Stanley v Fielding-Link

[2023] NZHC 2259

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2022-404-1257

[2023] NZHC 2259

UNDER

Section 8 of the Insolvency (Cross Border) Act 2006

IN THE MATTER OF

The bankrupt estate of Kaye Suzanne Fielding-Link (England)

BETWEEN

PAUL STANLEY and PAUL BARBER

Plaintiffs

AND

KAY SUZANNE FIELDING-LINK also

known as KAY SUZANNE LINK

Defendant

Hearing:	12 June 2023
Appearances:	K J Crossland and J S Langston for the plaintiffs R J Latton for the defendant
Judgment:	21 August 2023

JUDGMENT OF CAMPBELL J

This judgment was delivered by me on 21 August 2023 at 2.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

STANLEY and BARBER v FIELDING-LINK [2023] NZHC 2259 [21 August 2023]

[1]    The plaintiffs, Mr Stanley and Mr Barber, are the joint trustees in the English bankruptcy of the defendant, Ms Fielding-Link. The English bankruptcy Court has issued a letter of request for this Court to act in aid of the English bankruptcy proceeding.

[2]    The plaintiffs seek orders, under s 8 of the Insolvency (Cross-border) Act 2006 (ICBA), to give effect to the letter of request.

Background

[3]    Ms Fielding-Link and her husband, Matthew Link, lived in New Zealand from 1996 until 2010. During that period, in 2005, Ms Fielding-Link and Mr Link settled the Fielding-Link (No.2) Trust (the Trust). Ms Fielding-Link and Mr Link were trustees of the Trust, together with an independent trustee. In March 2005, the Trust purchased a commercial property at Mill Road, Helensville.

[4]    Clause 11 of the deed for the Trust (the Trust Deed) empowers a settlor of the Trust (either Ms Fielding-Link or Mr Link) to advance the date of distribution for the Trust.  If that power is exercised, the Trust fund is to be divided in half, with a half  to be distributed to each settlor (or at their direction).

[5]    In 2010, Ms Fielding-Link and Mr Link moved to England. Ms Fielding-Link taking up a position in her parents’ businesses in England.

[6]    This did not work out as planned. Ms Fielding-Link’s parents separated, and their businesses collapsed. Acrimonious litigation followed. Some of it involved claims against Ms Fielding-Link.

[7]    On 15 October 2015, Ms Fielding-Link was adjudicated bankrupt, upon her own petition, by the County Court in Liverpool. Her initial trustee in bankruptcy was a Mr  Williams.  On  30  October  2015,  soon  after  being  adjudicated  bankrupt, Ms Fielding-Link provided Mr Williams with a copy of the trust deed for the Trust (the Trust Deed).

[8]    The plaintiffs were appointed as  joint trustees of Ms Fielding-Link’s estate  in bankruptcy on 4 July 2016, replacing Mr Williams.  They formed the view that  Ms Fielding-Link was not co-operating in the  administration  of  her  bankruptcy. On 2 September 2016, they applied for an order suspending Ms Fielding-Link’s automatic discharge from bankruptcy, based on her alleged failure to co-operate.

[9]    Ms Fielding-Link opposed the plaintiffs’ application, but the County Court granted the application on 17 January 2017. The Court ordered that the period for the discharge of Ms Fielding-Link from bankruptcy be suspended until the plaintiffs confirmed to the Court, in writing, that she had fully and properly co‑operated with the plaintiffs in  her  bankruptcy.  No  such  confirmation  has  yet  been  provided, so Ms Fielding-Link remains undischarged from her bankruptcy.

[10]   On 2 October 2017, the plaintiffs wrote to Ms Fielding-Link, requesting her to voluntarily bring the Trust to an end (implicitly, by exercising the power under cl 11 of the Trust Deed) with the assets split equally between her estate in bankruptcy and Mr Link. They said if she did not do so, they would apply to court for orders that she bring the Trust to an end and that the Trust assets be distributed.

