Atrum Coal NL v Moran

Counsel for the First, Second, Fourth, Fifth, Sixth and Seventh Respondents: Mr ML Bennett

Solicitor for the First, Second, Fourth, Fifth, Sixth and Seventh Respondent: Bennett & Co

Counsel for the Third Respondent: Mr SG Leslie

Solicitor for the Third Respondent: Wilson & Atkinson

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1334 of 2015

AND: RUSSELL HAROLD MORAN AND OTHERS (AS PER THE SCHEDULE)

JUDGE: RARES J DATE OF ORDER: 16 DECEMBER 2015 WHERE MADE: SYDNEY

1. The first and second respondents' application, and the third respondent's application, to transfer these proceedings to the Supreme Court of Western Australia, or alternatively to the Perth Registry of the Federal Court of Australia, are dismissed.
2. The applicants' costs of the transfer applications be the applicants' costs in the proceeding.
3. Compliance with r 20.13 of the Federal Court Rules 2011 requiring an application to be made for discovery is dispensed with.
4. The parties are to agree an electronic disclosure protocol by 22 December 2015.
5. The parties are to give standard discovery by 19 February 2016, and documents are to be electronically discovered in accordance with the agreed electronic disclosure protocol, referred to above.
6. The applicants file and serve any evidence and submissions in response to the first, second, fourth, fifth, sixth and seventh respondents' application for security for costs (security for costs application) by 1 February 2016.
7. The first, second, fourth, fifth, sixth and seventh respondents serve any evidence and submissions in reply to those of the Applicants by 3 February 2016.
8. A tabbed bundle consisting of the interlocutory application, the evidence and the submissions of each party in relation to the application for security for costs (such submissions not to exceed 5 pages) be provided to the associate to Rares J by 4 February 2016.
9. The matter be listed at 2.15pm on 5 February 2015 for directions and hearing of the interlocutory application for security for costs filed on 10 December 2015 by the first, second, fourth, fifth, sixth and seventh respondents. THE COURT NOTES THAT:
10. The applicants undertake to lodge with the Court Registry by 30 December 2015 a bank guarantee for $50,000, representing security for the first, second, fourth, fifth, sixth and sevents respondents' costs to the completion of discovery, such bank guarantee to be: (a) in favour of the Registrar of the Court; (b) of a term of at least one year and extendable; and (c) able to be called upon by the Registrar providing a written demand and the guarantee to the bank, but otherwise being unconditional;; and
11. Such bank guarantee is proffered by the applicants without any admission as to their liability to be ordered to pay security for costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1334 of 2015

AND: RUSSELL HAROLD MORAN AND OTHERS (AS PER THE SCHEDULE)

JUDGE: RARES J DATE: 16 DECEMBER 2015 PLACE: SYDNEY

REASONS FOR JUDGMENT (REVISED FROM THE TRANSCRIPT) 1 These are two applications by each of the third respondent, Ms Candice Stevenson on her own behalf, and the other six respondents, being Russell Moran and Gino D'Anna and various companies with which they are associated (the Moran respondents), to transfer the proceedings to the Supreme Court of Western Australia pursuant to one of s 5(4) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) or s 1337H of the Corporations Act 2001 (Cth) or, alternatively, pursuant to s 48 of the Federal Court of Australia Act 1976 (Cth) to the Western Australian District Registry of this Court.

Background 2 The proceedings are complicated. The applicants (Atrum parties) commenced these proceedings after earlier proceedings in which they had sought preliminary discovery orders from some of the present respondents. That exercise provided the Atrum parties with information that they then deployed in commencing these proceedings. 3 Atrum Coal NL is a publicly listed company on the Australian Stock Exchange (ASX). It contends that its former directors, Mr Moran and Mr D'Anna, and its former group accountant, Ms Stevenson, in effect, together commenced their own commercial enterprises by causing the fourth to seventh respondents, to exploit coalmining opportunities in Canada that Atrum itself had in one way or another, through the involvement of, particularly, Mr Moran and Mr D'Anna, become aware of while they were directors or officers of Atrum. 4 Atrum also conducts coalmining activities in Canada. Suffice to say that the claims Atrum articulated in its statement of claim allege that the respondents, in one way or another, breached, or participated in the individual respondents' breaches of their fiduciary or statutory duties as officers of Atrum in acquiring rights to mine coal in Canada or otherwise exploited a commercial opportunity that provides the basis for the claim that the various respondents account to Atrum for their profits from the new ventures. The respondents deny those allegations. 5 The issues on the pleadings, which I have greatly oversimplified in this account, will involve a significant traverse of factual disputes concerning the actions of various persons within each side's respective camps in their dealings with each other and will require precise proof of the nature of and extent of the knowledge of the individual respondents at particular times during which each held office in Atrum.

Background 6 In June 2015, Mr Moran and Mr D'Anna commenced proceedings in the Supreme Court of Western Australia alleging that Atrum had disclosed to the ASX confidential information concerning their personal loans without seeking their approval. They sought to restrain that publication. The Supreme Court granted Mr Moran and Mr D'Anna some interlocutory relief which it later narrowed in a manner that is not in evidence before me. Subsequently, Atrum learnt, so it claimed, of the matters that have grounded both of its applications in this Court. 7 The trial judge in the Supreme Court proceedings in Western Australia, Miller J, has reserved his decision on whether he should grant Atrum's application summarily to dismiss those proceedings. It is uncertain when his Honour will deliver judgment, although the parties informed me today that his Honour has indicated it will not be before the end of this year. 8 Atrum asserts that the issues in the Western Australian proceedings are distinct from, and not in common with, those in these proceedings. Nonetheless, in their defence, the Moran respondents alleged that the reason that Mr Moran and Mr D'Anna resigned their employment was because of the unlawful conduct of Atrum, in disclosing the matters they complained of, to the ASX. At the moment, on the pleadings, Atrum has asserted that its conduct was, in fact, lawful. There may be some overlap with this matter, but the subject matter of the West Australian proceedings in the material before me does not appear to involve any substantive overlap with the issues currently in dispute in these proceedings. 9 Mr Moran and Mr D'Anna both live, and have families living, in Perth. Ms Stevenson and her partner live there. However, Mr Moran and Mr D'Anna travel frequently to Canada to pursue the corporate respondents' commercial opportunities which they are seeking to exploit there. 10 For its part, the non-executive chairman of Atrum, James Chisholm, lives in Sydney. Atrum's Australian operations are now conducted in Sydney, although its head office is in Vancouver, Canada. Atrum has other officers who are based either in Sydney or elsewhere in New South Wales and who are likely to be witnesses in the proceedings, including Ben Smith who lives in Wagga Wagga. From time to time, Mr Smith comes to Sydney but is mainly occupied in Atrum's business in Western Canada. Mr Smith has young children who live in Wagga Wagga. Peter Doyle, Atrum's vice-president of business, development and marketing is currently based in Sydney but, at about this time, will be moving to be based in Canada. Mr Doyle has a six month old child. 11 The issue now is where these proceedings ought be litigated. I think it fair to say that each side in the proceedings has a reasonable basis to argue that it would prefer for the proceedings to be heard in either, in Atrum's case, Sydney and, in the respondents' case, Perth.

The respondents' submissions 12 The respondents argued that there is a potential for conflicting decisions between whatever the Supreme Court will decide in the matter currently before it and these proceedings. The Moran respondents argued that, in substance, it is a matter of impression as to how the discretion ought be exercised in deciding whether the proceedings should be cross-vested to the Supreme Court or transferred under s 48 of the Federal Court Act to this Court's Western Australian registry. 13 The issues on which the respondents relied included that it would be more convenient for their witnesses, including the three individual respondents who will be likely to give evidence, to do so in a proceeding heard in Perth, a matter which is obvious, and that so far as concerned witnesses who may located in Canada, it will be a neutral factor as to whether their evidence were taken by video link in Sydney or Perth. They submitted that the corporate nature of the Atrum parties meant that, because the second applicant is a Canadian company, so its location there should not weigh in the balance as to where the proceedings ought be heard. They argued that recently Atrum itself had relocated its head office to Vancouver, albeit that it maintained its office in Sydney because it is an Australian company and it has some very limited operations here. 14 In addition, the respondents argued that they have engaged law firms in Perth that do not have offices in Sydney and that, for some reason, it will be necessary, were the trial to be held in Sydney, for them to engage new lawyers in Sydney. Atrum has engaged a national law firm with offices in both Sydney and Perth, although its legal work is performed principally by its solicitors who live and work in Sydney. Atrum is represented, at the moment, by senior and junior counsel who also live in Sydney. 15 The Moran respondents argued that the logistical convenience for them of having the proceedings conducted in Western Australia was significant and outweighed any countervailing factors in favour of the Atrum parties' choice of Sydney. Ms Stevenson argued that the question of where the proceedings should be held would be determined by identifying the natural forum. 16 All respondents also argued, among other things, that "but for the Cross-Vesting Act and pendent legislation", Atrum's breach of confidence and breach of contract claims would be within the jurisdiction of a State court and that, accordingly, the Supreme Court of Western Australia is the natural forum. They accepted that the Corporations Act claims were in the jurisdiction of both the Supreme Court and this Court.

Consideration 17 The last submission of the respondents betrayed a misunderstanding of the nature of federal jurisdiction and its capacity to resolve a justiciable controversy: see Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 585-588 [139]-[149] per Gummow and Hayne JJ, with whom Gleeson CJ and Gaudron J agreed on those points (at 546 [25], [26]). The existence of the claims under the Corporations Act entails that the whole controversy is, and will always be, in federal jurisdiction in whichever Court it is ultimately conducted: LNC Industries Ltd v BMW (Australia) Ltd (1983) 151 CLR 575 at 581-582 per Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ, with whom Murphy J agreed; see too Truthful Endeavour Pty Ltd v Condon (2015) 233 FCR 174 at 183-192 [32]-[61] per Allsop CJ, Katzmann and Gleeson JJ. 18 In my opinion, the claim under the Cross-Vesting Act is misconceived. That is because s 1337A(2)(a) of the Corporations Act provides that Div 1 of Pt 9.6A of that Act applies to the exclusion of the Cross-Vesting Act. The question of whether proceedings should be transferred from this Court falls to be considered under Subdiv C of Div 1 of Part 9.6A and, in particular, by reference to the considerations in ss 1337H and 1337L. Importantly, s 1337M provides that, at any stage, a Court may transfer a proceeding on the application of a party or of the Court's own motion. 19 Section 1337L identifies that, in deciding whether to transfer a matter under s 1337H, a Court must have regard to the principal place of business of any body corporate concerned in the proceeding, the place or places where the events that are the subject of the proceeding took place, and the other courts that have jurisdiction to deal with the proceeding. Critically, s 1337H(2) provides that: If it appears to the transferor court that having regard to the interests of justice, it is more appropriate for the relevant proceeding … to be determined by another court that has jurisdiction in the matters for determination in the relevant proceeding … the transferor court may transfer the relevant proceeding … to that other court. (emphasis added) 20 Thus, s 1337H(2) creates a discretion that requires the transferor court to have regard to the interests of justice and which is the more appropriate court to hear and determine the matter. In doing so, the Court must have regard to the considerations in s 1337L. 21 Here, the principal place of business of Atrum, as I have said, is Sydney. The second applicant is located in Canada. The fifth respondent is also located in Canada and the other corporate respondents are in substance, in Perth. I am not persuaded that anything really turns on a detailed examination of the locations of the various corporate parties in the consideration of where it is most appropriate for these proceedings to be heard. 22 The events that are the subject of the proceedings occurred in various places, although more of them appear to have occurred in Perth than in Sydney. Some events are likely to have taken place in Canada or by individuals using electronic communications. Again, it seems to me, that in the circumstances, that consideration does not weigh one way or another in the balance. Both the Supreme Court and this Court have jurisdiction to hear and determine all of the issues in controversy in these proceedings. 23 The question is whether it is more appropriate in the interests of justice to transfer these proceedings to the Supreme Court. I am not persuaded that it is more appropriate to transfer the proceedings to that Court on the material presently before me. Nonetheless, that question is not concluded once for all, because s 1337M enables this Court to revisit the question depending on how matters develop in the future. 24 The respondents did not identify any statute of Western Australia that could be applied by the Supreme Court alone, as opposed to this Court, as a source of power to determine any aspect of the controversy in this matter: see e.g. Smith v Smith (1986) 161 CLR 217 at 240-241 per Gibbs CJ, Wilson and Dawson JJ, 250-252 per Mason, Brennan and Deane JJ, Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559 esp at 590-595 [66]-[80] per Gleeson CJ, Gaudron and Gummow JJ. 25 Mr Moran and Mr D'Anna had contracts with Atrum that provided that they submitted to the non-exclusive jurisdiction of the Courts of Western Australia. This Court falls within this description as does the Supreme Court of Western Australia. 26 Nothing turns, as it did in BHP Billiton Limited v Schultz (2004) 221 CLR 400, on factors such as the lex loci delicti (see e.g. per Gummow J at 444 [189]) or the differences between the applicable procedural or substantive laws of Western Australia and this Court. This Court can, and must, apply the laws of Western Australia to the extent they are applicable and not inconsistent with a law made by the Parliament. The Australian common law and general law applies throughout the Commonwealth: see John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503 at 540 [86]-[87] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ. 27 The respondents did not identify any juridical advantage as between the proceedings being heard in this Court or the Supreme Court, other than the possibility that there may be a faintly articulated overlap between some issues. At the moment, I am not satisfied that any overlap would be substantive. The only potential overlap issue raised in the defences in this Court is whether each of Mr Moran and Mr D'Anna resigned as directors of Atrum, because as they claim, of Atrum's mistreatment of them, through the alleged unauthorised disclosure of confidential information or whether they did so in order to pursue opportunities to develop what Atrum now claims to be entitled to pursue, should it choose to do so, as its rights or interests in coal assets in British Columbia. 28 Whatever the states of mind of each of Mr Moran and Mr D'Anna about that topic, they made that allegation in answer to Atrum's allegation of the undisputed fact that they had resigned. It does not seem to me that there will be any particular significance in deciding the substantive issues in controversy in these proceedings whether, as a matter of law or fact, that one or other side is right about the debate in the Supreme Court concerning the characterisation of, or Atrum's motives in making, the impugned disclosure to the ASX. 29 How the factual issues in this case will fall out concerning whether Mr Moran and Mr D'Anna did, in fact, believe they had been wrongly treated or not, will not affect whether he or they acted in breach of any obligation of confidence or fiduciary obligation. The fact that one or other of the sides may have acted wrongly does not mean that, at the end of the day, the reason for the two resignations will be material in the determination of the questions of law in the Supreme Court proceedings. 30 In my opinion, the application for a transfer under s 1337H by each of the respondents should be refused. There are no juridical advantages or differences between the capacities of the Supreme Court or this Court to apply the law to the facts of the case. This Court, being a national court, can sit throughout Australia, including in Perth. It is absurd to suggest that the fact that the proceedings were commenced in Sydney militates against this Court sitting in whatever place in Australia is most appropriate as the place to hear evidence or argument. It can do so by reason of its flexible national character and s 48 of the Federal Court Act. 31 That leaves for consideration whether these proceedings should be transferred under s 48 of the Federal Court Act. In National Mutual Holdings Pty Limited v The Sentry Corporation (1988) 19 FCR 155 at 162, Bowen CJ, Woodward and Lockhart JJ held that: It should be noted that the Court may exercise its powers under O 30, r 6 either on the application of a party or of its own motion. The Court must, however, be satisfied, after considering all relevant matters, that there is sound reason to direct that the proceeding be conducted or continued elsewhere. Its starting point is that the proceeding has been commenced at a particular place. Why should it be changed? On the one hand, if the party who commenced the proceeding chose that place capriciously the Court would be justified in giving no weight to the choice of place. At the other end of the scale, a proceeding may have continued for some time at the place of commencement with many steps having been taken there, for example, filing of pleadings and affidavits, discovery and inspection. Due weight would be given by the Court to such matters before directing that the proceeding should continue at a different place. (emphasis added) 32 They also said that: The balance of convenience is important, but its weight must vary from case to case. Ultimately the test is: where can the case be conducted or continued most suitably bearing in mind the interests of all the parties, the ends of justice in the determination of the issues between them, and the most efficient administration of the Court. It cannot and should not, in our opinion, be defined more closely or precisely. (emphasis added) 33 At the present stage of this litigation, each of the parties has engaged its legal team in the city with which the relevant parties have their closest Australian connection, namely, Sydney for the applicants and Perth for the respondents. It is presently not practicable to identify what the ultimate issues for trial will be, the nature and extent of the evidence to be called, where the witnesses are located or where they ought give their evidence. Some of the likely witnesses will be, or work, in Canada, even though they are Australian residents. It is clear enough that those who, or whose families, live in either Sydney or other places in New South Wales or in Perth, will prefer to have the proceedings heard, respectively, in those places. 34 In my opinion, it is possible to case manage the proceedings by maintaining them in Sydney and conducting, where necessary, video hearings to Perth during the interlocutory stages. I do not see why the respondents would have to engage new lawyers in Sydney. That is not the experience of litigation in this Court involving parties located in different venues. 35 As the case develops and issues become clearer, it will be possible to ascertain how best to conduct a trial including by considering whether some or all of it should take place in Perth. Those matters will be able to be ascertained closer to the hearing, including by reason of the fact that, operationally, all of the corporate parties have interests in Canada and, apart from Ms Stevenson, the principal witnesses will be there at various times. It will only be when the issues for trial are settled, and the nature and involvement of the various witnesses has been clarified, that it will be sensible to work out, with the assistance of the parties, the most appropriate venue or venues in this Court for taking some or all of the evidence and submissions. That is, in my opinion, what ought to happen.

Conclusion 36 For these reasons, I dismiss the interlocutory applications for a transfer of the proceedings and for a change of venue. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares.

Associate: Dated: 17 May 2016 SCHEDULE NSD 1334 of 2015 GINO D'ANNA Second Respondent CANDICE STEVENSON Third Respondent BC COPPER NL ACN 602 793 153 Fourth Respondent BC ANTHRACITE INC BC 1046382 Fifth Respondent MINCO HOLDINGS PTY LTD ACN 137 336 808 Sixth Respondent INTERNATZIONALE CONSULTING PTY LTD ACN 152 214 876 Seventh Respondent