Application for declarations recognising a foreign courts orders

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6 May 2011

In the recent case of Re Chow Cho Poon (Private) Ltd [2011] NSWSC 300, the Supreme Court of NSW made ex parte declarations recognising the orders of the High Court of the Republic of Singapore and authorising a foreign liquidator to deal with certain property of the company located in Australia to extent he was permitted to do so by the law of Singapore.

FACTS

A company incorporated in Singapore and its liquidator brought an application seeking declaratory relief that the liquidator’s appointment and the powers granted to him under the laws of Singapore be recognised in Australia. The application sought Australian Court recognition of the orders of the High Court of the Republic of Singapore, which appointed the foreign liquidator and authorised him to operate the foreign corporation’s bank accounts, some of which were held with Westpac Bank, Australia. The application was brought under section 581(2)(a) of the Corporations Act 2001 (Cth) and not under the Cross-Border Insolvency Act 2008 (Cth) (CBI Act).

Issues

Section 581(2)(a) of the Corporations Act requires Australian courts to act in aid of and be auxiliary to the courts of prescribed countries. The Republic of Singapore is a prescribed company for the purpose of section 581. In providing declaratory relief in favour of the foreign liquidator and company, the court considered whether recourse to section 581(2)(a) was deprived by the effect of section 22 of the CBI Act. Section 22 of the CBI Act provides that section 581(2)(a) of the Corporations Act has no effect to the extent that is it inconsistent with the CBI Act, or the Model Law on Cross-Border Insolvency of the United Nations Commission on International Trade. Article 25 of the Model Law imposes a duty on the local court to “cooperate with” the foreign court.

The court also considered two other matters: First, whether the absence of an opposing party or contradictor to the application presented an impediment to the grant of declaratory relief; and secondly, whether the inherent jurisdiction of the court alone would have provided a sufficient basis for the grant of relief.

Decision

The Supreme Court of NSW found that the application was within the scope of section 581(2)(a) of the Corporations Act because the liquidator and the foreign company were seeking relief that would:

  1. provide added efficacy to the orders of the High Court of the Republic of Singapore; and
  2. assist and act in support of the High Court of the Republic of Singapore’s orders.

The court held that the declaratory relief would arm the liquidator and the foreign company with the means to gain access to the Westpac Bank accounts. 

It was not open to the court to exercise its discretion to deny assistance on the basis that the foreign legal system’s laws were at odds with a like aspect of the Australian system. Section 581(2)(a) of the Corporations Act therefore required that relief be granted in this case.

The court expressed a view that, notwithstanding that the winding-up of the foreign company had been ordered on the just and equitable ground alone (without any finding of insolvency), the Singapore proceedings might well constitute a “foreign proceeding” within the meaning of the CBI Act. This was because the jurisdiction for the winding-up order had its source in the Singapore Companies Act, which could be characterised as a “law relating to insolvency”.

Ultimately however, the court found that article 25 of the Model Law was not activated by the application because the court was not being called to “cooperate with” either the liquidator or the High Court of the Republic of Singapore. As a result, no issue of inconsistency arose and section 581(2)(a) of the Corporations Act was not deprived effect by under section 22 of the CBI Act.

The court considered that the lack of a defendant or contradictor was no impediment to the grant of declaratory relief because there was clear evidence that Westpac Bank would act on a declaration made by the court even though it is not a party to the proceedings. In any event, the court observed that the “irregularity of making a declaration in the absence of a contradictor is overborne by the statutory duty imposed by section 581(2)(a)”.

Finally, the court left open the possibility that the court’s inherent jurisdiction provided a sufficient basis to grant the discretionary relief sought. However, the court did not form a concluded view because of the statutory jurisdiction provided by section 581.

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