Plaintiffs v Defendants

For the first to fifth defendant in S ECI 2021 00105 and first to fourth defendants in S ECI 2021 01578

For the sixth defendant in S ECI 2021 00105 and fifth defendant in S ECI 2021 01578

For the seventh and eighth defendant in S ECI 2021 00105 and sixth defendant in S ECI 2021 01578

1. Mr Justin Epstein, who is the sixth defendant in proceeding S ECI 2021 00105 ('Xia proceeding') and the fifth defendant in proceeding S ECI 2021 01578 ('Shao proceeding') (collectively, 'Victorian proceedings'), applies to transfer each of these proceedings to the Federal Court of Australia pursuant to s 1337H(2) of the Corporations Act 2001 (Cth) ('Corporations Act') and/or s 5(1) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) ('Commonwealth Cross-vesting legislation') and/or s 5(1) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Vic) ('Victorian Cross-vesting legislation'). It is his intention that the Victorian proceedings be heard together with two proceedings in the Federal Court of Australia, being Meng Hua v One Funds Management Limited & Ors (NSD533/2024) and Yunfei Gong v One Funds Management Limited & Ors (NSD590/2024) (collectively, 'Federal Court proceedings'). Mr Epstein principally contends the Victorian proceedings are related to the Federal Court proceedings and that it is more appropriate they be determined by the Federal Court. Alternatively, he submits it is otherwise in the interests of justice that the proceedings be determined by the Federal Court. Given the Victorian proceedings are listed for trial commencing in late November 2024, the parties indicated there was a degree of urgency to the determination of the transfer applications.
2. In making his cross-vesting applications, Mr Epstein relies on: his further amended summonses dated 26 August 2024 (which replace his earlier iterations of the summonses dated 15 June 2024 and 22 August 2024);[1] the affidavit of Gerard Hugh Maxted, solicitor, dated 14 June 2024; the affidavit of Stuart Hogg, solicitor, dated 20 August 2024; and written submissions dated 14 June 2024.
3. The plaintiffs in the Victorian proceedings ('plaintiffs') oppose Mr Epstein's applications. They place reliance on the affidavits of Lisa Maree McNicholas, solicitor, dated 6 June 2024 and 8 July 2024, together with written submissions dated 8 July 2024.
4. Both parties supplemented their written material with oral submissions at the hearing of the applications on 22 August 2024.
5. In their material, the parties made extensive reference to a fifth proceeding, being Lin & Ors v One Funds Management Limited & Ors (proceeding 2021/00186738), which is in the New South Wales Supreme Court ('Lin proceeding'). However, at the hearing of the transfer applications, senior counsel for Mr Epstein confirmed the Lin proceeding was not especially relevant for the purposes of determining the transfer applications but explained that if the applications were successful, Mr Epstein would also make an application to transfer the Lin proceeding to the Federal Court. I agree that the Lin proceeding is not particularly relevant for the purpose of determining these applications. There is no pending transfer application in that proceeding. If and when such an application is made, it would fall to be determined by the New South Wales Supreme Court. That said, given the way in which the Lin proceeding has been referred to by the parties in these applications, I will make reference to it, where applicable.

1. Before considering the substance of the applications, it is important to set out the relevant factual background and corporate structure, which is relatively complex. The plaintiffs to the Xia proceeding are unitholders in a trust known as the Glen Waverley Fund ('GWF Trust'). The GWF Trust directly holds units in iProsperity Waverley Century City Walk Fund ('CCWF') and iProsperity JY Hotel Fund ('JY Trust'). The JY Trust, in turn, holds units in iProsperity JY Hotel Fund No 1 ('JY Sub-Trust'). The plaintiffs to the Shao proceedings are unitholders in the JY Trust. The GWF Trust was constituted in July 2017 with the stated purpose of acquiring the ultimate ownership of a shopping precinct known as the Century City Walk in Glen Waverley ('property') and to hold units in the JY Trust, which was established to acquire the ultimate ownership of the Novotel Melbourne Glen Waverley Hotel ('hotel'). The GWF Trust achieved this by way of its unitholding in both the JY Sub-Trust, which owned the hotel, and the CCWF, which owned the property.
2. One Funds Management Limited ('OFM') is the trustee for the GWF Trust, the JY Trust, the Cornerstone New SIV Bond Fund Asset Trust ('NSB Trust') and the Cornerstone Bond Fund. The ultimate holding company for OFM is One Investment Group Pty Ltd (OIG). One AR Pty Limited ('One AR') is the trustee for the CCWF and One FS Pty Ltd was, until July 2020, the trustee of the JY Sub-Trust.
3. In July 2019, both the property and the hotel were sold. The plaintiffs in the Victorian proceedings assert that the relevant trustees had no proper basis to do so. In August 2019, a substantial portion of the net proceeds of sale of the property and the hotel was invested by OFM (in its capacity as trustee of the JY Trust and the GWF Trust) in units in the NSB Trust. The NSB Trust then subscribed to a series of debentures issued by the Agricultural Land Trust ('debentures' and 'AL Trust', respectively). The trustee of the AL Trust is One Managed Investment Funds Limited ('OMI') (a related entity of OFM and One AR). OMI loaned the principal sums it raised from the issue of the debentures to one or more 'AL sub-Trusts', which then on-lent those funds to iProsperity Underwriting Pty Ltd (in liquidation) ('IPU'). Each of the loans to the AL sub-Trusts and IPU appear to have been made on a limited recourse basis. IPU ultimately defaulted on making repayment of its loans and is now in liquidation.
4. Sarah Wiesener, Frank Tearle and Justin Epstein were directors of OFM, One AR and OMI at all material times.
5. At a high-level, the plaintiffs' core claims in the Victorian proceedings are that OFM (as trustee of the JY Trust and the GWF Trust, respectively) breached its equitable duties to unitholders when it:

(a) failed to inform them of the sale of the hotel and/or property;

(b) received the proceeds of sale of those assets as trustee of the NSB Trust;

(c) invested those proceeds in the NSB Trust; and

(d) acquired the relevant debentures.

