“The Joint Provisional Liquidators shall have the following powers: (a) to ascertain and to take possession of, collect and get in all property and assets (of whatever nature) to which the Company is or appears to be entitled, including the books and records of the Company; … (h) to consider, and if thought to be in the interests of the creditors and the shareholders of the Company, to draft with a view to implementing, a scheme of arrangement to be entered into between the Company and its creditors.”
“Except as otherwise provided by this Act, all debts and claims proved in a winding up rank equally and, if the property of the company is insufficient to meet them in full, they must be paid proportionately.”
“Subject to the provisions of this Act as to preferential creditors, the company’s property in a voluntary winding up shall on the winding up be applied in satisfaction of the company’s liabilities pari passu…”
“Debts other than preferential debts rank equally between themselves in the winding up and, after the preferential debts, shall be paid in full unless the assets are insufficient for meeting them, in which case they abate in equal proportion between themselves.”
“In the winding up of a body corporate authorised under this Act to carry on insurance business, or in the winding up of a supervised body corporate, the assets in Australia of the body corporate shall not be applied in the discharge of its liabilities other than its liabilities in Australia unless it has no liabilities in Australia.”
“(1) This section applies where; a) a company is insured, under a contract of reinsurance entered into before the relevant date, against liability to pay amounts in respect of a relevant contract of insurance or relevant contracts of insurance; and b) an amount in respect of that liability has been or is received by the company or the liquidator under the contract of reinsurance. (2) Subject to subsection (4), if the amount received, after deducting expenses of or incidental to getting in that amount, equals or exceeds the total of all the amounts that are payable by the company under relevant contracts of insurance, the liquidator must, out of the amount received and in priority to all payments in respect of the debts mentioned in section 556, pay the amounts that are so payable under those contracts of insurance. (3) Subject to subsection (4), if subsection (2) does not apply, the liquidator must out of the amount received and in priority to all payments in respect of the debts mentioned in section 556, pay to each person to whom an amount is payable by the company under a relevant contract of insurance an amount calculated in accordance with the formula: Particular amount owed x Reinsurance payment Total amount owed Where: “particular amounts owed” means the amount payable to the person under the relevant contract of insurance. “reinsurance payment” means the amount received under the contract of reinsurance, less any expenses of or incidental to getting in that amount. “total amounts owed” means the total of all the amounts payable by the company under relevant contracts of insurance. (4) The Court may, on application by a person to whom an amount is payable under a relevant contract of insurance, make an order to the effect that subsections (2) and (3) do not apply to the amounts received under the contract of reinsurance and that that amount must, instead, be applied by the liquidator in the manner specified in the order, being a manner that the Court considers just and equitable in the circumstances. (5) The matters that the Court may take into account in considering whether to make an order under subsection (4) include, but are not limited to: a) whether it is possible to identify particular relevant contracts of insurance as being the contracts in respect of which the contract of reinsurance was entered into; and b) whether it is possible to identify persons who can be said to have paid extra in order to have particular relevant contracts of insurance protected by reinsurance; and c) whether particular contracts of insurance include statements to the effect that the contracts are to be protected by reinsurance; and d) whether a person to whom an amount is payable under a relevant contract of insurance would be severely prejudiced if subsections (2) and (3) applied to the amount received under the contract of reinsurance. (6) If receipt of a payment under this section only partially discharges a liability to a person, nothing in this section affects the rights of the person in respect of the balance of the liability. (7) This section has effect despite any agreement to the contrary. (8) In this section: “relevant contract of insurance” means a contract of insurance entered into by a company, as insurer, before the relevant date.” a) a company is insured, under a contract of reinsurance entered into before the relevant date, against liability to pay amounts in respect of a relevant contract of insurance or relevant contracts of insurance; and b) an amount in respect of that liability has been or is received by the company or the liquidator under the contract of reinsurance. Particular amount owed x Reinsurance payment Total amount owed Where: “particular amounts owed” means the amount payable to the person under the relevant contract of insurance. “reinsurance payment” means the amount received under the contract of reinsurance, less any expenses of or incidental to getting in that amount. “total amounts owed” means the total of all the amounts payable by the company under relevant contracts of insurance. a) whether it is possible to identify particular relevant contracts of insurance as being the contracts in respect of which the contract of reinsurance was entered into; and b) whether it is possible to identify persons who can be said to have paid extra in order to have particular relevant contracts of insurance protected by reinsurance; and c) whether particular contracts of insurance include statements to the effect that the contracts are to be protected by reinsurance; and d) whether a person to whom an amount is payable under a relevant contract of insurance would be severely prejudiced if subsections (2) and (3) applied to the amount received under the contract of reinsurance. “relevant contract of insurance” means a contract of insurance entered into by a company, as insurer, before the relevant date.”
