Jemmott v ENA Development Pty Ltd

Background 5 On 27 January 2022, the Liquidator was appointed as the liquidator of ENA in proceedings 2021/303982 in the Supreme Court of New South Wales: In the matter of ENA Development Pty Ltd [2022] NSWSC 54 (Black J). 6 On 3 February 2022, the Liquidator was also appointed as the receiver of the assets of the ENA Development Trust in proceedings 2022/32115 in the Supreme Court of New South Wales (2022 Proceedings). 7 On 11 July 2022, an order was made in the 2022 Proceedings that pursuant to s 90-15 of Sch 2 to the Act, the Liquidator would be justified in treating certain assets held in the name of ENA comprising real estate, shares and securities listed on the Australian Securities Exchange and moneys in a bank account as assets to which ENA was beneficially entitled: In the matter of ENA Development Pty Ltd (in liq) [2022] NSWSC 919. 8 In the period between 7 August 2022 and 14 August 2022, Mr Jemmott and persons associated with him filed a series of notices of motion in the 2022 Proceedings. 9 On 15 August 2022, Mr Jemmott and the associated persons were granted leave in the 2022 Proceedings to discontinue the latest iteration of the notices of motion, being a notice of motion that they had filed on 14 August 2022 (14 August Motion). The grant of leave was in these terms: … Grants leave to One T Development Pty Ltd )"One T Development") and the six named applicants, Ms Ansah and others, to discontinue the interlocutory process filed on 14 August 2022, on terms that this order be treated as constituting this discontinuance such that a separate notice of discontinuance need not be filed, on the undertaking given by each of One T Development and each of the Applicants by their counsel, not to bring a further application, interlocutory process or notice of motion, in or substantially in the form of paragraphs 2-4 and 6-11 of the Interlocutory Process filed 14 August 2022. 10 On 16 August 2022, Mr Jemmott commenced these proceedings by filing an originating process in this Court seeking relief under ss 482(1) and 480 of the Act and s 75-15 of the "Insolvency Act" (Originating Process). 11 On 8 September 2022, Markovic J made orders providing for (a) the service of a proposed amended originating process, (b) the defendants to file and serve any application for the proceedings to be transferred to the Supreme Court of New South Wales, together with any affidavit in support by 5 pm on 13 September 2022 and (c) the listing of the proceedings for a further case management hearing at 9.30 am on 15 September 2022. On that occasion Mr Jemmott appeared by a solicitor, Mr R Ardino. 12 On 15 September 2022, Markovic J made orders (a) granting leave to the defendants to file and serve an amended interlocutory process in the form emailed to the Court on 14 September 2022, (b) requiring Mr Jemmott to file and serve any affidavits and submissions, not exceeding five pages in length in response to the relief sought in the amended interlocutory process by midday on 20 September 2022, and (c) referring the amended interlocutory process and an oral application made by Mr Jemmott to amend an interlocutory process that he had filed (Oral Amendment Application) to the Commercial and Corporations Duty Judge for hearing at 2.15 pm on 21 September 2022. On that occasion Mr Jemmott appeared in person. In the course of the case management hearing on 15 September 2022 Markovic J stressed to Mr Jemmott that it was a matter of some urgency that the transfer application be determined.

Adjournment application 13 On 20 September 2022, Mr Carbone emailed the Court at 1.14 pm and 5.05 pm foreshadowing and then confirming that an application would be made for an adjournment of the hearing of the transfer application on the basis that he had only just been instructed and he needed time to prepare the affidavits and submissions the subject of the orders made by Markovic J on 15 September 2022. 14 On 21 September 2022, at 2.15 pm, the proceedings came before me as the Commercial and Corporations Duty Judge for the hearing of the transfer application. Mr Rose of counsel appeared for the defendants. Mr Carbone appeared for Mr Jemmott. 15 At the outset of the hearing on 21 September 2022, Mr Carbone made an oral application for the hearing of the transfer application to be adjourned for 14 days as he had only been retained on the afternoon of the previous day, Mr Jemmott had previously been unrepresented in the proceedings and Mr Carbone needed that amount of time to review the 134 pages of affidavit material relied upon by the defendant, the status of the various proceedings in the Supreme Court of New South Wales and to obtain advice from counsel on the scope of evidence that might be necessary to respond to the transfer application and to make any necessary amendments to the Originating Process. He acknowledged that from his preliminary review of the written submissions of the defendants on the transfer application that it would likely be necessary for the Originating Process to be amended. 16 The adjournment application was opposed by the defendants. Mr Rose submitted that, contrary to the submissions of Mr Carbone, Mr Jemmott had previously had the benefit of legal representation in the proceedings as Mr Ardino of Kazi & Associates had appeared for him at the case management hearing before Markovic J on 8 September 2022. He also submitted that Mr Jemmott had been expressly on notice since 8 September 2022 that the defendants proposed to make the transfer application and that the orders made by Markovic J provided for it to be determined at 2.15 pm today, 21 September 2022 in circumstances where the 2022 Proceedings were next before the Corporations Judge in the Supreme Court of New South Wales on Monday, 26 September 2022. 17 I declined to grant the adjournment of the transfer application on the basis that Mr Jemmott was clearly on notice that the hearing was to proceed at 2.15 pm on 21 September 2022 and of the need for the transfer application to be determined expeditiously, the absence of any explanation of why Mr Jemmott had not retained Mr Carbone until after the 12 noon deadline on 20 September 2022 for the filing of his submissions and any evidence in opposition to the transfer application, the absence of any evidence in support of the adjournment application and the absence of any apparent material prejudice to Mr Jemmott if the transfer application was acceded to. The orders sought by the defendants in their amended interlocutory process would not involve any dismissal of the proceedings nor determination of any issue raised in the Originating Process. Further, any proposed amendment to the relief sought in the Originating Process or in the Oral Amendment Application could be sought in the Supreme Court of New South Wales if the transfer application was successful.

Legal Principles 18 Section 1337H of the Act is, relevantly, in the following terms: (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. 19 There is no appeal from a decision in relation to the transfer of a proceeding made pursuant to s 1337H(2) of the Act: s 1337R(a) of the Act. 20 Section 1337H(2) confers a wide discretion to transfer proceedings where, having regard to the interests of justice, it is more appropriate for the proceeding to be heard by the other Court: Yeo, in the matter of Armstrong and Shaw Pty Ltd (in liq) v Whiteman [2020] FCA 849 (Yeo) at [29] (Anderson J). 21 In the context of the transfer of proceedings, the meaning of "in the interests of justice" has been considered on many occasions in different statutory schemes: Yeo at [29], citing BHP Billiton Limited v Schultz (2004) 221 CLR 400; [2004] HCA 61 (BHP Billiton). 22 BHP Billiton has been described as "the leading authority which canvasses many of the issues to be taken into account": Yara Pilbara Fertilisers Pty Ltd (formerly known as Burrup Fertilisers Pty Ltd) v Oswal (No 8) [2015] FCA 49 (Yara Pilbara) at [24] (McKerracher J). 23 While BHP Billiton considered the cross-vesting regime, for practical purposes the criteria for determining whether a proceeding should be transferred are broadly consistent with the criteria for determining cross-vesting: see Dwyer v Hindal Corporate Pty Ltd (2005) 52 ACSR 335 at [13] (Debelle J). 24 The question is essentially a practical, or, a "nuts and bolts" decision as to which Court, in the pursuit of the interests of justice, is the more appropriate to hear and determine the substantive dispute: Yara Pilbara at [24], citing BHP Billiton at [13] (Gleeson CJ, McHugh and Heydon JJ); Bankinvest AG v Seabrook (1988) 14 NSWLR 711 at 713-14 (Street CJ). 25 The "interests of justice" is an expression to be interpreted broadly: Yara Pilbara at [24], citing BHP Billiton at [15] (Gleeson CJ, McHugh and Heydon JJ). 26 The Court should not approach the transfer question with any presumption as to where the interests of justice lie, and it is not a circumstance in which an applicant has an onus of persuasion analogous to an onus of proof: Yara Pilbara at [25], citing BHP Billiton at [25] (Gleeson CJ, McHugh and Heydon JJ) and [71] (Gummow J). 27 Further, the disposition of an application for transfer of a proceeding does not require weight to be given to the plaintiff's choice of forum, which is essentially a neutral factor: Yara Pilbara at [25]; BHP Billiton at [168] (Kirby J) and [77] (Gummow J). 28 Justice McKerracher, in Commissioner of Taxation v Residence Riverside Proprietary Limited as Trustee for the D&J Discretionary Trust and as Trustee for the D&J Investment Trust [2013] FCA 720 at [17] (McKerracher J) in the analogous cross-vesting context, stated: In my view, ordinarily where cross-vesting transfer occurs, the factors in support of it would be obvious and a conclusion that the value judgment or decision about whether it is in the interests of justice for the proceeding to be dealt with in another court will be readily instinctive taking into account a variety of matters including: • the stage of the proceedings in the respective courts; • the commonality or diversity of the parties; • the nature of the proceedings; • the commonality or diversity of the issues; • the risk of conflicting findings of fact or conflicting orders; • a cost benefit analysis; • the potential unnecessary drain on judicial and other public and private resources; and • whether there is any particular judicial expertise residing in one court or the other. 29 Of central importance is whether one court has the power to determine all matters in issue, whilst the other court does not: In the matter of Peter G Ward Industries Pty Limited [2020] NSWSC 339 at [30] (Rees J).

Collateral proceedings and applications 30 Mr O'Neill gives evidence that since the commencement of proceedings 2015/325044 in the Supreme Court of New South Wales by Andy Vuong Duc Pham and Thi Hunog Giang Pham against Mr Robert Sebie and others, to which ENA was subsequently joined (2015 Proceedings), in excess of 35 judgments have been delivered in those proceedings and the 2022 Proceedings, including judgments of the Court of Appeal. 31 Mr O'Neill also gives evidence that the following notices of motion and interlocutory processes are currently before the Supreme Court of New South Wales: (a) an application by the Liquidator to transfer the 2022 Proceedings to the Federal Circuit and Family Court of Australia; (b) an application by the Liquidator for possession of certain real property owned by ENA, made in the 2022 Proceedings; (c) an application by ENA to transfer the 2015 Proceedings to the Federal Circuit and Family Court of Australia; (d) an application by Robert Sebie seeking, amongst other things, to set aside orders made in the 2015 Proceedings; and (e) an application by Robert Sebie in the 2022 Proceedings seeking, amongst other things, a stay of applications relating to the property in respect of which the Liquidator seeks orders for possession. 32 For the purposes of this application I accept the evidence of Mr O'Neill as to the existence of a relationship between the 2015 Proceedings and the 2022 Proceedings but the full extent and precise implications of that relationship to the matters raised in these proceedings is a matter that the Supreme Court of New South Wales would be in a much better position to determine than this Court. For present purposes, I have taken into account the number of judgments that have been delivered in the 2015 Proceedings and the 2022 Proceedings and the notices of motion and interlocutory processes currently before the Supreme Court of New South Wales.

Submissions 33 The defendants submit in their written submissions, that were not expanded upon in oral submissions, that for the following reasons it is in the interests of justice that it is appropriate that the proceedings be transferred to the Supreme Court of New South Wales: 21. First, the Liquidator was appointed as liquidator by order of the Supreme Court of New South Wales. Whilst this Court can, as a matter of law, terminate a winding up commenced in another Court (see Maamari v Ringwood and Ply Pty Ltd [2005] NSWSC 40), given the multitude of applications presently before that Court in connection with the winding up of ENA, it is appropriate that those matters be determined along with the matters raised in these proceedings. 22. Second, to the extent that orders are sought for the termination of the Liquidator's appointment as receiver, where that appointment arose as a result of an order of the Supreme Court of New South Wales, only that Court can determine questions in relation to the appointment of its officer. 23. Third, at least part of the relief claimed is sought by what ostensibly is a breach of an undertaking given by Mr Jemmott and others not to seek that relief without leave of the Supreme Court of New South Wales. 24. Fourth, the factual matters upon which one assumes Mr Jemmott will rely are likely intimately to be connected with the broad-ranging, and ongoing, factual inquiry currently before the Supreme Court of New South Wales in the 2015 and 2022 Proceedings. 25. Fifth, the claims made by Mr Jemmott at prayer six of his originating process seeks relief in substantially the same form as that sought by Mr Sebie in the 2022 Proceedings. Putting to one side the obvious issue as to want of parties (One T is not party to these proceedings), it is plainly more efficient that those similar claims be heard in the one forum. 26. Sixth, and related to the fifth point, prayer six of Mr Jemmott's originating process appears to be an abuse of process, when one has regard to the fact that One T has already unsuccessfully contended to a result in substance the same as that now sought by Mr Jemmott, its sole director. 27. Finally, there does not appear to be any relevant prejudice to Mr Jemmott were these proceedings to be transferred. 34 Mr Jemmott did not file any written submissions nor evidence in opposition to the transfer application and beyond referring to his submissions in support of his oral application for an adjournment of the transfer application, Mr Carbone did not advance any oral submissions on behalf of Mr Jemmott in opposition to the transfer applications.

Consideration 35 It is convenient to identify first the extent of the overlap between the relief sought by Mr Jemmott in the Originating Process and the relief sought by Mr Jemmott and the other applicants in the 14 August Motion in the 2022 Proceedings. 36 Mr Jemmott seeks the following relief in the Originating Process: 1. Pursuant to section 482(1) of the Act, that the winding up of the Company be terminated or stayed indefinitely. 2. Pursuant to section 482(3) of the Act, that the management and control of the Company revert back to the director; and 3. In the alternative to order 1 and 2, Peter Krecji's appointment as liquidator and receiver of ENA Development Pty Ltd (in liq) be terminated under the division 90-15 of the Insolvency Practice Schedule.( Corporations) and Domenic Calabretta be appointed as liquidator [and receiver] of that company. 4. Further and alternatively, that directions be given in the winding up of ENA Development Pty Limited (in liq), that the winding up be terminated upon the happening of the following events: a. Payment of the petitioner's debt in the amount of $46,164 plus costs from monies as were held in Trust from the sale of the ASX Shares Comsec Account ENA Development at the date of Mr Krecji's appointment as liquidator, and that are presently in an account maintained by the liquidator of ENA Developments Pty Limited; b. The filing of deeds of deferral of or release by the Creditors listed in Schedule 1, from the payment of their debts by the liquidator, in lieu of the repayment of their debts: Creditors as per creditor's schedule: Source: Liquidators Report to Creditors of dated 24 April 2022, refers page 25, list of creditors. c. The liquidator's reasonable fees and expenses in administering the winding up, from the fund presently maintained by the liquidator; 5. The company and trust both had a substantial positive net asset position of $3,100,000 and liquid assets (cash flow) position of $120,000 as at the date of winding up 6. A declaration that One T Development Pty Ltd as the Trustee of ENA Development Trust as or after 30 March 2021 to hold the assets on trust under Section 63 of the Trustee Act 1925; Property known as Lot 36, 146 Parramatta Road, Homebush NSW 2140, the Fund of $1,900,000 now sitting in the Liquidator Trust Account, realisation of Shares to the value of $115,000 now sitting the liquidator's trust account, the value of $9700 Cash at back Account CBA ENA Development 37 The relief that was sought by Mr Jemmott and the other applicants in the 14 August Motion relevantly included: 1. To terminate the winding-up pursuant to section 482 of the Corporations Act 2001 (Cth) on the basis the company has sufficient funds to pay creditors and the liquidator. 2. In the alternative to order 1, Peter Krecjrs appointment as liquidator and receiver of ENA Development Pty Ltd (in liq) be terminated and Domenic Calabretta be appointed as liquidator [and receiver] of that company. 3. Further and alternatively, that directions be given in the winding up of ENA Development Pty limited (in liq), that the winding up be terminated upon the happening of the following events: a. Payment of the petitioner's debt in the amount of $46,164_from the monies as were held in Court or from the sale of the ASX Shares Comsec Account ENA Development at the date of Mr Krecji's appointment as liquidator, and that are presently in an account maintained by the liquidator of ENA Developments Pty Limited; b. The filing of deeds of deferral of or release by the Second to Seventh Defendants(as Creditors) from the payment of their debts by the liquidator, in lieu of the repayment of their debts: Creditors as per creditor's schedule: Source: Liquidators Report to Creditors of 27-04-2022 refers page 25, list of creditors. c. The liquidator's reasonable fees and expenses in administering the winding up, from the fund presently maintained by the liquidator; … 8. That the court set aside, the orders of Justice Black made on 3 February 2022, in which Mr Krejci was appointed as Receiver over Lot 36, 146 Parramatta Road, Homebush NSW 2140. 9. In lieu of the orders made on 3 February 2022, the Court order that One T Development Pty Ltd as the Trustee of ENA Development Trust, to hold the assets of the trust pending further order but not to deal with them otherwise than upon the giving of 14 days' notice to the parties.. Particulars of the Trust Assets (a) Lot 36, 146 Parramatta Road, Homebush NSW 2140 (b) Fund in Supreme Court $1,900,000 (now sitting with the liquidator) (c) ASX Share Portfolio $115,000, Comsec Account ENA Development (d) Further Cash at bank CSA ENA Development Pty Ltd $9000 38 It is readily apparent that there is a substantial identity and overlap between the relief sought in the Originating Process and the 14 August Motion. 39 I am satisfied that this proceeding is a proceeding with respect to a civil matter arising under the Corporations Law and the Supreme Court has jurisdiction with respect to the matters for determination in the Originating Process. 40 Further, for the following reasons I have concluded that, having regard to the interests of justice, it is more appropriate that these proceedings be determined by the Supreme Court of New South Wales. 41 First, given the substantial overlap in the relief sought in the Originating Process and the 14 August Motion, it would appear that Mr Jemmott may have breached the undertaking that he gave to the Supreme Court of New South Wales not to bring any further application in or in substantially the same form as paragraphs 2 to 4 and 6 to 11 of the 14 August Motion. The overlap also raises potential issue estoppel and abuse of process considerations. These are matters that it is more appropriate for the Supreme Court to determine given the undertakings were given to the Supreme Court and the existence of any issue estoppels is a matter more readily capable of determination by that Court. 42 Second, the Liquidator was appointed as a liquidator of ENA and as a receiver of the assets of the ENA Trust pursuant to orders made by the Supreme Court of New South Wales. The Supreme Court is the more appropriate court to determine applications to terminate those appointments, particularly if there are other pending applications before the Supreme Court concerning the winding up of ENA. 43 Third, given that the Liquidator was appointed as a receiver of the assets of the ENA Development Trust by an order of the Supreme Court of New South Wales it is not apparent how any court other than the Supreme Court could make orders terminating that appointment. 44 Fourth, it is highly desirable for multiple controversies and disputes that might arise out of the same factual substratum to be determined in a single court rather than multiple courts. This not only reduces the risk of conflicting judgments and conflicting findings of fact but also avoids the parties incurring the likely inevitable additional costs and expenses that would be incurred in litigating common or overlapping issues in multiple courts. At the same time it ensures that there is a more effective utilisation of the finite resources of this Court and the Supreme Court of New South Wales for the benefit of the community as a whole in obtaining timely access to justice. 45 Fifth, I am not aware of any substantive prejudice to Mr Jemmott if the proceedings were transferred to the Supreme Court of New South Wales. The relief that he seeks in the Originating Process is relief that the Supreme Court has the power to determine and, as I explain above, the orders sought by the defendants to give effect to the transfer of the proceedings to the Supreme Court do not determine any issue in the proceedings and any amendment application, including the Oral Amendment Application, may be pursued in the Supreme Court.

Disposition 46 For these reasons, I determined that orders should be made transferring the proceedings to the Supreme Court of New South Wales. I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Halley.