Australian Broadcasting Corporation v O'Neill

Judgment 1Rectron Australia BV ("Rectron Australia") seeks declarations, at general law and under s 1322(2) of the Corporations Act 2001 (Cth) that Anthony Church and Ian Jackson were validly appointed as directors of Rectron Electronics Pty Limited ("Rectron Electronics") on 17 April 2013 and that Anthony Church was validly appointed as chairman of all shareholders and/or directors' meetings of Rectron Electronics from that date. Alternatively, Rectron Australia seeks declarations that the appointments or purported appointments of Messrs Church and Jackson as directors of Rectron Electronics and of Mr Church as chairman of shareholders' and/or directors' meetings on that date were not invalid by reason of any contravention of the Corporations Act or Rectron Electronic's constitution. Rectron Australia also seeks declarations that resolutions passed or purported to have been passed at a directors' meeting of Rectron Electronics held on 3 May 2013 are valid, or alternatively are not invalid, and specific performance of clause 8.2 of a Shareholders Agreement between various entities. The Defendants to the proceedings are Mr Chien-Min ("Jimmy") Lu and Mr Hung-Chih ("Mark") Lu, who are directors of Rectron Electronics resident in Victoria and South Africa respectively, and Rectron Electronics. 2The Court presently has to determine an application by Rectron Electronics for interlocutory relief restraining the Defendants from carrying out, or causing to be carried out, any transactions on Rectron Electronics' bank account without the prior knowledge and consent of Mr Church or such other person as Rectron Australia may notify in writing, such consent not to be unreasonably withheld. In the course of submissions, Rectron Australia offered a modified approach that would require Rectron Electronics to give 24 hours notice of transactions to Mr Church or Rectron Australia's nominee, and permit it to treat those transactions as approved unless Rectron Australia objected to them within that 24 hour period. 3By Summons filed on 14 May 2013 (which I will treat as an Interlocutory Process under the Supreme Court (Corporations) Rules 1999 (NSW)) Mr Jimmy Lu, who is the only defendant who has appeared, sought an order that the proceedings be transferred to the Supreme Court of Victoria. I declined to accede to a submission by Rectron Electronics that the Court should simply transfer the proceedings to Victoria and not deal with the application for interlocutory relief that had been brought by Rectron Australia. That approach, it seems to me, would very likely have led to an inappropriate delay in the determination of Rectron Australia's claim for interlocutory relief on its merits, while any transfer of the proceedings was implemented. Factual background 4I should first set out the factual background to the applications, which are set out in the affidavits of Rectron Australia's solicitor, Mr Mark Deutsch, dated 10 and 14 May 2013 and Mr Jimmy Lu dated 13 May 2013. Mr Deutsch's evidence was largely given on information and belief, derived from instructions given by Mr Chih-Hsing ("David") Kan on behalf of Rectron Australia. Mr Jimmy Lu's detailed affidavit set out the background to the formation and business operation of Rectron Electrics, identified Mr Lu's contributions to the development of the business and the Company's results under his management and also addressed the issues in dispute with Rectron Australia in some detail. 5Rectron Australia is an entity within a corporate group controlled by Mustke Limited, a publicly listed company in South African. Mr Kan is the Group Chief Executive of Mustke. Rectron Australia claims to be the holder of 1 of 2 ordinary shares issued in the capital of Rectron Electronics. Mr Jimmy Lu is the holder of the other ordinary share in Rectron Electronics and, as I noted above, is also a director of Rectron Electronics. Rectron Electronics imports and distributes computer components to computer dealers and resellers and has its head office in Melbourne and a distribution office in Sydney. 6In June 2003, Mr Jimmy Lu, Rectron International, Rectron Australia and Rectron Electronics entered into a Shareholders Agreement. Mr Jimmy Lu's affidavit evidence is that the Shareholders Agreement was signed at the suggestion of his brother, Mr Mark Lu; that he was not represented by a lawyer in respect of the execution of that agreement; that Mr Mark Lu made certain representations as to the continued operation of the Company and that he trusted Mr Mark Lu. The relevant provisions of the Shareholders Agreement are as follows: "2.1 Lu and Australia BV shall be entitled by written notice to the Company to appoint two (2) directors of the Company. Such shareholder (or their successors - in title) shall be entitled to remove any such directors appointed and replace any such director who is so removed or who ceases for any other reason to be a director of the Company. 5.1 Australia BV or its duly appointed director shall be appointed as the chairperson of any shareholders' and/or directors' meeting, as the case may be, and shall have a casting vote." 7Mr Mark Lu resigned as chief executive officer of Rectron Group in October 2011 and Mustke Limited, Rectron Australia's ultimate holding Company, subsequently commenced proceedings against him in South Africa. From early 2012, there were discussions between the Rectron Group and Mr Jimmy Lu as to the possibility of his purchasing Rectron Australia's shares in Rectron Electronics and Mr Jimmy Lu also appointed a broker to attempt to sell Rectron Electronics to a third party investor. Mr Jimmy Lu did not purchase Rectron Australia's shares in Rectron Electronics and the broker did not introduce any third party purchasers. In March 2012, Rectron Australia proposed the appointment of the Chief Executive of Mustke Limited, Mr David Kan, as a director of Rectron Electronics and the removal of Mr Mark Lu as a director of the Company. Mr Jimmy Lu declined to sign documents to bring about that result. 8By letter dated 17 April 2013, Rectron Australia appointed Messrs Church and Jackson as directors of Rectron Electronics, relying on clause 2.1 of the Shareholders Agreement. As noted above, that clause provides for each of Mr Jimmy Lu and Rectron Australia, by written notice, to appoint two directors to Rectron Electronics. Until April 2013, only Mr Jimmy Lu had exercised that right, and the two directors of Rectron Electronics were Mr Jimmy Lu and his brother Mr Mark Lu. 9On 19 April 2013, Mr Church gave notice of a directors' meeting on 26 April 2013, to consider and, if thought fit, pass resolutions for the appointment of a forensic accountant to perform a detailed audit of the financial affairs and conduct of Rectron Electronics over the past five years; to suspend Mr Lu's role as managing director pending consideration by the directors of the results of that audit; to employ Ms Shannon Ma as chief executive officer of Rectron Electronics and to terminate Mr Lu's rights of access and power of instruction over Rectron Electronic's bank accounts and confer those rights on Mr Church. 10The directors' meeting on 26 April 2013 did not proceed because, on Mr Deutsch's evidence, when Messrs Church and Jackson attended the Company's offices, they were informed that Mr Jimmy Lu was not on the premises as he was "sick". Mr Lu's evidence is that the directors' meeting on 26 April 2013 did not proceed "because Mark and I refused to attend as we do not recognise the purported appointment of Church and Jackson as directors of the Company". That evidence is, of course, not consistent with an explanation that Mr Jimmy Lu had been ill on the day. That directors' meeting was adjourned to 3 May 2013. It is common ground that the Company's constitution permitted the adjourned meeting to proceed on that date with a quorum of two directors. 11By letter dated 25 April 2013, received in Australia on 26 April, a firm of South African attorneys wrote to Rectron Australia's solicitors indicating that they had been retained by Messrs Mark Lu and Jimmy Lu and that they were unsure as to how Messrs Church and Jackson had been appointed as directors when Messrs Mark Lu and Jimmy Lu had not attended a directors' meeting or signed documentation consenting to that appointment; that Mr Mark Lu would not be present at the directors' meeting because he had not had sufficient notice; and that the proposed resolution (presumably, for the appointment of a forensic accountant) would result in a "costly fishing expedition aimed at destabilising the Company for an untoward purpose". They advised that they were proceeding to appoint "a correspondent in Australia to approach a competent Court to liquidate the Company and place it in the hands of a Receiver". Rectron Australia's solicitors responded by letter dated 29 April 2013 and further correspondence followed. 12By a letter dated 2 May 2013, Mr Jimmy Lu's Australian solicitor advised Rectron Australia's solicitors that Mr Jimmy Lu denied the validity of the purported Shareholders Agreement signed by him on 29 June 2003 on various grounds and did not recognise the purported appointment of Messrs Church and Jackson as directors of Rectron Electronics. Mr Jimmy Lu's solicitor also alleged that Mr Kan, who was involved in Court proceedings in South Africa with Mr Lu "hopes to go on a fishing expedition in relation to Rectron Electronics Pty Limited, hoping to find documents which he could use against Mark Lu in the SA Court proceedings". Mr Jimmy Lu's solicitor made clear that Messrs Church and Jackson "would not be permitted to be at the business premises of the Company on 3 May 2013 or on any other date to hold a purported directors' meeting of the Company" as Messrs Jimmy Lu and Mark Lu "do not recognise them as directors of the Company" and added: "To avoid trouble and confrontation, please advise them not to attend at the business premises of the Company unless they go there with a Court order. If they attempt to attend at the business premises of the Company on 3 May 2013 or on any other day, our client will call the police to have them removed and this letter will be shown to the police as proof that they are there to pick a fight with our client although they have been fore-warned that they are not welcome." 13As Mr Jimmy Lu's solicitor had foreshadowed, Messrs Church and Jackson were not permitted entry to the Company's premises on the adjourned date of the directors' meeting and the police were called. Mr Jimmy Lu gives evidence that the police were called because he was concerned that, after Messrs Church and Jackson passed the relevant resolutions, they "may forcibly enter the rest of the business premises to take over the Company and this may result in a fight". It might be noted that, if the Shareholders Agreement was valid, and Rectron Electronic's directors had validly passed the relevant resolutions, there would be no justification for Mr Lu to resist the implementation of those resolutions, still less by "a fight" and the appropriate course was to invoke the Court's jurisdiction to the extent that either of those matters were disputed. 14A directors' meeting subsequently proceeded on the footpath outside the Company's premises, Mr Jimmy Lu was invited to attend, but did not do so. Mr Jimmy Lu's affidavit evidence makes plain that his refusal to attend the adjourned directors' meeting on 3 May 2013 reflected his recognition that Messrs Jackson and Church would be able to pass the relevant resolutions at that meeting, by the exercise of Mr Church's casting vote. The resolutions set out in the notice previously given by Mr Church were purportedly passed by Messrs Church and Jackson at the directors' meeting held on 3 May 2013, and Rectron Australia's solicitors then advised Mr Lu's solicitors of the passage of those resolutions. By letter dated 7 May 2013, Mr Jimmy Lu's solicitors advised that he and Mr Mark Lu did not recognise the purported appointment of Messrs Church and Jackson as directors of the Company or the purported resolutions and that he and Mr Mark Lu would not abide by those resolutions. Whether interlocutory relief should be granted 15In determining whether an interlocutory injunction should be granted in the terms sought by Rectron Australia or on a narrower basis, I should apply the principles set out by the High Court of Australia in Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57 at [65], which in turn reflected earlier authorities requiring that there be established a prima facie case or a serious question to be tried in respect of the application. These principles were helpfully summarised in the judgment in Stratford Sun Ltd v OM Holdings [2011] FCA 414; (2011) 83 ACSR 84 at [7] ff. In order to obtain interlocutory relief, Rectron Australia must not only demonstrate a prima facie case or serious question to be tried as to its entitlement to the relief sought at the final hearing, but also that damages would not be an adequate remedy, so as to warrant the grant of injunctive relief, and that the balance of convenience favours the grant of an injunction on an interlocutory basis. 16So far as Rectron Australia's exercise of rights under clause 2.1 of the Shareholders Agreement is concerned, Mr Deutsch's evidence (admitted without objection) is that Rectron Australia decided to seek to build the business of Rectron Electronics after its shares were not sold and determined to appoint two directors to Rectron Electronics for that and other reasons. Mr Lu, in his affidavit, takes issue with Rectron Australia's claim that it seeks to appoint Messrs Church and Jackson as directors in order to facilitate the expansion of the business. Mr Lu also gives evidence that he has been informed by Mr Mark Lu that: "Since about March 2013, the Court proceeding in SA did not turn out as David Kan wanted to and he has now directed his attention to the Company here to assist in his Court proceeding in S[outh] A[frica] against Mark [Lu]." 17I give that statement little weight. In the absence of further supporting evidence, it provides no basis on which to form a conclusion that there is any element of impropriety in Rectron Australia's seeking to exercise its rights under the Shareholders Agreement to appoint directors of the Company or to have those directors participate in the Company's management. In any event, the validity of the exercise of Rectron Australia's rights under the Shareholders Agreement or of the subsequent directors' meetings does not depend upon its motivations in exercising those rights, nor do they impact on an assessment of the balance of convenience, so far as whether Rectron Australia should be permitted to exercise oversight of expenditures by Rectron Electronics which it would otherwise be able to do if there were no dispute as to its appointment of directors to Rectron Electronics. 