Austec Wagga Wagga Pty Ltd (in liq) v Cullen

Federal Court of Australia|2015-04-29|Before: Gleeson J

REASONS FOR JUDGMENT 1 By interlocutory process dated 12 March 2015, the plaintiffs applied for an order pursuant to s 5(5) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) ("Cross-Vesting Act") that this proceeding be transferred to the Family Court of Australia ("Family Court") to be heard together with Family Court proceedings (P)CAC200/2010 ("Family Court proceedings"). 2 The first and second defendants ("Mrs Cullen" and "Mr Cullen" respectively) and the second plaintiff ("liquidator") as liquidator of the first plaintiff ("Austec") and as trustee of the Cullen Family Trust (also known as the John Cullen Family Trust) are parties to the Family Court proceeding. 3 The fourth defendant is allegedly Austec's former accountant. 4 The application is made with the consent of all three defendants (the proceedings having been discontinued as against the third defendant). 5 The application is made following a successful mediation of both these proceedings and the Family Court proceedings. The parties have agreed to an "in principle" settlement, however, I was informed that a binding settlement requires Court and creditor approval. The liquidator seeks directions to the effect that he is justified in entering into the settlements: cf s 479(3) and s 477(2A) Corporations Act 2001 (Cth).

Statutory framework 6 Section 5(5) of the Cross-Vesting Act provides: (5) Where: (a) a proceeding (in this subsection referred to as the relevant proceeding) is pending in the Federal Court or the Family Court (in this subsection referred to as the first court); and (b) it appears to the first court that: (i) the relevant proceeding arises out of, or is related to, another proceeding pending in the other of the courts referred to in paragraph (a) and it is more appropriate that the relevant proceeding be determined by the other of the courts referred to in paragraph (a); or (ii) it is otherwise in the interests of justice that the relevant proceeding be determined by the other of the courts referred to in paragraph (a); the first court shall transfer the relevant proceeding to that other court.

Consideration 7 In order to grant the orders sought, the Court must be satisfied that: (a) This proceeding is related to the proceedings in the Family Court; and (b) It is more appropriate that the proceedings be determined by that Court. 8 The plaintiffs contend that: (1) The subject matter of the two proceedings are related, as the same parties are competing for interests in the same property, namely various residences and superannuation funds; (2) The Family Court is able to make orders satisfying the conditions to a concluded settlement in both proceedings; (3) If the settlements are not consummated, the Family Court is able to make orders in respect of the competing claims and property interests. 9 Although the evidence is sparse as to the subject matter of the Family Court proceeding, I am satisfied that this proceeding is related to the Family Court proceeding in that there is a significant overlap of parties and the parties to both proceedings have participated in a mediation. 10 The Family Court has power to deal with an application by the liquidator under s 477(2A) or s 479(3) of the Corporations Act: s 58AA Corporations Act. 11 In contrast, this Court does not have power to make orders altering the interests of the parties to a marriage in the property of the parties to the marriage. The Family Court has that power pursuant to s 79 of the Family Law Act 1975 (Cth). 12 In circumstances where the parties have reached an "in principle" settlement of both these proceedings and the Family Court proceedings, and the Family Court has the capacity to provide the relief that will be sought by the liquidator, I accept that in the interests of efficiency, it is more appropriate that the proceedings be determined by that Court. In reaching this conclusion, I am assuming that the two proceedings will be dealt with together which I consider to be an appropriate assumption. The effect of the transfer will be that only one court will be required to consider whether orders should be made to give effect to the "in principle" agreement and the parties will only be required to make one application for orders finalising the two proceedings. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson.

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