Official Assignee in Bankruptcy of the Property of Ma v Ma [2018] FCA 948 | Case summary

Official Assignee in Bankruptcy of the Property of Ma v Ma [2018] FCA 948 | Case summary | Zoe

a. The applicant will inform the Court of any changes in the status of the matter, or notify the Court of any foreign 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 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 RBG 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:

Service of the application, affidavit of Russell David Fildes, affidavit of Gregory Wayne Rodgers, applicant's genuine steps statement and the letter of request from the High Court of New Zealand to the Federal Court of Australia, all filed herein on 6 June 2018, is deemed to have been effected on the respondent on 13 June 2018.
The time for service of the application is abridged to 13 June 2018.
The applicant's appointment as Official Assignee in Bankruptcy of the respondent and the vesting in him of all the respondent's Current Property (as defined in the Schedule to these Orders) pursuant to s 101 of the Insolvency Act 2006 (NZ) and After Acquired Property (as defined in the Schedule) pursuant to s 102 of the Insolvency Act 2006 (NZ), other than Exempt Property (as defined in the Schedule) is recognised in Australia.
Any and all Current Property and After Acquired Property, other than Exempt Property, located in, situated in or subject to the jurisdiction of Australia, is declared to have vested in the applicant.
Michael Carrafa is appointed receiver (Receiver) without security to act on behalf of the applicant for the purposes of investigating, collecting and realising the Current Property and After Acquired Property of the respondent in Australia.
For the purposes of investigating, collecting and realising the Current Property and After Acquired Property of the respondent in Australia and collecting all other sums as may be collectible under the Insolvency Act 2006 (NZ), the Receiver is empowered to exercise all powers as are conferred on a trustee in bankruptcy of the respondent as if the respondent were declared a bankrupt under the Bankruptcy Act 1966 (Cth) on 1 June 2018 and the Receiver were the trustee of the property of the respondent under that Act.
The powers referred to in the preceding paragraph shall include, but are not limited to: (a) Such rights and powers as are available to a trustee in bankruptcy under Pt V of the Bankruptcy Act 1966 (Cth) for the purposes of investigating the affairs of the respondent as if he was declared bankrupt under the Bankruptcy Act 1966 (Cth) on 1 June 2018 and the Receiver were the trustee of the property of the respondent under that Act; (b) Such rights and powers as are available to a trustee in bankruptcy under Pt VI, Div 4 of the Bankruptcy Act 1966 (Cth) for the purposes of collecting and realising property as if the respondent was declared bankrupt under the Bankruptcy Act 1966 (Cth) on 1 June 2018 and the Receiver were the trustee of the property of the respondent under that Act; and (c) Such rights and powers as are available to a trustee in bankruptcy under Pt VI, Div 4B of the Bankruptcy Act 1966 (Cth) for the purposes of collecting contributions under s 147 of the Insolvency Act 2006 (NZ) as if the respondent was declared bankrupt under the Bankruptcy Act 1966 (Cth) on 1 June 2018 and the Receiver were the trustee of the property of the respondent under that Act, provided the contributions are assessed and payable on the same basis as income contributions are assessed and payable to a trustee in bankruptcy under Pt VI, Div 4B of the Bankruptcy Act 1966 (Cth).
The Receiver shall be entitled to draw reasonable remuneration and to pay reasonable costs and expenses properly incurred in the performance of its duties and the exercise of its powers as receiver under this order, on the same basis as if the respondent were declared a bankrupt under the Bankruptcy Act 1966 (Cth), the Receiver were the trustee of the property of the respondent under that Act, and the applicant were able to approve the Receiver's remuneration.
The interest held in the name of the respondent in the property described in volume 06359 folio 788, being situated at 41 Frederick Street Balwyn in the State of Victoria, is declared to have vested in the name of "Russell David Fildes as Official Assignee in Bankruptcy of the Property of Jian Guang Ma (bankrupt)" as sole registered proprietor of that interest.