1. There are similar allegations made against One AR as trustee of the CCWF in the Xia proceeding. Claims are also made against the directors of OFM and One AR in relation to their alleged knowing involvement in the breaches by OFM and One AR of their equitable obligations to the unitholders in the GWF and JY Trusts and the CCWF, respectively, and for accessorial liability. Further, in the Xia proceeding, the unitholders also make derivative claims against the directors of OFM and One AR on behalf of OFM and One AR as trustees in respect of alleged breaches of equitable duties and statutory duties under ss 180 and 181 of the Corporations Act and seek compensation under s 1317H of the legislation accordingly. In the Shao proceeding, allegations are made against OFM for misleading and deceptive conduct in contravention of s 18 of the Australian Consumer Law ('ACL') or, in the alternate, s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) ('ASIC Act'). Those claims concern representations made in the information memorandum pertaining to the JY Trust and issued in January 2017. The dates of the alleged breaches of duties and misleading conduct fall within the period July 2019 to September 2019.

1. The Victorian proceedings have been relatively protracted. The Xia proceeding was commenced on 20 January 2021 and the Shao proceeding was initiated on 14 May 2021. On 1 December 2022, Garde J ordered, among other things, that the Victorian proceedings be heard together on a date not before 9 October 2023 and that, subject to any further order, all evidence tendered in each of the Victorian proceedings shall be evidence in the other. Further, Garde J's orders made provision for additional pre-trial steps.
2. Following a mediation in late 2022, the defendants foreshadowed a creditors' scheme of arrangement in the first half of 2023. The scheme was proposed as a means of resolving claims brought by unitholders of the managed investment funds of which OFM is the trustee (including the GWF Trust; the JY Trust; the NSB Trust; and the Cornerstone Bond Fund) arising out of the collapse of the so-called iProsperity group of companies. The proposed scheme is more fully described by Jackman J in Re One Funds Management Limited.[2] As his Honour explained, each of the four funds or trusts were established to service investments made under the Australian Government's 'Significant Investor Visa' (or, 'SIV') program.
3. The parties agreed upon extensions to the pre-trial timetable which effectively put the Victorian proceedings into abeyance whilst the scheme of arrangement process could take place. At a meeting of scheme creditors on 31 October 2023, the scheme failed as the majority of the scheme creditors did not support it. As a consequence of these matters, no real substantive steps were taken in the Victorian proceedings throughout 2023; although by orders dated 13 July 2023, Garde J granted the seventh to ninth plaintiffs in the Shao proceeding leave to discontinue their claims.
4. In November 2023, Waller J ordered that the trial of the Victorian proceedings be listed to commence on 25 November 2024 on an estimated duration of 10 to 12 days. His Honour also further extended by consent the dates for lay and expert evidence and the preparation of a Court book and various trial aides.
5. Whilst the plaintiffs' lay evidence in the Victorian proceedings was filed late, the plaintiffs invited the defendants to propose an adjusted timetable that allowed sufficient time for the defendants to file and serve their lay statements. The defendants' solicitors then raised the prospect of seeking to vacate the trial but did not fully explain the basis for doing so. By later correspondence, the defendants were invited to make any such application by summons and supporting affidavit. Then, in late April 2024, Mr Epstein's new solicitors filed a notice of change of solicitor. By letter dated 16 May 2024, his new solicitors took issue with the existing timetable and said they were 'presently considering whether it would be appropriate for all of the matters [being the Victorian proceedings, the Federal Court proceedings and the Lin proceeding] to be consolidated'.
6. In advance of a directions hearing scheduled for 7 June 2024, Mr Epstein's solicitors filed and served affidavit material and submissions complaining about the adequacy of the plaintiffs' pleadings and seeking access to a list of tender documents relied upon by the plaintiffs. In addition, Mr Epstein sought to reset the existing trial timetable, including by deferring the filing of his evidence until those matters had been resolved. He also foreshadowed the making of these transfer applications. Justice Waller ultimately made orders requiring the plaintiffs to serve lists of documents they expected to tender in chief and extended the time for the filing of witness statements by the parties. The plaintiffs' lists of tender documents were due by 15 July 2024, however, they did not fully produce the documents until the end of July 2024. Throughout August 2024, the lawyers for the plaintiffs and Mr Epstein remained in correspondence about the tender bundles and the adequacy of the plaintiffs' pleadings.

1. Section 5(1) of the Commonwealth Cross-vesting legislation states:

5(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 (in this subsection referred to as the first court); and

(b) it appears to the first court 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);

(ii) having regard to:

(A) whether, in the opinion of the first court, apart from this Act and any law of a State relating to cross-vesting of jurisdiction and apart from any accrued jurisdiction of the Federal Court or the Federal Circuit and Family Court of Australia (Division 1), the relevant proceeding or a substantial part of the relevant proceeding would have been incapable of being instituted in the first court and capable of being instituted in the Federal Court or the Federal Circuit and Family Court of Australia (Division 1);

(B) the extent to which, in the opinion of the first court, the matters for determination in the relevant proceeding are matters arising under or involving questions as to the application, interpretation or validity of a law of the Commonwealth and not within the jurisdiction of the first court apart from this Act and any law of a State relating to cross-vesting of jurisdiction; and

(C) the interests of justice;

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), as the case may be; or

(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.

