Mann (Trustee) v Storey

Federal Court of Australia|2022-05-24|Before: Stewart J

THE COURT NOTES THAT: The applicant has by his Counsel made the following undertakings to the Court: A. The applicant will inform the Court of any changes in the status of the respondent's bankruptcy in Singapore, and notify the Court of any further foreign bankruptcy proceedings involving the respondent of which he becomes aware; B. All money or other property received by the applicant either directly or from any receiver appointed by this Court in this proceeding in relation to the bankruptcy of the respondent shall be applied in the due course of administration of the bankruptcy of the respondent; C. Any matters of controversy in connection with the bankruptcy between the applicant, any appointed receiver of the respondent's property in Australia and any party resident in Australia (other than any controversy between the applicant and the respondent) shall be determined by this Court; D. The applicant submits to the jurisdiction of this Court in all such matters as aforesaid and agrees to abide by any order the Court may make subject to appeal; and E. The applicant appoints Rydge Evans Lawyers to accept service on his behalf of any proceedings brought against him in relation to any matters of controversy as referred to in (c) above.

THE COURT ORDERS THAT:

The applicant's appointment as trustee in bankruptcy of the respondent and the vesting in him of all the respondent's divisible property (as defined in s 329 of the Insolvency, Restructuring and Dissolution Act 2018 (Singapore)) (Property) be recognised in Australia.

Introduction 1 On 4 March 2021, the applicant, Farooq Ahmad Mann, was appointed as trustee of the estate of the respondent, David Ian Andrew Storey, a bankrupt, pursuant to an order of the High Court of the Republic of Singapore. In the proceeding before me, the applicant seeks assistance in the administration of the bankruptcy by way of the appointment of an Australian bankruptcy trustee as receiver empowered to manage the respondent's bankruptcy in Australia. 2 The application is brought pursuant to s 29(2)(a) of the Bankruptcy Act 1966 (Cth) in reliance on a letter of request from the Supreme Court of Singapore.

Background 3 The bankruptcy order in Singapore was made on the application of judgment creditors of the respondent, the underlying debts arising from costs orders made in their favour in proceedings commenced by the respondent in Singapore. 4 The respondent is an Australian citizen and resides in Australia at an address in New South Wales. He cites his occupation as being a software developer. He had property in Singapore, namely shares in a Singapore-registered company. That is apparently the basis for the jurisdiction of the Singapore High Court to sequestrate his estate with reference to s 310(1)(b) of the Insolvency, Restructuring and Dissolution Act 2018 (Singapore). 5 In any event, the respondent advised me in the hearing that he opposed the bankruptcy order in Singapore, attending hearings in relation to it and submitting documentation in opposition. That conduct would ordinarily also amount to a submission to jurisdiction with the result that jurisdiction in the international sense is established and the foreign judgment would be capable of recognition. It is therefore not necessary to consider whether such international jurisdiction is not a requirement for recognition under s 29, as to which see Radich v Bank of New Zealand [1993] FCA 450; 45 FCR 101 at 105 per Einfeld J and 116 per Drummond J. 6 The respondent did not appeal against the bankruptcy order. 7 The applicant complains that the respondent has substantially refused to cooperate with him in relation to the conduct of the respondent's bankruptcy. The applicant has tendered a long history of correspondence between him and the respondent which bears out the validity of this complaint. 8 An element of the respondent's failure to cooperate with the applicant is that, despite numerous requests by the applicant, he has not returned a completed statement of affairs as required under Singapore insolvency law. 9 On 5 August 2021, the applicant filed a summons in the High Court of the Republic of Singapore requesting the issue of a letter of request to the courts exercising bankruptcy jurisdiction in Australia. The respondent actively opposed that proceeding in Singapore, including by filing an affidavit in which he raised various complaints against the applicant. 10 The summons was heard on 18 November 2021 and the High Court granted the relief sought in the summons. Thereafter, on 29 November 2021, the Honourable Justice Vinodh Coomaraswamy, Judge of the Supreme Court of Singapore, issued a letter of request addressed to this Court and the Federal Circuit and Family Court of Australia. The letter of request includes the following: 4. The reason why such assistance is sought, as put to this Court by Mr Mann, is that: a. Mr Storey has refused to file his statement of affairs (which he is required by law to do) or comply with many of his obligations as a bankrupt under Singapore law, or otherwise cooperate with the administration of his bankruptcy; b. Mr Storey is currently located in Australia, and understood to be ordinarily resident there, such that without the assistance of the Australian courts Mr Mann has limited ability to compel Mr Storey to comply with his obligations; and c. Mr Mann is of the view that Mr Storey may have assets in Australia, which may not be able to be readily recovered by him simply in reliance upon the Bankruptcy Order, but which may be able to be recovered with the assistance of orders made by an Australian court in bankruptcy. 5. This Court requests that for the reasons aforesaid, the courts of Australia exercising jurisdiction in bankruptcy provide such assistance as they are able and prepared to provide - and on such terms and in such form as the respective court sees fit - to assist in the administration of Mr Storey's bankruptcy, including but not limited to enabling Mr Mann (or a receiver appointed by the Australian court at Mr Mann's request) to: a. compel Mr Storey to provide disclosure of his assets, liabilities, and other information as may be required to administer his bankruptcy; b. recover assets owned by Mr Storey for the benefit of his estate in bankruptcy, including by exercising relevant powers to recover assets improperly dissipated by Mr Storey; and c. otherwise investigate Mr Storey's affairs for the purposes of his bankruptcy. 11 The applicant has identified a registered trustee in bankruptcy and a registered liquidator, Jason Lloyd Porter of SV Partners in Sydney, as the person to be appointed as receiver. Mr Porter has given written consent to such an appointment. He has made clear that he is not aware of any conflict of interest or duty that would make it improper for him to act as receiver of the property of the bankrupt estate of the respondent.

