Williams v Simpson no.7 HC Hamilton CIV 2010-419-1174
[2010] NZHC 1963
•10 November 2010
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
CIV 2010-419-1174
UNDER the Insolency (Cross-border) Act 2006
BETWEEN STEVEN JOHN WILLIAMS Applicant
ANDALAN GERAINT SIMPSON Debtor
Hearing: 5 November 2010
Counsel: K J Crossland and P J Morris for Applicant
P F Gorringe for Debtor
D M O'Neill for Mr Clough
P J Morgan QC for Ms Mann
A Reimer-Reeder and J Cuellar for Commissioner of Inland Revenue
G Caro for Official Assignee
Judgment: 10 November 2010
JUDGMENT (NO. 7) OF HEATH J
This judgment was delivered by me on 10 November 2010 at 12 noon pursuant to Rule 11.5 of the
High Court Rules
Registrar/Deputy Registrar
Solicitors:
Stace Hammond P O Box 19-101 Hamilton 3244Tompkins Wake, PO Box 258, Hamilton Kerry Burroughs, PO Box 19307, Hamilton Anderson Lloyd, PO Box 201, Queenstown
Inland Revenue Department, PO Box 761, Waikato Mail Centre, Hamilton
Companies Office, PO Box, Auckland
Counsel:
P Gorringe, PO Box 7098, HamiltonD M O’Neill, PO Box 815, Hamilton
P J Morgan QC, PO Box 19021, Hamilton
WILLIAMS V SIMPSON HC HAM CIV 2010-419-1174 10 November 2010
Introduction
[1] The background to this proceeding has been set out at length in earlier judgments of the Court. This judgment deals with procedural directions required to facilitate the resolution of outstanding issues involving ascertainment and realisation of property of Mr Simpson in New Zealand, as soon as practicable.[1]
Restrictions on Mr Simpson dealing with property in New Zealand
[1] This judgment should be read in conjunction with Williams v Simpson (No. 6) HC Hamilton CIV 2010-419-1175, 5 November 2010 and the reasons for that judgment, delivered today.
[2] In my reasons for judgment of 10 November 2010,[2] I observed that my order suspending Mr Simpson’s rights to deal with property in New Zealand, made on 17
September 2010[3] had been affected by my subsequent orders of 12 October 2010.[4]
That problem is due to an oversight on my part.
[2] Williams v Simpson (No.6) HC Hamilton CIV 2010-419-1174, 10 November (Reasons) at para [24].
[3] Williams v Simpson HC Hamilton CIV 2010-419-1174, 17 September 2010 at para [56](b).
[4] Williams v Simpson (No. 5) HC Hamilton CIV 2010-419-1174, 12 October 2010 at para [89].
[3] The attempts made by Mr Simpson to thwart the effect of the order granting assistance to the English Court under s 8 of the Insolvency (Cross-border) Act 2006 (the Act) make it necessary to clarify the position, in relation to that order.
[4] For the avoidance of doubt, I declare that Mr Simpson’s ability to deal with any of his assets in New Zealand is suspended, pending further order of the Court. In the event that the Official Assignee considers there is reason to believe that any asset may be the property of Mr Simpson in New Zealand, he is authorised to give notice to any third party that any dealings should be suspended, pending an order from this Court to the contrary. Mr Simpson may apply to the Court to set aside any particular decision of the Official Assignee in that regard, on three days’ notice to all parties to this proceeding. The actions taken by the Official Assignee to date, to prevent particular transactions being undertaken by Mr Simpson, are ratified retrospectively.
Availability of transcripts of examinations to Mr Williams
[5] I have already authorised the Official Assignee to make available to Mr Williams transcripts of all examinations conducted by him to date, subject to s 169 of the Insolvency Act 2010.[5]
[5] Williams v Simpson HC Hamilton CIV 2010-419-1174, 5 November 2010 at para [13]. See also the reasons for judgment at para [34].
[6] Mr Crossland, for Mr Williams, has sought permission for Mr Williams to append the transcript of Ms Mann’s examination of 21 October 2010, together with “all other past and future transcripts of interviews” as evidence in proceedings brought by Mr Williams in relation to a property in the Isle of Wight and the amounts held in an account in the name of James Walter Smith at the Nationwide Building Society.
