent on 4 March 2020 Mr Parlett informed Ms Cheah that he finally had the “OK for the change in business name for you”, and said that he attached a “[n]ew esmi agreement attached for signing, with updated dates”. Mr Parlett said that “esmi are fine for you to do your contact [sic] when you get back to LA”, and requested that Ms Cheah should let Mr Parlett know “when you can get your first post over for approval”.[32] This resulted in the making of a “Talent Services Agreement” between TWG “providing the services of Bianca Cheah” and Makeup Cartel Pty Ltd in which TWG was identified as the “Talent”.[33] The agreement covered the period 1 March to 31 May 2020.
[32] Affidavit of E F Barrett 01.09.2020, annexure “C”
[33] Exhibit EFB-1, pages 94-95
The next event the evidence reveals is an email Ms Cheah sent on 30 April 2020 to a Mr Malina of IMG in which she asked “how’s the LA talent agency coming along?”.[34] Mr Malina responded on the same day stating that “given [the] current situation this is on hold for now yet I’d love to pick it up again with you later in the year”.[35]
[34] Exhibit EFB-1, page 14
[35] Exhibit EFB-1, page 13
On 15 May 2020 Mr Parlett sent an email to Ms Cheah attaching “a new rep agreement for your review”, and set out an email Mr Parlett had received “from legal” in which “legal” requested that the draft agreement be sent to Ms Cheah for her review, and also for her to provide her “American address”.[36] The draft agreement (TWG/IMG Draft Agreement) names TWG (which is defined as “the Company”) and IMG as parties. It recites that IMG acts as a management representative for television, film, sporting, and other personalities; Ms Cheah (who is defined as the “Talent”) has “exclusively assigned” to TWG all of her “image, media, endorsement and other commercial rights”; and that the TWG/IMG Draft Agreement sets out the terms and conditions on which IMG will provide “talent management services” to TWG “for the benefit of the Talent”. Recital E is as follows:[37]
The parties acknowledge that IMG entered into an agreement with the Talent on an individual basis (the “Individual Agreement”) and that upon signing of this Agreement, the Agreement shall supersede the Individual Agreement.
[36] Exhibit EFB-1, page 26. The draft agreement begins at page 15
[37] Emphasis in original
Recital D to the TWG/IMG Draft Agreement states that the agreement sets out the terms and condition on which IMG “will provide talent management services to the Company for the benefit of the Talent”; and those terms include the following:
(a)The agreement will commence on 30 April 2020, and will continue for an initial term of twenty four months after which the agreement will automatically renew.[38]
[38] Clause 1
(b)Each party may terminate the agreement by giving at least 30 days’ notice before the expiration of the initial or renewed term.[39]
[39] Clause 2
(c)IMG’s appointment is on a worldwide basis (which is defined as the “Territory”).[40]
(d)TWG entrusts to IMG during the term of the agreement (which is defined as the “Representation Period”) the:[41]
sole responsibility for the development, negotiation and organisation of all income-producing activities and career development opportunities which are or may become available to the Talent in the Territory arising from the Talent’s name, fame, voice and reputation through the grant of sponsorship, endorsement, licensing, advertising, appearances and presenter activities (host or guest), publishing, broadcast and/or other commercial rights by means of all media, including, without limitation television, print media, radio, speaking engagements, internet, mobile and other digital media (the “Representation Rights”).
(e)IMG has no authority to bind or commit the Talent or TWG in any way; and contracts binding on TWG or “the Talent” or both “shall be set out in writing and signed by” TWG.[42]
(f)TWG is to pay IMG a commission of 20% of all “Commissionable Income” “received or receivable, directly or indirectly from . . . commercial arrangements (other than speaking arrangements) made or effected during the Representation Period” and “continuations, extensions and modifications of all commercial arrangements (other than speaking arrangements) made or effected during the Representation Period”.[43] “Commissionable Income” is defined as income “arising in connection in any way with the Representation Rights”.[44]
(g)From time to time during the Representation Period IMG “will book speaking engagements for the Talent through a third party speakers agency” and, where this occurs, “the Talent agrees to pay IMG the relevant third party speakers agency commission rate as notified to the Talent by IMG on a case by case basis” (emphasis added).[45]
(h)TWG and IMG must procure as far as they are reasonably able, that all Commissionable Income would in the first instance be paid to IMG who would then pay to TWG the balance after deducting commission.[46]
(i)The TWG/IMG Draft Agreement is governed by the laws of the State of New South Wales and of the Commonwealth of Australia, and each party agrees to submit to the non-exclusive jurisdiction of the courts of New South Wales and of the Commonwealth of Australia.[47]
[40] Clause 3
[41] Clause 4.1 (emphasis added; underlying in original)
[42] Clause 5
[43] Clause 7.1(a)
[44] Clause 7.2
[45] Clause 7.1(b)
[46] Clause 7.4
[47] Clause 25
The TWG/IMG Draft Agreement contains an annexure titled “Deed of Acknowledgment” addressed to IMG to be made by Ms Cheah. By the deed Ms Cheah undertakes to ensure that TWG performs its obligations under the TWG/IMG Draft Agreement “under which IMG agrees to provide talent management services to [TWG] for [Ms Cheah’s] benefit”.
