Palmer v Registrar-General of Land Titles of the Australian Capital Territory
[2017] ACTSC 407
•22 December 2017
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Palmer v Registrar-General of Land Titles of the Australian Capital Territory |
Citation: | [2017] ACTSC 407 |
Hearing Date: | 20 November 2017 |
DecisionDate: | 22 December 2017 |
Before: | Mossop J |
Decision: | 1. The Originating Application filed 11 October 2017 is dismissed. 2. There is no order as to the cost of the proceedings. |
Catchwords: | BANKRUPTCY – FOREIGN TRUSTEE – Australian representatives appointed under Cross-Border Insolvency Act 2008 (Cth) – whether foreign trustee entitled to be registered as proprietor of immovable property by virtue of recognition of foreign proceedings under the Cross-Border Insolvency Act 2008 (Cth) LAND TITLES – APPLICATION – Application to have register corrected by removing Australian representative of foreign trustee in bankruptcy and replacing with a foreign trustee – s 132 of the Land Titles Act 1925 (ACT) |
Legislation Cited: | Bankruptcy Act 1883 (Imp), s 118 Bankruptcy Act 1914 (Imp), s 122 Real Property Act 1900 (NSW), s 90 Model Law on Cross-Border Insolvency of the United Nations Commission on International Trade Law, arts 2, 9, 11, 15(1), 15(2), 17(1), 17(2), 19, 20, 21, 21(1), 21(1)(e), 21(2), 22, 23, 25, 26, 27, 28, 29, 30, 31, 32 |
Cases Cited: | Australian Mutual Provident Society v Gregory (1908) 5 CLR 615 Ayres v Evans (1981) 56 FLR 235 Williams v Arnold [2010] FCA 732 |
Texts Cited: | Lord Mackay of Clashfern (ed), Halbury’s Laws of England (LexisNexis Butterworths, 4th ed, 2002) Martin Davies et al, Nygh’s Conflict of Laws In Australia (LexisNexis Butterworths, 9th ed, 2014) |
Parties: | Julie Anne Palmer as Trustee in the Bankrupt Estate of David Ross Slater (Plaintiff) Registrar-General of Land Titles for the Australia Capital Territory (First Defendant) Richard Moretti (Second Defendant) Jason Lloyd Porter (Third Defendant) |
Representation: | Counsel R Vivekandanda (Plaintiff) K Katavic (First Defendant) |
| Solicitors Capital Lawyers (Plaintiff) ACT Government Solicitors (First Defendant) TressCox Lawyers (Second and Third Defendants) | |
File Number: | SC 402 of 2017 |
MOSSOP J:
Introduction
Julie Anne Palmer, the plaintiff, is the trustee of the bankrupt estate of David Ross Slater. She was appointed as trustee of the bankrupt estate of Mr Slater by an order of the County Court at Croydon, England, with effect from 9 February 2016. By Originating Application filed 11 October 2017, she has applied for an order under s 161 of the Land Titles Act 1925 (ACT) to correct the register of land titles by requiring and directing the Registrar-General of Land Titles to remove Jason Lloyd Porter and Richard Moretti as the registered proprietors of Block 13, Ainslie, in the Australian Capital Territory (‘the Ainslie property’), and register herself as the registered proprietor of that block. Mr Porter and Mr Moretti are her Australian representatives appointed as such by Gleeson J of the Federal Court of Australia by order on 16 August 2016. They were registered as the proprietor of the property on 20 March 2017
On 22 December 2015 Deputy District Judge Sadd of the Croydon County Court, England, adjudged Mr Slater to be bankrupt. By operation of s 306 of the Insolvency Act 1986 (UK) the property of Mr Slater automatically vested in the Official Receiver and subsequently in his trustee in bankruptcy. The plaintiff was appointed as trustee of Mr Slater’s bankrupt estate with effect from 9 February 2016.
Having initially declined to make the orders sought: see Palmer (Trustee), in the matter of Slater (Bankrupt) [2016] FCA 780, on 16 August 2016 Gleeson J made orders under the Cross-Border Insolvency Act 2008 (Cth) (the CBI Act) and the Model Law: Palmer (Trustee), in the matter of Slater (Bankrupt) (No 2) [2016] FCA 960. The orders were as follows:
1.Pursuant to s 6 of the Cross Border Insolvency Act 2008 (Cth) (“Act”), article 15 and cl 1 of article 17 of the Model Law on Cross-Border Insolvency of the United Nations Commission on International Trade Law (“Model Law”) and r 14.03 of the Federal Court (Bankruptcy) Rules 2005 (Cth), the administration of the estate of David Ross Slater, a bankrupt, by the applicant pursuant to proceeding 0215 of 2015 in the Croydon County Court in the United Kingdom (“UK proceeding”) be recognised as a foreign proceeding within the meaning of article 2(a) of the Model Law within Australia.
2.Pursuant to s 6 of the Act and cl 2(a) of article 17 of the Model Law, the UK proceeding be recognised as a foreign main proceeding within the meaning of article 2(c) of the Model Law within Australia.
3.Pursuant to s 6 and article 21(1)(e) of the Model Law, the administration and realisation of all of the assets of David Ross Slater located in Australia be entrusted to Jason Lloyd Porter and Richard Moretti of SV Partners Insolvency (NSW) Pty Ltd, of Level 7, 151 Castlereagh Street, Sydney in the state of New South Wales, as the local representatives of the applicant (“Australian representatives”).
4.Pursuant to s 6 of the Act and article 21(1)(g) of the Model Law, subject to the provisions of the Bankruptcy Act 1966 (Cth) (“Bankruptcy Act”), all powers normally available to a trustee in bankruptcy appointed under the provisions of the Bankruptcy Act be made available to the Australian representatives.
5.The costs of this proceeding be costs in and of the bankruptcy of Mr Slater and accorded the same priority as costs of proceedings incurred by a trustee in bankruptcy appointed under the Bankruptcy Act.
It should be noted that the issues in the present case turn upon the operation of order 3.
Mr Slater, the bankrupt, was the registered proprietor of the Ainslie property.
At some stage after their appointment as the plaintiff’s Australian representatives, Messrs Moretti and Porter instructed a local law firm to prepare a transmission application to transfer the Ainslie property into their names. This was executed in September 2016 and processed by the Registrar-General in December 2016 and registered on 20 March 2017 with the effect that they became registered proprietors of the land. This was done without the plaintiff’s knowledge, involvement or approval.
On 18 January 2017, an application was made by the judgment creditor Michael Wilson & Partners Ltd to lift or vary freezing orders made earlier in proceedings in the New South Wales Supreme Court to permit Mr Slater’s trustee in bankruptcy to deal with the Ainslie property. On 17 March 2017 freezing orders originally made by Palmer J of the New South Wales Supreme Court on 9 October 2006, extended by Einstein J on 28 May 2008 and further continued by the Court of Appeal on 31 May 2013, were varied, discharged or suspended by Stevenson J to the extent necessary to permit the plaintiff to become the registered proprietor of the Ainslie property, to deal with any interests registered against that property, and to dispose of Mr Slater’s interest in that property in accordance with the obligations under the Bankruptcy Act 1966 (Cth).
On 20 March 2017 the plaintiff discovered that as a result of the process undertaken by Mr Moretti and Mr Porter, they had, that very day, become the registered proprietors of the Ainslie property.
On 24 March 2017 the plaintiff wrote to the Registrar-General of Land Titles. That letter pointed out that Mr Moretti and Mr Porter had acted other than upon the plaintiff’s instructions and asserted that only the trustee in bankruptcy herself was entitled to become the registered proprietor of the property. She requested that because Mr Moretti and Porter were not the trustees of the bankrupt estate of Mr Slater and that she was, the register now be corrected to reflect this. The letter referred to the capacity of the Registrar-General to correct errors under s 160 of the Land Titles Act. The letter asserted that there was an error on the register “because of which is an accidental slip or omission”, namely failing to understand that order 3 made by Gleeson J did not make Mr Moretti and Mr Porter the trustee of the estate of Mr Slater but only her representatives. Further, because s 132 of the Act only allowed transmission to a trustee, the transmission of title to someone who was not the trustee was an error that required correction. The letter requested that the Registrar-General perform the function under s 160(2) of the Act
On 6 April 2017 an “Assistant Manager” at “Access Canberra” wrote to counsel for the plaintiff disagreeing with the suggestion that an error had been made in the register, pointing out that the Registrar-General had relied upon in order 3 made by Gleeson J on 16 August 2016. The email continued:
Given that there are current Supreme Court proceedings on foot, we suggest that you obtain an order from the court in accordance with the s 161 of the Land Titles Act 1925 directing the Registrar-General to correct the register with any details you considered to be incorrect.
Mr Moretti and Mr Porter were named as the second and third defendants respectively. They submitted to any order of the court save as to costs.
Land Titles Act
The Dictionary to the Land Titles Act defines “transmission” as follows:
transmission means the acquirement of title to or interest in land consequent on the death, will, intestacy, bankruptcy, insolvency, marriage, civil union or civil partnership of a proprietor.
