Break Fast Investments Pty Ltd v Perikles Giannopoulos

Judgment 1These proceedings are listed before me for a three day hearing commencing on 17 October 2011. The Plaintiff, Break Fast Investments Pty Limited ("Break Fast"), claims in these proceedings that the Defendants received various unauthorised payments from it. In his Defence previously filed in the proceedings, the First Defendant ("Mr Giannopoulos") admits that he received those payments but does not admit they were paid by Break Fast and denies that he was not entitled to receive them. 2By Notice of Motion filed on 15 August 2011, Break Fast sought orders that leave be granted to it to join Mr Christos Voukidis ("Mr Voukidis") as the Third Defendant and Citigroup Pty Limited ("Citigroup") as the Fourth Defendant and that leave be granted to it to file and serve an Amended Statement of Claim substantially in the form of the proposed Amended Statement of Claim exhibited to an affidavit of its solicitor, Mr Phair, sworn 12 August 2011. Break Fast also sought an order pursuant to section 5(2) of the Jurisdiction of Courts (Cross-vesting) Act 1987 that the proceedings be removed to the Supreme Court of Victoria. Amendment application in respect of the First and Second Defendants 3The application for leave to amend the Statement of Claim so far as it concerns Mr Giannopoulos and the Second Defendant is not opposed by them. Accordingly, I will grant that leave. Amendment application in respect of Mr Voukidis 4Break Fast seeks an order that leave be granted to it to join Mr Voukidis as an additional defendant in the proceedings and file and serve an Amended Statement of Claim pleading new claims against him. A letter from the solicitors for Mr Voukidis was tendered before me which indicated that Mr Voukidis did not seek to appear on the substantive hearing of the application for his joinder and, if the Court ordered that he be joined to these proceedings, then he neither consented to nor opposed the transfer of the matter to the Supreme Court of Victoria. 5I do not consider that I should grant leave to the Plaintiffs to join Mr Voukidis as a defendant in the proceedings or to file and serve the Amended Statement of Claim so far as it includes the amendments sought to be made against Mr Voukidis. Other proceedings have already been brought by the Plaintiff against Mr Voukidis in this Court concerning substantially the same allegations as are now sought to be made in these proceedings, which were subsequently transferred to the Supreme Court of Victoria ("Victorian Break Fast proceedings"). The matters raised against Mr Voukidis in respect of the payments made to Mr Giannopoulos could have been raised in those proceedings, although I have been informed that they were not. Those allegations were also not raised in the Statement of Claim filed in these proceedings on 18 June 2010. 6The Plaintiff has offered no explanation that the allegations now sought to be brought against Mr Voukidis were not previously advanced against Mr Voukidis in these proceedings, nor is there any suggestion that they could not (as Bergin CJ in Eq noted in the course of argument in respect of the Plaintiff's previous application to transfer the proceedings to the Supreme Court of Victoria) be raised in the Victorian Break Fast proceedings. 7The joinder of Mr Voukidis and an amendment which permitted those allegations to be raised at this point, a little more than a month before the commencement of the hearing, would require the hearing date be vacated and would be significantly prejudicial to the First and Second Defendants. Having regard to the overriding purpose specified in s 56 of the Civil Procedure Act 2005 (NSW), the objects of case management identified in s 57 of the Civil Procedure Act , and the dictates of justice, to which reference is made in s 58 of the Civil Procedure Act , and to the High Court's decision in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27. I do not consider that allowing Mr Voukidis to be joined as a defendant in these proceedings or permitting the amendment of the Statement of Claim to include the allegations sought to be made against Mr Voukidis at this late stage would be consistent with the overriding purpose of the Civil Procedure Act or with the dictates of justice. Amendment application in respect of Citigroup 8Break Fast also seeks an order that leave be granted to it to join Citigroup as a further defendant in the proceedings. I have been informed from the bar table that Citigroup does not seek to be heard in respect of the order that it be joined as a party to the proceedings. It appears that Citigroup is sought to be joined as a party to the proceedings since Break Fast seeks a declaration that it should be subrogated to Citigroup's rights in respect of a property situated at Homebush to the extent that the relevant moneys were used to pay or discharge any mortgages held by Citigroup over that property and another property. 