There is in evidence a copy of the TWG/IMG Draft Agreement that is apparently signed by Mr Chalmers on behalf of TWG, together with the deed of acknowledgment executed by Ms Cheah.[48] It is not signed by IMG. The form as signed on behalf of TWG is the same as the TWG/IMG Draft Agreement, except for two things. First, the TWG/IMG Draft Agreement did not include the day on which the agreement was made, but the signed TWG/IMG Draft Agreement states the agreement “is made the 1st day of February, 2020”. Second, cl 1.1 of the signed TWG/IMG Draft Agreement provides that “[t]his agreement will commence on 1st February 2020”, but cl 1.1 of the TWG/IMG Draft Agreement provides that “[t]his agreement will commence on 30 April 2020”.
[48] Exhibit EFB-1, beginning at page 31
There is also in evidence a copy of the TWG/IMG Draft Agreement in the form signed on behalf of TWG which also is signed on behalf of IMG by Ms Le Messurier, IMG’s senior counsel.[49] Ms Le Messurier signed the document electronically on 22 June 2020 (New IMG Agreement).[50]
[49] Exhibit EFB-1, beginning at page 42
[50] Exhibit EFB-1, page 51
Correspondence about date from which IMG ceased to represent Ms Cheah
At 1:18 pm on 25 June 2020 Ms Cheah sent the following email to Mr Parlett:[51]
Are you able to write me a letter ASAP saying how I am no longer personally repped by IMG.
Bee xx
As at XX/XX (whenever the contract date says, I think it says February 2nd 2020)
Bianca Cheah is not personally represented by IMG
Regards,
Jason Parlett
[51] Exhibit EFB-1, pages 56-57
At 3:17 pm on 25 June 2020 Ms Cheah sent the following further email to Mr Parlett:[52]
I just need confirmation that I’m not personally represented by IMG from 9th March onwards
[52] Exhibit EFB-1, page 54
Mr Parlett forwarded Ms Cheah’s email or emails of 25 June 2020 to Mr Malina who responded by email sent on 26 June 2020. Mr Malina asked whether Ms Cheah had any “further context to this”, suggesting that the best proof of Ms Cheah’s contractual status “is your representation agreement which states your company name”.[53]
[53] Exhibit EFB-1, page 54
Evidence of particular activities
There is in evidence documents that suggest particular business activities involving Ms Cheah. First, there are communications between Ms Cheah and IMG about outstanding payments. In an email sent to Ms Cheah on 20 March 2020 Mr Parlett said:[54]
For you, Finance (and myself) have been chasing Nordstrom for payment, so hopefully that will come through early next week and I can also set up invoicing for esmi once we get your first set of content for approval.
[54] Affidavit of E F Barrett 26.11.2020, annexure “F”, page 27
Second, there are the following agreements (Influencer Agreements) IMG negotiated in relation to Ms Cheah’s influencer activities.
(a)An undated agreement between TYK “providing the services of Bianca Cheah” (which appears in the column headed “Talent”) and Bondi Boost Pty Ltd (which appears in the column headed “Company”) (TYK influencer agreement).[55] Under that agreement the “Talent” agreed to publish on the “Talent’s official Instagram channel” on the dates there specified one post and one story with 3 frames and swipe up links that “focus on the Brand’s products”. The “Talent” also granted “the Company” the right to “repost the Posts and use the Talent’s identification during the Term”, which, in item 7, was defined to mean three months from 1 July 2019. The agreement required payment into the “IMG Client Trust Account”. Finally, next to the words “Item 6 Territory” there is typed “Australia”.
(b)An “Influencer Agreement” between Ms Cheah and Edelman Public Relations Worldwide Pty Ltd covering a nine month period commencing on 8 March 2019 (Cheah influencer agreement).[56] Next to the word “Territory” there appear the words “Australia and New Zealand”.
(c)An undated but signed agreement to which I have already referred, being the “Talent Services Agreement” between TWG “providing the services of Bianca Cheah” and Makeup Cartel Pty Ltd, covering the period 1 March 2020 to 31 May 2020 (TWG influencer agreement).[57] It is in similar form to the TYK influencer agreement. It requires payment into the “IMG Client Trust Account”; and next to the words “Item 6 Territory” there is typed “Australia”.
[55] Exhibit EFB-1, pages 86-89
[56] Exhibit EFB-1, pages 74-79
[57] Exhibit EFB-1, pages 94-96
It is reasonable to infer, and I find, that the TYK and TWG influencer agreements are in standard forms IMG uses, and the Cheah influencer agreement is in the form used by the other party to that agreement.
Third, there are posts Ms Cheah made to her “Instagram” account on 29 March 2020 and 15 May 2020 referring to her use of esmi products.[58] These appear to have been made pursuant to the TWG influencer agreement.
[58] Exhibit EFB-1, pages 98-99
STATUTORY PROVISIONS AND PRINCIPLES
Subsection 43(1) of the Act identifies the circumstances in which this Court may make a sequestration order. It provides:
Subject to this Act, where:
(a) a debtor has committed an act of bankruptcy; and
(b) at the time when the act of bankruptcy was committed, the debtor:
(i)was personally present or ordinarily resident in Australia;
(ii)had a dwelling-house or place of business in Australia;
(iii)was carrying on business in Australia, either personally or by means of an agent or manager; or
(iv)was a member of a firm or partnership carrying on business in Australia by means of a partner or partners or of an agent or manager;
the Court may, on a petition presented by a creditor, make a sequestration order against the estate of the debtor.
An “act of bankruptcy” is any one of the acts specified in s 40(1) of the Act. Relevant to the case before me is the act of bankruptcy identified in s 40(1)(g), namely, the failure to comply with the requirements of a bankruptcy notice.
It is unnecessary to refer to cases that have considered when a person is to be taken to be personally present or ordinarily resident in Australia. Cadence does not submit Ms Cheah was present in Australia at the time by which she was required to comply with the requirements of the bankruptcy notice; and, I am not satisfied Ms Cheah was ordinarily resident in Australia on 9 March 2020. The principal question that arises is whether as at 9 March 2020 Ms Cheah carried on business in Australia, either personally or through IMG as her agent or manager. It is, therefore, necessary to examine the meaning of the expression “carrying on business in Australia, either personally or by means of an agent or manager”. I begin with the word “business”.
“Business” is a “chameleon-like word”;[59] and the word “is notorious for taking its colour and its content from its surroundings”.[60] As noted by Bowen CJ and Franki J in Ferguson v Federal Commissioner of Taxation, therefore, the meaning of “business” is to be ascertained from the cases:[61]
Section 6 of the Income Tax Assessment Act defines “business” stating that it includes any profession, trade, employment, vocation or calling, but does not include occupation as an employee. This does not afford much assistance in the present case. It is necessary to turn to the cases. There are many elements to be considered. The nature of the activities, particularly whether they have the purpose of profit-making, may be important. However, an immediate purpose of profit-making in a particular income year does not appear to be essential. Certainly it may be held a person is carrying on business notwithstanding his profit is small or even where he is making a loss. Repetition and regularity of the activities is also important. However, every business has to begin and even isolated activities may in the circumstances be held to be the commencement of carrying on business. Again, organization of activities in a business-like manner, the keeping of books, records and the use of system may all serve to indicate that a business is being carried on. The fact that, concurrently with the activities in question, the taxpayer carries on the practice of a profession or another business, does not preclude a finding that his additional activities constitute the carrying on of a business. The volume of his operations and the amount of capital employed by him may be significant. However, if what he is doing is more properly described as the pursuit of a hobby or recreation or an addiction to a sport, he will not be held to be carrying on a business even though his operations are fairly substantial.
