Mann (Trustee) v Storey (No 2)

Case [2022] FCA 609

FEDERAL COURT OF AUSTRALIA

Mann (Trustee) v Storey (No 2) [2022] FCA 609  

File number: NSD 67 of 2022
Judgment of: STEWART J
Date of judgment: 24 May 2022
Catchwords:

BANKRUPTCY AND INSOLVENCY – where applicant was appointed trustee of the estate of the respondent by orders of the High Court of the Republic of Singapore – where letter of request received from the Supreme Court of Singapore – application pursuant to s 29(2)(a) of the Bankruptcy Act 1966 (Cth) for the appointment of a receiver empowered to manage the respondent’s foreign bankruptcy in Australia – whether any inconsistency between the Cross-Border Insolvency Act 2008 (Cth) and the UNCITRAL Model Law on Cross-Border Insolvency and s 29 of the Bankruptcy Act in relation to giving assistance to the foreign trustee – no inconsistency where there is no bankruptcy in Australia – where applicant has been frustrated in efforts to administer bankruptcy in Singapore and requires assistance of the Court – whether specific relief sought is justified and necessary – relief granted

PRACTICE AND PROCEDURE – further application by the respondent to vacate the hearing and adjourn for several months due to alleged inability to participate adequately due to illness and lack of personal computer – finding that respondent has had sufficient time to prepare for hearing – application dismissed

Legislation:

Bankruptcy Act 1966 (Cth) ss 29, 77(1)

Bankruptcy Regulations 2021 (Cth) reg 2, 7(b)

Bankruptcy Regulations 1996 (Cth), reg 3.01.

Bankruptcy and Other Legislation Amendment (Repeal and Consequential Amendments) Regulations 2021 (Cth) s 2(1) and Sch 1, item 1

Corporations Act 2001 (Cth) s 581

Cross Border Insolvency Act 2008 (Cth) s 21

Insolvency, Restructuring and Dissolution Act 2018 (Singapore) ss 310, 339

Model Law on Cross-Border Insolvency of UNCITRAL, art 7

Explanatory Memorandum, Cross-Border Insolvency Bill 2008 (Cth)
Cases cited:

Ayres v Evans [1981] FCA 238; 39 ALR 129; 56 FLR 235

Dick v McIntosh [2001] FCA 1008

Kapila, in the matter of Edelsten [2014] FCA 1112

Levy v Reddy [2009] FCA 63; 6 ABC(NS) 758

Mann (Trustee) v Storey [2022] FCA 542

Official Assignee in Bankruptcy of the Property of Hanna, in the matter of Hanna v Hanna [2018] FCA 156

Official Assignee in Bankruptcy of the Property of Ma v Ma [2018] FCA 948

Radich v Bank of New Zealand [1993] FCA 450; 45 FCR 101

Re Ayres; Ex parte Evans [1981] FCA 48; 34 ALR 582; 51 FLR 395

Re Chow Cho Poon (Pte) Ltd [2011] NSWSC 300; 80 NSWLR 507
Division: General Division
Registry: New South Wales
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Number of paragraphs: 43
Date of last submission/s: 22 May 2022
Date of hearing: 19 May 2022
Counsel for the Applicant: D Edney
Solicitor for the Applicant: Ryde Evans Lawyers
Counsel for the Respondent: The respondent appeared in person

ORDERS

NSD 67 of 2022
BETWEEN:

FAROOQ AHMAD MANN AS THE TRUSTEE OF THE ESTATE OF DAVID IAN ANDREW STOREY,…

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AGLC
Mann (Trustee) v Storey (No 2) [2022] FCA 609
Case
[2022] FCA 609
Decision Date

CaseChat Overview and Summary

In Mann (Trustee) v Storey (No 2), the Federal Court of Australia was called upon to consider an application for the appointment of a receiver to assist in the administration of a foreign bankruptcy in Australia. The applicant, Mann, was appointed as the trustee of Storey's estate by the High Court of Singapore, and he sought the assistance of the Australian courts to manage Storey's bankruptcy, given that Storey resides in Australia and has assets potentially located there. The legal issues revolved around whether there was any inconsistency between the Cross-Border Insolvency Act 2008 (Cth) and the UNCITRAL Model Law on Cross-Border Insolvency with section 29 of the Bankruptcy Act 1966 (Cth) concerning the provision of assistance to foreign trustees, and whether the specific relief sought by Mann was justified and necessary.

The court found no inconsistency between the relevant statutes, as there was no bankruptcy in Australia. It was noted that Mann had been frustrated in his efforts to administer the bankruptcy in Singapore and required the assistance of the Australian courts. The court concluded that the relief sought was both justified and necessary, leading to the grant of the application. The court also dismissed a subsequent application by Storey to vacate the hearing and adjourn it for several months due to alleged illness and lack of a personal computer, finding that Storey had had sufficient time to prepare for the hearing.

In summary, the court granted the application for the appointment of a receiver to assist in the administration of Storey's bankruptcy in Australia. The receiver was empowered to compel Storey to provide disclosure of his assets, liabilities, and other information, recover assets for the benefit of his estate, and investigate his affairs for the purposes of his bankruptcy. Storey was required to complete a statement of his affairs and deliver it to the receiver, and to comply with certain obligations as if he were a bankrupt under Australian law. The court also provided for the receiver's remuneration and costs, and allowed for applications to discharge or vary the orders.

Orders

Orders of the court

1. The applicant’s appointment as trustee in bankruptcy of the respondent and the vesting in him of all the respondent’s divisible property (as defined in s 329 of the Insolvency, Restructuring and Dissolution Act 2018 (Singapore)) (Property) be recognised in Australia.

2. Any and all Property located in, situated in or subject to the jurisdiction of Australia be vested in the applicant.

3. Jason Lloyd Porter be appointed receiver (Receiver) without security to act on behalf of the applicant for the purposes of investigating, collecting and realising the Property of the respondent in Australia, and investigating all other Property as may be collectible under the Insolvency, Restructuring and Dissolution Act 2018 (Singapore).

4. For the purposes of investigating, collecting and realising the Property of the respondent in Australia and investigating all other Property as may be collectible under the Insolvency, Restructuring and Dissolution Act 2018 (Singapore), the Receiver is empowered to exercise all powers as are conferred on a trustee in bankruptcy of the respondent as if the respondent were declared a bankrupt under the Bankruptcy Act 1966 (Cth) on 4 March 2021 and the Receiver were the trustee of the Property of the respondent under that Act.

5. The powers referred to in the preceding paragraph shall include, but are not limited to:

(a) Such rights and powers as are available to a trustee in bankruptcy under Pt V of the Bankruptcy Act 1966 (Cth) for the purposes of investigating the affairs of the respondent as if he was declared bankrupt under the Bankruptcy Act 1966 (Cth) on 4 March 2021 and the Receiver was the trustee of the property of the respondent under that Act;

(b) Such rights and powers as are available to a trustee in bankruptcy under Pt VI, Div 4 of the Bankruptcy Act 1966 (Cth) for the purposes of collecting and realising property as if the respondent was declared bankrupt under the Bankruptcy Act 1966 (Cth) on 4 March 2021 and the Receiver was the trustee of the property of the respondent under that Act; and

(c) Such rights and powers as are available to a trustee in bankruptcy under Pt VI, Div 4B of the Bankruptcy Act 1966 (Cth) for the purposes of collecting contributions under s 339 of the Insolvency, Restructuring and Dissolution Act 2018 (Singapore) as if the respondent was declared bankrupt under the Bankruptcy Act 1966 (Cth) on 4 March 2021 and the Receiver was the trustee of the property of the respondent under that Act, provided the contributions are assessed and payable on the same basis as income contributions are assessed and payable to a trustee in bankruptcy under Pt VI, Div 4B of the Bankruptcy Act 1966 (Cth).

6. The respondent, within 14 days:

(a) Complete a statement of his affairs providing the information required by Form BR-5 at pages 14-30 of annexure “FAM2” to the affidavit of Farooq Ahmad Mann affirmed 4 February 2022; and

(b) Deliver that statement to the Receiver.

7. The respondent, unless excused by the Receiver or prevented by illness or other sufficient cause, do each of the things he would be required to do pursuant to s 77(1) of the Bankruptcy Act 1966 (Cth) as if he had been declared bankrupt under the Bankruptcy Act 1966 (Cth) on 4 March 2021 and the Receiver was the trustee of the estate of the respondent under that Act.

8. The Receiver shall be entitled to draw reasonable remuneration and to pay reasonable costs and expenses properly incurred in the performance of his duties and the exercise of his powers as receiver under this order, on the same basis as if the respondent was declared a bankrupt under the Bankruptcy Act 1966 (Cth), the Receiver was the trustee of the property of the respondent under that Act, and the applicant was able to approve the Receiver’s remuneration.

9. The applicant, the respondent, the Receiver, and any third party affected by these orders have liberty to apply on notice to the applicant to discharge or vary these orders, or to seek directions hereunder.

10. The applicant’s costs of this application be the applicant’s costs in the administration of the bankrupt estate of the respondent.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

The application is brought pursuant to s 29(2)(a) of the Bankruptcy Act 1966 (Cth) in reliance on a letter of request from the Supreme Court of Singapore.Background The bankruptcy order in Singapore was made on the application of judgment creditors of the respondent, the underlying debts arising from costs orders made in their favour in proceedings commenced by the respondent in Singapore. The respondent is an Australian citizen and resides in Australia at an address in New South Wales. He cites his occupation as being a software developer. He had property in Singapore, namely shares in a Singapore-registered company. That is apparently the basis for the jurisdiction of the Singapore High Court to sequestrate his estate with reference to s 310(1)(b) of the Insolvency, Restructuring and Dissolution Act 2018 (Singapore). In any event, the respondent advised me in the hearing that he opposed the bankruptcy order in Singapore, attending hearings in relation to it and submitting documentation in opposition. That conduct would ordinarily also amount to a submission to jurisdiction with the result that jurisdiction in the international sense is established and the foreign judgment would be capable of recognition. It is therefore not necessary to consider whether such international jurisdiction is not a requirement for recognition under s 29, as to which see Radich v Bank of New Zealand [1993] FCA 450; 45 FCR 101 at 105 per Einfeld J and 116 per Drummond J. The respondent did not appeal against the bankruptcy order. The applicant complains that the respondent has substantially refused to cooperate with him in relation to the conduct of the respondent’s bankruptcy. The applicant has tendered a long history of correspondence between him and the respondent which bears out the validity of this complaint. An element of the respondent’s failure to cooperate with the applicant is that, despite numerous requests by the applicant, he has not returned a completed statement of affairs as required under Singapore insolvency law. On 5 August 2021, the applicant filed a summons in the High Court of the Republic of Singapore requesting the issue of a letter of request to the courts exercising bankruptcy jurisdiction in Australia. The respondent actively opposed that proceeding in Singapore, including by filing an affidavit in which he raised various complaints against the applicant. The summons was heard on 18 November 2021 and the High Court granted the relief sought in the summons. Thereafter, on 29 November 2021, the Honourable Justice Vinodh Coomaraswamy, Judge of the Supreme Court of Singapore, issued a letter of request addressed to this Court and the Federal Circuit and Family Court of Australia. The letter of request includes the following: 4. The reason why such assistance is sought, as put to this Court by Mr Mann, is that:a. Mr Storey has refused to file his statement of affairs (which he is required by law to do) or comply with many of his obligations as a bankrupt under Singapore law, or otherwise cooperate with the administration of his bankruptcy;b. Mr Storey is currently located in Australia, and understood to be ordinarily resident there, such that without the assistance of the Australian courts Mr Mann has limited ability to compel Mr Storey to comply with his obligations; andc. Mr Mann is of the view that Mr Storey may have assets in Australia, which may not be able to be readily recovered by him simply in reliance upon the Bankruptcy Order, but which may be able to be recovered with the assistance of orders made by an Australian court in bankruptcy.5. This Court requests that for the reasons aforesaid, the courts of Australia exercising jurisdiction in bankruptcy provide such assistance as they are able and prepared to provide - and on such terms and in such form as the respective court sees fit - to assist in the administration of Mr Storey’s bankruptcy, including but not limited to enabling Mr Mann (or a receiver appointed by the Australian court at Mr Mann’s request) to:a. compel Mr Storey to provide disclosure of his assets, liabilities, and other information as may be required to administer his bankruptcy;b. recover assets owned by Mr Storey for the benefit of his estate in bankruptcy, including by exercising relevant powers to recover assets improperly dissipated by Mr Storey; andc. otherwise investigate Mr Storey’s affairs for the purposes of his bankruptcy.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

That conclusion as to the absence of inconsistency is supported by the Explanatory Memorandum to the Cross-Border Insolvency Bill 2008 (Cth), which at paragraphs 41 to 43 explains the purpose of s 21 of the CBI Act being principally to ensure that the discretion to refuse aid to non-prescribed countries under s 29(2)(b) of the Bankruptcy Act will not prevail over the mandatory obligation to recognise a foreign insolvency under the Model Law. That is, its purpose is to expand rather than restrict the circumstances in which relief is given. Consideration There can be no serious question that the preconditions for the exercise of the power under s 29(2)(a) to act in aid of the Singaporean bankruptcy are satisfied. The respondent did not contend to the contrary. The various matters raised by the respondent in his affidavit and orally are not such as to displace the mandatory requirement of s 29(2)(a). They were apparently brought forward on the erroneous understanding that the court has a discretion to grant, or to refuse, the relief. I will briefly identify each of those matters in the following paragraphs. The respondent says that he has already given the applicant substantial information about his financial affairs, and it will take a long time for him to complete the statement of affairs that he is required to complete under the insolvency laws of Singapore. This is all self-evidently irrelevant. The respondent makes complaints about the conduct of the applicant in relation to certain bankruptcy proceedings against the respondent in Sweden. Save to note that the Swedish trustee has indicated that he intends to “close the Swedish bankruptcy very soon”, nothing about the Swedish bankruptcy has any relevance to the exercise of the court’s power in the present case. The respondent complains of what he characterises as “the inflexible, inconsistent, and unreasonable conduct” of the applicant. If the respondent indeed has any legitimate complaint against the applicant about the administration of the bankruptcy, which is by no means apparent on the information before me, that is a matter to be dealt with in Singapore. It has no bearing on the exercise of the court’s power in this case. The respondent also alleges a “conspiracy involving the applicant, the solicitors for the applicant and [the petitioning creditors in Singapore]”. The complaint is that the petitioning creditors in Singapore, using the same solicitors as the applicant in the present proceeding, issued a bankruptcy notice in Australia in respect of the same foreign judgment debt underlying the bankruptcy orders in Singapore. On the respondent’s evidence, his application to set aside the bankruptcy notice succeeded on the basis that the debt was not enforceable because of the supervening bankruptcy orders in Singapore. His complaint is that he has been put to expense in contesting the bankruptcy notice, and he says that he intends to pursue proceedings against “the alleged conspirators”. He includes the applicant as such a “conspirator” on the basis that the petitioning creditors were assisted and represented by the applicant’s solicitors. Needless to say, none of that has a bearing on the exercise of the court’s power in the present case.