Application for an adjournment 12 At the commencement of the hearing, at which the respondent appeared by telephone, the respondent applied for the hearing to be vacated and the proceeding to be adjourned for several months. The background to that application is follows. 13 First, as set out in my reasons for judgment refusing an adjournment the previous week (Mann (Trustee) v Storey [2022] FCA 542), the respondent has previously complained that on 20 April 2022 his primary computer system failed which had caused him prejudice in preparing for the hearing and would cause him prejudice in attending the hearing remotely. I rejected that as a basis to vacate the hearing, and I put in place a regime that ensured that the respondent would have available to him hard copies of the materials and that he would be able to appear in person in court, rather than remotely. The applicant also offered him the use of a base model laptop computer for the purpose of doing research and preparing documents. 14 The respondent was required to file and serve submissions on the application by midday on 16 May 2022. He failed to meet that deadline. 15 On 18 May 2022, the respondent sent an email to my Associate and to the applicant's solicitors in which he said the following (as corrected in a subsequent email): I have been directed to attend the 19 May 2022 hearing in person due to a computer system failure that I have previously explained. Yesterday (17 May 2022) I was experiencing a sore throat however I ignored it as I had previously had the same issue in the evening of 12 May 2022 and it did [not] persist into the following day. However today (18 May 2022) the sore throat remains, I have developed a cough, I have less energy than usual, and I will shortly be returning to bed to rest. I have taken a COVID-19 RAT and the result was negative. I'm not sure what to do because I do not know if I will recover enough to attend the hearing and, as I have to leave at around 8am to ensure I arrive with plenty of time, there will not be the opportunity to provide an update in the morning before I'd have to leave, at which point I'd only be contactable by phone. 16 My Associate replied to the respondent a short while later saying that if he is unable to appear in court in person, he can appear by audio visual link or by audio link using Microsoft Teams. She sent him the links and also explained that if he was unable to use Microsoft Teams, he could appear by telephone using dial-in details that she sent him. 17 At the hearing, the respondent said that he was not prepared for it and he lacked the ability to properly participate in it, in part because of his lack of legal training and experience but also because of his computer problems dealt with by me previously. He also said that he wishes to seek help from Legal Aid. 18 I dismissed his application for an adjournment. These are my reasons for doing so. 19 As will be seen when I deal with the basis upon which an application such as the present might be resisted, the grounds upon which the respondent might rely in opposition to the application are constrained. The many matters canvassed by him in his affidavit, to which I will return, are not within those grounds. There is nothing in what the respondent has presented, including what he told me at the hearing, that suggests that he has any reasonably arguable basis to resist the applicant's claim. Indeed, I infer that the real reason that he did not file submissions is that he has nothing useful to say in opposition to the application and he wishes to delay its disposition as long as possible. 20 Moreover, matters have already been very considerably delayed, principally because of the conduct of the respondent, and the respondent has had ample opportunity to prepare for the hearing. In that regard: (1) As mentioned, the applicant was appointed the respondent's trustee in bankruptcy on 4 March 2021, more than 14 months ago. (2) After five months of seeking cooperation from the respondent, the applicant eventually applied for a letter of request in Singapore on 5 August 2021. (3) The respondent put on an opposing affidavit in the proceeding, dated 8 November 2021. (4) The matter was heard and determined on 18 November 2021, with a letter of request being issued on 29 November 2021. (5) The present proceeding was commenced on 7 February 2022. (6) On 24 February 2022, Markovic J gave the respondent until 21 March 2022 to file and serve any affidavits. He filed his affidavit on 23 March 2022. That was a long period of time to prepare his affidavit, and at a time that preceded his computer and health issues. (7) By letter dated 31 March 2022, the applicant's solicitors explained to the respondent the nature of the applicant's case and his principal contentions. The letter also identified the applicant's contentions in response to the respondent's case as gleaned from his affidavit. As observed by me previously, the respondent has thus had very clear notice of the case against him for a long period of time. (8) The proceeding was thereafter docketed to me and listed for hearing on 19 May 2022. 21 In short, I am not persuaded that the applicant has had insufficient time to prepare for the hearing or that his temporary computer system, lack of legal training or cold-like symptoms present an obstacle to him participating in the hearing adequately. Moreover, he has not shown that he has any reasonably arguable point in opposition to the relief sought by the applicant. Justice would not therefore be served by the hearing being vacated and the proceeding further delayed.