The applicant serve a sealed copy of these Orders on the respondent (by way of email service on the respondent's solicitors, Bell Legal Group) and any creditors of the respondent of which the applicant is aware, as soon as practicable hereafter.
The respondent and any third party affected by these Orders shall have liberty to apply on notice to the applicant to discharge or vary these Orders, or to seek directions hereunder.
The applicant's costs of this application are the applicant's costs in the administration of the bankrupt estate of the respondent.
There be liberty to apply. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. Schedule The Current Property means: All of the respondent's property, whether inside or outside of New Zealand, that was belonging to the respondent or vested in the respondent on 1 June 2018. The After Acquired Property means: All of the respondent's property, whether inside or outside of New Zealand that the respondent acquires or is passed to the respondent in between the commencement of his bankruptcy on 1 June 2018 and the discharge of the bankruptcy. The Exempt Property means: a. property held by the respondent in trust for another person; b. the respondent's household property that is household property (including recreational and sports equipment) that is reasonably necessary for the domestic use of the respondent's household, having regard to current social standards, and specifically: i. in the case of kitchen equipment, cutlery, crockery, foodstuffs, heating equipment, cooling equipment, telephone equipment, fire detectors and extinguishers, anti-burglar devices, bedding, linen, towels and other household effects--that property to the extent that it is reasonably appropriate for the household; ii. sufficient household furniture; iii. sufficient beds for the members of the household; iv. educational, sporting or recreational items (including books) that are wholly or mainly for the use of children or students in the household; v. one television set; vi. one set of stereo equipment; vii. one radio; viii. either: 1. one washing machine and one clothes drier; or 2. one combined washing machine and clothes drier; ix. either: 1. one refrigerator and one freezer; or 2. one combination refrigerator/freezer; x. one generator, if relied on to supply electrical power to the household; xi. one telephone appliance; xii. one video recorder. c. the respondent's property that is for use by the respondent in earning income by personal exertion, not exceeding the value of $3,750.00; d. property used by the respondent primarily as a means of transport, being property whose aggregate value does not exceed $7,700.00; e. policies of life assurance or endowment assurance in respect of the life of the respondent or the spouse or de facto partner of the respondent, and any proceeds thereof received on or after 1 June 2018; f. the interest of the respondent in: i. a regulated superannuation fund (within the meaning of the Superannuation Industry (Supervision) Act 1993 (Cth)); ii. an approved deposit fund (within the meaning of that Act); or iii. an exempt public sector superannuation scheme (within the meaning of that Act); iv. a payment to the respondent from such a fund received on or after the date of the bankruptcy (1 June 2018), if the payment is not a pension within the meaning of the Superannuation Industry (Supervision) Act 1993 (Cth). g. a payment to the respondent under a payment split under Part VIIIB of the Family Law Act 1975 (Cth) where: i. the eligible superannuation plan involved is a fund or scheme covered by subparagraph (f) (iii); and ii. the splittable payment involved is not a pension within the meaning of the Superannuation Industry (Supervision) Act 1993 (Cth); h. the amount of money a respondent holds in an RSA; i. a payment to a respondent from an RSA received on or after the date of the bankruptcy, if the payment is not a pension or annuity within the meaning of the Retirement Savings Accounts Act 1997 (Cth); j. a payment to the respondent under a payment split under Part VIIIB of the Family Law Act 1975 (Cth) where: i. the eligible superannuation plan involved is an RSA; and ii. the splittable payment involved is not a pension or annuity within the meaning of the Retirement Savings Accounts Act 1997 (Cth); k. any right of the respondent to recover damages or compensation: i. for personal injury or wrong done to the respondent, the spouse or de facto partner of the respondent or a member of the family of the respondent; or ii. in respect of the death of the spouse or de facto partner of the respondent or a member of the family of the respondent; l. any damages or compensation recovered by the respondent (whether before or after he or she became a respondent) in respect of such an injury or wrong or the death of such a person; m. a support for the respondent that was funded under the National Disability Insurance Scheme (as defined in the National Disability Insurance Scheme Act 2013 (Cth)); or n. an NDIS amount (as defined in the National Disability Insurance Scheme Act 2013 (Cth)).

[3]

MOSHINSKY J: 1 The applicant is the Official Assignee of the bankrupt estate of the respondent, Jian Guang Ma (Mr Ma) pursuant to a bankruptcy in New Zealand under the provisions of the Insolvency Act 2006 (NZ). Mr Ma filed an application to have himself adjudicated bankrupt pursuant to the Insolvency Act 2006 (NZ) on 29 May 2018. He was adjudicated bankrupt on 1 June 2018. Pursuant to s 101(1) of the Insolvency Act 2006 (NZ), "all property (whether in or outside New Zealand) belonging to the bankrupt or vested in the bankrupt" vested in the Official Assignee. Mr Ma has not been made bankrupt in Australia. 2 The applicant seeks the assistance of this Court, pursuant to s 29 of the Bankruptcy Act 1966 (Cth). In broad terms, the applicant seeks orders: recognising his appointment as Official Assignee; for the appointment of a local receiver for the purposes of investigating, collecting and realising certain property in Australia; that certain property be declared to have vested in the applicant; for substituted service; and abridging time. Specifically, the orders sought are as follows: 1. Service of the application, affidavit of Russell David Fildes, affidavit of Gregory Wayne Rodgers, applicant's genuine steps statement and the letter of request from the High Court of New Zealand to the Federal Court of Australia, all filed herein on 6 June 2018, is deemed to have been effected on the respondent on 13 June 2018. 2. The time for service of the application is abridged to 13 June 2018. 3. The applicant's appointment as Official Assignee in Bankruptcy of the respondent and the vesting in him of all the respondent's Current Property (as defined in the Schedule to these Orders) pursuant to s 101 of the Insolvency Act 2006 (NZ) and After Acquired Property (as defined in the Schedule) pursuant to s 102 of the Insolvency Act 2006 (NZ), other than Exempt Property (as defined in the Schedule) is recognised in Australia. 4. Any and all Current Property and After Acquired Property, other than Exempt Property, located in, situated in or subject to the jurisdiction of Australia, is declared to have vested in the applicant. 5. Michael Carrafa is appointed receiver (Receiver) without security to act on behalf of the applicant for the purposes of investigating, collecting and realising the Current Property and After Acquired Property of the respondent in Australia. 6. For the purposes of investigating, collecting and realising the Current Property and After Acquired Property of the respondent in Australia and collecting all other sums as may be collectible under the Insolvency Act 2006 (NZ), the Receiver is empowered to exercise all powers as are conferred on a trustee in bankruptcy of the respondent as if the respondent were declared a bankrupt under the Bankruptcy Act 1966 (Cth) on 1 June 2018 and the Receiver were the trustee of the property of the respondent under that Act. 7. The powers referred to in the preceding paragraph shall include, but are not limited to: (a) Such rights and powers as are available to a trustee in bankruptcy under Pt V of the Bankruptcy Act 1966 (Cth) for the purposes of investigating the affairs of the respondent as if he was declared bankrupt under the Bankruptcy Act 1966 (Cth) on 1 June 2018 and the Receiver were the trustee of the property of the respondent under that Act; (b) Such rights and powers as are available to a trustee in bankruptcy under Pt VI, Div 4 of the Bankruptcy Act 1966 (Cth) for the purposes of collecting and realising property as if the respondent was declared bankrupt under the Bankruptcy Act 1966 (Cth) on 1 June 2018 and the Receiver were the trustee of the property of the respondent under that Act; and (c) Such rights and powers as are available to a trustee in bankruptcy under Pt VI, Div 4B of the Bankruptcy Act 1966 (Cth) for the purposes of collecting contributions under s 147 of the Insolvency Act 2006 (NZ) as if the respondent was declared bankrupt under the Bankruptcy Act 1966 (Cth) on 1 June 2018 and the Receiver were the trustee of the property of the respondent under that Act, provided the contributions are assessed and payable on the same basis as income contributions are assessed and payable to a trustee in bankruptcy under Pt VI, Div 4B of the Bankruptcy Act 1966 (Cth). 8. The Receiver shall be entitled to draw reasonable remuneration and to pay reasonable costs and expenses properly incurred in the performance of its duties and the exercise of its powers as receiver under this order, on the same basis as if the respondent were declared a bankrupt under the Bankruptcy Act 1966 (Cth), the Receiver were the trustee of the property of the respondent under that Act, and the applicant were able to approve the Receiver's remuneration. 9. The interest held in the name of the respondent in the property described in volume 06359 folio 788, being situated at 41 Frederick Street Balwyn in the State of Victoria, is declared to have vested in the name of "Russell David Fildes as Official Assignee in Bankruptcy of the Property of Jian Guang Ma (bankrupt)" as sole registered proprietor of that interest. 10. The applicant serve a sealed copy of these Orders on the respondent (by way of email service on the respondent's solicitors, Bell Legal Group) and any creditors of the respondent of which the applicant is aware, as soon as practicable hereafter. 11. The respondent and any third party affected by these Orders shall have liberty to apply on notice to the applicant to discharge or vary these Orders, or to seek directions hereunder. 12. The applicant's costs of this application are the applicant's costs in the administration of the bankrupt estate of the respondent. 13. There be liberty to apply. (Schedule omitted.) 3 Mr Ma has not appeared at the hearing today. The material before the Court indicates that although he has not been personally served, his solicitors have received a copy of the application. It also appears from the material that Mr Ma is aware of the application. 4 Section 29 of the Bankruptcy Act relevantly provides as follows: 29 Courts to help each other … (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. … (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. 5 The principles applicable to an application under s 29 were discussed by Lockhart J in Re Ayres; Ex parte Evans (1981) 51 FLR 395; 34 ALR 582 (Re Ayres) (affirmed on appeal: Ayres v Evans (1981) 56 FLR 235; 39 ALR 129). In a number of subsequent cases, this Court has made orders of the kind sought by the applicant pursuant to s 29: see, eg, Cooksley v Cooksley (2017) 15 ABC(NS) 352; [2017] FCA 1193; Hanna v Hanna (2018) 15 ABC(NS) 603; [2018] FCA 156; Williams v Arnold (2010) 8 ABC(NS) 331; [2010] FCA 732. 6 In the course of the hearing today, I raised with the solicitor for the applicant whether it would be appropriate for the application to be made under the Cross-Border Insolvency Act 2008 (Cth) in addition to s 29. The applicant submitted, and I accept, that there is some doubt as to whether that Act is available in the present circumstances. On the basis of the material presently before the Court, the New Zealand bankruptcy would not fall within the definition of "foreign main proceeding" in art 2 of the Model Law (which is Sch 1 to the Act) as the centre of Mr Ma's main interests is not in New Zealand. (It appears that the centre of his main interests is Australia.) Further, it is unclear whether the New Zealand bankruptcy would constitute a "foreign non-main proceeding" as defined in art 2 because it is unclear whether Mr Ma has an "establishment" as defined in sub-paragraph (f) of art 2 in New Zealand. 7 I return then to the question of whether the orders sought by the applicant are appropriate orders pursuant to s 29 of the Bankruptcy Act. 8 The High Court of New Zealand has addressed a letter of request to this Court, requesting aid in relation to Mr Ma's bankruptcy. 9 The applicant has given the following undertakings: (a) the applicant will inform the Court of any changes in the status of the matter, or notify the Court of any foreign proceedings involving Mr Ma 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 Mr Ma shall be applied in the due course of administration of the bankruptcy of Mr Ma; (c) any matters of controversy in connection with the bankruptcy between the applicant, any appointed receiver of Mr Ma's property in Australia and any party resident in Australia 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 RBG 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. 