Bendigo and Adelaide Bank Limited v Louie

Supreme Court of NSW|2019-01-31|Before: Gummow J

Judgment

HER HONOUR: The issue to be determined is whether these proceedings should be cross vested to the Victorian Supreme Court.
By summons filed 22 August 2018, the plaintiff seeks firstly, an order that District Court proceedings No 2016/284203 between Bendigo and Adelaide Bank Limited v Jeffrey Louie be transferred to the Supreme Court of New South Wales pursuant to s 140(1) of the Civil Procedure Act 2005 (NSW); and secondly, that the proceedings then be transferred to the Supreme Court of Victoria pursuant to s 5(2) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW).
The plaintiff is Bendigo and Adelaide Bank Limited. The defendant is Jeffrey Louie. The parties relied upon Court Books (3 Volumes) (Ex A). This case is one of a significant number of cases that arise out of the collapse of the Great Southern Managed Investment Scheme.
Both parties agreed that these proceedings should be transferred from the District Court to this Court. As the District Court does not have jurisdiction to hear these proceedings, it is appropriate that they be transferred to this Court. I make an order pursuant to s 140 of the Civil Procedure Act that District Court proceedings No 2016/284203 between Bendigo and Adelaide Bank Limited v Jeffrey Louie be transferred to this Court.
Cross-vesting scheme
The cross-vesting scheme gives the Supreme Court of every state and territory the jurisdiction to hear proceedings based on the law of another state or territory: see s 4 of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW) and BHP Biliton Limited v Schultz [2004] HCA 61; (2004) 221 CLR 400 ("BHP") per Gummow J at [43].
Section 5(2)(b)(iii) of the Jurisdiction of Courts (Cross-Vesting) Act relevantly reads: "5 Transfer of proceedings (2) Where: ... (b) it appears to the … court that: … (iii) it is otherwise in the interests of justice that the relevant proceedings be determined by the Supreme Court of another State or of a Territory; the … court shall transfer the relevant proceeding to that other Supreme Court."

The application of cross-vesting principles

The "interests of justice" are a broadly-based and flexible concept: see discussion by Street CJ in Bankinvest AG v Seabrook (1988) 14 NSWLR 711 at 730; 90 ALR 407 ("Bankinvest").
The process of determining the "interests of justice" entails a judicial evaluation. Although there are no precise or fixed principles which guide or determine the weight to be attached to particular factors of a potentially varied nature, a determination under s 5(2)(b)(iii) does not involve the exercise of a common law discretion: see BHP per Kirby J at [172].

The amended statement of claim

These proceedings arise out of the District Court proceedings 2016/28420, where the plaintiff filed an amended statement of claim ("ASC") seeking judgment against the defendant in the sum of $115,610.08, plus interest and costs.
On 30 August 2006, the plaintiff alleges that the defendant and Great Southern Finance Pty Limited (In Liquidation) ACN 009 235 143 entered into a combined loan deed ("first loan deed"). The terms included that Great Southern Finance would lend the plaintiff the sum of $43,200 for the purpose of investing in the "Great Southern Plantations 2006 Project" ("first loan") (CB7).
Great Southern Finance alleges that it assigned its rights under the first loan deed to ABL Nominees Pty Limited ACN 106 756 521 in its capacity as trustee of the Lighthouse Trust No 12, with effect from 1 November 2006 (ASC [2]).
On 1 July 2007, the plaintiff alleges that the defendant and ABL Nominees entered into a loan deed ("second loan deed"). The terms included that ABL Nominees would lend the defendant the sum of $24,096 for the purpose of investing in the "Great Southern Plantations 2007 Project" ("second loan deed") (ASC [7]). The defendant and ABL Nominees also entered into a loan deed ("third loan deed"). The terms included that ABL Nominees would lend the defendant the sum of $25,100 for the purpose of investing in the "Great Southern 2007 High Value Timber Project" ("third loan") (ASC [12]). This loan is governed by ABL Nominees, which, in its capacity as trustee of the Lighthouse Trust No 12, assigned all of its rights under the first loan deed, the second loan deed and the third loan deed to Adelaide Bank, effective from 1 December 2008 (ASC [3B], [8A], [13A]).
The plaintiff alleges that the defendant is in breach of the terms of the first loan deed, the second loan deed and the third loan deed to Adelaide Bank, and seeks the repayment of these loans.

The amended defense

On 12 July 2018, the defendant filed an amended defense. He does not admit that the first loan deed was assigned to Adelaide Bank, and denies that the third loan deed was assigned to Adelaide Bank (AD [3C], [13A]).
The defendant denies that he appointed Great Southern Finance as his attorney to enter into the second loan deed or the third loan deed with ABL Nominees (AD [7] and [12]).
The defendant also alleges that the deed of settlement in the group proceedings does not cover the first loan deed, the second loan deed or the third loan deed (AD [20] and [31]).

The group proceedings

There is currently a group of proceedings in the Supreme Court of Victoria, case managed by Croft J ("the group proceedings"). There are currently 36 "test cases" that arise out of the collapse of the Great Southern Managed Investment Scheme.
In respect of the "Great Southern Plantations 2006 Project", group members were relevantly defined in paragraph [2] of the 2FASC ("Clarke group proceedings 2010/02882") to be persons who, at any time between 28 February 2006 and 31 May 2007 inclusive, acquired and/or held an interest as a member of the 2006 Plantation Scheme; entered into a land and management agreement with GMSAL for woodlots in the 2006 Plantation Scheme; and entered into a loan with Great Southern Finance to fund payment of application fees in respect of the 2006 Plantation Scheme
In respect of the "Great Southern Plantations 2007 Project", group members were relevantly defined in paragraph [2] of the 2FASC ("Murray group proceedings 2011/04476") to be persons who, at any time between 1 April 2007 and 31 March 2008 inclusive, acquired and/or held an interest as a member of the 2007 Plantation Scheme; entered into a land and management agreement with GMSAL for woodlots in the 2007 Plantation Scheme; and entered into a loan with ABL Nominees to fund payment of the application fees in respect of the 2007 Plantation Scheme.
In respect of the "Great Southern 2007 High Value Timber Project", group members were relevantly defined in paragraph [2] of the 2FASC ("Murray group proceedings 2011/04071") to be persons who, at any time between 16 February 2007 and 30 June 2007 inclusive, acquired and/or held an interest as a member of the 2007 HVT Scheme; entered into a lease and management agreement with GSMAL for woodlots in the 2007 HVT Scheme; and entered into a loan with ABL Nominees to fund payment of the application fees in respect of the 2007 HVT Scheme.
While the defendant disputes that he is a group member, if he is found to be one, it may be dispositive of the defenses raised against the plaintiff in respect of those loans.

Deed of settlement

In these group proceedings, Adelaide and Bendigo Bank pleads (ASC [23]) that the deed of settlement (CB12) entered in the group proceedings is binding of the defendant in relation to the first loan deed, the second loan deed and the third loan deed.
The deed of settlement includes the following terms: a. (clause 4.1.4) "The Lead Plaintiffs for and on behalf of themselves and all Group Members acknowledge and admit the validity and enforceability of the Lead Plaintiffs' Loan Deeds and the Group Members' Loan Deeds"; b. (clause 4.1.6) "Each of the Lead Plaintiffs acknowledges and admits their liability to the BEN Parties to pay the Loan Balance under their Loan Deed"; c. (clause 4.1.10) "The Lead Plaintiffs for and on behalf of themselves and on behalf of all Group Members release the BEN Parties and their Related Entities and Javelin and its Related Entities from all Claims"; and d. (clause 4.1.12) "Each of the Lead Plaintiffs for and on behalf of themselves and on behalf of all Group Members and each of the M+K Counterclaim Claimants agree that they will not bring or pursue, or procure that a third party bring or pursue, a Claim against the BEN Parties or their Related Entities and Javelin and its Related Entities".
In Bendigo and Adelaide Bank Ltd v Lonergan [2018] VSC 357 ("Lonergan"), Croft J set out at [27] the consequences of being a group member as follows: "For the reasons which follow, the consequence of the Defendant being a Group Member with respect to both the 2007 Plantations Group Proceeding and the 2007/2008 HVT Group Proceeding is that he is bound by the terms of the Deed of Settlement of the group proceedings and, particularly, the acknowledgment that his Loan Deeds are valid and binding (cl 4 1 4) and the release of any Claims (as defined in the Deed of Settlement) that he might otherwise have against the Plaintiff in this proceeding (cll 4 1 10 and 4 1 12)." (footnotes omitted)
See also Bendigo and Adelaide Bank Ltd & Anor v Hague [2018] VSC 406 at [39]-[44].
Four proceedings commenced in this Court have recently been transferred to the Supreme Court of Victoria. They are: (a) Bendigo and Adelaide Bank Limited v Rathbone [2017] NSWSC 1547 (R A Hulme J); (b) Allan v Bendigo and Adelaide Bank Limited [2018] NSWSC 177 (Schmidt J); (c) Bendigo and Adelaide Bank Limited v Burkett (Case No 2016/56666) (Rein J); and (d) Bendigo and Adelaide Bank Limited v Tulloch (unreported) (Fagan J).
In these four proceedings, the plaintiffs also dispute that they are bound by the group proceedings and the deed of settlement.
In Bendigo and Adelaide Bank Limited v Ratana [2018] NSWSC 1227 Adamson J, an application to transfer proceedings from this Court to the Victorian Supreme Court was refused on the basis that it had already been allocated a hearing date. Her Honour stated at [9]: "I regard the interests of justice as being fairly evenly balanced. Were it not for the allocation of a hearing date and its imminence, I would have been disposed to transfer the matter to the Supreme Court of Victoria. However, I am persuaded by the submission of Mr Horne that it would not be in the interests of justice to require the defendant to go to Melbourne and be required to obtain a further hearing date some way down the track, given that she would otherwise be entitled to have her matter heard in this Court on 4 September 2018."

Should these proceedings be transferred to the Supreme Court of Victoria?

The question is essentially practical, or in the words used in BHP, it is 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: see BHP at [13]; Bankinvest per Street CJ at NSWLR 713-14; ALR 408-9. The "interests of justice" is an expression to be interpreted broadly: BHP per Gleeson CJ, McHugh and Heydon JJ at [15].
In James Hardie & Coy Pty Ltd v Barry (2000) 50 NSWLR 357, Mason P at [95] endorsed the following useful checklist of six factors: firstly, the application of substantive law; secondly, forensic advantage or detriment conferred by procedural law; thirdly, the choice made by a plaintiff or a forum and the reasons for that choice; fourthly, substantive connections with the forum; fifthly, balance of convenience to parties and witnesses; and finally, convenience to the court system. In light of the decision of the High Court in BHP, no particular significance is now attached to the original choice of forum: see Taurus Funds Management Pty Ltd v Aurox Resources Ltd [2010] NSWSC 1223 ("Taurus") at [5]. If the defendant is successful on any of these issues, it leaves the plaintiff's claim for restitution, a common law concept to be determined.
The Court should not approach the transfer question with any presumption as to where the interests of justice lie: see BHP per Gleeson CJ, McHugh and Heydon JJ at [25]. It is not a circumstance in which an applicant has an onus of persuasion analogous to an onus of proof: see BHP per Gummow J at [71]. The disposition of an application for transfer of a proceeding does not require weight to be given to the plaintiff's choice of forum, which is essentially a neutral factor: see BHP per Kirby J at [168], and per Gummow J at [77].

The plaintiff's submissions

The plaintiff submitted that in the present case, interests of justice support a transfer to the Supreme Court of Victoria because Croft J is presently managing a significant number of matters arising out of the collapse of the Great Southern Managed Investment Schemes, and is therefore best placed to conduct the present proceedings efficiently and effectively in that Court.
On 14 April 2018, Croft J issued a note in respect of a series of "test cases" being heard by the Supreme Court of Victoria. The note confirms that as of 16 February 2018, approximately 36 cases have been set down for hearing before Croft J between July and November 2019. The earliest date these proceedings can be listed in this Court for hearing (with the parties' estimate of two days) is June 2019.

The defendant's submissions

The defendant raises a number of reasons why these proceedings should not be transferred to the Supreme Court of Victoria. They are:
Firstly, the lex causae is likely New South Wales (but may be South Australia or Western Australia) because: (a) the loan applications completed by the defendant were signed in New South Wales; (b) the first loan deed upon which the Bank sues was entered between Great Southern Finance (in WA) and the defendant (in NSW) and is said to be governed by the law of Western Australia; (d) the second and third loan deeds upon which the Bank sues were purportedly entered between ABL Nominees (in SA) and the defendant (in NSW) and are said to be governed by the law of Western Australia; and (d) completion of the transactions by the loan deeds was in New South Wales.
Secondly, the subsidiary issues in dispute concern the laws of various states and territories. Specifically, they concern whether: (a) the loan applications completed by the defendant in relation to the second loan and third loan in New South Wales validly created a power of attorney; (b) the second and third loan deeds, which are governed by the law of Western Australia, were in fact entered into by the defendant; (c) the loan deeds were in fact offered for sale under the Loan, Sale and Servicing Deed ("LSSD"), the terms of which are governed by the law of the Australian Capital Territory; and (d) the first loan, second loan and third loan were assigned in equity to the plaintiff by an acceptance by Adelaide Bank of offers purportedly made by Great Southern Finance and ABL Nominees under sale notices, the terms of which are governed by the laws of Western Australia and of New South Wales.
Thirdly, there are issues falling for determination that could only be resolved by the law of New South Wales apart from the Jurisdiction of Courts (Cross-vesting) Act and other cross-vesting of jurisdiction, namely whether: (d) the first loan, second loan and third loan were assigned by Adelaide Bank pursuant to s 12 of the Conveyancing Act 1919 (NSW) by the 14 June 2006 letter and the second sale notice (as is apparently also contended by Adelaide Bank), and (b) the powers of attorney purportedly created in New South Wales pursuant to s 8 of the Powers of Attorney Act 2003 (NSW) gave ABL Nominees power to enter into the second loan deed and third loan deed and, particularly, the powers to assign the loan deeds to third parties.
Fourthly, the only matter that has any relation to the law of Victoria is whether the defendant is bound by the deed of settlement.
Even if the defendant were bound by the deed of settlement, it is doubtful that the deed of settlement touches on these proceedings, because the admissions made by the deed of settlement are limited to loans which were assigned from Greater Southern Finance and ABL Nominees prior to the deed of settlement. This is because: (a) Clause 12 of the Deed of Settlement limits the admissions made by the Group Members via the Lead Plaintiffs under the Deed to "admit the validity and enforceability of the Group Members' Loan Deeds"; (b) "Loan Deeds" are defined by the LSSD to mean the "Loan Agreements the subject of the Group Proceedings entered into between the Group Members and Greater Southern Finance, which were subsequently assigned by GSF to one or more of the BEN Parties, or the Group Members and ABL Nominees Pty Ltd, which were subsequently assigned by ABL Nominees to one or more of the BEN Parties"; (c) "Loan Agreements" are defined by the LSSD to mean the "loan agreements under which monies were advanced to Scheme Members to finance their interest in managed investment schemes of which GSMAL, and (in the case of the Great Southern 2008 Future Forestry Investment Scheme) GSMAL and Rural Funds Management Limited (formerly Great Southern Funds Management Limited), is or was the responsibly entity".
Fifthly, there is no reason why the Supreme Court of Victoria is better placed to hear the issues relating to the deed of settlement. The Victorian Court of Appeal found of a deed of settlement arising out of group proceedings under the same class action regime created by the Supreme Court Act 1986 (Vic) that: "The fact that the deed emerged from proceedings in which certain matters were and others were not in issue, does not dictate any special approach to its construction.": see Byrne v Javeline Asset Management Pty Ltd [2016] VSCA 214 at [23].
Sixthly, there are good reasons for not allowing a party to transfer proceedings to another state court simply because matters are being dealt with in a particular way. The courts of each state may decide matters quite differently despite there being a common law of Australia in respect of certain contracts, as observed by Einstein J in Taurus at [32].
Finally, the defendant resides and works in Sydney. His solicitor and counsel practice in Sydney. If these proceedings are transferred to Victoria it will incur additional expense for himself and his legal representatives to travel and attend court in Victoria. Neither the defendant nor the plaintiff intends to call any witnesses from New South Wales.
The defendant contends that the proceedings relate to several matters which concern the laws of various states and territories, and that New South Wales in the most suitable jurisdiction. In response the plaintiff submitted that firstly, there is a common law of Australia rather than of each Australian jurisdiction: see Taurus at [27]-[29]. Secondly, the Supreme Court of Victoria is more than capable of construing the provisions of s 12 of the Conveyancing Act 1919 (NSW) and s 8 of the Power of Attorney Act 2003 (NSW).
On the issues of additional expense of interstate travel, the plaintiff submitted that this should be regarded as a neutral factor, and referred to Bioag Pty Ltd v Hickey [2007] NSWSC 296 at [14]: "Ultimately, I think the natural forum for proceedings, particularly in this day and age of electronic communication and interstate travel, usually falls to be determined by more principled issues than where the preponderance of the witnesses reside and 1 do not consider that there is any significant preponderance of convenience such as to resolve the question of more appropriate forum on the facts in this particular cast." That it is common for interstate legal practitioners to appear in either jurisdiction, and travel between Melbourne and Sydney, is straightforward: see Monash IVF Pty Limited v Burmeister (No 2) [2017] NSWSC 903 per Ball J at [18]. The plaintiff does not intend to call any witnesses from New South Wales.

Consideration

Essentially, there are four main issues to be determined in these current proceedings. They are whether the deed of settlement is binding, whether the power of attorney is valid, whether the assignments of the loan deeds are valid, and finally, only if the defendant is successful with any of these arguments, the plaintiff's claim for restitution.
The lex causae of these proceedings is likely to be New South Wales, Western Australia and South Australia. This is because firstly, the loan applications completed by the defendant were signed in New South Wales; secondly, the first loan deed upon which the Bank sues was entered between Great Southern Finance (in WA) and the defendant (in NSW), and are said to be governed by the law of Western Australia; thirdly, the second and third loan deeds upon which the Bank sue were purportedly entered between ABL Nominees (in SA) and the defendant (in NSW), and are said to be governed by the law of Western Australia; and finally, completion of the transactions by the loan deeds was in New South Wales. The deed of settlement in the group proceedings is governed by the law of Victoria.
The four cases commenced in this Court and transferred to the Supreme Court of Victoria dispute whether they are bound by the group proceedings and the deed of settlement. This is an issue common to the defendant in these current proceedings. The defendant's position in these proceedings is that he did not know anything about the group proceedings. It is my view that there is no forensic advantage or detriment conferred by procedural law. There are factual issues to be determined. The issue of whether the power of attorney is valid has already been determined in Victoria, although I accept the wording of the defendant's power of attorney is similar, albeit not identical. The Supreme Court of Victoria is more than capable of construing the provisions of s 12 of the Conveyancing Act and s 8 of the Powers of Attorney Act. So far as the notice of assignment is concerned, the defendant's position is that he does not recall receiving the notice of assignment (Aff 17/9/2018 [4]).
I accept that the defendant and his legal representatives will be required to travel interstate to Melbourne for the hearing and that he will incur this expense. Neither party intends to call witnesses from New South Wales.
The earliest hearing date that can be allocated in this Court is June 2019, the same time as proceedings may be heard in the Victorian Supreme Court. It is preferable that proceedings that raise substantially similar issues to the many other proceedings arising from the collapse of the Great Southern Managed Investment Scheme be dealt with by the one Court, namely the Supreme Court of Victoria.
Having considered all the relevant factors referred to in this judgment, I am persuaded that it is in the interests of justice that these proceedings be determined by the Supreme Court of Victoria.
I make an order pursuant to s 5(2) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW) that these proceedings be transferred to the Supreme Court of Victoria.

The Court orders that: (1) Pursuant to s 140(1) of the Civil Procedure Act that District Court proceedings No 2016/284203 between Bendigo and Adelaide Bank Limited v Jeffrey Louie are transferred to this Court. (2) Pursuant to s 5(2) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW) these proceedings between Bendigo and Adelaide Bank Limited v Jeffrey Louie are transferred to the Supreme Court of Victoria. (3) Costs are reserved.

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: 11 February 2019

Power of Attorney Act 2003(NSW)

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