Legal principles 22 Section 29 of the Bankruptcy Act relevantly provides as follows: 29 Courts to help each other (1) … (2) In all matters of bankruptcy, the Court: (a) shall act in aid of and be auxiliary to the courts of the external Territories, and of prescribed countries, that have jurisdiction in bankruptcy; and (b) may act in aid of and be auxiliary to the courts of other countries that have jurisdiction in bankruptcy. (3) Where a letter of request from a court of an external Territory, or of a country other than Australia, requesting aid in a matter of bankruptcy is filed in the Court, the Court may exercise such powers with respect to the matter as it could exercise if the matter had arisen within its own jurisdiction. (4) … (5) In this section, prescribed country means: (a) the United Kingdom, Canada and New Zealand; (b) a country prescribed by the regulations for the purposes of this subsection; and (c) a colony, overseas territory or protectorate of a country specified in paragraph (a) or of a country so prescribed. (Emphasis added.) 23 The applicant relies on reg 7(b) of the Bankruptcy Regulations 2021 (Cth) as prescribing Singapore as one of several countries for the purposes of s 29(5)(b) of the Bankruptcy Act. It is, however, to be observed that by reg 2, those regulations commenced on 1 April 2021, whereas the bankruptcy orders in this case were made on 4 March 2021. A possible question therefore arises as to whether the prescription of Singapore under the 2021 regulations is available in respect of a Singapore bankruptcy that preceded 1 April 2021. That question, however, does not require to be answered because Singapore was also a prescribed country under the previous regulations: Bankruptcy Regulations 1996 (Cth), reg 3.01. There was continuity from the 1996 regulations to the 2021 regulations: Bankruptcy and Other Legislation Amendment (Repeal and Consequential Amendments) Regulations 2021 (Cth), s 2(1) and Sch 1, item 1. 24 In Re Ayres; Ex parte Evans [1981] FCA 48; 34 ALR 582; 51 FLR 395, Lockhart J (at 34 ALR 591; 51 FLR 406) held that the use of "shall" in s 29(2)(a), in contradistinction to "may" in s 29(2)(b), means that in the absence of a conflict with a domestic bankruptcy, the court is "bound to give all the assistance that it can" to the court of a prescribed country. That view was upheld on appeal in Ayres v Evans [1981] FCA 238; 39 ALR 129; 56 FLR 235 (at 38 ALR 138; 56 FLR 247 per Northrop J and at 38 ALR 144; 56 FLR 254 per McGregor J). The Court's jurisdiction extends to a power to appoint a receiver without security over both moveable and immovable assets of the bankrupt: Radich per Einfeld, Foster and Drummond JJ. 25 Thus, the court is required to give all assistance that it can to a requesting court of a specified country if the conditions of the section are satisfied, leaving with the court a discretion as to what assistance ought to be given, including a discretion as to what, if any, conditions or undertakings are required as part of the providing of assistance: Dick v McIntosh [2001] FCA 1008 at [8] per Cooper J, citing the cases referred to in the preceding paragraph. 