1. Whilst s 5(1) of the Victorian Cross-vesting legislation was initially in the same form, ss 5(1)(b)(i) and 5(1)(b)(iii) of the Victorian statute have since been repealed. As Waller J explained in He Run Pty Ltd v LPY Investments Pty Ltd,[3] there appears to be greater scope for transfer of a proceeding under s 5(1) of the Commonwealth Cross-vesting legislation which requires the proceeding to be transferred if any of the provisions of ss 5(1)(b)(i), (ii) or (iii) are satisfied, while the Victorian legislation mandates transfer only if the provisions of s 5(1)(b)(ii) are satisfied.[4] The weight of authority in this Court suggests that an applicant seeking to transfer a proceeding may rely on either the Victorian or the Commonwealth Cross-vesting legislation[5] (noting the differences to which I have referred).
2. In H v D,[6] a decision concerning the equivalent provisions in the Jurisdiction of Courts (Cross-vesting) Act 1987 (WA), Pritchard J helpfully summarised the principles relevant to applications for transfer of proceedings from one court to another:

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 [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)).[7]

1. For the purpose of the legislative scheme, a proceeding relates to another proceeding: if the two are associated or connected; where a 'substantial and common question' arises in both proceedings; where the facts and circumstances in the two proceedings appear to be intertwined; or if there is an 'essential commonality of facts and of parties.[8]
2. By contrast, s 1337H of the Corporations Act relevantly provides:

(1) This section applies to a proceeding (the relevant proceeding) in a court (the transferor court) if:

(a) the relevant proceeding is:

(i) a proceeding with respect to a civil matter arising under the Corporations legislation; ...

(b) the transferor court is:

...

(ii) a State or Territory Supreme Court.

(2) ... if it appears to the transferor court that, having regard to the interests of justice, it is more appropriate for:

(a) the relevant proceeding; or

(b) an application in the relevant proceeding;

to be determined by another court that has jurisdiction in the matters for determination in the relevant proceeding or application, the transferor court may transfer the relevant proceeding or application to that other court.

1. Section 1337L of the Corporations Act further provides that:

In deciding whether to transfer under section 1337H, 1337J or 1337K a proceeding or application, a court must have regard to:

(a) the principal place of business of any body corporate concerned in the proceeding or application; and

(b) the place or places where the events that are the subject of the proceeding or application took place; and

(c) the other courts that have jurisdiction to deal with the proceeding or application.

1. In Yara Pilbara Fertilisers Pty Ltd (formerly known as Burrup Fertilisers Pty Ltd) v Oswal (No 8),[9] McKerracher J observed that the transfer question should not be approached with any presumption as to where the interests of justice lie and that the applicant does not have an onus of persuasion or proof.[10] Further, the transfer question does not require weight to be given to the plaintiff's choice of forum, which is essentially a neutral factor.[11] His Honour also restated the following non-exhaustive list of factors as being relevant to the transfer decision, which will vary in weight from case to case:

(a) the stage of the proceedings in the respective courts;

(b) the commonality or diversity of the parties;

(c) the nature of the proceedings;

(d) the commonality or diversity of issues;

(e) the risk of conflicting findings of fact or conflicting orders;

(f) a costs benefit analysis;

(g) the potential unnecessary drain on judicial and other public and private resources; and

(h) whether there is any particular judicial expertise residing in one court of the other. [12]

1. The court is required to undertake a practical or 'nuts and bolts' management decision as to which court is the more appropriate to hear and determine the substantive dispute, having regard to the 'interests of justice',[13] an expression that should be interpreted broadly.[14]
2. Whilst s 5(1) of the Commonwealth and Victorian Cross-vesting legislation is expressed in mandatory terms, the power to transfer a proceeding found in s 1337H(2) of the Corporations Act appears to be discretionary,[15] although the distinction is unlikely to be relevant in practice.[16] That said, a transfer should not proceed if it is 'equally appropriate' for each court to determine the matter.[17]
3. Section 1337A(2)(a) of the Corporations Act further provides that Pt 9.6A of Div 1 (in which s 1337H is found) operates to the exclusion of the Commonwealth Cross-vesting legislation. Therefore, if a proceeding meets the criteria specified in s 1337H(1) of the Corporations Act, that proceeding will fall within the regime for transfer under Pt 9.6A Div 1 of that legislation and the Commonwealth Cross-vesting legislation will not apply.[18] However, s 1337A(2)(a) does not explicitly address the position of the Victorian Cross-vesting legislation. In addition, s 1337A(5) provides that nothing in Div 1 affects any other jurisdiction of any court. In Re Rock S Pty Ltd & Rock P Pty Ltd; Flood v Serra,[19] Harris J observed that these drafting features may demonstrate an intention to exclude the Commonwealth Cross-vesting legislation but to leave the jurisdiction of this Court under the Victorian equivalent unaffected.[20] Her Honour further noted s 5E of the Corporations Act provides that the legislation is not intended to exclude or limit the concurrent operation of any law of a State or Territory. At the same time, there are authorities which suggest that s 1337H operates to the exclusion of the applicable State Cross-vesting legislation.[21] However, given the urgency of the transfer applications, the manner in which they have been argued and the features and related nature of the Victorian proceedings (which I discuss further below), it is unnecessary for me to give further consideration to that question.
4. Having regard to the material facts pleaded and the relief sought, it is apparent that the Xia proceeding concerns a civil matter arising under the Corporations Act, despite also raising claims under general law.[22] Consequently, Mr Epstein's application in the Xia proceeding strictly falls for consideration under s 1337H and not the Commonwealth Cross-vesting legislation. Notwithstanding that conclusion, the test is ultimately the same, namely whether it is more appropriate for the proceeding to be determined by the transferee court having regard to the interests of justice (noting of course, the factors in s 1337L of the Corporations Act). Further, on the assumption that it remains possible to consider the application through the lens of s 5(1)(b)(ii) of the Victorian Cross-vesting legislation on the basis that it is not explicitly excluded, the interests of justice will still be the overriding consideration.
5. By contrast, the Shao proceeding does not concern a civil matter arising under the Corporations Act. I therefore accept that Mr Epstein can rely on the relevant transfer provisions of each of the Corporations Act and the Commonwealth and Victorian Cross-vesting legislation. Moreover, because the Victorian proceedings share common features and have been managed together, it is convenient to consider the relevant factors for transfer which arise under each of the legislative provisions, which are, as already noted, broadly similar.
6. The plaintiffs submit that, in considering the exercise of its powers to cross-vest or transfer a proceeding, this Court must, as with any civil proceeding, act in accordance with s 8 of the Civil Procedure Act 2010 (Vic) ('CPA') by giving effect to the overarching purpose found in s 7 'to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute'. However, the argument was not fully developed having regard to the particular legislative schemes for the transfer of proceedings found in the Corporations Act and the Commonwealth and Victorian Cross-vesting legislation and their underlying constitutional context. Whilst it is not clear that I am required to take into consideration the overarching purpose when considering whether to transfer the Victorian proceedings out of this Court, I accept considerations of efficiency and timeliness will fall under the rubric of the interests of justice in any event.
7. I will now consider the factors relevant to the determination of the transfer applications and the submissions made by the parties in that regard.

Section 1337L factors

1. I note that the principal place of business of each of the corporate defendants in the Victorian proceedings (being OFM, One AR and OMI) is in Sydney. However, the key transactions the subject of these proceedings (being the acquisition and the subsequent sale of the hotel and the property) occurred in Melbourne, Victoria. I disagree with Mr Epstein's submission that the key controversy raised by these proceedings is the actual investment of the proceeds of sale of the hotel and property assets, rather than the sale of the assets themselves. Properly construed, the Victorian proceedings concern, and raise substantive claims about, the sale of the underlying assets in Victoria in addition to the subsequent investment of the proceeds of sale. Aside from the derivative claim made in the Xia proceeding which alleges breaches of directors' statutory duties under ss 180 and 181 of the Corporations Act, and the misleading and deceptive conduct claims made under the ACL and ASIC Act in the Shao proceeding, most of the claims in the Victorian proceedings, including for breach of trust and common law duties, are typically pursued in the Victorian Supreme Court and would fall within the Federal Court's associated or accrued jurisdiction. However, I do not suggest that the Federal Court is less equipped to hear such claims.
2. On balance, I consider that the s 1337 factors weigh against the transfer or, at the very least, are neutral.

Stage of proceedings in respective courts

1. I do not accept Mr Epstein's submission that the Victorian proceedings are not far advanced or that the extent of their progress has been overstated by the plaintiffs. They have been on foot for more than three years, including the hiatus period during which time the scheme of arrangement was being propounded. The proceedings are scheduled for trial commencing on 25 November 2024 - that is, in less than three months' time.
2. Mr Epstein concedes that if the matters are transferred, the plaintiffs would lose their current trial dates and would likely wait longer for a new trial date, but says such prejudice is minimal because there has been limited progress in the proceedings. As I have said, I do not accept the proposition that limited progress has been made, nor do I accept that the plaintiffs' prejudice of losing the trial dates would be minimal.
3. At the same time, it was also suggested the current trial dates cannot be guaranteed. Mr Epstein's senior counsel informed the Court that if the matters are not transferred, his client intends to make an application to vacate the trial at the next directions hearing on 13 September 2024 on the basis there has been delay by the plaintiffs in complying with timetabling orders, including the filing of their witness statements and the identification of tender documents. However, I note the delay in the filing of the plaintiffs' witness statements was regularised by the Court's orders of 7 June 2024. Mr Epstein also argued that the plaintiffs are seeking to tender between 2,500 and 2,700 documents at trial which may affect the viability of the trial dates. However, this must be viewed in the context of Mr Epstein's earlier production of approximately 32,000 to 33,000 critical documents under s 26 of the CPA. Regardless, any application to vacate the trial is hypothetical at this stage and would need to be considered on its merits. Even if it succeeds, it is likely that new dates could be obtained in the first half of 2025, whereas if the matters were transferred to the Federal Court, it is likely that their hearing and determination will be significantly delayed.
4. In contrast to the position of the Victorian proceedings, the Federal Court proceedings are in their early stages, having only been commenced in May 2024. A concise statement has been filed by the plaintiff in each of the proceedings and their first return occurred on 25 June 2024. Orders were made by Goodman J on that occasion, confirming that the proceedings would be managed together for the filing by each plaintiff of a statement of claim and the return of the matters for a case management hearing on 27 August 2024.
5. Similarly, while the Lin proceeding was commenced in June 2021, no apparent steps were taken by any party to progress the proceeding between 2021 and 2024. Nor is there any evidence before the Court of when the proceeding will be ready for trial. After changing her legal representation, in April 2024, the plaintiff served a proposed further amended Commercial List Statement.
6. In September 2021, the defendants to the Lin proceeding, including Mr Epstein, commenced an application to transfer the Lin proceeding to the Victoria Registry of the Federal Court under the Commonwealth Cross-vesting legislation and its New South Wales equivalent. At that time, there was a proceeding before the Federal Court in Melbourne in which the plaintiff sued OFM as trustee of the Cornerstone Bond Fund; its directors; and another entity, One Investment Administration Ltd, in relation to losses arising from the plaintiff's investment. Justice Ball refused the application and published reasons for doing so on 11 November 2021.[23] His Honour concluded it was not in the interests of justice to order the proceeding be transferred and did not consider that the Victoria Registry of the Federal Court was the more appropriate forum to determine the dispute.