[59] PP Consultants Pty Ltd v Finance Sector Union [2000] HCA 59, at [14]
[60] Re Australian Industrial Relations Commission; Ex Parte Australian Transport Officers Federation [1990] HCA 52, at [15]
[61] Ferguson v Federal Commissioner of Taxation [1979] FCA 29, at [15]
In Re Mendonca; Ex parte Commissioner of Taxation Gibbs J observed that a “somewhat wide understanding” of the words “carrying on business” has come to be established.[62] His Honour referred to two cases. The first is the judgment of the House of Lords in Theophile v Solicitor-General.[63] One of the questions in that case was whether a person who had ceased trading activities of a business he conducted in England nevertheless carried on business for the purposes of the United Kingdom equivalent of s 43(1)(b)(iii) of the Act because he had been assessed to pay an excess profit tax in connection with the profits earned in carrying on the business which remained undischarged.
[62] Re Mendonca; Ex parte Commissioner of Taxation (1969) 15 FLR 256, at pages 260-1
[63] Theophile v Solicitor-General [1950] AC 186
Lord Porter, with whose speech the other members of the House of Lords agreed, held that the expression “carrying on business” covered not only the period in which trading activities occurred in England, but also any period after those activities ceased for which there remained uncollected or undischarged debts that had accrued in the course of carrying out those trading activities. His Lordship said: [64]
But the further argument still remains open to the appellant that he was not carrying on business in England within three months of the presentation of the petition and therefore was not a debtor within the meaning of the Act. In a sense it is true that the appellant was not actively carrying on business within three months of the presentation of the petition, but there is a series of cases beginning with In re Dagnall and ending with In re Reynolds which in unbroken sequence have decided that trading does not cease when, as the expression is, “the shutters are put up,” but continues until the sums due are collected and all debts paid. It is true that all the decisions have been given in respect of married women’s trading and that a distinction has been made between the earlier Acts where the expression was “as a trader” and the later where the phrase “carrying on trade” is found. But it is the later, not the earlier, phrase which has been adopted in the Act of 1914.
[64] Theophile v Solicitor-General [1950] AC 186, at pages 201-202 (references omitted)
Lord Porter further held that the debts that remained unpaid that are relevant to whether the debtor carried on business were not restricted to debts incurred in acquiring or selling goods and services in the course of the business. The word “debt” includes all debts that have been incurred because of the debtor’s carrying on business, including the assessment of an excess profit tax. Lord Porter said: [65]
There is, however, one further matter which requires consideration. In all the cases referred to, the debts which were to be paid or collected were strictly trade debts, and it is maintained that in that respect they differ from the case under appeal in that the debt claimed by the Crown to be due is in respect of excess profits tax and that such a debt is not a trade debt but a sum due for taxes and no more connected with the appellant’s business than income tax or any other tax liability. Whatever else may be said about excess profits tax, however, it is imposed upon the debtor because he has been trading, and I do not see any reason for confining trade debts to those incurred in buying or selling. In re Allen shows that they extend to liabilities incurred in incidental matters which occur during the course of carrying on the trade, including a liability for the careless driving of a servant resulting in an accident. In Dagnall’s case Vaughan Williams L.J. said: “It seems to me that trading is not completed until you have performed all the obligations that the fact of trading imposed upon you”; and this language was quoted with approval by Swinfen Eady L.J in In re Reynolds. I think it is accurate, and that the payment of excess profits tax was one of the obligations imposed on the appellant by his trading.
[65] Theophile v Solicitor-General [1950] AC 186, at pages 202-203 (references omitted)
The second case to which Gibbs J in Re Mendonca referred is In Re Bird v Inland Revenue Commissioners; Ex parte the Debtor,[66] where Harman LJ said it was: [67]
settled law that for bankruptcy purposes a bankrupt has been looked at as continuing to carry on a business in this country, even though he had in fact ceased trading, so long as any debts of the business remained outstanding.
