Plaintiff v Defendants

2 James and various entities associated with him are the applicants in separate proceedings commenced by James against Eric and others in the Victorian Registry of the Federal Court (the 'Federal Court Proceeding').

3 Eric relies upon four affidavits sworn by his instructing solicitor, Yu Chen, made 24 November 2023, 30 November 2023, 18 December 2023 and 8 January 2024. He also relies upon an email from the solicitor for the third respondent in the Federal Court Proceeding consenting to the proposed transfer and submissions filed by James in the Federal Court in support of an unsuccessful application by James to discharge a freezing order earlier made against him in the Federal Court Proceeding.

4 James relies on an affidavit of his solicitor, Bowen Qi (the 'Qi Affidavit') made 21 December 2023.

6 I have had regard to each of the affidavits and exhibits relied upon by the parties and their written and oral submissions. Any failure to refer specifically to any aspect of that material does not mean it was not taken into account.

7 On 7 April 2022, YHA, a company controlled by James, commenced proceedings against Eric seeking to recover moneys alleged to be owing by Eric to YHA pursuant to a written loan agreement dated 21 March 2019 (the '21 March 2019 Loan Agreement').

8 The County Court Proceeding is fixed for trial in the County Court on 31 January 2024 on an estimated duration of one to two days.

9 On 23 August 2023, James, along with two other associated entities, Ausea Capital Investments Pty Ltd and Australia Bai Fu Xin (International) Pty Ltd, as applicants, commenced a proceeding against Eric, Tasman Development Holdings Pty Ltd ('TDH'), Xin Ran (Yvonne) Liu and Northwalker Realty Pty Ltd ('Northwalker Realty'). TDH is a company controlled by Guoqiang Zhang, who is apparently allied to Eric.

10 In the County Court Proceeding and in this proceeding, James[2] is represented by Moray & Agnew solicitors. In the Federal Court Proceeding, James is represented by Gilbert + Tobin solicitors. Eric is represented in all three proceedings by Juris Cor Legal, solicitors, who also act for TDH in the Federal Court Proceeding. Until 20 November 2023, Juris Cor Legal also acted for Yvonne Liu and Northwalker Realty in the Federal Court Proceeding. Due to a perceived conflict of interest, Ms Liu and Northwalker Realty are now separately represented.

11 It is common ground that the County Court Proceeding ought not be removed to this Court unless the Court was satisfied that it was appropriate to transfer that proceeding, once removed into this Court, to the Federal Court.

12 Accordingly, the gist of the dispute between the parties is whether the County Court Proceeding should be transferred to the Federal Court.

13 In that regard, Eric relies upon s 5(1) of the Commonwealth Act which relevantly provides:

(1) Where -

(a) a proceeding (in this subsection referred to as the relevant proceeding) is pending in the Supreme Court of a State or Territory [which assumes removal pursuant to s 8(1) of the Victorian Act] (in this subsection referred to as the first court)

(b) it appears to the first court [that that -

(i) the relevant proceeding arises out of or is related to another proceeding pending in the Federal Court or the Federal Circuit and Family Court of Australia (Division 1) and it is more appropriate that the relevant proceeding be determined by the Federal Court or the Federal Circuit and Family Court of Australia (Division 1);

(iii) it is otherwise in the interests of justice that the relevant proceeding be determined by the Federal Court or the Federal Circuit and Family Court of Australia (Division 1);

the first court shall transfer the relevant proceeding to the Federal Court or the Federal Circuit and Family Court of Australia (Division 1) as the case may be.

14 The subject matter and procedural steps taken in the County Court Proceeding and the Federal Court Proceeding are critical to the appropriateness of any transfer. Accordingly, it is necessary to refer to them in some detail in their relevant chronological context.

Steps taken in the County Court Proceeding and the Federal Court Proceeding

15 As noted above, the County Court Proceeding was commenced by James' company, YHA on 7 April 2022. The claim is a narrow one; YHA seeks to recover amounts alleged to be owing by Eric under the 21 March 2019 Loan Agreement, alleging that the loan was repayable on 21 September 2020, and a demand for repayment was made on 22 October 2020.

16 The claim seeks recovery of the principal sum advanced of $500,000 plus interest at a rate of 24% per annum, compounded monthly. The amount outstanding as at 7 April 2022 by way of interest was said to be $235,152.80.

17 In November 2022, Eric retained Juris Cor Legal to act for him in the County Court Proceeding.

18 On 18 January 2023, Eric filed a defence and counterclaim. By orders made 1 March 2023, the County Court Proceeding was fixed for trial on 31 January 2024.

19 On 22 May 2023, Eric filed a defence and an amended counterclaim in the County Court Proceeding. He admits that he signed the 21 March 2019 Loan Agreement but alleges that it was varied on or about 16 December 2019 to the effect that YHA could only recover from any investment returns derived from a project to develop land at Wolli Creek in New South Wales (the 'Wolli Creek Project').

20 Alternatively, Eric seeks orders by way of counterclaim to the effect that he relied upon various representations made on or about 20 March 2019, 22 November 2019, and 16 December 2019 which had the effect of giving rise to the alleged variation.

21 The amended counterclaim includes pleas to the following effect:

(a) At the time of entering into the 21 March 2019 Loan Agreement, James and Eric and companies controlled by them were involved in the Wolli Creek Project, the land of which was owned by TFM Chatswood Pty Ltd ('TFM Chatswood') which was jointly owned by James and Eric.[3]

(b) TFM Chatswood had borrowed funds for the project from Balmain Fund Administration Limited (the 'Balmain Loan Agreement') and was required as from 17 December 2018 to pay the sum of $1.5 million to discharge the Balmain Loan Agreement.

(c) On 20 March 2019, James represented to Eric that 'he' could only make a contribution to the amount required under the Balmain Loan Agreement by structuring the contribution as a loan to Eric (the 'Contribution Representation').

(d) Eric relied on the Contribution Representation in signing the 21 March 2019 Agreement and believed that James' contribution and that of his companies to the debt under the Balmain Loan Agreement would be made later and would in that process discharge the liability of Eric.

(e) TFM Chatswood entered into a loan facility agreement with QREF Senior Debt No. 29 Pty Ltd ('Qualitas') pursuant to which Qualitas agreed to provide a loan to TFM Chatswood of up to $44,900,000 (the 'Qualitas Facility') in respect of which TFM Chatswood drew down $4,476,083.43.

(f) By 22 November 2019, Qualitas were alleging that TFM Chatswood was in default under the Qualitas Facility and a contribution was required of $312,410.80 sourced from equity funding, to be made in reduction of the facility with the likelihood that if there was a default and Qualitas exercised its security over the Wolli Creek land, the investors including Eric (and James) would lose their investment.

(g) That Eric did not have the funds to meet Qualitas' demands.

(h) On or about 22 November 2019, James represented to Eric that he (James) would not put any more funds into the Wolli Creek Project unless Eric gave control of the project to James, in which case James would repay all moneys contributed to the project by Eric.

(i) On 15 December 2019, Eric was provided with change of control documents which included a document entitled 'Irrevocable Authority to pay' (the 'Change of Control Documents').

(j) On 16 December 2019, the chief financial officer of a company controlled by James spoke to Eric and told Eric that unless he signed the Change of Control Documents, James would not contribute any further money in which case the Wolli Creek Project would fail.

(k) Also on 16 December 2019, James informed Eric that if Eric signed the change of control documents, any amount repayable under the 21 March 2019 Loan Agreement would only have to be repaid out of the proceeds of the Wolli Creek Project (the 'Loan Repayment Representations') but that if he did not sign them, then James would not put any more funds in, in which case the Wolli Creek Project would fail (the 'Change of Control Representations').

(l) Eric signed the Chang of Control Documents in reliance on the Contribution Representation, the Loan Repayment Representations and the Change of Control Representations.

(m) The Contribution Representation, the Loan Repayment Representations and the Change of Control Representations were misleading and deceptive, or unconscionable entitling Eric to relief under the Australian Consumer Law (the 'ACL') and the Australian Securities and Investment Commission Act 2001 (Cth) (the 'ASIC Act') including to the effect that the 21 March 2019 Loan Agreement be amended to limit its recourse to the proceeds of the Wolli Creek Project.

(n) Further or alternatively, the 21 March 2019 Loan Agreement was varied to include a term limiting recourse to the proceeds of the Wolli Creek Project.

22 By way of reply to the defence and amended counterclaim, James, inter alia, denies the making of the representations.

23 On 7 August 2023, James and various other entities controlled by him, commenced the Federal Court Proceeding against Eric, TDH, Ms Liu and Northwestern Realty. In the statement of claim, in which he makes allegations of misleading and deceptive conduct and unconscionable conduct in respect of the proposed development of properties situated in Campsie, New South Wales (the 'Campsie Project') and the Wolli Creek Project.

24 More specifically, the allegations made by James include allegations of:

(a) a failure to disclose a valuation report for the land the subject of the Campsie Project;

(b) representations regarding the proposed revenue costs, profit and expected return on investment in relation to the Campsie Project;

(c) representations regarding a proposed buyer of the applicant's interest in the Campsie Project by the respondents; and

(d) representations made by Eric and Ms Liu regarding presales of properties in relation to the Wolli Creek Project which were made in the context of TFM Chatswood considering whether to enter into the Qualitas Facility, which was to be guaranteed by, inter alios, James and Eric.

25 The various representations and conduct concerning the Campsie Project occurred between November 2018 and December 2018, whilst the representations as to presales made in relation to the Wolli Creek Project were made from late February 2018 to about 28 February 2019.

26 James alleges that he relied upon the various representations in entering into various agreements with Eric and companies controlled by him, relating to both the Campsie Project and the Wolli Creek Project, including relevantly by guaranteeing the Qualitas Facility.

27 Relevantly, the statement of claim includes a section titled 'D4 Defaults under the Qualitas Loan Agreement', where James pleads material facts to the following effect:[4]

(a) Between October and November 2019, Qualitas issued notices of default under the Qualitas Facility.

(b) In order to remedy the default, TFM Chatswood was required to make further equity contributions of $312,410.80 before 15 November 2019 and $817,664 before 31 January 2022.

(c) In or about late 2019, Eric represented to James that he (Eric) did not have the capacity to fund the remediation of any default and that the only way in which James could recover his investment was to take over the Wolli Creek Project and that if James did so, James could cause any returns from the Wolli Creek Project to be applied towards the payment of a loan described as the 'First Ausea Loan' which was a loan made by Ausea, an entity controlled by James, to TFM Chatswood of $12,400,000, the repayment of which was subject to a guarantee and indemnity provided by Eric.

(d) That on or about 16 December 2019, in order to give effect to the arrangement as described in (c) above, James and Eric, among others, entered into a Heads of Agreement relating to the Wolli Creek Project; James took over the management of TFM Chatswood from Eric and Eric resigned as a director of TFM Chatswood.

28 On 30 August 2023, a mediation was held in relation to the County Court Proceeding. The matter did not resolve.

29 On 1 September 2023, the Federal Court Proceeding was listed for a first directions hearing before O'Callaghan J. His Honour made orders for the provision of a defence and cross-claim by 1 November 2023. At the directions hearing, senior counsel for Eric said, in effect, that he had been recently retained and that the Federal Court Proceeding was one of a number of pieces of litigation between James and Eric or parties controlled by them which included the County Court Proceeding. Senior counsel advised that he would assess the allegations made in the concluded proceedings and the current County Court Proceeding to see whether they needed to be the subject of any application to be brought in the Federal Court.

30 On 7 September 2023, the County Court made orders confirming the County Court trial date of 31 January 2024.

31 On 6 October 2023, Eric obtained a freezing order against James from Beach J in the Federal Court. The freezing order was prompted by a transfer by James of his interest in a property owned by him to his wife for no consideration on 15 September 2023 and the sale by him of a motor vehicle registered in his name and the purchase by him of another vehicle registered in the name of a corporate entity, not party to any of the earlier property development transactions between Eric and James. The freezing order was obtained on an inter partes basis; Eric submitted that there was a genuine risk of dissipation of assets arising from a combination of circumstances including the alienation occurring after the commencement of the Federal Court Proceeding, in the context of the counterclaim in the County Court Proceeding, the failure to provide any explanation as to the transfer, and in circumstances where James was the subject of a criminal conviction in China said to be attended by elements of fraud and not disclosed by James to Eric prior to them agreeing to undertake property development activities together. The alleged non-disclosure of the criminal conviction formed the basis of Eric's asserted good arguable case for damages against James arising from James' failure to disclose that conviction to Eric which is alleged to have been misleading or deceptive contrary to the ACL and the ASIC Act, which had it been disclosed would have resulted in Eric not entering into his commercial relationships with James, and sustaining losses as a result.

32 The affidavit of Eric's solicitor, Siyu Zhang made 29 September 2023 relied upon in the application for the freezing order, noted the existence of the County Court Proceeding and stated that instructions had been received to make application for the County Court Proceeding to be transferred to the Federal Court Proceeding and consolidated with the Federal Court Proceeding. That statement of intention was repeated in the submissions filed in support of the application.

33 By an interlocutory application dated 24 November 2023, James applied to have the freezing order set aside. The application was heard by O'Callaghan J on 13 December 2023. On 22 December 2023, his Honour made orders dismissing the application and provided reasons.[5] As the transcript of the hearing before Beach J and the reasons of O'Callaghan J make clear, the fact that James provided no explanation of the reasons for the transfers was influential in Beach J's making of the freezing order.

34 On 20 November 2023, Juris Cor Legal ceased to act for the third and fourth respondents in the Federal Court Proceeding.

35 On 24 November 2023, Eric commenced this proceeding by originating motion supported by the affidavit of Yu Chen made 24 November 2023. The originating motion and supporting affidavit were served on James' solicitors on 27 November 2023.

36 On 28 November 2023, Eric filed a defence and cross claim in the Federal Court Proceeding. In his cross claim, Eric pleaded matters to the effect foreshadowed at the application for the freezing order based on the non-disclosure of the conviction, alleging inter alia, that James had engaged in misleading and deceptive conduct by silence in failing to disclose a conviction in respect of an offence against him in China and that, as a consequence of that misleading and deceptive conduct, Eric was entitled to various forms of relief, including damages or the setting aside various agreements entered into by related entities.

37 On 18 December 2023, a pre-trial directions hearing was held in the County Court Proceeding. Judicial Registrar Bennett made orders, among other things, confirming the trial listed for 31 January 2024, and noted the following in 'Other Matters':

1. The Court notes that the defendant failed to provide a pre-trial information form to the Court. The Court considers this breach of its directions to be entirely unsatisfactory and disrespectful to the Court and the plaintiff.

...

1. The Court was informed for the first time during the hearing by the defendant's counsel that the defendant had filed an application on 24 November 2023 in the Supreme Court of Victoria seeking orders transferring this proceeding to that Court under s 5 of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) with a view to having further orders made transferring this proceeding from the Supreme Court to the Federal Court to have the matter heard and determined in the Federal Court together with a related proceeding in the Federal Court. The Court notes that this is the very type of information which should have been supplied by the defendant in advance of the hearing, by the provision of a pre-trial information form. Having regard to the lack of information before this Court as to the transfer application, the late filing of that application, the late notice given to this Court of that application, the fact that the plaintiff indicated that the transfer application would be opposed, the fact that it is not apparent to this Court that s 5 of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) makes provision for the transfer of a proceeding from the County Court and that there is no certainty that the transfer application will succeed, the Court considered it appropriate to make the orders below for the continued preparation of the matter for trial in this Court on 31 January 2024.

Legislative criteria and applicable authorities

38 Before this Court can exercise the power to transfer the County Court Proceeding to the Federal Court, the County Court Proceeding must first be removed to this Court pursuant to s 8(1) of the Victorian Act. Upon the making of an order removing the County Court proceeding to the Supreme Court, the proceeding so removed then constitutes a proceeding pending in the Supreme Court and hence a relevant proceeding for the purposes of the making of a transfer order pursuant to s 5(1) of the Commonwealth Act.

(a) a proceeding (in this subsection referred to as the relevant proceeding ) is pending in -

(i) a court, other than the Supreme Court; or

(ii) a tribunal established by or under an Act; and

(b) it appears to the Supreme Court that -

(i) the relevant proceeding arises out of, or is related to, another proceeding pending in the Federal Court, the Family Court or the Supreme Court of another State or of a Territory and, if an order is made under this subsection in relation to the relevant proceeding, there would be grounds on which that other proceeding could be transferred to the Supreme Court; or

(ii) an order should be made under this subsection in relation to the relevant proceeding so that consideration can be given to whether the relevant proceeding should be transferred to another court -

the Supreme Court may, on the application of a party to the relevant proceeding or of its own motion, make an order removing the relevant proceeding to the Supreme Court.

40 In relation to the criteria specified in s 5(1)(b)(i) of the Commonwealth Act, namely the question of whether the County Court Proceeding arises out of or is related to the Federal Court Proceeding, both parties referred to the observations of Greenwood J in Amalia Investments Ltd v Virgtel Global Networks NV (No 2) ('Amalia Investments'),[6] where his Honour observed:

A relevant proceeding arises out of another proceeding if there is some causal element between the two even if the causal element is not "... direct or proximate": Re Hamilton Irvine (1990) 94 ALR 428 at 432. A pending proceeding relates to another proceeding if the two are associated or connected: Re Hamilton Irvine at p 433; Leithead v Leithead (1991) 109 FLR 177; Hoddell v Hoddell Pty Ltd [1999] WASC 156; Armstrong v Armstrong [2004] WASC 121, [49] to [56]; Bell Group Ltd v Westpac Banking Corporation [2000] FCA 439; (2000) 173 ALR 427 at [186] to [203]. A proceeding is related to another proceeding where "... a substantial and common question" arises in both proceedings (Mattock v Mattock (1989) 13 Fam LR 288 per McLelland J at 290) or where the "... facts and circumstances in the two proceedings ... appear to be intertwined" (Foley v Green [2011] VSC 155 per Almond J at [21]. In Buckley v Gibbett, the two proceedings were found to be related on the footing of the "... essential commonality of facts and of parties" thus satisfying the "... requirements of relationship" per RD Nicholson J at p 560F.

41 The question of whether the County Court Proceeding is one arising out of the Federal Court Proceeding can be disposed of quickly. 'Arising out of' means originating in or springing from.[7] Given that the County Court Proceeding was commenced by James some 16 months prior to his commencement of the Federal Court Proceeding, it cannot be said to have originated in or sprung from the latter. Understandably, Eric did not press this characterisation in submissions.

42 Before turning to the criteria in s 5(1)(b)(i) or (iii) concerning the question of whether the two proceedings are related in the relevant sense and if so, whether it is otherwise in the interests of justice to transfer the County Court Proceeding to the Federal Court, it is necessary to consider whether the assessment should be carried out on the basis of the pleadings which have been filed to date in the County Court Proceeding. In the affidavits of Yu Chen made on 30 November 2023 and 8 January 2024, Eric's solicitor deposes to instructions, to the effect that if the removal and transfer application fails, Eric will make an application on the first day of the trial of the County Court Proceeding for leave to amend the counterclaim so as to, in effect, replicate the allegations of misleading and deceptive conduct made in the Federal Court Proceeding, and rely upon those allegations as a basis for seeking orders that the 21 March 2019 Loan Agreement be set aside.

43 Although Eric's outline of written submissions included some arguments which assumed that that the pleading in the County Court replicated that in the Federal Court, in oral submissions, the argument was, with respect, appropriately confined to the existing pleading. Accordingly, I accept that the question of whether the proceedings are related is to be considered by reference to the present pleadings.

44 The principles relevant to applications for transfer of proceedings from one court to another under the relevant legislative scheme which, here, comprises the Victorian Act and the Commonwealth Act, are well-established and conveniently summarised by Pritchard J in reference to the equivalent provisions in the Jurisdiction of Courts (Cross-vesting) Act 1987 (WA) (the 'Western Australian Act') in H v D in the following terms:[8]

First, if it appears to the court to which the application is made that the criteria set out in the legislation for a transfer are established (such as that it is in the interests of justice that the proceedings be determined by another court), then the first court is required to exercise the power of transfer. No exercise of discretion arises: BHP Billiton Ltd v Schultz (2004) 221 CLR 400, 421 [14] (Gleeson CJ, McHugh & Heydon JJ), 434 [62] (Gummow J, Hayne J agreeing (468) [177]), 481 [222] (Callinan J).

Secondly, no particular significance attaches to the plaintiff's choice of forum and a party applying for the transfer of proceedings to another court does not bear any burden of showing that the first court is a clearly inappropriate forum for the resolution of the litigation. It is both necessary and sufficient that, in the interests of justice, the second court is more appropriate to determine the proceedings: BHP Billiton Ltd v Schultz 421 [14] (Gleeson CJ, McHugh & Heydon JJ). A court dealing with a transfer application therefore applies the legislation without any kind of presumption as to where the balance of the interests of justice might lie: BHP Billiton Ltd v Schultz 421 - 422 [14] - [16], 425 [25] (Gleeson CJ, McHugh & Heydon JJ) 436 [69], 437 [72], 439 [77] (Gummow J, Hayne J agreeing [177]), 465 - 466 [167] - [169] (Kirby J).

Thirdly, the interests of justice are not the same as the interests of one party, and the Cross-vesting Act should not be applied in a way that favours the rights of one party to litigation over another: BHP Billiton Ltd v Schultz 421 [15] (Gleeson CJ, McHugh & Heydon JJ), 466 [169] (Kirby J), 481 [222], 492 [258] (Callinan J). The interests of justice necessarily include justice to all parties to the proceedings, and it may also be necessary to take into account interests wider than those of the parties to the proceedings. Nevertheless, the interests of the respective parties, which might in some respects be common and in other respects conflicting, will arise for consideration. The justice referred to in s 5 of the Cross-vesting Act is not divorced from practical reality: BHP Billiton Ltd v Schultz 421 [15] (Gleeson CJ, McHugh & Heydon JJ).

Fourthly, whether it is more appropriate, or in the interests of justice, that one court rather than another determine a particular matter will require an analysis of all of the circumstances of the particular case. The decision calls for a "nuts and bolts" management decision as to which court is the more appropriate to hear and determine the substantive dispute: BHP Billiton Ltd v Schultz [420 - 421 [13] (Gleeson CJ, McHugh & Heydon JJ, citing Bankinvest AG v Seabrook (1988) 14 NSWLR 711, 713 - 714 (Street CJ)). The sorts of factors which will be relevant to determining which court is the more appropriate to determine the proceedings and where the interests of justice will lie, include questions of cost, efficiency, expense and the specialist nature of one or other court in relation to the subject of the litigation: BHP Billiton Ltd v Schultz [421 - 424 [15] - [21] (Gleeson CJ, McHugh & Heydon JJ).

Finally, whether the transfer of proceedings is in the interests of justice is a value judgment to be made having regard to the circumstances of the case: Seymour v Devine and Ors [2003] WASC 260 [10] (Pullin J, citing Dawson v Baker (1994) 120 ACTR 11, 14 and Hoddell v Hoddell Pty Ltd [1999] WASC 156 [17] (Murray J)).

45 Eric filed lengthy written submissions in support of the application and delivered brief oral submissions which further refined the argument. It is convenient to summarise Eric's submissions by reference to those advanced orally. Eric submitted that the submission could be confined to nine key points. There is no bright line between the nine points and there is some overlap. I have endeavoured to summarise them as follows:

(a) It is artificial to consider the County Court Proceeding for recovery of moneys alleged to be going under the 21 March 2019 Loan Agreement in a standalone fashion, isolated from the wider commercial relationship between James and Eric which is to be ventilated in the Federal Court.

(b) Whilst questions of credit which relate to entirely collateral matters may not have any great significance, in the present case, they do, because Eric, in the Federal Court Proceeding and in the County Court Proceeding as alleged in the existing counterclaim, and James in the Federal Court Proceeding, both rely upon conversations which are alleged by each of them to have affected the nature of various agreements entered into by them and that credit generally will inform the determination of the facts in issue in each case, namely, whether the particular representations relied upon in each proceeding were made.

(c) The transfer assessment is not confined to an assessment of the interests of one side alone and must take account of Eric's interests, as well as those of James. Eric will be disadvantaged by the County Court Proceeding being heard separately in various ways including by being vexed with two sets of costs and the stress of two proceedings, not just one, and may be further disadvantaged by the scope of the County Court Proceeding depending on evidentiary rulings, being confined only to the 21 March 2019 Loan Agreement and an alleged subsequent oral variation of that agreement or misrepresentations which are alleged to have been made on or about December 2019 which have the effect of varying or otherwise entitling Eric to relief. He will also be disadvantaged by an inability to set off any damages that he may recover in his cross claim in the Federal Court Proceeding against any liability he may be found to have in the County Court Proceeding.

(d) Although the parties to the proceeding involve claims brought by and against corporate entities at their core, the moving parties in both sets of proceedings are Eric and James, who will be the primary witnesses in both actions, and a Federal Court judge deciding the matter in its wider context (that is to say, deciding both the claims brought by James in the Federal Court and in Eric's cross-claim and those brought by James in the County Court) will, in the determination of the case, have the benefit of the entire history of the parties' dealings which may impact on the assessment of the probabilities of either party's version of events. Relatedly, it is not an efficient or helpful use of the court's resources or the parties' own resources to have those matters determined to a lesser or greater extent in two separate proceedings.

(e) Whist Eric's defence and counterclaim in the County Court Proceeding may seem unusual if considered in a narrow context, when regard is had to the wider dealings between the parties, which included, among other things, James agreeing to obtain control of the Wolli Creek Project and take out Eric's interest formerly held in that development, Eric's defence and counterclaim in the County Court Proceeding must be viewed in a different light.

(f) An early determination of the County Court Proceeding is not assured given the proposed amendment application and otherwise that it is unlikely that the matter can be concluded in two days, even on the basis of the existing pleadings. Further, any determination of the County Court Proceeding in advance of the wider dispute is not in the interests of justice for the reasons summarised at (c) and (d) above. In any event, there is no reason to consider that the Federal Court Proceeding will not be prosecuted with expedition, including in circumstances where James as the applicant is subject to a freezing order and where Eric's senior counsel has undertaken on Eric's behalf to prosecute the proceeding with expedition.

(g) James' conduct is suggestive of a person who uses litigation as a tool to obtain commercial advantage. The conduct revealing of that approach includes his decision to prosecute the County Court Proceeding first and then commence larger complex litigation in the Federal Court, his disposal of assets which resulted in the making of a freezing order against him, his dishonesty and manipulation of prior litigation involving other parties in China which formed the basis of the convictions obtained against him which were raised in the cross-claim in the Federal Court, and his prosecution of a hopeless application to set aside a freezing order which had been earlier obtained against him inter partes and was not the subject of appeal.

(h) The duplication of costs and the incurring of unnecessary costs associated with the prosecution and defence of two separate proceedings in parallel, and the associated stresses are unfair to Eric's interests as he has less resources available to him than James.

(i) Two separate courts should not be tied up with a dispute between two men that essentially could be efficiently heard in the one proceeding and in the one court.

46 James submitted that the County Court Proceeding should not be transferred to the Federal Court and, accordingly, it was not appropriate to make the removal order. First, he submitted that, in the case of a proceeding beginning in a court (or a tribunal established by or under an Act) other than the Supreme Court, a transfer order under s 5(1) of the Commonwealth Act can only be made in circumstances where the criteria specified in s 5(1)(b)(i) of the Commonwealth Act is satisfied; that is, the relevant proceeding must be one which arises out, of or is related to, a proceeding in the Federal Court and it is more appropriate that the relevant proceeding be determined by the Federal Court. To put the submission another way, James submitted that there was no entitlement to a transfer order in respect of a removed proceeding on the basis that the transfer is otherwise in the interests of justice pursuant to s 5(1)(b)(iii) of the Commonwealth Act.

47 The submission is based on the relevantly identical wording in s 8(1)(b)(i) of the Victorian Act and s 5(1)(b)(i) of the Commonwealth Act.

48 On that basis he submitted that the County Court Proceeding does not arise out of or is not related to the Federal Court Proceeding in the relevant sense sufficient to engage both s 8(1) of the Victorian Act and s 5(1)(b)(i) of the Commonwealth Act because in order for a proceeding to relate to another proceeding within the meaning of the Acts, a substantial and common question must arise in both proceedings. That is not the case here, where the only overlap relates to tangential facts or matters of credit alone.

49 Secondly, it cannot be assumed that the proceeding if transferred to the Federal Court will be heard at the same time or consolidated with the existing Federal Court Proceeding.

50 Thirdly, Eric's delay in making the application is such that if it is granted, James will be denied the opportunity to have his claim advanced in the County Court Proceeding heard on 31 January 2024 with the work completed in preparation for the trial and associated costs thrown away. Further, the delay is such that it should be inferred that the application is a tactic to avoid an imminent trial in respect of which Eric has limited prospects of success.

51 Fourthly, the 21 March 2019 Loan Agreement includes a governing law clause, which provides that the agreement is governed by the law in force in Victoria and each party submits to the non-exclusive jurisdiction of courts exercising jurisdiction in this State and waives any right to claim that the courts are an inconvenient forum.

52 I reject James' submission that a transfer order can only be made where the County Court Proceeding is related to the Federal Court Proceeding and the latter is the more appropriate Court, or to put it another way, that there is no power to make a transfer order where it is otherwise in the interests of justice. The submission assumes that the removal of the County Court Proceeding to the Supreme Court can only be effected pursuant to s 8(1)(b)(i) of the Victorian Act. Section 8(1)(b)(ii) of the Victorian Act constitutes a separate and additional source of power which provides that an order may be made under s 8(1)(b) solely for the purpose of considering whether the relevant proceeding could be transferred to another court.

53 It would also, if accepted, have the anomalous consequence that for the purposes of a transfer order under s 5(1) of the Commonwealth Act, there would be two classes of proceedings pending in the Supreme Court, those that had been commenced in the Supreme Court and those removed to the Supreme Court pursuant to an order made under s 8(1)(b) of the Victorian Act. In relation to the former class, the Supreme Court could transfer such proceedings to the Federal Court if it was otherwise in the interests of justice whereas in the latter class, the transfer order could only be made where the transferred proceeding arose out of or was related to another proceeding pending in the Federal Court and it is more appropriate that the relevant proceeding be determined by the Federal Court. In any event, given my conclusion with respect to the application of s 5(1)(b)(i) of the Commonwealth Act (and necessarily s 8(1)(b)(i) of the Victorian Act), nothing turns this point.

54 Section 5 of the Commonwealth Act and s 8 of the Victorian Act should be read in a complementary fashion. The two sections are interrelated and are intended to work together where necessary to facilitate the operation of s 5 of the relevant cross-vesting legislation. An order will be made to uplift a proceeding from an inferior court such as the County Court to the Supreme Cort if such an order is necessary for the Supreme Court to effect a transfer pursuant to s 5 of the Commonwealth Act.

55 In Qualia Wine Services Pty Ltd v Pearce,[9] Adamson J of the Supreme Court of New South Wales exercised power pursuant to s 8 of the Jurisdiction of Courts (Crosss-vesting) Act 1987 (NSW) (the 'New South Wales Act'), which is the New South Wales equivalent of the Victorian Act, on the basis that the uplift order was necessary in order to invoke the New South Wales Supreme Court's power under s 5 of the New South Wales Act to transfer the proceeding to the Supreme Court of Victoria.

56 Moreover, in any event, I do not accept that the reference to 'or is related to' as it appears in both s 8(1)(b)(i) of the Victorian Act and s 5(1)(b)(i) of the Commonwealth Act is confined to cases where there is 'a substantial and common question' arising in both proceedings.

57 Whilst the reference to 'a substantial and common question' as an element in establishing that one proceeding is related to another appears in Amalia Investments, his Honour's observations cannot be taken as standing for the proposition that the only way in which a proceeding can be related to another is where a substantial and common question arises in both proceedings. Whilst the existence of a substantial and common question arising in both proceedings will be highly relevant to that conclusion, there is nothing in his Honour's reasons which suggests that this requirement is a necessary condition for one proceeding to be related to the other. On the contrary, in the same extract, his Honour refers to various other cases supporting the proposition that one proceeding relates to another in far less exacting circumstances, such as where the two proceedings 'are associated or connected', or where the 'facts and circumstances in the two proceedings ... appear to be entwined or where there is an essential commonality of facts and of parties'.[10]

58 The phrase '... is related to', is a phrase of wide import.[11] There is no warrant to construe it in as narrow as fashion as requiring that there be a substantial and common question arising in both proceedings, as James submits. That is particularly so where the conclusion as to the relationship of the proceedings is part of and anterior to the assessment as to which forum is the more appropriate to hear the dispute. Issues as to the significance of the asserted common questions to each proceeding will form part of the appropriateness assessment in any event. Further, a narrow reading of the phrase 'or is related to', to the effect urged by James, has limited practical effect in circumstances where it remains open to Eric to press his claim for a transfer order on the basis that it is otherwise in the interests of justice within the meaning of s 5(1)(b)(iii) of the Commonwealth Act. Questions of the appropriateness of the forum and the interests of justice will inevitably overlap.

59 Either way, as the authorities make clear, the relevant decision is one which calls for a 'nuts and bolts' management decision as to which court should hear and determine the substantive dispute. This assessment will no doubt take account of the extent of the overlap between the contested issues which fairly arise for determination in each proceeding, and the significance those issues have in the determination of each case.

60 Whilst I accept that James' claim in the County Court Proceeding is a simple debt claim for the purposes of the recovery of amounts owing under the 21 March 2019 Loan Agreement to YHA, the loan was made in the context of James and Eric's wider commercial dealings and, more particularly, the necessity of discharging or reducing TFM Chatswood's liability under the Balmain Loan Agreement. The fact that the loan the subject of the 21 March 2019 Loan Agreement arose for the purposes of assisting in the discharge of a liability of TFM Chatswood, a jointly owned entity, taken out for the purposes of James and Eric's joint property development activities and that aspects of those joint development activities are the subject of the wider claims brought in the Federal Court Proceeding, may not on its own justify the conclusion that a transfer order should be made.

61 However, Eric's existing counterclaim makes the extent of the overlap of issues that arise for determination in the Federal Court Proceeding and the County Court Proceeding all the more stark. In particular, part of Eric's defence and his associated counterclaim relies on conversations which occurred on 15 December 2019 and 16 December 2019 concerning James' obtaining of control of TFM Chatswood as the prerequisite for James' commitment of further equity to that company such as to alleviate the company's default under the Qualitas Facility.

62 That same sequence of events has also been pleaded by James in the statement of claim filed in the Federal Court proceeding in section D4 at paragraphs 59 to 62,[12] which paragraphs have been denied by Eric in his defence and cross-claim. When the pleadings are viewed through a common sense lens, it seems that James and Eric are, for the most part, at one in relation to the events prompted by and consequent upon TFM Chatswood's default under the Qualitas Facility, save that Eric contends that as an additional component of James taking out Eric's interest in TFM Chatswood and thereby obtaining control of TFM Chatswood, James agreed that any obligation that Eric had to repay the amounts owing under the 21 March 2019 Loan Agreement varied so as to be confined to the proceeds recoverable from the Wolli Creek Project.

63 Whilst the allegations made in section D4 of James' statement of claim in the Federal Court Proceeding do not appear integral to the core of his case, it remains the fact that they are pleaded allegations of material fact which have been denied and, as such, will be the subject of evidence in that proceeding. The very same events will have to be the subject of the County Court Proceeding, given the content of Eric's defence and counterclaim. That conclusion alone is sufficient to compel the conclusion that the County Court Proceeding is related to the Federal Court Proceeding and hence, subject to the further consideration that the Federal Court Proceeding is more appropriate to determine the County Court Proceeding, should be the subject of a transfer order.

64 In any event, I consider that the proceedings are related in the relevant sense, even when the issue is assessed in a broader context. The 21 March 2019 Loan Agreement was but one of the transactions that were entered into by James and Eric in the course of their commercial relationship. That commercial relationship encompassed, among other things, the Campsie Project, the buyout agreement with respect to Eric's interest in the Campsie Project, the alleged assignment of the Tasman loan, the Wolli Creek Project, and the agreement by which James took over the management of TFM Chatswood from Eric in circumstances where TFM Chatswood was in default of the Qualitas Facility taken out for the purposes of the Wolli Creek Project. Whilst the 21 March 2019 Loan Agreement is of itself a discrete transaction, the Campsie Project and the Wolli Creek Project also give rise to separate transactions and yet claims made by James in respect of both have understandably been included in the same proceeding. The 21 March 2019 Loan Agreement and the claims made by James under that agreement are a subset of the wider disputes between James and Eric. Further, as noted above, Eric's existing defence and counterclaim in the County Court Proceeding, raises matters which fall within the broader context of aspects of the disputes raised in the Federal Court Proceeding.

65 I do not accept James' submission that uncertainty as to whether the Federal Court will hear the proceedings together or be consolidated militates against transfer; clearly, Eric would not advance any such a contention and there is no evidence which suggests that James would advocate a course which maintains that the two proceedings should be managed and heard separately even if the County Court Proceeding was transferred to the Federal Court. When pressed in oral submissions as to whether James would make such a submission in the Federal Court, Senior Counsel for James submitted that no decision had yet been made as it was premature. Given the commonality of parties, the overlap of issues and Eric's declared position, it is inevitable that the proceedings will be heard together or consolidated.

66 The only significant factor militating against the conclusion that the Federal Court is the more appropriate court or that the interests of justice favour a transfer to the Federal Court, is the imminence of the County Court trial and Eric's alleged delay in seeking the removal and transfer. In the Qi Affidavit relied upon by James in opposition to the transfer, Mr Qi deposes to the fact that Moray & Agnew was first advised of the transfer application on 27 November 2023, notwithstanding that the Federal Court Proceeding was commenced on 7 August 2023. Given the imminency of the hearing date on 31 January 2024, such a circumstance is relevant to the question of whether the Federal Court is the more appropriate court and whether it is in the interests of justice to transfer the proceeding. However, notwithstanding the content of Mr Qi's affidavit, in fact, the prospect of Eric seeking a transfer of the County Court Proceeding to the Federal Court was first foreshadowed by his counsel at the directions hearing held before O'Callaghan J on 1 September 2023 where counsel stated, inter alia, that the County Court Proceeding would have to be looked at as Eric did not want to have two proceedings dealing with the same issues or potentially the same issues between the same parties in different courts. That position was confirmed in the affidavit of Siyu Zhang made 29 September 2023 filed in the Federal Court and in the submissions dated 6 October 2023 in respect of the freezing order application.

67 I accept that Mr Qi, and Moray & Agnew, only became aware of the transfer application on 27 September 2023. Certainly, Gilbert + Tobin and critically James, must have been aware of the likelihood of the transfer application from 1 September 2023.

68 There is no evidence from Mr Qi as to when Moray & Agnew became aware of the existence of the Federal Court Proceeding; nor is there any evidence of whether Gilbert + Tobin knew of the County Court Proceeding commenced by their client when they commenced the Federal Court Proceeding on James' behalf on 7 August 2023 although they must have become aware of the existence of the proceeding at the latest by 1 September 2023.

69 Critically, James was aware of both proceedings when he commenced the Federal Court Proceeding and he ought to have been aware of the risk that the issue of the Federal Court Proceeding by him would give rise to the very application that ensued. In any event, he was on notice of the possibility of a transfer application by 1 September 2023.

70 Whilst it is less than ideal that the transfer application was not commenced until 24 November 2023, well after it had been first foreshadowed, I accept that it was reasonable to have waited for the pleadings in the Federal Court action to be prepared. I further note and accept Mr Chen's evidence to the effect that there were reasons for the delay in preparation of that cross-claim, including the need to obtain detailed instructions and documentation relating to the broad array of claims brought by James in the Federal Court Proceeding. The delay was further exacerbated by the conflict of interest with the position of the third and fourth respondents which arose during the course of the preparation of the cross-claim, as well as the making of the freezing order and then resisting James' attempt to have that freezing order set aside.

71 I do not accept the submission to the effect that the delay was such that James was entitled to assume that the transfer application would not be made; there is no evidence to that effect and further, the apprehension to that effect hardly seems reasonable in circumstances where it had been the subject of the affidavit of Ms Siyu Zhang and was an obvious course having regard to the existence of the two proceedings. Further, whilst Judicial Registrar Bennett was understandably aggrieved with the failure to provide a pre-trial information form to the County Court and to foreshadow this application to that court before 18 December 2023, I am conscious of Mr Chen's explanation to the effect that his non-provision of the form was an oversight on his part and I do not consider that, in those circumstances, it is appropriate to hold that against Eric.

72 Of significant importance is the absence of any specific form of prejudice alleged by James in the event of a delay in the determination of the claim made by YHA in the County Court Proceeding beyond the general prejudice which arises from the fact that there will be a delayed resolution to the claim as a consequence of the transfer.

73 Whilst there was nothing improper in James instructing a separate firm of solicitors to commence a narrow and discrete proceeding in the County Court in April 2022 and thereafter instructing another firm of solicitors to commence a wider proceeding concerning, in substance, the same parties some 16 months later, the bifurcation of the dispute in that manner carried with it the risk of exactly that which has ensued, namely, an application by the defendant in both actions for orders to the effect that both proceedings be prosecuted in the same court and as part of the same proceeding. Likewise, whilst he is entitled to engage whatever firm of solicitors he wishes, the engagement of separate solicitors carries with it the risk which may well have eventuated here, which is that one firm (Moray & Agnew) apparently knew little of what was going on in the proceeding commenced by their client in another court.

74 I do not accept that James' decision to commence a narrow proceeding in the County Court was prompted by some desire to obtain a collateral advantage, the fact remains that it was open to him to expand the allegations made by him in the County Court so as to include those allegations that are now the subject of his claim made in the Federal Court, if necessary seeking an uplift of the proceeding to this Court or alternatively, for him to have included the debt claim as part of the rubric of claims advanced by him in the Federal Court Proceeding and not pressed the claim in the County Court Proceeding. Although the debt claim is not a federal claim, the Federal Court has associated jurisdiction pursuant to s 32 of the Federal Court of Australia Act 1974 (Cth), which permits it to determine that claim as part of the wider claims brought by James. Further and in any event, the counterclaim advanced by Eric in the County Court Proceeding seeking relief under the ASIC Act is also plainly justiciable in the Federal Court.

75 Nor do I place any real significance on the content of clause 12.1 of the 21 March 2019 Loan Agreement. The Federal Court has no difficulty in applying the law in force in this State in the determination of the contract claims, the ACL claims and the claims for relief under the ASIC Act made in the County Court Proceeding and the Federal Court has jurisdiction exercisable in this State in any event.

76 As the authorities make clear, in determining whether to make a transfer order, the Court is required to make a nuts and bolts management decision as to which court is the more appropriate venue to hear and determine the substantive dispute and to make a broad evaluative judgment by reference to the interests of justice and the circumstances of the particular case as to whether a transfer order should be made.

77 Having regard to the commonality of parties, the fact that the issues raised in the County Court Proceeding form part of a subset of the wider commercial dealings between James and Eric the subject of the Federal Court Proceeding; the overlap of factual issues to be determined in particular those relating to the events of December 2019 and the discussions which occurred between James and Eric relating to the takeover by James of control of TFM Chatswood in the context of the default under the Qualitas Facility; the interests of the parties and the public more generally in ensuring that one court, not two, is vexed with the responsibility of determining the commercial disputes between James and Eric and the ability of the Federal Court to entertain matters raised in both proceedings; thus, the Federal Court is the more appropriate court to determine the County Court Proceeding and the interests of justice are such that a transfer order of that proceeding should be made.

78 It follows therefore that I will make a removal order pursuant to s 8(1) of the Victorian Act and a transfer order pursuant to s 5(1)(b)(i) and (iii) of the Commonwealth Act.

79 I will hear the parties as to costs, but my tentative view is that the parties' costs of this proceeding and the parties' costs of the County Court Proceeding to date should be costs in the proceeding, which will now be transferred to the Federal Court.

[1] Referring to the parties by their first names is intended to convey no disrespect and accords with the practice followed by the parties.

[2] Whilst there are corporate entities involved in the various proceedings they are effectively controlled by James and Eric (save for the third and fourth respondents in the Federal Court proceeding). As such, it is convenient to refer to the parties as James and Eric, unless it is material to refer to the individual entity.

[3] In fact, James and Eric held their ownership interests through corporate entities but it is more convenient and sufficient in the circumstances to refer to the ownership as being held by James and Eric.

[4] See paragraphs 59 to 62 of the statement of claim.

[5] Zhang v Zhang [2023] FCA 1660.

[6] [2011] FCA 1270; (2011) 198 FCR 248, [41] ('Amalia Investments').

[7] Walton v National Employers Mutual Insurance [1973] 2 NSWLR 73, 83.

[8] [2012] WASC 291, [16]-[20].

[9] [2020] NSWSC 126.