Lau Yu (also known as Jaffe Lau) v Patrick Cowley and Wong Wing Sze Tiffany (trustees in bankruptcy of the Debtor in Hong Kong)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Fancourt |
| Judgment Date | 10 September 2020 |
| Neutral Citation | [2020] EWHC 2429 (Ch) |
| Date | 10 September 2020 |
| Court | Chancery Division |
| Docket Number | Case No: CH-2020-000029 |
[2020] EWHC 2429 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
CHANCERY APPEALS (ChD)
Rolls Building
7 Rolls Buildings
Fetter Lane, London
EC4A 1NL
The Hon. Mr Justice Fancourt
Case No: CH-2020-000029
Ian Clarke QC and Oberon Kwok (instructed by Zhong Lun Law Firm) for the Debtor
Christopher Boardman QC and Katie Longstaff (instructed by Marriott Harrison LLP) for the Trustees
Hearing date: 27 July 2020
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
THE HON. Mr Justice Fancourt
This is an appeal against a recognition order made under The Cross-Border Insolvency Regulations 2006 (S.I. 2006 No.1030) (“the Regulations”) by Deputy Insolvency and Companies Court Judge Barnett on 8 January 2020.
By his order, the Deputy Judge ordered that bankruptcy proceedings (number 104 of 2017) regarding Lau Yu, also known as Jaffe Lau (“the Debtor”), in the High Court of the Hong Kong Special Administrative Region Court of First Instance be recognised as a foreign main proceeding in accordance with the UNCITRAL Model Law on Cross-Border Insolvency as set out in Schedule 1 to the Regulations (“the Model Law”). The Deputy Judge also ordered that, in so far as was necessary, service of the recognition application (“the Application”) be validated retrospectively, the Application having been served on the Debtor by courier on Wednesday, 11 December 2019 at his home in Regalia Bay, Stanley, Hong Kong.
Permission to appeal was granted on 28 April 2020 by Birss J on one ground only, namely whether there was power under Sched 2 to the Regulations (“Sched 2”) retrospectively to validate service of a recognition application outside England and Wales.
The Debtor says that there is no such power because Sched 2, on its true construction, requires an application to be made to the court prospectively to obtain authority to serve proceedings including recognition applications outside the jurisdiction and contains no provision for the grant of permission with retrospective effect.
The respondents (“the Trustees”) contend that there is such a power because CPR rule 6.15 applies under Sched 2 and such a power is in any event implicit; but no such exercise of the power was needed in any event because the Debtor had been validly served under Sched 2 without any court order. Alternatively, the Trustees submit that if the regulations do require a prior application, there is simple non-compliance with them that had no consequences, since the Debtor received the Application in time and contested it at the hearing, when he was represented by lawyers. In those circumstances, the court should treat non-compliance as an irregularity and waive the breach, alternatively dispense with the need for formal service. In the further alternative, the Trustees argue that the Debtor submitted to the jurisdiction by engaging with the merits of the Application at the hearing.
A recognition application under the Regulations is a claim for ancillary relief in Great Britain in support of foreign insolvency proceedings, made by an authorised foreign representative. In general terms, its purpose is to stay any proceedings or execution against the debtor in Great Britain or to prevent the disposal of the debtor's assets in Great Britain (article 20.1 of the Model Law). Additional specific relief can be granted, including entrusting the administration or realisation the debtor's assets in Great Britain to the foreign representative (article 21.1(e)), or the distribution of those assets (article 21.2), and especially conferring standing on the foreign representative to apply for relief under various provisions of the Insolvency Act 1986.
The court in either part of Great Britain has jurisdiction under article 4.2 of the Model Law if:
“(a) the debtor has –
(i) a place of business; or
(ii) in the case of an individual, a place of residence; or
(iii) assets,
situated in that part of Great Britain; or
(b) the court in that part of Great Britain considers for any other reason that it is the appropriate forum to consider the question or provide the assistance requested.”
There may therefore be questions about whether the domestic court has jurisdiction to act at all (though no such challenge was raised in this case). That is so whether the debtor is served in England and Wales at his proper address as of right, under para 22(2) of Sched 2, or elsewhere in Great Britain or overseas in accordance with the directions of the court. There is no suggestion that the court must resolve the substantive issue of jurisdiction under article 4.2 of the Model Law before permitting service out. Service out therefore performs the function of giving the debtor (and any other person required to be served) notice of the proceedings in good time, not of establishing the court's substantive jurisdiction. The issue and service of a recognition application under the Regulations is by no means the same as satisfying the court under Section IV of CPR Part 6 that there exists a sufficiently arguable ground for the court to assume jurisdiction over a foreign defendant.
Article 10 of the Model Law states:
“The sole fact that an application pursuant to this law is made to a court in Great Britain by a foreign representative does not subject the foreign representative or the foreign assets and affairs of the debtor to the jurisdiction of the courts of Great Britain or any part of it for any purpose other than the application.”
Foreign proceedings are to be recognised if the court has jurisdiction over the debtor under article 4.2 and if (paraphrasing the effect of article 17.1 of the Model Law):
i) it is a foreign proceeding as defined in paragraph (i) of article 2 of the Model Law (essentially foreign insolvency proceedings);
ii) the foreign representative applying for recognition is a person or body authorised in a foreign proceeding to administer the reorganisation or the liquidation of the debtor's assets or affairs or to act as a representative of the foreign proceeding;
iii) the application is accompanied by appropriate certified evidence as to the foreign proceedings and any other insolvency proceedings known to the foreign representative; and
iv) the application has been submitted to the Chancery Division of the High Court in England and Wales or the Court of Session in Scotland.
These matters are required to be established by the recognition application itself and the affidavit in support of it: Sched 2, paras 2, 3, 4.
Part 6 of Sched 2 (which includes paras 20, 21 and 22) is concerned specifically with “Principal Applications”, which include a recognition application. Para 20 of Sched 2 requires such an application to be filed, whereupon the court fixes a hearing date and venue. By para 21(2): “unless the court otherwise directs, the application shall be served on the following persons”, and there then follows a list, which includes the debtor, any British insolvency office holder and any other foreign representative acting in other foreign proceedings in relation to the debtor. Para 22 provides:
“(1) Service of the application in accordance with paragraph 21(2) shall be effected by the applicant, or his solicitor, or by a person instructed by him or his solicitor, not less than 5 business days before the date fixed for the hearing.
(2) Service shall be effected by delivering the documents to a person's proper address or in such other manner as the court may direct.
(3) A person's proper address is any which he has previously notified as his address for service within England and Wales; but if he has not notified any such address or if for any reason service at such address is not practicable, service may be effected as follows –
(a) (subject to sub-paragraph (4)) in the case of a company incorporated in England and Wales, by delivery to its registered office;
(b) in the case of any other person, by delivery to his usual or last known address or principal place of business in Great Britain.
(4) If delivery to a company's registered office is not practicable, service may be affected by delivery to its last known principal place of business in Great Britain.
(5) Delivery of documents to any place or address may be made by leaving them there or sending them by first class post in accordance with the provisions of paragraph 70 and 75(1).”
Para 22(2) appears to be mandatory, in the sense that either delivery to a proper address or directions are required, but para 22(3) and (4) extend it by permitting service at certain non-notified addresses. There is no express requirement for an application for service out of the jurisdiction in part 6 of Sched 2. In part 9, which contains general provisions as to procedure and practice, para 30(1) provides:
“The CPR and the practice and procedure of the High Court (including any practice direction) shall apply to proceedings under these Regulations in the High Court with such modifications as may be necessary for the purpose of giving effect to the provisions of these Regulations and in the case of any conflict between any provision of the CPR and the provisions of these regulations, the latter shall prevail.”
Part 12 of Sched 2 also contains general provisions. Para 70 permits service of any document by post or personally. The following provisions of part 12 are material:
“76. General Provisions as to service and notice
Subject to paragraphs 22, 75 and 77, CPR part six (service of documents) applies as regards any matter relating to service of...
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