Hung (Trustee), in the matter of Farouk v Farouk
[2021] FCA 117
•17 February 2021
FEDERAL COURT OF AUSTRALIA
Hung (Trustee), in the matter of Farouk v Farouk [2021] FCA 117
File number: QUD 399 of 2020 Judgment of: DERRINGTON J Date of judgment: 17 February 2021 Catchwords: PRACTICE AND PROCEDURE – cross-border insolvency – Singapore bankruptcy proceeding – application for recognition of a “foreign main proceedings” pursuant to the Cross-Border Insolvency Act 2008 (Cth) and the Model Law on Cross-Border Insolvency of the United Nations Commission on International Trade Law – interlocutory application pursuant to Federal Court (Bankruptcy) Rules 2016 (Cth) for service of originating application by email – application granted Legislation: Federal Court (Bankruptcy) Rules 2016 (Cth) rr 14.03, 14.06 Division: General Division Registry: Queensland National Practice Area: Commercial and Corporations Sub-area: General and Personal Insolvency Number of paragraphs: 15 Date of hearing: 17 February 2021 Counsel for the Applicant: Mr M McKechnie Solicitor for the Applicant: Ashurst Australia Counsel for the Respondent: The Respondent did not appear ORDERS
QUD 399 of 2020 IN THE MATTER OF MOHAMMED FAROUK
BETWEEN: YUEH HUNG LIN AND CHEE YOH CHUANG IN THEIR CAPACITY AS JOINT AND SEVERAL TRUSTEES
Applicants
AND: MOHAMMED FAROUK
Respondent
ORDER MADE BY:
DERRINGTON J
DATE OF ORDER:
17 FEBRUARY 2021
THE COURT ORDERS THAT:
1.The following court documents be served in accordance with Order 2:
(a)the Originating Application filed on 23 December 2020;
(b)the affidavit of Chee Yoh Chuang filed on 11 February 2021;
(c)the affidavit of Catherine Espiritu filed on 23 December 2020; and
(d)the Interim Application being in the form of the document annexed and marked “A” to the Originating Application.
2.Pursuant to rr 14.03(4) and 14.06(1)(a) of the Federal Court (Bankruptcy) Rules 2016 (Cth), the court documents referred to in Order 1 are to be served by email sent to [email protected].
3.Pursuant to r 14.06(1)(b) of the Federal Court (Bankruptcy) Rules 2016 (Cth), the applicants publish a notice of filing of the Originating Application in accordance with Form B20 in The Straits Times.
4.Pursuant to r 14.06(1)(a) of the Federal Court (Bankruptcy) Rules 2016 (Cth), the applicants send a notice of the filing of the Originating Application in accordance with Form B20 to each person whose claim to be a creditor of the respondent is known to the applicants.
5.Further service of the Interim Application referred to in Order 1(d) be dispensed with.
6.The Originating Application and the Interim Application referred to in Order 1(d) be listed for hearing at 9:30 am AEST on 15 March 2021.
7.The applicants have liberty to apply.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
DERRINGTON J:
This is an interlocutory application by the joint and several trustees in bankruptcy of the estate of Mr Mohammed Farouk. They were appointed as such pursuant to an order of the High Court of the Republic of Singapore on 29 November 2018.
The substantive application in the proceedings is to have the foreign bankruptcy proceedings recognised as a “foreign proceeding” pursuant to rr 14.03(1) and 14.04(2) of the Federal Court (Bankruptcy) Rules 2016 (Cth) (the Rules), s 6 of the Cross-Border Insolvency Act 2008 (Cth), and Art 17 of the Model Law on Cross-Border Insolvency of the United Nations Commission on International Trade Law (the Model Law). The applicants also seek additional relief pursuant to Art 21 of the Model Law contingent upon such recognition, by way of an interim application seeking their effective appointment as trustees in bankruptcy with respect to the respondent’s local assets.
The present application is for orders pursuant to r 14.03(3) concerning the service and listing of the originating application. In particular, the applicants seek directions concerning how service is to be effected on the respondent. The applicants also seek orders concerning the satisfaction of the notice requirements set out in r 14.06.
As is inevitably the case in interlocutory applications concerning the service of an originating process, it was heard ex parte.
By way of background, the evidence before the Court indicates the following:
(a)the applicants have previously corresponded with the respondent by email using the email address [email protected]. The respondent has since ceased communicating with the trustees’ by email and the applicants’ attempts to contact him by telephone and registered mail have been unsuccessful;
(b)the respondent has failed to comply with various requirements of the Singaporean bankruptcy legislation, specifically the duties imposed upon him consequent upon the making of the bankruptcy order;
(c)it appears that the respondent has a number of residences, including one in India. The applicants do not know where the respondent is physically located, except that he is not presently residing in Singapore; and
(d)based on searches conducted by the applicants’ legal representatives, there is a significant possibility, perhaps even a probability, that the respondent has assets in Australia, and it is for that reason that the applicants, as the trustees in bankruptcy of his estate, seek to have the proceedings recognised here.
RELEVANT PROVISIONS
The Rules make provision for the service of proceedings of this kind and for the giving of notice of such proceedings. The Court may also give directions about such matters.
In relation to service, r 14.03 provides:
14.03 Application for recognition
(1) An application by a foreign representative for recognition of a foreign proceeding under article 15 of the Model Law must be made by filing an application in accordance with Form B2.
(2) The application must:
(a) be accompanied by the statements mentioned in article 15 of the Model Law and in section 13 of the Cross-Border Insolvency Act; and
(b) name the foreign representative as the applicant and the debtor as the respondent; and
(c) be accompanied by an affidavit verifying the matters mentioned in paragraphs 2 and 3 of article 15 of the Model Law and in section 13 of the Cross-Border Insolvency Act.
(3) When filing the application, the foreign representative must file, but need not serve, an interim application seeking directions as to service, and the Court may give any directions about service, and make any incidental orders, that it thinks just.
(4) The applicant must serve a copy of the application and the other documents mentioned in subrule (2):
(a) unless the Court otherwise orders—on each respondent (if any) to the proceeding as soon as practicable after filing an application and, in any case, at least 5 days before the date fixed for hearing; and
(b) on any other persons the Court may direct at the hearing of the interim application.
…
In relation to the giving of notice, r 14.06 provides:
14.06 Notice of filing of application for recognition
(1) Unless the Court otherwise orders, the applicant in a proceeding mentioned in rule 14.03 must:
(a) send a notice of the filing of the application in accordance with Form B20 to each person whose claim to be a creditor of the respondent is known to the applicant; and
(b) publish a notice of the filing of the application:
(i) in accordance with Form B20; and
(ii) once in a daily newspaper circulating generally in the State or Territory where the respondent has his or her principal, or last known, place of residence.
(2) The Court may direct the applicant to publish a notice in accordance with Form B20 in a daily newspaper circulating generally in any State or Territory not described in subparagraph (1)(b)(ii).
CONSIDERATION
The only real issue before the Court in the interlocutory application concerns the manner in which service of the proceedings is to be effected.
In an appropriate case, it may also be necessary to give consideration to whether any other person needs to be served.
In this case, where the applicants have previously communicated with the respondent via email, I am of the opinion that it is just and appropriate that service of the proceedings also be effected in that fashion. Further, I am satisfied that, for the purposes of r 14.03(3), it is just and appropriate that the applicants undertake service on the respondent by emailing the relevant documents to him at the email address [email protected].
The respondent’s last known place of residence was in the Republic of Singapore. The Straits Times is a daily newspaper circulating generally in that jurisdiction and the evidence indicates that a previous notice relating to the respondent’s bankruptcy has been advertised in that publication. Accordingly, I am satisfied that it is appropriate that the applicants comply with r 14.06(1)(b) by publishing a notice of the filing of the originating application in accordance with Form B20 in The Straits Times.
In cases of this nature, it is appropriate that persons who are creditors of the bankrupt be notified of the making of the application for recognition of the foreign bankruptcy proceeding (as is contemplated by r 14.06(1)). The applicants have made provision for this in the draft orders and I imagine that they would be well aware of the identity of those who might have claims on the respondent’s estate. I am prepared to order that the applicants send notice of the filing of the originating application in accordance with Form B20 to each person who claims to be a creditor of the respondent, as far as that is known to the applicants.
I am also satisfied that any further service of the interim application be dispensed with.
The originating application and the interim application will be listed for hearing on 15 March 2021 at 9:30 am AEST.
I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Derrington. Associate:
Dated: 17 February 2021
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