The on-going matter of the Halifax liquidation came before Justice Jacqueline Gleeson in the Federal Court of Australia (FCA) on 18 December 2019, and jointly, before Justice Geoffrey Venning of the High Court of New Zealand (NZHC), by video-link.
The intermingled nature of the assets and liabilities of Halifax AU and Halifax NZ has prompted the need for joint court sitting arrangements. See my earlier comments.
Justice Venning likewise saw the matter as “eminently suitable”[1] for both Courts sitting together to hear the same evidence and submissions. The alternative would be separate hearings in the FCA and in the NZHC. Apart from there being a duplication of costs, there would be a risk of the two courts
“coming to different conclusions about the same pool of funds [which] would be problematic for the Liquidators (to say the least) and potentially costly for investors”.
Counsel were not aware of any case where there have been cross-national jurisdiction hearings of this nature involving the two courts. The Nortel Networks administration is an overseas cross-border insolvency example where the Canadian and US Courts co-operated by holding joint hearings.[2]
In any event, Gleeson J accepted that the Federal Court had jurisdiction to request the NZHC to conduct concurrent hearings by way of a letter of request under s 581(4) of the Australian Corporations Act 2001. The NZHC has authority to respond, under s 8 of the New Zealand Insolvency (Cross-border) Act 2006.
It was proposed that such a letter would be issued promptly.
There was no reason why the NZHC should not physically sit in Australia at the request of the Federal Court or why the Federal Court should not sit in New Zealand. The arrangement would apply in response to a request for aid from the FCA; hence no issues of comity arose, nor of sovereignty.
The Judges saw it necessary to establish a protocol regarding case management conferences and communications. The Guidelines for Communication and Co-operation between Courts in Cross-Border Insolvency matters produced by the Judicial Insolvency Network were referred to.
Another approach?
In the latest Insolvency Law Bulletin, Paul Apáthy and Hongbei Li have suggested[3] that co-operation would have been available under the UNCITRAL Model Law on Cross-Border Insolvency. Justice Venning thought that “seem[ed] wrong” but in any event he said the issue could be resolved by the letter of request process.
But as Apáthy and Li say, a view appears to have been taken that as there were separate corporate entities of Halifax, the Model Law was not available as it was only intended to provide assistance in cross-border insolvency matters relating to the same entity.
The authors see this as
“open to debate. Whilst the UNCITRAL Model Law is primarily focused on “multiple proceedings concerning a single debtor”, it does not necessarily follow that the scope of relief or facilitation should be drawn narrowly to exclude all circumstances involving multiple debtors”. [citations omitted].
The authors envisaged one alternative approach whereby the liquidators of Halifax AU and Halifax NZ sought recognition in New Zealand and Australia, respectively, of their liquidations as foreign main proceedings under the Model Law, giving rise to the availability of potential relief under articles 20 and 21. This relief is framed non-exhaustively and is available “where necessary to protect the assets of the debtor or the interests of the creditors”. Also, court cooperation under the Model Law is not dependent on recognition and does not appear to be limited to communications between courts in respect of the same debtor. The authors also refer to the use of a protocol on communication (including any joint hearing) between the New Zealand and Australian courts and to Justice Gleeson’s paper on this subject.[4]
They also note that the UNCITRAL Model Law on Enterprise Group Insolvency will provide a more comprehensive framework for coordination and communication in respect of cross-border insolvent corporate groups.
February 2020
In any event the matter is proceeding by the letter of request process, retained in the law alongside the Model Law processes under Australia’s 2008 cross-border insolvency legislation.
Orders made by Gleeson J were that any application to be joined or to seek to be heard be filed and served by 4 February 2020 with the matter fixed for a [joint] hearing of those applications on 18 and 19 February 2020 at 9.15 am EST, 11.15am NZ.
[1] Minute No 4, Venning J, 12 December 2019
[2] Discussed in Classic cross-border cooperation: joint court hearings in the Halifax insolvency by Paul Apáthy and Hongbei Li (2019) 20(4&5) INSLB 68
[3] Classic cross-border cooperation: joint court hearings in the Halifax insolvency, Apáthy and Li (2019) 20(4&5) INSLB 68
[4] Judicial cooperation in cross-border insolvency, presented at the UNCCA Fifth Annual May Seminar, Canberra, by Justice Jacqueline Gleeson, 10 May 2019
