Habchi v Jayhab Developments Pty Ltd

BACKGROUND 3 Mr Habib is one of two shareholders of Jayhab Developments. Mr Jason Habchi, to whom I will refer, again with no disrespect, as Mr Jason, is the brother of Mr Habib and the sole director of Jayhab Developments. 4 This proceeding is commenced by an originating process filed on 20 May 2024 wherein Mr Habib, who appeared in person, seeks the following relief: s139 of the Corporations Act 2001 (Cth) the Respondent provide a copy of the Constitution of the Respondent; and s173 of the Corporations Act 2001 (Cth) the Respondent provide registers of the Respondent; and s233 of the Corporations Act 2001 (Cth) a. The Director be removed, and the Applicant be appointed in his staid [sic]; or b. That the Applicant be appointed as co-director; and s251B of the Corporations Act 2001 (Cth) the Respondent provide all minutes of the meetings; and s247A of the Corporations Act 2001 (Cth) the Respondent provide financial records of the Respondent including financial documents, service agreements, and any shareholders agreements. 5 It appears that Mr Habib alleges that Mr Jason has engaged in oppressive conduct and has misappropriated over $6 million in assets from Jayhab Developments and other related entities. 6 As is deposed to in the affidavit of Mr Benjamin Timothy Cohen filed on 22 May 2024, there are a number of proceedings before the Supreme Court of Queensland which involve Mr Habib and Mr Jason or entities related to them. The matter of Jason Habchi v Habib Habchi, which relates to the ownership of properties in Redbank Plains, has been heard and judgment is reserved as at the date of the filing of Mr Cohen's affidavit. As to the proceedings which have not yet been heard, the defendant referred to the following: (1) The Habib Habchi & Anor v Jason H Pty Ltd as trustee & Ors proceeding, which relates to the ownership of properties in Beenleigh and Sherwood (City and Sherwood Road proceeding). The proceeding comprises three Supreme Court of Queensland proceedings which were commenced in 2022 and have been consolidated. (2) The Habib Habchi v Peter Habchi & Anor proceeding, which was commenced in February 2024 and relates to the ownership of property located at Oxley (Cook Street proceeding); and (3) The Habib Habchi v Lantona Pty Ltd & Ors proceeding, which was commenced in March 2024 and claims an entitlement by Mr Habib to a shareholding in two of the respondents in that matter (Lantona proceeding). Mr Jason is one of four respondents in the matter. On 18 April 2024, Jayhab Developments, which was included as the second applicant in the matter, was removed from the proceedings. These proceedings will be collectively referred to as the Supreme Court proceedings. 7 It appears that the City and Sherwood Road proceeding, the Lantona proceeding and the Cook Street proceeding are presently being case managed by Freeburn J in the Supreme Court of Queensland. His Honour has indicated his intention for all the relevant proceedings to be case managed and dealt with together. 8 The plaintiff filed an outline of submissions addressing only the substantive matter and the originating process. At the hearing, Mr Habib indicated that while he did not oppose the application, he also wished to raise some reservations he had regarding a transfer to the Supreme Court of Queensland. Those are discussed below. 9 At the hearing, the defendant read the interlocutory process filed on 1 July 2024, the two affidavits of Mr Benjamin Timothy Cohen affirmed on 22 May 2024 and 2 August 2024, the affidavit of Alexander William Thompson sworn on 28 June 2024 and the defendant's outline of submissions filed on 16 July 2024.

Legal Principles 10 Section 1337H of the Act relevantly provides: (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. 11 Section 1337L of the Act provides further matters for the Court to have regard to when determining whether to transfer a proceeding to another court pursuant to s 1337H: In deciding whether to transfer under section 1337H, 1337J or 1337K a proceeding or application, a court must have regard to: (a) the principal place of business of any body corporate concerned in the proceeding or application; and (b) the place or places where the events that are the subject of the proceeding or application took place; and (c) the other courts that have jurisdiction to deal with the proceeding or application. 12 The overarching question relevant to the exercise of this wide discretion is whether, having regard to the interests of justice, it is more appropriate that the proceeding be determined in the other court: Yara Pilbara Fertilisers Pty Ltd (formerly known as Burrup Fertilisers Pty Ltd) v Oswal (No 8) [2015] FCA 49 at [24], referring to BHP Billiton Ltd v Schultz (2004) 221 CLR 400; [2004] HCA 61 at [13], per Gleeson CJ, McHugh and Heydon JJ. While BHP Billiton was concerned with the cross-vesting regime, the relevant factors for consideration are broadly consistent with those relevant to an application under s 1337H of the Act: Dwyer v Hindal Corporate Pty Ltd (2005) 52 ACSR 335; [2005] SASC 24 at [13]. As to the expression "interests of justice", in BHP Billiton, Gleeson CJ, McHugh and Heydon JJ stated at [15] that "[t]he 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", noting however that the "interests of the respective parties, which might in some respects be common (as, for example, costs and efficiency), and in other respects conflicting, will arise for consideration". 13 In Yara, McKerracher J considered some of the factors that the Court may have regard to when determining whether to exercise its discretion to transfer the proceedings (at [26]): As I noted in Commissioner of Taxation v Residence Riverside Proprietary Ltd (as trustee for the D& J Discretionary Trust and as trustee for the D& J Investment Trust) [2013] FCA 720 (at [17]), this court has previously recognised many factors as being relevant to the decision, which will vary in weight from case to case, including: (1) the stage of the proceedings in the respective courts; (2) the commonality or diversity of the parties; (3) the nature of the proceedings; (4) the commonality or diversity of issues; (5) the risk of conflicting findings of fact or conflicting orders; (6) a costs benefit analysis; (7) the potential unnecessary drain on judicial and other public and private resources; and (8) whether there is any particular judicial expertise residing in one court of the other. 14 The power to transfer the proceedings is discretionary and remains so even if the other court is the more appropriate forum: Dwyer at [14]. However, it has been observed that it is rare for the Court to decline to transfer proceedings in circumstances where the other court is the more appropriate forum: Re HIH Insurance Ltd (in liq) (2014) 104 ACSR 240; [2014] NSWSC 545 at [6].

Consideration 15 First, Jayhab Developments submitted, in relation to the mandatory considerations set out in s 1337L of the Act, Jayhab Developments' principal place of business is in Queensland, and accordingly, the events the subject of the proceedings can be inferred to have occurred in Queensland. As to s 1337L(c), Jayhab Developments noted that the Supreme Court of Queensland is the only court to which a transfer is suggested. 16 As referred to by Jayhab Developments, while the issues will be "thrown into sharper focus" on a contested application for transfer, the Court is nevertheless required to have regard to the considerations in s 1337L of the Act in exercising the discretion pursuant to s 1337H: Webster (as trustee for Elcar Pty Ltd Super Fund Trust) v Murray Goulburn Co-Operative Co Ltd [2017] VSC 249 at [15]. I have had regard to the mandatory considerations set out in s 1337L of the Act and accept the defendant's submissions in that regard. Jayhab Developments' principal place of business is in Queensland and I am satisfied that it may be inferred that the events the subject of the proceedings occurred in Queensland. Further, the Supreme Court of Queensland has jurisdiction to determine the matter and it is the court suggested for transfer for reasons which will be considered further below. 17 In relation to the relative stages of the proceedings, Jayhab Developments noted that the proceedings in the Supreme Court of Queensland are at varying stages, having been commenced at various times. Jayhab Developments also noted that the transfer of the proceeding would not compromise any trial dates as none have yet been listed. Jayhab Developments submitted that the Supreme Court is alive to the possibility of this matter being transferred and has indicated its intention that all relevant proceedings be dealt with together. As well, it was submitted that the Supreme Court proceedings are still at the interlocutory stage and, with respect to the City and Sherwood Road proceeding, further pleadings are still to be filed. 18 As to the commonality of issues between the proceedings, Jayhab Developments referred to the City and Sherwood Road proceeding in which Mr Habib claims that Jayhab Developments effected a transfer of a property to another company for no consideration and did not account to Mr Habib for profits generated by a property owned by Jayhab Developments. To that end, Jayhab Developments submitted that these matters will be relevant to the determination of the issues brought in this Court with respect to oppressive conduct. Jayhab Developments submitted that so much is clear from the fact that the affidavit of Mr Habib refers to the property and development agreement, which is crucial to the City and Sherwood Road proceedings, as can be seen from the plaintiffs' substituted statement of claim filed in that matter in the Supreme Court of Queensland. Jayhab Developments also submitted that the oppression action as it relates to "commercial unfairness", "cannot be assessed in a vacuum or simply from one member's point of view": Lukaszewicz v Polish Club Ltd (2019) 370 ALR 698; [2019] NSWSC 446 at [8] - [9], citing Thomas v HW Thomas Ltd [1984] 1 NZLR 686; (1984) 2 ACLC 610 at 618, and, therefore, the dealings and affairs of the relevant parties in the Supreme Court proceedings would also need to be examined in the matter before this Court. 19 A factor which Jayhab Developments contended weighed strongly in favour of transfer is the substantial commonality of parties between this proceeding and the Supreme Court proceedings. Specifically, all other parties to the Supreme Court proceedings are individuals or entities related to Mr Habib or Jayhab Developments. In that regard, Jayhab Developments referred to Valceski v Valceski (2007) 70 NSWLR 36; [2007] NSWSC 440 wherein Brereton J stated at [85] that "justice can best be done by one court resolving the whole justiciable controversy, in order to avoid both duplication and inconsistency". 20 As previously stated, Mr Habib raised some reservations regarding the transfer application. It appears his primary submission in that regard was the concern that he would be prejudiced if the matter were to be transferred to the Supreme Court of Queensland on the basis that he would no longer be able to argue his claim against Jayhab Developments. He also submitted that the matter is one which is simple enough to be determined by this Court without the need for the transfer. 21 Having regard to the interests of justice generally and the matters outlined above, I consider that this is plainly a case in which the Supreme Court of Queensland is the more appropriate court to determine the application. The circumstances of the matter before this Court and the Supreme Court proceedings mean that there is likely to be an overlap in relation to factual findings and issues. Further, as submitted by Jayhab Developments, the oppression action may necessitate a consideration of the breakdown of the relationship between Mr Habib and Mr Jason, which forms part of the Supreme Court proceedings. For those reasons, there is a risk of a multiplicity of proceedings or conflicting findings: Vaughan v Frost [2010] NSWSC 492 at [11]. I also accept Jayhab Developments' submission that many of the parties to the Supreme Court proceedings are not parties to these proceedings, and accordingly any findings of this Court will not bind them, leading to the risk of unnecessary duplication. 22 As to Mr Habib's concerns regarding the prejudice he may face, I do not consider that there is a real risk of Mr Habib having a reduced opportunity to litigate his claim against Jayhab Developments in the Supreme Court of Queensland. Mr Habib also submitted that the matter before this Court is simple and should be able to be determined independently of the Supreme Court proceedings. However, he did acknowledge that there was commonality of issues between the Supreme Court proceedings and those in this Court when the question was to put to him. 23 On the basis of the above, I do not consider that there is any reason why the proceeding ought not to be transferred to the Supreme Court of Queensland. 24 Further, consistent with the overarching principle of civil practice as set out in s 37M of the Federal Court of Australia Act 1976 (Cth), it is appropriate that the matter be transferred to the Supreme Court of Queensland as this will assist in facilitating the efficient, expeditious and inexpensive resolution of the dispute.

conclusion 25 For the above reasons, the application is allowed. While Mr Habib said that he did not oppose the application, he expressed some concerns about it at the hearing. Mr Habib should pay Jayhab Developments' costs of the interlocutory process filed on 1 July 2024. Any remaining costs of the proceeding up to the date of the transfer ought to be each party's costs in the cause. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Meagher.