Michael Wilson & Partners Ltd v Slater

Status-based criteria 27 These criteria are the conditions precedent specified by article 17(1) of the Model Law, namely: (1) The UK proceeding is a "foreign proceeding" within the meaning of article 2(a); (2) The applicant is a "foreign representative" within the meaning of article 2(d); (3) The application has been submitted to the court referred to in article 4. 28 As to (3), the application has been submitted to the court referred to in article 4, being the Federal Court of Australia.

Is the UK proceeding a foreign proceeding? 29 The applicant's evidence is that Mr Slater was adjudged bankrupt by an order made in the UK proceeding. Her evidence is that the order satisfied the requirements of article 15(2)(b) of the Model Law. However, article 15(2)(b) refers to a certificate from the foreign court affirming the existence of the foreign proceeding and of the appointment of the foreign representative. The order is not such a certificate. 30 The precise nature and scope of the UK proceeding is not explained by the evidence. The relevant evidence includes: (1) the applicant's evidence that the bankruptcy petition was filed in the UK proceeding; (2) the bankruptcy order made in the UK proceeding; (3) Mr Slater's completed questionnaire which refers to the bankruptcy "in the Croydon Country Court No 215 of 2015"; and (4) the certificate of the applicant's appointment as trustee of the bankrupt estate of Mr Slater which is headed "In the County Court at Croydon 215 of 2015". 31 The applicant's evidence is that she is administering the bankrupt estate of Mr Slater under the Insolvency Act. Section 363(1) of the Insolvency Act provides, relevantly, that every bankruptcy is under the general control of the court. By s 385(1), "the court" is defined to mean, in relation to any matter, the court to which, in accordance with s 373 in Part X and the rules, proceedings with respect to that matter are allocated or transferred. 32 Section 373 provides: (1) The High Court and the county courts have jurisdiction throughout England and Wales for the purposes of the Parts in this Group. (2) For the purposes of those Parts, a county court has, in addition to its ordinary jurisdiction, all the powers and jurisdiction of the High Court; and the orders of the court may be enforced accordingly in the prescribed manner. (3) Jurisdiction for the purposes of those Parts is exercised - (a) by the High Court [or the Central London County Court] in relation to the proceedings, which, in accordance with the rules, are allocated to the London insolvency district, and (b) by each county court in relation to the proceedings which are so allocated to the insolvency district of that court. 33 The power of "the court" to make a bankruptcy order is conferred by s 264, which falls within "the Parts in this Group" referred to in s 373(1). Accordingly, the county courts have jurisdiction to make a bankruptcy order. That jurisdiction is exercised by each county court in relation to the proceedings which are so allocated to the insolvency district of that court. 34 Rule 3 of The Insolvency (Commencement of Proceedings) and Insolvency Rules 1986 (Amendment) Rules 2014 provides: (1) Proceedings under Parts 7A to 11(1) of the Act that are allocated in accordance with the Insolvency Rules to the London Insolvency District when they are commenced in the county court may only be commenced in the County Court at Central London. (2) Elsewhere such proceedings when they are commenced in the County Court may only be commenced in the county court hearing centre determined in accordance with the Rules. (3) However if the county court hearing centre so determined is one for which Schedule 1 lists an alternative county court hearing centre then such proceedings when they are commenced in the county court may only be commenced in the alternative county court hearing centre. 35 The applicant did not identify the relevant provision or provisions of the Insolvency Rules by which the UK proceeding was required or permitted to be commenced in the County Court at Croydon. 36 In the absence of more evidence, I am not satisfied that the UK proceeding is a "foreign proceeding" within the meaning of the Model Law. As presently advised, in order to be so satisfied, I would require a certificate of the kind described in article 15(2)(b), or a document of the kind described in article 15(2)(a) if the proceeding was commenced by a "decision" within the meaning of that article, or an affidavit from the applicant which verifies that the UK proceeding is a "foreign proceeding" within the meaning of the Model Law. Such an affidavit would demonstrate that the applicant had considered and understood each element of the definition of "foreign proceeding" for the purpose of satisfying herself that the UK proceeding is a "foreign proceeding".

