Efax Pty Ltd v Sonray Capital Markets Pty Ltd

Background facts 6Briefly, the dispute the subject of the present proceedings has arisen following the entry by Sonray into administration on 22 June 2010 (and its subsequent placement into liquidation by its creditors on 27 October 2010). Sonray's business, and the various means by which it or its clients traded securities, was summarised by the Liquidators when reporting (in their then capacity as administrators) to creditors on 19 October 2010. 7Sonray is a company that acted as a financial intermediary described by the Liquidators as a non-market participant broker/adviser, which provided financial services and was the holder of an Australian Financial Services Licence, and performed many of the functions of a traditional securities broker but which did not place trades directly on any exchanges for its clients and which utilised a range of service provides to provide execution and settlement services for its clients. It provided access to a variety of financial products, including listed securities, through three electronic trading platforms (Sonray Trader, Sonray Global and WebTrader). It was incorporated in Victoria in April 2003 (but had an office at the relevant time in New South Wales, and elsewhere). 8Of the electronic trading platforms available to its clients, the one used by Efax in the transactions which have led to the current dispute was the Sonray Trader platform. There was a distinction between the various platforms (under some of which the client dealt directly with the particular broker used by Sonray, and in others, such as the platforms under which the relevant Efax order was placed, an investor dealt with Sonray and funds were paid to Sonray.) This distinction is described as being between the "non-Agency" and the "Agency" methods of servicing clients. 9Efax was one of Sonray's clients. It entered into an International Swap Dealers Association (ISDA) Master Agreement dated 23 December 2003 with Sonray. There are various versions of the standard form ISDA agreement that Sonray used over the period up until it went into administration. Mr Georges (one of the liquidators, who gave evidence on the present application) conceded that there were a number of forms of agreement used by Sonray of which he was aware (T 3.47). Hence, the same contractual provisions do not govern all of the contracts between Sonray and its various clients. (Relevantly, it was suggested, and Mr Georges seemed prepared to accept, that the version into which Efax entered, being a version used prior to September 2009, did not expressly authorise Sonray to charge assets or money to third parties or to intermingle funds, unlike later versions of the contract - T 4.24.) The contract provided that it was governed by the law of Victoria and there was a non-exclusive submission to the jurisdiction of the courts in that state. Under the agreement, Sonray was to act as agent of the client for the purpose of acquisition of various financial products (T 4.33) 10Although Efax is a creditor of Sonray in relation to a number of accounts (and its solicitor, Mr Musgrove, is a member of the company's Committee of Inspection representing Efax), these proceedings relate to a claim that Efax maintains in specie against the holder of the BHP Shares. Furthermore, Senior Counsel for Efax (Mr Cotman SC) maintains that the claim is almost entirely a documentary claim (and can be determined without the need for a detailed examination of the complex issues that have arisen in relation to the interests of various parties in the moneys held in Sonray's accounts). 11The BHP Shares were acquired following a direction or order placed by Efax with Sonray for it to make on-market acquisitions of three parcels of shares. The order was effected using the Sonray Trader suite or platform (utilising the "Non-Agency" method). A sum of $3,176,000 was deposited by Efax into a Client Segregated Account (that being an account of a kind required pursuant to s 981B of the Corporations Act ). Sonray, having received the purchase order or instruction from Efax (and the funds in its Client Segregated Account) then instructed Saxo Bank to purchase the shares. It is contended that the purchase was effected by Sonray as Efax' agent. The relevant order was placed in New South Wales. 12There was, however, an arrangement in place between Sonray and Saxo Bank such that no physical funds were moved from the Client Segregated Account to Saxo Bank in relation to the acquisition of the BHP Shares. Apparently, the practice was for book entries to be made to record transactions of this kind (and, from time to time, there would be a netting off or adjustment as between Sonray and Saxo Bank of the amounts due between them). Mr Georges has expressed the opinion to creditors (and confirmed in cross-examination that this his view - T 5.47) that the accounts were used as between Sonray and Saxo Bank in order to manipulate the financial position between Sonray and Saxo Bank on order to pre-empt margin calls (in other words that the running account recording and adjustment of amounts payable as between Sonray and Saxo Bank was an arrangement to permit the avoidance of margin calls). Whatever the purpose of the book entry arrangement, it does not seem to be disputed that the funds paid by Efax to Sonray when it gave the relevant purchase instructions were not physically on-forwarded by Sonray to Saxo Bank for the acquisition of the BHP Shares. (Mr Georges said at T 17.2, in re-examination, that there was no correlation between money that came in from a client to a payment that went out to Saxo and "no specific logic or reason" to such payments.) 13Furthermore, according to the Liquidators, at the time that Efax paid the moneys for the acquisition of the BHP Shares, the Client Segregated Account into which those moneys were deposited was deficient. The Liquidators estimate that total investor claims against the Client Segregated Account are approximately $75,000,000. As at 19 October 2010, the estimated shortfall in the Client Segregated Account is said to be approximately $46,000,000; as at 22 March 2011, the estimated shortfall had decreased to approximately $44,500,000. 14Settlement of the purchase of the first parcel of shares (23,041 BHP shares) took place on 21 April 2010 for the sum of $1,004,357.19; settlement of the purchase of the second parcel (23,724 BHP shares) occurred on 27 April 2010 for the sum of $1,000,923.57; and settlement of the purchase of the third parcel of shares (32,059 BHP shares) occurred on 4 May 2010 ($1,299,992.45). It does not seem to be disputed that Efax' account with Sonray (said then to be in credit) was debited with those sums together with commission charged by Sonray on those purchases in respective amounts of $2,008.71, $2,001.85 and $2,859.98. 15The BHP Shares so acquired were held by a custodian (Citicorp Nominees Pty Limited) in the name of UBS AG (referred to as the Prime Broker) on behalf of Saxo Bank. 16Prior to 22 June 2010 (when Sonray went into administration), Sonray forwarded to Efax for execution by it a form under which direction was to be given to each of Saxo Bank, UBS and Citicorp for the transfer of the BHP Shares to a nominated CHESS account in the name of Efax. However, that form was not completed and returned to Sonray. Therefore, as at the time that Sonray was placed in liquidation, the BHP Shares remained held by Citicorp as custodian in the name of UBS. 17Proceedings were commenced by Efax in this Court on 6 July 2010 (as noted above). Since then, draft points of claim have been prepared and those are annexed to the affidavit sworn 17 December 2010 by its solicitor (Mr Kenneth Musgrove). Affidavit evidence has been filed in support of the claim and it is submitted by Mr Cotman both that there is a serious question to be tried (satisfying the test in King v Peters [2007] NSWSC 200) and that the claim (which is largely documentary) is well advanced. 18In essence, what is alleged is that the BHP Shares are held on trust for Efax because Sonray, in arranging for the purchase of the BHP Shares through Saxo Bank, acted as agent for a disclosed principal (Efax) and thus Saxo Bank became liable to account to Efax directly for the right to direct registration of the BHP Shares on CHESS. It is said that the effect of the trading arrangements between Sonray and Saxo Bank is that Saxo Bank is estopped from denying that it has been paid for the shares. 19It is submitted by Mr Cotman that, although there has been no defence or other pleading yet filed by the defendants, it can be seen (from a letter dated 24 November 2010 from Norton Rose, acting for the Liquidators and Sonray (a copy of which is annexed to the affidavit of Kenneth Musgrove dated 21 January 2011), that the real dispute in this matter is likely to be the assertion by Saxo Bank that it has some claim on the BHP Shares by reason of the financial dealings between it and Sonray. 20Mr Cotman further contends that the significance of the fact that Efax is making a claim in specie against the holder of the BHP Shares is that this is not a claim that could be formulated as a proof of debt in the liquidation ( Parkview QLD Pty Limited v Fortia Management Limited (in liq) [2010] NSWSC 1469) and hence there is no issue as to whether it would be more convenient to allow Sonray to pursue its claim in these proceedings or to lodge a proof of debt for the claim with the liquidator (as was considered in United Pacific Finance Pty Limited v Tarrant [2009] NSWSC 630). 21The relief that is sought by Efax in relation to Sonray is said to be only that the latter be bound by any orders that may be made in respect of Saxo Bank and all others involved in the purchase of the BHP Shares. 22Meanwhile, in Victoria, the Liquidators (as administrators) commenced proceedings in the Federal Court of Australia on 15 July 2010 seeking orders with respect to the extension of the convening period under s 439A(6) of the Corporations Act and subsequently commenced other proceedings in the Supreme Court of Victoria seeking orders for the issue of examination summonses in respect of various persons in relation to the examinable affairs of Sonray. Public examinations of the CEO (Mr Scott Murray) and a director (Mr Russell Johnson) of Sonray took place in Victoria in September 2010. Other public examinations have been held of two accountants in relation to the affairs of the company. 23Mr Georges has deposed that in late October proceedings were commenced against Saxo Bank in the Supreme Court of Victoria (by Taverners J Pty Ltd and others) in relation to an alleged unauthorised transfer to Saxo Bank by Sonray of funds alleged to be held on trust for the plaintiffs (in which proceedings an application by Saxo Bank to proceed by way of a third party notice filed against Sonray has been made but had not as at 25 February 2011 been heard). In late December 2010, other proceedings were commenced in Victoria in the Federal Court of Australia (by Eagle Securities Pty Ltd) in relation to alleged breaches of contracts by Sonray and by Saxo Bank in dealing with funds allegedly held on trust for the plaintiff. 24On 31 January 2011, orders were made in the original Federal Court proceedings (i.e. the ones commenced in July 2010 - Proceedings No VID 562 of 2010) authorising the liquidators to enter into a mediation funding deed and a mediation agreement. A mediation of the disputes between various parties was due to take place this week. (It is conceded that Efax is not a party to the mediation and will not be bound by any agreement reached in the mediation.) Mr Georges' affidavit outlines the steps taken in relation to the mediation (the first mediation conference having been held on 21 February 2011 and a timetable for exchange of points of claim, points of defence, and exchange of documents then being set down). 25On 10 February 2011, the Sonray parties applied to transfer this proceeding to the Federal Court of Australia in Victoria. 26Mr Georges has deposed that it has always been and remains the liquidators' intention to issue a representative proceeding, with the participation of appropriate appointed representative contradictors, seeking judicial guidance as to the claims by beneficiaries of the Segregated Accounts and of property purchased with money passing through the deficient segregated accounts but that the liquidators have taken the position that a representative proceeding could not be issued until a significant volume of work had been undertaken (including a substantial forensic investigation into the financial circumstances of Sonray) and the court had provided the liquidators with advice or orders as to their remuneration out of trust assets and authorisation to enter into a mediation funding deed in relation to an offer of mediation funding by Saxo Bank. 27As at the present time, there are no representative proceedings on foot against Sonray in relation to the transactions it has entered into on behalf of clients including Efax and Mr Georges accept that no entity has sought to raise the same kind of claim to a beneficial interest in property acquired in the circumstances in which the BHP Shares were acquired. What has, however, happened (to use the words of Counsel for the Sonray parties, Mr Lucarelli) is that "A practical and sensible roadmap for the global resolution of those issues has been methodically laid down and approved" by the Federal Court in Victoria, involving a combination of multi-partite mediation and Court-approved mediation funding of the liquidators. (That roadmap does not presently include any proceeding for the non-consensual disposal of disputes arising out of the liquidation, although Mr Georges deposes to his intention being to seek to have all future proceedings commenced in the Victorian registry of the Federal Court of Australia and to his belief that all such future proceedings would be case managed by the same judge. 28The Liquidators (as at the time of the application before me) were proposing to approach the Federal Court in Victoria for directions and judicial guidance "to unravel the various rights and entitlements of 'investor beneficiaries' ... to what remains of (and what is to be added to) the substantially deficient Client Segregated Account". A draft interlocutory process was tendered (Exhibit 5) in which a series of questions for judicial advice were posited (that document apparently then being before the Creditors' Committee for approval). 29One of the questions as to which judicial advice is sought goes to the characterisation of investors. The class of investor referred to in 5(a)(ii) was said by Mr Georges in cross-examination to be the class into which he considers Efax would be placed. That particular question is: 5. If the answer to 3 and 4 above is yes [ie all financial products purchased with money from the deficient Segregated Accounts or all financial products purchased through the Saxo Platform, and proceeds of sale thereof, are tainted by the deficiency] then (a) a direction that for the purposes of regulation 7.8.0..3(d) of the Regulations, the Liquidators are entitled to treat clients as falling into one of the following 4 classes: ... (ii) clients that purchased financial products after on or about 16 February 2005, or those that traded on or about 16 February 2005 in financial products purchased prior to on or about 16 February 2005. 30Mr Cotman submits (and I accept) that this draft of the questions proposed to be submitted to the Federal Court for judicial advice would not resolve the fundamental issue posed in the current proceedings (namely whether Efax, or an investor in its position, has a beneficial interest in particular shares held by a custodian in the name of a broker but acquired at the investor's instruction through a broker as agent). 31Any representative proceeding would need to encompass a myriad of different factual situations in that Mr Georges has acknowledged in cross-examination that some of the 4,500 or so investor accounts may not be client accounts; that some relate to foreign exchange transactions (unlike the Efax account); that some relate to a variety of other financial products; that some can be traced to what particular product was being dealt with in a client account and that, for others, there is an "undistinguishable pool" within which there is a dealing referable to a particular client (see T 6). Not all products were brokered through Saxo Bank (and the terms of dealing of other brokers were not necessarily the same as those with Saxo Bank). 32Mr Cotman therefore questions the suggestion that the Sonray parties will be able to initiate and resolve, by way of a relatively small number of appropriately constituted representative proceedings, all claims regarding the assets and/or all parties having any connection to Sonray. It is submitted that the Sonray defendants would not necessarily be the appropriate parties to initiate all such proceedings (because clients may claim particular assets and thus fall outside of the liquidation and outside the statutory trusts of which Sonray claims to be trustee). Reference is made to the difficulty occasioned by divergent facts, claims and interests of somewhere in the order of 4,500 client accounts. Even within the 770 or so accounts said to be "of a similar nature" to the Efax account, it is accepted that there is diversity in the underlying facts relating to the accounts. 33Mr Georges accepted that the only investor presently making a claim for an interest in specific property was Efax (T 9.26) but suggested that this was because other parties had agreed to wait for the outcome of the mediation, there referring to parties represented by Slater & Gordon (who were, however, parties who used Interactive Brokers, not the Saxo Bank trading suite). Mr Georges further accepted that no representative proceedings concerning brokers other than Saxo Bank had yet been constituted and (at T 13) that there was nothing before the Federal Court in which the legal consequences of the operation of the payment system as described in the Efax matter had been raised.

Jurisdiction 34The jurisdiction invoked by the Sonray parties is threefold: under the Corporations Act , the cross-vesting legislation and the inherent jurisdiction of the Court. I consider each in turn.

Corporations Act 2001 35Pursuant to s 1337H(2) of the Corporations Act, there is power (subject to sub-sections (3), (4) and (5) which are not applicable in the present case) for this Court to transfer a "relevant proceeding" (as defined in s 1337H(1)) where it appears that, having regard to the interests of justice, it is more appropriate for the relevant proceeding or an application in the relevant proceeding to be determined by another court that has jurisdiction in the matters for determination in the relevant proceeding, the transferor court may transfer the relevant proceeding to that other court. 36A "relevant proceeding" for the purposes of s 1337H is either "a civil matter arising under the Corporations legislation" or (which is clearly not the case here, as a s 1337B(3) proceeding is a proceeding in respect of matters arising under the Administrative Decisions (Judicial Review) Act 1977 (Cth) involving or related to decisions made, or proposed or required to be made, under the Corporations legislation by a Commonwealth authority or an officer of the Commonwealth) a s 1337B(3) proceeding. 37Mr Cotman submits that the subject proceeding is not a civil matter arising under the Corporations Act (or a s 1337B(3) proceeding) and therefore s 1337H(2) has no application. 38By written submissions forwarded to my associate after the conclusion of the hearing (to which Mr Cotman took objection and which led to the matter being re-listed for further argument on 14 April 2011), Mr Lucarelli submits that the subject proceeding is a civil matter arising under the Corporations Act for two reasons. First, the Sonray client agreement with Efax contains express acknowledgments to the effect that, with respect to all money deposited by Efax with Sonray, the Segregated Provisions of the Corporations Act apply (referring to clause 3(xv) and clause 11); and, second, that Efax seeks declarations that the BHP Shares are held on trust for it and that the claimed trust cannot be divorced from the operation of the statutory trust provisions of Part 7.8 Div 2(A) of the Corporations Act (especially ss 981A-C, 981H, 984 A-B and Corporations Regulations 2001 (Cth) 7.8.03(4) and (5) and 7.8.07). 39Mr Cotman, however, submits that the relevant issue is as to the beneficial ownership of the shares (not any claim to the funds in the Client Segregated Account) and that, to the extent that the Sonray parties' submissions relate to the relationship between Efax as client and Sonray as its licensed financial services provider, the pleaded case of Efax (in its points of claim) does not put those matters in issue; rather, it pleads a case based on acquisition of property such that no Corporations Act issue arises. 40Mr Lucarelli further submits that a civil matter arising under the Corporations Act does not cease to be so simply because the plaintiff also asserts non- Corporations Act causes of action (referring to Litmus Australia Pty Limited v Cantry & ors [2006] NSWSC 196; (2006) 57 ACSR 71 at [37]). 41Reference is made by Mr Lucarelli to the consideration of what amounts to a 'matter' in a jurisdictional sense for the purposes of Chapter III of the Constitution (citing IMF (Australia) Ltd v Sons of Gwalia (administrator Appointed) [2004] FCA 1390; (2004) 211 ALR 231 at [43]; Litmus at [35]; British American Tobacco Australia Ltd v Western Australia (2003) 217 CLR 30 at [5]-[6]; Australian Securities & Investments Commission v Axis International Management Pty Limited [2009] FCA 852 at [9]). He notes that in Re: Judiciary and Navigation Acts (1921) 29 CLR 257 at [266], the High Court said that "a matter under the judicature provisions of the Constitution must involve some right or privilege or protection given by law, or the prevention, redress or punishment of some act inhibited by law". 42In Acton Engineering Pty Ltd v Campbell (1991) 103 ALR 437, in a different statutory context, the Full Court of the Federal Court noting that the word "matter" is of wide import, expressed the opinion that a matter arising under the Corporations Law was "a justiciable controversy, identifiable independently of the proceedings which are brought for its determination and encompassing all claims made within the scope of the controversy". 43Mr Lucarelli submits that the 'matter' presented by Efax' claim is the beneficial ownership of the BHP Shares "or the proceeds thereof" and that the Court's ability to adjudicate that 'matter' involves the operation of several Corporations Act provisions and therefore is a civil matter arising under the Act. He places weight on the relationship between Efax as client and Sonray as its licensed financial services provider as being one governed by obligations and requirements under the Act. 44In response, Mr Cotman reiterates the submission that the claim is not about the money deposited with or held by Sonray; that no complaint is made about that dealing; rather, that the complaint is about shares held by "remote parties downstream of Saxo Bank" and that Efax does not claim that Sonray holds the shares on trust, but claims that Sonray must act to direct that Efax be registered on the CHESS account as the holder of the shares. 45Insofar as Mr Lucarelli further submits that the very right of Efax to maintain these proceedings is a "matter" arising under the Act (because Efax is required to obtain leave pursuant to s 500(2)), Mr Cotman points out that the application for leave need only be made against Sonray (not against Saxo Bank) (and, as noted above, Mr Cotman submits that the real focus of the dispute is between Efax and Saxo Bank). 46On the claim as it currently stands (on the Summons and the points of claim) and without the benefit of any defence or points of defence by the defendants, there is some force in the argument that simply because the property the subject of the alleged trust (and in which Efax claims a beneficial interest) is comprised of shares (and the arrangements pursuant to which Efax acquired any interest it may have in those shares, through an entity which is a licensed financial services provider under the Act, are governed by the provisions of the Corporations Act and Regulations ) this does not mean that the claim (that there is a proprietary interest in the shares) is a civil matter arising under the Act. (A dispute as to a beneficial interest in shares so acquired as between joint venturers, for example, or a challenge to their disposition by will, say, would not at first blush seem to fall within the definition of 'relevant proceeding' even though the subject matter of the dispute is an interest in shares. Nor does the fact that there is a separate dispute in the liquidation of Sonray as to the rights in respect of the Client Segregated Account seem to me necessarily to mean that a dispute as to property acquired from funds designated for that purpose when paid into the account is a civil matter within the said definition, although to the extent that this gave rise to issues as to the import of the statutory trust over such accounts then it would arguably do so.) 47That said, it seems to me that the claim for leave to proceed against Sonray in liquidation is a justiciable controversy which forms part of the current proceedings (though not before me for determination) and it is also likely (in light of the debate during the course of submissions on the current application) that the defences to the claim will raise matters relating to the obligations of some of the parties under the Corporations Act in relation to the disbursement of funds out of accounts governed by the Act or the imposition of the statutory trust over funds in the those accounts and, if so, the matter would raise issues likely to bring it within the definition of a 'relevant proceeding' for the purposes of s 1337H of the Act . On balance, therefore, it seems to me that s 1337H(2) is applicable.

Jurisdiction of Courts (Cross-Vesting) Act 1987 48Section 5(1) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW), provides for the transfer of proceedings from the Supreme Court of a State or Territory to, relevantly, the Federal Court if it appears to the court being asked to transfer the proceedings that: (b) (i) the relevant proceeding arises out of, or is related to, another proceeding pending in the Federal Court or the Family Court and it is more appropriate that the relevant proceeding be determined by the Federal Court or the Family Court, (ii) having regard to: (A) whether, in the opinion of the first court, apart from this Act and any law of a State relating to cross-vesting of jurisdiction and apart from any accrued jurisdiction of the Federal Court or the Family Court, the relevant proceeding or a substantial part of the relevant proceeding would have been incapable of being instituted in the first court and capable of being instituted in the Federal Court or the Family Court, (B) the extent to which, in the opinion of the first court, the matters for determination in the relevant proceeding are matters arising under or involving questions as to the application, interpretation or validity of a law of the Commonwealth and not within the jurisdiction of the first court apart from this Act and any law of a State relating to cross-vesting of jurisdiction and (C) the interests of justice, it is more appropriate that the relevant proceeding be determined by Federal Court or the Family Court as the case may be; or (iii) it is otherwise in the interests of justice that the relevant proceeding be determined by the Federal Court or the Family Court, the first court shall transfer the relevant proceeding to Federal Court or the Family Court as the case may be. 49Mr Cotman submits that before a 'relevant proceeding' can be transferred pursuant to this section there must be another proceeding pending in the Federal Court or Family Court that the relevant proceeding either arises out of or to which it is related and that, as at the date of the application before me, there are no such pending proceedings. 50In response, Mr Lucarelli submits that s 5(1)(b)(iii) of the Act is an independent head of power to cross-vest a matter in the interests of justice, regardless of whether there are other proceedings in the Federal Court ( Bankinvest AG v Seabrook ( 1988) 14 NSWLR 711 at [730]; BHP Billiton Ltd v Schultz [2004] HCA 61; (2004) 221 CLR 400 at [14]). I agree. Inherent jurisdiction 51Efax acknowledges that the Court has an inherent jurisdiction to transfer proceedings to another court, existing outside the national scheme of legislation of which the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) is a part. However, Mr Cotman places emphasis on the existence of a duty of the court to exercise its jurisdiction, referred to in Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197, where Deane J said that "it is a basic tenet of our jurisprudence that where jurisdiction exists, access to the courts is a right. It is not a privilege, which can be withdrawn otherwise than in clearly defined circumstances" (at 252) and referring also to the BHP Billiton case . Mr Lucarelli submits that such notion should be rejected having regard to the import of the introduction of cross-vesting laws (citing BHP Billiton at [25] and Bankinvest at [727B]). 52It seems to me that the duty to exercise the jurisdiction of the Court must be considered in the context of the jurisdiction to cross-vest matters where that is in the interests of justice. In any event, as noted above I consider that the jurisdiction under the cross-vesting legislation has been properly invoked and on balance that there is also jurisdiction under the Corporations Act to transfer the proceedings. Application of legal principles 53The test applicable under s 1337H(2), is whether the interests of justice make it more appropriate for the proceeding to be determined in the Federal Court in Victoria. Notwithstanding what has been said as to the 'roadmap' for the determination of issues arising in the conduct of the liquidation there being formulated or case managed, for the reasons that I set out below I am not persuaded that the interests of justice make this particular case more appropriate to be dealt with elsewhere. 54The test for determining when proceedings should be transferred to another jurisdiction under s 5(1) of the Jurisdiction of Courts Cross Vesting Act focuses on whether the proceeding would have been incapable of being instituted in the first court, and what is the more appropriate forum for the dispute, so that if the court is satisfied that there is another jurisdiction which is simply "more appropriate" or it is in the "interests of justice" for the transfer to occur, then proceedings shall be transferred. 55This is unlike the test for determining when local proceedings should be stayed in favour of another international forum, which gives greater precedence to the plaintiff's choice of forum (being the "clearly inappropriate forum" test as adopted in Voth v Manildra Flour Mills Pty Ltd [1990] HCA 55; (1990) 171 CLR 538, preferring the view of Deane J in Oceanic Sun ). The Court of Appeal in Bankinvest indicated that the test to be applied was not that espoused by the High Court in Voth and Oceanic Sun in relation to forum nonconveniens (at [727]) . 56In Bankinvest, Rogers AJA (with whom Street CJ and Kirby P agreed) found, by the legislature's use of the words "more appropriate", as well as by reference to the Preamble to the Act, an intention that a test akin to that stated by the House of Lords in Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 be utilised in this context (namely, a test focusing on what is the more "natural forum" for the case to be tried, and this will require the court to look at numerous factors going to the interests of the parties and the interests of justice). 57Rogers AJA, after reviewing the terms of the Act and explanatory memoranda, referred to the policy underlying the forum non conveniens principles and indicated that under the new legislative regime it is n o longer appropriate to regard the court of another State as a "foreign" court, going on to state (at [726] - [728]): One consequence is that the principles of forum non conveniens, applied in circumstances where the competition is between an Australian and a non- Australian court, have no role to play in the resolution of applications made under the legislation or in its interpretation. Legislation prescribes the criteria whereby such applications are to be determined. The criteria are rather more specific in some respects but in referring to the "interests of justice", call for considerations of a more general kind than the judicially established rules of forum non conveniens ... Here, the legislation works in terms to displace that "traditional approach" [referring to Oceanic Sun ]. The very test in s 5(2)(b)(i) is the proscribed "more appropriate". Even if, ultimately, the accepted test for forum non conveniens, in relation to non-Australian venues, should remain the "traditional approach", described by Deane J, the Australian Parliaments have prescribed different criteria for determining a place for hearing within Australia. Although, in my view, the traditional principles of forum non conveniens have little to say to the problems of exercise of jurisdiction under the crossvesting legislation, it is possible to obtain assistance from the more recent English decisions which are driven by the same principles as the Australian legislation. In Oceanic , the majority of the High Court declined to accept the decision of the House of Lords in Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 as the law of Australia on forum conveniens. Nonetheless, the criteria laid down by Lord Goff of Chieveley, with the approval of the other members of the House, for the application of principles of forum non conveniens, broadly correspond to the criteria designated by the Act. The questions posed by Spiliada and the legislation are the same. What court is more appropriate and what court is pointed to by the interests of justice. (my emphasis) 58In Bankinvest , Street CJ said (at [713] - [714]): 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. 59In BHP Billiton, the High Court had occasion to consider when proceedings should be transferred under s 5(2), and after referring to Voth, Oceanic Sun, Spiliada and Bankinvest, Gleeson CJ, McHugh and Heydon JJ said (at [12], [14] - [16]): The national scheme of legislation, of which the Cross-vesting Act is a part, was intended to operate, and to be applied, in a different juridical context. This was clearly stated in the first case to come before the Court of Appeal of New South Wales under the Cross-vesting Act, Bankinvest AG v Seabrook . It has been recognised by the Court of Appeal in later cases in which jurisdiction of one kind or the other has been invoked. ... 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. The reason why a plaintiff has commenced proceedings in a particular court might, or might not, concern a matter related to the interests of justice. It might simply be that the plaintiff's lawyers have their offices in a particular locality. It is almost invariably the case that a decision as to the court in which an action is commenced is made by the plaintiff's lawyers, and their reasons for making that choice may be various. To take an example at the other extreme, it might be because a plaintiff is near death, and has a much stronger prospect of an early hearing in one court than in another. 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. Even so, the interests of the respective parties, which might in some respects be common (as, for example, cost and efficiency), and in other respects conflicting, will arise for consideration. The justice referred to in s 5 is not disembodied, or divorced from practical reality. If a plaintiff in the Tribunal were near to death, and, in an application such as the present, it appeared that the Supreme Court to which transfer was sought could not deal with the case expeditiously, that would be a consideration relevant to the interests of justice. Justice would ordinarily dictate that the interest of the plaintiff in having a hearing would prevail over the interest of the defendant in such benefit as it might obtain from the plaintiff's early death. The capacity of the Tribunal to deal expeditiously with cases has always, and rightly, been regarded as relevant to the interests of justice, bearing in mind the condition of many sufferers from dust diseases. On the other hand, there may be conflicting interests of such a kind that justice would not attribute greater weight to one rather than the other. The advantage which a plaintiff might obtain from proceeding in one court might be matched by a corresponding and commensurate disadvantage to a defendant. The reason why a plaintiff commenced proceedings in one court might be the same as the reason why the defendant seeks to have them transferred to another court. In such a case, justice may not dictate a preference for the interests of either party. 60Davies and Nygh, in Conflicts of Laws in Australia ( 7 th edn) at [6.13], conclude that the approach indicated by the Court of Appeal in Bankinvest will mean that: Other than in exceptional circumstances, courts will transfer proceedings to the court to which that proceeding normally belongs, especially where all the matters raised in that proceeding are within the proper jurisdiction of the other court. If the proceedings in the forum fall partly within the proper jurisdiction of the forum and partly within the proper jurisdiction of another superior court, the proceeding will be retained or transferred depending on which court has the most substantial connection with the proceedings as a whole. 61In relation to s 5(1)(b)(iii), the "interests of justice" ground for transfer (i.e. where the proceedings are not otherwise related to proceedings in another court and do not involve the determination of other state or federal law (thus subclauses (i) and (ii) are not satisfied)), Rogers AJA in Bankinvest stated (at [730]): Self-evidently, this subclause was designed to provide a basis for a transfer in circumstances where the requirements of subcl (i) and subcl (ii) are not satisfied. Thus, where there are no related proceedings pending in the other Supreme Courts, the dispute does not involve matters of inter-State law, in D relation to which jurisdiction is acquired only by reason of the cross-vesting legislation, nonetheless, the court may effect a transfer. What then are the "interests of justice" which the legislature considers should be taken into account in this process? To my mind, the relevant matters and considerations are essentially the same as were specified by the House of Lords in the Spiliada . These considerations were criticised and held to be inapplicable, at least by Brennan J, in Oceanic on the basis that they are too uncertain. Yet, in my opinion, they have already, in effect, been made applicable in Australian courts in relation to transfers between Supreme Courts by the various Australian Parliaments. As this jurisdiction comes to be exercised more frequently and the courts better acquainted with the discretion conferred (if not before), it may be that the perception in Oceanic that the criteria are uncertain in content will undergo review. Absent the presence of related proceedings or interstate law, the inquiry directed by consideration of the 'interests of justice' encompass all the matters that determine which is the more appropriate forum that I have already discussed. The two considerations of "more appropriate" and the "ends" or "interests" of justice are used in the same sense by Lord Goff in the passage I have already cited (at 727). I would be going over ground I have already covered if I were to discuss the contents of "interests of justice" further. I should, however, mention that its presence and content call for a rejection of Mr Nicholas' submission that the principle of forum non conveniens continues to exist concurrently with the legislation. The former has been clearly subsumed by s 5(2)(b)(iii). 62In Oceanic Sun Deane J said: (165 CLR 197 at [ 243]): the traditional process of determining such an application for the dismissal or stay of an action is not a mere balancing of convenience or inconvenience or the resolution of competing claims of different jurisdictions neither of which could be said to be clearly inappropriate (cf per Gibbs J, Cope Allman (Australia) Ltd v Celermajer (1968) 11 FLR488, at p 492) The starting point of the determination of such an application in accordance with traditional principle must be the prima facie right of a plaintiff to insist upon the exercise of competent jurisdiction which he has regularly invoked That prima facie right of a plaintiff is not to be lightly displaced or denied. and at ([244]) Not only is the jurisdiction one which should be exercised "with great care" or "extreme caution"" It has, as has been indicated, traditionally been seen as a jurisdiction which is only available to be exercised on inappropriate forum grounds where the court whose jurisdiction has been invoked by the plaintiff is so inappropriate for their determination that a continuance of the proceedings in it would be productive of the injustice of oppression and vexation of the defendant concluding (at [248]): The power should only be exercised in a clear case and the onus lies upon the defendant to satisfy the local court in which the particular proceedings have been instituted that it is so inappropriate a forum for their determination that their continuation would be oppressive and vexatious to him Ordinarily, a defendant will be unable to discharge that onus unless he can identify some appropriate foreign tribunal to whose jurisdiction the defendant is amenable and which would entertain the particular proceedings at the suit of the plaintiff Otherwise, that onus will ordinarily be discharged by a defendant who applies promptly for a stay or dismissal if he persuades the local court that, having regard to the circumstances of the particular case and the availability of the foreign tribunal, it is a clearly inappropriate forum for the determination of the dispute between the parties. 63Mr Cotman submits that the proceedings were properly commenced in this jurisdiction and that there are factors which connect with New South Wales (the plaintiff and its representatives, as well as the Prime Broker and Custodian being based in this State). Sonray, of course, is based in Victoria and the liquidators are there (and the contract is governed by the law of Victoria). There is an obvious inconvenience to the liquidators in conducting proceedings outside the jurisdiction in which they are based. However, it is by no means apparent that the liquidators would need physically to be present in court during the proceedings (particularly if the matter is, as Mr Cotman says, to be run largely as a documentary case and the real dispute is between Saxo Bank and Efax). As Mr Cotman notes, the transactions in question predate the appointment of the liquidators so that it is difficult to see that there would be any personal knowledge requiring a lengthy attendance by the liquidators (as opposed to their representatives) during the hearing. The location of the parties and their legal representatives therefore seems to me to be a factor evenly balanced as between the respective jurisdictions and the choice of law clause does not add greatly in that balancing exercise. 64Mr Cotman submits that no issue has been identified in the proceedings which is the same or which overlaps or is likely to be informed by any other proceedings which would render it more economical to conduct the proceedings out of New South Wales to the financial detriment of Efax. At present that seems to be the case and is a factor pointing against a transfer (there being no suggestion that the proceedings had not been properly commenced in this jurisdiction). 65Insofar as there was reference by Mr Lucarelli to the potential for other claims involving similar matters, the evidence suggesting that there were some 770 accounts of a similar nature to the Efax transaction was to a large extent speculative. Mr Georges explanation of the similarity focussed not so much on the substantive claim but the fact the money had not actually passed to Saxo Bank to make the relevant acquisitions. Mr Cotman submits that the primary issue for litigation is between Efax and Saxo Bank (or its counterparties in the purchase transaction or warehousing of the shares), since Sonray performed its instructed role and has been paid to do so. 66Mr Cotman also submits that it is unnecessary and inappropriate to transfer the proceedings where the Sonray parties have no appropriate pending proceedings to which to transfer the matter. I place no weight on this factor given that there are proceedings presently on foot, not wholly unrelated to the present, to which it might be possible to join these proceedings and given the role which seems to have been played by Finkelstein J in the Federal Court in relation to issues in the liquidation which may be of lesser or greater relevance to Efax, depending on the outcome of its proprietary claim. 67Mr Lucarelli submits that Efax' case involves shares that represent a value of some 4% of the overall claims by investors against Sonray. He submits that Sonray itself has a claim to the BHP Shares (or their proceeds of sale or value) and, depending on the application of the Corporations Act and Corporations Regulations , such shares or proceeds are either impressed with a statutory or constructive trust in favour of the other 770 investors said to be in the same position as Efax, or impressed with a statutory or constructive trust in favour of the 4,000 or so overall investors, including Efax. (Insofar as Mr Georges said that there were 770 accounts of a similar nature to the Efax transaction, he explained in re-examination that what he had meant when he said that was that Efax had invested money into Sonray which passed through a deficient segregated account and what they were able to see on the trading platform was the processing of the transaction, but that the money had not physically passed to Saxo Bank to make the relevant acquisitions.) It is by no means apparent that the particular claims that Efax wishes to bring in the current proceedings are or are likely to be mirrored elsewhere. 68The main thrust of Mr Lucarelli's submission that the proceedings should be transferred is that the issues to be addressed in the liquidation overall are complex and require consideration of the respective contractual obligations owed by Sonray, questions of misapplication of investor funds, the consequence of the deficiency in the Client Segregated Account, statutory and constructive trusts, related tracing issues and insolvent transaction issues. Mr Lucarelli submits, in effect, that even if Mr Cotman's submission that this is a discrete property issue as between Efax and Saxo Bank (or the custodian holding the shares currently) is correct, if the outcome of that determination is unfavourable to Efax, then Efax' claim will require an examination of Sonray's internal dealings with investor funds and the financial dealings and securities trading between Sonray and Saxo Bank (matters that are said to be the subject of the case management being undertaken by the Federal Court in Victoria); and that if the submission as to the discrete nature of the issue is wrong in the first place then the same result will follow. However, it does not seem to me to be disputed that the claimed entitlement to a beneficial interest in the BHP Shares is a matter that could be determined in advance of other more general claims to the moneys in the Segregated Accounts or the proceeds of assets acquired out of funds from those accounts. 69Mr Lucarelli submits that it is the Federal Court in Victoria which should more appropriately determine whether, and if so on what terms or in what circumstances, Efax should be allowed to continue to agitate a separate claim "having regard to the road to global resolution that has already been laid down and along which the major parties are already travelling". In particular, it is said that there is the 'liquidation specific desirability' of one court having overall control of what is a large and complex liquidation "a fortiori a complex liquidation now entering a crucial non-litigious process of multi-party mediation and judicial directions aimed at resolving fundamental issues that will determine the future trajectory of the liquidation". I accept that there is considerable merit in having all of the disputes in the liquidation raising similar issues being determined and case-managed in the one court, provided this can be done without undue prejudice to the rights of an individual claimant seeking to pursue its own separate claim in another court (particularly where there is no suggestion that there was any abuse of process involved in the commencement of the proceedings in that other forum). 70Mr Lucarelli points to difficulties it is suggested are evident in Efax' pleaded case, including that the Client Segregated Account into which Efax deposited the money was materially deficient as at 18 and 25 January 2010 (being the dates upon which Efax deposited the amounts of $176,000 and $3m respectively), thus casting doubt as to whether the subsequent book entry to the sub-account referable to Efax amounts to any form of 'payment' as between Efax and Sonray; that no funds actually passed from Sonray to Saxo Bank for any of the BHP Shares; as to the effect of the ISDA between Sonray and Saxo Bank on the alleged right of Efax "to direct registration" on CHESS; and the import of the statutory trust imposed on the commencement of Sonray's voluntary administration by reference to Corporations Regulation 7.8.03(4) and (5) over what remained in the Client Segregated Account in favour of all investors and a statutory trust over all assets into which Client Segregated Account funds had been invested. Those seem to be matters which go to whether the claimed beneficial interest can ultimately be established, not to whether it is appropriate that this issue be determined in this Court. 71To the extent that Mr Lucarelli submits that there are other related issues in the liquidation of Sonray which will impact upon the claim by Efax, such as how the deficiencies in the Client Segregated Account maintained by Sonray under s 981B of the Corporations Act affect the various money and financial products held by Sonray and by other trading platform providers to Sonray in positions similar to Saxo Bank; whether the bank accounts maintained by Sonray pursuant to s981B of the Corporations Act (including those in foreign currencies) can be pooled; whether the liquidators need to undertake further investigations into the affairs of Sonray (especially relating to trust property held by Sonray) so that the liquidators are able to explain precisely every defalcation on trust property maintained by Sonray and how each of those defalcations affects the position of each of Sonray's 4,000 clients; and whether other Sonray clients who traded on trading platforms other than that provided by Saxo Bank are in an identical position to those Sonray clients who traded on the platform provided by Saxo Bank (each of those being issues on which the liquidators say that they need to seek judicial advice), at least some of those issues (such as the extent of defalcations on the trust property) do not seem to impact directly on the initial question posed by Efax' claim (which is whether, notwithstanding the fact that its funds were paid into a deficient Client Segregated Account and not on-paid to Saxo Bank, it nevertheless acquired a beneficial interest in the shares acquired on its instructions through its agent Sonray). 72Mr Lucarelli submits (and I accept) that the liquidation of Sonray is a complex and large one, in which investors are presently faced with the prospects of substantial losses. He places weight on the fact that there is a regime in place by which major claims and recoveries open to the liquidators have been submitted to a multi-party mediation, coupled with Court approved funding to enable the liquidators to make an application for directions and judicial guidance for rulings on issues some of which he submits will inevitably arise in the case brought by Efax. It is said that the liquidation is in a real sense already under the overall supervision of the Federal Court of Victoria and that these proceedings ought be placed under the control of that Court as well, conformably with the comments made by Palmer J In the matter of Clivpee Ltd (in administration) [2010] NSWSC 1215 at [9]. There, his Honour noted that in very large corporate insolvency "special arrangements are sometimes made in a court to have one judge case manage a variety of different applications which may be made in that administration so as to produce some sort of cost and time efficiency" and that had those arrangements already been in place for the administration of Clivpee in the other court, then that might well have been a weighty factor in the exercise of discretion in that case. (However, one matter to which his Honour also adverted was whether the similarity of issues in other proceedings would provide any template for management of proceedings in this court.) 73While I accept that there are complex issues on which the liquidators wish to seek judicial advice (in the context of the overall liquidation), such as whether the liquidators should treat the various segregated trust accounts as one separate trust or as several individual trusts, and that there is already in place in Victoria a measure of case management in relation to the mediation of disputes (involving some but not all of those involved in the Sonray transactions - to which reference was made in Re Georges (Liquidator) in the matter of Sonray Capital Markets Pt Ltd (in liq) [2010] FCA 1371), those issues broadly seem to assume that the interest of Efax in the BHP Shares is as an investor with a claim to whatever are the proceeds in the trust accounts (not going to whether the BHP Shares form part of the accounts at all). Mr Cotman emphasises that Efax is not in these proceedings claiming any money out of the Segregated Client Accounts, instead it maintains that it has a beneficial interest in the Shares themselves so as to take the shares out of the proceeds of the accounts available for distribution to investors or creditors of Sonray. Therefore, the separate determination of Efax' claim does not seem to me likely to pre-empt or prejudice the broader steps taken in relation to the liquidation or the giving of judicial advice or directions in the Victorian proceedings (but can instead, be determined separately and expeditiously without prejudicing the overall conduct of the liquidation). Conclusion 74Ultimately, the factors that have persuaded me against the conclusion that it is in the interests of justice for this matter to be transferred to the Federal Court in Victoria (for the purpose of the test applicable under the cross-vesting legislation) or that it is the natural or more appropriate forum for the determination of the present dispute (for the purposes of the tests applicable in the inherent jurisdiction of under s 1337H(2) of the Corporations Act ), notwithstanding the case management of matters raised in the liquidation to date and the liquidators' intention to seek judicial advice in relation to various matters that may potentially impact on Efax' position generally as an investor, is that the claim as framed by Efax is a discrete claim of a proprietary interest in specific assets; it is said to be largely a documentary claim; and, significantly, that there is a real risk of prejudice to Efax arising out of delay in the determination of its claim by reason of the fact that it has submitted to an undertaking as to damages (well recognised to be an onerous undertaking) as the price for the BHP Shares, which it claims to own beneficially, not being sold. It is thus exposed to the vicissitudes of the stock market for so long as it takes for its claim to an interest in the shares in specie has been determined. It does not seem to me that this complaint can be sufficiently met by the response that the shares could be sold and the funds retained in a controlled account (having regard to the nature of the securities and the desire of Efax to retain them). 75Mr Cotman submits that Efax should not be put in the position where it has to start the process of litigation all over again, particularly where no undertaking was proffered on behalf of the Sonray parties to consent to the grant of leave in Victoria for the proceedings to continue in that court against the company in liquidation. I place less weight on this factor in circumstances where there has not yet been a determination as to whether leave to proceed will be granted. (Further, it may well be that the most expeditious way of proceeding would be for the claim to a beneficial interest in the shares to be determined in advance of any other claim Efax might (i.e. in the absence of a beneficial interest in the shares) have to a share of any proceeds that may be available for distribution either out of the Client Segregated Account(s) or in the course of the liquidation and for that alternative claim to be determined as part of any then ongoing representative proceedings in which those more general issues applicable to various classes or investor will be decided, but that is a matter that would not appropriately be determined until after the hearing of the application for leave to proceed against Sonray in liquidation.) 76However, what I do place weight on is the fact that there are subsisting undertakings as to damages (which neither the Sonray parties nor Saxo Bank was willing to release) which means that there is real risk of prejudice arising if Efax is not permitted to pursue what seems to me to be a separate claim from the more complex issues arising in the liquidation (the determination of the latter being unlikely to be resolved in the near future given that they must await the initial judicial advice proposed to be sought by the liquidators and then the exigencies of the commencement of representative proceedings involving a number of potential respondents and what are frankly conceded to be complex issues). I am not persuaded that a determination of the claim Efax makes to a beneficial interest in the shares in specie necessarily involves any "unravelling" of the statutory regime or the import of the statutory trusts over the Sonray accounts. 77Had there been a willingness by the Sonray parties to consent to a regime whereby the existence of the claimed beneficial interest was to be determined by the court in Victoria expeditiously, as a separate issue from the general investor claims, then I would have been inclined to the view that it was in the interests of maintaining an overview of the overall litigation in which the liquidators were involved to have this matter transferred to the court in Victoria which is already dealing with some aspects of the liquidation. However, no such consent was forthcoming and, in circumstances where there is a discrete issue and it is by no means clear that there are a body of investors making similar claims to Efax, the potential prejudice of delay in the context of the transfer of the existing proceedings is such that I have concluded that it is not in the interests of justice for the matter to be transferred, nor am I satisfied that there is another jurisdiction in which the determination of this claim as a discrete claim would more appropriately take place. 78I therefore dismiss the application to transfer these proceedings to another jurisdiction. I will hear the parties as to costs and I will consider the appropriate directions to be made to list the application for leave to proceed against the company in liquidation to be heard without further delay.

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