[7] Re Baird (A Bankrupt)[6] holds that the Official Assignee may append a transcript of an examination as evidence in a civil proceeding. As Mr Simpson is bankrupt in England, it may be appropriate for an English trustee to append a transcript on a similar basis, without the need for Court permission under s 169(2). However, I do not determine this point as other counsel have not yet been heard on the topic. Any further submissions shall be filed and served by 5pm on 12
November 2010. I will then rule on the application.
Appointment of an “examiner”
[6] Re Baird (A Bankrupt) [1994] 2 NZLR 463 (HC).
[8] I indicated on 5 November 2010 my intention to consider the appointment of a person (to whom I referred as an “examiner”) to liaise with the parties with a view either to facilitating some practical means of resolving claims to Mr Simpson’s assets in New Zealand or to identify the issues on which argument was required before decisions about distribution. My intention was to draft terms of reference, including a requirement that the appointee’s fees be paid out of assets realised by the Official Assignee, and then to seek submissions both on the terms of the proposed reference and any questions of jurisdiction or discretion that I may have overlooked.
[9] In many cross-border insolvencies Courts have appointed independent parties to assist in identifying issues and facilitating cross-border Court communication and the co-ordination of concurrent proceedings[7] The term “examiner” has often been given to such a person.
[7] Questions of Court co-operation and co-ordination are subject of specific legislative provisions in
Insolvency (Cross-border) Act 2006, Schedule 1, arts 25-27.
[10] In an early cross-border insolvency case, Judges in the United States and England independently raised with respective counsel the notion that an insolvency agreement between two insolvency administrations could resolve conflicts and facilitate the exchange of information. Two goals drove that proposal: maximisation of the value of the estate and harmonisation of the proceedings to minimise expense,
waste and jurisdictional conflict.[8]
[8] See Re Maxwell Communication Corporation Plc 93 F3d 1036 (2nd Cir (NY)) 21 August 1996, discussed in UNCITRAL Practice Guide on Cross-Border Insolvency Co-operation (United Nations
Commission on International Trade Law, 2010) at 128-129.
[11] While there are no parallel proceedings in this case (in the sense that this Court is acting in aid of a single bankruptcy commenced by order of the English Court), there are still potential areas of conflict in relation to the claims made by the Commissioner of Inland Revenue in New Zealand, in light of expert evidence that foreign revenue debts will not be admitted to proof in the United Kingdom, based on
the House of Lords decision in Government of India v Taylor.[9]
[9] Government of India v Taylor [1955] AC 491 (HL). See also Peter Buchanan Ltd v McVey [1955] AC 516n (Supreme Court of Eire).
[12] It is distinctly possible that this Court may need to communicate with the English Court to ascertain whether the Government of India v Taylor approach would be adopted in respect of a foreign revenue claim that constitutes but one of a number of creditors; compare the approach taken under Australian order in aid provisions in repatriating funds to New Zealand on a Letter of Request from this Court to the Federal Court of Australia, when a major creditor in the New Zealand
bankruptcy was the Commissioner of Inland Revenue.[10]
[10] See Re Ayres ex parte Evans (1981) 34 ALR 582 (FCA) and Ayres v Evans (1981) 39 ALR 129 (Full Court FCA) in the context of s 29(2)(a) of the Bankruptcy Act 1966 (Cth). Note that these decisions were given before Australia and New Zealand agreed that tax debts could be treated as
capable of enforcement under provisions relating to the reciprocal enforcement of judgments:
reflected in s 3(3A) of the Reciprocal Enforcement of Judgements Act 1934, enacted by s 3(4) of the
Reciprocal Enforcement of Judgments Amendment Act 1992.
[13] Provided jurisdiction existed to do so, I consider that the appointment of a senior person to liaise with people in the position to make decisions on behalf of individual participants in this process would enhance the likelihood of avoiding wasteful costs and maximising the returns to creditors of Mr Simpson’s bankrupt estate.
[14] The starting point for analysis is s 8 of the Act. I discussed that provision in my judgment of 12 October 2010.[11] In that decision, I indicated that the terms of art 22(1) of Schedule 1 of the Act (relief that could be granted on recognition as a foreign main or non-main proceeding) should inform the exercise of the s 8 discretion; that being an approach which was consistent with the application of principles of comity and the common law, as expressed in Cambridge Gas Transport Corporation v Official Committee of Unsecured Creditors of Navigator Holdings Plc.[12]
[11] Williams v Simpson (No. 5) HC Hamilton CIV 2010-419-1174, 12 October 2010 at paras [67]-[85].