[11]   Ms Fielding-Link declined the plaintiffs’ request. On 28 August 2018, the plaintiffs applied, in Ms Fielding-Link’s bankruptcy  proceeding,  for  orders  that Ms Fielding-Link bring the Trust to an end and that half the Trust’s assets be transferred to her estate in bankruptcy. In due course, all three of the Trust’s trustees were made respondents to that application.

[12]   The respondents opposed the plaintiffs’ application for orders that the Trust be brought to an end.  Ms Fielding-Link and Mr Link each signed witness statements   in opposition, dated 20 December 2019. In his statement, Mr Link set out at some length the history of the Trust and why he considered Ms Fielding-Link could not bring it to an end. Ms Fielding-Link said she agreed with his statement.

[13]   At some point in 2019, Ms Fielding-Link and Mr Link failed to comply with procedural orders made by the County Court dealing with the plaintiffs’ application. On 22 May 2019, the County Court issued “unless” orders against Ms Fielding-Link

and Mr Link. It appears that they did not comply with those orders, as the Court made an order on 26 September 2019 debarring Ms Fielding-Link and Mr Link from further defending the application.

[14]   The same day, the County Court granted the plaintiffs’ application. The Court ordered that the three trustees execute such documents as were required to bring the Trust to an end and to distribute half the assets to the plaintiffs.

[15]   Ms Fielding-Link and Mr Link returned to New Zealand in 2019, where they have resided since.

[16]   The plaintiffs later learned that the trustees of the Trust had already taken steps to wind up the Trust. On 16 September 2020, the plaintiffs were told for the first time by a lawyer acting for Mr Link that:

(a)Ms Fielding-Link resigned as a trustee of the Trust on 20 March 2018.

(b)On 20 March 2018, the remaining trustees resettled the assets of the Trust on a different trust.

(c)The trust was then wound up.

The letter of request

[17]   On 8 March 2022, the plaintiffs applied to the  County  Court for the  issue  of a letter of request to the High Court of New Zealand to act in aid of and be auxiliary to the County Court for the purpose of:

(a)recognition in New Zealand of their appointment as trustees in the bankruptcy of Ms Fielding-Link;

(b)consequential orders in order to allow them to trace assets which have been ordered to be realised in part for the benefit of the bankruptcy estate; and

(c)such further order as the plaintiffs may apply to the High Court for in order to assist them in the administration of the bankruptcy estate.

[18]   The County Court granted the application on 12 April 2022 and issued a letter of request. The letter requests this Court’s assistance in the terms sought and requests such further or other assistance as this Court sees fit.

The plaintiffs’ application

[19]   The plaintiffs apply to this Court to give effect to the County Court’s letter  of request. Specifically, the plaintiffs seek the following orders:

(a)An order recognising in  New  Zealand  the  plaintiffs’  appointment in England as the joint trustees in bankruptcy of Ms Fielding-Link.

(b)An order permitting the plaintiffs by counsel to examine Ms Fielding- Link, Mr Link and Mr Van  Rossem  (the director of the third trustee of the Trust, Basque Trustees Ltd) as to Ms Fielding-Link’s financial and asset position before the Court.

(c)An order that, ahead of that examination, the examinees provide disclosure of all documents pertaining to Ms Fielding-Link’s financial and asset position within 20 working days of the order.

(d)An order permitting the plaintiffs to realise Ms Fielding-Link’s assets in New Zealand and for them to be realised for the benefit of the creditors in Ms Fielding-Link’s estate in bankruptcy.

[20]   The plaintiffs say these orders are necessary to enable Ms Fielding-Link’s assets to be dealt with by the plaintiffs.

[21]   Ms Fielding-Link opposes the application.   She  says the High Court has      a discretion whether to assist the requesting court. She says the discretion should not be exercised here.

The legal framework

[22]   The ICBA provides two sources of jurisdiction under which a letter of request for assistance can be actioned.1 The first is in sch 1 of the ICBA. Schedule 1 is based on the UNCITRAL Model Law on Cross-border Insolvency. The second is in the residual powers conferred by s 8 of the ICBA. Section 8 provides the Court a general discretion to assist in cases where sch 1 of the Act is not engaged.2

[23]   The plaintiffs considered that sch 1 did not apply and therefore pursued their application under s 8. Ms Fielding-Link agreed that was the correct jurisdictional path. I proceed on that basis, without deciding whether sch 1 may have been available.3

[24]Section 8 states:

8        High Court to act in aid of overseas courts

(1)This section applies to a person referred to in article 1(1) of Schedule 1.

