Cooper v Davison
[2024] NZHC 158
•13 February 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-1542
[2024] NZHC 158
UNDER the Insolvency (Cross Border) Act 2006, Part 19 of the High Court Rules 2016 and High Court Rule 24.56 IN THE MATTER OF
the bankruptcy of TERRY ALEXANDER DAVISON
BETWEEN
NICHOLAS DAVID COOPER
as Trustee in Bankruptcy of
TERRY ALEXANDER DAVISON
ApplicantAND
TERRY ALEXANDER DAVISON
Respondent
Hearing: 11 December 2023 Appearances:
J S Langston for the Applicant
No appearance for the Respondent
Judgment:
13 February 2024
JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR
[Recognition of foreign proceedings]
This judgment was delivered by me on 13 February 2024 at 3:00pm
pursuant to Rule 11.5 of the High Court Rules
…………………………. Registrar/Deputy Registrar
Solicitors:
Shieff Angland (Kalev Crossland/J S Langston), Auckland, for the Applicant
NICHOLAS DAVID COOPER v TERRY ALEXANDER DAVISON [2024] NZHC 158 [13 February 2024]
Introduction
[1] Mr Nicholas Cooper (Mr Cooper), as trustee in the bankruptcy of Mr Terry Davison (Mr Davison), seeks recognition of Mr Davison’s Australian bankruptcy as a foreign main proceeding.
Background
[2] On 31 May 2019, the Federal Circuit Court of Australia at Adelaide made a sequestration order against Mr Davison (the Sequestration Order).1 On the same day Mr Cooper was appointed trustee of Mr Davison’s bankrupt estate.
[3] On 1 September 2022, Mr Cooper filed an originating application to have that judgment recognised as a foreign main proceeding in accordance with art 15 of sch 1 of the Insolvency (Cross-border) Act 2006 and r 24.56 of the High Court Rules 2016.
[4] On 20 August 2023, in accordance with Associate Judge Brittain’s 1 August 2023 order for substituted service,2 service of that originating application was effectuated on Mr Davison.3 He has filed nothing in response to this proceeding and therefore Mr Cooper’s application proceeds unopposed.
Mr Cooper’s application for recognition of foreign proceeding
[5]Mr Cooper seeks orders:4
a. Recognising the Australian bankruptcy of Terry Alexander Davison (the respondent), arising out of a sequestration order made in the Federal Circuit Court of Australia at Adelaide on 31 May 2019, as a foreign main proceeding;
b. Entrusting the administration or realisation of the respondent’s New Zealand assets to the Official Assignee for the Central Region (Anthony Pullan);
1 CCC Financial Solutions No 3 Pty Ltd v Davison FCCA Adelaide ADG89/2019, 31 May 2019 (Sequestration Order).
2 Cooper v Davison HC Auckland CIV-2022-404-1542, 1 August 2023 (Minute of Associate Judge Brittain) at [3].
3 Affidavit of service of Robert Walter Foster dated 8 September 2023.
4 Originating application for recognition of foreign proceeding dated 1 September 2022 at [1].
c. Leave for the applicant to apply to the Court in the event that further orders pursuant to Article 21(1) of Schedule 1 to the Insolvency (Cross- border) Act 2006 are required to discharge the applicant’s duties; and
d. The respondent pay the costs of and incidental to this application.
[6]The grounds on which the orders are sought are:5
a. The respondent was made bankrupt by the Federal Circuit Court of Australia at Adelaide on 31 May 2019.
b. The bankruptcy proceeding referred to above is a foreign proceeding as defined in Article 2 of Schedule 1 of the to the Insolvency (Cross-border) Act 2006.
c. In the Foreign Proceeding, the applicant was appointed by the Federal Circuit Court of Australia at Adelaide as the Trustee of the respondent’s estate in bankruptcy.
d. The applicant is a foreign representative as defined in Article 2 of Schedule 1 of the to the Insolvency (Cross-border) Act 2006.
e. At the time of commencement of the respondent’s bankruptcy, the respondent was residing in Australia. He left Australia but has since returned.
f. The respondent has assets in New Zealand including a vehicle and a share in Māori freehold land.
g. In order for the applicant, in his capacity as Trustee of the respondent’s estate in bankruptcy, to deal with the respondent’s property in New Zealand, it is necessary that the respondent’s bankruptcy in Australia be recognised in New Zealand, and that an agent be appointed to conduct any required action regarding the property in New Zealand.
h. Appearing in the affidavits of Nicholas Cooper filed and Anthony Pullan herein.
Affidavit of Nicholas David Cooper dated 30 June 2022
[7] Mr Cooper, managing partner of Oracle Insolvency Services Pty Ltd (formerly at Worrells Solvency & Forensic Accountants) and trustee of Mr Davison’s estate in bankruptcy, has made an affidavit in support of his application.6 He confirms his appointment as trustee following Mr Davison’s bankruptcy by creditor’s application.
5 At [2].
6 Affidavit of Nicholas David Cooper in support of originating application for recognition of foreign proceeding dated 30 June 2022.
[8] Mr Cooper outlines his initial attempts to contact Mr Davison, to request he complete a statement of affairs, at an address associated with him in Auckland’s Beachlands and Queensland’s Victoria Point (the Queensland Property). He says on 22 July 2019, Mr Davison responded to a letter sent to the Queensland Property via calling Mr Cooper’s offices. Mr Davison is said to have confirmed he ordinarily resides in Queensland, occasionally flies out of New Zealand for work and that the available equity in the Queensland Property may achieve an annulment of the bankruptcy.
[9] On 30 July 2019, Mr Cooper says Mr Davison provided the Australian Financial Security Authority with a statement of affairs (the Statement of Affairs) confirming he resided in Australia with his spouse and child at the Queensland Property, which he owned.
[10] Mr Cooper says that Mr Davison’s spouse was to purchase his share of the equity in the property to allow annulment of the bankruptcy debt. Mr Cooper says it then became apparent that Mr Davison had separated from his wife, who was to remain living at the Queensland Property. On 30 September 2020, he says Mr Davison’s wife purchased Mr Davison’s share of the equity with the proceeds expected to meet the known debts of the bankrupt estate and allowing annulment.
[11] On 8 December 2020, Mr Cooper’s office received a call which disclosed that Mr Davison also owed $55,559.51 to Avanti Finance Limited (Avanti), from a judgment obtained in New Zealand and registered in Australia. This means the proceeds from the sale of his equity in the Queensland Property were no longer sufficient to permit annulment. Mr Cooper says his office attempted multiple times to seek further information from Mr Davison about the claim, but that he did not respond.
[12] He says despite Mr Davison only disclosing the Queensland Property and an Australian bank account on the Statement of Affairs, he now understands Mr Davison has a share in Māori freehold land (the New Zealand Property) and a Mitsubishi Triton vehicle (the Vehicle). The Vehicle is subject to a finance contract with Avanti entered into in New Zealand on 6 May 2019. He says Avanti sought to repossess the vehicle on 17 October 2019 and 4 August 2020 but could not locate it, so they obtained
judgment for the outstanding finance and registered this in Australia after the date of bankruptcy.
[13] On the necessity of recognition of the Australian bankruptcy in New Zealand, Mr Cooper says given Mr Davison’s New Zealand assets it is necessary for recognition to occur, and an agent be appointed to conduct any required actions. Mr Cooper is contemplating obtaining a warrant to seize and sell the Vehicle and any other steps that can be taken in relation to the New Zealand Property.
[14] Mr Cooper then provides information about his attempts to locate Mr Davison who had left Australia for New Zealand without Mr Cooper’s permission, as required by law. Mr Cooper says he prevented Mr Davison’s further travel once he returned to Australia and on 25 March 2022 was able to receive information from Mr Davison stating that he had no income for the 2021 and 2022 year, had left the Vehicle outside a former New Zealand address in late July 2019 and assumed Avanti had repossessed it.
[15] Mr Cooper says the explanation of the Vehicle’s location is inconsistent with claims in January 2020 that Mr Davison had sold the Vehicle to Magnus Mitsubishi and that the Vehicle was now tied to a New Zealand logging company in liquidation.
[16] Mr Cooper admits Mr Davison has provided some further details about having not worked in New Zealand, and thus obtaining no income, and about the Vehicle. Although he says these are insufficient and further information is required about Mr Davison’s income, assets and liabilities before Mr Cooper will permit Mr Davison’s overseas travel.
[17] Ultimately, Mr Cooper says Mr Davison’s responses have been extremely slow and only follow from numerous written and verbal requests. Given his failure to respond, Mr Davison’s expected discharge date is now 31 July 2027.
Affidavit of Anthony Stephen Pullan dated 27 June 2022
[18] Anthony Pullan (Mr Pullan), Official Assignee for the Midlands Regions, has made an affidavit in support of Mr Cooper’s application.7 In it he consents to being appointed Mr Cooper’s representative entrusting the administration and/or realisation of all Mr Davison’s assets located in New Zealand.
Legal principles
[19] The Act provides a statutory framework for facilitating insolvency proceedings when a person is subject to insolvency administration in one country but has assets or debts in another country,8 or where more than one insolvency administration has commenced in more than one country in relation to a person.9 In this case we are concerned with the first of those situations. Mr Davison is subject to insolvency administration in Australia but is said to have assets in New Zealand.
[20] The relevant rules relating to the recognition of a foreign bankruptcy proceeding are contained in Chapter III of Schedule 1 of the Act.
[21]Article 15 of Schedule 1 provides:
Article 15: Application for recognition of a foreign proceeding
(1)A foreign representative may apply to the High Court for recognition of the foreign proceeding in which the foreign representative has been appointed.
(2) An application for recognition shall be accompanied by:
(a)a certified copy of the decision commencing the foreign proceeding and appointing the foreign representative; or
(b)a certificate from the foreign court affirming the existence of the foreign proceeding and of the appointment of the foreign representative; or
7 Affidavit of Anthony Stephen Pullan in support of originating application for recognition of foreign proceeding dated 27 June 2022.
8 Insolvency (Cross-border) Act 2006, s 3(b)(i).
9 Insolvency (Cross-border) Act 2006, s 3(b)(ii).
(c) in the absence of evidence referred to in subparagraphs (a) and (b), any other evidence acceptable to the Court of the existence of the foreign proceeding and of the appointment of the foreign representative.
(3) An application for recognition shall also be accompanied by a statement identifying all foreign proceedings in respect of the debtor that are known to the foreign representative.
(4) The Court may require a translation of documents supplied in support of the application for recognition into an official language of New Zealand.
[22] The terms “foreign proceeding” and “foreign representative” are defined in Article 2 of Schedule 1 as follows:
For the purposes of this Schedule:
(a)foreign proceeding means 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 debtor are subject to control or supervision by a foreign court, for the purpose of reorganisation or liquidation;
(b)foreign main proceeding means a foreign proceeding taking place in the State where the debtor has the centre of its main interests;
(c)foreign non-main proceeding means a foreign proceeding, other than a foreign main proceeding, taking place in a State where the debtor has an establishment within the meaning of subparagraph (f) of this article;
(d)foreign representative means a person or body, including one appointed on an interim basis, authorised in a foreign proceeding to administer the reorganisation or the liquidation of the debtor’s assets or affairs or to act as a representative of the foreign proceeding;
[23] Article 17 sets out the criteria for determining when a foreign proceeding should be recognised. Article 17 provides:
Article 17: Decision to recognise a foreign proceeding
(1) Subject to article 6, a foreign proceeding shall be recognised if:
(a)the foreign proceeding is a proceeding within the meaning of subparagraph (a) of article 2;
(b)the foreign representative applying for recognition is a person or body within the meaning of subparagraph (d) of article 2;
(c)the application meets the requirements of paragraph (2) of article 15; and
(d)the application has been submitted to the High Court.
(2)The foreign proceeding shall be recognised:
(a)as a foreign main proceeding if it is taking place in the State where the debtor has the centre of its main interests; or
(b)as a foreign non-main proceeding if the debtor has an establishment within the meaning of subparagraph (f) of article 2 in the foreign State.
(3)An application for recognition of a foreign proceeding shall be decided upon at the earliest possible time.
(4)As soon as practicable, after the Court recognises the foreign proceeding under paragraph (1) of this article, the foreign representative shall notify the debtor, in the prescribed form, that the application has been recognised.
