Consideration
55 For the reasons that follow, in my opinion, the ancillary relief sought by Mr Aquino, including the Opposed Relief, should be granted.
56 The first order Mr Aquino seeks by way of ancillary relief is in para 3 of the Originating Application. There Mr Aquino seeks an order that, pursuant to s 6 of the CBI Act and Art 21(1)(e) of the Model Law, the administration and realisation of Mr McGowan's assets located in Australia be entrusted to Messrs Scott and Pascoe as the Australian Representatives. The evidence establishes that Mr McGowan has an interest in assets in Australia, namely shares in TRW, and that he previously held interests in real property in Australia.
57 There is nothing unorthodox about the relief sought in the form of para 3 of the Originating Application: see for example Edelsten at [58]. Mr McGowan opposes the relief sought in para 3 of the Originating Application but he makes no substantive submissions that go to that relief save for a suggestion that the appointment of Messrs Scott and Pascoe as the Australian Representatives would be inutile if the ancillary relief sought in para 6 of the Originating Application is not granted. That is, Mr McGowan does not appear to oppose the appointment of the Australian Representatives per se. Rather, his submissions and opposition focus on the relief sought in para 6 of the Originating Application under Art 21(1)(g) of the Model Law.
58 In any event, given that there are assets in Mr McGowan's name in Australia, I am satisfied that they should be entrusted to Messrs Scott and Pascoe as the Australian Representatives to administer and realise. Relevantly, Messrs Scott and Pascoe have signed a "Trustee Consent to Act Declaration" for that purpose.
59 The next order sought by Mr Aquino by way of ancillary relief is in para 4 of the Originating Application. That relief is not opposed by Mr McGowan. By para 4 of the Originating Application Mr Aquino seeks moratoria on proceedings against Mr McGowan or any of his assets, a stay on enforcement of judgments or orders, and suspension of dealings in Mr McGowan's property. As is appropriate, that order is only sought to the same extent as would apply if the moratoria or suspension arose under the Bankruptcy Act: see Edelsten at [59]. An order in the terms sought in para 4 of the Originating Application should be made.
60 The final order sought by Mr Aquino by way of ancillary relief is in para 6 of the Originating Application. It is in relation to that relief that the real controversy between the parties lies and to which Mr McGowan's submissions are directed. In para 6 of the Originating Application Mr Aquino seeks an order pursuant to s 6 of the CBI Act and Art 21(1)(g) of the Model Law that, subject to the Bankruptcy Act, all powers normally available to a trustee in bankruptcy under the Bankruptcy Act be made available to the Australian Representatives.
61 At the heart of Mr McGowan's opposition to the grant of the Opposed Relief and, in particular, the relief sought in para 6 of the Originating Application is his contention that the relief is inutile. This is said to be because any claim sought to be brought pursuant to ss 120-122 of the Bankruptcy Act would not be available as any like claim under the Bankruptcy Code is statute barred. On this basis Mr McGowan says that any grant of relief would need to be limited to exclude the equivalent antecedent transaction avoidance provisions under those sections of the Bankruptcy Act and s 37A of the Conveyancing Act.
62 Before proceeding further it is convenient to set out some of the principles which apply to the CBI Act and the Model Law generally. In Akers Allsop CJ (with whom Robertson and Griffiths JJ agreed), after summarising relevant provisions of the Model Law, identified at [68] the "four key elements of the Model Law": access to local courts for foreign representatives; recognition of certain orders of foreign courts; relief to assist foreign proceedings; and cooperation amongst courts of the states where assets are held and coordination of concurrent proceedings.
63 At [111]-[113] Allsop CJ observed that the Model Law reflected a universalist approach, stating:
111 That the Model Law reflects a universalist approach (reflected in the pre-existing common law framework discussed in Re HIH) can be accepted: see the 2002 discussion paper entitled CLERP 8 at pp 17 and 21. CLERP 8 explained the universal approach as:
[O]ne insolvency proceeding will be universally recognised by the jurisdictions in which the entity has assets or carries on business. All the assets of the insolvent company will be administered by the court or the administrator in, and possibly also according to, the law of the place of incorporation. All creditors seeking to claim in the winding up submit claims to that court or administrator. When assets of the insolvent company are located in foreign countries, the court has the power to apply for assistance from the courts of those countries.
