HIH Casualty and General Insurance Ltd, Re; McGrath and Others v Riddell and Another
| Jurisdiction | England & Wales |
| Judge | Lord Justice Tuckey,Lord Justice Carnwath |
| Judgment Date | 09 April 2008 |
| Neutral Citation | [2006] EWCA Civ 732 |
| Docket Number | Case No: A3/2005/2508–2509–2510–2511–2513 |
| Court | Court of Appeal (Civil Division) |
| Date | 09 April 2008 |
[2006] EWCA Civ 732
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
MR JUSTICE DAVID RICHARDS
Royal Courts of Justice
Strand, London, WC2A 2LL
The Chancellor of The High Court
Lord Justice Tuckey and
Lord Justice Carnwath
In The Matter of Hih Casualty and General Insurance Limited and
In The Matter of Fai General Insurance Company Limited and
In The Matter of World Marine & General Insurances Pty Limited and
In The Matter of Fai Insurances Limited and
In The Matter of The Insolvency Act 1986
Case No: A3/2005/2508–2509–2510–2511–2513
Case No: 4519, 4520, 4521 and 4522 of 2001
Mr Simon Mortimore QC and Mr Tom Smith (instructed by Norton Rose) for the Appellants (Joint Liquidators appointed by the Supreme Court of New South Wales)
Mr Richard Adkins QC and Mr Peter Arden (instructed by Eversheds) for the Appellants (Amaca Pty Limited and Amaba Pty Limited)
Mr William Trower QC and Mr Jeremy Goldring (instructed by Freshfields Bruckhaus Deringer) for the Respondents (joint provisional liquidators appointed by the High Court of Justice of England and Wales)
The Chancellor
Introduction
S.426 Insolvency Act 1986, entitled "Co-operation between courts exercising jurisdiction in relation to insolvency" provides, so far as material:
"(4) The courts having jurisdiction in relation to insolvency 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.
[(6) – (9) ]
(10) In this section "insolvency law" means –
(a) in relation to England and Wales, provision extending to England and Wales made by or under this Act….
[(b) ..
(c) …]
(d) in relation to any relevant country or territory, so much of the law of that country or territory as corresponds to provisions falling within any of the foregoing paragraphs;
and references in this subsection to any enactment include, in relation to any time before the coming into force of that enactment the corresponding enactment at that time.
(11) In this section "relevant country or territory" means –
[(a) …]
(b) any country or territory designated for the purposes of this section by the Secretary of State by order made by statutory instrument."
By the Co-operation of Insolvency Courts (Designation of Relevant Countries and Territories) Order 1986 SI 1986/2123 Australia was designated for the purposes of s.426.
The HIH Group was the second largest insurance group in Australia until its collapse in March 2001. At that time it comprised 274 companies through which the Group carried on insurance business in many countries including Australia and England. These proceedings relate to four of them ("the Companies") , namely HIH Casualty and General Insurance Ltd ("HIH") , FAI General Insurance Company Ltd ("FAIG") , World Marine & General Insurances Pty Ltd ("WMG") and FAI Insurances Ltd ("FAII") . Each of the Companies was incorporated in Australia. In addition each of HIH, FAIG and FAII is or was registered in England as an oversea company under Companies Act 1985 and was authorised to carry on insurance business in the United Kingdom under Insurance Companies Act 1982. In March and April 2001 each of the Companies presented its own petition for compulsory winding up to the Supreme Court of New South Wales and provisional liquidators were duly appointed by that court. On 27th August 2001 the Supreme Court of New South Wales ordered each of the Companies to be wound up and appointed the provisional liquidators, Mr McGrath and Mr Macintosh, to be the liquidators thereof ("the Australian Liquidators") .
Contemporaneously with the presentation of winding up petitions to the Supreme Court of New South Wales that court requested the High Court in England, pursuant to s.426, to appoint provisional liquidators to each of the Companies in England. Between 23rd March and 10th April 2001 such appointments were duly made, pursuant to s.426 Insolvency Act, under s.472 Corporations Act 2001 (Australia) . On 16th July 2001 the High Court in England authorised another company in the HIH Group to present petitions to the High Court in England for the winding up of each of the Companies by that court. Such petitions were duly presented on 24th July 2001. On 14th September 2001, pursuant to a further request of the Supreme Court of New South Wales to the High Court in England made on 10th September 2001, the latter court discharged the orders for the appointment of provisional liquidators made, pursuant to s.426 under s.472 Corporations Act 2001 (Australia) and reappointed the same individuals, namely Mr McMahon, Mr Riddell and Mr Wardrop, as provisional liquidators in accordance with the provisions of s.135 Insolvency Act 1986 ("the English Provisional Liquidators") .
:
| HIH | FAIG | FAII | WM&G | |
| Assets | ||||
| Australia | 864 | 799 | 33 | 15 |
| UK | 206 | 23 | 10 | 8 |
| Elsewhere | 41 | 70 | ||
| Total | 1,111 | 892 | 43 | 23 |
| Liabilities | ||||
| Australia | 3,488 | 2,274 | 1,903 | 35 |
| UK | 882 | 5 | 85 | 12 |
| Elsewhere | 129 | 50 | 154 | 0 |
| Total | 4,500 | 2,329 | 2,142 | 47 |
The Companies are insolvent but no winding up orders have been made against any of them in England. Nor is it intended to seek such orders if the proposed schemes of arrangement command sufficient support from the creditors of each of the Companies and are sanctioned by the Court in both Australia and England. On 10th December 2004 and 25th February 2005 the Australian Liquidators and English Provisional Liquidators respectively sought orders convening meetings of creditors seeking their approval to schemes of arrangement. Those schemes were designed to reflect the different priorities for distributions to creditors of the Companies in a winding up in England and Australia respectively. Creditors in Australia suggested that it was not necessary to have two schemes for the assets collected by the English Provisional Liquidators which could and should be remitted to the Australian Liquidators for distribution by them in accordance with the insolvency law of Australia. On 14th June 2005 the Australian Liquidators asked the English Provisional Liquidators to remit the assets under their control ("the English Assets") to Australia for distribution by them in accordance with Corporations Act 2001 (Australia) . On 20th June 2005 the English Provisional Liquidators replied to the effect that they had no power to do so.
On 24th June 2005 the English Provisional Liquidators applied to the High Court in England for directions. The directions sought fall into three categories. The first category sought directions as to how, if the Companies were wound up in England, the English Assets should be distributed having regard, in particular, to certain provisions of Australian law. The second category sought directions, having regard to the directions given in relation to the first category, as to the nature of the scheme of arrangement the English Provisional Liquidators might promulgate. The third category sought directions as to whether creditors should be divided into more than one class for voting purposes depending on the directions given under the first and second categories.
On 4th July 2005 Barrett J sitting in the Supreme Court of New South Wales, on the application of the Australian Liquidators, issued a further letter of request to the High Court in England:
"to assist and to act in aid of and be auxiliary to this Court in this proceeding by hearing and determining an application by the Australian Liquidators for:
(a) directions to the English Provisional Liquidators to pay over to the Australian Liquidators all sums collected, or to be collected, by them in their capacity as English Provisional Liquidators, after paying or providing for all proper costs, charges and expenses of the English Provisional Liquidators, pursuant to the demand of the Australian Liquidators dated 14th June 2005, so that such sums may be applied in the due course of the winding-up of the Company under the provisions of the Corporations Act 2001 or in accordance with a scheme of arrangement, if such scheme is sanctioned by the Supreme Court of New South Wales under s.411 of the Corporations Act 2001 and/or by the High Court of Justice in England and Wales under s.425 of the English Companies Act 1985; and
(b) extension and amendment of the powers of the English Provisional Liquidators as set out in the order of the High Court of Justice of England and Wales dated 14th September 2001 so as to enable them to pay over to the Australian Liquidators all sums collected, or to be collected, by them in their capacity as English Provisional...
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