“It is of utmost importance that insured persons, policy-holders, beneficiaries and any injured party having a direct right of action against the insurance undertaking on a claim arising from insurance operations be protected in winding-up proceedings ... In order to achieve this objective Member States should ensure special treatment for insurance creditors according to one of two optional methods provided for in this Directive. Member States may choose between granting insurance claims absolute precedence over any other claim with respect to assets representing the technical provisions or granting insurance claims a special rank which may only be preceded by claims on salaries, social security, taxes and rights in rem over the whole assets of the insurance undertaking.”
“The essential characteristic of the statutory scheme is that the liquidator or administrator is bound to deal with the assets of the company as directed by statute for the benefit of all creditors who come in to prove a valid claim. There is a statutory obligation on the administrators of [the company] to treat the general creditors in a particular way …. If … the asset is the absolute beneficial property of the company there is no general power in the liquidator, the administrators or the court to amend or modify the statutory scheme so as to transfer that asset or to declare it to be held for the benefit of another person. To do that would be to give a preference to another person who enjoys no preference under the statutory scheme.”
“Although a winding up in the country of incorporation will normally be given extra-territorial effect, a winding up elsewhere has only local operation. In the case of a foreign company, therefore, the fact that other countries, in accordance with their own rules of private international law, may not recognise our winding up order or the title of a liquidator appointed by our courts, necessarily imposes practical limitations on the consequences of the order. But in theory the effect of the order is world-wide. The statutory trusts which it brings into operation are imposed on all the company's assets wherever situate, within and beyond the jurisdiction. Where the company is simultaneously being wound up in the country of its incorporation, the English court will naturally seek to avoid unnecessary conflict, and so far as possible to ensure that the English winding up is conducted as ancillary to the principal liquidation. In a proper case, it may authorise the liquidator to refrain from seeking to recover assets situate beyond the jurisdiction, thereby protecting him from any complaint that he has been derelict in his duty. But the statutory trusts extend to such assets, and so does the statutory obligation to collect and realise them and to deal with their proceeds in accordance with the statutory scheme”
“Wholly unclear whether there was any, and if so what, limits to the extent to which English liquidators in a so-called “ancillary” liquidation can decline to apply provisions of English insolvency law and procedure in deference to the insolvency law and procedure of the country in which the principal winding up is taking place.”
“This line of authority establishes, in my opinion, at least the following propositions. (1) Where a foreign company is in liquidation in its country of incorporation, a winding up order made in England will normally be regarded as giving rise to a winding up ancillary to that being conducted in the country of incorporation. (2) The winding up in England will be ancillary in the sense that it will not be within the power of the English liquidators to get in and realise all the assets of the company worldwide. They will necessarily have to concentrate on getting in and realising the English assets. (3) Since in order to achieve a pari passu distribution between all the company’s creditors it will be necessary for there to be a pooling of the company’s assets worldwide and for a dividend to be declared out of the assets comprised in that pool, the winding up in England will be ancillary in the sense, also, that it will be the liquidators in the principal liquidation who will be best placed to declare the dividend and to distribute the assets in the pool accordingly. (4) None the less, the ancillary character of an English winding up does not relieve an English court of the obligation to apply English law, including English insolvency law, to the resolution of any issue arising in the winding up which is brought before the court. It may be, of course, that English conflicts of law rules will lead to the application of some foreign law principle in order to resolve a particular issue.”