(2)If a court of a country other than New Zealand has jurisdiction in an insolvency proceeding and makes an order requesting the aid of the High Court in relation to the insolvency proceeding of a  person     to whom this section applies, the High Court may, if it thinks fit, act in aid of and be auxiliary to that court in relation to that insolvency proceeding.

(3)In acting in aid of and being auxiliary to a court in accordance with subsection (2), the High Court may exercise the powers that it could exercise in respect of the matter if it had arisen within its own jurisdiction.

1      Batty v Reeves [2015] NZHC 908 at [6].

2      Williams v Simpson [2010] NZHC 1786, [2011] 2 NZLR 380 at [7].

3      The plaintiffs considered sch 1 was unavailable because, at the time they brought their application, Ms Fielding-Link had neither a “centre of main interest” nor an “establishment” in England, so that the court could not recognise her bankruptcy as either a “foreign main proceeding” or a “foreign non-main proceeding” (see Williams v Simpson [2010] NZHC 1786, [2011] 2 NZLR 380 and Batty v Reeves [2015] NZHC 908). I consider it is a plausible interpretation of the ICBA that the relevant time for assessing this is the time the foreign insolvency proceeding was commenced. Support for that interpretation is found in Leeds v Richards (Privilege) [2016] NZHC 2314, [2016] NZAR 1405 at [25], [28] and [32] (references to whether the bankrupt’s centre of main interests “was” in England when he was adjudged bankrupt in England). On that interpretation, the plaintiffs’ application would be within sch 1.

[25]   It is common ground that the requirements of s 8(1) and (2) are met. This means the Court’s discretion under s 8(2) is engaged. The dispute between the parties is whether that discretion should be exercised in this case.

Principles governing the exercise of the discretion in s 8

[26]   In Williams v Simpson,4 Heath J analysed the s 8 discretion in detail. His Honour said the purposes in s 3(b) of the ICBA were applicable to s 8. Section 3(b) says the purpose of the Act is to provide a framework for facilitating insolvency proceedings when a person is subject to insolvency administration in one country, but has assets or debts in another country, or when more than one insolvency administration has commenced in more than one country in relation to a person.

[27]   Heath J said that comity meant that, at least in relation to countries with similar provisions to s 8, “the Court will generally exercise its discretion in favour of granting assistance, unless there is some compelling reason not to”.5 His Honour said the justification for granting comity to a foreign insolvency proceeding is:6

… the need to ensure that a debtor’s property is realised as quickly as possible for the benefit of all creditors entitled to participate in the distribution of assets. It is also consistent with economies of scale, in having a single insolvency administrator act on behalf of all creditors, with a view, subject to priorities accorded by national legislation, to ensuring maximum returns to creditors on a parri passu basis.

[28]   His Honour also favoured the “universalist” approach to international insolvency adopted by Lord Hoffmann, delivering the advice of the Privy Council, in Cambridge Gas Transport Corporation v Official Committee of Unsecured Creditors of Navigator Holdings plc.7 Heath J highlighted the following passage from Lord Hoffmann’s advice:

[16] The English common law has traditionally taken the view that fairness between creditors requires that, ideally, bankruptcy proceedings should have universal application. There should be a single bankruptcy in which all creditors are entitled and required to prove. No one should have an advantage

4      Williams v Simpson [2010] NZHC 1786, [2011] 2 NZLR 380.

5 At [74].

6 At [76].

7      Cambridge Gas Transport Corporation v Official Committee of Unsecured Creditors of Navigator Holdings plc [2006] UKPC 26, [2007] 1 AC 508.

because he happens to live in a jurisdiction where more of the assets or fewer of the creditors are situated. …

[29]   Heath J considered that Lord Hoffmann’s principles were akin to those that arise when questions of comity arise and should inform the exercise of the s 8 discretion.8 His Honour said there must be some compelling reason why a universalist approach should not be applied on a s 8 request.9