[66] In Re Bird v Inland Revenue Commissioners; Ex parte the Debtor [1962] 1 WLR 686
[67] In Re Bird v Inland Revenue Commissioners; Ex parte the Debtor [1962] 1 WLR 686, at page 690
Next, there is the notion of “carrying on” a business. Subparagraph (iii) of s 43(1)(b) of the Act requires that “the debtor” was carrying on the business. It must therefore be shown that the debtor was carrying on “his or her own business”; it “is not sufficient that the debtor was engaged as an employee in the business of somebody else”.[68] Thus the expression “carrying on business in Australia, either personally or by means of an agent or manager” does not apply to a person “who is running his company’s business, even though he [or she] be the sole beneficial shareholder and in complete control”.[69]
[68] Alan Turner v Ronald William Trevorrow and R and P Trevorrow Pty Ltd [1994] FCA 1091, at [22]
[69] Re Brauch; Ex parte Britannic Securities and Investments Ltd [1978] Ch 316, at page 328
That a person has engaged in activities in which he or she used a company or companies does not, however, preclude a finding that the person did so in the course of his or her conducting a business separate from the business of the company or companies. That is what the English Court of Appeal found occurred in Re Brauch; Ex parte Britannic Securities and Investments Ltd where the debtor was a property developer who undertook projects through separate companies.[70] Buckley LJ said:[71]
The role assumed by the debtor in these transactions was, in my judgment, certainly not confined to that of an investor in companies engaged in property developments, as he claimed. Nor was he acting in all respects merely on behalf of the companies; on the contrary I think on a true view of the evidence it would be more accurate to say that the companies were part of the machinery by which the debtor implemented his business projects. It is probable that in the course of doing so the several companies entered into contracts and incurred liabilities in respect of which the debtor could not have been made personally liable. There is no inconsistency between this and the debtor's having carried on a business which was distinct from the companies’ activities, although associated with them.
[70] Re Brauch; Ex parte Britannic Securities and Investments Ltd [1978] Ch 316
[71] Re Brauch; Ex parte Britannic Securities and Investments Ltd [1978] Ch 316, at page 336
Finally, there is the expression of carrying on a business “by means of an agent or manager”. That denotes nothing more than one person’s authorising another to undertake on the first person’s behalf activities that constitute a business.
PARTIES’ SUBMISSIONS AND QUESTIONS ARISING
Cadence submits that as at 9 March 2020 Ms Cheah carried on a business in Australia. The basis of that submission is the submission that the IMG Agreement was on foot on 9 March 2020; and the effect of that agreement was that IMG represented Ms Cheah in Australia. Cadence further submits that Ms Cheah posted material on her Instagram account.
Ms Cheah, on the other hand, submits she was not carrying on any business in Australia on 9 March 2020. Counsel for Ms Cheah submits that although the New IMG Agreement was signed after 1 February 2020 Ms Cheah and IMG contemplated that the IMG Agreement would be replaced with a new agreement; that such new agreement would take effect from 1 February 2020; and it is for that reason the New IMG Agreement was stated to take effect from 1 February 2020. Counsel relies on the chain of emails commencing with the email Ms Cheah sent to Mr Parlett on 5 February 2020 in which Ms Cheah said that all agreements are to be made using the name of TWG, and also on cl 8.1 of the IMG Agreement which, counsel submits, shows the parties contemplated the possibility Ms Cheah could assign exclusive rights to her social media profile to another party, and that the terms of the IMG Agreement would continue to operate, binding that other party. Counsel for Ms Cheah ended this part of his submissions as follows:
Now, in my submission what that [that is, the New IMG Agreement being dated 1 February 2020] reflects is the state of play as both of the parties were aware that from February 2020 and from at the very least 4 March 2020, IMG, to the extent it was doing anything in Australia, was doing it on behalf of [TWG], doing business as Ms Cheah, consistent with Ms Cheah’s employment agreement of 1 January 2020 with [TWG], which didn’t give Ms Cheah the right to use her social media for her own benefit, even if she wanted to.
Counsel for Ms Cheah also submitted that two of the Influencer Agreements related to terms that had expired before 9 March 2020 and the Influencer Agreement that came into effect after 9 March 2020 was made by TWG.
The following questions arise:
(a)Was there any business with which Ms Cheah was concerned as at 9 March 2020? If so, what was the nature of the business?
(b)Assuming there was a business, by whom was the business carried on? In particular, was it carried on by Ms Cheah personally or by means of IMG as her agent or manager? Or was it carried on by TWG?
(c)Assuming there was a business that was carried on by Ms Cheah personally or by means of IMG as her agent or manager, was the business carried on in Australia?
WAS THERE A BUSINESS?
There are two items and one class of evidence that is relevant to this question. The first item is the IMG Agreement; and the following matters are relevant:
(a)The parties to the agreement are Ms Cheah, who is referred to as “the Talent”, and IMG.
(b)Ms Cheah exclusively entrusted IMG with developing, negotiating, and organising all of Ms Cheah’s “income producing activities”, these being “her activities and businesses as a digital influencer, blogger, model, actress, musician, designer, consultant, presenter, creative director, media personality” (emphasis added).
(c)All income that was to be derived as a consequence of IMG’s tasks referred to in (b) was to be paid in the first instance to IMG out of which payments were to be made to Ms Cheah after deduction of commission.
The second item of evidence is the New IMG Agreement. The following matters are relevant:
(a)The parties to the agreement are TWG and IMG.
(b)Recital D states the agreement contains the terms and conditions on which IMG would provide talent management services to TWG “for the benefit of the Talent”, that is, for the benefit of Ms Cheah.
(c)TWG exclusively entrusted IMG with developing, negotiating, and organising all of the Talent’s (that is Ms Cheah’s) “income producing activities and career development opportunities . . . arising from the Talent’s name, fame, voice and reputation through the grant of sponsorship, endorsement, licensing, advertising, appearances and presenter activities (host or guest), publishing, broadcast and/or other commercial rights by means of all media”.
(d)IMG would book speaking engagements “for the Talent” through a third party speakers agency.
(e)All income that was to be derived as a consequence of IMG’s tasks referred to in (c) and (d) were to be paid in the first instance to IMG out of which payment were to be made to TWG after deduction of commission.
Finally, there are the Influencer Agreements. These consist of the following elements.
(a)An obligation to create and publish posts on social media that refer to or are associated with particular products or brands (Content). The TYK and TWG influencer agreements identify the social media as “the Talent’s official Instagram channel”, and the Cheah influencer agreement describes the social media as “your personal social channel, @biancamaycheah”.
(b)The second element is the identity of the persons who assumed the obligation to create and publish Content. In the case of the TYK and TWG influencer agreements, the obligation to publish the posts is assumed by each of TYK and TWG “providing the services of Bianca Cheah”, and in the case of the Cheah influencer agreement Ms Cheah assumes the obligation to publish the posts.
(c)The third element is the grant of a licence for the term specified in each of the Influencer Agreements to use the Content and other information. In the case of the TYK and TWG influencer agreements, the licence is “to use the Talent’s Identification and any other Intellectual Property Rights in the Content”.[72] In the case of the Cheah influencer agreement, the licence was to use Ms Cheah’s “approved name” and “repost” Ms Cheah’s “social posts”.[73]
(d)The fourth element is the identity of the person who granted or purported to grant the licence. In the case of the TYK and TWG influencer agreements, the grantors are TYK and TWG respectively, and Ms Cheah is the grantor in the case of the Cheah influencer agreement.
[72] Clause 5 of each of the printer terms and conditions – Exhibit EFB-1, pages 88 and 96
[73] Clause 5 - Exhibit EFB-1, page 76
This evidence supports findings, and I find, that as at 9 March 2020 Ms Cheah had what may loosely be described as an asset that is capable of commercial exploitation; the asset was the power of Ms Cheah’s identity, name, and personality to attract a large number of followers on social media; Ms Cheah, and then TWG, had engaged IMG to find suppliers of goods or services who were prepared to pay money in return for Ms Cheah publishing Content on social media that favourably associated her identity and name with the goods or services the suppliers sold or intended to sell; and contracts had been made under which suppliers agreed to pay, and had paid, money in return for Ms Cheah publishing Content and granting to the suppliers a licence to use the Content. The seeking out of suppliers, and the entering into of contracts with suppliers, are activities that had been carried on since at least 2014, and were continuing as at 9 March 2020. The activities have been regular, and they have been directed to the earning of income. In those circumstances, these activities constituted a single business, and that business was in operation as at 9 March 2020. It will be convenient if I refer to the business as the “Influencer Business”.
WHO CARRIED ON THE INFLUENCER BUSINESS AS AT 9 MARCH 2020?
Determining who carried on the Influencer Business is complicated by the presence of agreements – the New IMG Agreement and the TYK influencer agreement - in which companies, namely, TYK or TWG, contracted to procure Ms Cheah to create and publish Content, rather than Ms Cheah herself entering into a contract to do so; and contracts under which TYK or TWG rather than Ms Cheah granted a licence to use the Content. That raises the question whether the Influencer Business was being conducted by TYK or by TWG.