Is the applicant a foreign representative? 37 The applicant's evidence is that she is "Trustee of the Estate of David Ross Slater, a Bankrupt". Annexed to the applicant's affidavit is a document dated 9 February 2016 which purports to certify that the applicant "has been appointed as trustee of the bankruptcy estate of DAVID ROSS SLATER with effect from 9 February 2016". The document is signed by S Mallon on behalf of the Secretary of State. 38 The applicant's evidence is that upon Mr Slater's bankruptcy, trusteeship of his estate passed to the official receiver in the United Kingdom. This evidence appears to reflect the language of s 287(1) of the Insolvency Act which provides that, "[b]etween the making of a bankruptcy order and the time at which the bankrupt's estate vests in a trustee under Chapter IV of this Part, the official receiver is the receiver and (subject to s 370 (special manager)) the manager of the bankrupt's estate and is under a duty to act as such." 39 By s 296(1) of the Insolvency Act, at "any time when the official receiver is the trustee of a bankrupt's estate by virtue of any provision of this Chapter (other than s 297(1) below) he may apply to the Secretary of State for the appointment of a person as trustee instead of the official receiver." By s 296(2), on an "application under subs (1) the Secretary of State shall either make an appointment or decline to make one." 40 Section 305 of the Insolvency Act sets out the general functions of a trustee of a bankrupt estate. Section 305 states relevantly: (1) This Chapter applies in relation to any bankruptcy where either - (a) the appointment of a person as trustee of a bankrupt's estate takes effect, or (b) the official receiver becomes trustee of a bankrupt's estate. (2) The function of the trustee is to get in, realise and distribute the bankrupt's estate in accordance with the following provisions of this Chapter; and in the carrying out of that function and in the management of the bankrupt's estate the trustee is entitled, subject to those provisions, to use his own discretion. … (4) The official name of the trustee shall be "the trustee of the estate of ............, a bankrupt" (inserting the name of the bankrupt); but he may be referred to as "the trustee in bankruptcy" of the particular bankrupt. 41 The status of "foreign representative" arises only in connection with a "foreign proceeding". The current evidence does not explain the relationship between the UK proceeding and the applicant, however, it may be that this would be sufficiently clear, if the nature of the UK proceeding as a foreign proceeding is established. If not established in accordance with article 15(2)(a) or (b), the status of "foreign representative" might be established by an affidavit from the applicant which verifies that she is a "foreign representative" within the meaning of the Model Law. Again, such an affidavit would demonstrate that the applicant had considered and understood each element of the definition of "foreign representative" for the purpose of satisfying herself that she is a "foreign representative".

Procedural criteria 42 The procedural conditions precedent are set out in article 17(1)(c) of the Model Law, s 13 of the CBI Act and r 14.03 of the Bankruptcy Rules.

Article 17(1)(c) 43 Article 17(1)(c) requires the application to meet the requirements of article 15(2). The article 15(2) requirements are: (a) A certified copy of the decision commencing the foreign proceeding and appointing the foreign representative; or (b) A certificate from the foreign court affirming the existence of the foreign proceeding and of the appointment of the foreign representative; or (c) In the absence of evidence referred to in subparagraphs (a) and (b), any other evidence acceptable to the court of the existence of the foreign proceeding and of the appointment of the foreign representative. 44 The applicant tendered a certified copy of the bankruptcy order and a certificate of her appointment as trustee of the bankrupt estate of Mr Slater. These documents do not satisfy the requirements of either article 15(2)(a) or (b). 45 For the reasons explained above, the current evidence is not evidence acceptable to the court of the existence of the foreign proceeding. I accept that the certificate of the applicant's appointment as trustee of Mr Slater's bankrupt estate is acceptable evidence of her appointment to that position, but not of appointment as a foreign representative. At present, I do not have sufficient evidence to be satisfied that the applicant is "authorized in a foreign proceeding to administer the reorganization or the liquidation" of Mr Slater's assets or affairs.

