Bavistock v Macquarie Equities Limited

REASONS FOR JUDGMENT 1 This proceeding presented interesting questions of case management of multiple proceedings in multiple jurisdictions involving a number of the same parties and the same or similar issues of fact and law. On 10 October 2008, Peter Bavistock and a group of eight others filed an application and statement of claim in this Court against Macquarie Equities Ltd ("Macquarie"). In general terms, the applicants are clients of Macquarie who allege that Macquarie mishandled their money by, amongst other things, increasing the limits on the clients' margin loan accounts and in engaging in high risk margin trades without the clients' consent, trading in such a way as to generate excessive fees and commissions for itself and otherwise acting in disregard of the clients' best interests. 2 Various statutory and common law causes of action are asserted, including breach of fiduciary duties, breach of contract and misleading or deceptive conduct in relation to financial services. The applicants' claimed losses are said to run into the millions of dollars. 3 Case management issues arise because, prior to the filing of this matter in the Federal Court, Macquarie, along with a related entity, Macquarie Bank Ltd, issued its own proceedings against the applicants in the Supreme and District Courts of South Australia ("South Australian proceedings"). There, Macquarie seeks, in seven separate actions, to recover allegedly outstanding margin loan balances from the clients. The filing date of each of those debt proceedings ranges from 2 to 9 October 2008. 4 In other words, each of the South Australian proceedings was filed earlier in time than in this proceeding, although only by a few days. The Federal Court proceeding came on for directions on 21 October 2008. Macquarie sought to have the action stayed, under O 20 r 5 of the Federal Court of Australia Rules 1979 (Cth), on the basis that the applicants' claims in this Court should properly be litigated in South Australia, as counterclaims in the South Australian proceedings, because they arise out of the same common nucleus of operative facts. 5 Macquarie submitted that to allow the Federal Court proceedings to continue would give rise to a multiplicity of overlapping suits, resulting in a waste of the parties' and the Court's resources and risking inconsistent findings. Needless to say, the investors foreshadowed raising the same arguments in favour of staying the South Australian proceedings. 6 At the same time, the applicants applied for leave pursuant to O 6 r 2(b) of the Federal Court Rules, for the applicants to be joined in the Federal Court proceeding. Unsurprisingly, Macquarie opposed that application. 7 During the course of debate with counsel it became apparent that the issues raised in both the Federal Court proceeding and the South Australian proceedings would, at the very least, overlap in terms of parties, legal issues, and factual issues, and that resolution of the issues raised by the parties by way of multiple proceedings was not going to assist in the "just resolution" of the disputes as quickly, inexpensively and efficiently as possible: see Notice to Practitioners and Litigants issued by the Chief Justice - Case Management and the Individual Docket System. (5 May 2008) ("Notice to Practitioners"), available at . 8 There was little doubt that the best thing for all would be for the claims to be litigated together, in one place. The question that remained, however, was which place, and in what form? In the circumstances, I adjourned the directions hearing on the understanding that the parties and their legal advisers would discuss the appropriate form and forum for both the Federal Court proceeding and the South Australian proceedings, consistent with the principles set out in the Notice to Practitioners. 9 Upon resumption of the directions hearing today (23 October 2008), I was informed that the parties now consent to the cross-vesting to the Federal Court of Australia of proceedings numbered 1458, 1459 and 1478 of 2008 in the Supreme Court of South Australia and proceeding numbers 1578, 1589, 1590 and 1603 of 2008 in the District Court of South Australia, and that the trial or trials of these proceedings, together with the Federal Court proceeding, should be in Adelaide. 10 There are, however, two areas of disagreement: which registry of the Federal Court should manage the proceedings; and, secondly, what the form of those proceedings should be. The first issue, which registry of the Federal Court should manage the proceedings, is, in my view, easily resolved. The applicants' position was that it was a matter for the Court. Macquarie's position was that the proceedings should be managed in the South Australia Registry. There is no doubt that each proceeding or set of proceedings must be considered in terms of its own individual facts and circumstances in deciding which registry of the Federal Court should manage them: see JLV Industries Pty Ltd v MacDonald [2006] FCA 721 at [2] (stating that the standard to apply in deciding whether a case should be transferred to another registry is, bearing in mind the interests of the parties and the ends of justice, where the case can be conducted most suitably). However, in litigation of this nature it is important and in the interests of justice that it is the trial Judge and not another Judge who actively manages the litigation from the outset. 11 In particular, in my view, it should be the trial Judge who decides the appropriate form of the proceedings and the interlocutory steps that should and should not be taken. That view is consistent with the principles which underpin the Federal Court docket system and the fact that the Court is a national Court: see Recent Developments, New Case Management Approach - Federal Court of Australia: The Individual Docket System (1997) 7 JJA 11, 14; Individual Docket System, available at . Accordingly, as the parties agree that the trial should be conducted in Adelaide, I consider that the trial Judge in Adelaide should manage the proceedings. In reaching that conclusion, it is important to record that the solicitors for the applicants did not point to, and I cannot identify, any prejudice to them if that should occur. That is not surprising. Each of the applicants (save one) resides in, or is based in, South Australia and their firm of solicitors is a national firm. 12 That brings me to the second area of disagreement: the form of the proceedings. Given what I have decided with respect to the first issue, it is neither necessary nor appropriate for me to resolve that question. As I have just said, the appropriate form of the proceedings is an issue for the docket Judge. After inquiries with the South Australian Registry, I have arranged for the docket Judge to hold a directions hearing to consider and, if necessary, resolve that issue and any other interlocutory matters at 2:30pm on 14 November 2008. 13 Before concluding I should say that the parties are to be congratulated for having resolved the majority of their differences by agreement. Resolution of these kinds of procedural disputes in this manner is consistent with the way in which modern litigation should be conducted, as outlined by the Chief Justice in the Notice to Practitioners. It saves the parties significant time and expense, and facilitates the just and efficient resolution of the real issues in dispute between the parties. 14 For the foregoing reasons, after noting that the parties consent to the cross-vesting to the Federal Court of Australia, South Australian District Registry, proceedings numbered 1458, 1459 and 1478 of 2008 in the Supreme Court of South Australia, and proceedings numbered 1578, 1589, 1590 and 1603 of 2008 in the District Court of South Australia ("South Australian proceedings"), I propose to make the following orders: 1. The respondent's notice of motion dated 16 October 2008 be dismissed; 2. The applicants' application pursuant to O 6 r 2(b) of the Federal Court Rules be adjourned to 2:30pm on 14 November 2008; 3. Pursuant to s 48 of the Federal Court Act 1976 (Cth) and O 10 r 1(2)(f) of the Federal Court Rules, these proceedings be transferred to the Federal Court of Australia, South Australian District Registry, at Adelaide; 4. By no later than 7 November 2008:- (a) the respondent file and serve its defence; and (b) the applicants file and serve a defence to the South Australian proceedings; 5. The proceedings are adjourned for further directions before Mansfield J at 2:30pm on 14 November 2008; 6. Costs reserved; and 7. Liberty to apply. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon.