Jersey Unreported Judgments

[2009]JRC054

royal court

(Samedi Division)

24^th March 2009

IN THE MATTER OF STEVEN JOHN WILLIAMS AS TRUSTEE IN BANKRUPTCY OF MICHAEL STEPHEN COLLETT

AND IN THE MATTER OF ARTICLE 49 OF THE BANKRUPTCY (DESASTRE)(JERSEY) LAW 1990.

Advocate A. J. N. Dessain for the Representor.

judgment

COMMISSIONER:

1.        On 3rd March 2009 the Court granted assistance under Article 49(1) of the Bankruptcy (Désastre)(Jersey) Law 1991 ("the Bankruptcy Law") to the High Court of Justice of England and Wales by recognising the appointment of the representor Stephen John Williams as trustee in bankruptcy of Michael Stephen Collett, notwithstanding the fact that 99.8% of the claims in the bankrupt estate were due to Her Majesty's Revenue & Customs ("HMRC").

2.        Article 49 of the Bankruptcy Law is in the following terms:-

"49.    Assistance for other courts in insolvency matters

(1)       The court may, to the extent it thinks fit, assist the courts of a relevant country or territory in all matters relating to the insolvency of a person, and when doing so may have regard to the extent it considers appropriate to the provisions for the time being of any model law on cross border insolvency prepared by the United Nations Commission on International Trade Law.

(2)       For the purposes of paragraph (1), a request from a court of a relevant country or territory for assistance shall be sufficient authority for the court to exercise, in relation to the matters to which the request relates, any jurisdiction which it or the requesting court could exercise in relation to these matters if they otherwise fell within its jurisdiction.

(3)       In exercising its discretion for the purposes of this Article the court shall have regard in particular to the rules of private international law.

(4)       In this Article "relevant country or territory" means a country or territory prescribed by the Minister."

3.        Under the Bankruptcy (Désastre)(Jersey) Order 2006 the United Kingdom has been designated a prescribed country for the purposes of Article 49(4) of the Bankruptcy Law.

4.        The granting of assistance is discretionary and the Court is required under Article 49(3) to have regard in particular to the rules of private international law. 

5.        It is a rule of private international law that the Court has no jurisdiction to entertain an action for the enforcement either directly or indirectly of a penal, revenue or other other public law of a foreign state (see Rule 3 Dicey and Morris Conflict of Laws, 13th edition). The rule is explained by Lord Keith in Government of India (1955) 1 All ER at page 299 where he says:-

"One explanation of the rule thus illustrated may be thought to be that enforcement of a claim for taxes is but an extension of the sovereign power which imposed the taxes and that an assertion of authority by one State within the territory of another, as distinct from a patrimonial claim by a foreign Sovereign is (treaty or convention apart) contrary to all concepts of independent sovereignties."

6.        In the case of In re Tucker [1987-88] JLR 473, the Court refused aid under Section 122 of the Bankruptcy Act 1914 where the Inland Revenue was the only creditor and thus the sole object of seeking aid was to enforce a foreign revenue claim.   If there had been another ordinary creditor, the Court would have been inclined to the views of Deemster Luft in the case of In re Tucker (Isle of Man) (1988) FLR 154, that (following Priestly v Clegg 1985 (3) SA 955) the rule had no application where money which the trustee was seeking to get in would in due course benefit even one ordinary creditor.  The Court in Tucker (Jersey) found that there was no valid distinction between collecting assets and the seeking of information to assist in the recovering of assets. 

7.        In Ayres v Evans (1981) 56 Fed LR 235, 53% of the claims were due to a revenue authority, with the balance due to ordinary claims.  The court said:-

"the rule that the courts will not act to enforce a revenue claim by another State does not apply where a liquidator or official assignee seeks to get in property which will in due course benefit ordinary creditors as well as the Revenue.  It is only if the Revenue is the only claimant that the Government of India rule will apply." (my emphasis)

8.        In the case of Robert Jeremy Bomford [2002] JLR N 34, the Court gave assistance under the Bankruptcy Law where the Inland Revenue's claim amounted to 90% of the claims filed with the trustee.  Bailhache, Bailiff, said this:-

"It would be unfair to those creditors, in our judgment, if we were to refuse to exercise our discretion in favour of the Trustee merely because the Inland Revenue was a more substantial creditor than them.  We, accordingly, grant the prayer of the representation and accord the Trustee in Bankruptcy the relief sought."

9.        In this case, Coutts Bank has a claim against the bankrupt which will rank pari passu with that of HMRC, but it is the only other creditor with HMRC's claim amounting to some 99.8%.  The purpose of the application is to obtain information from a local trust company in relation to funds transferred into a Jersey trust and from there to a trust in Hong Kong.  The trustee believes that some £300,000 could ultimately be recovered from Hong Kong from which Coutts Bank as the only creditor would benefit to the extent of some £400.

10.      In our view, it would be wrong to impose an arbitrary rule that when the proportion that the claim of the ordinary creditor(s) bears to the claim of the foreign revenue falls below a certain percentage, the rule of private international law will be applied to bar assistance.  What percentage would we stipulate?  In cases involving large sums, a small percentage might still represent a very material sum for the ordinary creditor concerned but, whatever the amounts, fairness dictates that the rule should not apply where there is another ordinary creditor to that of the foreign revenue who will stand to benefit from the assistance being given.

11.      Accordingly, we recognised the appointment of the trustee and made orders enabling him to obtain documents and information within this jurisdiction.

Authorities

Bankruptcy (Désastre)(Jersey) Law 1991.

Bankruptcy (Désastre)(Jersey) Order 2006.

Dicey and Morris Conflict of Laws, 13th edition.

Government of India (1955) 1 All ER.

In re Tucker [1987-88] JLR 473.

Bankruptcy Act 1914.

In re Tucker (Isle of Man) (1988) FLR 154.

Priestly v Clegg 1985 (3) SA 955.

Ayres v Evans (1981) 56 Fed LR 235.

Robert Jeremy Bomford [2002] JLR N 34.