Section 13 CBI Act 46 Section 13 of CBI Act requires that the application must be accompanied by a statement identifying: (a) all proceedings under the Bankruptcy Act 1966 in respect of the debtor; and (b) any appointment of a receiver (within the meaning of section 416 of the Corporations Act 2001), or a controller or a managing controller (both within the meaning of section 9 of that Act), in relation to the property of the debtor; and (c) all proceedings under Chapter 5, or section 601CL, of the Corporations Act 2001 in respect of the debtor; that are known to the foreign representative. 47 Paragraph 7 of the amended application purports to be a statement pursuant to s 13 of the CBI Act. However, instead of identifying proceedings that fall within paras 13(a) to (c), the statement purports to set out all other proceedings involving Mr Slater. In fact, the statement lists a mixture of judgments, proceedings and orders as well as proceedings involving "companies of Mr Slater". The list includes the 2014 FCCA judgment. 48 The applicant's evidence is that "there are no separate proceedings to identify under the [Bankruptcy Act] in respect of Mr Slater, and that there is no receiver who has been appointed in respect of Mr Slater … and there are no proceedings to identify under Chapter 5". The applicant makes no reference to s 601CL of the Corporations Act 2001 (Cth) in respect of Mr Slater. Without more, I am not satisfied that the amended application is accompanied by a statement pursuant to s 13 of the CBI Act.

Rule 14.03 of the Federal Court (Bankruptcy) Rules 2016 49 Rule 14.03(1) requires an application by a foreign representative for recognition of a foreign proceeding under article 15 of the Model Law to be made by filing an application in accordance with Form B2. The amended application did not comply strictly with Form B2. Given the ex parte nature of the application, this was a matter that should have been drawn to the Court's attention. 50 As to r 14.03(2)(a), although the amended application purported to include a statement in accordance with article 15 of the Model Law and s 13 of the CBI Act, it did not do so. It did not identify "foreign proceedings" within the meaning of the Model Law in respect of Mr Slater. Rather, it was a list comprising judgments, proceedings and orders which obviously includes items that are not "foreign proceedings". Nor did it clearly identify the three types of proceedings and matters that are referred to in s 13 of the CBI Act. 51 The applicant did not comply with r 14.03(3). Again, given the ex parte nature of the application, this should have been drawn to the Court's attention. The evident purpose of r 14.03(3) is to require the Court to give consideration of whether service is required and, if so, how it should be effected. 52 There is some evidence that Mr Slater is aware of the application, in the form of an email from an email address apparently given by him in the bankruptcy questionnaire. The email acknowledges receipt of an email and attachments sent to Mr Slater by Ms Nash on Monday, 6 June 2016 at 6.46 pm. However, the contents of Ms Nash's email are not proved. In particular, those contents are not proved by Ms Lonnon's affidavit because it does not state that she effected service by an email sent from Ms Nash.

Recognition of the UK proceeding as a foreign proceeding and a foreign main proceeding 53 There is nothing to suggest that article 6 applies to this case. 54 In Re Edelsten at [39], Beach J recognised that the question is where the debtor has the centre of his main interests at the time of the Court's decision. 55 At [40], Beach J noted that there is no express definition in the Model Law of "centre of main interests" but article 16 contains a rebuttable presumption based upon the debtor's habitual residence. 56 In his bankruptcy questionnaire, Mr Slater gave his home address as an address in the United Kingdom. The applicant gave evidence that this is where Mr Slater is currently residing. The bankruptcy petition states that the debtor resided within the district of the Croydon County Court during the six month period immediately preceding its presentation. The bankruptcy order refers to an address in Kent as Mr Slater's residential address. There is no evidence to suggest that Mr Slater resides at the Ainslie property, which is the only real property identified as an asset of Mr Slater in his bankruptcy questionnaire. I infer from this evidence, on the balance of probabilities, that Mr Slater's habitual residence in the United Kingdom. 57 Accordingly, on the available evidence, I would accept, if the UK proceeding is a foreign proceeding, then it is taking place in the State where Mr Slater has the centre of his main interests, being the United Kingdom.

Article 21 relief 58 The applicant seeks an order pursuant to article 21(1)(e) of the Model Law, entrusting administration and realisation of Mr Slater's assets located in Australia to Mr Porter and Mr Moretti as local representatives of the applicant. A similar order was made by Beach J in Re Edelsten. Messrs Porter and Moretti have signed a Trustee Consent to Act declaration, by which they consent to act as the Australian representative appointed under the Model Law by Court order for the applicant. 59 The bankruptcy questionnaire indicates that there are assets of the bankrupt estate which are required to be administered or realised. Accordingly, I accept that the proposed order is necessary to protect the assets of Mr Slater and I would be prepared to grant this relief, provided that I am satisfied that the Model Law applies. 60 The applicant also seeks an order pursuant to article 21(1)(g) of the Model Law, subject to the provisions of the Bankruptcy Act, that all powers normally available to a trustee in bankruptcy appointed under the provisions of the Bankruptcy Act be made available to Mr Porter and Mr Moretti as local representatives of the applicant. 61 The applicant gave the following evidence: 17(c) [T]here are matters within Australia involving the financial dealings of Mr Slater after the commencement of proceedings against him by BWP which necessitate investigation in what I would describe in the sense of the BA as the "examinable affairs". s. 5 BA, of Mr Slater upon which I may need to report or take steps following investigation to bring action for recovery, including in particular, but not limited to: (i) Australian creditors, including MWP; (ii) Bank and trust accounts, invoices and financial books and records howsoever relating to the litigation referred to in paragraph 12 above, as well as the terms of engagement, sources of payment and origin and propriety of funds paid, or promised to be paid to professional advisors and others, howsoever relating to. acting in or involved in such litigation; (iii) any choses in actions, claims, debtors, trust. client or other monies or assets of the bankrupt in Australia, whether held directly or indirectly, including nominees and designates; (iv) investigation of land, buildings, bank accounts, trust funds, property and all and any other assets howsoever acquired in the names of the bankrupts de-facto partner, Alexandra Sofia Neovius, and her mother Gunborg Neovius-Howe at 51 Bannerman Crescent, Rosebery, Mascot, NSW 2018, and comprising Lot 25, Detailed Plan 237387, or elsewhere, in which the bankrupt may have an interest. Annexed hereto and marked JAP-5 are true copies of documents relating to such property; (v) shares, options, warrants and other interests howsoever held, and whether directly or indirectly, including without limitation in the PJT Group, comprising all of PJT International Pty., Limited (acting both in its own right and as Trustee of the Temujin Trust), PJT Corporate Services Pty Limited, the FOF Group, comprising all of FOF International Pty., Limited (acting in its own right and as Trustee of the FOF Trust) and FOF Consulting Services Pty., Limited, as well as all and any bank and credit card accounts and other assets and liabilities of all such entities. Annexed hereto and marked JAP-6 are true copies of ASIC searches relating to such companies; (vi) all dealings with Ms Debra Marie Lighezzolo, the current nominee director and shareholder of the bankrupt in the PJT and FOF Groups, as well as her predecessors Messrs Weir, Pearson and Cole, and who also acted for him in relation to the formation of Lynus Develop. Co., Ltd and the Fencourt Foundation as found by the NSW Supreme Court and admitted by all of the defendants in the proceedings and judgments referred to above; (vii) furniture and an art collection apparently held in a Grace Bros. storage unit in Australia; (viii) superannuation, pension, income protection, life and other insurance policies and for other benefits; and (ix) all documents relating to and dealings with, or involving Messrs Rothwell lawyers, T. P. Rothwell, Effective Recoveries Pty., Ltd, J. F. Emmott and their affiliates, nominees and designates. 62 This evidence does not demonstrate that the proposed order is "necessary to protect the assets of the debtor or the interests of the creditors". In order to be satisfied of that matter, I would need evidence from the applicant that she holds the opinion, on reasonable grounds, that the proposed order is necessary to protect the interests of creditors of Mr Slater.

Conclusion 63 I will grant leave to the applicant to file a further amended application and any further evidence upon which she may seek to rely on or before Monday 11 July 2016, or such later date as the applicant may reasonably require. 64 I will direct the applicant to: (a) serve any such further amended application and any further evidence, together with a copy of her affidavit of 28 June 2016 and a copy of these reasons, on Mr Slater by email to the email address nominated in his bankruptcy questionnaire; (b) file an affidavit of service on or before Monday 11 July 2016. 65 I will otherwise reserve my decision on the amended application. I certify that the preceding sixty-five (65) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson.