[2004] HCA 61
Perpetual Trustee Company Ltd v Batt [2014] NSWSC 1211
Valceski v Valceski (2007) 70 NSWLR 36
Source
Original judgment source is linked above.
Catchwords
[2004] HCA 61
Perpetual Trustee Company Ltd v Batt [2014] NSWSC 1211
Valceski v Valceski (2007) 70 NSWLR 36
Judgment (2 paragraphs)
[1]
Judgment - EX TEMPORE
This is an application for transfer of proceedings pursuant to the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW), s 5. Proceedings arise out of dealings between the plaintiff company, to which I will refer as MS, and a company called Inverter Solar Pty Ltd, to which I will refer as IS.
IS was incorporated in New South Wales. In March 2013 it entered into a five year lease of business premises at Silverwater. MS began to use the Silverwater premises for its business, which is apparently similar to that of IS, in May 2015, on a shared basis.
MS claims that there was an oral licence granted by officers of IS. In July 2015, IS's principal place of business was transferred to Burwood in Victoria. On 13 July 2016, IS was ordered to be wound up by the Supreme Court of Victoria. The first and second defendants were appointed as liquidators.
Massive Solar Pty Ltd v Woods [2017] NSWSC 924 | Case summary | Zoe
On 27 July 2016, the liquidators took possession of the Silverwater premises by changing the locks. These proceedings were commenced on the following day, 28 July, by the filing of a summons naming MS as plaintiff and the liquidators as the defendants. On that day, orders were also obtained ex parte preventing the liquidators from interfering with MS's access to the Silverwater premises.
On 2 August, the matter came before the Court on a contested basis. Consent orders were ultimately made extending the earlier ex parte orders until further order of the Court and provision was made for the proceedings to continue in the ordinary way.
A statement of claim was filed for MS on 19 August. On 23 August, there was an agreed timetable put in place which provided for the defendants to file their defence and any cross-claim. The proceedings were re-listed on 22 November.
On 14 September 2016, a letter of demand was sent by the liquidators to MS. That letter asserted various claims by the liquidators on behalf of IS against MS associated with the alleged transfer of IS's business without consideration being paid; the alleged transfer of stock from IS to MS without proper consideration being given; and a set off between debts owed, or allegedly owed, from MS to IS. The letter demanded payment of a sum of approximately $5.7 million and stated that unless payment was made within seven days, legal proceedings would be commenced without further reference to MS.
20 September was the date by which the liquidators' defence and any cross-claim had to be filed. A defence was filed for the liquidators on 4 October, but no cross-claim was filed.
In October 2016, MS vacated the Silverwater premises. On 4 November 2016, solicitors for the liquidators wrote to the solicitors for MS in the following terms:
We refer to this matter and recent communications. We are instructed that our client has now received notice that your client Massive Solar Pty Ltd has vacated the premises and removed all of the stock and other equipment which is the subject matter of the dispute.
We note that, in the circumstances, much of the relief sought in your client's Statement of Claim would appear to fall away. Could you please advise whether your client intends to pursue the claim in the NSW Supreme Court, and, if so, whether it intends to file an amended statement of claim.
In response, on 21 November, the solicitors for MS wrote stating that they had nearly finalised an amended statement of claim. On 22 November, proceedings were before the Court in accordance with the timetable fixed in August. Consent orders were made for the filing of the proposed statement of claim and for evidence to be filed by the parties. On 29 November, a draft version of the amended statement of claim (which was subsequently filed) was provided to the solicitors for the liquidators. By amendment, MS joined the third defendant, Deloitte Financial Advisory Pty Ltd. It was alleged that the third defendant was an employer of the first and second defendant and the third defendant was vicariously liable for their conduct.
The amended statement of claim carried forward claims, earlier pleaded, to the effect that the actions by the liquidators in seeking to, or in taking, possession of the premises caused damage, including loss of sales and the like.
On 6 December, the liquidators commenced proceeding as applicants in the Federal Court. Proceedings were filed in Melbourne and entered in the Victorian District Registry of that Court. They reflected the earlier letter of demand from September. The originating application and supporting affidavit were apparently served at some point in January 2017.
Meanwhile, the plaintiff has served evidence in accordance with the timetable which was fixed by the Court in these proceedings in November, although it appears the evidence may not be complete.
The application with which I am concerned is the liquidators' application to transfer the proceedings, which was made by way of notice of motion filed on 6 April 2017. Although the notice of motion seeks an order for transfer to the Victorian District Registry of the Federal Court, counsel for the liquidators indicated that it was not appropriate for an order to be made in this form, the particular Registry in which the proceedings would continue being a matter for the Federal Court rather than for this Court to specify by way of order under the Jurisdiction of Courts (Cross-Vesting) Act.
Four days later, on 10 April, MS made an interlocutory application to the Federal Court. The application sought to have the proceedings in the Federal Court transferred to the New South Wales Registry. I was told, however, that this application was made by way of fall-back against the possibility that the present application succeeds. It is now clear that MS wishes to have the Federal Court proceedings transferred to this Court. MS has undertaken that if this application is unsuccessful it will amend its interlocutory application in the Federal Court to seek an order to that effect.
It is not necessary to go into the claims made in these proceedings and in the Federal Court proceedings in any detail. There is obviously overlap between the proceedings and it is obvious that the proceedings should be heard in one court. That is common ground.
MS points to what it contends is a preponderance of witnesses and other connecting factors to New South Wales. The liquidators have not argued to the contrary. The liquidators concede that if the proceedings are transferred from this Court to the Federal Court, then the proceedings should be appropriately conducted in the Sydney Registry of the Federal Court. Although in terms this concession was only conditional on the proceedings first being transferred to the Federal Court, it reflects, in my view, that the proceedings are indeed most efficiently conducted in Sydney.
In effect, the choice is between the proceedings being heard together in this Court or the proceedings being heard together in the Sydney Registry of the Federal Court.
Counsel for MS says that the liquidators could, and should, have pursued their claim by way of cross-claim in these proceedings. It is true that the liquidators did not take advantage of the entitlement they had under the timetable fixed in August for the filing of a cross-claim. However, it was not until the following month that the letter of demand was sent and it may be that at that stage the liquidators were not in a position to formulate any such cross-claim. Even so, it might have been expected that they would have sought an extension of time in which to do so.
It is also true that by November it might have been reasonable, once MS ceased to occupy the premises, for the liquidators to think that the proceedings in this Court would peter out. However, this very issue was raised by the solicitors for the liquidators in their letter of 4 November and it was apparent from the response that MS did intend to pursue these proceedings.
It is clear that the proceedings were commenced in Melbourne as a result of a deliberate choice by the liquidators, presumably on the basis that that was most convenient to them. The proceedings were commenced knowing that there were related proceedings pending in this Court which MS intended to pursue.
Counsel for the liquidators submitted that the Federal Court proceedings are much more extensive than the proceedings in this Court. The issues are indeed wider and the amounts at stake are much greater, but counsel did not suggest that the continuation of the proceedings in this Court were in some way colourable or that they were otherwise not maintainable.
In these circumstances, there is no reason why the liquidators' claim could not have been brought by way of cross-claim in these proceedings. I have no doubt that had leave been sought to do this in November or December, it would have been granted.
It not infrequently occurs that issues raised on a cross-claim come to dominate proceedings and to overshadow claims made in a statement of claim. If that happens, the Court's case management powers are amply capable of ensuring that the issues are addressed in a way that is convenient and efficient.
Counsel for the liquidators referred to the decision of the High Court in BHP Billiton Ltd v Shultz (2004) 221 CLR 400. That case concerned an application to transfer proceedings from the Dust Diseases Tribunal of New South Wales to the Supreme Court of South Australia. Previous first instance decisions had accepted that the plaintiff's choice of venue was something which should be taken into account in deciding whether to make a transfer. The High Court decision rejected that, at least in ordinary circumstances.
The reason is that a substantive or procedural advantage to the plaintiff may very well be a substantive or procedural disadvantage to the defendant. The Court's task in an application under the Jurisdiction of Courts (Cross-Vesting) Act is to do justice to both parties. The plaintiff's position should not be privileged by the fact that the plaintiff has chosen a particular court to initiate the proceedings. If there are differences of substantive law, the Court's obligation is to draw back from those and decide where the proceedings should be brought by reference to more neutral factors, such as procedural advantages or efficiencies which favour both parties rather than just one.
In my opinion, this decision does not help the liquidators in the current case. The choice here is between two Courts sitting in Sydney. No question of different substantive law arises. The Courts are both equally capable of dealing with the claims which are made.
Counsel for the liquidators argued that I should ignore the fact that the proceedings in this Court were commenced first and that I should transfer the proceedings to the Federal Court because the larger part of the dispute is pending there.
I accept that I should not privilege MS's position merely because MS commenced these proceedings first in this Court. But, in my view, if I were to act on the basis which I am invited to act by counsel for the liquidators, I would, in effect, be privileging the liquidators' choice to bring their claims by way of separate proceedings in the Federal Court in Victoria, rather than by way of cross-claim.
In Valceski v Valceski (2007) 70 NSWLR 36, a case involving an application to transfer proceedings from the Equity Division of this Court to the Family Court, Brereton J said at [70] (citations omitted; emphasis added):
I reject the submission … that the applicant for a transfer bears some onus or has to show some good reason for disturbing the plaintiff's initial choice of venue, or that the plaintiff's choice of court is to be given weight; despite earlier suggestions to that effect, it is now established that an applicant for a transfer bears no burden of persuasion or onus of proof, and no particular significance attends the plaintiff's original choice of forum. It is only if both courts are equally appropriate that the initial choice will have significance; if one is more appropriate than the other, however so slightly, a transfer to the more appropriate court is mandatory.
In that case, his Honour did transfer the proceedings to the Family Court, but it was a special case because of the Family Court's familiarity with jurisdiction under the Family Law Act 1975 (Cth). It could properly be seen as more advantageous for such issues to be determined in the Family Court, as a specialist court, than in the Equity Division of this Court. The Federal Court has no such advantage over this Court in cases involving commercial and corporation issues such as those in the present proceedings.
In Perpetual Trustee Company Ltd v Batt [2014] NSWSC 1211, Robb J pointed out that although a determination that it is in the interests of justice to transfer proceedings to another court is not discretionary, the process is, nevertheless, an evaluative one which may involve what his Honour described as (at [44]):
[A]n intuitive weighing of different factors and considerations, which do not necessarily have any direct relationship or connection the one with the other.
His Honour went on to say at [45]:
There may be many cases where, in practical reality, the ability to make fine calibrations becomes illusory, and the court should accept that the courts of the competing forums are equally appropriate, in which case, as Brereton J said in Valcevski at [70], the initial choice may have some significance. It would be unfortunate if parties to proceedings in Australian courts were encouraged to pursue cross vesting orders based upon the notion that the making of such orders is compulsory if the court can be persuaded that, on a miniscule balance, another forum is more appropriate than the forum in which the proceedings were commenced.
In my view, it would be equally unfortunate if the Court were to give any encouragement to a party which has pursued a claim by way of separate proceedings in a court of its own choice rather than by way of cross-claim, by inquiring too minutely into whether that other court is, by some featherweight, the "more appropriate" forum. In my view, the substance of the matter is that both Courts are equally well placed to deal with the proceedings and all the claims made by the parties.
In my opinion, the institution of separate proceedings is always apt to result in additional costs being incurred compared with bringing a claim by way of cross-claim in the original proceedings. In those circumstances, having regard to the history that I have set out, the interests of justice require that the proceedings continue in this Court as the first Court to embark on determining the disputes between the parties.
Accordingly, I must refuse the liquidators' application for transfer and I see no reason why costs should not follow the event.
The orders of the Court are therefore:
Order that the liquidators' notice of motion filed 6 April 2017 be dismissed.
Order that the liquidators pay the plaintiff's costs of the notice of motion.
[2]
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Decision last updated: 13 July 2017