There are three plaintiffs in these proceedings, namely Beijing Joseph Investment Co. Ltd, Joseph Investment International Co. Ltd and Guangzhou Guangrong Investment Management Group Co. The first two plaintiffs are incorporated in the People's Republic of China. The third plaintiff was described by the solicitor for the plaintiffs as a Chinese company listed on the stock exchange in Hong Kong.
There are four defendants. The first defendant is Starr World Investment Ltd (Starr World), which is apparently incorporated in Hong Kong. The second defendant, Cauldron Energy Ltd (Cauldron) is a company incorporated under the Corporations Act 2001 (Cth) and registered in Western Australia. The third defendant, Mr Shengjie (Anson) Huang (Mr Huang) is a citizen of the People's Republic of China. The solicitor for the plaintiffs gave evidence that he understands that Mr Huang resides in Shanghai. The fourth defendant, Mr Anthony Sage (Mr Sage), is an Australian citizen who is a resident of Western Australia.
The proceedings were commenced by summons filed in Court on Sunday 12 October 2014 by leave of Lindsay J sitting in the duty list. The plaintiffs claim the following substantive relief in the summons:
3. Order that, until further order or pending final resolution of the proceedings, each of the defendants by themselves, their servants or agents be restrained from:
a. dealing with the shares in the second defendant namely Cauldron Energy Limited (Cauldron) owned by or held in the name of the first defendant namely Starr World Investment Limited (Starr World).
b. dealing with the funds held by being comprised of the subscription sum paid by Starr World for all and any of the shares in Cauldron.
c. dealing with the funds held by Cauldron being or being comprised of any subscription sum paid by any of the plaintiffs or Joseph Investment International Limited for all and any of the shares in Cauldron
d. enforcing or acting upon the demand for subscription fees dated 2 October 2014 made by Cauldron Beijing Joseph Limited (Beijing Joseph) or Joseph Investment International Co Limited (Joseph Investment)
4. A declaration that all and any shares held by or in the name of Starr World in Cauldron are held by it in trust for the plaintiffs.
5. Damages, equitable compensation against the first, second and third defendants.
The summons bears the following endorsement concerning its service on the defendants:
This summons is intended to be served: (a) on the first defendant outside Australia and in Hong Kong; and (b) on the third defendant outside Australia and in the People's Republic of China.
This summons is to be served on the second and fourth defendants in Western Australia and the plaintiff intends to proceed with that service under the Uniform Civil Procedure Rules 2001 (NSW).
On 12 October 2014 Lindsay J made the following substantive interlocutory order:
4. Upon the plaintiffs and Doctor Joseph Chen, by their counsel (Mr Garry McGrath SC upon instructions from Mr Wilson Shen), giving to the Court the usual undertaking as to damages, ORDER, up to and including 5pm (Sydney time) on 15 October 2014 or further order of the Court, that the 1st, 2nd and 3rd defendants, jointly and severally, by themselves, their servants and agents, be restrained from:
a. Dealing with shares in the 2nd defendant (Cauldron Energy Limited ACN 102 912 783) owned by, or held in the name of, the first defendant (Starr World Investment Limited).
b. Dealing with funds held by the 2nd defendant being, or being comprised of, any subscription sum paid by or on behalf of the plaintiffs (including any sum paid by Joseph Investment International Limited) for shares in the second defendant.
c. Enforcing, or acting upon, the demand for subscription fees dated 2 October 2014 made by the second defendant (by the fourth defendant acting as executive chairman of the second defendant) on the first and second plaintiffs
His Honour made the summons returnable before the duty judge on 15 October 2014.
The plaintiffs served the summons and accompanying documents on Cauldron and Mr Sage. Mr Sage is the chairman of directors of Cauldron.
Cauldron and Mr Sage appeared before Pembroke J sitting as duty judge on 15 October 2014.
On that date his Honour gave Cauldron and Mr Sage leave to file in Court a notice of motion dated 14 October 2014. Relevantly, the notice of motion made following claims for relief:
3. Pursuant to section 5(2) (b) (ii) and (iii) of the Jurisdiction of the Courts (Cross Vesting) Act 1987 (NSW) these proceedings forthwith be transferred to the Supreme Court of Western Australia
4. Unless by 4pm on 15 October 2014 the plaintiff's pay to the Court the sum of $5,000,000, or such other sum as the Court considers just, as security for the undertakings as to damages referred to in Order 4 of the Orders made 13 October 2014, Orders 4 of the Orders made 13 October 2014, as varied by Orders 2 and 3 herein, be automatically discharged.
Pembroke J by consent of Cauldron and Mr Sage, and in the formal absence of Starr World and Mr Huang, made a number of orders that altered the ex parte interlocutory orders made by Lindsay J on 12 October 2014. Orders 4(b) and (c) were discharged. Order 4(a) was extended against Starr World and Mr Huang until further order of the Court, on the basis that the usual undertaking as to damages was given by the plaintiffs, and not by Dr Joseph Chen. As against Cauldron and Mr Sage order 4(a) was varied to read: "registering any transfer, dealing or encumbrance of any shares in the second defendant in the name of Starr World Investment Ltd". Again, the undertaking as to damages was only given by the plaintiffs.
Pembroke J also made an order that the application made by Cauldron and Mr Sage in pars 3 and 4 of their notice of motion be stood over to 5 November 2014 for hearing by the duty judge.
Because of the nature of the relief sought by the plaintiffs in their summons, on 5 November 2014 Slattery J, sitting as duty judge, arranged for the notice of motion to be listed before me sitting in the Corporations List.
On 5 November 2014 the parties to the notice of motion who were before the Court reached an agreement as to an appropriate order that should be made to provide security to Cauldron and Mr Sage to ensure that the plaintiffs' undertaking as to damages would be satisfied. I made an order that dealt with that issue, which resolved the claim in par 4 of the notice of motion.
The only issue that remained is whether the Court should make an order that the proceedings be transferred to the Supreme Court of Western Australia.
[2]
Service of initiating process on Starr World and Mr Huang
Starr World and Mr Huang did not appear on the hearing of the notice of motion. The plaintiffs accepted that they had not properly served the summons on those defendants. The first and third defendant's solicitor gave evidence that on 15 October 2014 a solicitor present at the bar table informed the Court that she acted for Starr World and Mr Huang but those parties did not formally appear. The solicitor informed the Court that her clients did not submit to the Court's jurisdiction, and that they would insist upon formal and proper service. The solicitor for the plaintiffs gave evidence that he caused a copy of the summons and associated documents to be delivered to Starr World's registered office in Hong Kong, as well as that those documents were personally served on Mr Huang in Shanghai. That service occurred after the hearing before Pembroke J on 15 October 2014.
Nonetheless, Starr World and Mr Huang did not appear when the notice of motion was called before me on 5 November 2014.
The plaintiffs accept that, if Starr World and Mr Huang continue to insist upon formal service, then the effect of UCPR r 11.2 is that service will have to be effected in accordance with Schedule 6. Physical service will have to be effected in accordance with UCPR Pt 11A and the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters. That service may, as the plaintiffs' solicitor said in his evidence, take in the order of 6 months to effect.
After the hearing was completed, I asked the plaintiffs to inform the Court of the basis upon which they would found their claims that the Court could exercise jurisdiction against Starr World and Mr Huang under Schedule 6 of the UCPR. I made the request because it appeared to me that the strength of the plaintiffs' claim that this Court could exercise jurisdiction in respect of the claims against those two defendants might have some bearing on the issue of whether a cross-vesting order should be made, even if only in relation to the manner in which the Court should exercise any discretion reposed in it.
The plaintiffs advised the Court that it could exercise jurisdiction under par (g) of Schedule 6 in relation to Mr Huang, and under par (i) in relation to Starr World. Those provisions are respectively as follows:
Originating process may be served outside Australia in relation to the following circumstances …
(g) if the person to be served is domiciled or ordinarily resident in New South Wales …
(i) if the proceedings are properly commenced against a person served or to be served in New South Wales and the person to be served outside New South Wales is properly joined as a party to the proceedings …
Counsel for the plaintiffs made a submission that, although Mr Huang is presently residing in China, he has a home in this State, and permanent residency in Australia, and is on the electoral roll in an electorate on the North Shore of Sydney. There was some evidence that Mr Huang has Australian residency. However, on the evidence, Mr Huang is a resident of Shanghai, in the People's Republic of China. The evidence does not support a finding that Mr Huang is domiciled or ordinarily resident in New South Wales within the meaning of Schedule 6 par (g).
If the proceedings are properly commenced against Mr Huang, it may well be, as the plaintiffs submit, that Starr World should properly be joined as a party to the proceedings. However, Schedule 6 par (i) only permits service outside Australia on a party on the basis that it is a proper party joined as a party to the proceedings and Mr Huang is a person served or to be served in New South Wales. The extended jurisdiction made available by par (i) must be based upon service of the other party (Mr Huang) within the State; not service upon the other party outside Australia under another basis for exercising extra-territorial jurisdiction, such as par (g). There appears to be little likelihood that Mr Huang will cooperate in allowing himself to be served in New South Wales. (I note that Cauldron and Mr Sage were also not served personally within the State, so Starr World cannot be served under par (i) on the basis that they are proper parties to the claims against those defendants).
While it cannot be said that the question whether this Court will be able to exercise extra-territorial jurisdiction over Starr World and Mr Huang has been determined as an issue on the present application, so long as those defendants persist in requiring that they be formally served with the summons issued by the Court, it seems to be unlikely that this Court will be able to proceed to hear the case against them.
[3]
Plaintiff's claims in the proceedings
As the plaintiffs have not yet had an opportunity to file any pleading, the nature of the case that they wish to make against the defendants appears only from the terms of the summons, and the second affidavit of their solicitor, Mr Shen, who in par 6 sets out a summary of the plaintiffs' contentions.
Paragraph 3 of the summons seeks interlocutory injunctions that prevent the defendants dealing with the shares in Cauldron; dealing with the subscription monies paid by Start World, or the plaintiffs and another company, for shares in Cauldron; or enforcing a demand for subscription fees. In par 4 the plaintiffs seek a declaration that all shares held by Start World in Cauldron are held on trust for the plaintiffs.
Mr Shen provided the following elaboration of the plaintiffs' claims against Cauldron and Mr Sage in par 6(b), (c) and (d) of his 11 October 2014 affidavit:
b. Cauldron (in paragraph 7.7 at page 24) in its Notice of Annual General Meeting to be held on 8 September 2014, misrepresented to shareholders that the plaintiffs did not wish or intend to take up any opportunity of further investment in Cauldron, in order to obtain approval of shareholders to the placement of shares to Starr World. A copy of letter of Beijing Joseph to Cauldron dated 3 September 2014, complaining of the misrepresentation, is at page 123 of the exhibit WS-1
c. The board of Cauldron did not act in the interest of the company as a whole in making the placement offer to Starr World, as the plaintiffs or their nominees are and were willing to invest further in Cauldron and to do so on more favourable terms than those in the placement offer to Starr World
d. A dispute has arisen between the parties by reason of the above matters, but notwithstanding the dispute Cauldron has on 2 October 2014 Cauldron made a demand upon Beijing Joseph and Joseph Investment International for a subscription sum of $1,000,000, giving 3 days to pay
The subject matter of the claim is, put simply, in so far as it involves property, shares in Cauldron or subscription monies.
Cauldron is a company incorporated under the Corporations Act, and is registered in Western Australia. It has places of business in Western Australia and in Argentina. It does not have any place of business in New South Wales.
I infer that any funds held by Cauldron constituted by subscription monies received in respect of the issue of its shares are held in Western Australia.
Consequently, the plaintiffs cannot call in aid to support the Court's jurisdiction over Starr World and Mr Huang the provisions of Schedule 6 that depend upon the subject-matter of the proceedings being property in New South Wales (par (k); or that the proceedings affect the person to be served in respect of his or her membership of a corporation incorporated in New South Wales, or of an association formed or carrying on any part of its affairs in New South Wales (par (q).
[4]
Extra-territorial jurisdiction of Supreme Court of Western Australia
Order 10 Rule 1 of the Rules of the Supreme Court of Western Australia 1971 relevantly provides:
(1) The Court may grant leave to serve a person outside Australia with a writ, or notice of a writ, that begins an action if -
(a) the subject matter of the action, so far as it concerns the party to be served, is -
(i) … property situate within the State …; or
(ii) any shares or stock of a corporation… having its principal place of business within the State …
(e) the action is one brought to enforce, rescind, dissolve, annul, or otherwise affect a contract, or to recover damages or obtain other relief in respect of the breach of a contract, being in either case a contract -
(i) made within the jurisdiction; or
(ii) made by or through an agent trading or residing within the jurisdiction on behalf of a principal trading or residing out of the jurisdiction; or
(iii) which by its terms or implications is governed by the law of Western Australia …
(g) in the action an injunction is sought ordering the defendant to do or refrain from doing anything within the jurisdiction, or any nuisance within the jurisdiction is sought to be prevented or removed whether damages are or are not also sought in respect thereof;
(h) any person out of the jurisdiction is a necessary or proper party to an action properly brought against some other person duly served within the jurisdiction …
While, as I have noted, the Court is not strictly concerned about whether the Supreme Court of Western Australia could exercise jurisdiction in these proceedings over Starr World and Mr Huang, there appear to be strong grounds for believing that it could. To start with, Cauldron and Mr Sage are amenable to service within that State. It appears that any subscription money held by Cauldron will be held in Western Australia, and so will be properly situated in that State. The subject matter of the dispute otherwise concerns shares issued in Cauldron. Cauldron is not only registered in that State, but it has its principal place of business in Western Australia.
Furthermore, the evidence shows that clause 8(b) of the placement agreements between Cauldron and the plaintiffs to whom shares were issued has the effect that the agreements are governed by the laws of Western Australia.
Although the precise manner in which the various paragraphs of Order 10 rule 1 might apply to the plaintiffs' claim against all of the defendants was not explored on the hearing of the notice of motion, it seems to be probable that the plaintiffs would be entitled to serve Starr World and Mr Huang with a summons either issued by the Supreme Court of Western Australia, or after the summons in these proceedings is transferred to that court. It is relatively obvious that at least one superior court in Australia should have jurisdiction to authorise the service of its process outside Australia on defendants who are relevantly involved in a claim based upon dealings with shares in a company incorporated in Australia, and on the evidence the Supreme Court of Western Australia seems to be the court that most likely satisfies that description.
[5]
The Cross-vesting Act
Cauldron and Mr Sage submit that the Court should make an order under s 5(2) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW) (the Cross-vesting Act), which relevantly provides:
(2) Where:
(a) a proceeding (in this subsection referred to as the relevant proceeding) is pending in the Supreme Court (in this subsection referred to as the first court), and
(b) it appears to the first court that …
(iii) it is otherwise in the interests of justice that the relevant proceeding be determined by the Supreme Court of another State or of a Territory,
the first court shall transfer the relevant proceeding to that other Supreme Court.
Cauldron and Mr Sage correctly submit that, if the requirements of pars (a) and (b) are satisfied, the Court has no discretion but to transfer the proceeding to the Supreme Court where the interests of justice will be served by the proceeding being determined by that Court.
They submit, and I agree, that this Court must be guided by the following expression of principle, as to how it should apply the Cross-vesting Act, stated by Gleeson CJ, McHugh and Heydon JJ in BHP Billiton Ltd v Schultz [2004] HCA 61; (2004) 221 CLR 400 at [13],[14], [18] and [19]:
[13] In Bankinvest, Street CJ said (omitting footnotes):
The cross-vesting legislation passed by the Commonwealth, the States and the Territories both conferred on each of the ten courts Australia-wide jurisdiction and set up the mechanism regulating the transferring of proceedings from one of these ten courts to another. In relation to transfer, the common policy reflected in each of the individual enactments is that there must be a judicial determination by the court in which proceedings are commenced either to transfer or not to transfer the proceedings to one of the other nine based, broadly speaking, upon consideration of the interests of justice … It calls for what I might describe as a 'nuts and bolts' management decision as to which court, in the pursuit of the interests of justice, is the more appropriate to hear and determine the substantive dispute.
[14] In the context of the Cross-vesting Act, one is not concerned with the problem of a court, with a prima facie duty to exercise a jurisdiction that has been regularly invoked, asking whether it is justified in refusing to perform that duty. Rather, the court is required by statute to ensure that cases are heard in the forum dictated by the interests of justice. An application for transfer under s 5 of the Cross-vesting Act is brought upon the hypothesis that the jurisdiction of the court to which the application is made has been regularly invoked. If it appears to that court that it is in the interests of justice that the proceedings be determined by another designated court, then the first court "shall transfer" the proceedings to that other court. There is a statutory requirement to exercise the power of transfer whenever it appears that it is in the interests of justice that it should be exercised. It is not necessary that it should appear that the first court is a "clearly inappropriate" forum. It is both necessary and sufficient that, in the interests of justice, the second court is more appropriate.
…
[18] There is nothing unusual, either in the State or the federal judicature, about actions between residents of different Australian law areas. Federal diversity jurisdiction is an obvious example. Actions in New South Wales courts are commonly brought by residents of other States, especially when the residence or principal place of business of the defendant is New South Wales. Reference is sometimes made to one forum or another being the "natural forum". Such a description is usually based upon a consideration of "connecting factors", described by Lord Goff in Spiliada as including matters of convenience and expense, such as availability of witnesses, the places where the parties respectively reside or carry on business, and the law governing the relevant transaction. Lord Templeman described such factors as "legion", and said that it was difficult to find clear guidance as to how they are to be weighed in a particular case. Thus, New South Wales might well be the "natural forum" for an action for damages brought by a passenger in a motor vehicle against the driver if they were both residents of New South Wales, even though the injury resulted from a collision that occurred on the other side of the Queensland or Victorian border.
[19] In many cases, there will be such a preponderance of connecting factors with one forum that it can readily be identified as the most appropriate, or natural, forum. In other cases, there might be significant connecting factors with each of two different forums. Some of the factors might cancel each other out. If the action is between two individuals, and the plaintiff resides in one law area and the defendant in another, there may be no reason to treat the residence of either party as determinative, although, as already noted, it will ordinarily be the residence of the defendant that is important to establish jurisdiction. Weighing considerations of cost, expense, and convenience, even when they conflict, is a familiar aspect of the kind of case management involved in many cross-vesting applications.
Cauldron and Mr Sage also rely upon the following statement by Brereton J in Valceski v Valceski [2007] NSWSC 440:
[69] That leaves to the third factor, the interests of justice. The question is simply whether, assuming that the jurisdiction of the transferor court has been regularly invoked, it is in the interests of justice that the proceedings be heard and determined in the transferee court, there being a statutory obligation to transfer the proceedings to that court whenever it appears to be in the interests of justice to do so - for which purpose it is both necessary and sufficient that the transferee court be the "more appropriate" forum [BHP Billiton Ltd v Schultz (2004) 221 CLR 400 at 421 [14], 434-5 [63]]. In identifying the "more appropriate forum", relevant considerations include the cost and efficiency of proceedings in the respective jurisdictions, and the "connecting factors" described by Lord Goff in Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 at 478 - including matters of convenience and expense such as availability of witnesses, the places where the parties respectively reside or carry on business, and the law governing the relevant transaction [BHP v Schultz, 422 [18]]. Consideration of relevant connecting factors may identify a "natural forum" [BHP v Schultz, 423 [19]; cf British American Tobacco Australia Ltd v Gordon [2007] NSWSC 230, [44]]. As Schultz makes clear, the interests of justice concern those of both parties, and rather than the selection of the most advantageous, or least disadvantageous, forum for one of them, the "interests of justice" are to be judged by more objective factors, such as facilitate identification of the "natural forum", in which objectively judged it might be expected that the dispute would fall to be resolved, with its concomitant juridical advantages and disadvantages for each party, whatever they may be [cf British American Tobacco v Gordon, [47]].
[70] I reject the submission, advanced on behalf of Bobby, that the applicant for a transfer bears some onus or has to show some good reason for disturbing the plaintiffs' initial choice of venue, or that the plaintiff's choice of court is to be given weight; despite earlier suggestions to that effect [Global Technology Australasia Ltd v Bank of Queensland [2001] VSC 230; Bourke v State Bank of New South Wales (1988) 22 FCR 378; Kenda v Johnson (1992) 15 Fam LR 369 (1993) FLC 92-331, 79,505; Re Chapman & Jansen (1990) 13 Fam KR 853, FLC 92-139; Bankinvest AG v Seabrook (1988) 14 NSWLR 711, it is now established that an applicant for a transfer bears no burden of persuasion or onus of proof [BHP v Schultz at 437 [71]; Bankinvest AG v Seabrook, 727], and no particular significance attends the plaintiff's original choice of forum [BHP v Schultz, 425-6 [26]-[27], 439 [77]; British American Tobacco v Gordon, [43]]. It is only if both courts are equally appropriate that the initial choice will have significance; if one is more appropriate than the other, however so slightly, a transfer to the more appropriate court is mandatory.
[6]
Requirement that jurisdiction be regularly invoked
The plaintiffs' primary submission is that, as a matter of law, s 5(2) of the Cross-vesting Act does not at the present time empower this Court to make an order transferring these proceedings to the Supreme Court of Western Australia, and it will not do so until the plaintiffs have been able to serve all of the defendants in a manner that is effective to give this Court jurisdiction to determine the proceedings against all of the defendants.
The plaintiffs rely upon the principle that the Court exercises jurisdiction over defendants in personam, so that the jurisdiction to determine any claim does not arise upon the issue of the initiating process out of the Registry of the Court, but is only perfected if and when a defendant is served with the initiating process in a manner that is permitted by the rules that govern the Court's procedures. There is no doubt as to the truth of this proposition as a general principle.
It will be noted that, in that extracts from the two cases that are referred to above, reference was made to the Court's jurisdiction being "regularly invoked". A review of the judgments in Schultz will find many references to the need for the Court's jurisdiction being regularly invoked, before the Court can make an order under the Cross-vesting Act. Perhaps the most direct statement of that requirement is the following, taken from the judgment of Gummow J:
[72] Section 5 assumes the regular invocation of jurisdiction, both as to amenability of the defendant to process and as to subject-matter.
Accordingly, say the plaintiffs, even though Cauldron and Mr Sage are before the Court, because they have been served with the summons that initiated the proceedings, it is premature for the Court to be able to make a cross-vesting order, which will apply to the proceedings in so far as they seek relief against Starr World and Mr Huang, because the jurisdiction of the Court has not yet regularly been invoked against the latter two defendants.
The statutory precondition to the Court having power to make a cross-vesting order, found in s 5(2) of the Cross-vesting Act, is that a proceeding be pending in the Supreme Court. In so far as the courts have explained the concept of the pendency of proceedings in terms of the jurisdiction of the Court being regularly invoked, which requires that the Court have jurisdiction over both the subject matter of the proceeding and the person of the defendant, the courts have given recognition to the principle that, notwithstanding the issue of initiating process, the court cannot proceed at all in a way that will determine the claim in a manner binding on a defendant, until that defendant is first served with the initiating process.
However, in my view, if there are multiple defendants to a suit, and the plaintiff has properly served at least one defendant, even if it has not served the others, the jurisdiction of the Court has been regularly invoked, even if only against the defendant who has been served. From the point when the first defendant has been served, there is a proceeding pending in the Court.
I do not take the members of the High Court in Schultz to have directed their attention to the situation that arises when less than all of multiple defendants have been served with the initiating process, and I do not understand that Court to have held that there can be no proceeding pending in a court if less than all of multiple defendants have been served.
It is, with respect, understandable why a proceeding cannot be pending until the jurisdiction of the Court has regularly been invoked against at least one of a number of defendants, by service of the initiating process on that defendant. The Court cannot proceed to do anything in the case until at least one defendant has been served. Before the one defendant has been served, all that has happened is that an originating process has been issued by the Registry of the Court. There is no proceeding, in a strict sense, because the Court has no jurisdiction to proceed. However, when at least one defendant has been served, the Court can proceed, and there is therefore a proceeding which is pending.
I am reinforced in this view because I can discern no reason why the Parliament, in enacting the Cross-vesting Act, would have intended to make service on all defendants named in the originating process a pre-condition on the power of the Court to make a cross-vesting order. It is easy to see why service on at least one defendant is necessary, because the Court should not be able to cross-vest a proceeding for which its jurisdiction has not been invoked at all. But if service on all of the defendants was essential, the Court could not cross-vest a proceeding, irrespective of how loudly the interests of justice cried out for that to occur, until the plaintiff had served the last defendant. As long as there remained a defendant unserved, the power to cross-vest would be sterilised. The plaintiff could manipulate the choice of forum by joining a defendant who could not be served. That outcome would not depend simply on the plaintiff not taking, or being able to take, available steps to serve a defendant, but the plaintiff could join a defendant who was not amenable to service under the rules governing the Court's procedure. That would not stop the plaintiff proceeding to judgment against the other defendants.
[7]
The interests of justice in this case
As the Court has power to make a cross-vesting order under s 5(2) of the Cross-vesting Act in favour of the Supreme Court of Western Australia, notwithstanding that the plaintiffs have not yet been successful in serving the initiating process in this matter on Starr World and Mr Huang, the question is whether the interests of justice favour the determination of these proceedings by that Court.
In my view the answer to that question is clearly yes. This is not one of those cases, alluded to by Brereton J in Valceski, where the balance of the interests of justice may only slightly favour the proceedings being determined in one court rather than another.
I should first note that the plaintiffs submitted that the Court should defer making a decision on whether or not to make a cross-vesting order until the plaintiffs have had an opportunity to plead their case, and the defendants who have not yet been served have an opportunity to put their own arguments as to why the interests of justice favour the proceedings being determined by this Court.
I rejected this suggestion because I am satisfied that the outline of the basis of the plaintiffs' case against the various defendants is sufficient to enable the Court to decide the issue properly at this stage. So far as Starr World and Mr Huang are concerned, there was evidence before the Court that, even though they have not been served, a lawyer instructed by them was in Court when Pembroke J made the order that the cross-vesting application would be heard on 5 November 2014. They therefore were aware that the Court might deal with the cross-vesting application in their absence. They chose not to appear to put their own case.
The plaintiffs made a desultory attempt to put reasons why the position of Starr World and Mr Huang led to this Court being the proper court to determine the proceedings. The reality is that those defendants are residents of the People's Republic of China, and they will experience no great difference defending the plaintiffs' claims in Perth as compared to Sydney.
The decisive reason, however, for my decision that the cross-vesting application should be determined now was that, on the one hand the plaintiffs are pursuing separate and serious claims against Cauldron and Mr Sage (set out above in the extract from Mr Shen's affidavit) and those defendants will have to record those claims as a contingent liability in their financial statements. They have a right to require the plaintiffs to prosecute the claims against them expeditiously. On the other hand, the plaintiffs have conceded that it may take in the order of 6 months to serve Starr World and Mr Huang under the Hague Convention, and even after service, the proceedings may substantially be delayed by disputes as to whether those defendants are within the extra-territorial jurisdiction of this Court under UCPR r 11.2.
The plaintiffs rely upon the argument that the primary claims of the plaintiffs against Starr World and Mr Huang will depend upon the law of the People's Republic of China. Appropriate evidence of that law will have to be obtained from Chinese legal experts, and translated into English. Because the plaintiffs are obliged by circumstances to conduct litigation in a foreign jurisdiction, in a language that is not their own, they will be particularly reliant upon the assistance of a lawyer qualified to practice before the relevant Australian court; who is competent in both Australian and Chinese law; who is able to speak both languages; and who is able to assist the plaintiffs with relevant cultural differences. Mr Shen satisfies these requirements, and the plaintiffs desire to have his services. Mr Shen practices in Sydney but not in Perth.
The plaintiffs also point to evidence that, although there are direct air services between cities in China and both Sydney and Perth, there are more regular flights between Sydney and various cities in China, than is the case for Perth.
These considerations are entitled to weight, but in my opinion the preponderance of connecting factors and other considerations that are relevant have the effect that the interests of justice will best be served if these proceedings are determined by the Supreme Court of Western Australia. It is not necessary that Western Australia be the natural forum to support that conclusion, but in my view there is at least a strong argument that Western Australia is the natural forum to determine the present proceedings.
It should first be noted, however, that Cauldron and Mr Sage have provided evidence that they commonly instruct their solicitor, with whom they have had a long and close relationship, and they desire to retain him to act for them in these proceedings. Their solicitor only practices in Perth. By and large the desire of the plaintiffs on the one hand, and Cauldron and Mr Sage on the other, to retain the solicitor of their choice balances out. It is unfortunate, but one or the other set of parties cannot retain the lawyer of their choice.
These proceedings concern shares in Cauldron, which, as I have noted above, is a company incorporated under the Corporations Act, and is registered in Western Australia. The proceedings also concern monies received by Cauldron for the issue of its shares. Those monies are held in Western Australia. Cauldron's principal place of business is in Western Australia. No party has a place of business in New South Wales. All of the shares in Cauldron that were issued were issued to relevant parties under placement agreements, the proper law of which is the law of Western Australia. Cauldron's hardcopy records are held in Western Australia. Its electronic records are held on computers situated in that State. Two of Cauldron's directors (including Mr Sage) reside in Western Australia, while the other two reside in China. It is too early in the proceedings to be able to identify the persons who will be required to give evidence. However, there is a high likelihood that the witnesses will be resident in Western Australia, or in various locations in China. No likely witness has been identified who resides in New South Wales.
I am fortified in my finding that the interests of justice favour the transfer of these proceedings to the Supreme Court of Western Australia by the result of my consideration of the respective application of the extra-territorial jurisdiction of the two courts. The Supreme Court of Western Australia appears able to exercise extra-territorial jurisdiction over these proceedings on clearer and stronger grounds than does this Court. If the proceedings are transferred to Western Australia, there should be significantly less scope for delay in dealing with the proceedings caused by disputes about the entitlement of the court to exercise extra-territorial jurisdiction.
I will therefore make the following orders:
1. Pursuant to section 5(2) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW) order that these proceedings forthwith be transferred to the Supreme Court of Western Australia.
2. Order the plaintiffs to pay the second and fourth defendants' costs of their notice of motion filed on 14 October 2014.
3. Order that the exhibits may be returned forthwith in accordance with the Rules.
[8]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 04 March 2015