Mortimer v Opes Prime Stockbroking Limited

Federal Court of Australia|2009-07-01|Before: McKerracher J

INTRODUCTION 1 There are two applications before the Court. The first in time is the applicants' application for leave nunc pro tunc to proceed against the first respondent (Opes Prime) (which is both in liquidation and has receivers and managers appointed) and also against the fourth respondent (Green Frog), a subsidiary of Opes Prime. Green Frog is also in liquidation. Leave was sought on the basis that the applicants will not, without the leave of the Court, enforce any judgment obtained against either Opes Prime or Green Frog if leave to proceed is granted. Leave was not sought by the applicants prior to commencing proceedings. Leave on that basis is unopposed by the liquidator but the position of the receiver is more complex. For reasons expressed below, the leave issue will be deferred. The second application is the motion of the second and third respondents (ANZ) to transfer the proceeding to the Victoria District Registry of this Court pursuant to s 48 of the Federal Court of Australia Act 1976 (Cth) (the Act). These reasons deal with the transfer motion.

STATUTORY FRAMEWORK 2 Section 48 of the Act provides: The Court or a Judge may, at any stage of a proceeding in the Court, direct that the proceeding or a part of the proceeding be conducted or continued at a place specified in the order, subject to such conditions (if any) as the Court or Judge imposes. 3 In addition O 10 r 1(2)(f) of the Federal Court Rules provides that the Court or a judge may: 1 Directions hearing - general (2) Without prejudice to the generality of subrule (1) or (1A) the Court may: … (f) direct that the proceeding be transferred to a place at which there is a Registry other than the then proper place. Where the proceeding is so transferred, the Registrar at the proper place from which the proceeding is transferred shall transmit all documents in his charge relating to the proceeding to the Registrar at the proper place to which the proceeding is transferred;

ISSUES ON THE CURRENT PLEADING 4 In Beconwood Securities Pty Ltd v Australia and New Zealand Banking Group Ltd [2009] FCA 131 at [2]-[6] his Honour succinctly outlined Beconwood's claims against the respondents to those proceedings. An examination of the outline by his Honour of the complex claims reveals that in many respects the claims are similar to the claims brought by the applicants in these proceedings. There are some differences in this application but those differences essentially are, as I perceive it, differences arising by reason of the proper legal characterisation of the relationships and circumstances arising on the evidence. Of course each applicant's position will differ to some extent but the extent to which there are common issues between not only the Beconwood proceedings and these proceedings but also proceedings in other States is very significant. The common features substantially outweigh the differences. 5 The Beconwood proceedings were due to proceed to trial on 10 March 2009. It has been evident from media reports that the trial dates were vacated pending the outcome of prospective negotiations. In light of that development I invited the parties to consider whether they wished to make any further brief written submissions as to the effect of the Beconwood trial. ANZ contends that the adjournment of the Beconwood proceeding enhances its transfer argument as the gap between progress in the various cases will narrow, especially if a settlement can not be achieved. The applicants contend to the contrary. The applicants submit that the circumstances leading to the adjournment of the Beconwood proceedings, (those circumstances being a proposed scheme of arrangement to settle the various cases concerning the collapse of Opes Prime) makes it appropriate to adjourn ANZ's transfer application until the outcome of the proposed Scheme is known. Alternatively it is argued that the adjournment justifies a 'wait and see' approach for which the applicants have advocated. In my view it may well be that a period of time to permit negotiation on complex matters may be desirable but in relation to the transfer application, there is no reason to think that such a period would not be as readily afforded in the Victoria District Registry as the Western Australia District Registry. I have considered these submissions but in the end consider that the ultimate disposition of the transfer application is unaffected by the recent developments. In the absence of much more information about what may or may not ensue in consequence of the adjournment, in my view the Beconwood adjournment is more appropriately treated as a neutral factor on the transfer issue. Submissions have also been received from the liquidators of Opes Prime in light of the events leading to the adjournment of Beconwood asking that the matter be stood over, save for the delivery of this decision. The liquidators submit these orders should be made: (a) The proceeding is listed for mention at 10.00 am on the date most convenient to the Court after 30 June 2009; (b) All current interlocutory orders and processes be suspended until further order; (c) The parties have liberty to apply on 72 hours notice; (d) Costs are reserved. 6 Those submissions will be on the Court file but for reasons which will become clear, I will not rule on those submissions.

OTHER PROCEEDINGS 7 There are also proceedings of a similar nature to these in several courts in several States. All of the proceedings arise from the collapse of the Opes Prime Group of companies. They involve characterising the legal effect of standard arrangements entered into between Opes Prime (stockbrokers) and its customers (who include the applicants) and alleged liability of ANZ arising out of those arrangements. 8 I am informed by Mr Donaldson SC for ANZ that motions will be or have been brought in all of the proceedings to which ANZ respond, to transfer the proceedings to the Victoria District Registry of this Court. The objective of doing so is to increase the likelihood of the proceedings being managed by one judge. 9 In addition to Beconwood, Finkelstein J is also managing in his Honour's docket a class action Imobilari Pty Ltd v Opes Prime Stockbroking Ltd. Contemporaneous directions hearings in the matters raising the same issues have been taking place in the Victoria District Registry. 10 There is also a third similar case which has been commenced before Finkelstein J, namely, CMG Equity Investments Pty Ltd v Australia and New Zealand Banking Group Ltd. 11 In New South Wales there are two proceedings pursued by Opes Prime customers - Melewar Steel Ventures Pty Ltd v ANZ Nominees Ltd and Terpu v ANZ Nominees Ltd. The proceedings are at a preliminary stage in Melewar. An application to transfer the proceedings was stood over by Windeyer J so that it could be revisited if cross-vesting proved to be in the interests of justice as the case progressed. 12 There is also the matter of Solamind Pty Ltd v Australia and New Zealand Banking Group Limited in the Supreme Court of Victoria. I am informed that Judd J delivered an ex tempore judgment on 4 March 2009 allowing the transfer of those proceedings to the Victoria District Registry of this Court. 13 I am told that there are also proceedings brought in the Supreme Court of Queensland of a similar nature. 14 There seems a significant likelihood that most of the claims in other States will be transferred to the Victoria District Registry of this Court.

THE PRINCIPLES 15 The appropriate principles arising in this motion are not controversial. The relevant principles presently arising, in my view are these: · There must be sound reason to direct that the proceeding be conducted or continued elsewhere. If the party commencing the proceeding chose the place capriciously the Court would be justified in giving no weight to the choice of place. The balance of convenience is important but its weight must vary from case to case. What needs to be ascertained is where the case can be conducted or continued most suitably bearing in mind the interests of the parties, the ends of justice and determination of the issues between them, and the most efficient administration of the Court (National Mutual Holdings Pty Ltd v The Sentry Corporation (1988) 19 FCR 155 at 162). · The location of parties and witnesses, the place where the cause of action arose and the convenience of the Court are all factors (National Mutual 19 FCR 155 at 162, Wang v Australian China Marketing Co Pty Ltd [2001] FCA 13 at [21], Aquila Resources Ltd v Pasminco Ltd [2004] FCA 39 at [27]-[34] and [42]-[43]. · Typically there is no factor that is determinative but rather it is necessary to weigh all the relevant factors that might connect the proceedings to one jurisdiction or the other (Australian Competition and Consumer Commission v Fila Sport Oceania Pty Ltd [2003] FCA 430 at [19]). · The national character of the Court including its capacity to make flexible arrangements for the taking of evidence and the receipt of submissions is relevant. (Australian Competition and Consumer Commission v Virgin Mobile Australia Pty Ltd [2002] FCA 1239). · The question of which District Registry should conduct the proceedings does not raise matters of high principle. Essentially it is a matter of case management and proper recognition of the legitimate interests of each of the parties reflected in the balance of convenience as between them and the convenience of the Court and any economies and efficiencies which may attach to one choice or the other (Lamb v Hog's Breath Company Pty Ltd (No 1) [2007] FCA 49). · There may be flexibility - one Registry could conduct pre-trial management while allocating the trial to a judge in another Registry (Hog's Breath at [10]). · There is no burden of proof governing the exercise of the discretion in s 48 of the Act (National Mutual 19 FCR 155 at 162). · The existence of related proceedings which may be case managed jointly may be important (Wyllie Group Pty Ltd [2000] FCA 1382 at [14]-[19]). 16 Factors which may be relevant for consideration include: · the residence of the parties, the residence of the witnesses, the expense and prejudice likely to the respective parties, the likelihood of delay being a significant consideration, whether there is, in respect of the competing suggestions as to venue, any possibility of an interference with a fair trial of the hearing, the balance of convenience in regard to all considerations (Jacobs v Claudius Enterprises Pty Ltd [1985] ATPR 40-511). 17 To these points I would add, perhaps an obvious point, that a judge to whom management of a case has been allocated will be reluctant to transfer that duty to another judge unless there is good reason to do so.

ARGUMENT ON THE TRANSFER MOTION 18 At the hearing of the transfer motion argument in support was developed by ANZ and against it, by the applicants. Neither the liquidator nor the receiver opposed the transfer. 19 Mr Bennett, counsel for the applicants stressed those features of the pleading advanced for these applicants which are not advanced in some or any of the other proceedings. Putting aside any question of whether the case will still be run on that basis when it comes to trial, it seems to me that those individual characteristics of the pleaded case in these proceedings essentially go to conclusions of law which might be reached from the established facts. It was not clear to me that the unique features of this case gave rise to any practical ramifications in terms of its management until trial. A single judge managing a series of cases which have very common features will be well placed to identify different features arising in any particular case and to make whatever provision is required to deal with the differences just as provision may be made for the common claims. 20 Mr Bennett correctly submitted that there is no suggestion that this proceeding was instituted in the Western Australia District Registry capriciously. A significant proportion of the applicants reside or (in the case of companies) were incorporated and have registered offices in Western Australia. An approximately equal number of applicants reside in Victoria. Mr Bennett and the instructing solicitors, Lavan Legal are based in Perth. They have jointly undertaken all preliminary research and prepared all court documentation in relation to the proceeding. Nevertheless there would be nothing to preclude Mr Bennett who is experienced counsel, appearing in the Victoria District Registry as counsel at any significant hearing or appearing by video-link on general interlocutory applications. There is no reason to believe that in interlocutory applications counsel appearing by video is at any significant disadvantage, if at all. Lavan Legal is a large firm. The applicants, importantly, have the benefit of litigation funding. It is common ground that the applicants in the Beconwood proceedings as with the applicants in this proceeding are being funded by a litigation funder, IMF (Australia) Ltd (IMF). Any additional costs occasioned by a transfer will not be directly born at least in the first instance by the applicants themselves. 21 Mr Bennett submits that as they have not acted capriciously in their choice of Registry they should not in the absence of 'compelling reasons' be deprived of their choice of venue. In my respectful view this places the test too highly. The real question is where the case can be conducted or continued most suitably bearing in mind the interests of all parties, the ends of justice in the determination of the issues between them and the most efficient administration of the Court. 22 It is also true that the respondents, their representatives and the external administrators of the companies in liquidation are located in Melbourne, but I accept the submission of the applicants that this should not carry great weight in balancing the relevant factors. 23 The applicants strenuously oppose consolidation of the proceedings. That opposition can be maintained. I make it clear that I am not assuming one way or another that there will be any consolidation. They also contend that the logical and practical location for the trial is Perth. However, the issue as to where the trial can most efficiently be held is not the relevant consideration in the transfer application. The proceedings are a substantial distance from trial. There is a statement of claim and foreshadowed challenges to it. 24 If the proceedings are transferred to the Victoria District Registry it does not necessarily follow that the trial or the entirety of the trial would be conducted there. It is possible that part of the trial be conducted in Perth, and part of the trial be conducted in Melbourne, or elsewhere. The real issue is how the proceeding can most efficiently be managed between now and trial (as well as at trial) given the substantial commonality of issues between this and other litigation presently and/or likely to be transferred to the Victoria District Registry. 25 The number of and location at which there are documents is evenly balanced. Both the applicants and ANZ have adduced evidence that they have significant numbers of documents relevant to the proceedings located in each of Western Australia and Victoria. As the applicants observed, however, there is no reason on the evidence as to why the parties to the proceeding cannot agree on an electronic discovery protocol in accordance with Practice Note No 17. 26 The reliance by ANZ on a Victorian law provision in the Securities Lending and Borrowing Agreement (SLBA) as a basis for the proceeding being transferred to the Victoria District Registry, taken alone is not a significant factor. There is no particular reason why a Court sitting in Perth could not determine the effect of Victorian law in relation to the dispute. The clause is not an exclusive jurisdiction clause but its content did disclose an intention to prefer any dispute arising under the contract to be conducted in a court within the specified State: Australian Co-operative Foods Ltd & Anor v National Foods Milk Ltd [1998] FCA 376 and Aquila Resources Limited [2004] FCA 39 at [36]- [41]. Notwithstanding this, however, such a clause in a change of venue application does not carry significant weight where federal legislation is involved: Plantagenet Wines Pty Limited v Lion Nathan Wine Group Australia Limited [2006] FCA 247 at [61].

APPLICATION OF THE PRINCIPLES 27 As observed by Carr J in Wyllie Group Pty Ltd v ANZ Securities Ltd [2000] FCA 1382 at [19]-[20] in a similar situation: Given the existence of six very similar proceedings, I think that it is in the interests of justice and good case management for the same judge to oversee the interlocutory steps so that all of the matters proceed together to trial. For example, orders could be made for discovery on common issues, expert evidence and the obtaining of documents from third parties. Even at an interlocutory stage there could be a saving in judicial resources with one judge dealing with the interlocutory matters rather than two. There would certainly be a saving of that type if all of the matters were heard at the one hearing. In terms of all three main factors identified by the Full Court in National Mutual Holdings the existence and current status of such very similar proceedings in the Victoria Registry weigh, in my opinion, very heavily indeed in favour of transfer from Western Australia to Victoria. 28 To actually determine whether these matters can sensibly be dealt with in a coordinated way, or common issues dealt with commonly and uncommon issues dealt with in a coordinated way is best dealt with by a single judge who has significant familiarity with the relevant issues. Consistency in the administration of justice and efficiency in the use of judicial resources suggest so far as possible that one judge should be responsible in determining what are substantially the same issues in these proceedings. 29 Case management considerations suggest that one judge should manage the interlocutory aspects of the case so as to achieve the most efficient and cost effective resolution of common issues. If one judge manages the various proceedings or at least these and other proceedings in the Victoria District Registry, that may also assist in preventing or avoiding oppressive or unnecessary cross-examination of ANZ witnesses on multiple occasions, the risk of inconsistent outcomes with inconsistent findings and the prospect of diverse appeals. 30 Significantly, a transfer may well also assist in a saving of time and costs for the applicants given the Court's familiarity with the relevant issues. 31 These factors taken alone may not be sufficient if it would cause significant prejudice to the applicants, however, the applicants' solicitors are apparently the largest independent Western Australian law firm. They have appeared by video-link in related Court proceedings on behalf of other Opes Prime customers. As the applicants are funded by the litigation funder IMF, the immediate costs of running interstate litigation are not directly visited on the applicants personally.

CONCLUSION ON TRANSFER 32 The predominant consideration on this motion is that the case can be continued most suitably in the Victoria District Registry, bearing in mind the interests of the parties, the ends of justice and determination of the issues between them, and the most efficient administration of the Court.

LEAVE 33 Although the liquidator was prepared to consent to the applicants' motion for leave nunc pro tunc on the conditions sought, the receiver also wished to appear on a limited basis. The receiver wished to pursue by way of cross-claim, claims for debts allegedly owing by certain of the applicants. The receiver raised this point on the morning of the hearing and there was inadequate opportunity for the parties to consider their positions. I heard argument and invited the parties to confer and if possible to file a consent minute in relation to the question of leave. That has not been possible. 34 I will not at this stage, in light of my intended disposition of the transfer application, deal with the arguments concerning that issue although I did give the parties an additional eight days to file written submissions in relation to it. As I propose to transfer the proceeding to the Victoria District Registry, the parties can take up the issue in that Registry. No doubt the liquidators will also ask that there be a period of time for all parties to negotiate as their recent submissions suggest. It is preferable that the conduct of the proceedings be supervised in their entirety in the Victoria District Registry. 35 For these reasons the following orders will be made: 1. Pursuant to section 48 of the Federal Court of Australia Act 1976 (Cth), the proceeding be transferred to the Victoria District Registry of the Federal Court of Australia. 2. The costs of this application be costs in the proceeding. 3. The applicants' application for leave to commence proceedings against the first and fourth respondents be adjourned. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.

Associate: Dated: 13 March 2009 Counsel for the Applicants: ML Bennett with IR Freeman

Solicitor for the Applicants: Lavan Legal

Counsel for the Receivers of the First Respondent: JC Vaughan

Counsel for the Liquidators of the First Respondent: RD Strong

Solicitor for the First Respondent: Deacons

Counsel for the Second and Third Respondents GR Donaldson SC with PD Crutchfield

Solicitor for the Second and Third Respondents: Minter Ellison

Mortimer v Opes Prime Stockbroking Limited (ACN 086 294 028) (Administrators Appointed) (In Liquidation) [2009] FCA 227

PRACTICE AND PROCEDURE - leave to commence proceedings against company in liquidation - transfer of proceeding - whether proceeding should be transferred from Western Australia District Registry to Victoria District Registry - considerations include the interests of justice, efficiency and administration of the Court - similar proceedings in Victoria District Registry - proceedings all arise from collapse of Opes Prime Group Companies Held: Transfer allowed. Corporations Act 2001 (Cth) ss 761A Federal Court of Australia Act 1976 (Cth) s 48 Federal Court Rules O 10 r 1(2)(f) Aquila Resources Ltd v Pasminco Ltd [2004] FCA 39 Australian Competition and Consumer Commission v Fila Sport Oceania Pty Ltd [2003] FCA 430 Australian Competition and Consumer Commission v Virgin Mobile Australia Pty Ltd [2002] FCA 1239 Australian Co-operative Foods Ltd & Anor v National Foods Milk Ltd [1998] FCA 376 Beconwood Securities Pty Ltd v Australia and New Zealand Banking Group Ltd [2009] FCA 131 Jacobs v Claudius Enterprises Pty Ltd [1985] ATPR 40-511 Lamb v Hog's Breath Company Pty Ltd (No 1) [2007] FCA 49 National Mutual Holdings Pty Ltd v The Sentry Corporation (1988) 19 FCR 155 Plantagenet Wines Pty Limited v Lion Nathan Wine Group Australia Limited [2006] FCA 247 Wang v Australian China Marketing Co Pty Ltd [2001] FCA 13 Wyllie Group Pty Ltd v ANZ Securities Ltd [2000] FCA 1382 ANDREW KENNETH BRUCE MORTIMER, PETER MACAULAY, GEORGE SAKALIDIS, IAN DONALD FINCH, GUN CAPITAL MANAGEMENT PTY LTD (ACN 091 221 546), NATHAN BRUCE MCMAHON, DEBRA LEE MCMAHON, KINGSREEF PTY LTD (ACN 083 553 968), RAVINDRAN GOVINDRAN, WILLIAM JAMES HAMERSLEY, BEJJAL PTY LTD (ACN 102 541 917), I & B FELDMAN & ASSOCIATES PTY LTD (ACN 064 654 619), VASILIOS SARIS AND STAVROULA SARIS, GOLDSTEIN ENTERPRISES PTY LTD (ACN 062 508 267), D & F (WA) PTY LTD (ACN 108 063 001), GARY WILLIAM DOUTCH, JOHN WALLACE DOUTCH, JUSTIN AARON DOUTCH, MALCOLM JAMES DOUTCH, RHIANNON LILLIAN JESSIE DOUTCH, RAYMORE JOHN MILLARD, JAMES NORMAN FORD, MYLES EFREM SPICER, MATHEW JOHN KENNEDY AND BRIONY KENNEDY, GERARD LYNTON GARDINER, HARTKON INVESTMENTS PTY LTD (ACN 007 168 167), ANDREW MARK WALTERS, STARBUCK CAFE PTY LTD (ACN 075 020 478) AND MEDCO FINANCIAL SERVICES PTY LTD (ACN 073 438 105), NORTON LESLIE GOLD, KEVIN FRANCIS ANGLIN, KAB INVESTMENTS PTY LTD (ACN 103 037 789), MANDOLIN PTY LTD (ACN 050844 098), BURBAY PTY LTD (ACN 093 402 647), GRATITUDE HOLDINGS PTY LTD (ACN 118 246 718), DAVID JOHN VINCENT, MATCH CORP PTY LTD (ACN 087 113 264), MILLWEST INVESTMENTS PTY LTD (ACN 098 422 809), CYGNET CAPITAL PTY LTD (ACN 103 488 606), KATONE INVESTMENTS PTY LTD (ACN 106 944 441), MIKONOS INVESTMENTS PTY LTD (ACN 083 309 095), SEIVAD INVESTMENTS PTY LTD (ACN 103 065 443), CYBERSPACE INVESTMENTS PTY LTD (ACN 090 912 753), MILLCREST PTY LTD (ACN 008 742 210), MAX GUNDELL PTY LTD (ACN 106 773 791), MICHAEL ANDREW GREENWOOD AND BELINDA GAYE CHRISTIAN-GREENWOOD, DENNIS G PAMPLIN PTY LTD (ACN 100 582 750), SHOWCAST PTY LTD (ACN 103 507 768), JOYZON INVESTMENTS PTY LTD (ACN 125 911 499), MARAT BASYROV, KATAPUNOZ PTY LTD, DAVY DEVERAJ, MINING INVESTMENTS LIMITED, BASE JUMPER PTY LTD, ANTHONY HOWARD LEIBOWITZ, FAIR CHOICE LTD, SABER LIMITED, SANPEREZ PTY LTD (ACN 001 677 872), ACESTAR CAPITAL INCORPORATED, BO TAN TAN, SIEW ANN TEO, KIN KHYE CHUA, DAPHNE BENG HUI ONG, SIEW LIAN NEOH, LAI CHEN CHEONG, JUI CHIEW TAN, and WARRIOR FINANCE PTY LTD (ACN 104 500 969) v OPES PRIME STOCKBROKING LIMITED (ACN 086 294 028) (ADMINISTRATORS APPOINTED) (IN LIQUIDATION), AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED (ACN 005 357 522), ANZ NOMINEES LIMITED (ACN 005 357 568) and GREEN FROG NOMINEES PTY LTD (ACN 089 972 136) (IN LIQUIDATION)

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