As I have already noted, counsel for Ms Cheah submits the Influencer Business was and is conducted by TWG, not by Ms Cheah; that the New IMG Agreement reflects that fact because TWG, rather than Ms Cheah, is a party to the agreement; and Ms Cheah, TWG, and IMG contemplated that that state of affairs was effective from 1 February 2020. I do not accept those submissions.
(a)Although the Second TWG employment contract provides that Ms Cheah is appointed to the position of “Brand ambassador”, it does not identify the “brand” for which she has been appointed ambassador, or the duties Ms Cheah was employed to perform in relation to the brand or in relation to anything else.
(b)The Second TWG employment contract does not contain any term that could reasonably be read as requiring Ms Cheah to perform work of the nature TWG undertakes in the TWG influencer agreement Ms Cheah will perform.
(c)Although under cl II of the Second TWG employment contract Ms Cheah grants a licence to TWG, the licence is limited to the term of the agreement, and to “the Products”. Ms Cheah has given no evidence that is relevant to identifying “the Products”.
(d)Clause 4.1 of the IMG Agreement refers to “the Talent’s”, that is, Ms Cheah’s, “activities and businesses as a digital influencer”.
(e)Recital D to the New IMG Agreement states that IMG will provide the services under that agreement to TWG “for the benefit of the Talent”, namely, Ms Cheah. Under cl 4.1 IMG is entrusted with developing, negotiating, and organising all income producing activities, and career development activities available to “the Talent” – not TWG - arising from “the Talent’s name, fame, voice and reputation”.
(f)That Ms Cheah requested IMG send a letter stating IMG ceased personally representing her in February 2020 in circumstances where the New IMG Agreement, as executed by the parties, stated it commenced on 1 February 2020, is inconsistent with the parties having had a common intention that the agreement had effect from 1 February 2020. Had that been the common intention, Ms Cheah would not have requested any such letter; she would have instead been content to rely on the terms of the New IMG Agreement itself.
The true position is that Ms Cheah, rather than TWG or TYK, was carrying on the Influencer Business as at 9 March 2020. Ms Cheah owned the income producing asset of the business, namely, her name, identity, and personality; there is nothing to suggest that Ms Cheah had assigned to any company or to any other person her income producing asset and had agreed to exploit that asset for the benefit of any company or other person; Ms Cheah engaged IMG under the IMG Agreement to exploit Ms Cheah’s income producing activities; and the IMG Agreement was on foot as at 9 March 2020. Even if, however, the New IMG Agreement was in effect as at 9 March 2020, that would not mean Ms Cheah was not carrying on the Influencer Business. The effect of the New IMG Agreement was for TWG, rather than Ms Cheah, to engage IMG to do for the benefit of Ms Cheah, not for the benefit of TWG, the very things IMG had agreed to do for Ms Cheah under the IMG Agreement. In other words, the New IMG Agreement presupposes that which the IMG Agreement presupposed, namely, that Ms Cheah carries on income producing activities arising from Ms Cheah’s name, fame, voice, and reputation.
It is true that under the TYK influencer agreement the supplier agreed to contract with TYK, and it agreed to pay to TYK, rather than to Ms Cheah, the money it agreed to pay for Ms Cheah producing the Content, and for being granted a licence to use the Content; and it is also true that under the New IMG Agreement, income generated by Ms Cheah’s activities as an influencer would be paid to TWG. That, however, does not mean the Influencer Business was carried on by TYK or by TWG. It only means that Ms Cheah had decided that the income her activities as an influencer would generate would be paid to an entity other than herself; and Ms Cheah gave effect to that intention by causing TYK and TWG, rather than herself, to enter into contracts as the entity responsible for producing Content and for granting the licence to use the Content.
It appears this is how Ms Cheah collected payment for much of her income producing activities. In her email to Ms Cheah on 10 January 2020,[74] Ms Ragulova stated that IMG’s accounting system did not record Ms Cheah having a bank account, but it did associate with Ms Cheah bank accounts held by TYK and TWG. That suggests that IMG paid the amounts it received under the IMG Agreement to these bank accounts, not to Ms Cheah. It is open to infer, and I find, that rather than TYK or TWG engaging Ms Cheah to produce Content and to licence the use of the Content, Ms Cheah engaged TYK and TWG as part of the machinery by which she engaged in her income producing activities as an influencer.
