The recent English decision in the Australian liquidation, New Cap Reinsurance Corpn Ltd (in liquidation) and another v Grant and others (available here), has further opened up the possibility for New Zealand insolvency proceedings to be recognised and enforced in the United Kingdom.
The liquidators for an Australian reinsurance company, New Cap Reinsurance Corporation Limited (New Cap), had successfully brought an action in the New South Wales Supreme Court against two Lloyd's syndicates (Syndicates) determining that payments made by New Cap to the Syndicates were voidable transactions under Australian insolvency laws. As the Syndicates were based in the United Kingdom and refused to accept the jurisdiction of the Supreme Court, the Court issued a letter of request to the UK High Court asking them to uphold the NSW judgment and order the Syndicates to return the payments. The High Court found in favour of the liquidators and the Syndicates appealed.
The Court of Appeal held:
- Both the Foreign Judgments (Reciprocal Enforcement) Act 1993 (UK) – which provides for the enforcement of foreign money judgments – and the Order extending the application of that Act to Australian apply to bankruptcy and corporate insolvency proceedings. However, that does not exclude section 426 of the Insolvency Act 1986 (UK). In particular, section 426 can be used to seek assistance with a view to the enforcement of a money judgment issued in foreign insolvency proceedings, including through a local order to enforce a foreign judgment for the payment of money made in insolvency proceedings.
- Section 426 is a discretionary provision. However, the Court cited Rubin v Eurofinance SA for the principle that "the jurisdiction of the court conducting, or supervising, the unitary insolvency proceeding in the court of the bankrupt's domicile should receive recognition world-wide, and at any rate in the English courts". In that context, the Court upheld the High Court's exercise of its discretion and dismissed the appeal.
This decision may be helpful to Australian and New Zealand insolvency officials in two ways. First, it recognises alternative methods of obtaining assistance from the UK courts in relation to foreign insolvency proceedings. Second, it provides further support for the principle of modified universalism recognised by Lord Hoffmann in HIH Insurance and Cambridge – i.e. that "ideally, bankruptcy proceedings should have universal application" and "[t]here should be a single bankruptcy in which all creditors are entitled and required to prove". It therefore indicates that the UK courts will be willing and able to recognise and assist New Zealand insolvency officials in relation to primary insolvency proceedings brought in New Zealand.
Leave to appeal this case (and Rubin v Eurofinance SA) has been granted. As always, we will keep you posted on these developments.