Freeway Sports Centre Pty Ltd ATF Freeway Sports Centre Unit Trust v Freeway... [2025] FCA 82 | Case summary

Consideration 10 This application was advanced on the basis that there are associated family law proceedings on foot in the FCFCOA (Div 1) between Mr Harrison and Ms Harrison (the family law proceeding). 11 The family law proceeding was commenced by Ms Harrison on 18 April 2024. She seeks an equitable division of the marital assets of her relationship with Mr Harrison, including the transfer of FSC's shares in Freeway Fitness (and its units in the Trust) to her. If she were to obtain that relief, Mr Harrison would no longer have any ownership interest in the Business. 12 This proceeding, seeking relief that includes winding up Freeway Fitness, was commenced by FSC on 25 June 2024. 13 Ms Harrison has made an affidavit in which she deposes to being concerned that Mr Harrison (through FSC) is using this proceeding (ie the Federal Court proceeding) to alter the matrimonial asset pool and diminish the value of the Business, which she is seeking in the division of assets in the family law proceeding. She also deposed to being concerned that, if Mr Harrison succeeds in his application to wind up Freeway Fitness, there will be no Business and FSC's shares in Freeway Fitness (and its units in the Trust) will be worthless, or their value will be diminished. Given Ms Harrison's position, her support for the position of Mr Woods and Ms Abela, and the fact that she is employed in the Business, it is unlikely that she would cause FSC to proceed with the winding up and oppression proceeding if she were to obtain control of FSC through the family law proceeding. 14 Accordingly, the impact of the relief sought by FSC in this proceeding on the family law proceeding is obvious. 15 Ms Harrison brought an application in the family law proceeding seeking to restrain Mr Harrison from pursuing this proceeding. That application was argued in October 2024, but has not yet been determined. It appears that the determination of that application in the FCFCOA (Div 1) has been delayed (and the application reopened) on the basis that there is an issue regarding the FCFCOA's jurisdiction in the family law proceeding. That issue concerns whether the FCFCOA (Div 1) lacks jurisdiction on the basis that orders were made in property settlement proceedings between Mr Harrison and Mr Harrison in 1994. 16 The transfer application is brought pursuant to s 32AB of the Federal Court of Australia Act 1976 (Cth) (the FCA Act), r 27.01 of the Federal Court Rules 2011 (Cth) (the Rules), and s 1337H(2) of the Corporations Act. 17 Section 32AB of the FCA Act is, relevantly, in the following terms: 32AB Discretionary transfer of civil proceedings to the Federal Circuit and Family Court of Australia (1) If a proceeding is pending in the Court, the Court may, by order, transfer the proceeding from the Court to the Federal Circuit and Family Court of Australia. (2) The Court may transfer a proceeding under subsection (1): (a) on the application of a party to the proceeding; or (b) on its own initiative. (3) The Rules of Court may make provision in relation to transfers of proceedings to the Federal Circuit and Family Court of Australia under subsection (1). (4) In particular, the Rules of Court may set out factors that are to be taken into account by the Court in deciding whether to transfer a proceeding to the Federal Circuit and Family Court of Australia under subsection (1). (5) Before Rules of Court are made for the purposes of subsection (3) or (4), the Court must consult the Federal Circuit and Family Court of Australia. (6) In deciding whether to transfer a proceeding to the Federal Circuit and Family Court of Australia under subsection (1), the Court must have regard to: (a) any Rules of Court made for the purposes of subsection (4); and (b) whether proceedings in respect of an associated matter are pending in the Federal Circuit and Family Court of Australia; and (c) whether the resources of the Federal Circuit and Family Court of Australia are sufficient to hear and determine the proceeding; and (d) the interests of the administration of justice. (7) If an order is made under subsection (1), the Court may make such orders as it considers necessary pending the disposal of the proceeding by the Federal Circuit and Family Court of Australia. 18 Rule 27.01 of the Rules is in the following terms: 27.01 Transfer to the Federal Circuit and Family Court of Australia (1) The Court must not make an order under subsection 32AB(1) of the Act on its own initiative transferring a proceeding from the Court to the Federal Circuit and Family Court of Australia unless the parties to the proceeding have been notified of the proposed transfer and have been given an opportunity to be heard in relation to the proposed transfer. (2) Before the Court makes an order under subsection 32AB(1) of the Act transferring a proceeding from the Court to the Federal Circuit and Family Court of Australia (Division 1): (a) the Court must consult the Chief Justice of the Court in relation to the proposed transfer; and (b) the Chief Justice of the Court must consult the Chief Justice of the Federal Circuit and Family Court of Australia (Division 1) in relation to the proposed transfer. (3) …. (4) A failure to comply with this rule in relation to a proposed transfer of a proceeding under subsection 32AB(1) of the Act does not affect the validity of an order made under that subsection transferring the proceeding. 19 Sections 1337H(1)-(2) of the Corporations Act provide as follows: 1337H Transfer of proceedings by the Federal Court and State and Territory Supreme Courts (1) This section applies to a proceeding (the relevant proceeding) in a court (the transferor court) if: (a) the relevant proceeding is: (i) a proceeding with respect to a civil matter arising under the Corporations legislation; or (ii) a subsection 1337B(3) proceeding; and (b) the transferor court is: (i) the Federal court; or (ii) a State or Territory Supreme Court. (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. 20 FSC accepts that the FCFCOA (Div 1) has jurisdiction to hear and determine the issues arising in this proceeding: the FCFCOA (Div 1) is a "Court" pursuant to s 58AA of the Corporations Act. 21 FSC opposes the transfer on the following grounds: (1) Both proceedings are "relatively well advanced". (2) The parties and issues in the two proceedings diverge. (3) It will not be more efficient or quicker to have the issues in this proceeding (concerning Freeway Fitness) determined if the proceeding is transferred, and it might even take longer and be more costly. (4) There is also a VCAT proceeding between Freeway Fitness and its landlord, which cannot be transferred so there will remain litigation in more than one forum in any case. (5) There is an issue concerning the jurisdiction of the FCFCOA (Div 1) given the orders that were made in 1994. (6) There is judicial expertise in this Court concerning oppression and winding up applications. 22 Insofar as the application is advanced pursuant to s 1137H(2) of the Corporations Act, the key issue is whether "having regard to the interests of justice" it is "more appropriate" for the proceeding in this Court to be determined by the FCFCOA (Div 1). 23 Insofar as the application is advanced pursuant to s 32AB of the FCA Act, the relevant considerations are: (a) whether proceedings are pending in respect of an associated matter in the FCFCOA; (b) whether the resources of the FCFCOA are sufficient to hear and determine the proceeding; (c) the "interests of the administration of justice". 24 In my view, the family law proceeding in the FCFCOA (Div 1) is an associated matter that is pending in that court (although this conclusion is not a necessary condition for the transfer). Its resources are also sufficient to hear and determine the oppression and winding up proceeding. While FSC suggested that this Court has greater expertise in cases of that kind, it did not suggest that the resources and expertise of the FCFCOA (Div 1) are not sufficient for the purposes of this consideration applying to transfers under the FCA Act. I also observe that the oppression and winding up proceeding brought in this Court is not particularly complex or wide-ranging. 25 The key issue is what is in the "interests of justice" and the "interests of the administration or justice". Neither side submitted that there was, in this application, any distinction that needed to be drawn between the "interests of justice" and the "interests of the administration of justice" (cf circumstances in which such a distinction may arise, eg McLachlan v Assistant Minister for Immigration & Border Protection [2018] FCA 109 at [25] (McKerracher J)). 26 I accept that there is a divergence in the parties in the two proceedings, and the substantive issues in the proceedings. Unlike some transfer cases, this is not one where there is a direct overlap in the parties and the areas in dispute. While counsel for the Defendants suggested that there are factual issues in common, and while I note that the Statement of Claim alleging oppression refers (in detailing the breakdown in the relationship between Mr Harrison, Mr Woods and Ms Abela) to various steps they have taken in support of Ms Harrison in the family law proceeding, I do not know enough about the family law proceeding to anticipate the full landscape of the contested factual matters. My view that a transfer is in the interests of justice does not depend on there being any clear overlap in factual issues, legal issues or parties. 27 Rather, in my view, there are two critical factors that compel the conclusion that a transfer is in the interests of justice. 28 The first factor concerns the relief sought in this proceeding. As set out above, the relief sought in this proceeding includes the winding up of Freeway Fitness. As this proceeding has developed, the winding up of Freeway Fitness is the preferred relief sought by FSC, as evidenced by it seeking a winding up order by the early and separate determination of the question whether Freeway Fitness should be wound up on the just and equitable ground. Whether or not the question of whether Freeway Fitness should be wound up is heard separately from other issues in the oppression proceeding (as FSC considers should occur), the relief sought (if granted) has obvious impacts on the determination of the family law proceeding as the shares of FSC in Freeway Fitness, and its units in the Trust, are a substantial asset in the pool of assets that are the subject of the family law proceeding. 29 The second factor is that the very bringing of this proceeding has itself become a point of contention in the family law proceeding. Ms Harrison suspects Mr Harrison of bringing this proceeding (by FSC) in order to thwart her pursuit of control and ownership of FSC and its units in the Trust in the division of the marital assets in the family law proceeding. That has already resulted in an application having been made - which is presently still on foot - to restrain Mr Harrison's pursuit of the oppression and winding up proceeding. Addressed at a "nuts and bolts" case management level, the two proceedings should be case managed together in the one court. 