[12] Cambridge Gas Transport Corporation v Official Committee of Unsecured Creditors of Navigator
Holdings Plc [2006] 3 All ER 829 (PC) at paras 14-17.
[15] Section 8 of the Act provides:
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.
[16] Section 8 falls to be interpreted against the general purpose of the Act, set out in s 3. Section 3(a) deals with implementation of the Model Law on Cross-border insolvency adopted by the United Nations Commission on International Trade Law, amended and supplemented in order to apply to New Zealand in Schedule 1 of the Act. Section 3(b) goes further by providing:
3. Purpose
The purpose of this Act is to—
...
(b) provide a framework for facilitating insolvency proceedings when—
(i) a person is subject to insolvency administration (whether personal or corporate) in 1 country, but has assets or debts in another country; or
(ii) more than 1 insolvency administration has commenced in more than 1 country in relation to a person.
[17] This Court’s jurisdiction to act in aid of and to be auxiliary to a foreign Court in relation to a foreign insolvency proceeding is provided by s 8(2). On the other hand, s 8(3) is declaratory of this Court’s ability to exercise powers that it possesses in respect of the matter, if it had arisen within its own jurisdiction.
[18] There is nothing in s 8 which would oust the inherent jurisdiction of this
Court to provide relief, provided (otherwise) that jurisdiction was available.
[19] The availability of the inherent jurisdiction in a case involving a statutory insolvency regime was discussed by a Full Court of this Court in Re Roslea Path Ltd (in liq); Flynn v McCallum and Levin.[13] That case involved the assessment of remuneration of liquidators by the High Court. In the course of its decision, the Full Court discussed the possibility of a Judge or Associate Judge appointing an “assessor” to recommend whether particular costs were reasonable; and in doing so,
[13] Re Roslea Path Ltd (in liq); Flynn v McCallum and Levin HC Tauranga CIV 2005-470-611, 17 December 2009
commented on the availability of the inherent jurisdiction of the Court to make such an appointment. Venning J and I said:[14]
[14] Ibid, at paras [162]-[163].
[162] Although, in Franklin v Baycorp Holdings Ltd (1990) 4 PRNZ 258 (HC), Doogue J held that Masters [now Associate Judges] were not entitled to exercise the inherent jurisdiction of the Court, that view has not been followed in other cases: see, for example, Stephens v Stephens [1991] 1
NZLR 633 (HC) and Hollebone v Howden (High Court, Wellington, CP71/91, 16 April 1991, Master Williams QC). Indeed, with respect to Doogue J, his view is inconsistent with the express terms of s 26I(3) of the Judicature Act 1908. That provision confers on Associate Judges “all the jurisdiction and powers of the Court to deal with … matters incidental to the matters over which an Associate Judge has jurisdiction” under s 26I(1) or (2). Jurisdiction to deal with liquidator’s remuneration stems from s
26I(2)(e) of the Judicature Act, which incorporates all jurisdiction under Part
16 of the 1993 Act, in which both ss 277 and 284 appear.
[163] We have no doubt that a Judge of this Court could exercise inherent jurisdiction to appoint an assessor on terms that would allow that person to inquire into the claim and to report to the Court. In our view, for the reasons we have given, an Associate Judge could exercise that power to resolve the application to confirm remuneration, as a jurisdiction ancillary to s
284(1)(e). An Associate Judge should hear from counsel for a liquidator before making a formal order to appoint an assessor, so that the process to be followed can be spelt out in the order and a specific direction made that the costs of the assessor are to be paid out of the assets of the company in the first instance.
[20] Roslea Path makes it clear that if an assessor’s report were obtained “it could do no more than to express an independent opinion on the reasonableness or otherwise of the fees claimed”; it was not open for the Court to “delegate its jurisdiction” to an “assessor”. Nor could the Court act on such a report without providing to the liquidator and any other interested parties who wished to be heard
an opportunity to make further submissions.[15]
[15] Ibid, at para [160].