Section 132 of the Act provides:
132 Transmission by bankruptcy or insolvency
(1) Upon the bankruptcy or insolvency of the registered proprietor of any land or interest under this Act, the assignee or trustee of the bankrupt or insolvent shall be entitled to be registered as proprietor in respect of the land or interest.
(2) The registrar-general, upon the receipt of an office copy of the appointment of the assignee or trustee, accompanied by an application in writing under his or her hand to be so registered in respect of any land or interest of the bankrupt or insolvent therein specified and described, shall enter in the register, upon the folium constituted by the grant or certificate of title of the land affected, a memorandum notifying the appointment of the assignee or trustee.
Note 1A fee may be determined under s 139 (Determination of fees, charges and other amounts) for lodgment of an application for transmission on bankruptcy or insolvency.
Note 2If a form is approved under s 140 (Approved forms) for an application, the form must be used.
(3) Upon the entry being made, the assignee or trustee shall be deemed and taken to be the registered proprietor of the interest of the bankrupt or insolvent in the land, and shall hold the land or interest subject to the equities upon and subject to which the bankrupt or insolvent held the land or interest, but for the purpose of any dealings with the land or interest under this Act the assignee or trustee shall be deemed to be the absolute proprietor thereof.
Section 132 was based upon the terms of s 90 of the Real Property Act 1900 (NSW) which in turn was based upon the terms of s 75 of the Real Property Act 1862 (NSW).
Sections 160 and 161 provide:
160 Correction of errors
(1) The registrar-general may –
(a)on application by the registered proprietor of an interest in land or the registered proprietor’s legal practitioner; and
(b) subject to any order of the court;
correct an error in the register in accordance with subsection (5).
(2) Where the register is found to contain an error that is an accidental slip or omission, the registrar-general shall –
(a) subject to any order of the court, correct the register in accordance with subsection (5); or
(b) where he or she considers it necessary –
(i) notify each person who appears from the register to have an interest in the land to which the error relates, that the registrar-general intends to make a specified correction after a specified date, being a date not less than 14 days after the date of the notice; and
(ii) request that person’s consent or other comment in relation to the making of the correction.
(3) A person notified under subsection (2) (b) may apply, within 14 days of the date of the notice, to the court for an order directing the registrar-general not to make the correction.
(4) Where the registrar-general takes action under subsection (2) (b), he or she may, subject to any order of the court, correct the register in accordance with subsection (5) after considering any response provided under subsection (2) (b) (ii).
(5) A correction shall –
(a) be made in such a manner as to preserve the record and show that a correction has been made and the date on which it was made; and
(b) be authorised by the registrar-general.
(6) No correction shall be made under this section that would affect rights acquired by an entry in the register in reliance on the uncorrected register.
(7) The registrar-general may apply to the court for directions in relation to a possible error in the register.
161 Power of court
(1) In any proceedings in which the correctness or otherwise of the register is in issue, the court may require the registrar-general to correct the register or direct the registrar-general not to do so.
(2) In any proceedings in the court in relation to –
(a) any land; or
(b) any transaction, contract or application relating to land; or
(c) any instrument, memorial or other entry affecting land;
the court may, by order, direct the registrar-general –
(d) to correct, record, substitute, issue or cancel any certificate or memorial, or to correct, record, substitute, make or cancel any entry in the register, notwithstanding that the relevant duplicate certificate has not been produced to the registrar-general; or
(e) otherwise to do any acts and make any entries that are necessary to give effect to any judgment or order of the court given or made in those proceedings;
and the registrar-general shall give effect to such a direction.
(3) An order made under subsection (2) is not effective to vest a registrable interest in any person before the appropriate entry is made in the register.
Cross-Border Insolvency Act
The CBI Act adopts and gives legal effect to the Model Law on Cross-Border Insolvency of the United Nations Commission on International Trade Law. The Model Law is drafted in a manner which requires an adopting state to insert into the terms of that Model Law appropriate references. The points at which such references must be inserted are shown using square brackets and a description of what is required to be inserted. The CBI Act states that the Model Law, with the modifications required by the CBI Act, has the force of law in Australia: s 6. It also identifies for the purposes of the bracketed references in the Model Law what needs to be inserted in order to make it operate effectively in Australia. For example, s 8 provides:
8 Identifying Australian laws relating to insolvency
The Model Law has the force of law in Australia as if the Model Law referred to:
(a) the Bankruptcy Act 1966; and
(b) Chapter 5 (other than Parts 5.2 and 5.4A) of the Corporations Act 2001, section 601CL of that Act and Schedule 2 to that Act;
wherever the Model Law provides that the laws of the enacting State relating to insolvency are to be identified.