112 A similar statement of general approach and underlying informing concept is to be found in Re ABC Learning Centres Ltd 728 F (3d) 301 at 306 (3rd Circuit, 27 August 2013):
The Model Law reflects a universalism approach to transnational insolvency. It treats the multinational bankruptcy as a single process in the foreign main proceeding, with other courts assisting in that single proceeding. In contrast, under a territorialism approach a debtor must initiate insolvency actions in each country where its property is found. This approach is the so-called "grab rule" where each country seizes assets and distributes them according to each country's insolvency proceedings.
113 This, the Court said, at 306, involved a rejection of:
the territorialism approach … in favour of aiding one main proceeding. "The purpose is to maximise assistance to the foreign court conducting the main proceeding." Thus, a Chapter 15 court in the United States acts as an adjunct or arm of a foreign bankruptcy court where the main proceedings are conducted.
64 Mr McGowan's submission that, where a foreign proceeding is recognised under the Model Law, this Court acts "as an adjunct or arm of the foreign bankruptcy court where the main proceeding is conducted" can be accepted.
65 The granting of relief under Art 21 of the Model Law is discretionary and is conditioned by Art 22 (see [29] above) which requires the court in granting relief under, relevantly, Art 21 to be satisfied that the interests of creditors and other interested persons, including the debtor, are adequately protected and permits the court to impose conditions on the grant of any relief under Art 21.
66 Also relevant are Art 11 and Art 23 of the Model Law. Article 23 of the Model Law, as modified by s 17 of the CBI Act, relevantly provides that upon recognition of a foreign proceeding the foreign representative has standing to initiate an action arising under or because of ss 120, 121, 121A, 122, 128B or 128C or Div 4A of Pt VI of the Bankruptcy Act. Article 11 of the Model Law, read subject to the modifications in s 8 of the CBI Act, relevantly provides that:
A foreign representative is entitled to apply to commence a proceeding under the Bankruptcy Act 1966 if the conditions for commencing such a proceeding are otherwise met.
67 As Mr McGowan submits Art 23 does not create substantive rights. It is a rule about standing and is procedural in nature: see King (Trustee), in the matter of Zetta Jet Pte Ltd v Linkage Access Limited [2018] FCA 1979 at [35].
68 Relevantly, Chapter 1 of the Explanatory Memorandum to the Cross-Border Insolvency Bill 2008 (Cth) which "explains the objectives of the Bill, the scope of its application and the nature and extent of its implementation" and "also comments on the … interaction between the Model Law and section 29 of the Bankruptcy Act" includes under the heading "[a]ctions to avoid acts detrimental to creditors":
1.29 Article 23 of the Model Law provides for a foreign representative having standing to initiate actions to recover assets when actions have been taken that are detrimental to the interests of creditors. Under Australian law, these are the voidable transactions provisions in Division 2 of Part 5.7B of the Corporations Act and sections 120, 121, 121A, 122, 128B, 128C and Division 4A of Part VI of the Bankruptcy Act.
1.30 The provisions listed for the purposes of article 23 of the Model Law relate to allowing for the reversal or avoidance of transactions that a debtor has entered into that prejudice the interests of creditors. The effect of enacting article 23 of the Model Law is that the foreign representative is not precluded from commencing such actions by the sole fact that the foreign representative is not the insolvency representative approved in Australia.
1.31 Under the Division 2 of Part 5.7B of the Corporations Act the liquidator of a company is given standing to make an application in relation to voidable transactions. It is intended that the foreign representative will have the same standing as if they were a liquidator in relation to all provisions within Division 2 of Part 5.7B of the Corporations Act. The Bankruptcy Act provides for the trustee having certain rights in relation to transactions covered by the relevant sections. The foreign representative is to have the same rights as if they were the trustee in relation to those transactions …
(Emphasis added.)
69 It follows from the combined operation of Art 11 and Art 23, as modified by the CBI Act, that Mr Aquino has standing to commence proceedings under, relevantly, ss 120-122 of the Bankruptcy Act. He has the same rights he would have if he was an Australian trustee in relation to the transactions the subject of such proceedings. He does not require a grant of relief under Art 21(1)(g). That being so, to the extent Mr McGowan opposes the relief sought in para 6 of the Originating Application because it would empower Mr Aquino to commence proceedings pursuant to ss 120-122 of the Bankruptcy Act, that concern is misplaced.
70 The relief sought in para 6 of the Originating Application is confined to the Australian Representatives. They can enjoy no greater rights than those which Mr Aquino currently enjoys. Thus, as submitted by Mr Aquino, if the US Proceeding, for the purposes of which he is Trustee, is recognised as a foreign main proceeding he would, because of the recognition of that proceeding, be entitled to administer Mr McGowan's Australian assets. However, for orthodox reasons he wishes to have that done by Australian practitioners familiar with Australian insolvency law and procedure. It is appropriate that the Australian Representatives have power granted to them to do so.
71 To that end, the relief sought in para 6 of the Originating Application is for the Australian Representatives to exercise all of the powers normally available to a trustee under the Bankruptcy Act. Those powers are not limited to bringing proceedings under ss 120-122 of the Bankruptcy Act, which is the focus of Mr McGowan's objection, but include, by way of example, the power to examine people who may be able to provide information about Mr McGowan or his examinable affairs under s 81 of the Bankruptcy Act and the power to require the production of books under s 77A of that Act. Mr McGowan says nothing about the exercise of these other powers. In circumstances where Mr McGowan had and has assets in Australia and the circumstances surrounding the transfer of some of those assets remains unclear to Mr Aquino, it is appropriate that an order conferring powers of that nature on the Australian Representatives be made.
72 Mr McGowan's principal opposition to the Opposed Relief is based on his argument that Mr Aquino would not be permitted to commence proceedings under ss 120-122 of the Bankruptcy Act because of the operation of principles of private international law. For example, the first reason why Mr McGowan says that the relief sought, in particular, in para 6 of the Originating Application would be refused is because Art 21(1)(g) only functions through the recognition of a foreign proceeding. To that end, Mr Aquino contends that the functions bestowed by Art 21(1)(g) must be assessed by reference to the foreign proceeding and as "additional" to the statutory rights which Mr Aquino has under the statutory scheme by which he is appointed to act in the US Proceeding. The second reason given by Mr McGowan is that the Court would be satisfied that the interests of creditors and other relevant persons, including him, are best protected by denying the relief sought under Art 21. Mr McGowan contends that a creditor lodging a proof of debt in a foreign proceeding submits to the jurisdiction of that proceeding according to the lex fori concursus, and is thus willing to be susceptible to the limitation of the powers and functions able to be exercised in that proceeding.
73 There are two principal reasons why those arguments cannot succeed, at least at this stage.
74 First, they are premature. They are arguments that can and should be made if such proceedings are commenced or, indeed, threatened.
75 Secondly, the evidence relied on by Mr McGowan to demonstrate that Mr Aquino would be barred from bringing an equivalent proceeding in the US Proceeding is not conclusive.
76 Mr McGowan relies on Mr Hanlon's evidence. As set out at [22] above, Mr Hanlon is a partner of law firm Seyfarth Shaw LLP based in Boston, Massachusetts. He has been practising bankruptcy law for over 30 years and was engaged as an expert to provide his opinion on the question of "whether as a matter of U.S. bankruptcy law, the avoidance actions contemplated by [Mr McGowan's] bankruptcy trustee in the Litigation would otherwise be time-barred as a result of a two year statute of limitations, considering among any other legally relevant exceptions to the two-year limitations period, the application of the doctrine of equitable tolling".
77 Before turning to consider Mr Hanlon's evidence I note that Mr Aquino objected to Mr Hanlon's evidence insofar as he expresses opinions on how the relevant court, being a US Bankruptcy Court or other US court exercising jurisdiction under the Bankruptcy Code, would determine an issue. To the extent that Mr Hanlon expressed such opinions, his evidence was read as a submission.
78 In summary, in his report Mr Hanlon;
(1) sets out the general scheme and relevant provisions of the Bankruptcy Code including:
(a) s 548 which he says "allows for the avoidance of transfers that are either intentionally or constructively fraudulent". Mr Hanlon observes that while administering the estate the trustee has the sole right to pursue claims under that section;
(b) s 546(a) which "establishes a statute of limitations for avoidance actions brought under" relevantly, s 548 of the Bankruptcy Code. Mr Hanlon notes that s 546(a)(1)(A) "establishes a two-year statute of limitation after the entry of the order for relief" and that "[i]f the defense is not timely asserted, a defendant may waive its statute of limitations defense under section 546(a)". He also observes that the s 546(a) limitation period can be extended "by stipulation between the parties" and that it may be equitably tolled. As to the latter, Mr Hanlon gives the following evidence:
The limitations periods in Section 546(a) may be equitably tolled when a trustee, exercising due diligence, has been prevented from asserting a cause of action because he or she remains unaware of the action due to fraud or misrepresentation, or when extraordinary circumstances beyond the trustees [sic] control make it impossible to file claims on time. Jobin v. Boryla (In re M&L Bus. Mach. Co., Inc.), 75 F.3d 586, 591 (10th Cir. 1996). The doctrine of equitable tolling is to be used sparingly. See, e.g., Wiscovitch-Rentas v. Super Roof & Gen. Contractor, 405 B.R. 397 (D.P.R. 2009). In the case of fraud, equitable tolling will apply if the trustee can prove that (1) the alleged fraud was concealed by affirmative acts of the defendant, or (2) although the fraud was not affirmatively concealed, it went undiscovered despite due diligence on the trustee's part. See, e.g., Milby v. Templeton (In re Milby), 875 F.3d 1229, 1235 (9th Cir. 2017). The limitation period will not be equitably tolled, however, if the court finds that that trustee has not acted diligently. See, Ernst & Young v. Matsumoto (In re United Ins. Mgmt., Inc.), 14 F.3d 1380, 1386 (9th Cir. 1994) ("equitable tolling's requirement of diligence is particularly acute in the bankruptcy context"); In re Silva, 2016 U.S. App. LEXIS 22312 (9th Cir. Dec. 15, 2016) (unpublished). Eckbold v. Miller (In re Redden), 2013 Bankr. LEXIS 4023, at *13-15 (Bankr. D. Del. Sept. 26, 2013); Nasuti v. Dolin (In re McDonald), 500 B.R. 209, 211-13 (Bankr. N.D. Ga. 2013) (refusing to equitably toll statute of limitations where trustee did not exercise proper diligence).
(c) s 549 which enables the trustee to avoid post-petition transfers by a debtor that are not authorised by the Bankruptcy Code or the court. Mr Hanlon notes that to establish a post-petition transfer under s 549 the trustee must establish: first, that there was transfer; secondly, that the transfer was of estate property; thirdly, that the transfer was not authorised; and fourthly, that the transfer occurred after the commencement of the case. Section 549(d) establishes a statute of limitations of two years after the date of the transfer sought to be avoided. An action under the section "must be filed timely". The s 549(d) statute of limitations can be waived and may also be equitably tolled; and
(2) provides an analysis of the application of the statute of limitations in s 546(a) of the Bankruptcy Code in relation to the Double Bay Properties and the application of the s 549(d) statute of limitations in relation to the sale of the Merriwa Properties.
79 In relation to the Double Bay Properties Mr Hanlon's report includes the following, which was read as a submission:
Under the Bankruptcy Code and cases interpreting it, a court should hold that the statute of limitations to bring an action for fraudulent transfer of the Double Bay proceeds expired on May 18, 2018, two years after the commencement of the Chapter 7 Case. Although the Debtor failed to schedule the transfer of Double Bay, he disclosed the transfer during the June 21, 2016 Examination, and the Trustee was on notice of the Double Bay transfer, as evidenced by his request for the agreement between the Debtor and his spouse and his March 20, 2017 Status Report. Despite knowledge of the potential claim, the Trustee did not commence an action within 2 years of the commencement of the Chapter 7 Case.
A Court would not apply the doctrine of equitable tolling to extend the statute of limitations under Section 546(a) of the Bankruptcy Code. Even assuming that Debtor's failure to schedule the transfer was intentional fraud and constituted "extraordinary circumstances" which prevented the Trustee from filing a claim, the transfer was discovered by the Examination. A trustee seeking to apply the doctrine of equitable tolling must demonstrate an inability to discover assets and avoid post-petition transfers in a time to file a timely action to "either active [] or passive [] concealment" of the underlying facts by the debtor. In re Anderson, 511 B.R. 481, 499 (Bankr. S.D. Ohio 2013). Here, the Double Bay transfer and unequal distribution of proceeds was disclosed to the Trustee twenty-three months before the statute expired. Applying Ninth Circuit's "stop-clock rule" would extend the statute of limitations to June 16, 2018, two years from the discovery of the Double Bay transfer. See, In re Milby, 875 F.3d 1229, 1235 (9th Cir. 2017).
80 Mr Hanlon then addresses the Merriwa Properties. He notes that Mr McGowan does not own the First Merriwa Property, the Second Merriwa Property or the shares in Tawarri but that his 50% shareholdings in TRW is property of Mr McGowan's bankrupt estate and that the Trustee's rights as a shareholder of TRW would be determined under corporate laws applicable to TRW. Mr Hanlon says that the s 549(d) statute of limitation does not apply because that section would only apply if there has been a transfer of property of the estate and there is no evidence that Mr McGowan has transferred his shares in TRW.
81 Mr Hanlon's report includes the following summary, which was also read as a submission:
Based on the foregoing and subject to the limitations and assumptions set forth in this Opinion, it is my opinion that under present reported decisional authority and statutes applicable to federal bankruptcy cases, in a properly presented and competently argued case, a United States Bankruptcy Court or other United States court exercising jurisdiction of such case under the Bankruptcy Code and under Title 28 of the United States Code would, in the proper exercise of its equitable discretion, apply the 2 year statute of limitation to the Trustee's attempt to recover proceeds of Double Bay as a fraudulent transfer, and would not exercise its discretion to apply equitable tolling to the statute of limitations, except to the extent of the "stop-clock rule," which would extend the limitations period to June 21, 2018. The 2 year statute of limitation in Section 549(d) does not apply to the transfers of the First Merriwa Property and the Second Merriwa Property, because neither is property of the Debtor's estate.
82 Mr Hanlon's report is expressed to be subject to a number of limitations including:
My opinion herein is expressly predicated on a timely and procedurally proper defense of statute of limitations being asserted and fully litigated by Debtor. I note that a Bankruptcy Court or other United States court exercising jurisdiction of such case under the Bankruptcy Code, as a court of equity, has the express power to issue any order or process necessary to carry out the purposes and provisions of the Bankruptcy Code (provided that the foregoing does not alter the reasoned opinion set forth herein).
Equitable tolling analysis requires a fact-intensive inquiry, and so equitable tolling cases are largely sui generis. Accordingly, it is difficult to ascertain a consistent factual pattern upon which legal precedent of general applicability may be based. The foregoing opinion, therefore, necessarily is based upon a reasoned analysis of cases decided by courts under the laws of various jurisdictions, which cases would not necessarily be controlling and offer at best a general guide in attempting to anticipate what circumstances will result in substantive consolidation.
83 The effect of Mr Hanlon's evidence is as follows:
(1) pursuant to s 546(a) of the Bankruptcy Code, a trustee has a period of two years after the date of entry of the order for relief to bring an avoidance claim under s 548 of the Bankruptcy Code against a debtor;
(2) it is for the defendant to such an action to assert a defence based on the statute of limitations in s 546(a). That defence must be raised in a timely fashion and the failure to do so may result in a waiver of the statute of limitations defence;
(3) the limitation period in s 546(a) can be extended by agreement or may be equitably tolled; and
(4) a claim by a trustee under s 549 of the Bankruptcy Code to avoid a post-petition transfer not authorised by the Bankruptcy Code or the court is to be brought within two years after the date of the transfer sought to be avoided. That limitation period can be waived if not pleaded as a positive defence and may be equitably tolled.
84 Having regard to Mr Hanlon's evidence and Mr McGowan's submissions, based on Mr Hanlon's report, the following issues arise.
85 First, contrary to Mr McGowan's submissions, it does not appear that an avoidance action is extinguished by operation of s 546(a)(1) if the action is not brought within the two year limitation period. Mr McGowan's position is based on the terms of s 546(a) which provides:
(a) An action or proceeding under section 544, 545, 547, 548, or 553 of this title may not be commenced after the earlier of -
(1) the later of -
(A) 2 years after the entry of the order for relief; or
(B) 1 year after the appointment or election of the first trustee under section 702, 1104, 1163, 1202, or 1302 of this title if such appointment or such election occurs before the expiration of the period specified in subparagraph (A); or
(2) the time the case is closed or dismissed.
86 Notwithstanding the chapeau to s 546(a), the effect of Mr Hanlon's evidence is that, while a statute of limitations is established under s 546(a) of the Bankruptcy Code, a claim can be brought by a trustee with the onus then being on the defendant to plead an affirmative defence relying on that section. If that is not done in a timely fashion the entitlement to rely on such a defence may be waived. Mr Hanlon also points out that the limitation period can be extended "by stipulation" or may be equitably tolled.
87 Seemingly, in support of the proposition that failure to assert a timely defence based on the statute of limitations in s 546(a) may result in a waiver of that defence, Mr Hanlon refers, by way of example to one case, IBT International, Inc. v Northern (In Re International Administrative Services, Inc.) 408 F3d 689 (11th Cir 2005) (IBT International). In that case the trustee of the debtor, International Administrative Services, Inc. (IAS), commenced a proceeding against IBT International, Inc. (IBT) and Southern California Sunbelt Developers, Inc. (SCSD) to recover assets which the trustee alleged had been fraudulently transferred from IAS to IBT and SCSD.
88 The background to the claims is complicated. IAS had been the subject of a number of proceedings claiming damages for negligent advice and of a number of regulatory investigations. As a result of the litigation and investigations, with the assistance of lawyer, David Tedder, IAS attempted to formulate a plan to shield assets from creditors. Mr Tedder transferred assets to foreign and domestic entities which he owned and then "recycled" those assets through international transactions. Between 1992 and 1996 Charles Givens, the sole shareholder of IAS, removed in excess of $50 million from IAS.
89 IAS filed a voluntary Chapter 11 bankruptcy petition on 20 June 1996. The US Trustee appointed the Official Committee of Unsecured Creditors (Committee) to facilitate IAS' reorganisation. However, Mr Givens still had an active role in IAS which hampered its ability to investigate the transfers. The Committee discovered the transfers between IAS and Mr Givens and IAS assigned its right and duty to pursue any fraudulent transfers or avoidance actions to the Committee.
90 By September 1996 the trustee faced the task of unravelling the transfers; his ability to do so was hampered by Mr Givens and his associates who, among other things, delayed document production, withheld discovery responses and "lost" records of the transfers. A special master was eventually appointed by the bankruptcy court to oversee discovery compliance. Ultimately, because of the problems associated with discovery, the trustee was unable to commence proceedings to avoid the transfers within the two year limitation period which expired on 20 June 1998. The bankruptcy court extended the time to file avoidance actions "through the time of a hearing by the Special Master on July 29, 1998, when the court would against consider any extensions based upon the prospection of discovery".