1. At a general level, there is commonality between a number of the parties to the Victorian proceedings, the Federal Court proceedings and the Lin proceeding. The defendants to the Victorian proceedings are the same, save that One AR is not a defendant to the Shao proceeding. Similarly, the eight defendants to the Federal Court proceedings are identical. More relevantly, five of the eight defendants in the Federal Court proceedings are also defendants in the Victorian proceedings, being: OFM, OMI, Ms Wiesener, Mr Tearle and Mr Epstein. Each of those directors, together with OFM, are defendants in the Lin proceeding. Mr Epstein also argues that the plaintiffs in both the Victorian proceedings and the Federal Court proceedings are all investors in a fund of which OFM was the trustee, and who ultimately invested in the NSB Trust.
2. However, there are also important differences in the identities of the parties. In particular:

(a) the plaintiffs in the Federal Court proceedings and the Lin proceeding are not investors in the same funds as the plaintiffs in the Victorian proceedings. Further, while all the plaintiffs were ultimately investors in the NSB Trust, the plaintiffs in the Victorian proceedings are not alleged to have made direct investments in that fund;

(b) OIG (OFM's parent company) is a defendant in the Federal Court proceedings but not the Victorian proceedings or the Lin proceeding;

(c) Ms Elizabeth Reddy (who is a former director of OFM, OIG and OMI) is a defendant in the Federal Court proceedings and the Lin proceeding. Importantly, she is not named as a defendant in the Victorian proceedings because she was not a director of OFM at the time of the sale of the hotel and property and the investment of the proceeds in the NSB Trust;

(d) Austar Group Limited ('Austar') is named as a defendant to the Federal Court proceeding but not in the Victorian proceedings or the Lin proceedings. Austar is a third-party agent and unrelated to any of the corporate entities in the Federal Court proceedings and the Victorian proceedings; and

(e) critically, the capacity in which OFM is sued is different. The claims brought against OFM in the Victorian proceedings are in its capacity as trustee of the GWF Trust and the JY Trust. In the Federal Court proceedings, claims are made against OFM in its capacity as trustee of the NSB Trust.

1. I have already described the nature of the Victorian proceedings. The plaintiffs in the Federal Court proceedings are unitholders in the NSB Trust, with units acquired between November 2016 and January 2018. The plaintiffs pursued permanent residency in Australia by seeking Significant Investor Visas through Austar, a company registered in China that acted as a professional immigration and investment agency. Austar allegedly made certain representations to the plaintiffs, which induced them to acquire their respective units in the NSB Trust. OFM then caused the NSB Trust to invest in a series of nine debentures issued by the AL Trust between 2016 and 2019 and the AL Trust on-lent the proceeds in making loans to IPU.
2. At a high level, the plaintiffs in the Federal Court proceedings are suing:

(a) Austar for misleading or deceptive conduct and misleading representations under provisions of both the ASIC Act and the Corporations Act;

(b) OFM as trustee of the NSB Trust for breach of trust and fiduciary duties owed to unitholders of the NSB Trust and for unconscionable conduct for investing the entirety of the NSB Trust assets in a single managed fund without security;

(c) OIG, OMI as trustee of the AL Trust, Ms Wiesener, Mr Tearle, Justin Epstein and Ms Reddy for accessorial liability, breach of fiduciary duty and unconscionable conduct; and

(d) OIG and OMI for misleading and deceptive conduct, and the directors for breach of fiduciary duties and misleading and deceptive conduct.

1. The plaintiff in the Lin proceeding, Ms Enying Lin, applied for units in the NSB Trust in December 2018, although she says that, despite requests, OFM failed to identify the relevant debenture series acquired following her investment(s). In her proposed further amended Commercial List Statement, she alleges breaches of various obligations owed by OFM as trustee to unitholders in the NSB Trust in relation to the acquisition of Series 3, 4, 6, 7 and 9 debentures on limited recourse terms. Ms Lin further alleges the directors of OFM knowingly induced and/or procured the alleged breaches of trust by causing OFM to acquire the debentures and make loans to IPU.

1. Mr Epstein submits there is significant overlap between the issues raised in the Victorian proceedings, the Federal Court proceedings and the Lin proceeding. He says that the common core alleged facts are as follows:

(a) each unitholder invested in an investment fund of which OFM was the trustee;

(b) each unitholder's investment was invested (either directly or indirectly) in the NSB Trust;

(c) OFM as trustee of the NSB Trust invested each unitholder's investment in the debentures which, at the relevant time, were the only investments of the NSB Trust;

(d) the debentures were issued by the AL Trust on terms which did not provide any recourse on the part of OFM as trustee of the NSB Trust against the assets of the AL Trust in repayment of the amounts paid for the debentures;

(e) the investments by OFM as trustee were 'speculative', 'high risk' or 'hazardous';

(f) the proceeds of the debentures were on-lent by OFM to IPU and those loans were either unsecured or, if secured, the security was manifestly inadequate to secure the repayment by IPU;

(g) the loans to IPU have not been repaid, IPU has since been wound up and the unitholders have been unable to recover their investment from IPU; and

(h) the directors, including Mr Epstein, authorised or approved the investment in the debentures and/or the loans to IPU with actual or constructive knowledge of alleged breaches of duties.

1. To make good those submissions, Mr Epstein's lawyers produced at the hearing an aide-mémoire table, which sets out the 'common allegations' made in the Victorian proceedings, the Federal Court proceedings and the Lin proceeding by reference to specific pleading paragraphs. Putting to one side the fact that there are no defences filed in the Federal Court proceedings and that the Lin proceeding is at the point of being re-pleaded, I accept there is some commonality of issues. However, a closer examination of the available pleadings and initiating documents suggests the commonality is superficial and that the Victorian proceedings can be readily distinguished from the Federal Court proceedings and the Lin proceeding. Many of the core allegations identified by Mr Epstein are not the subject of dispute. For example, the fact that each unitholder invested in a fund of which OFM was trustee and that OFM as trustee of the NSB Trust invested each unitholder's investment in debentures issued by the AL Trust, are not matters of contention.
2. As I have previously noted, the claims brought against OFM in the Victorian proceedings are in relation to its capacity as trustee of the GWF Trust and the JY Trust, whereas the claims brought against OFM in the Federal Court proceedings and the Lin proceeding are brought in a different capacity, namely as trustee of the NSB Trust.
3. There are also important differences in relation to the circumstances and timing of the investments and the involvement of the directors of OFM and the other corporate entities. The Victorian proceedings primarily concern the sale of the hotel and property in mid-2019 contrary to the interests of the unitholders in the JY Trust and the GWF Trust, and the investment of the sale proceeds in the NSB Trust at that particular point in time. In the Xia proceeding, the plaintiffs say that by at least 9 August 2019, OFM (as trustee of the NSB Trust and the JY Trust) and the trustees of the CCWF and the JY Sub-Trust intended to invest the proceeds of the sale of the property and the hotel in Series 9 or Series 7 debentures in the AL Trust. The Series 9 debentures were apparently the last, or one of the last, investments made by the NSB Trust in the AL Trust (in around late August 2019), before it became apparent that the trust assets (particularly its loan book to IPU) were worthless. By contrast, the other proceedings concern claims by investors in the NSB Trust concerning the marketing of that fund and the investments made by that fund from as early as 2016.
4. Whilst I accept that parts of the underlying factual substratum between in the respective proceedings are the same, each of the proceedings are fact and date specific. Different funds were invested in the NSB Trust in different circumstances and at different times. The facts and circumstances are not intertwined. Critically, the investments by the plaintiffs in the Victorian proceedings were indirect, as distinct from the direct investments made by the plaintiffs in the other proceedings. In effect, the plaintiffs in the Victorian proceedings say they were not even aware investments were made in the NSB Trust with the proceeds of sale of the hotel and property. Further, across all of the proceedings, the question of whether the debentures were speculative, high risk or hazardous will turn on what was known to OFM and its directors in relation to nine debenture series issued by the AL Trust over around four years. For each case, it will be necessary to examine those matters at the time the investments were made. Moreover, while the proceeds of the debentures were on-lent to IPU, different loans were made at different times.
5. It follows that whilst there is some commonality of issues between the relevant proceedings, there are important points of distinction which militate against any transfer of the Victorian proceedings.

Risk of conflicting findings of fact or conflicting orders

1. In my opinion, there is little risk of conflicting findings of fact in the Victorian proceedings and the Federal Court proceedings. This is because there is no significant commonality of issues in dispute and there are, in fact, important points of distinction. In the Victorian proceedings, the Court will ultimately be required to determine the essential issue of whether in August 2019, the investment by OFM (and One AR in the case of the Xia proceeding) in the NSB Trust of the proceeds of the sale of the hotel and property constituted breaches of trustee duties, including because of the alleged speculative and risky nature of the investment. In the Federal Court proceedings, the key question is whether OFM breached its trustee duties at different times, and in respect of a different trust, albeit in relation to similar investments. But as Ball J observed in the earlier transfer application in Lin v One Funds Management Limited:[24]

A conclusion in one case that [OFM] breached its duty and in the other that it did not does not involve inconsistent findings. It is possible that if the two cases are heard by different judges, those judges could express different views on the same question. For example, it is theoretically possible that one judge could conclude that no trustee, consistently with its duties, could have acquired [AL Trust] debentures in any circumstances, whereas another may conclude that in the particular circumstances of the case, [OFM] did not breach its duties by acquiring [the] debentures.[25]

1. Mr Epstein properly concedes that the perceived risk of inconsistency is not directed at the ultimate findings in the cases (such as whether a trustee breached an alleged duty), but rather critical intermediate findings (such as whether the debentures were speculative, high risk or hazardous) and the actual or constructive knowledge of the directors in relation to the acquisition of the debentures and the loans to IPU. However, a critical intermediate finding in one case will not necessarily apply in another case because of the differences in dates and circumstances. Moreover, each case will be decided on the basis of different evidence, whether heard separately or together. I do not consider there to be a significant risk of inconsistent findings which would likely bring the administration of justice into disrepute.

1. Mr Epstein submits it would be inefficient and costly for the defendants to participate in two to three trials in different jurisdictions that largely address the same issues, as this would result in a duplication of costs and wasted resources. Further, he says that if the Victorian proceedings were transferred, the Federal Court could make case management orders for the efficient conduct of all four proceedings, such as by treating the approximately 32,000 documents discovered by the defendants in the Victorian proceedings as discovery in the Federal Court proceedings. However, on closer examination, the perceived efficiencies and cost savings identified by Mr Epstein are more illusory than real.
2. Mr Epstein is proceeding on an underlying assumption that all four proceedings will be heard together if transfer orders were made. Whilst I accept it is highly likely all of the proceedings would be managed together, whether they will ultimately be heard together, with evidence in one proceeding being evidence in the other proceedings, would be an important case management decision to be made by the managing judge, having regard to the key issues in dispute as discerned from the pleadings (which have not yet been developed in the case of the Federal Court proceedings) and the evidence, when it is complete (which may not be for some time in the case of the Federal Court proceedings). The managing judge would also have different options available in relation to the manner in which the proceedings could be heard together, such as whether they are heard concurrently, consecutively or on a formally consolidated basis.
3. An order that evidence in one proceeding be evidence in the others may have the counterintuitive effect of increasing costs because the lawyers for the parties will need to make important forensic assessments of what evidence already prepared will be relied upon and how future evidence should be structured and responded to, having regard to the myriad of claims and diversity of issues the proceedings raise. Further, an order that documents discovered in the Victorian proceedings should be received as part of discovery in the Federal Court proceeding could potentially have the effect of introducing thousands of irrelevant documents into the document pool and increasing the costs of reviewing those documents. Were the proceedings to be formally consolidated, the pleadings would likely also need to be recast into a single set of claims which would be a substantial and expensive undertaking.
4. While the transfer, management and hearing of the proceedings together would no doubt be preferable for Mr Epstein as he would avoid having to prepare for and give evidence in multiple proceedings, it would also have the likely effect of increasing the overall duration of the trial of the proceedings, which would again compound the costs and time expended by the parties in the Victorian proceedings, the Federal Court proceedings, and possibly also the Lin proceeding (if a further transfer application was made). I accept, as a general proposition, that the hearing of four proceedings (or five proceedings if the Lin proceeding is also transferred) as a single trial or consecutive trials will not inevitably be shorter, but will necessarily be longer with more lay witnesses and additional parties with separate representation. Whilst it is no doubt open to the plaintiffs in the Victorian proceedings to seek to be excused from attending parts of a trial that do not concern them specifically, their lawyers may consider it prudent to monitor the entire hearing of the trial to protect the interests of their clients and, if necessary, make any application to cross-examine a witness giving evidence that may touch upon the issues arising in their case. Separating claims and witnesses may well prove challenging and impractical.
5. Mr Epstein goes further to say that given multiple plaintiffs seek to run common arguments against the same defendants, in the absence of any apparent conflict of interest, they ought to engage common representation and bring their claims in a single forum. Whilst the question of separate legal representation may well be relevant to the determination of costs at the conclusion of the proceedings, Mr Epstein has not clearly identified the source of a court's power to compel the plaintiffs to be represented by common legal practitioners or why such power should be exercised in the circumstances.
6. The plaintiffs in the Victorian proceedings have been represented by the same legal team based in Melbourne since the proceedings began in early 2021 and have paid for a significant amount of work preparing their matters for trial. The bulk of the work has been completed. In the event the matters were transferred to the Federal Court in the New South Wales Registry, the plaintiffs would need to make an election between retaining the same legal team, and paying for travel and accommodation costs for interlocutory hearings and the trial itself, or briefing new lawyers who would be required to spend considerable time taking instructions and 'getting up to speed'. It would be an expensive exercise either way. Any cost savings that may be obtained by transferring the Victorian proceedings to the Federal Court will therefore likely be offset by increased costs to the plaintiffs.
7. Lastly, the plaintiffs contend, and I accept, that a transfer of the Victorian proceedings would delay the trial by over a year and increase costs which will arise during that time, including as a result of the inevitable need for additional case management hearings whilst the Federal Court proceedings are brought up to date.
8. In my view, the costs of transferring the Victorian proceedings outweigh the benefits.

Potential unnecessary drain on judicial and other public and private resources

1. In my opinion, the separate trial of the Victorian proceedings and the Federal Court proceedings would not necessarily be inefficient or constitute an unnecessary drain on Court resources. By contrast, the transfer of the Victorian proceedings would likely constitute an unnecessary drain on the plaintiffs' resources. Whilst there is no direct evidence adduced by Mr Epstein on this point, I do accept that the conduct of multiple proceedings will prove costly for Mr Epstein or an insurer in respect of any insurance policy responsive to the claims made against him. I therefore propose to give this consideration a neutral weighting in assessing the interests of justice.

1. Mr Epstein states that if the matter is not transferred, he (and the other directors) will be cross-examined on at least two, if not three occasions, in relation to their actual and constructive knowledge of the investment in the debentures issued by the AL Trust and the loans to IPU. He says this violates the usual rule of fairness that a witness is only cross-examined on a topic once by parties in the same interest. I have already sought to explain why there is little overlap in the issues arising across the proceedings. In my view, this reduces the prospect of Mr Epstein being cross-examined in relation to the same material. The cross-examination of Mr Epstein is likely to cover different ground in each proceeding, although there may be common themes. But even if he was cross-examined on the same transactions, in accordance with s 91 of the Evidence Act 2008 (Vic) and the equivalent Commonwealth and New South Wales legislation, any findings of fact made by the Court in one proceeding are generally inadmissible to prove the existence of the fact in other proceedings. This would mitigate any prejudice to Mr Epstein.
2. I note the remaining defendants in the Victorian proceedings consent to Mr Epstein's applications for transfer and potential consolidation with the Federal Court proceedings. Similarly, Mr Epstein's lawyers have apparently procured the consent of the other defendants to the Lin proceeding for the transfer of that proceeding to the Federal Court of Australia and its potential consolidation with the Federal Court proceedings and the Victorian proceedings.
3. However, there is no evidence before the Court regarding the attitude of the plaintiffs in the Federal Court proceedings and the Lin proceeding to the transfer of all proceedings to the Federal Court and their potential consolidation or concurrent hearing. Nor is there any evidence from Austar in relation to the transfer and hearing of all of the proceedings in the Federal Court. By contrast, the plaintiffs have adduced evidence of real prejudice in the event the transfers were made. Given the resources expended by the plaintiffs to date, and the proximity to trial, I consider their prejudice to be significant.