[30]   The United Kingdom Supreme Court subsequently held, in Rubin v Eurofinance SA,10 that Cambridge Gas was wrongly decided. The Supreme Court did not criticise Lord Hoffmann’s adoption of the universalist principle, merely its application in Cambridge Gas. Two years later, the Privy Council returned to the matter in Singularis Holdings Ltd v PricewaterhouseCoopers.11 The Privy Council said that two of the three propositions for which Cambridge Gas was authority could not be supported, but that the “principle of modified universalism” was not discredited.12 The “principle of modified universalism” was:13

That principle that requires English court should, so far as is consistent with justice and UK public policy, co-operate with the courts in the country of the principal liquidation to ensure that all the company’s assets are distributed to its creditors under a single system of distribution.

[31]   Heath J considered these developments in Batty v Reeves,14 another application under s 8 of the ICBA. Heath J distinguished Singularis on the basis it was concerned with the common law jurisdiction to provide aid to a foreign court, rather than with  a statutory jurisdiction such as s 8. His Honour emphasised that s 8(3) authorised the High Court to exercise the powers it could exercise if the matter had arisen in New Zealand,15 and that the Privy Council in Singularis acknowledged that assistance could be given “within the limits of [the receiving court’s] own statutory” powers.16 Heath J

8      Williams v Simpson [2010] NZHC 1786, [2011] 2 NZLR 380 at [79] and [82].

9 At [83].

10     Rubin v Eurofinance SA [2012] UKSC 46, [2013] 1 AC 236.

11     Singularis Holdings Ltd v PricewaterhouseCoopers [2014] UKPC 36, [2015] AC 1675.

12     At [18] and [19] per Lord Sumption and at [112] per Lord Clarke.

13     At [16] per Lord Sumption

14     Batty v Reeves [2015] NZHC 908.

15 At [12].

16     At [13], quoting from Singularis Holdings Ltd v PricewaterhouseCoopers [2014] UKPC 36, [2015] AC 1675 at [19] per Lord Sumption.

concluded that the grant of assistance on the principle of modified universalism could be exercised when a statute expressly permitted that course.17

[32]   I consider that, at least in relation to countries with similar provisions to s 8 (such as England and Wales), the following principles govern the exercise of the discretion under s 8:

(a)The discretion should be exercised in light of the ICBA’s purpose to provide a framework for “facilitating” insolvency proceedings in defined situations.

(b)The discretion should be exercised in favour of granting assistance, unless there is some compelling reason not to. This reflects the modified universalism principle. It follows that a compelling reason not to grant assistance can include the assistance being inconsistent with New Zealand public policy.

[33]   Mr Latton, counsel for Ms Fielding-Link, submitted there were some further limitations on the court’s jurisdiction to grant assistance. I deal with those below when addressing the particular reasons he advanced for this Court declining to grant assistance.

Should the Court act in aid of the English bankruptcy proceeding?

[34]   On the face of  it, the discretion under  s 8 should  be exercised  in  favour    of granting assistance. Ms Fielding-Link remains subject to a bankruptcy proceeding that is of a nature very familiar to this Court. The County Court saw fit to issue the letter of request. The plaintiffs seek assistance in the form of orders that this Court could exercise if Ms Fielding-Link were subject to a bankruptcy proceeding in New Zealand. There is nothing remarkable about the assistance sought.

[35]   Mr Latton submitted the Court should, nonetheless, decline to grant assistance because:

17 At [13].

(a)the plaintiffs are seeking assistance to do something they could not do in England; and

(b)assistance is not necessary for the performance of the plaintiffs’ functions as trustees in bankruptcy; and

(c)the assistance sought is not consistent with New Zealand law.

[36]I address each in turn below.

The plaintiffs are seeking assistance to do something they could not do in England

[37]   Mr Latton submitted, in reliance on Singularis, that there was a limit on the court’s discretion to grant assistance under s 8. Assistance is not, he submitted, available to enable the foreign court’s officers to do something they could not do under the law by which they were appointed. He submitted the plaintiffs were trying to do exactly that in this application.

[38]   I accept that in Singularis the Privy Council said that the common law power to grant assistance could not be exercised in the circumstances that Mr Latton described.18 But I agree with Mr Crossland, counsel for the plaintiffs, that this limit does not apply to the statutory power in s 8. As Heath J said in Batty, distinguishing Singularis, s 8(3) “authorises this Court to make an order that it could exercise if the issue had arisen in New Zealand”.19 At most, the fact that the foreign court’s officers were seeking to do something they could not do in the foreign jurisdiction might,    in some circumstances, be a reason for declining jurisdiction as a matter of discretion.

[39]   As to whether the plaintiffs are seeking assistance to do something they could not do under English law,  Mr Latton did not suggest that the formal orders sought  by the plaintiffs were unavailable under English law. Rather, he submitted that the plaintiffs’  only  interest   in  pursuing  Ms  Fielding-Link  in  New   Zealand  was   to investigate  the Trust.   Ms  Fielding-Link’s  only  possible  item  of  property with

18     Singularis Holdings Ltd v PricewaterhouseCoopers [2014] UKPC 36, [2015] AC 1675 at [25] and [113].

19     Batty v Reeves [2015] NZHC 908 at [12].

respect to the Trust was her power under cl 11 to (effectively) bring the Trust to an end. Mr Latton submitted that while such a power was, under New Zealand law, “property” that would vest in the Official Assignee if Ms Fielding-Link had been made bankrupt here, that was not the case under English law.

[40]   Mr Latton did not advance that submission with much vigour at the hearing, saying the position in English law was “arguable”. There was no evidence of English law on the matter.20 I am not satisfied that the plaintiffs are seeking assistance in order to do something they could not do under English law.

Assistance is not necessary for the performance of the plaintiffs’ functions as trustees in bankruptcy

[41]   Mr Latton submitted, correctly, that Singularis holds that assistance is available only when that is necessary for performance of the office-holder’s functions. He submitted that this limit applied under s 8. He said that, although it may be so obvious as to not need saying, someone seeking assistance under s 8 must first establish that there is a need for assistance. A New Zealand court will not, he said, exercise its discretion to give assistance unless satisfied that it is needed.

[42]   I do not accept that submission. Section 8 applies only where a foreign court makes an order requesting the aid of the New Zealand court. Mr Latton is correct that a person seeking assistance under s 8 does have to first establish a need for assistance. However, the person will establish that need when persuading the foreign court to make the order requesting assistance from the New Zealand court. I do not consider that the person has to discharge that burden again when applying under s 8.   If     Mr Latton were correct, this court would have to re-examine the reasons of the foreign court in requesting assistance whenever an application was made under s 8. Singularis did not concern a request for assistance or an equivalent to s 8. The Privy Council therefore did not have to address whether, if the applicant had already persuaded the foreign court that assistance was necessary, the applicant had to persuade the receiving court of that same matter.

20     I was referred to some legislation and commentary, but that is not proof of a foreign law.

[43]   This is not to say that a court could not take into account, in exercising its discretion under s 8, a lack of necessity for the assistance. Courts are generally disinclined to exercise their powers pointlessly. However, I consider the burden is on the defendant to show the lack of necessity before a court will take such a matter into consideration. This is because it is a reasonable inference, from the plaintiffs seeking the assistance and the foreign court making an order requesting it, that the assistance is necessary.

[44]   In this case, Mr Latton submitted that assistance was not necessary because the plaintiffs’ ultimate aim was to exercise cl 11 of the Trust Deed. He said that, now that the assets of the Trust had been resettled, assistance to the plaintiffs towards that aim was unnecessary, because it would be of no effect.

[45]   I disagree. Mr Latton’s submission invites me to determine that there is no prospect of the plaintiffs challenging the transactions that led to, and constituted, the resettlement. Perhaps there could be cases where the merits are so clear that, even on an application such as this, the court would be prepared to make such a determination. But this is not a clear-cut case. It is, for example, at least arguable that the transactions involved a disposition by Ms Fielding-Link of her cl 11 power and that this disposition is open to challenge.

The assistance sought is not consistent with New Zealand law

[46]   Mr Latton’s final objection to the Court granting assistance was that the circumstances of Ms Fielding-Link’s bankruptcy were not consistent with New Zealand law. This was because Ms Fielding-Link had been bankrupt for almost eight years, and remained bankrupt “effectively at the pleasure of the plaintiffs” because  of the order made by the County Court that her bankruptcy continue until the plaintiffs confirmed to that Court that she had fully complied with her obligations.

[47]   Mr Latton submitted this was a situation unknown to New Zealand law. He said that, under s 298 of the Insolvency Act 2006, if a New Zealand court were to allow an objection to discharge from bankruptcy, it would specify a date when discharge could be applied for. He said the inconsistency with New Zealand law was exacerbated by two matters: the plaintiffs’ tardiness in resolving the only matter they

appear to regard as outstanding in the bankruptcy (the Trust), and the relatively small sum involved (which he said was about £30,000).

[48]   I do not accept that every inconsistency with New Zealand law is a sufficient reason to decline assistance. Were  it otherwise, assistance would rarely be granted, as insolvency regimes always have some differences and therefore inconsistencies.  It is, I consider, necessary to show an inconsistency with New Zealand public policy.

[49]    Such an inconsistency would arise if it were the case that Ms Fielding-Link remained bankrupt at the plaintiffs’ pleasure. I agree that a bankruptcy of such nature would be inconsistent with the policy underlying the discharge regime in New Zealand’s Insolvency Act.  But I do not accept  Mr Latton’s characterisation.  This  is because it must be open to Ms Fielding-Link to apply to the County Court either  to revoke its order extending her bankruptcy or to annul her bankruptcy.

[50]   I also do not accept Mr Latton’s criticism of the speed with which the plaintiffs have advanced matters under the bankruptcy. These are relevant events:

(a)The plaintiffs applied for an order suspending Ms Fielding-Link’s automatic discharge on the ground she was not co-operating in the administration of her bankruptcy. After hearing from both parties, the County Court made that order. There is no basis for revisiting the findings of that Court.

(b)Subsequently, the plaintiffs applied to bring  the  Trust  to  an  end. Ms Fielding-Link and Mr Link actively defended that application, including by filing extensive evidence as to why the plaintiffs should not be able to bring the Trust to an end. They did not reveal that they had already taken steps themselves to bring the Trust to an end. They then failed to comply with procedural orders made by the County Court. The application was thereby unnecessarily delayed. A further year passed before the plaintiffs were  told  that  Ms  Fielding-Link  and  Mr Link had themselves brought the Trust to an end.

(c)When the present application was brought, Ms Fielding-Link initially took no steps. A formal proof hearing was allocated for 2 March 2023. Ms Fielding-Link filed a statement of defence on 1 March 2023 and the formal proof hearing was vacated.   While the initial failure to file     a defence on time appears to have been attributable to counsel, it is difficult to understand why the defence was eventually filed only the day before the hearing.

[51]   In these circumstances I consider Ms Fielding-Link is to a large extent responsible for the delays of which she complains.

[52]   As to the amount involved in the bankruptcy, this was a matter of dispute. It is not a dispute I can resolve in this judgment. In any event, while Mr Latton put forward good arguments for the claims against the bankrupt estate being around £30,000, this is not an insignificant amount.

Summary

[53]   I find there is no compelling reason not to grant the assistance sought by the plaintiffs. I therefore exercise my discretion to grant the assistance.

Costs

[54]   The plaintiffs are entitled to costs. I encourage counsel to reach agreement on quantum. Failing agreement, the plaintiffs are to file and serve a brief memorandum (not exceeding three pages, excluding relevant annexures) by 4 September 2023, and Ms  Fielding-Link  is  to  respond  with  an  equivalently  brief  memorandum  by   11 September 2023.

Result

[55]   I make the orders set out in A-D of the prayer for relief in the plaintiffs’ statement of claim.

[56] The plaintiffs are entitled to costs. Failing agreement on quantum, memoranda are to be filed and served as set out in [54].

Campbell J