Creighton v Australian Executor Trustees Limited

REASONS FOR JUDGMENT 1 On 30 September 2015, I ordered that: Pursuant to s 1337H of the Corporations Act 2001 (Cth), this proceeding be transferred to the Supreme Court of New South Wales. The mediation ordered to be conducted by a Registrar of the Federal Court of Australia be vacated. The costs of the proceeding to this date (except to the extent the subject of a specific order) and the costs of the application to transfer the proceeding, be costs in the cause. 2 These are the reasons for the transfer order. 3 By application dated 11 September 2015, Australian Executor Trustees Limited ('AETL') (the Respondent in this proceeding) sought orders to transfer this proceeding to the Supreme Court of New South Wales pursuant to s 1337H(2) of the Corporations Act 2001 (Cth) ('the Act'). 4 AETL is also the defendant in a separate representative proceeding pending in the Supreme Court of New South Wales (the 'Smith proceeding'). It is alleged in both this proceeding in the Federal Court of Australia and in the Smith proceeding that AETL contravened s 283DA of the Act in relation to the issue of debentures by Provident Capital Limited. 5 The principles that govern applications for transfer were not in dispute. Section 1337H(2) of the Act provides: (2) Subject to subsections (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. 6 Therefore, I must consider, having regard to the interests of justice, whether it is more appropriate that this proceeding be determined by the Supreme Court of New South Wales. Whilst the Applicant for a transfer does not have, in any formal sense, an onus of proof, the Applicant must at least persuade a transferor court to transfer the proceeding to another court. The transferor court must undertake an exercise in balancing a number of relevant factors that inform the court as to whether it is in the interests of justice to transfer a proceeding to a more appropriate court. No one factor will normally be decisive, although in some cases, a factor may be significant. This is one of those cases, to which I will return. 7 There are a number of factors that are relevant in considering the interests of justice and the more appropriate course to follow, including for the purposes of this application: (a) not having separate proceedings in more than one court dealing with the same issue being run concurrently, with the potential for inconsistent factual findings and determinations and wasted costs; (b) the stage of the proceedings in the two courts; (c) the experience of a particular court and the ability to provide an efficient and speedy trial; (d) considerations of costs, expense and convenience of the parties and witnesses; (e) the places where the parties carry on business; and (f) the law covering the relevant transactions. See generally Huntingdale Village Pty Ltd (Receiver and Managers Appointed) (ACN 085 048 531), In the matter of Huntingdale Village Pty Ltd (Receiver and Managers Appointed) (ACN 085 048 531) [2009] FCA 1323; BHP Billiton Ltd v Schultz (2004) 221 CLR 400; and Henry v Henry (1996) 185 CLR 571. 8 The significant factor in considering this application for transfer is the fact of there being separate proceedings in more than one court dealing with the same issues. In addition, it could not be guaranteed that the Smith proceeding would either be stayed or ultimately transferred to the Federal Court, with the result that one court (the Federal Court) could case manage, consider and determine the whole controversy between the parties. The application for transfer has been made to the Federal Court, and it must be properly considered by the Federal Court on the basis of the circumstances now existing. No application for transfer has been made in the Supreme Court of New South Wales. If the proceeding was not transferred to the New South Wales Supreme Court there would be the possibility of two courts dealing with substantially the same subject matter, as it could not be properly anticipated that the New South Wales Supreme Court would ever transfer the Smith proceeding to the Federal Court, or stay the Smith proceeding until the Federal Court proceeding was finalised. 9 Both parties accepted that there was considerable overlap in the group membership of this proceeding and the Smith proceedings, and that both proceedings would cover what is likely to be very similar, if not identical ground. 10 It was argued by the Applicant that even though there was a considerable overlap between the two proceedings this did not compel the conclusion that the Federal Court should transfer this proceeding to the Supreme Court of New South Wales. It was contended that there were alternative ways of avoiding the multiplicity of proceedings with the attendant risks of inconsistent findings and wasted costs that do not prejudice AETL, and would preserve the Applicant's legitimate juridical advantage of a trial date already fixed in March 2016. 11 It was submitted that AETL could seek a temporary stay in the Supreme Court of New South Wales of the Smith proceeding on the basis of the principles in Sterling Pharmaceuticals Pty Ltd v Boots Co (Australia) Pty Ltd (1992) 34 FCR 287. Upon determination of this proceeding, it was contended by the Applicant that the findings made would likely dispose of a substantial part of the Smith proceeding. 12 Further, it was contended by the Applicant that AETL could seek a transfer of the Smith proceeding into the Federal Court, and the Federal Court could then either manage the proceeding in a way that avoided duplication by granting a temporary stay of the Smith proceeding, or by placing the Smith proceeding on a timetable towards the March 2016 trial. 13 However, in my view, these two arguments only indicate the importance of one court case managing, hearing and determining both proceedings. The one court that can, with certainty, do that will be the Supreme Court of New South Wales, by the transfer of this proceeding. The Supreme Court can then deal with the case management issues of both proceedings. The parties will then not have the uncertainty of whether or not a temporary stay of the Smith proceeding would be granted or whether or not the New South Wales Court would transfer the Smith proceeding to the Federal Court. 14 This is not to say there are not some sound arguments in favour of this Court keeping the proceeding and not transferring it to the Supreme Court of New South Wales. However, the above consideration in my mind, on balance, determines the fate of the application to transfer to the Supreme Court of New South Wales. 15 One critical factor that may indicate a contrary approach to transfer is taking account of the stage of this proceeding contrasted to the Smith proceeding. This proceeding was filed on 23 December 2014; the Smith proceeding was filed on 17 July 2015, some six months later. This proceeding has been actively case managed in the Federal Court since at least 30 January 2015, a trial has been listed for three weeks commencing on 7 March 2016, and listed in that month since the first directions hearing in the matter on 30 June 2015. As far as the Smith proceeding is concerned, that proceeding has been provisionally listed for a six week trial commencing on 26 November 2016, which is some six months after this proceeding is listed for hearing. As the parties seemed to accept, if this proceeding was transferred to the Supreme Court of New South Wales both proceedings could not be heard concurrently in the Supreme Court in March 2016. Therefore, the trial of this proceeding would be delayed. However, this consideration is secondary to the overriding need to have this proceeding case managed, heard and determined in the one court. The only certain way to have that occur is to transfer this proceeding to the New South Wales Supreme Court. In any event, if this proceeding and the Smith proceedings are to be heard together or one immediately after the other, as I think they should, it is unlikely this could occur in March 2016 even in this Court, having regard to the current stage of the Smith proceeding. 16 As far as the other matters referred to in paragraph 7 above that may be relevant in considering a transfer application, I do not think they have any impact upon the appropriate course to follow to transfer this proceeding. Each factor relied upon by each party was neutral in the balancing of the various considerations that must be taken into account in determining the interests of justice and the more appropriate course to follow. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Middleton.