9There may be an open question whether Citigroup's rights or interests would in fact be adversely affected by the making of an order for subrogation so as to require its joinder to the proceedings. Observations of Cohen J in State Bank of New South Wales v Geeport Developments Pty Ltd (1991) 5 BPR 11,947 may suggest that Citigroup would remain entitled to its rights until it was paid the whole of its secured debt and would have no interest with what happens to its security after that point. However, Citigroup has not contended before me that it is not properly joined as party to the proceedings and I consider that I should order that leave be granted to the Plaintiffs to join Citigroup as a defendant in the proceedings and to file and serve its Amended Statement of Claim so far as it seeks relief against Citigroup. Application for transfer of proceedings to the Supreme Court of Victoria 10As noted above, Break Fast seeks an order pursuant to s 5(2) of the Jurisdiction of Courts (Cross-vesting) Act 1987 that proceedings be removed to the Supreme Court of Victoria. 11In support of its motion, Break Fast refers to the existence of two proceedings in the Supreme Court of Victoria, and particularly on a Third Party Notice filed by National Australia Bank Limited ("NAB"), against the First Defendant ("Mr Giannopoulos"). The first relevant proceedings in the Supreme Court of Victoria are those brought by Ambridge Investments Pty Ltd against Mr Baker and others ("Ambridge proceedings"). Mr Voukidis (who the Plaintiff was unsuccessful in joining as the Third Defendant in these proceedings) is the Second Defendant and Break Fast is the Sixth Defendant in those proceedings. In the Ambridge proceedings, Ambridge Investments contends that Break Fast made payments which were not for the benefit of a joint venture between Baker, Voukidis and Break Fast including a payment of $182,000 to Mr Giannopoulos. Break Fast contended before me that the amount of payments to Mr Giannopoulos in fact was $317,000 rather than $182,000. 12The second relevant proceedings in the Supreme Court of Victoria are the Victorian Break Fast proceedings to which I referred above. 13Break Fast relies on the affidavit of Mr Damian Phair dated 13 April 2011, on which it also relied in support of the application before Bergin CJ in Eq, to which I refer below, in support of that motion. Break Fast also relies on a second affidavit of Mr Phair dated 12 August 2011 which refers to the fact that NAB has joined Mr Giannopoulos in the Victorian Break Fast proceedings through a Third Party Notice claiming the sum of $81,200 against him, which is part of the amount claimed by Break Fast against the First Defendant in these proceedings. A copy of that Third Party Notice is exhibited to that affidavit and indicates that NAB contends that it made the relevant payments operating under a mistake and seeks an order that the amount received by Mr Giannopoulos is money had and received to the use of NAB or alternatively that Mr Giannopoulos is unjustly enriched at NAB's expense and is liable to make restitution. 14Break Fast also relies on three affidavits of Mr Phair dated 5 September 2011 which respectively deal with the present status of these proceedings; the fact of the payments made to Mr Giannopoulos; and the transcript of an earlier application before Bergin CJ in Eq, heard on 18 May 2011, where Break Fast had previously applied for transfer of these proceedings to the Supreme Court of Victoria under s 5(2) of the Jurisdiction of Courts (Cross-vesting) Act 1987. In that application, Break Fast relied on likely common issues in the Ambridge proceedings, the Break Fast Victorian proceedings and these proceedings, including: the entitlement of the recipient of money from Break Fast's account to receive the money; whether the payment from Break Fast's accounts involved a breach of fiduciary duty; and whether Mr Giannopoulos knew of the breach; and the credibility of Mr Voukidis. 15During the course of argument before Bergin CJ in Eq on 18 May 2011, the Defendants referred to matters on which they also rely before me, including the fact that the Defendants have limited means; that they have presently given undertakings without admissions in settlement of an earlier application for an Mareva injunction which constrain the use of their home and that this warrants a degree of expedition in these proceedings; and that the Defendants oppose the transfer of these relatively simple proceedings to be heard together with other proceedings in which there are presently at least eighteen parties with numerous claims against them which are presently still at the pleading stage. The Defendants also pointed out that the parties to the proceedings all reside in New South Wales. In the course of argument before Bergin CJ in Eq, her Honour noted that it was open to the Plaintiff to assert its claims against Mr Voukidis in the Supreme Court of Victoria and that different issues as to the state of the Defendants' knowledge were raised in these proceedings. Her Honour dismissed the application seeking to transfer the proceedings to the Supreme Court of Victoria. 16In the course of argument before me, Mr Dubler SC, who appears for the Plaintiff, fairly acknowledged that the only new development since the matter was heard before Bergin CJ in Eq was the filing of the Third Party Claim by NAB, but contended that represented a fundamental change of circumstances. Mr Dubler contended that I should infer that Mr Giannopoulos' defence to that claim would be the same as his defence in these proceedings, namely that he received the relevant payments without notice that they were unauthorised. However, it seems to me that the nature of the Defendants' defence to that claim and the role which they will be required to play in respect of that claim is not yet known, and they have every reason to seek to limit the role which they are required to play in respect of that claim having regard to the relatively small amount involved in it. I should add that, if Break Fast is successful in recovering the entire amount claimed against the Defendants in these proceedings, that would seem to extinguish the loss underlying that part of its claim against NAB and remove the need for any corresponding claim by NAB against Mr Giannopoulos. 17The Courts have emphasised the disadvantages attached to multiple interlocutory applications but there is greater justification for such an application where circumstances have changed: DA Christie Pty Ltd v Baker [1996] 2 VR 582 at 602-603; Nominal Defendant v Manning (2000) 50 NSWLR 139; [2000] NSWCA 80 at [72], [97]; Fletcher v Besser [2010] NSWCA 30. In the present case, it seems to me that the change in circumstances arising from the Third Party Notice filed by NAB in the Victorian Break Fast proceedings requires the reconsideration of the earlier exercise of the Court's discretion not to transfer the proceedings to the Supreme Court of Victoria. Application of s 5(2)(b)(i) of the Jurisdiction of Courts (Cross-vesting) Act 1987 18Where a proceeding is pending in this Court, s 5(2)(b)(i) of the Jurisdiction of Courts (Cross-vesting) Act 1987 requires this Court to transfer the relevant proceedings to the Supreme Court of another State where it appears to this Court that: (1) the relevant proceeding arises out of, or is related to, another proceeding pending in the Supreme Court of the other State and (2) it is more appropriate that the relevant proceeding be determined by that other Supreme Court. 19The first question arising under s 5(2)(b)(i) of the Jurisdiction of Courts (Cross-vesting) Act 1987 is therefore whether this proceeding is related to the Victorian proceedings. In my view, this proceeding is "related to" the Victorian proceedings by reason of the common issues as to Mr Voukidis' conduct and the fact that part of the moneys claimed by Break Fast in these proceedings against the First and Second Defendants are also claimed by NAB against Mr Giannopoulos by the Third Party Notice in the Victorian Break Fast proceedings. 20The second question arising under s 5(2)(b)(i) of the Jurisdiction of Courts (Cross-vesting) Act 1987 is whether it is more appropriate that this proceeding be determined by the Supreme Court of Victoria. I proceed on the basis that the Plaintiff bears no onus of proof and there is no presumption in favour of New South Wales as the jurisdiction in which the proceedings were commenced: BHP Billiton Ltd v Shultz (2004) 221 CLR 400; [2004] HCA 61 at [77]; Livestock Transport (Sydney) v Commonwealth of Australia [2011] NSWSC 283 at [14]. 21I accept that, on the one hand, if this proceeding is not transferred to the Supreme Court of Victoria, there is a risk of the two Courts in which the separate proceedings having been commenced making inconsistent findings of fact and law, particularly in respect of NAB's Third Party Notice, and this factor would support the transfer of the proceedings to the Supreme Court of Victoria. 22On the other hand, there are other factors which tend against the transfer of the proceedings to the Supreme Court of Victoria. The properties which are subject of the proceedings are situated in New South Wales. It appears that each of the relevant witnesses is situated in New South Wales, although I accept that it is possible that the Defendants would be required to give evidence in respect of NAB's Third Party Notice, although I am not satisfied that is inevitable given the narrower scope of that claim. In my view, the First and Second Defendants would suffer real disadvantage, particularly in respect of costs, if joined in the substantially wider proceedings in the Supreme Court of Victoria, which may or may not be able to be reduced by case management of those proceedings. 23These proceedings are also substantially further advanced than the Break Fast Victorian proceedings. As I noted above, these proceedings are listed for hearing in about a month's time in this Court. By contrast, Counsel advised me that they could not indicate an anticipated hearing date or length for the Victorian Proceedings, and that directions presently made in those proceedings included directions for discovery by 30 September 2011 and further directions on 21 October 2011. Accordingly, a transfer of proceedings to the Supreme Court of Victoria would deprive the First and Second Defendants of an early hearing of the claim against them. 24On balance, and having regard to these various factors, I do not consider that it is more appropriate that the present proceedings be determined by the Supreme Court of Victoria and accordingly the requirements for transfer of the proceedings to that Court under s 5(2)(b)(i) are not satisfied. Application of s 5(2)(b)(iii) of the Jurisdiction of Courts (Cross-vesting) Act 1987 25So far as the application for transfer of these proceedings to the Supreme Court of Victoria is brought under s 5(2)(b)(iii) of the Jurisdiction of Courts (Cross-vesting) Act 1987, the question is whether it is in the interests of justice that the proceeding be determined by the Supreme Court of Victoria. The High Court has noted that "the interests of justice are not the same as the interests of one party and there may be interests wider than those of either party to be considered": BHP Billiton Ltd v Shultz at [15]. 26It seems to me that, at least on the present facts, the question whether it is appropriate that the proceedings be determined by the Supreme Court of Victoria and whether it is in the interests of justice that the proceedings be determined by the Supreme Court of Victoria raise similar considerations. I accept that the interests of Break Fast, the public interest in avoiding duplication of resources and the risk of inconsistent findings are factors weighing in the direction of transfer of the proceedings to the Supreme Court of Victoria. 27On the other hand, I consider that there are real and substantial disadvantages to the Defendants from the transfer of the proceedings to the Supreme Court of Victoria, to be joined with substantially larger proceedings which are substantially less advanced, in circumstances that their property is currently the subject to the undertakings to which I have referred above - which I may properly take into account in determining where the interests of justice lie: Livestock Transport (Sydney) Pty Ltd v Commonwealth of Australia at [39]. Having regard to these and the other matters to which I have referred above, I do not consider that it is "otherwise in the interests of justice" that the present proceedings be determined by the Supreme Court of Victoria. Orders 28Accordingly, I will order that: (a) Leave be granted to the Plaintiff to join Citigroup Pty Limited as a defendant in the proceedings. (b) Leave be granted to file and serve an Amended Statement of Claim containing the amendments in respect of the First and Second Defendants and Citigroup Pty Limited as set out in the Exhibit marked "EX-DGP-2" to the affidavit of Damian Grant Phair sworn on 12 August 2011. (c) The Motion otherwise be dismissed. I will hear the parties as to costs and as to the further directions (as to filing and service of the Amended Statement of Claim, the Defence to it, any further discovery, any further evidence and the usual order for hearing) which should be made to ensure the proceedings will be ready for hearing on 17 October 2011.