26 On inquiry, the applicant explained that relief was not sought under the Cross Border Insolvency Act 2008 (Cth) (CBI Act), in particular because it was doubtful that the respondent had his "centre of main interests" in Singapore insofar as it might be contended that the Singapore bankruptcy proceeding was a "foreign main proceeding", or that the respondent has an "establishment" in Singapore insofar as it might be contended that the Singapore bankruptcy proceeding was a "foreign non-main proceeding". 27 The CBI Act nevertheless needs to be considered because in s 21 it provides that if the Model Law on Cross-Border Insolvency of UNCITRAL (which is given the force of law in Australia by s 6 of the CBI Act) or a provision of the CBI Act is inconsistent with s 29 of the Bankruptcy Act, then the Model Law or the provision of the CBI Act prevails, and s 29 has no effect to the extent of the inconsistency. However, Art 7 of the Model Law provides that nothing in it limits the power of a court to provide additional assistance to a foreign representative under other laws of Australia. 28 Thus, in circumstances where there is no bankruptcy of the respondent in Australia, the giving of "additional assistance" to a foreign representative in Australia under s 29 is not inconsistent with any provision of the CBI Act and the Model Law. This point has been considered on various prior occasions, although sometimes only in passing, and relief under s 29 has not been refused on the basis of any inconsistency with the CBI Act or the Model Law where there is no domestic bankruptcy: Levy v Reddy [2009] FCA 63; 6 ABC(NS) 758 at [15] per Collier J; Gainsford v Tannenbaum [2021] FCA 904; 216 FCR 543 at [56]-[58] per Logan J; Kapila, in the matter of Edelsten [2014] FCA 1112 at [75]-[76] per Beach J; Official Assignee in Bankruptcy of The Property of Cooksley, Re Cooksley v Cooksley [2017] FCA 1193 at [10] and [32] per Logan J; Official Assignee in Bankruptcy of the Property of Hanna, in the matter of Hanna v Hanna [2018] FCA 156 at [48]-[52] per Gleeson J; Official Assignee in Bankruptcy of the Property of Ma v Ma [2018] FCA 948 at [6] per Moshinsky J. There was the same result in Re Chow Cho Poon (Pte) Ltd [2011] NSWSC 300; 80 NSWLR 507 at [66]-[68] per Barrett J in respect of a potential conflict between the CBI Act and the Model Law, on the one hand, and s 581 of the Corporations Act 2001 (Cth), being the near-identical corporations equivalent to s 29 of the Bankruptcy Act. 29 That conclusion as to the absence of inconsistency is supported by the Explanatory Memorandum to the Cross-Border Insolvency Bill 2008 (Cth), which at paragraphs 41 to 43 explains the purpose of s 21 of the CBI Act being principally to ensure that the discretion to refuse aid to non-prescribed countries under s 29(2)(b) of the Bankruptcy Act will not prevail over the mandatory obligation to recognise a foreign insolvency under the Model Law. That is, its purpose is to expand rather than restrict the circumstances in which relief is given.

Consideration 30 There can be no serious question that the preconditions for the exercise of the power under s 29(2)(a) to act in aid of the Singaporean bankruptcy are satisfied. The respondent did not contend to the contrary. 31 The various matters raised by the respondent in his affidavit and orally are not such as to displace the mandatory requirement of s 29(2)(a). They were apparently brought forward on the erroneous understanding that the court has a discretion to grant, or to refuse, the relief. I will briefly identify each of those matters in the following paragraphs. 32 The respondent says that he has already given the applicant substantial information about his financial affairs, and it will take a long time for him to complete the statement of affairs that he is required to complete under the insolvency laws of Singapore. This is all self-evidently irrelevant. 33 The respondent makes complaints about the conduct of the applicant in relation to certain bankruptcy proceedings against the respondent in Sweden. Save to note that the Swedish trustee has indicated that he intends to "close the Swedish bankruptcy very soon", nothing about the Swedish bankruptcy has any relevance to the exercise of the court's power in the present case. 34 The respondent complains of what he characterises as "the inflexible, inconsistent, and unreasonable conduct" of the applicant. If the respondent indeed has any legitimate complaint against the applicant about the administration of the bankruptcy, which is by no means apparent on the information before me, that is a matter to be dealt with in Singapore. It has no bearing on the exercise of the court's power in this case. 35 The respondent also alleges a "conspiracy involving the applicant, the solicitors for the applicant and [the petitioning creditors in Singapore]". The complaint is that the petitioning creditors in Singapore, using the same solicitors as the applicant in the present proceeding, issued a bankruptcy notice in Australia in respect of the same foreign judgment debt underlying the bankruptcy orders in Singapore. On the respondent's evidence, his application to set aside the bankruptcy notice succeeded on the basis that the debt was not enforceable because of the supervening bankruptcy orders in Singapore. His complaint is that he has been put to expense in contesting the bankruptcy notice, and he says that he intends to pursue proceedings against "the alleged conspirators". He includes the applicant as such a "conspirator" on the basis that the petitioning creditors were assisted and represented by the applicant's solicitors. Needless to say, none of that has a bearing on the exercise of the court's power in the present case. 36 The respondent says that there are Australian creditors and creditors in other countries who have no confidence in the applicant as trustee. Once again, if indeed there is any valid complaint in relation to this it, is a matter to be taken up in Singapore. 37 Finally, the respondent says that the applicant has refused to provide information to him. If indeed that is correct, and he is entitled to the information, that is also a matter to be taken up in Singapore. It has no bearing on the present case. 38 In the circumstances, the only matter to address is whether the relief that is sought is justified and appropriate. In my view it clearly is. 39 In that regard, first, the relief is modelled on that granted in Ma v Ma. 40 Secondly, I am satisfied that the applicant has been frustrated in his efforts to administer the bankruptcy in Singapore and that he requires the assistance of this Court. Moreover, that assistance includes compelling the applicant to provide a statement of affairs and appointing a receiver with the powers of a trustee in bankruptcy in Australia. 41 Thirdly, relief of the nature sought by the applicant is specifically requested in the Supreme Court of Singapore's letter of request. That Court was satisfied as to the need, or at least desirability, of relief of that nature. 42 The applicant has given undertakings, by his counsel, that have become customary in applications such as this. They appear to have their genesis in Re Ayres at 34 ALR 592-593; 51 FLR 409. I will record the undertakings in the orders. 43 For those reasons, I will make orders essentially in the form of the orders sought, although with some minor amendments. I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Stewart.

Bankruptcy and Other Legislation Amendment (Repeal and Consequential Amendments) Regulations 2021(Cth)s 2(1)

Cross Border Insolvency Act 2008(Cth)s 21

Bankruptcy Act 1966(Cth)ss 29, 77(1)

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