[21] I follow that approach in this case. The inherent jurisdiction of the Court may be exercised in any case in which the order made does not conflict with a statutory or regulatory provision to the contrary.[16] There is no such conflict in this case.
[16] See Zaoui v Attorney-General [2005] 1 NZLR 577 (SC), Taylor v Attorney-General [1975] 2 NZLR 675 (CA), Donselaar v Mosen [1976] 2 NZLR 191 (CA) and Champtaloup v NorthernDistricts Aero Club Inc [1980] 1 NZLR 673 (CA).
[22] I raised at the 5 November 2010 hearing the possibility of appointing a retired Judge of this Court, The Hon Sir Hugh Williams QC as an “examiner”. There was no objection to Sir Hugh’s appointment, if I were to consider that there was jurisdiction to make the appointment and it was otherwise appropriate. Inquiries have been made as to Sir Hugh’s availability and he is prepared to undertake the task, if required.
[23] I am satisfied that, in order to avoid wasteful costs and to maximise available assets for the benefit of creditors entitled to participate in the pool on a pari passu basis, an order appointing a person whom I will call an Examiner can be made. One
of the objects of the appointment is to separate out the investigative functions of the Official Assignee from those involving liaison with the parties, in an endeavour to find an economical way through the present legal thicket.
[24] My proposed terms of appointment are set out below. Counsel shall file and serve any submissions on the terms of appointment (as well as any jurisdictional or discretionary issues) on or before 19 November 2010. I will give a further judgment (on the papers) during the week of 22 November 2010, determining whether an order should be made and, if so, on what terms.
[25] The proposed order of the Court is:
The Honourable Sir Hugh Williams QC is appointed as an Examiner by this Court, to undertake the following functions independently of both Mr Williams and the Official Assignee:
(a) To liaise with all creditors who have made claims in New Zealand and to make recommendations about steps that need to be taken in order to quantify the amounts of any debts owed by Mr Simpson to those parties.
(b)To inquire into the costs and disbursements incurred in New Zealand by the solicitors for Mr Williams and by the Official Assignee as the Court’s agent and to make recommendations as to the payment of those costs out of funds realised from Mr Simpson’s assets.
(c)To identify (after discussion with the Commissioner of Inland Revenue) what (if any) steps should be taken by this Court to communicate with the English Court to ascertain whether, if the net realised value of Mr Simpson’s assets in New Zealand were made available to Mr Williams, any claim by the Commissioner would be admitted to proof in England.
(d)To act as a facilitator to assist the parties to reach some agreement as to the way in which realised funds should be distributed.
(e) To identify any issues that the Court may need to resolve relating to Mr Simpson’s ownership of property in New Zealand, in respect to any property identified by the Official Assignee as potentially being his.
[26] I intend the costs and disbursements incurred by the Examiner (if appointed) to be paid out of funds held by the Official Assignee from the realisation of assets seized on 20 and 29 September 2010 and voluntarily surrendered subsequently by
Mr Simpson, as well as the proceeds in New Zealand dollars of foreign currency seized during the searches.
[27] I propose that the Examiner should report to this Court with his recommendations on or before 19 December 2010. That will enable him to consult with the Official Assignee about the likely content of his report; that report is to be filed and served on or before 17 December 2010. I propose that the Examiner’s report would be forwarded by the Registrar by email to counsel for all parties to this proceeding, including the Official Assignee. Submissions could then be made in the manner contemplated in para [31] below.
[28] I do not regard my drafting as perfect. I welcome comments if counsel considered particular terms might be expressed in a more lucid manner.
Result
[29] Orders are made in terms of para [4] above, in relation to suspension of Mr Simpson’s right to deal with property, pending further order of the Court and the Official Assignee’s ability to take steps to freeze any transactions into which Mr Simpson may purport to enter.
[30] Submissions may be made on whether and, if so, on what basis an Examiner should be appointed: see para [24] above.
[31] If I were to appoint an Examiner, I would propose that each party file and serve submissions on the terms of the Examiner’s report on or before 28 January
2011 and the Registrar would be asked to allocate a one day hearing, on the first available date after 28 January 2011, for me to hear submissions on what orders should be made in consequence of the Official Assignee’s and the Examiner’s reports.
[32] Costs reserved.
P R Heath J
Delivered at 12 noon on 10 November 2010.
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