10 The bankruptcy in this case was initiated by Mr Ma. Although he initiated the bankruptcy in New Zealand, it appears that Mr Ma resides and has property in Australia. In the circumstances of this case, which include the undertakings given by the applicant, it is appropriate that property of Mr Ma located in Australia be dealt with in the bankruptcy. The assistance of an Australian court is required to enable the applicant to do the things that are required to be done in the ordinary course of a bankruptcy, such as making inquiries and administering the estate. Mr Ma has not appeared to oppose the application, despite having initiated the bankruptcy and being (it would appear) on notice of the application. Further, on the basis of the material before the Court, there would not appear to be any adverse effect on creditors if the orders sought were made. It is proposed that liberty to apply be reserved. It would therefore be open to Mr Ma or any creditor to apply to the Court to have the orders varied. 11 One of the matters dealt with in the applicant's submissions is whether the orders sought would offend public policy. The issue is raised in circumstances where the New Zealand Inland Revenue is one of the creditors in the bankruptcy. In my view, the orders sought are not contrary to public policy. In Re Ayres, Lockhart J (FLR at 407) characterised a letter of request by the High Court of New Zealand as a request for aid to administer the estate of a New Zealand bankrupt rather than an attempt to enforce the country's revenue laws. Justice Lockhart also stated (FLR at 408) that the public policy principle regarding foreign revenue claims and s 29 of the Bankruptcy Act do not interact; an attempt to recover a revenue debt and a request for aid under s 29 are qualitatively different. I note that, in dismissing the appeal, the members of the Full Court did not express the principle in precisely the same way: see Ayres v Evans (1981) 56 FLR 235 at 238 per Fox J, 249 per Northrop J, and 253-254 per McGregor J. However, any difference is not material on the facts of the present case, as there are other creditors apart from the New Zealand Inland Revenue, and New Zealand is a prescribed country within the meaning of s 29(5) of the Bankruptcy Act. 12 The applicant's submissions identify two alternative mechanisms that could be adopted to assist in the administration of the Mr Ma's estate: (a) to recognise the New Zealand bankruptcy and authorise the Official Assignee to carry out the administration, utilising such powers as the Court permits; or (b) to appoint a local registered trustee as a receiver. 13 The applicant prefers the second of these alternatives. 14 The letter of request from the High Court of New Zealand is couched in terms leaving it open for this Court to appoint a receiver. 15 Section 29(3) of the Bankruptcy Act provides that the Court may exercise such powers with respect to the matter as it could exercise if the matter had arisen within this jurisdiction. The applicant submits, and I accept, that the powers of the Court in this regard extend to appointing a private trustee to act as receiver. A private trustee was appointed as receiver in Levy v Reddy (2009) 6 ABC(NS) 758; [2009] FCA 63 (see [13]). 16 The applicant submits, and I accept, that it is appropriate for a local registered trustee to be appointed in this case. Among other things, there will be a need to deal with a property in Balwyn that is registered in the name of Mr Ma. A construction project on the property is only partly completed and steps need to be taken as a matter of urgency in relation to that project. Also, inquiries will need to be undertaken. Steps may also need to be taken in relation to a proceeding in this Court brought by the Deputy Commissioner of Taxation against Mr Ma. Michael Carrafa, who is a local registered trustee, has consented to act as receiver. 17 Further, it is appropriate to make an order declaring that the relevant property has vested in the applicant: see, eg, Williams v Arnold at [18]. 18 Insofar as the applicant seeks orders for substituted service and abridging time, the affidavit material provides a proper basis for these orders. The circumstances of this case include that: Mr Ma himself initiated the bankruptcy; it appears that he is aware of the present application; and there is some urgency, as indicated above. 19 For these reasons, I will make the orders sought by the applicant. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moshinsky.

Official Assignee in Bankruptcy of the Property of Ma v Ma

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