Midori International Pty Ltd v Prentice

REASONS FOR JUDGMENT 1 The cross-claimant in the first cross-claim ("the Trustee") has applied by way of notice of motion for leave to serve the first cross-claim and an accompanying pleading on Barry Davies, the fourth cross-respondent, outside the Commonwealth. The motion is brought pursuant to Federal Court Rules, Order 8, r 2(2). The sub-rule reads as follows: "2(2) Where the Court is satisfied of the following matters- (a) that the proceeding is a proceeding in which the Court has jurisdiction; (b) that the proceeding is a proceeding to which rule 1 applies; and (c) that the applicant has a prima facie case for the relief which he seeks, the Court may, by order, grant leave to serve originating process outside the Commonwealth under this Order." 2 In the first cross-claim the Trustee seeks a declaration that he is the beneficial owner of all shares issued in Midori International Pty Ltd ("Midori"), which is the first cross-respondent to the first cross-claim. The cross-claim also seeks an order that Midori rectify the Register of Members maintained by it, to record the Trustee as the legal and beneficial owner of the shares. 3 The cross-claim pleads that on 13 September 1991, one share in Midori was issued to Peter Tsu (the second cross-respondent) and one share was issued to Gert Berglund (the third cross-respondent). It is alleged that at the time the shares were allotted to them, Mr Tsu and Mr Berglund each executed in favour of the bankrupt (the fifth cross-respondent) a declaration of trust and a transfer of the share. This is said to have produced the consequence that the bankrupt became the beneficial holder of the shares and that therefore the shares vested in the Trustee from the date of commencement of the bankruptcy. 4 No relief is sought directly against Mr Davies, who resides in the United Kingdom. However, it appears that Mr Tsu has asserted that Mr Davies is a shareholder in Midori and that the bankrupt was never a shareholder in that company. As I understand the Trustee's case, it is sought to join Mr Davies as a party to the cross-claim in order to ensure that he is bound by any declaration and orders made by the Court. 5 Mr Johnson, who appears for the Trustee, has referred to a number of paragraphs of FCR, Order 8, r 1, in order to show that r 2(2)(b) is satisfied. It is difficult to see what relevance a number of these paragraphs have to the proceedings. It is, however, necessary to refer only to FCR, Order 8, r 1(g). This provides that "originating process" may be served outside the Commonwealth of Australia: "(g) where the proceeding is properly brought against a person served or to be served in the Commonwealth and the person to be served outside the Commonwealth is properly joined as a party to the proceeding". In my opinion, the cross-claim is an "originating process" for the purposes of FCR, Order 8, r 2(2): cf Fiorentino v Irons (unreported 12 November 1997, Foster J.) 6 The cross-claim has properly been brought against the four cross-respondents who have been served within the Commonwealth. Mr Johnson has not clearly explained why Mr Davies should be regarded as a person "properly joined as a party to the proceeding". However, I think that, in the light of the evidence suggesting that Mr Davies might be entitled to an interest in the shares, he "is a person whose joinder as a party is necessary to ensure that all matters in dispute in the proceeding may be effectually and completely determined and adjudicated upon": FCR, Order 6, r 8(1)(b). Unless Mr Davies is bound by any orders, it is possible that the proceedings will not finally resolve the question of ownership of the shares. 7 It is also necessary, under r 2(2)(c), for the Trustee to establish that he has a prima facie case for the relief which he seeks. I am satisfied on the documentary and other evidence adduced by the Trustee that a prima facie case for the relief sought in the cross-claim has been made out. 8 Accordingly, I grant leave to the Trustee to serve the cross-claim on Mr Davies outside the Commonwealth. I certify that this and the preceding eight (8) paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sackville