Duncan (Trustee) v Shrestha, in the matter of Shrestha

Recognition as a foreign proceeding 26 The criteria for recognition are set out in Art 17 which provides: Article 17 - Decision to recognize a foreign proceeding 1. Subject to Article 6, a foreign proceeding shall be recognized 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; (d) The application has been submitted to the court referred to in article 4. 2. The foreign proceeding shall be recognized: (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. 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.

Article 17(1)(a) 27 Article 2(a) defines a "Foreign proceeding" as a: … judicial or administrative proceeding in a foreign State, … 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. 28 The requirements of Art 17(1)(a) are met.

Article 17(1)(b) 29 Article 2(d) defines a "Foreign representative" as: … 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. 30 Since the applicants were appointed by the High Court of the Republic of Singapore as the respondent's trustees in bankruptcy, they come within the meaning of a "Foreign representative" in Art 2(d). 31 The requirements of Art 17(1)(b) are met.

Article 17(1)(c) 32 This article provides that the application must meet the requirements Art 15(2). I have found that that the requirements of Art 15 have been satisfied such that the requirements of Art 17(1)(c) are met.

Article 17(1)(d) 33 The article requires the application be submitted to a court referred to in Art 4. This Court is such a court. The requirements of Art 17(1)(d) are met.

Non-main proceedings 34 The next issue is whether the proceedings are main or non-main proceedings. 35 Article 17(2) provides that for a foreign proceeding to be recognised as a "foreign main proceeding" it is taking place in the State where the debtor has the centre of its main interest. Alternatively, the proceedings may be recognised as a "foreign non-main proceeding" if the debtor has an establishment within the meaning of subparagraph (f) of Art 2 in the foreign state. 36 Article 2(f) defines an "Establishment" as meaning any place of operations where the debtor carries out a non-transitory economic activity with human means and goods or services. 37 Article 16(3) provides that in the absence of proof to the contrary, in the case of an individual, the debtor's habitual residence is presumed to be the centre of the debtor's main interests. 38 The applicants submit that the respondent's centre of main interests is in Melbourne, Australia since: (a) The respondent has an Australian passport; (b) The respondent informed the applicants that he travelled to Singapore on occasions for business but did not have any work pass or permit to work in Singapore and always entered as a tourist; (c) A personal name search of the Singapore Accounting and Corporate Regulatory Authority shows the respondent's address as an address in Southbank, Victoria; (d) The respondent is a director of ASDB and the Australian Securities and Investments Commission lists the respondent's address as an address in Southbank, Victoria; (e) The respondent told Mr Kim he was based in Australia during the COVID pandemic; (f) The respondent told Mr Kim his usual place of residence is Melbourne, Australia; and (g) The respondent has a bank account with CBA in Australia but no bank accounts in Singapore. 39 The circumstances to which Mr Kim deposes in the first Kim affidavit at [27], the second Kim affidavit at [13] concerning the Cranbourne North property (noting the respondent's denial of any connection with that property notwithstanding a title search reveals the respondent is a joint registered proprietor of that property) satisfies me that the respondent's habitual residence is in Melbourne, Australia. I am satisfied the presumption in Art 16(3) is available to the applicants and that the respondent's centre of main interests is in Melbourne, Australia. 40 Even were that not the case, the High Court has held that the application of the expression "habitual residence" "… permits a consideration of a wide variety of circumstances that bear upon where a person is said to reside and whether the residence is said to be habitual" and that past and present intentions of the person under consideration will often bear upon the significance that is to be attached to particular circumstances of the duration of a person's connections with a particular place of residence": LK v Director General, Department of Community Services [2009] HCA 9; (2009) 237 CLR 582 at [23]. 41 Consideration of the circumstances deposed to by Mr Kim as set out above, also satisfy me that in the wide variety of circumstances he has identified, the respondent's habitual residence is in Melbourne, Australia and as such, the respondent's centre of main interests is in Melbourne, Australia. 42 The applicants have satisfied the Court that the Singapore proceedings should be recognised as a "foreign non-main proceeding" under Art 17(2)(b).

The applicants are entitled to the relief sought 43 The effect of recognising the Singapore proceedings as a "foreign non-main proceeding" is that pursuant to Art 21 the Court may, at the request of the foreign representative, grant "any appropriate relief" where necessary to protect the assets of the debtor or the interests of the creditors. 44 A number of powers are identified under Art 21(1), however the powers are not intended to be exhaustive and the Court may grant further relief in the assistance of foreign trustees: Tucker v Aero Inventory (UK) Ltd (No 2) (2009) 181 FCR 374; Hung (Trustee), in the matter of Farouk v Farouk (No 2) [2021] FCA 270 at [34] (Derrington J). 45 The applicants apply for relief under Art 21(1)(a)-(c), (e) and (g): (a) Staying the commencement or continuation of individual actions or individual proceedings concerning the debtor'' assets, rights, obligations or liabilities, to the extent they have not been stayed under paragraph 1(a) of Art 20; (b) Staying execution against the debtor's assets to the extent it has not been stayed under paragraph 1(b) of Art 20; (c) Suspending the right to transfer, encumber or otherwise dispose of any assets of the debtor to the extent this right has not been suspended under paragraph 1(c) of Art 20; (d) … (e) Entrusting the administration or realization of all or part of the debtor's assets located in this State to the foreign representative or another person designated by the court; (f) … (g) Granting any additional relief that may be available to [a trustee in bankruptcy appointed under the provisions of the Bankruptcy Act] under the laws of this State. 46 The applicants submit the Court should grant the relief it seeks because it is "desirable in the interests of ensuring that the foreign representatives have sufficient ability to carry out their functions so that the creditors' interests can be advanced": Wong at [61]. 47 In Wong, the bankrupt had refused to comply with his obligations under the foreign bankruptcy laws to provide information or materials to the trustees. Derrington J considered that generated sufficient concern as to what he may do with any assets he has in Australia such that the granting of the powers sought was necessary in the circumstances: at [61]. The same may be said in this matter. 48 His Honour continued at [62] by observing that in the exercise of the discretion to vest the foreign representative with additional powers, Art 22(1) requires the Court to be satisfied that the interests not just of the creditors and other interested persons but also the debtor are adequately protected. In this matter, as with Wong, the interests of the respondent are protected because any extension of power does not go beyond that which would otherwise exist under the Bankruptcy Act. 49 In all the circumstances I am satisfied it is appropriate to make the orders sought by the applicants and there will be orders accordingly.

Costs 50 The applicants seek an order that the applicants' costs of and incidental this proceeding be costs in the bankruptcy of the respondent and accorded the same priority as costs of the proceedings incurred by a trustee in bankruptcy appointed under the Bankruptcy Act. There is no reason why such an order should not be made. The respondent has failed to comply with Singapore's insolvency laws in particular that he has not filed a statement of affairs as required. This application was necessitated, at least in part, by that failure. If the order as to costs is made in the form requested, the consequence is that the applicants' costs will be accorded appropriate priority in the same way as the costs of a trustee in bankruptcy appointed under the Bankruptcy Act. 51 There will be a costs order accordingly. I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice O'Sullivan.