91 The hearing before the special master did not conclude until 3 September 1998, one month after the expiry of the initial extension. The special master determined that the transfer documents did not seem to have been misplaced but that they had been "deliberately and intentionally secreted" from the trustee. Based on these findings, the trustee's oral application made on 3 September 1998 to extend further the time to file avoidance actions was granted and an order extending the time to file avoidance actions until 10 February 1999 was entered on 17 September 1998. On 10 February 1999 the trustee filed the proceeding against a number of defendants. IBT and SCSD were joined as defendants on 17 August 1999, once the trustee had traced IAS assets to them. By the first count of the amended complaint the trustee sought to avoid any transfer of an interest of IAS in property pursuant to s 544(b) of the Bankruptcy Code.
92 Judgment was entered in favour of the trustee in the bankruptcy court and was affirmed on appeal to the district court. IBT and SCSD then appealed to the Court of Appeals, Eleventh Circuit. One of the questions on appeal was whether the statute of limitations prevented an extension of time for bringing the action by either court order or equitable tolling. IBT and SCSD argued that: the bankruptcy court did not have the power to extend the s 546(a) limitation period; the bankruptcy court's extension of that period was inoperative because of the gap between the orders that were made; the doctrine of equitable tolling should not apply to the adversary proceeding; and the s 546(a) enlargement orders were ineffective against them.
93 The court first dealt with the threshold issue of whether the bankruptcy court had any authority, either by its own order or by equitable tolling to enlarge the period in s 546(a) for commencing avoidance actions. The court found at 699 that s 546(a) is a "statute of limitations, subject to waiver, equitable tolling, and equitable estoppel". The court held that s 546(a) does not operate as "a jurisdictional bar". The court also held at 699-700 that the bankruptcy court has the discretion to extend the filing period for an adversary proceeding and, in the context of the facts before it, found that the limitation period was extended albeit, the court observed, not in a seamless way.
94 Out of "an abundance of caution" the court did "not limit [its] analysis of the limitations period to the bankruptcy court's orders" and considered whether the trustee demonstrated an equitable basis for extending the limitation period. The Court said at 700-702:
Where, despite the exercise of due diligence, a trustee fails to timely bring an avoidance action due to fraud or extraordinary circumstances beyond the trustee's control, equitable tolling prevents the expiration of s 546(a)'s limitations period.
…
Generally, two types of cases give rise to the equitable principles of tolling where the plaintiff cannot timely commence an action because of a defendant's affirmative or negligent conduct. In re Pomaville, 190 B.R. 632 (Bankr.D.Minn.1995). First, when the fraud goes undiscovered because the defendant has taken positive steps after the commission of the fraud to keep it concealed, then the statute of limitations is tolled until the plaintiff actually discovers the fraud. Id. at 636-37. In re Lyons, 130 B.R. 272, 280 (Bankr.N.D.III.1991). "Fraudulent concealment must consist of affirmative acts or representations which are calculated to, and in fact do, prevent the discovery of the cause of action." Lyons, 130 B.R. at 280. The identity of the party concealing the fraud is immaterial, the critical factor is whether any of the parties involved concealed property of the estate. Id. The second instance is the more mundane circumstance where the defendant has not actively concealed the fraud, and the plaintiff must then exercise due diligence in an attempt to discover the fraud. Id. The limitations clock starts ticking when the plaintiff obtains - or should have obtained - knowledge of the underlying fraud. Id. Again, the inquiry is whether assets of estate have been concealed. Id. Because the applicability of equitable tolling is a fact-based decision, the bankruptcy court determines whether equitable tolling governs on a case-by-case basis. Pomaville, 190 B.R. at 636.