“The accumulation of judicial endorsements of the concept of ancillary liquidations have, in my judgment, produced a situation in which it has become established that in an “ancillary” liquidation the courts do have power to direct liquidators to transmit funds to the principal liquidators in order to enable a pari passu distribution to worldwide creditors to be achieved. The House of Lords could declare such a direction to be ultra vires. But a first instance judge could not do so and I doubt whether the Court of Appeal could do so. But the judicial authority which has established the power of the court to give, in general terms, the direction to which I have referred has certainly not established the power of the court to disapply rule 4.90 or any other substantive rule forming part of the statutory scheme under the Act and Rules of 1986. Nor, in my opinion, has this line of judicial authority established the power of the court to relieve English liquidators in an ancillary winding up of the obligation to determine whether proofs of debt submitted to them should be admitted or to see to it, so far as they are able to do so, that creditors whose claims they do admit receive the pari passu dividend to which, under the statutory insolvency scheme, they are entitled.”
“It is difficult to see how any other conclusion could have been reached, given the traditional approach of the English courts for an ancillary liquidation; the application of the set-off rules forms part of the process of getting in debts (i.e. the collection of assets) and settling lists of creditors.”
“do have power to direct liquidators to transmit funds to the principal liquidators in order to enable a pari passu distribution to worldwide creditors to be achieved.”
“Since in order to achieve a pari passu distribution between all the company’s creditors it will be necessary for there to be a pooling of the company’s assets worldwide and for a dividend to be declared out of the assets comprised in the pool, the winding up in England will be ancillary in the sense, also, that it will be the liquidators in the principal liquidation who will be best placed to declare the dividend and to distribute the assets in the pool accordingly.”
“Nor, in my opinion, has this line of judicial authority established the power of the court to relieve English liquidators in an ancillary winding up of the obligation … to see to it, so far as they are able to do so, that creditors whose claims they do admit receive the pari passu dividend to which, under the statutory insolvency regime, they are entitled.”
“It is not entirely clear what North J envisaged would be done with the English assets once the English liquidators had got them in. It is a fair inference, however, that he had in mind that the assets and the list of creditors would be transmitted to Australia so that the Australian liquidator could pay a dividend, pari passu, to all creditors.”
“for I consider that I am justified in taking steps to secure the English assets until I see that proceedings are taken in the New Zealand liquidation to make the English assets available for the English creditors pari passu with the creditors in New Zealand.”
“Under these circumstances, the first question of substance that arises is whether Queensland assets should be applied in payment of Queensland creditors in priority to others, or whether the administration of the whole of the assets of the company in the three countries should be treated as one administration, and the creditors paid pari passu, without regard either to the local situation of the assets, or the place where the debts were contracted, or the place in which they are proved.”
“And, having regard to the part which is played in the commerce of the world by the system of joint-stock companies, and to the doctrine that equality is equity, (which is true irrespective of positive law), I have no difficulty in holding that, in the administration of the affairs of an insolvent company the assets of which are situated in several jurisdictions, the English law requires that (subject to any positive local law) the affairs of the company should be administered in such a manner as to provide for equal treatment of all the creditors, wherever their debts were contracted and wherever they may formally make proof of their claims.”
“a question of discretion to be exercised according to the principles of international comity. No definite rule of guidance to be followed under all circumstances can be extracted from the decided cases. The one broad principle underlying all the decisions is that the course ought to be pursued which will secure the best results for the creditors and shareholders.”
“the procedure of the Bankruptcy Court is quite as efficient for the purpose of securing an equal distribution of the Company’s assets as is our procedure under the Winding-Up Act.”
“Whatever, if anything, further is necessary to make the assets of the Company not yet vested in the bankruptcy trustee available for the Canadian creditors pari passu with the creditors in the United States should be done.”
“If, in the present liquidation, the Canadian assets were retained here it would only be for the purpose of paying the Canadian creditors pari passu with the English and other creditors. The surplus would then have to be remitted to the English liquidator, unless the Court should be unreasonable enough to insist that the proceedings here were not ancillary. As there can be no apprehension that the Canadian creditors will not have equal treatment with all other creditors, there is no reason why the assets in the hands of the Canadian liquidator should not now be remitted to the English liquidator, less amount required to pay Canadian preferred creditors, and other amounts either approved by the Court or by the English liquidator, and costs of the liquidation.”
“applied to the satisfaction of the claims of the Victorian creditors pari passu with the claims of other creditors of the same class.”
