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[2005] VSC 375
Supreme Court of Victoria
2005-04-15
DODDS-STREETON J.
Original judgment source is linked above.
1 In this proceeding, by summons filed 21 March 2005, the defendant, Kevin Munro, seeks an order pursuant to s.5(2) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 that the proceeding issued in this Court be transferred to the Supreme Court of New South Wales.
2 The application is supported by the affidavit of John Waters sworn 21 March 2005 and by the affidavit of Peter Stockdale sworn 12 April 2005, save for certain specific paragraphs, or parts thereof, of Mr Stockdale's affidavit.
3 The plaintiffs, David McLeod and GDK Financial Solutions Pty Ltd ("GDK"), oppose the application. The plaintiffs rely on the affidavit of Miranda Ball sworn 5 April 2005 and the second affidavit of Ms Ball sworn 14 April 2005 (save for parts of paragraph 12).
4 The present proceeding was commenced by writ and statement of claim dated 17 February 2005 in the Commercial List of this Court. By the statement of claim, it is alleged that the first plaintiff (the director of the corporate second plaintiff) was a licensed financial planner. The corporate plaintiff conducted a finance and investment consulting business. It managed partnerships which invested in retirement villages. Its principal place of business and its registered office between May 1999 and April 2002, were the offices of the defendant, Mr Munro, situated in Macquarie Street, Sydney.
5 The other two directors of GDK were Mr Munro and a Mr Woodham. GDK was the trustee of a trust, the beneficiaries of which were the family trusts of the three directors, Messrs McLeod, Munro and Woodham.
6 It is alleged that Mr Munro, a solicitor admitted to practice and carrying on business in New South Wales, held himself out as a specialist in corporate and taxation advice. The plaintiffs allege that in early 1998, Mr Munro advised Mr McLeod on the application of certain Corporations Law provisions, a tax ruling in relation to a Werribee retirement village project, and the structuring of the investment. In particular, it is alleged that Mr Munro advised that a prospectus was not necessary and that if the partnership had fewer than 15 members, it would not affect Mr McLeod's licence. It is not specifically alleged where that initial advice was given, but it is alleged that it was confirmed on 30 June 1998 at a meeting in Melbourne, which was attended by Mr Sent and Ms Porter of Primelife.
7 It is further alleged that, relying on the advice, Mr McLeod became a member of a number of partnerships in order to invest in ten named retirement villages, which were almost all situated in Victoria. He also became involved in the management of other partnerships and retirement villages. There were about 19 or 20 other partnerships and retirement villages.
8 It is alleged that Mr Munro was party to some of the partnerships. He also acted as Mr McLeod's solicitor in relation to some partnerships and therefore, as a solicitor, owed a duty of care, skill and diligence to advise Mr Munro on the Corporations Act provisions in relation to managed investment schemes. Mr Munro is also alleged to have acted as a solicitor for GDK from 8 April 1999 in relation to five managed partnerships, owing it a like duty in those circumstances.
9 The alleged breach of duty is that the defendant failed to advise the plaintiffs on the introduction and implications of the management investment scheme provisions of the Corporations Law effective from 1 July 1998, or alternatively to advise them to obtain independent legal advice.
10 ASIC has commenced proceedings against GDK in the Federal Court in relation to seven retirement villages which are alleged to be unlawful, non-registered management investment schemes. It is pleaded that GDK will suffer loss and damage as a consequence of Mr Munro's alleged breach. That assumes, I think, that the ASIC allegations will be found to be made out in the Federal Court proceedings.
11 The plaintiffs further allege that Mr Munro exerted undue influence to pressure Mr McLeod to acquire Munro's interest in GDK through an exit agreement executed on 20 December 2002. The exit agreement provided, broadly, that Mr McLeod and his entities would pay Mr Munro and his associated entities $350,000, together with other amounts. It included other terms alleged to be disadvantageous to Mr McLeod. The exit agreement also provided that it would be governed by the law of New South Wales.
12 The plaintiffs allege actual undue influence by way of abuse, physical assault, threats and the like in the course of a relationship which had broken down.
13 It is alleged that Mr Munro, at various meetings, threatened, and attempted to eject, Mr McLeod. Such behaviour allegedly took place at a meeting which occurred on 30 September 2002 in the Macquarie Street offices. It is also alleged that the defendant made abusive telephone calls. Further meetings which involved threats and pressure, are alleged to have occurred in Sydney from October and December 2002.
14 The exit agreement is alleged to be unenforceable by reason of Mr Munro's breaches of fiduciary duty, uncertainty and other factors. Further, it is alleged, (as the third principal claim) that Munro is indebted to GDK for certain amounts; the total amount of indebtedness allegedly is in the order of $1.4m. It is alleged that Mr McLeod has taken an assignment of the debts for that total amount. There is no guidance in the statement of claim on where the debts were incurred or where the assignment was executed.
15 The affidavit in support of the application to transfer, sworn by Mr Waters on 21 March 2005, deposes first, that all the parties to the proceeding are recorded as residing in New South Wales and the corporate plaintiff has its registered and principal place of business in New South Wales; that evidence will be required from Messrs McLeod, Woodham, West and Coulter; and that Messrs McLeod, Munro and West are said to reside in New South Wales.
16 It now appears that Mr Woodham resides in the ACT. Further, it is clear from Ms Ball's affidavit that other witnesses, Mr Sent and Ms Porter, will be called.
17 Mr Waters deposes that the Munro exit agreement is the subject of a proceeding in New South Wales commenced on 6 November 2003, in which Mr Munro and his company, Yaltala, obtained judgment on 27 September 2004 for breach of the exit agreement in the sum of approximately $340,000. Mr Munroe has also served a bankruptcy notice dated 16 November 2004 on Mr McLeod.
18 Mr McLeod has, by notice of appeal filed 17 December 2004, appealed to the New South Wales Court of Appeal from Judge Rolfe's judgment and, by an application filed 7 December 2044, has sought to set aside the bankruptcy notice.
19 There is also a proceeding brought by Mr Woodham and his corporate entity against the plaintiffs and others, (originally commenced in the ACT), which has now been transferred to New South Wales. That is not asserted in Mr Waters' affidavit, but emerged during the hearing that that transfer has now occurred, pursuant to application filed 20 July 2004 by the plaintiffs (who are defendants in the ACT proceeding) and other defendants to that action. Mr Waters deposes that the New South Wales and ACT proceedings arose out of the exit agreement or the same business relationship which gave rise to this proceeding. That assertion was also, in a sense, modified at the hearing of this application. Dr Collins, counsel for the defendant, did not submit that the ACT proceeding related to this one, but rather, that the plaintiffs could be taken to be heavily engaged in litigation in New South Wales. The transcript of the proceedings before Judge Rolfe indicated that Mr McLeod had failed to comply with directions, and had raised various defences in relation to the exit agreement which were not pursued, for no disclosed reason.
20 The notice of appeal exhibited to Mr Waters' affidavit refers to arguments Mr McLeod now seeks to make in relation to the exit agreement, including failure to afford an opportunity for independent legal advice. Ms Ball, in opposition to this application, by affidavit sworn 5 April 2005, deposes that the present proceeding is brought in Victoria because it is the plaintiffs' choice, and because their solicitor, Mr Brereton, and a number of counsel briefed in various matters, are all located in Victoria. She also deposes to the Prime Life proceeding brought by ASIC in relation to the seven villages.
21 The retirement villages the subject of those proceedings are all situated in Victoria, and GDK is a defendant in all of the proceedings. It appears that Mr McLeod is currently subject to a joinder application in relation to all or some of those proceedings. The principal allegation in those proceedings is that GDK and Mr McLeod promoted, operated or managed investments schemes on terms contrary to the Corporations Act.
22 Mr McLeod and GDK have retained Mr Brereton as their solicitor and Mr Hayes QC and Mr Martindale of counsel for the Primelife proceeding, and Messrs Hayes, Galvin and Ms Fregon of counsel for this proceeding.
23 Mr McLeod, it is said, on average spends two to three days a week in Melbourne for the purposes of the Primelife proceeding. Ms Ball points out that although, the plaintiffs' address is New South Wales, they conduct a substantial amount of business in Victoria in relation to the villages, which leads to Mr McLeod spending some days each week in Melbourne, as do the negotiations for the sale of a village, known as the Avonleigh Village. She deposes that Mr West, although a resident of New South Wales, spends time in Victoria regularly. I have been informed that Mr West is willing to spend time in Victoria for the purpose of the litigation.
24 Mr Munro is said to have instructed Clayton Utz in Melbourne in relation to the Primelife proceeding. Ms Ball states that some of the advice complained of was given in Melbourne on 30 June 1998, and was witnessed by Ms Porter and Mr Sent, who reside in Melbourne. Mr Woodham, she deposes, has given his address as an ACT residence in an affidavit sworn in another proceeding.
25 Ms Ball deposes that the ACT proceeding brought by Mr Woodham does not directly relate to this proceeding. That was conceded by counsel for the defendant. The proceeding has, at any rate, now indisputably been transferred to New South Wales at the instance of persons including the plaintiffs.
26 Mr Stockdale, by affidavit sworn 12 April 2005 in support of the application for transfer, deposes that Mr Coulter, another likely witness, is a Sydney solicitor, resident in Sydney, that the defendant, Mr Munro, has, for his part, retained three counsel resident in Sydney and a Sydney solicitor for the District Court proceeding, the appeal and the bankruptcy proceeding. He further deposes that the Primelife proceedings in the Federal Court in Melbourne include defendants who are, in fact, trustees for two partnerships, each comprising eight or nine individual legal practitioners, all of whom reside in New South Wales. They have retained Clayton Utz, Melbourne, to act for them, simply because ASIC initiated the proceedings in the Melbourne Registry.
27 Mr Stockdale deposes that although the Primelife proceedings concern the question whether the plaintiffs operated unlawful managed investment schemes, they do not concern questions of the scope of any professional retainer of Mr Munro. That assertion was repeated in submissions by Dr Collins at the hearing of the matter today.
28 Further, Mr Stockdale deposes that the defendant has informed him that the management of the affairs of the GDK partnership were overwhelmingly conducted out of New South Wales, where the partners resided, where the meetings took place and where the corporate entities involved had their principal places of business. He deposes that the defendant does not travel to Melbourne regularly for any purpose and has visited here twice only in the last year. He further deposes that there is a proceeding filed in New South Wales by a Woodham entity to wind up GDK.
29 Ms Ball, in a responsive second affidavit, confirms that the first plaintiff's application for leave to appeal the Judge Rolfe decision is still on foot and will be mentioned on 2 May 2005. She deposes that the defendant actively instructs in the Primelife proceeding and that the details of becoming involved in the investments would be relevant to that proceeding. She refers to a matter called Cresthaven v Primelife Mount Evelyn, a matter presently before me, which appears to be a case where the plaintiff is seeking a return of deposit, and which involves planning and building issues.
30 Ms Ball complains of Mr Stockdale's reliance on affidavits sworn in other proceedings. That issue has been dealt with in the hearing today.
31 As Mr Hayes, Senior Counsel for the plaintiffs contended, this is a case involving sophisticated business persons and the incidence and complexity of the various proceedings in which they play a part, or have an interest, is such that some inconvenience is likely, whatever course is adopted. The parties were essentially agreed on the fundamental principles which govern an application to transfer. Dr Collins, counsel for the defendant, argued that the preponderance of connecting factors in this case overwhelmingly favoured New South Wales, and that the plaintiffs were emphasising more marginal connecting factors. Mr Hayes submitted that I should have regard to Justice Gillard's judgment in Ewins v BHP Billiton Ltd[1] ("Ewins") decision, where His Honour took a more expansive view of the connecting factors.
32 In Rogan v Rushton (Qld) Pty Ltd,[2] Bridge & Marine Engineering v Taylor,[3] Ross Mollison v The Really Useful Co (Aust) Pty Ltd,[4] Bankinvest AG v Seabrook,[5] and, most recently and significantly, in the High Court decision in BHP Billiton Ltd v Schultz,[6] ("Schultz") it has been consistently recognised that, in determining whether to order a transfer under the legislation in the interests of justice, a court must be satisfied as to which court is the more appropriate forum in the sense that has the most real and substantial connection with the subject matter of the proceeding.
33 The connecting factors have been recognised as "legion".[7] There can be no exhaustive or prescriptive statement of what they are, but principal relevant factors which are constantly recognised as legitimate and central are: first, the governing law of any agreement in dispute; secondly, the connection between the alleged conduct and the jurisdiction (for example, where the alleged wrong was committed); and thirdly, issues of cost and convenience to the parties, such as a consideration of the place where the witnesses and parties reside and carry on business, and the like.
34 In this context, it is no longer accepted that independent weight is to be attributed to the plaintiff's choice of jurisdiction. Gleeson CJ, McHugh and Heydon JJ, in their joint judgment in Schultz, stated such an approach to be "out of place in a decision about s 5 of the Cross-vesting Act".[8] Similarly, Justice Gummow stated:
"The phrase 'otherwise in the interests of justice' in subpar (iii) of s 5(2)(b) of the Cross-vesting Act requires the Supreme Court to determine a transfer application by identifying the more appropriate forum without any specific emphasis in favour of the choice of forum made by the plaintiff."[9]
35 In determining an application for transfer the court must perform a balancing exercise in the interests of justice. In Schultz, Gleeson CJ, McHugh and Heydon JJ stated that:
"[i]n the context of the Cross-vesting Act, one is not concerned with the problem of a court, with a prima facie duty to exercise a jurisdiction that has been regularly invoked, asking whether it is justified in refusing to perform that duty. Rather, the court is required by statute to ensure that cases are heard in the forum dictated by the interests of justice."[10]
36 Where it is in the interests of justice that a proceeding be transferred, the court has no discretion but is under a statutory obligation to exercise the power to transfer.[11] A general inquiry will be made, and, as has been recognised, it must often be resolved as a matter of impression.
37 In Schultz, Gummow J, with whom Hayne J agreed,[12] indicated that no onus, or burden akin to an onus or presumption, would operate in determining where the balance of the interests of justice would come down.[13] In that context, his Honour referred[14] to the judgment of Rogers AJA in Bankinvest, where the latter said that "[t]he only lodestar that a judge may steer by is, what do the interests of justice dictate should be done? It is inapt to speak in terms of onus."[15] Gummow J's view was, however, not expressly endorsed by other members of the Court in Schultz. Recently, Gillard J in Ewins adhered to the view that the applicant may bear some burden.[16] I recognise that there may be different views, but I consider the observations of Gummow J in Schultz to be persuasive. There was no expressed dissent in the joint judgment from His Honour's observation. Indeed, Dr Collins has taken me to a number of statements in the other judgments in Schulz which appear consistent with the view expressed by Gummow J.[17]
38 The issue of whether there is an onus, however, is not determinative of the present application, because, in weighing up the competing considerations, I take the view that New South Wales is the more appropriate jurisdiction by a clear margin. The second plaintiff is registered in New South Wales and has its principal place of business there. The other parties are residents of New South Wales. Of five other potential witnesses, two reside in New South Wales and one apparently in Canberra, making a total of four witnesses resident in New South Wales and one in ACT, as opposed to two in Melbourne.
39 While I accept that residence should be considered as a matter of substance, it is not contended that the witnesses' stated places of residence in this case are merely nominal, and I do not consider that the plaintiff's preference for a jurisdiction, expressed by willingness to proceed in it, should indirectly be restored as a governing factor. Further, there is a proceeding before the New South Wales Court of Appeal which involves the very same exit agreement (which is governed expressly by the law of New South Wales), which is a substantial claim in this proceeding. It may ultimately involve Anshun issues.
40 There is also a proceeding involving the same entities and business relationship which has now been transferred to New South Wales from the ACT. The transfer was made pursuant to an application in which the plaintiffs participated. There is also an application to set aside the bankruptcy notice served on Mr McLeod, based on the judgment of Judge Rolfe. Further, there is an application on foot in New South Wales to wind up the second plaintiff.
41 The Primelife proceedings in the Federal Court in Melbourne involve related or overlapping issues to the negligent advice claims, (and, in a sense, it appears that the claim for damages in this case may depend on an adverse finding against the plaintiffs in that case). The defendant, although not a party, is substantially involved or concerned in the Primelife proceedings. However, large numbers of persons belonging to the partnerships reside in New South Wales, and I accept, as Dr Collins contended, that the Primelife proceedings do not involve, as a core issue, the ambit of the defendant's professional retainer, which is at issue in the present proceeding. Against the Primelife proceedings is posed the existence of a number of pieces of litigation more directly between the parties, (although GDK is not a party to the District Court proceeding) which more directly involve the same issues, the subject of this proceeding.
42 In relation to the locus of the events complained of, it would appear that it was principally New South Wales, both in relation to the negligent advice and the exit agreement. (The alleged debt may be more equivocal). Although the initial allegedly negligent advice is said to have been "confirmed" in Melbourne in June 1998, in the presence of Ms Porter and Ms Sent, it is not in fact alleged that it was given in Melbourne. Further, that early advice is only an aspect of the negligent advice complaint. The gravamen of that claim appears to be that there was a continuing failure to give advice on the application of the Corporations Act managed investment scheme provisions, applicable only after July 1998. There is no reason to suppose that those omissions should be viewed as 'occurring' in Victoria. New South Wales was the principal place of business and the official residence of the parties, and a reading of the statement of claim indicates that New South Wales was the location of a great many of the transactions and events which occurred between them.
43 Further, there is some support in the authorities that negligence claims against a solicitor may be best determined in the home jurisdiction. Dr Collins put that as being a manifestation of the principle that regard is had to the substantive law that will apply. The exit agreement is squarely grounded in New South Wales and is governed by the law of New South Wales. Its execution, and the meetings, alleged abuse, undue influence and telephone calls and other events which occurred in relation to it, (which are alleged to have vitiated it) also appear to have occurred in New South Wales.
44 The defendant resides in New South Wales and it is deposed that he does not regularly visit Melbourne. He has retained a number of legal practitioners in New South Wales. In that context, the fact that the plaintiffs have preferred to retain Victorian counsel and that Mr McLeod regularly visits Melbourne for various purposes, cannot outweigh all of the other factors combined which, in my view, establish that on balance the more appropriate forum is New South Wales. The preponderance of relevant connecting factors favour transfer, and if there is any burden, it is, in my view, in this case, discharged.
[7] Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 at 465 per Templeman LJ, cited in Bankinvest AG v Seabrook (19988) 14 NSWLR 711 at 728 per Rogers AJA.
[8] [2004] HCA 61 at [25].
[9] Ibid at [77]; see also Kirby J at [168].
[10] Ibid at [14].
[11] Ibid at [14] per Gleeson CJ, McHugh and Heydon JJ, at [49] per Gummow J with whome Hayne J agreed, at [222] per Callinan J.
[12] Ibid at [177].
[13] Ibid at [71]-[72] and [77].
[14] Ibid at [71].
[15] (1988) 14 NSWLR 711 at 727.
[16] [2005] VSC 4 at [23]
[17] [2004] HCA 61 at [25] per Gleeson CJ, McHugh and Heydon JJ, [168] per Kirby J, [258] per Callinan J.
Mcleod
Munro [2005] VSC 375
(1988) 14 NSWLR 711