[74] See paragraph 18 of these reasons for judgment
DID MS CHEAH CARRY ON THE INFLUENCER BUSINESS IN AUSTRALIA?
The final question to consider is whether as at 9 March 2020 Ms Cheah was carrying on the Influencer Business in Australia. That question must be answered in the affirmative. First, Ms Cheah and, later, TWG, engaged an Australian based entity, IMG, to perform the “Representation Rights” under cl 4.1 of each of the IMG Agreement and New IMG Agreement. Second, the Influencer Agreements are stated to operate in Australia or in Australia and New Zealand.
CONCLUSION ON CARRYING ON BUSINESS IN AUSTRALIA
I am satisfied that as at 9 March 2020, being the day on which Ms Cheah committed an act of bankruptcy, Ms Cheah was carrying on business in Australia. Ms Cheah did so in part by means of IMG as agent, the scope of the agency being IMG’s seeking suppliers with whom Ms Cheah or some other entity could enter into contracts for the production and publication of Content, and the granting of licences to use the Content; and in part by Ms Cheah entering, and by causing companies to enter, into contracts for the production of Content for use in Australia, and for the licencing the use of Content in Australia. Thus, the jurisdictional requirements of s 43 of the Act are satisfied in relation to Ms Cheah.
ORDINARILY RESIDENT IN AUSTRALIA?
Cadence submits that as at 9 March 2020 Ms Cheah was ordinarily resident in Australia. Cadence relies on Ms Cheah holding and travelling on an Australian passport, Ms Cheah having referred to Australia as “home”, and Ms Cheah recording on her Instagram Profile that she was “LA/SYD based”. Having regard to the other evidence before me, and in particular, evidence that Ms Cheah does not own or rent property in Australia, and she holds a lease in Los Angeles,[75] I am not satisfied it is open to me to find Ms Cheah was ordinarily resident in Australia as at 9 March 2020.
[75] Affidavit of B Cheah 26.06.2020, annexure “G”
OTHER PRECONDITIONS FOR MAKING SEQUESTRATION ORDER
I am satisfied that all the other requirements of the Act and under the Federal Circuit Court (Bankruptcy) Rules 2016 (Cth) (Bankruptcy Rules) for making a sequestration order against Ms Cheah under s 52(1) of the Act have been satisfied. In particular, I am satisfied of the following:
(a)Cadence filed a creditor’s petition in the prescribed form;[76] and, as required by s 47(1) of the Act and r 4.02(2) of the Bankruptcy Rules, an affidavit verifying paragraphs 1, 2, 3, and 4 of the creditor’s petition has been made.[77]
(b)Cadence filed at the time it filed the creditor’s petition an affidavit as required by r 4.04(1)(a)(i) of the Bankruptcy Rules.[78]
(c)Cadence filed a “Trustee Consent to Act Declaration” given by Mr Bradley John Tonks.
(d)Cadence has not filed an affidavit of service of the creditor’s petition and other documents, as required by r 4.05 of the Bankruptcy Rules. Ms Cheah, however, has obviously received notice of the creditor’s petition because she has appeared at the hearing to present evidence and make submissions in opposition to Cadence’s application for a sequestration order.
(e)An affidavit of debt,[79] as required by r 4.06(4) of the Bankruptcy Rules, and an affidavit of search, as required by r 4.06(3), have also been read.[80]
[76] Bankruptcy Rules, r 4.02(1); Form B6
[77] Affidavit verifying creditor’s petition of G Cronin 18.03.2020
[78] Affidavit of C D La Guzza 19.03.2020
[79] Affidavit of debt of G Cronin 26.11.2020
[80] Affidavit of C L McTaggart 26.11.2020
DISPOSITION
I propose to make an order sequestrating the estate of Ms Cheah, and note that a consent to act as trustee signed by Mr Bradley John Tonks has been filed under s 156A of the Act. I also propose to order that the costs of Cadence be paid out of Ms Cheah’s estate. Cadence has filed a short form bill of costs claiming costs and disbursements in the sum of $18,363.75. I am satisfied this represents a reasonable amount for Cadence’s costs. I therefore also propose to order that Cadence’s costs be set in the amount of $18,363.75.
I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Manousaridis. Associate:
Dated: 20 January 2021
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