1. In support of his contention that the New South Wales Registry of the Federal Court is the more appropriate forum for the Victorian proceedings, Mr Epstein draws the Court's attention to the fact that:

(a) each of the defendants in the Victorian proceedings are based in New South Wales; and

(b) only three of the plaintiffs across the Victorian proceedings, the Federal Court proceedings and the Lin proceeding live in Victoria, while those remaining plaintiffs live in China; and

(c) the constitution of the NSB Trust is governed by New South Wales law.

1. Given key transactions the subject of the proceeding occurred in Victoria, the fact that a number of parties reside outside of Victoria is not decisive and is outweighed by the other factors I have identified which tell against the transfers. I also note, as an aside, that in making the earlier unsuccessful application to transfer the Lin proceeding from the New South Wales Supreme Court to the Victoria Registry of the Federal Court, Mr Epstein was then residing in New South Wales.[26]
2. As regards the constitution of the NSB Trust, I observe that cl 29.11 of that document states the constitution is 'governed by and to be interpreted in accordance with the laws of New South Wales' and that '[t]he parties... submit to the non-exclusive jurisdiction of the courts of New South Wales'. It was not suggested by Mr Epstein that this clause prevents the Victorian proceedings from being heard in this Court. The clause is not exclusive in nature.

1. In the result, I consider that the balance of the interests of justice lies against the transfer of the Victorian proceedings to the Federal Court of Australia. Whilst the arguments presented by Mr Epstein had some superficial attractiveness, I have sought to explain why as a matter of sound case management, the transfers should not proceed. This Court is the more appropriate forum for the resolution of the Victorian proceedings.
2. I will hear the parties in relation to the question of costs.

ONE MANAGED INVESTMENT FUNDS LIMITED (ACN 117 400 987)

IPROSPERITY CORNERSTONE MANAGEMENT PTY LTD (IN LIQUIDATION) (ACN 620 127 291)

CORNERSTONE CAPITAL INVESTMENT GROUP PTY LTD (IN LIQUIDATION) (ACN 612 659 079)

ONE MANAGED INVESTMENT FUNDS LIMITED (ACN 117 400 987)

CORNERSTONE CAPITAL INVESTMENT GROUP PTY LTD (IN LIQUIDATION) (ACN 612 659 079)

[1] On 20 June 2024, Waller J referred the cross-vesting applications to an Associate Judge for hearing and determination pursuant to r 77.05 of the Supreme Court (General Civil Procedure) Rules 2015 and, if required, also pursuant to r 16.1(3) of the Supreme Court (Corporations) Rules 2023.

[2] [2023] FCA 1212 (Jackman J).

[3] [2024] VSC 223 (Waller J) ('He Run').

[5] Caltex Australia Petroleum Pty Ltd v Calypso Haulage Pty Ltd [2003] VSC 359 (Byrne J); Jane v Jane [2008] VSC 341 (Hansen J); PCM Nominees (No 2) Pty Ltd v Brighton Bay Developments Pty Ltd [2007] VSC 17 (Hollingworth J); Zhang v Zhang [2024] VSC 3 (Osborne J).

[6] [2012] WASC 291 (Pritchard J).

[8] Amalia Investments Ltd v Virgtel Global Networks N.V. (No 2) [2011] FCA 1270; [2011] 198 FCR 248, [41] (Greenwood J).

[9] [2015] FCA 49 (McKerracher J) ('Yara Pilbara').

[10] Ibid, [25] citing BHP Billiton Limited v Schultz (2004) 221 CLR 400, [25] ('BHP') (Gleeson CJ, McHugh and Heydon JJ).

[11] Yara Pilbara, [25], citing BHP [71] (Gummow J), [168] (Kirby J).

[13] BHP, [13] (Gleeson CJ, McHugh and Heydon JJ) citing Bankinvest AG v Seabrook (1988) 14 NSWLR 711; 713-4 (Street CJ).

[14] BHP, [15] (Gleeson CJ, McHugh and Heydon JJ).

[15] Vanis Capital Investments Pty Ltd (as trustee of the Vanis Capital Investment Trust) v Morris [2023] FCA 359, [27] (Anderson J) ('Vanis Capital').

[16] Re HIH Insurance Ltd (in liq) [2014] NSWSC 545; (2014) 104 ACSR 240, [6] (Brereton J) ('Re HIH'); Vanis Capital, [27].

[17] Bell Group NV v Bell Group Finance Pty Ltd, Re Western Interstate Pty Ltd [2018] FCA 1440, [23] (McKerracher J). See also Re HIH [7]; Seven Network (Operations) Limited and Anor v Amber Harrison [2017] NSWSC 405, [33] (Sackar J); and Coshott v Crouch [2018] NSWSC 853, [65] (Parker J).

[18] Vanis Capital, [25]; see also Re Farley Bay Pty Ltd (in liq) [2022] VSC 604, [181] (Gardiner AsJ); Fletcher and Ors v Fortress Credit Corporation (Australia) II Pty Limited and Ors [2012] QSC 359, [19] (Fryberg J).

[19] [2024] VSC 362 (Harris J).

[21] See Re Sol Sana Pty Ltd [2018] NSWSC 570, [2] (Leeming JA); Re Lime Gourmet Pizza Bar (Charlestown) Pty Ltd (2014) 104 ACSR 457, [11] (Brereton J); see also Re HIH, [6].

[22] See Shepard, Re Grainpro Pty Ltd (in liq) v Bonfante [2020] FCA 1618 (Markovic J).

[23] See Lin v One Funds Management Ltd [2021] NSWSC 1450 (Ball J) ('Lin v OFM').

[24] [2021] NSWSC 1450 (Ball J).