THE OFFICIAL TRUSTEE v HENARE [2019] NZHC 1024

THE OFFICIAL TRUSTEE v HENARE [2019] NZHC 1024 [10 May 2019]IN THE HIGH COURT OF NEW ZEALANDHAMILTON REGISTRYI TE KŌTI MATUA O AOTEAROAKIRIKIRIROA ROHECIV-2019-419-357[2019] NZHC 1024UNDER The Insolvency (Cross-border) Act 2006AND UNDER The High Court RulesIN THE MATTER of an application pursuant to Schedule 1,Chapter III, Article 15, and rules 24.56,24.57 and 18.7 of the RulesBETWEEN THE OFFICIAL TRUSTEE INBANKRUPTCYApplicantAND PINEHUA MARY JOSEPHINE HENARERespondentHearing: 30 April 2019Appearances: P V Cornegé for ApplicantJudgment: 10 May 2019JUDGMENT OF PAUL DAVISON JThis judgment was delivered by me on 10 May 2019 at 4:30 pmPursuant to r 11.5 of the High Court RulesRegistrar/Deputy RegistrarSolicitors:Tompkins Wake, Hamilton[1] The Official Trustee in Bankruptcy of Australia as trustee of the bankrupt estateof Pinehuia Mary Josephine Henare (the respondent) applies pursuant to theInsolvency (Cross-border) Act 2006 and High Court Rules 2016 for an order that therespondent's Australian bankruptcy be recognised as a foreign main proceeding andfor further associated orders.[2] The applicant previously applied on a without notice basis and sought leavefor service of the application upon the respondent to be dispensed with. By hisjudgment dated 25 February 2019, van Bohemen J declined the application to dispensewith service upon the respondent, granted leave to the applicant to serve theapplication for recognition upon the respondent in Australia; reserved leave to theapplicant to re-apply for an order dispensing with service upon the filing of evidenceof the respondent's consent to such an application; and directed service of theapplication upon the ANZ Bank in Whakatane as an interested party.1[3] Following delivery of the judgment of van Bohemen J, the applicant filed anamended on-notice originating application for recognition of the respondent'sAustralian bankruptcy as a foreign main proceeding. The application and threesupporting affidavits were served upon the respondent on 7 March 2019 with servicebeing proven by an affidavit of service sworn by the process server who effectedservice upon the respondent.Service of the application and supporting affidavits upon the ANZ Bank atWhakatane[4] Counsel for the applicant, Mr Cornegé, advises that service of the applicationand supporting affidavits upon the ANZ Bank was effected on 19 March 2019.However, by reason of the unavailability of the process server, obtaining proof ofservice has been delayed and at present is still awaited.[5] Neither the respondent nor the ANZ Bank have taken any steps followingservice of the application upon them.1 The Official Trustee in Bankruptcy v Henare [2019] NZHC 248.Application for recognition[6] The Insolvency (Cross-border) Act 2006 (the Act) provides a statutoryframework for facilitating insolvency proceedings when a person is subject toinsolvency administration in one country, but has assets or debts in another country,or where more than one insolvency administration has commenced in more than onecountry in relation to a person.2 Rules applying to cross border insolvencyproceedings are contained in Schedule 1 of the Act. Relevantly here, the rules relatingto recognition of a foreign proceeding are contained in Chapter III of Schedule 1 ofthe Act.[7] Article 15 of Chapter III establishes the procedure and prescribes therequirements of an application to the High Court by a foreign representative forrecognition of foreign proceedings in which the foreign representative has beenappointed. Article 15 provides:(1) A foreign representative may apply to the High Court for recognitionof the foreign proceeding in which the foreign representative has beenappointed.(2) An application for recognition shall be accompanied by:(a) a certified copy of the decision commencing the foreignproceeding and appointing the foreign representative; or(b) a certificate from the foreign court affirming the existence ofthe foreign proceeding and of the appointment of the foreignrepresentative; or(c) in the absence of evidence referred to in subparagraphs (a)and (b), any other evidence acceptable to the Court of theexistence of the foreign proceeding and of the appointment ofthe foreign representative.(3) An application for recognition shall also be accompanied by astatement identifying all foreign proceedings in respect of the debtorthat are known to the foreign representative.(4) The Court may require a translation of documents supplied in supportof the application for recognition into an official language of NewZealand.2 Insolvency (Cross-border) Act 2006, s 3(b)(i).[8] The terms "foreign proceeding", and "foreign representative" for the purposesof the Schedule are defined as:3(a) foreign proceeding means a collective judicial or administrativeproceeding in a foreign State, including an interim proceeding,pursuant to a law relating to insolvency in which proceeding the assetsand affairs of the debtor are subject to control or supervision by aforeign court, for the purpose of reorganisation or liquidation;(b) foreign representative means a person or body, including oneappointed on an interim basis, authorised in a foreign proceeding toadminister the reorganisation or the liquidation of the debtor's assetsor affairs or to act as a representative of the foreign proceeding;[9] Article 17 sets out the criteria for determining recognition of a foreignproceeding. Article 17 provides as follows:Decision to recognise a foreign proceeding(1) Subject to article 6, a foreign proceeding shall be recognised if:(a) the foreign proceeding is a proceeding within the meaning ofsubparagraph (a) of article 2;(b) the foreign representative applying for recognition is a personor body within the meaning of subparagraph (d) of article 2;(c) the application meets the requirements of paragraph (2) ofarticle 15; and(d) the application has been submitted to the High Court.(2) The foreign proceeding shall be recognised:(a) as a foreign main proceeding if it is taking place in the Statewhere the debtor has the centre of its main interests; or(b) as a foreign non-main proceeding if the debtor has anestablishment within the meaning of subparagraph (f) ofarticle 2 in the foreign State.3 Insolvency (Cross-border) Act 2006, Schedule 1, Chapter 1, Article 2.(3) An application for recognition of a foreign proceeding shall bedecided upon at the earliest possible time.(4) As soon as practicable, after the Court recognises the foreignproceeding under paragraph (1) of this article, the foreignrepresentative shall notify the debtor, in the prescribed form, that theapplication has been recognised.(5) The provisions of articles 15, 16, 17 and 18 do not preventmodification or termination of recognition if it is shown that thegrounds for granting it were fully or partially lacking or have ceasedto exist.[10] The procedural rules relating to cross-border insolvency proceedings arecontained in the High Court Rules 2016 in subpart 15 of Part 24. Rule 24.56 of theRules provides:Applications for recognition of foreign proceedings(1) An application by a foreign representative under article 15(1) must bemade by originating application under Part 19.(2) In addition to complying with the requirements of article 15, theapplication must—(a) be supported by an affidavit verifying the statement referredto in article 15(3) identifying all foreign proceedings inrespect of the debtor that are known to the foreignrepresentative) or by other sworn evidence acceptable to thecourt:(b) be served, in accordance with Part 6 of these rules, on thedebtor or a New Zealand agent or representative of the debtorunless a Judge directs that the application may in all thecircumstances proceed without that service.(3) A foreign representative who has filed an application under subclause(1) may apply without notice for relief of a provisional nature underarticle 19(1).[11] In Williams v Simpson, Heath J summarised the requirements to establish thatthe applicant is a "foreign representative" and the foreign bankruptcy in a "foreignproceeding" as follows:4On that approach, the right to apply has the following elements:(a) The "foreign proceeding" in respect of which recognition is soughtmust be a judicial or administrative proceeding in a foreign state;4 Williams v Simpson [2011] 2 NZLR 380 (HC) at [23].(b) The proceeding must be "collective" in nature;(c) The judicial or administrative proceeding must have arisen out of alaw relating to insolvency, in which the debtor's assets and affairs aresubject to control or supervision by a foreign court, for the purpose ofreorganisation or liquidation;(d) The control or supervision must be effected by a "foreign court";namely "a judicial or other authority competent to control or supervisea foreign proceeding"; and(e) The applicant must be authorised, in the foreign proceeding, "toadminister the reorganisation or the liquidation of the debtor's assetsor affairs or to act as a representative of the foreign proceeding".[footnote omitted]The application and supporting affidavitsAffidavit of Ms Katrina Howard – Case manager[12] The applicant has filed an affidavit sworn by Ms Katrina Howard (Ms Howard)in support of the application. Ms Howard is the Acting Case Manager in the Insolvencyand Trustee Services business line of the Australian Financial Security Authority(AFSA). Ms Howard explains that subject to supervision and direction by herprincipals, she has the conduct, care and supervision of the bankrupt estate of therespondent. She states that she is authorised by the Official Trustee in Bankruptcy (theOfficial Trustee) to make her affidavit.[13] Ms Howard states that the respondent became bankrupt on 8 June 2018 bymeans of a Debtor's Petition. A copy of the respondent's debtor's petition togetherwith a copy of the respondent's Statement of Affairs document is annexed andexhibited to Ms Howard' affidavit. The statement of affairs document is dated 6 June2018 and signed by the respondent, she declaring that the particulars set out in thestatement of affairs are correct.[14] Ms Howard confirms that the Official Trustee was appointed the trustee of therespondent's bankrupt estate, and she has attached to her affidavit and exhibited a copyof the Certificate of Appointment.[15] Ms Howard explains that in her Statement of Affairs, the respondent noted thatshe owns a property at 12 Emme Allan Road, Kawerau. Mr Roger Rota Brown'sdeceased estate is noted on the title as the other owner of the property. Also attachedand exhibited to Ms Howard's affidavit is a copy of Mr Brown's death certificateissued by the Registrar of Births, Deaths and Marriages, Western Australia, recordingthat he died at Bunbury in Western Australia on 1 June 2014. The respondent is namedon the death certificate as Mr Brown's de facto partner. Ms Howard also attaches andexhibits a document that appears to be Mr Brown's Will dated 27 June 2013 by whichhe left all his estate to the respondent.[16] Ms Howard says that in order for the Official Trustee to deal with the Kawerauproperty it is necessary that the respondent's bankruptcy in Australia be recognised inNew Zealand, and that a New Zealand agent is appointed to conduct any requiredaction regarding the property in New Zealand.[17] Addressing the issue of the respondent's centre of main interest, Ms Howardnotes that the respondent's Statement of Affairs records that the respondent resides inAustralind, Western Australia, and that her two previous residential addresses werealso located there. In her Statement of Affairs the respondent says that she has lived ather current address in Western Australia since January 2013, and that she also ownsfour further properties located in Western Australia which were purchased betweenSeptember 2006 and January 2013. Ms Howard further notes that while born in NewZealand, the respondent holds a Western Australian driver's licence, and is employedas a commercial cleaner by Bunbury Cleaning Services in Bunbury, Western Australia.[18] Addressing the issue of whether there are any other foreign proceedings inrespect of the respondent that are known to the foreign representative, Ms Howardrefers to the contents of the respondent's Statement of Affairs and notes that therespondent says that she is not involved in any other legal processes or disputes. MsHoward says that she is aware that the ANZ Bank which holds a mortgage over therespondent's Australian properties, may take possession of some or all of theproperties, however this would only affect the extent of property available in therespondent's bankruptcy. Ms Howard states that apart from those matters she is notaware of any other court proceedings involving the respondent.[19] Ms Howard confirms that on behalf of the Official Trustee she has requestedMs Joanne McCarthy who holds the position of Deputy Official Assignee in NewZealand to act as her agent in New Zealand in relation to the respondent's bankruptestate.Affidavit of Mathew Osborne – Legal Officer AFSA[20] The application is further supported by an affidavit of Matthew Osborne, whois a Principal Legal Officer with AFSA. Mr Osborne confirms that the respondentbecame bankrupt on 8 June 2018, and by operation of s 160 of the AustralianBankruptcy Act 1966, the Official Trustee is the trustee of the respondent's bankruptestate.[21] Mr Osborne states:5 The administration of the bankrupt estate of the Bankrupt is anAustralian bankruptcy proceeding, which:(a) is a collective administrative proceeding in relation to themaking of the Debtor's Petition and on-going oversight inrelation to the administrative functions and duties the OfficialTrustee performs during the period from the time theBankrupt was declared bankrupt to the time she is dischargedfrom the bankruptcy;(b) is collective in nature. That is, it is for the benefit of all theBankrupt's creditors entitled to prove their debt in herbankruptcy, the debts proved are to rank equally except asotherwise provided, and creditors are to be paidproportionately, subject to statutory priorities: sections 82 and108, 109 of the Bankruptcy Act 1966;(c) arose out of the law relating to insolvency, namely theBankruptcy Act 1966 in which the bankrupt's assets andaffairs are subject to control or supervision by a "foreigncourt", namely either the Federal Circuit Court of Australia orthe Federal Court of Australia, for the purpose ofreorganisation or liquidation: section 30 of the Bankruptcy Act1966. The control or supervision is effected by an authoritycompetent to control or supervise foreign proceedings,namely the Official Trustee: sections 18, 19, 58, and 134 ofthe Bankruptcy Act 1966; and(d) The Official Trustee is authorised to administer thereorganisation or the liquidation of the Bankrupt's assets oraffairs and to act as a representative of the foreign proceeding:sections 18, 19, 58, 108, 109 and 134 of the Bankruptcy Act1966 and section 11 of the Cross-border Insolvency Act 2008(Cth).Discussion[22] I am satisfied that Ms Howard is a duly authorised and appointed foreignrepresentative of the Official Trustee for the purposes of making the presentapplication, and I am satisfied that the respondent's centre of main interest is that ofWestern Australia where she has been residing for a substantial time.[23] Article 15 (2) of the Act provides that an application for recognition shall beaccompanied by a certified copy of the decision commencing the foreign proceedingand appointing the foreign representative, or a certificate from the foreign courtconfirming the existence of the foreign proceeding. In the absence of such evidence,the Court is able to consider any other acceptable evidence to establish the existenceof the foreign proceeding and the appointment of the foreign representative.[24] Because the respondent was adjudicated bankrupt following her lodgement ofa debtor's petition, there is no "decision commencing the foreign proceeding andappointing the foreign representative". Nor is there a "certificate from the foreigncourt affirming the existence of the foreign proceeding and the appointment of theforeign representative". I am nevertheless satisfied by the affidavit evidence of MsHoward and Mr Osborne that the Official Trustee's administration of the respondent'sbankrupt estate in Australia is a foreign proceeding as defined. The Official Trusteehas established that as trustee of the respondent's bankrupt estate, "the assets andaffairs of the debtor are subject to control or supervision by a foreign court, for thepurpose of reorganisation or liquidation".[25] The respondent's Australian bankruptcy is an administrative proceeding in aforeign state pursuant to which the respondent's assets and affairs are subject to thecontrol of the Australian Court for the purposes of the administration of her bankruptestate. The administrative proceeding in Australia is collective in nature by beingundertaken for the benefit of all of the respondent's creditors who prove debts inbankruptcy and who become entitled to receive a pro rata distribution from therespondent's bankrupt estate.[26] Finally, I am satisfied that all the procedural requirements of the Act and Ruleshave been met and complied with.The appointment of Joanne Margaret McCarthy (Official Assignee) as theapplicant's New Zealand agent[27] The applicant seeks an order entrusting the administration or realisation of allof the respondent's assets located in New Zealand to Ms Joanne Margaret McCarthy.Ms McCarthy has sworn an affidavit confirming that she is an Official Assigneeemployed by the Insolvency and Trustee Service of the Ministry of BusinessInnovation and Employment and is based in Hamilton. Ms McCarthy states that theHamilton office of the Insolvency and Trustee Service is the liaison office with theAustralian Financial Security Authority (AFSA) in respect of requests for assistancewith Australian bankruptcies. She further states that she has been asked by KatrinaHoward to assist with the respondent's bankruptcy where necessary in relation to therealisation of the respondent's assets located in New Zealand. Ms McCarthy consentsto being appointed as the applicant's agent and being entrusted with the administrationor realisation of the respondent's assets located in New Zealand.[28] I am satisfied that the appointment of Ms McCarthy to administer or realise therespondent's assets located in New Zealand is an appropriate and necessary means bywhich the Australian bankruptcy proceedings and administration of the respondent'sbankruptcy estate can be properly and effectively conducted.Result[29] I make the following orders:(a) That the respondent's Australian bankruptcy arising out of a debtor'spetition under s 55(2) of the Australian Bankruptcy Act 1996 berecognised as a foreign main proceeding.(b) Entrusting the administration or realisation of all of the respondent'sassets located in New Zealand to Joanne Margaret McCarthy (OfficialAssignee).(c) Granting leave to the applicant to serve the orders made by the Courtoutside New Zealand.[30] I further direct that pending proof of service of the application and supportingaffidavits upon the ANZ Bank, that the orders made therein shall lie in Court. Uponthe filing of satisfactory proof of service of the application upon the ANZ Bank, theCourt shall issue a minute and confirm that the orders made herein shall hereafter comeinto effect._____________Paul Davison J