Similarly, s 11 provides:
11 Functions of the trustee (in bankruptcy proceedings) and the registered liquidator (in corporate insolvencies)
The Model Law has the force of law in Australia as if the Model Law referred to whichever of the following is appropriate:
(a) the trustee (within the meaning of subsection 5(1) of the Bankruptcy Act 1966);
(b) a registered liquidator (within the meaning of section 9 of the Corporations Act 2001);
wherever the Model Law indicates that the title of the person or body administering a reorganization or liquidation under the law of the enacting State is to be inserted.
In short it provides a mechanism by which the Model Law may apply to the insolvency of individuals and corporations.
Of significance in the present case is the manner in which the recognition of bankruptcy proceedings is given effect and, in particular, the manner in which a foreign trustee in bankruptcy may take steps in relation to assets that are within Australia. The Model Law defines a “Foreign representative” as “a person or body, including one appointed on an interim basis, authorized in a foreign proceeding to administer the reorganization or the liquidation of the debt or is assets or affairs or to act as a representative of the foreign proceeding”. Chapter II of the Model Law relates to access of foreign representatives and creditors to courts in Australia. It permits a Foreign Representative to apply directly to a court in Australia: Article 9 and, if the conditions for commencing proceedings under the Bankruptcy Act are otherwise met, to commence a proceeding under that Act: Article 11.
Chapter III of the Model Law is entitled “Recognition of a foreign proceeding and relief”. A “foreign proceeding” is defined in Article 2 as:
a collective judicial or administrative proceeding in a foreign State, including an interim proceeding, pursuant to a law relating to insolvency in which proceeding the assets and affairs of the debt or are subject to control or supervision by a foreign court, for the purpose of reorganization or liquidation.
This concept use further dissected into a “foreign main proceeding” and a “foreign
non-main proceeding”. The former is a proceeding taking place in the State where the debtor “has the centre of its main interests”. The latter is a proceeding other than a foreign main proceeding taking place in a State where the debtor has “an establishment” as that term is defined in the article. As the title to Chapter III suggests, it relates to “recognition” of the foreign proceeding. It permits a foreign representative to apply to the court for recognition of the foreign proceeding in which the foreign representative has been appointed: Article 15(1). There are procedural provisions relating to that application: Article 15(2). If the substantive and procedural requirements have been met then the foreign proceeding must be recognised: Article 17(1). The court then recognises the proceeding as either a foreign main proceeding or a foreign non-main proceeding: Article 17(2).
The main consequences of recognition of the foreign proceeding are identified in Articles 19, 20 and 21. Those articles provide:
Article 19
Relief that may be granted upon application for recognition
of a foreign proceeding
1. From the time of filing an application for recognition until the application is decided upon, the court may, at the request of the foreign representative, where relief is urgently needed to protect the assets of the debtor or the interests of the creditors, grant relief of a provisional nature, including:
(a) Staying execution against the debtor’s assets;
(b) Entrusting the administration or realization of all or part of the debtor’s assets located in this State to the foreign representative or another person designated by the court, in order to protect and preserve the value of assets that, by their nature or because of other circumstances, are perishable, susceptible to devaluation or otherwise in jeopardy;
(c) Any relief mentioned in paragraph 1 (c), (d) and (g) of article 21 below.
2. [Insert provisions (or refer to provisions in force in the enacting State) relating to notice.]
3. Unless extended under paragraph 1 (f) of article 21, the relief granted under the present article terminates when the application for recognition is decided upon.
4. The court may refuse to grant relief under the present article if such relief would interfere with the administration of a foreign main proceeding.
Article 20
Effects of recognition of a foreign main proceeding
1. Upon recognition of a foreign proceeding that is a foreign main proceeding:
(a) Commencement or continuation of individual actions or individual proceedings concerning the debtor’s assets, rights, obligations or liabilities is stayed;
(b) Execution against the debtor’s assets is stayed;
(c) The right to transfer, encumber or otherwise dispose of any assets of the debtor is suspended.
2. The scope, and the modification or termination, of the stay and suspension referred to in paragraph 1 of the present article are subject to [refer to any provisions of law of the enacting State relating to insolvency that apply to exceptions, limitations, modifications or termination in respect of the stay and suspension referred to in paragraph 1 of the present article].
3. Paragraph 1 (a) of the present article does not affect the right to commence individual actions or proceedings to the extent necessary to preserve a claim against the debtor.
4. Paragraph 1 of the present article does not affect the right to request the commencement of a proceeding under [identify laws of the enacting State relating to insolvency] or the right to file claims in such a proceeding.
Article 21
Relief that may be granted upon recognition of a
foreign proceeding
1. Upon recognition of a foreign proceeding, whether main or non‑main, where necessary to protect the assets of the debtor or the interests of the creditors, the court may, at the request of the foreign representative, grant any appropriate relief, including:
(a) Staying the commencement or continuation of individual actions or individual proceedings concerning the debtor’s assets, rights, obligations or liabilities, to the extent they have not been stayed under paragraph 1 (a) of article 20;
(b) Staying execution against the debtor’s assets to the extent it has not been stayed under paragraph 1 (b) of article 20;
(c) Suspending the right to transfer, encumber or otherwise dispose of any assets of the debtor to the extent this right has not been suspended under paragraph 1 (c) of article 20;
(d) Providing for the examination of witnesses, the taking of evidence or the delivery of information concerning the debtor’s assets, affairs, rights, obligations or liabilities;
(e) Entrusting the administration or realization of all or part of the debtor’s assets located in this State to the foreign representative or another person designated by the court;
(f) Extending relief granted under paragraph 1 of article 19;
(g) Granting any additional relief that may be available to [insert the title of a person or body administering a reorganization or liquidation under the law of the enacting State] under the laws of this State.
2. Upon recognition of a foreign proceeding, whether main or non‑main, the court may, at the request of the foreign representative, entrust the distribution of all or part of the debtor’s assets located in this State to the foreign representative or another person designated by the court, provided that the court is satisfied that the interests of creditors in this State are adequately protected.
3. In granting relief under the present article to a representative of a foreign non‑main proceeding, the court must be satisfied that the relief relates to assets that, under the law of this State, should be administered in the foreign non‑main proceeding or concerns information required in that proceeding.
Several points should be noted at this stage.
(a)Article 19 operates from the point at which an application for recognition of the foreign proceeding is filed until that application is decided. It only applies “where relief is urgently needed to protect the assets of the debtor or the interests of the creditors” and permits the granting of relief of a provisional nature.
(b)Whether or not to grant relief under Article 19 and Article 21 is discretionary.
(c)Articles 20 and 21 operate upon recognition of a foreign proceeding, that is, at a later stage than Article 19.
(d)Article 20 describes the effect of recognition of a foreign main proceeding. Because it is limited to a “foreign main proceeding” the consequences specified in Article 20 do not apply in relation to a “foreign non-main proceeding”.
(e)In contrast to Articles 19 and 21, the consequences set out in Article 20 are automatic, that is, they do not rely upon the making of a discretionary decision. Thus the stay on proceedings, execution and the transfer, encumbrance or disposal of assets only arises automatically where the proceedings is recognised as a foreign main proceeding.
(f)Article 21 applies to all foreign proceedings whether main or non-main and provides a broad discretionary power to grant relief as set out in the various paragraphs of Article 21(1).
(g)
Article 21(1)(e) is of significance in the present case because it was this provision which empowered the making of one of the orders made by
Gleeson J.
(h)Article 21(2) relates to the “distribution” of the debtor’s assets located in Australia and is to be contrasted with Article 21(1)(e) which relates to the “administration or realization” of those assets.
Article 22 requires the court to be satisfied that the interests of creditors and other interested persons are adequately protected when making orders under Article 19 or 21 and permits the court to impose conditions upon any relief granted under those Articles.
Article 23 operates upon the recognition of a foreign proceeding and gives the foreign representative standing to initiate certain actions under, relevantly, the Bankruptcy Act which are set out in s 17 of the CBI Act. Chapter IV of the Model Law (Articles 25-27) relates to “cooperation with foreign courts and foreign representatives” and Chapter V (Articles 28-32) relates to “concurrent proceedings”.
Submissions
As the matter was argued by the parties the issue that divided them was whether under the orders made by Gleeson J on 16 August 2016, the appointment of Mr Porter and Mr Moretti had the consequence that those persons were entitled to have the Ainslie property transferred into their names or whether, notwithstanding that order, the only person who could meet the definition of “trustee of the bankrupt” for the purposes of s 132 of the Land Titles Act was the plaintiff.
Plaintiff’s submissions
The plaintiff submitted:
(a)Although deriving her title under a foreign law namely the Insolvency Act 1986 (UK) she is regarded under the Model Law as the trustee of the bankrupt estate of Mr Slater and there is no other person who is the trustee of the bankrupt estate of Mr Slater in Australia. Further, there is no power under the CBI Act for the Federal Court to appoint a person as a trustee.
(b)It would be contrary to the objectives of the CBI Act if there was more than one person responsible for a debt cause assets and affairs because it would not enhance the efficiency of the administration of those efforts and affairs.
(c)What occurred as a result of the orders of Gleeson J was the appointment of a person other than the foreign representative “to assist [in] the realisation of assets and also their distribution to creditors of a debtor”.
(d)
Because no order was made in relation to distribution of assets under Article 21(2) the only person that could distribute the proceeds of the assets of
Mr Slater to his creditors was the plaintiff.
(e)The empowering of Mr Porter and Mr Moretti to realise Mr Slater’s assets invested them with the same powers as a trustee in bankruptcy but did not make them the trustee of the bankrupt estate of Mr Slater.
(f)Article 23 of the Model Law gave the foreign representative standing to initiate proceedings under various provisions of the Bankruptcy Act to avoid or render ineffective acts detrimental to creditors. Mr Porter and Mr Moretti could also exercise such powers having regard to the powers given to them under order 3 made by Gleeson J. Thus the foreign representative had power to bring proceedings to set aside transactions even though the Australian representatives had been appointed by the court to realise the debtor’s assets. The same logic should be applied to the realisation of property generally so that it might be undertaken by the plaintiff or by her Australian representatives.
(g)It would not be lawful for Mr Moretti and Mr Porter to realise Mr Slater’s property because s 58(2) of the Bankruptcy Act requires, relevantly, the law of the Territory relating to registration of the transmission of property vested in the trustee of the estate to be complied with. (This provision contrasts with s 306 of the Insolvency Act 1986 (UK) which invests property in the trustee “without any conveyance of assignment or transfer”.)
(h)Sections 132(1) and (2) of the Land Titles Act each refer to “the assignee or trustee”. Mr Porter and Mr Moretti are neither the assignees nor trustees of the bankrupt estate of Mr Slater and hence could not provide to the Registrar-General “an office copy of [their] appointment” for the purposes of s 132(2).
(i)Notwithstanding that orders were made by Gleeson J giving to Mr Porter and Mr Moretti “all powers normally available to a trustee in bankruptcy appointed under the provisions of the Bankruptcy Act” that did not make them the trustee of the bankrupt.
(j)The act of the Registrar-General making Mr Porter and Mr Moretti the registered proprietors of the property “was invalid, as they were not, and have never been, nor could they have ever been, the trustees of the bankrupt estate of David Ross Slater”.
First defendant’s submissions
The Registrar-General submitted to any order of the court under s 161 of the Land Titles Act but opposed the making of any costs order against it. Notwithstanding this submission, the Regsitrar-General advanced several contentions about the respective positions of foreign representatives and Australian representatives under the CBI Act.
The Registrar-General submitted that because Article 21(1)(c) permitted the administration or realisation of all or part of the debtor’s assets to “the foreign representative or another person designated by the court” (emphasis added), the appointment of the Australian representatives was to the exclusion of the foreign representative who cannot seek to exercise of those powers conferred on the Australian representatives..
Next the Registrar-General submitted that because of order 4 made by Gleeson J, the Australian representatives had all the powers otherwise available to a trustee appointed under the Bankruptcy Act and that the powers afforded to the Australian representatives pursuant to order 4 “must necessarily include the power to make an application for transmission of the property into the Australian representatives own names”.
The Registrar-General therefore submitted that, in the light of the terms of orders 3 and 4 made by Gleeson J, the Registrar-General correctly registered the Australian representatives of the plaintiff as proprietors of the property. It was therefore not open to the Registrar-General, in the absence of a court order, to correct any error pursuant to s 160 of the Land Titles Act.
Plaintiff’s submissions in reply
In reply the plaintiff submitted that once she was recognised as a duly appointed foreign representative, the combined effect of ss 6, 8 and 11 of the CBI Act operated to cloak the plaintiff with all the rights of a trustee who had been appointed under the Bankruptcy Act would have to administer the bankrupt estate in Australia. There was therefore no need for an express grant of relief under Article 21.
Further, the plaintiff submitted the Federal Court had no power under the CBI Act to make an order limiting the right of a foreign representative to administer the bankrupt estate in Australia. Article 21 should be understood as a provision designed to augment the powers of a foreign representative not be the sole source of those powers. That is illustrated by the terms of the paragraphs of Article 21(1).
Consideration and conclusion
The submissions made by the parties were made solely by reference to the terms of the CBI Act and Land Titles Act. They made no reference to any applicable principles of private international law issues or any relevant authorities that explain the operation of overseas bankruptcy orders.
Generally speaking, Australian courts treat a foreign bankruptcy as an assignment of all of the bankrupt’s movable property situated in the forum to the foreign trustee provided that the foreign law purports to apply to property situated in the forum: Davies et al, Nygh’s Conflict of Laws In Australia (LexisNexis Butterworths, 9th ed, 2014) at [36.3]. However a foreign bankruptcy has, by itself, no effect on the bankrupt’s title to immovable property situated in the forum. That is because of the rule of private international law that an assignment of the bankrupt’s property effected by foreign law by the making of an adjudication by a foreign court having jurisdiction over the bankrupt’s person is not recognised in the forum as operating as an assignment of the bankrupts immovable property within the forum: Australian Mutual Provident Society v Gregory (1908) 5 CLR 615 at 623, 625, 628, 630; Radich v Bank of NZ (1993) 116 ALR 676 at 693; Nygh’s Conflict of Laws In Australia at [36.4]. This is consistent with the position stated in Halbury’s Laws of England namely “In the case of the real estate situated outside the United Kingdom, the property may pass only according to the law of the place where it is situated”: vol 3(2) [391]. The relevant footnote provides: “By the rules of private international law, immovable property may be transferred only in accordance with the lex situs”.
However, while Australian courts do not recognise the foreign trustee’s title to the bankrupts local land, they have long acted under provisions such as s 29 of the Bankruptcy Act to make those lands available to the foreign trustee: Radich at 693. An example of this approach at a time when s 122 of the Bankruptcy Act 1914 (Imp) was the relevant provision and a statement of the law are found in Re Dunn and Edwards [1935] QWN 14. The process of assisting foreign bankrupcies is now made easier and more widely available by the operation of the CBI Act.
The mechanisms by which foreign trustees or assignees have been empowered to take control of the immovable property within the jurisdiction have varied depending on the order made by the court within the jurisdiction. Some examples are:
(a)In Re Greenaway (1910) 27 WN (NSW) 112 and Re Fogarty (1904) QWN 67, the foreign assignee was empowered by declaring the bankrupt a trustee of his local lands for the foreign assignee and by then making an order under the local Trustee Act vesting the lands in question in the foreign assignee. In neither case was the foreign decree, recognised as vesting title to the bankrupt's local lands in the foreign assignee. However, this same result was achieved by the local court acting in aid of the foreign bankruptcy court under s 118 the Bankruptcy Act 1883 (Imp).
(b)In Re Osborn, Ex parte Trustee (1932) 15 B & C R 189, Osborn was declared bankrupt by a court of the Isle of Man. The trustee obtained a letter of request from that court pursuant to s 122 the Bankruptcy Act 1914 (UK) (equivalent to s 29 the Bankruptcy Act), seeking the aid of the English court in obtaining the bankrupt's English property. Farwell J refused to recognise the title conferred by the Manx sequestration order but gave the trustee full control of the bankrupt’s real and personal property by appointing the trustee to be receiver of the rents and profits of the bankrupt's interest in all real property in England with liberty to sell the same and to deal with all such proceeds as trustee in the Manx bankruptcy as well as receiver of the bankrupt's English personalty with power to sell the same, but subject to conditions.
(c)In Ayres v Evans (1981) 56 FLR 235 at 240, Fox J referred to aid that may be given under s 29 of the Bankruptcy Act as including “transfer of the [bankrupt’s] interest to the official assignee, or the appointment of a receiver of it for the official assignee”.
(d)In Williams v Arnold [2010] FCA 732, Emmett J made orders to assist the Chancery Division of the High Court of Justice of England and Wales in relation to the administration of a bankrupt estate. His Honour made orders vesting the legal title to that property in the trustee so as to facilitate its sale.
In summary, a foreign bankruptcy may be given effect in relation to immovable property within Australia by a court making orders vesting the property in the foreign trustee or assignee, appointing the foreign trustee or assignee (or someone else) as receiver of those properties for the purposes of their sale or by methods such as those adopted in Re Greenway and Re Fogarty.
Therefore in the present case, the position is that Australian law does not automatically recognise the title of the plaintiff to the real property of the bankrupt within Australia. That is notwithstanding that under the Insolvency Act 1986 (UK) property vests automatically without any requirement for registration: Insolvency Act, s 306 and extends to property outside the jurisdiction: Insolvency Act 1986 (UK), s 436; Singh v Official Receiver [1997] BPIR 530 at 531. As a consequence, in the absence of orders of the court under s 29 of the Bankruptcy Act or, as here, orders made under the CBI Act, the plaintiff, as foreign trustee, has no immediate entitlement to have the property registered in her name or capacity to take control of it for the purposes of the bankruptcy. Section 132 of the Land Titles Act operates (and its predecessors referred to at [14] have operated) within the context of the rules of private international law and hence does not compel her registration as a proprietor.
The submissions of the plaintiff proceeded on the basis that the recognition, under the CBI Act, of the foreign proceedings gave rise to an entitlement on the plaintiff’s part to be registered as the proprietor of the Ainslie property. The provisions of the Model Law are inconsistent with the submission made on behalf of the plaintiff. Some of the provisions of the Model Law give powers directly to the foreign representative that are not the consequence of a specific court order. Others are only expressed to arise when the Federal Court has so ordered. The effect of the CBI Act and Model Law is to give to the foreign representative the powers expressly contemplated by the Act. The scheme of the CBI Act and Model Law is not such as to give expressly, or to imply, any general power of administration of assets within Australia. Rather, the specific consequences of recognition of foreign proceedings are spelt out. Those consequences vary as between main proceedings and non-main proceedings. They are a mixture of consequences which arise automatically and consequences which only arise upon the making of orders by the Federal Court. I do not accept the plaintiff’s submission that the combined operation of ss 6, 8 and 11 of the CBI Act is “to cloak [the plaintiff] with all the rights that a trustee would have who has been appointed under the act Bankruptcy Act, to administer the bankrupt estate in Australia”. Rather, except where stated to arise automatically as a result of recognition of the foreign main proceeding, the powers of the foreign representative are those which are granted under Article 21 or those that arise in accordance with the principles of private international law.
The terms of paragraphs of Article 21(1) are consistent with this interpretation. Paragraphs (a) to (c) are drafted by reference to the possibility of the operation of Article 20 because Article 20 will have applied automatically where the proceedings are a foreign main proceeding. Paragraphs (a) to (c) permit for the making of orders that go beyond the effect of Article 20(1)(a)-(c) in relation to foreign main proceedings and also have general application in relation to foreign non-main proceedings where there are no automatic consequences equivalent to Article 20(1)(a)-(c) of recognition of the proceedings. So far as Article 21(1)(d)-(g) are concerned, these operate according to their terms and their terms do not suggest that they are merely supplementary to some unstated general reservoir of power that exists in a foreign representative in the absence of orders of the Federal Court.
The only orders that the plaintiff has obtained are orders empowering her Australian representatives. It is those orders which were sought to be given effect by Mr Porter and Mr Moretti. For the purposes of this application it is not necessary to determine whether or not the terms of order 4 made by Gleeson J were sufficient to give to Mr Porter and Mr Moretti the same entitlement to registration as if they had been appointed trustees under that Bankruptcy Act. It is only necessary to reach the conclusion that the plaintiff did not have that entitlement.
As a consequence I accept the submission made on behalf of the Registrar-General that as a result of the terms of order 3 made by Gleeson J, the “administration and realisation” of the assets of Mr Slater in Australia was entrusted to the Mr Porter and Mr Moretti. This was expressly an order under article 21(1)(e). That paragraph permits a binary choice, namely to entrust the administration or realisation of the debtor’s assets to either the foreign representative or “another person designated by the court”. The plaintiff, is not the person referred to in the order. That situation, of course, arises from the fact that those were the terms of the orders that the plaintiff sought from the Federal Court. As a consequence, Gleeson J’s orders did not empower the plaintiff to become the registered proprietor of the Ainslie property. She does not have, by reason of the recognition of the foreign proceedings, any relevant general power under the CBI Act and Model Law that arises in the absence of a court order. The rules of private international law which provide the context in which the CBI Act and the Land Titles Act operate do not give automatic effect to the law of the United Kingdom so as to permit the plaintiff in the absence of an order under s 29 of the Bankruptcy Act or under the CBI Act to become the registered proprietor of the Ainslie property.
The plaintiff’s application must therefore be dismissed.
Costs
I consider that in relation to costs, the appropriate order is that there is no order as to costs. While the plaintiff has been unsuccessful, the position of the Registrar-General was at least formally a submission except in relation to costs. In those circumstances I consider that the Registrar-General’s costs are more appropriately considered as part of the costs of the general administration of the Act.
Orders
The orders of the Court are:
1. The Originating Application filed 11 October 2017 is dismissed.
2. There is no order as to the cost of the proceedings.
| I certify that the preceding forty-five [45] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Mossop. Associate: Date: 22 December 2017 |
4
6
9