“I think it is now clearly established that the Victorian creditors have no priority over other creditors of the same class. To enable this equal distribution to be made it may be necessary to transmit money from the situs of the ancillary winding up to the situs of the principal winding up … On the other hand, in order to effect this equal distribution, moneys may have to be transmitted from the situs of the principal to that of the ancillary winding up … There is authority for the view that in these cases the Court of the situs of the ancillary winding up has control of the assets in that winding up, and will secure the local assets until it is clear that they will be made available to local creditors pari passu with other creditors of the same class – see In re Matheson Brothers Ltd.”
“The administration should be such as to provide for equal treatment of all creditors of equal degree, wherever their claims arise or are proved. There should be no preference or priority in the distribution of the assets found in any forum contrary to the statutes or laws of that forum … and, as a corollary, any preference or priority subsisting under such statutes or laws should, in the distribution of those particular assets, be preserved.”
“It is clear that when a winding up is proceeding in different jurisdictions, the principle to be applied is that, subject to priorities secured by local law, all creditors of the company are as far as possible to be treated equally wherever they are and wherever their debts were contracted … There is no doubt that Stanley J had regard to this principle when he made the order under consideration …”
“Where an ancillary winding up has been ordered, the ultimate objective is to hand over the English assets to the foreign liquidator: so that the foreign court, conducting the main liquidation, has control of all the corporation’s assets; and all the creditors, foreign and English, may bring their claims pari passu in a single set of proceedings.”
“The making of a winding-up order terminates a company’s beneficial interest in its property. Thereafter the property must be dealt with in the manner provided by theInsolvency Act 1986 . In particular the liquidator must take into his custody or under his control all the property and things in action to which the company is or appears to be entitled. However the court may provide in the order that the liquidator is not to get in assets situate outside England without first seeking a direction from the court. The court may also provide in order that the liquidator should not settle a list of other than “English” creditors without first obtaining a direction. These may be convenient provisions in the case of a company incorporated outside England which is being wound up at the place of its incorporation. Subject to compliance with any such special provisions in the winding-up order, the liquidation is a liquidation of the company and not merely of its English affairs. Accordingly assets collected by the liquidator may be applied in satisfaction of “foreign” as well as of “English” liabilities; whilst where there is a simultaneous liquidation abroad the court should seek to secure that all creditors of equal priority benefit equally whether they are claimants here or in the foreign proceedings.” and at para 30–075: “In winding up a company the courts apply English law to both matters of procedure and (subject to what is said below) matters of substance. This principle is incontestable, for matters of procedure are inevitably determined by the lex fori, and a liquidation under theInsolvency Act 1986 and theInsolvency Rules 1986 can hardly be conducted otherwise than in accordance with the provisions of that Act and those Rules. The Rule is not modified where there is a simultaneous liquidation under the law of the place of incorporation, even though in such circumstances the English winding up is expressed as being ancillary to that proceeding abroad. Thus in Re Bank of Credit and Commerce International S.A. (No 10), Sir Richard Scott V-C held that although where a foreign company was in liquidation in the country of its incorporation, a winding-up order made in England would normally be regarded as ancillary, that did not relieve the English court of the obligation to apply English law to the resolution of any issue arising in the winding up which was brought before the English court. The court had power in an ancillary liquidation of this nature to direct liquidators to transmit funds to the principal liquidators in the country of incorporation in order to enable pari passu distribution to worldwide creditors to be achieved. But the court had no power to display the English rule on set-off or any other substantive rule forming part of the statutory insolvency scheme contained in theInsolvency Act 1986 and theInsolvency Rules 1986 . Further, the court had no power to relieve English liquidators of the obligation to determine whether proofs of debt submitted to them should be admitted or of the obligation to ensure the creditors whose claims have been admitted receive the pari passu dividend to which they were entitled.”
“The form of assistance will be dictated by the particular circumstances of the case. The English court will sanction any sensible arrangement between an English trustee or liquidator and his foreign counterpart which will benefit English creditors. The practice of the court indicates the application of three general principles: (1) creditors, having priority under the insolvency law where the assets are situated, receive payment out of those assets in priority to all other creditors; (2) all remaining assets are pooled and distributed equally among all the unsecured creditors; and (3) any creditor who has received payments in priority under the insolvency law of one country or who has separately attached assets of the debtor will not receive a dividend until he brings the sums he has already received into hotchpot , or until the dividends paid out to the unsecured creditors equal the sums he has already received.”
“The making of a winding-up order divests the company of the beneficial ownership of its assets which cease to be applicable for its own benefit. They become instead subject to a statutory scheme for distribution among the creditors and members of the company. The responsibility for collecting the assets and implementing the statutory scheme is vested in the liquidator subject to the ultimate control of the court. The creditors do not themselves acquire a beneficial interest in any of the assets, but only have a right to have them administered in accordance with the statutory scheme. These principles were established in Ayerst (Inspector of Taxes) v C & K (Construction) Ltd[1976] AC 167 . They apply to all the assets of the company, both in England and abroad, for the making of a winding-up order is regarded as having worldwide effect.”
“Thus by his alternative claim as unsecured creditor Mr Royle does not claim to have suffered any damage which has not also been suffered by all other unsecured creditors. He does not assert that he is in any special position in this respect; he claims damages as a member of the class of unsecured creditors of the partnership. His claim, in effect, is that unsecured creditors have suffered loss by reason of the loss suffered by the partnership.”
“falls well short of the theoretical ideal that the distribution of assets should be governed by a single law, and therefore not affected by the location of particular assets or particular creditors.”
“It must, however, be accepted that identifying the appropriate law cannot be accomplished by Judges alone; it requires international agreement, which is very difficult to achieve as not all countries share the belief that local assets should not be ring-fenced.”
“Applicable law 28. Save as otherwise provided in this Regulation, the law applicable to secondary proceedings shall be that of the Member State within the territory of which the secondary proceedings are opened. Assets remaining in the secondary proceedings 35. If by the liquidation of assets in the secondary proceedings it is possible to meet all claims allowed under those proceedings, the liquidator appointed in those proceedings shall immediately transfer any assets remaining to the liquidator in the main proceedings.”
“Upon recognition of a foreign proceeding, whether main or non-main, the court may, at the request of the foreign representative, entrust the distribution of all or part of the debtor’s assets located in this State to the foreign representative or another person designated by the court, provided that the court is satisfied that the interests of creditors in this State are adequately protected.”
“In granting or denying relief under article 19 or 21, or in modifying or terminating relief under paragraph 3 of this article, the court must be satisfied that the interests of the creditors and other interested persons, including the debtor, are adequately protected.”
“§ 304. Cases ancillary to foreign proceedings (a) A case ancillary to a foreign proceeding is commenced by the filing with the bankruptcy court of a petition under this section by a foreign representative. (b) Subject to the provisions of subsection (c) of this section, if a party in interest does not timely controvert the petition, or after trial, the court may - - (1) enjoin the commencement or continuation of - - (A) any action against - - (i) a debtor with respect to property involved in such foreign proceeding; or (ii) such property; or (B) the enforcement of any judgment against the debtor with respect to such property, or any act or the commencement or continuation of any judicial proceeding to create or enforce a lien against the property of such estate; (2) order turnover of the property of such estate, or the proceeds of such property, to such foreign representative; or (3) order other appropriate relief. (c) In determining whether to grant relief under subsection (b) of this section, the court shall be guided by what will best assure an economical and expeditious administration of such estate, consistent with - - (1) just treatment of all holders of claims against or interests in such estate; (2) protection of claim holders in the United States against prejudice and inconvenience in the processing of claims in such foreign proceeding; (3) prevention of preferential or fraudulent dispositions of property of such estate; (4) distribution of proceeds of such estate substantially in accordance with the order prescribed by this title [11 USCS §§ 101 et seq]; (5) comity; and (6) if appropriate, the provision of an opportunity for a fresh start for the individual that such foreign proceeding concerns.” (1) enjoin the commencement or continuation of - - (A) any action against - - (i) a debtor with respect to property involved in such foreign proceeding; or (ii) such property; or (B) the enforcement of any judgment against the debtor with respect to such property, or any act or the commencement or continuation of any judicial proceeding to create or enforce a lien against the property of such estate; (2) order turnover of the property of such estate, or the proceeds of such property, to such foreign representative; or (3) order other appropriate relief. (1) just treatment of all holders of claims against or interests in such estate; (2) protection of claim holders in the United States against prejudice and inconvenience in the processing of claims in such foreign proceeding; (3) prevention of preferential or fraudulent dispositions of property of such estate; (4) distribution of proceeds of such estate substantially in accordance with the order prescribed by this title [11 USCS §§ 101 et seq]; (5) comity; and (6) if appropriate, the provision of an opportunity for a fresh start for the individual that such foreign proceeding concerns.”
“It would be a mistake to construe this provision to mean that a court must find effective congruence between the distribution schemes of the United States and the country in which the foreign proceeding is pending. The problem with such an approach is that every country has its own scheme of priorities, reflecting local public policy choices that may or may not be shared by other countries. One country may give priority to internal tax claims, priming even secured lenders. Yet a third may give special treatment to social claims enforced by governmental entities. Were one to insist on congruence, it is doubtful that any court would ever find it appropriate to grant relief under § 304(b). Congress can be fairly presumed to have been familiar with the wide variety of distributional schemes worldwide. Its provision should not therefore be construed to effectuate an intent clearly at odds with structure and overall purpose of section 304 - - to provide a mechanism for cooperation with foreign proceedings.”
“The authorities establish the principle that if a company is being wound up in an English liquidation and also in a liquidation in a foreign country, a creditor who has proved and received a dividend in the foreign liquidation may not receive a dividend in the English liquidation without bringing into hotchpot his foreign dividend.”
“… it is a case in which the same estate is being distributed, partly in Brazil and partly in England, but where the Brazilian law says that a certain class of creditors are to have a preference, and where the law of England says that all creditors are to take equally. That being the case, I am of the opinion there is nothing to prevent the application of the common rule that if the creditor comes to take the benefit of the English law and proves against the English estate, he cannot take advantage of the preference he has received under the law of foreign state.”
“If receipt of a payment under this section only partially discharges a liability of the company to a person, nothing in this section affects the rights of the person in respect of the balance of liability.”
“In other words it would be treated in a conceptually similar way to a secured creditor under s 554E, although if that were intended it could have been said.”
“100. But once the claim to which s562A applied had been quantified, it would enjoy a position of first priority (that is, priority over all admitted claims covered by the scale of priorities in s 556 and those afforded no priority at all) as regards access to the particular asset with which s 562A is concerned. I have suggested elsewhere (see (1990) 64 ALJ 523) that a statutory provision which, in a winding up, requires a particular class of claims to be met out of particular property in priority to all claims not within the class might be regarded as creating a charge or having the effect of a charge upon that property. The suggestion was made in relation to a now superseded provision of banking legislation directing that, if an Australian bank became unable to meet its obligations or suspended payment, “the assets of the bank in Australia shall be available to meet that bank’s liabilities in Australia in priority to all other liabilities of the bank”
“(4) The courts having jurisdiction in relation to insolvency law in any part of the United Kingdom shall assist the courts having the corresponding jurisdiction in any other part of the United Kingdom or any relevant country or territory. (5) For the purposes of subsection (4) a request made to a court in any part of the United Kingdom by a court in any other part of the United Kingdom or in a relevant country or territory is authority for the court to which the request is made to apply, in relation to any matters specified in the request, the insolvency law which is applicable by either court in relation to comparable matters falling within its jurisdiction. In exercising its discretion under this subsection, a court shall have regard in particular to the rules of private international law. (11) In this section “relevant country or territory” means – (a) any of the Channel Islands or the Isle of Man, or (b) any country or territory designated for the purposes of this section by the Secretary of state by order made by the statutory instrument.”
“plainly some element of discretion vested in me as to whether I should or should not accede to the originating application pursuant to the letter of request, notwithstanding that sub-s(4) of s426 uses the word “shall assist”.”
“The obligation to assist is imposed on a court, not some executive agency. It would in my view require very clear words to justify a conclusion that the court in England was not intended by Parliament to perform its normal function of seeking to do justice in accordance with the law. There is no such indication. Accordingly the function of the court under s426 must be to consider whether in accordance with the three sources of law I earlier identified as (a), (b) and (c) the assistance may properly be granted. If it may then it should be, thereby discharging the statutory duty imposed by s426. But if it may not be properly granted then it should be withheld for it must be implicit in the fact that the duty is cast on a court that the duty is qualified by reference to what the court may properly do as a court. Of course if the court in England cannot do exactly what is sought then it should consider whether it can properly assist in some other way in accordance with any of the available systems of law. Thus the reasons for withholding assistance either as sought or in any other way are not limited to reasons of public policy. Of course public policy is a reason why assistance may be impossible under (a) or (b). But it is by no means the only reason. Further, public policy might prevent assistance being given under (c) if the provision of the insolvency law of the country the court of which requested the assistance were contrary to the public policy recognised by the court in England. In my view the court must consider in all cases whether the assistance sought or any other comparable assistance may be properly granted in accordance with the laws the court is authorised to apply on the hypotheses likewise permitted. In some cases the assistance sought is, in accordance with the system of law (sc (a), (b) and (c)) under which it is available, discretionary. Obviously the fact of the request for assistance is a weighty factor to be taken into account. Further the court in England may be expected, as Knox J did in this case, to accept without further investigation the views of the requesting court as to what was required for the proper conduct of the bankruptcy or winding up. But I do not think that the request can ever be conclusive as to the manner in which the discretion of the court should be exercised. It would be incompatible with the principle of the law which was being applied that the decision was one for the discretion of the court if the fact of the request was anything more than a factor however weighty. In my view this is the justification for the reservations expressed, in various ways, by all the judges who have been faced with requests for assistance under s426 or its statutory predecessors. In summary therefore I would reject the submission of counsel for the joint liquidators that the only ground on which a request for assistance may be refused is public policy or that the only discretion of the court is to decide which system of law made available under sub-s(5) is to apply and how, as opposed to whether, the assistance is to be rendered. But I would also reject the submission of counsel for Hannover Re that the only obligation of the court in England is to entertain the application for assistance. The assistance should be given if, in accordance with the law to be applied, the relief sought may properly be granted. In cases requiring the exercise of a discretion the fact of the request is a weighty matter to be taken into account but it cannot outweigh all others. In my view, having regard to the circumstances of the individual cases, in none of Re Dallhold Estates (UK) Pty Ltd, Re Bank of Credit and Commerce International SA (No.9) and Re Focus Insurance Co Ltd did the judge adopt an approach not warranted by the section; contrary to the submission of counsel for Hannover Re, I would approve rather than overrule them.”
“I think under the section it is plain that this court must give such assistance as it can, but subject of course, to the considerations which would arise if there was also a bankruptcy in this country, or to the rights of the creditors and other persons in this country.”
“Section 426(4), which I have read, appears to impose on the courts of this country a mandatory obligation. The words used are “shall assist”
“The purpose of ordering Mr Hardy to do the various things that the originating application and letter of request propose he be ordered to do is to obtain information about his assets. But that is the function, once bankruptcy has intervened, of his trustee in bankruptcy. The judgment debt is no longer recoverable by the various processes normally available for satisfaction of judgment debts. During the currency of the bankruptcy, if the debt can be recovered at all – I have said that the proof of debt has not yet been accepted – it must be recovered by submission of a proof in the bankruptcy upon which some dividend will become payable. The amount of the dividend will depend upon the amount of the debtor’s assets that the trustee has been able to realise. The purpose behind the originating application and the letter of request seems to me to be opposed to the scheme for realisation of a debtor’s assets and payment of the debtor’s creditors prescribed by the bankruptcy legislation in force in this country.”
“In the normal course (and leaving aside for the moment HIH (UK)), given that they were appointed pursuant to s426 of the Act, the English PLs would simply remit any assets gathered by them to Australia. Those assets would then be distributed according to the Australian regime. As explained above, this Australian distribution regime could result in a dividend for some creditors which would be significantly different than would be the case if the distribution had taken place under the English regime. The English PLs have not yet been able to consider in detail the impact of this from a financial perspective, but there is no doubt it might lead to significant differences. For this reason, the English PLs have not remitted any assets to Australia. This gives rise to an issue for the English PLs in relation to their duties to this Court, inter alia, to protect assets for creditors as a whole and their duty to assist the Australian PLs and the Australian winding-up”