30 The disparity of parties and the divergence in issues - whether complete or partial - does not undermine either of these critical factors. With the oppression proceeding transferred to the FCFCOA (Div 1), a judge of that court will be able to determine how the two proceedings should be managed relative to one another. While there may not be efficiency gains in the transfer, it is not inevitable that there will be additional costs either. 31 What, then, of the other matters raised by FSC in opposing the transfer of the proceeding to the FCFCOA (Div 1)? 32 FSC's submissions relied heavily on the question mark over the FCFCOA's jurisdiction that has arisen from the orders that were made in 1994. Ms Harrison has made an application under s 79A of the Family Law Act 1975 (Cth) (Family Law Act) that will, if successful, overcome the jurisdictional issue raised. FSC accepts as much. 33 On one view, it may appear odd to transfer this proceeding before the question of the FCFCOA's jurisdiction has been resolved. However, I am not persuaded that the existence of an, as yet unresolved, issue concerning the jurisdiction of the FCFCOA (Div 1) means that there should be no transfer, or that this proceeding should be stayed with a transfer only proceeding if the s 79A application is successful. I note that FSC's "fallback" position (if the Defendants' application were to succeed in some form) was that the proceeding should be stayed until the s 79A application has been determined, and then be transferred. 34 As matters stand, the prospect that the FCFCOA (Div 1) will conclude it lacks jurisdiction given the orders that were made over 30 years ago in 1994 and/or will refuse Ms Harrison's application under s 79A(1A) of the Family Law Act is a matter of speculation. Even if the FCFCOA (Div 1) were ultimately to conclude it lacks jurisdiction, and refuse Ms Harrison's application under s 79A, that does not preclude progress being made on the oppression and winding up proceeding following a transfer. Contrary to FSC's submissions, the proceeding in this Court is not "well advanced". While pleadings have closed, no orders have been made for evidence to be put on. The fact that FSC has unilaterally served some expert reports does not change that. This is not a case that, absent a transfer, would be ready for trial in this Court in the near future. 35 In the worst case scenario, this proceeding could, if the proceeding in the FCFCOA (Div 1) suffers a fatal lack of jurisdiction, be transferred back to this Court. However, as indicated, that does not necessarily mean that there will be significant wasted costs, as progress can be made towards readying the matter for trial in the meantime. In addition, where the FCFCOA (Div 1) has jurisdiction to hear the issues arising under the Corporations Act, it is not a foregone conclusion that the oppression and winding up proceeding would need to come back to this Court if the family law proceeding fails on jurisdictional grounds. 36 While I was initially somewhat attracted by FSC's fallback position, I have concluded that an immediate transfer is preferable. That is because there is an obvious prospect of an appeal by the losing party in relation to the s 79A application, meaning that the question of when that application will have been "resolved" might be debated, or deferred if there is an appeal. Conversely, and as already noted, an immediate transfer permits progress to continue to be made in this proceeding, subject to the supervision of the judge managing it alongside the family law proceeding. 37 Another point raised by FSC related to the existence of the VCAT proceeding brought by Freeway Fitness against its landlord, FSC, concerning repairs to the premises. While FSC referred to that proceeding on the basis that a transfer would not result in all issues between those concerned being in the one court, that does not undermine the reasons for the transfer being in the interests of justice, which relate to the relief sought in the oppression and winding up proceeding, and its impact on the family law proceeding. 38 FSC also suggested that, contrary to the Defendants' position, there was some urgency in resolving the winding up and oppression proceeding as Freeway Fitness was not paying distributions as it had previously. This point was made by reference to an affidavit (dated 13 August 2024) filed earlier in the proceeding for case management purposes, and which was not relied on in the applications until it was raised in the running by FSC. This point was met (without objection) from the Bar table on the basis Freeway Fitness had since made distributions. Accordingly, that point fell away. 39 As stated at the outset, the Defendants also applied for a temporary stay, until the final determination of the family law proceeding. The transfer and stay were alternatives set out in their application, but the temporary stay was their preferred outcome. 40 While a stay of this proceeding would prevent its determination affecting the asset pool in the family law proceeding, staying this proceeding would prevent any progress being made in it, potentially for a long time. Conversely, a transfer allows for progress to continue to be made, under the supervision of the judge overseeing both proceedings. Accordingly, I consider a transfer more appropriately balances the parties' interests and serves the interests of justice, than a stay. 41 I have had regard to the making of the Separate Question Application in considering the Transfer/Stay Application. I do not consider that the making of the Separate Question Application suggests a transfer is not appropriate in the interests of justice for two reasons. First, while a transfer would mean that that application, which FSC wishes to amend in any case, would not proceed to be determined by this Court, a transfer does not preclude the application being pursued in the FCFCOA (Div 1) if FSC wishes to do that. Secondly, in my view the merits of the Separate Question Application are not obviously strong. As that application has not been argued, and may yet be pressed in the FCFCOA (Div 1), I will limit my observations to noting the application faces obvious hurdles when the relief sought pursuant to the separate question (if amended as foreshadowed) would see a solvent corporate trustee wound up, and a successful Business with 3,500 members, 16 employees, and several contractors, put in the hands of receivers, when each side - FSC on the one hand, and Mr Woods and Ms Abela on the other - seeks relief buying the other's shares in Freeway Fitness and units in the Trust. 42 While the parties both cited several cases in their submissions, the question of what is in the interests of justice depends on the circumstances in each particular case, and other cases in which transfers have been made, or refused, are of limited relevance and do not provide assistance in determining the present application. Nevertheless, for completeness, I note the following in relation to the relevant factors, as identified by the Plaintiff in its submissions by reference to Yara Pilbara Fertilisers Pty Ltd v Oswal (No 8) [2015] FCA 49 at [26] (McKerracher J): (1) The stage of the proceedings in the respective courts. The proceeding in this Court has only recently been commenced and is not close to being ready for trial. The family law proceeding, while commenced earlier, is not, from the information available to me, close to being ready for trial. This is a neutral factor. (2) The commonality or diversity of the parties. There is a diversity in the parties, but there are (as set out above) other considerations that compel my conclusion that the proceeding in this Court should be transferred. (3) The nature of the proceedings, the commonality or diversity of issues and the risk of inconsistent findings or conflicting orders. The proceedings concern different overarching subject matters (winding up and oppression vs division of marital assets). It is possible that there is some overlap in the issues and therefore some potential for conflicting findings (as set out above) but it is the other considerations arising from the impact of the oppression and winding up proceeding on the pool of marital assets that form the corpus in the family law proceeding (discussed above) that, in my assessment, compel my conclusion that the proceeding in this Court should be transferred. (4) Cost-benefit analysis. The transfer of the proceedings will not materially increase the costs, whereas the existence of the two proceedings in different courts has already caused interlocutory applications to be made in both courts (the application in the FCFCOA (Div 1) to restrain Mr Harrison in the pursuit of the proceeding in this Court, and the application made in this Court to stay the proceeding or transfer it to the FCFCOA (Div 1)). (5) The potential unnecessary drain on judicial and other public and private resources. The proceedings can be most efficiently managed if they are run in the same court and case-managed by the same judge. While there are, and may continue to be, different sets of solicitors involved (given that corporations law and family law are areas in which some practitioners specialise) it does not follow that the costs of running the winding up and oppression proceeding following transfer will be materially higher, or higher to an extent that outweighs the significance of the factors that I have explained lead me to conclude that it is in the interests of justice that the proceeding in this Court be transferred. (6) Whether there is any particular judicial expertise residing in one court or another. The FCFCOA (Div 1) has jurisdiction under the Corporations Act. Accepting that, nonetheless, this Court deals more frequently with oppression and winding up cases than the FCFCOA (Div 1), this is not a particularly complex example of such a case and there is no reason to think it is not well within the expertise of the FCFCOA (Div 1). Conversely, this Court has no expertise, or jurisdiction, in family law matters of the kind before the FCFCOA (Div 1) in the family law proceeding. 43 For the foregoing reasons, orders will be made for the transfer of the proceeding to the FCFCOA (Div 1). The Plaintiff will also be directed to pay the costs of the Defendants in respect of their Interlocutory Process. The Court's orders will provide a mechanism for the Plaintiff to contest the costs order and will stay the costs and transfer order until the costs position is resolved. I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Button .

Freeway Sports Centre Pty Ltd ATF Freeway Sports Centre Unit Trust v Freeway Fitness Pty Ltd ATF Freeway Fitness Unit Trust

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