(5)The provisions of articles 15, 16, 17, and 18 do not prevent modification or termination of recognition if it is shown that the grounds for granting it were fully or partially lacking or have ceased to exist.
[24] Applications for the recognition of foreign proceedings under the Act are dealt with in this Court under r 24.56 of the High Court Rules 2016. That rule provides:
24.56 Applications for recognition of foreign proceedings
(1)An application by a foreign representative under article 15(1) must be made by originating application under Part 19.
(2)In addition to complying with the requirements of article 15, the application must—
(a)be supported by an affidavit verifying the statement referred to in article 15(3) (identifying all foreign proceedings in respect of the debtor that are known to the foreign representative) or by other sworn evidence acceptable to the court:
(b)be served, in accordance with Part 6 of these rules, on the debtor or a New Zealand agent or representative of the debtor unless a Judge directs that the application may in all the circumstances proceed without that service.
(3)A foreign representative who has filed an application under subclause
(1) may apply without notice for relief of a provisional nature under article 19(1).
Analysis
[25] Heath J, in Williams v Simpson,10 summarised the requirements to establish that the applicant is a “foreign representative” and the foreign bankruptcy is a “foreign proceeding” as follows:
On that approach, the right to apply has the following elements:
(a)the “foreign proceeding” in respect of which recognition is sought, must be a judicial administrative proceeding in a foreign state;
(b)the proceeding must be “collective” in nature;
(c)the judicial administrative proceeding must have arisen out of a law relating to insolvency in which the debtor’s assets and affairs are subject to the control or supervision by a foreign court, for the purposes of reorganisation or liquidation;
(d)the control or supervision must be effected by a “foreign court”; namely a “judicial or other authority competent to control or supervise a foreign proceeding”; and
(e)the applicant must be authorised, in the “foreign proceeding”, to administer the reorganisation or liquidation of the debtor’s assets or affairs or to act as representative of the foreign proceeding.”
[26] I am satisfied that Mr Davison’s bankruptcy in Australia constitutes a “foreign proceeding” for the purposes of the Act. It is a collective administrative procedure in a foreign state in which the assets and affairs of Mr Davison are subject to the control or supervision by a foreign court (the Federal Circuit Court of Australia or the Federal Court of Australia).11 The administrative proceeding of Australia is collective in nature as it is being undertaken for the benefit of all Mr Davison’s creditors who have proved debts in his bankruptcy and who have become entitled to receive a pro rata distribution from his bankrupt estate.
[27] I am satisfied that the proceeding is a “foreign main proceeding”. There is a presumption that an individual debtor’s habitual residence is the centre of his or her main interests. It is apparent from Mr Cooper’s evidence that at the time of his Australian bankruptcy Mr Davison was an habitual resident of Australia and that was where the majority of his assets were located and where his family resided.
10 Williams v Simpson [2010] NZHC 1786.
11 Official Trustee in Bankruptcy (as Trustee of the bankrupt estate of Sadler) v Sadler [2020] NZHC 1060 at [21].
[28] Mr Cooper has confirmed in his affidavit that he is not aware of any other foreign proceeding in respect of Mr Davison and so article 15(3) of Schedule 1 of the Act is satisfied. The requirement of r 24.56 of the High Court Rules have been met. Mr Cooper has attached to his affidavit a sealed order of the Court confirming the existence of Mr Davison’s Australian bankruptcy and the applicant’s appointment.
[29] Mr Pullan is obviously suitably qualified and it is appropriate to appoint him as Mr Cooper’s representative entrusted with the administration/or realisation of all Mr Davison’s assets located in New Zealand.
Orders
[30]I make the following orders:
(a)Mr Davison’s Australian bankruptcy, arising out of a sequestration order made in the Federal Circuit Court of Australia at Adelaide on 31 May 2019 is recognised as a foreign main proceeding under the Act;
(b)the administration or realisation of Mr Davison’s New Zealand assets entrusted to the Official Assignee for the Central Region (Mr Anthony Pullan);
(c)leave is granted to the applicant to apply to the Court in the event that further orders pursuant to Article 21(1) of Schedule 1 of the Act are required to discharge the applicant’s duties.
[31] Costs are reserved in accordance with counsel’s memorandum dated 18 December 2023.
…………………………….. Associate Judge Taylor
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