95 Based on Mr Hanlon's evidence and the decision in IBT International it cannot be said conclusively that Mr Aquino's right to bring an action under s 548 of the Bankruptcy Code in relation to the transfer of the Double Bay Properties has been extinguished. Section 546(a) operates as a statute of limitations. If a proceeding is commenced, it may be met by a defence based on the statute of limitations in s 546(a). The court would need to determine whether the defence was made out and, presumably whether in the circumstances, equitable tolling prevented the expiration of the limitation period in s 546(a). Whether that is so will depend on the facts surrounding the circumstances in which Mr Aquino as Trustee became aware of the existence of the Double Bay Properties and the cause of action. It is not an issue to be determined on this application.
96 Secondly, an avoidance action under s 548 of the Bankruptcy Code may, and is most likely, to be brought against a party other than Mr McGowan. That is, the recipient of the asset in question rather than the donor. While one may infer that if such an action is brought against Mr McGowan he would plead a defence based on the statute of limitations in s 546(a) of the Bankruptcy Code, the attitude and approach of other potential defendants is unknown.
97 Thirdly, at this stage Mr Aquino has not identified what cause of action, if any, may lie as a result of any inquiries or investigations made by the Australian Representatives and against whom. That is hardly surprising given the limited information available to him. Nor as I have already observed is there sufficient evidence before me to determine whether, if a claim was brought under s 548 of the Bankruptcy Code, it would be successfully defended on the basis of a statute of limitations defence relying on s 546(a) or whether Mr Aquino would be successful in extending the period within which the claim could be brought relying on the principles of equitable tolling. As Mr Hanlon points out an "equitable tolling analysis requires a fact-intensive inquiry" and "it is difficult to ascertain a consistent factual pattern upon which legal precedent of general applicability may be based".
98 Finally, s 549(d) of the Bankruptcy Code has no application to the transfers of the Merriwa Properties because those properties are not property of Mr McGowan's estate nor to the shares in TRW because there is no evidence that Mr McGowan has transferred his shares in TRW.
99 To the extent that Mr McGowan seeks to limit the grant of any relief under Art 21(1)(g) of the Model Law to exclude the power to bring proceedings under ss 120-122 of the Bankruptcy Act, for the reasons set out above there is no basis on which such a limitation should be placed on the grant of relief.
100 Mr McGowan also submits that any relief granted under Art 21(1)(g) of the Model Law should be limited to exclude s 37A of the Conveyancing Act for the same reasons as he seeks to exclude ss 120-122 of the Bankruptcy Act. Section 37A of the Conveyancing Act provides:
(1) Save as provided in this section, every alienation of property, made whether before or after the commencement of the Conveyancing (Amendment) Act 1930, with intent to defraud creditors, shall be voidable at the instance of any person thereby prejudiced.
(2) This section does not affect the law of bankruptcy for the time being in force.
(3) This section does not extend to any estate or interest in property alienated to a purchaser in good faith not having, at the time of the alienation, notice of the intent to defraud creditors.
101 The relief available under s 37A(1) of the Conveyancing Act bears some similarity to ss 120-122 of the Bankruptcy Act and s 548 of the Bankruptcy Code. However, in contrast to those sections, any creditor of Mr McGowan has standing to commence a proceeding seeking relief under s 37A of the Conveyancing Act provided they are a person prejudiced by the relevant transfer. That will be the case if at the date of hearing or at the date of filing the summons commencing the proceeding, they are a person who is owed a debt: see HP Mercantile Pty Ltd v Dierickx [2012] NSWSC 1005 at [86]-[87]. It is difficult to see how the limitation periods prescribed in the Bankruptcy Code for avoidance actions by a trustee could affect the commencement of a proceeding by a person with standing under s 37A of the Conveyancing Act. Insofar as Mr McGowan says that any relief granted under Art 21(1)(g) of the Model Law should be fashioned to exclude the ability for the Australian Representatives to commence a proceeding under s 37A of the Conveyancing Act, for the same reasons as set out above in relation to the similar provisions of the Bankruptcy Act, I would decline to do so.