18Rectron Australia also points to a concern that Mr Jimmy Lu may have a conflict of interests and duties in respect of his role as a director of Rectron Electronics, by reason of its use of a company located in Taiwan ("New Venture") as an international purchasing office to source, purchase and ship to it the equipments, goods and parts used in Rectron Electronics' business. Until June 2006, Rectron Electronics used a company based in Taiwan, Recgistics Technology Co Limited ("Recgistics") as its international purchasing office. The chairman of Recgistics is Mr Mark Lu's wife and Mr Jimmy Lu's sister-in-law, and Mr Jimmy Lu and family members have significant shareholding in Recgistics. Since July 2006, Rectron Electronics has used New Venture as its international purchasing office, and that entity is registered in Samoa and operates from the same address and uses the same staff and business infrastructure as Recgistics and also uses the Recgistics domain name for its business email addresses. Mr Jimmy Lu also gave evidence as to the circumstances in which an international purchasing office was established. Mr Jimmy Lu also denies that he had received any remuneration, benefits or dividends from New Venture. Again, the validity of the exercise of Rectron Australia's rights under the Shareholders Agreement or of the subsequent directors' meetings does not depend upon the merit of its concerns in respect of that arrangement, nor would the propriety or otherwise of that arrangement impact on an assessment of the balance of convenience, so far as whether Rectron Australia should be permitted to exercise oversight of expenditures by Rectron Electronics which it would otherwise be able to do if there were no dispute as to its appointment of directors to Rectron Electronics. 19In resisting interlocutory relief, Mr Jimmy Lu relies on the fact that a company search obtained from the Australian Securities and Investments Commission records the name of the shareholder in Rectron Electronics as being "Rectron (Australia)" rather than Rectron Australia. Mr Deutsch's evidence, based on instructions from Mr Kan, is that Rectron Australia was the shareholder at the time the Shareholders Agreement was entered into and that Rectron Australia has not transferred or assigned its share in Rectron Electronics to any other entity, and that there is no other entity within the Rectron Group in the Netherlands or elsewhere under the name of "Rectron (Australia)". Rectron Australia contends that the reference to "Rectron (Australia)" in ASIC's records is intended to be a reference to Rectron Australia BV. Rectron Australia draws attention to annual returns lodged by Rectron Electronics with ASIC in the years 1999-2001, the first of which referred to the shareholder as Rectron Australia BV; the second of which referred to it as "Rectron Australia" (omitting the letters BV) and the third of which referred to it as "Rectron (Australia)". The reference to Rectron (Australia) in the ASIC record seems to me to be, at best, a slender basis for Mr Jimmy Lu to contend that Rectron Australia is not entitled to exercise any rights under the Shareholders Agreement, where there is no other evidence of a transfer of shares from Rectron Australia to "Rectron (Australia)" and, indeed, no evidence that an entity by the name of "Rectron (Australia)" exists. 20Mr Wilson QC, who appears with Mr Lim for Mr Lu, vigorously criticised this appointment of Messrs Church and Jackson as directors of Rectron Electronics because nothing was known by Mr Jimmy Lu of them or of their qualifications for appointment. However, no legal obligation has been established requiring such information to be provided by Rectron Australia prior to or as a condition of exercising its rights under the Shareholders Agreement. Mr Wilson also placed substantial weight on the fact that Mr Lu had been substantially left to run the Company over a considerable period. However, that proposition does not seem to me to give rise to a basis to object to Rectron Australia's exercise of its rights under the Shareholders Agreement, if they are otherwise validly exercised. 21Mr Jimmy Lu also contends that there is no need for a forensic investigation of the Company's accounts. His affidavit evidence is that Rectron Electronic's accounts have been audited since about March 2007 and that there has been report by the auditor of mismanagement by the board or any irregularities in the accounts. It should, of course, be recognised that an audit of a company's financial statements is not an exercise that will necessarily disclose irregularities in the company's business dealings. Rectron Australia seeks to justify the appointment of a forensic accountant as necessary to assist the newly appointed directors to understand the Company's current and historical financial affairs and to allow a proper assessment whether the conflict of interest affecting Mr Jimmy Lu in relation to the Recgistics and new venture company have caused actions contrary to the interests of Rectron Electronics. It is also not necessary for me to express any view as to the merits of the respective parties' contentions as to those matters. The question of such an appointment is, at least outside the context of an oppression action, a matter for Rectron Electronic's board as constituted in accordance with its constitution and the Shareholders Agreement, and the board, by a properly constituted majority, may authorise such an investigation if it considers in the Company's interests notwithstanding that Mr Jimmy Lu may consider it to be unnecessary. 22I am satisfied that there is a serious question to be tried that the resolutions passed at the meeting on 3 May 2013 have been validly passed, with the effect that authority to authorise transaction on Rectron Electronics' bank account is now vested in Mr Church in accordance with those resolutions. In expressing that view, I note that the Shareholders Agreement has been in place for a considerable time and apparently without challenge, until Rectron Australia sought to exercise its rights under it; that the process for appointment of Messrs Church and Jackson as directors prima facie appears to follow the process contemplated by the Shareholders Agreement; and that it was not contended before me that the process for the convening of the first and second meeting of directors did not meet the requirements under Rectron Electronics' constitution. 23The relief sought by Rectron Australia, so as to restrain transactions on the Rectron Electronic's account without the consent of its nominee, falls short of the management powers that would be conferred on its nominees to Rectron Electronics' board, if validly appointed as a directors. I have addressed Mr Jimmy Lu's contention that "Rectron (Australia)" and not Rectron Australia is the shareholder in Rectron Electronics above. The proposition that Mr Jimmy Lu is entitled to set aside the Shareholders Agreement by reason of his lack of English skills or lack of legal advice or his reliance on his brother as the then chief executive of the Rectron Group does not seem to me sufficient to displace the proposition that Rectron Australia has established a serious question to be tried, where Mr Lu is obviously an experienced businessman with the capacity to run a company with substantial revenue trading throughout Australia and internationally, and is likely to have taken such steps to understand the Shareholders Agreement and seek legal advice about it as he considered appropriate in the relevant circumstances. 24Prima facie, the balance of convenience seems to me to favour interlocutory relief, at least in some form, where Rectron Australia would otherwise have no visibility of transactions prior to their occurrence and would be exposed to the risk that transactions are undertaken that are at least inconsistent with those which it would have approved, had its rights to appoint directors under the Shareholders Agreement been recognised. However, Mr Lu expresses concern that, if the Court restrains the defendants from carrying out any transaction on the bank account of Rectron Electronics without the prior knowledge and consent of Mr Church or Rectron Australia, it would cause "irreparable damage to the credibility and reputation of the Company and our suppliers will stop the supply and seek immediate payment of all outstanding debts due to them. It would be impossible to measure or even estimate the loss and damage to the Company". After that concern was articulated in Mr Lu's affidavit, Rectron Australia's solicitors responded that: "Our client proposes that as and when the needs for payment arises you provide Mr Anthony Church by email with a list of proposed payments (such email to be copied to Mr David Kan) and that you wait 24 hours from the time of provision of any such list before processing the payments. Mr Church will raise any objection he may have to a proposed transaction within that 24 hour period. If Mr Church (or Mr Kan if Mr Church is unavailable for any reason) does not object to any particular transaction within that 24 hour period our client accepts that you may in those circumstances assume that our client consents to the proposed transactions and be free to effect them." 25I must nonetheless give some weight to Mr Lu's concerns in that regard. I also accept that the wider form of orders sought by Rectron Australia would, if abused, have the potential to damage the Company's business by interfering with ordinary course transactions, if Mr Church declined to approve them; although one would expect that the Court would readily modify any such regime if that occurred. Mr Jimmy Lu also points to another factor against granting the wider restraint sought by Rectron Australia, namely that there is an issue as to the adequacy of the undertaking as to damages which it has offered, where its only asset in Australia is its interest in Rectron Electronics. It is apparent that that interest is not readily realisable since, as I noted above, Mr Lu has also not introduced other interested buyers. 26In the course of submissions, Mr Lu made an open offer to provide Rectron Australia with weekly details of cheques written in respect of banking and electronic fund transfers in relation to the business no later than each Friday, to a nominated address in South Africa or the two people nominated as directors in Australia, on the basis that the matter was transferred to the Supreme Court of Victoria. That offer was not accepted by Rectron Australia. It has the difficulty that it contemplated advice only after the relevant transactions occurred. 27I do not consider that the wider interlocutory order sought by Rectron Electronics should be made, given the issue as to the adequacy of its undertaking as to damages to which I have referred in paragraph 25 above. However, under Civil Procedure Act 2005 (NSW) s 90(1), the Court is obliged to give judgment or make such order as the nature of the case requires. Under Uniform Civil Procedure Rules 2005 (NSW) r 36.1, the Court may make such order as the nature of the case requires, whether or not a claim for relief extending to that order is included in any notice of motion: Farrell v Mulroney [1978] 1 NSWLR 221; NSW Trustee and Guardian v Schneider [2011] NSWSC 424 at [24]. It seems to me that the balance of convenience favours the grant of interlocutory relief at least requiring the giving of notice of transactions to Rectron Australia in advance, so that it would have the opportunity to seek further relief in respect of genuinely disputed transactions. There is evidence, uncontested by Rectron Electronics, that Rectron Australia has no knowledge of transactions being carried out on a daily or periodic basis by Rectron Electronics, and receives only summary information as to Rectron Electronics financial activities and that the most recent monthly management accounts provided to it were dated February 2013. There is no apparent disadvantage to Rectron Electronics in giving such notice, since any attempt by Rectron Australia to restrain a particular transaction would be determined by the Court. Transfer of proceedings to Supreme Court of Victoria 28Mr Jimmy Lu's application for transfer of the proceedings was originally brought under the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) but Rectron Australia contended, correctly in my view, that that application could only be brought under the Corporations Act where the relevant proceedings were proceedings under that Act. Mr Jimmy Lu subsequently relied in the alternative on the relevant provisions of the Corporations Act for that application, and Rectron Australia, properly, took no objection to his doing so. In Westgate Wool Co Pty Ltd (in liq) [2006] SASC 372 at [18]; (2006) 206 FLR 190 at 194, Debelle J noted that reliance on the Jurisdiction of Courts (Cross-Vesting) Act was not available in respect of proceedings brought under the Corporations Act, notwithstanding that relief under the general law was also claimed; that decision was followed by Fryberg J in Fletcher & Ors v Fortress Credit Corporation (Australia) II Pty Ltd [2012] QSC 359 and I consider that it is plainly correct. These proceedings are brought under the Corporations Act, so far as Rectron Australia has invoked the Court's jurisdiction under s 1322 of the Act, and I will therefore consider the transfer application only by reference to Part 9.6A of the Corporations Act. 29Section 1337A(1) of the Corporations Act provides that Part 9.6A Division 1 of the Corporations Act deals with the jurisdiction of Courts in respect of civil matters arising under the Corporations legislation, relevantly to the exclusion of the Jurisdiction of Courts (Cross-Vesting) Act 1987. Section 1337H(1) deals with the transfer of proceedings by State Supreme Courts, and applies to a proceeding with respect to a civil matter arising under the Corporations legislation. Section 1337H(2) provides that: "Subject to sub-sections (3), (4) and (5), if it appears to the transferor Court that, having regard to the interests of justice, it is more appropriate for: (a) The relevant proceeding; or (b) An application in the relevant proceeding; to be determined by another Court that has jurisdiction in the matters for determination in the relevant proceeding or application, the transferor Court may transfer the relevant proceeding or application to that other Court." By contrast with s 5(2) of the Jurisdiction of Courts (Cross-Vesting) Act, s 1337H(2) expressly confers a discretion whether to transfer the proceedings, and does not require such transfer: Dwyer v Hindal Corporate Pty Ltd [2005] SASC 24; (2005) 52 ACSR 335 at [14]; Fletcher v Fortress Credit Corporation (Australia) II Pty Ltd above at [22]; Matyear v Prismex Technologies Pty Ltd [2006] NSWSC 1350; (2006) 60 ACSR 210. 30Mr Jimmy Lu's evidence is that the Company and most of its business operations are based in Victoria and most of its records kept in Mulgrave, Victoria. Although it appears that Rectron Electronics conducts its business throughout Australia, and accepts electronic financial transactions both from Melbourne and Sydney, the fact that its head office is situated in Victoria and most of its business records are kept there is a matter which tends in favour of the hearing of the proceedings in Victoria. The weight to be attributed to that matter is reduced by the fact that these proceedings presently raise relatively narrow issues as to the validity of a Shareholders Agreement and two directors' meetings, which are unlikely to require discovery or production of Rectron Electronics' business records generally. Mr Lu has foreshadowed a potential cross-claim seeking the appointment of a provisional liquidator to Rectron Electronics, but it is also unlikely that such a claim would require the production of large volumes of business records. 31Mr Jimmy Lu also relies on the fact that he is resident in Victoria and works as managing director at Rectron Electronics' business premises in Mulgrave; that Rectron Electronics is the landowner and registered proprietor of its premises at Mulgrave in Victoria; and Rectron Australia is a foreign company incorporated in the Netherlands. A further statement that "all other relevant witnesses reside in Victoria" was not pressed. The fact that Mr Lu is resident in Victoria also supports the hearing of the proceedings in Victoria; on the other hand, Messrs Church and Jackson are each resident on the Gold Coast, and Rectron Australia leads evidence that they would find it more convenient to travel to New South Wales than to Victoria, to reduce travelling time and costs. If Mr Mark Lu is to give evidence in the proceedings, he is resident in South Africa and travel to Victoria or New South Wales is likely to be equally inconvenient. I do not consider that the fact that Rectron Electronics owns land in Victoria is of any relevance, since that matter is not in issue in the proceedings. The fact that Rectron Australia is incorporated in the Netherlands is a neutral matter. On balance, I am satisfied that, having regard to the interests of justice, it would be more appropriate to transfer these proceedings to the Supreme Court of Victoria, on the basis that Rectron Electronic's head office is located in that state; the documents relevant to the matters in issue, notwithstanding that they may be in relatively narrow in scope, are likely to be located in Victoria; Mr Lu is resident in Victoria and the difference in time and costs in travel from the Gold Coast to Sydney or Melbourne is marginal, particularly where they have accepted appointment as directors of a company based in Victoria. 32It is therefore necessary to exercise the Court's discretion whether to transfer the proceedings to the Supreme Court of Victoria in this case. Section 1337L of the Corporations Act in turn requires the Court to have regard, in exercising that discretion to the principal place of business of a body corporate concerned in the proceeding or application; the place or places where the events that are the subject of the proceeding or application took place; and the other Courts that have jurisdiction to deal with the proceeding or application. Each of those factors provides some support for a transfer of the proceedings to the Supreme Court of Victoria, since it appears that the principal place of Rectron Electronic's business is Melbourne, although it also has a place of business in Sydney; the directors' meetings in issue took place (or, in the case of the first of them, did not take place) in Melbourne; and the Supreme Court of Victoria is another Court that would have jurisdiction to deal with the matters for determination in the proceedings. I am satisfied that, on balance, I should exercise the discretion to transfer the proceedings to that Court having regard to the matters set out above. 33I should add, for completeness, that Mr Lu also foreshadowed an application for security for costs of the proceedings and the institution of proceedings in the Supreme Court of Victoria to wind up Rectron Electronics under ss 181, 232-233 and 461 of the Corporations Act 2001 (Cth). I have given little weight to those matters in the exercise of my discretion. An application for security for costs would, of course, need to be brought in the Court in which the proceedings are being heard. Had the Court not ordered the transfer of proceedings to the Supreme Court of Victoria, the question whether the commencement of other proceedings relating to the same subject matter in that Court would have amounted to an abuse of process, and its implications for the transfer of these proceedings to that Court or those proceedings to that Court, would have been a matter to be determined if those other proceedings were commenced. Orders and costs 34Accordingly, I make the following orders: