Practice and Procedure - Cross-vesting - traditional State matter - partnership dispute - purpose of cross-vesting legislation - effect of delay in bringing application to cross-vest.

Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth)

Solicitors for the Applicants : Messrs Fisher Jeffries

Counsel for the Respondents : Mr P.A. McNamara

Solicitors for the Respondents : Messrs J.A. Carr and Co

The Court orders:

1. That the application for an order transferring the proceedings to the

Supreme Court of the State of South Australia be dismissed.

2. That the respondents pay the costs of the applicants which costs are to be taxed in default of agreement.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

The issue for determination at this interlocutory stage is whether the history and circumstances of this litigation are such that I should transfer the proceedings to the Supreme Court of South Australia pursuant to the powers contained in the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) ("the Cross-Vesting Act").

2. The first two-named applicants in the substantive proceedings, Glen Henry and Lila May Lamshed, are husband and wife and the third applicant, Trevor William Lamshed, is their eldest son. The respondent Geoffrey Glen Lamshed is their second son and Kathleen Isabelle Lamshed is his wife; the corporate respondent, GGL Pty. Ltd., is the trustee of Mr and Mrs Geoffrey Lamshed's family trust.

3. Until recently the three applicants and the first two named respondents had carried in partnership their farming business in the north of Yorke Peninsula in partnership using lands that are owned by one or more members of the larger Lamshed family. It is, in my opinion, a matter of significance that the corporate respondent was not a member of the partnership just as it is a matter of curiosity that it is a respondent to these proceedings.

4. It is apparent that the parties are locked in bitter conflict; the interlocutory processes have thrown up intractable attitudes on both sides. At this stage it is impossible as well as undesirable to engage in any fault finding exercise but I am compelled to observe that any proposal advanced by one side is invariably challenged and fought out by the other. For example, whilst all partners agree that their partnership is now dissolved, they cannot agree on the date of dissolution.

5. Proceedings were commenced in this Court on 14 November 1991 by way of an Application together with a Notice of Motion seeking the appointment of a Receiver of the partnership assets and restraining orders against all respondents. The orders that were sought were supported by the affidavit of Glen Henry Lamshed that was sworn on the same day, 14 November 1991. That affidavit was very detailed; it extended over 36 pages and contained numerous exhibits; it chronicled factual assertions - principally against the respondent Geoffrey - of the most serious kind. However, despite the nature of the relief claimed in the Application against the corporate respondent, the affidavit contained nothing that would support any entitlement to that relief. In paragraphs 40, 41 and 43 there are mere references to GGL Pty. Ltd. and the GG Lamshed Family Trust acquiring certain land; in paragraphs 82 and 83 there are references to that Trust being indebted to the partnership. But nowhere are there any allegations that would support the applicants' claims in paragraphs 2 and 5 of the Application for a declaration that the third respondent has engaged in misleading or deceptive conduct in breach of s.52 of the Trade Practices Act and for damages pursuant to the provisions of s.82 of that Act. It was submitted by Mr McNamara, counsel for the respondents, that the inclusion of the corporate respondent as a respondent in these proceedings was merely a device so that the applicants could invoke the jurisdiction of the Federal Court independently of the cross-vesting legislation. On the material that was filed by the applicants in November of last year, that interpretation appears to be correct.

6. The relief that was sought in the Application included references to the Fair Trading Act 1987 (S.A), the Trade Practices Act 1974 (Cth) and the appointment of a Receiver. But in truth, these proceedings are directed at the heart of the former partnership; what is needed is the orderly winding up of the affairs of the partnership and, if necessary, the court-supervised taking of accounts and enquiries to resolve the rights of the former partners inter se. Such proceedings have always been the traditional province of State Courts.

7. There is power vested in the Federal Court to transfer these proceedings to the Supreme Court of South Australia. That power is to be found in sub-s.5(4) of the Cross-Vesting Act which provides as follows:

"Where:

(a) a proceeding (in this subsection referred to as the

'relevant proceeding') is pending in the Federal Court

or the Family Court (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 Supreme Court of a State or

Territory and it is more appropriate that

the relevant proceeding be determined by

that Supreme Court;

(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, 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

Supreme Court of a State or Territory;

(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 State or

Territory referred to in

sub-subparagraph (A) 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 that Supreme

Court; or

(iii) it is otherwise in the interests of justice

that the relevant proceeding be determined

by the Supreme Court of a State or Territory;

the first court shall transfer the relevant proceeding to

that Supreme Court."

8. The presence of the word "or" immediately before the commencement of sub-paragraph 5(4)(a)(iii) indicates a disjunctive exercise. Thus, if it appears to this Court that one or other of the three criteria that are referred to in sub-paragraphs (i), (ii) or (iii) is present, there will be an obligation on - not merely a discretion in - this Court to make the order of transfer. The first of the tests can be put to one side; no other proceedings are pending in the Supreme Court of South Australia or elsewhere. The second of the three criteria requires the Court to consider, cumulatively, a further three nominated issues so that it may be determined, by "having regard to" their totality whether "it is more appropriate that the relevant proceeding" be cross-vested to the Supreme Court.

9. In terms of s.5(4)(b)(ii)(A) it is my opinion that, apart from the cross-vesting legislation and the accrued jurisdiction of the Federal Court, a substantial part of the relevant proceeding "would have been incapable of being instituted in the (Federal) Court and capable of being instituted in the Supreme Court". Bearing in mind the adverse views that I have expressed about the presence of the corporate respondent, the winding up of the partnership and all consequential matters flowing therefrom are a very substantial part of, if not in reality, the whole of, the relevant proceeding; furthermore, they are traditionally matters that are properly classified as "State matters". In due course, the proper consideration by a Court of these State matters will be dependant on the provisions of the Partnership Act (1891) (SA) and the principles of partnership law, both of which are part of the law of the State of South Australia. These factors militate strongly in favour of a cross-vesting order. However, they are to be weighted by having regard additionally to the third of the nominated issues - that is, "the interests of justice". In Bourke v State Bank of New South Wales (1988-89) 85 ALR 61 Wilcox J. said at p 77 that "this phrase ought to be read widely". I respectfully agree. In my opinion it is incumbent upon the Court which is being asked to make the cross-vesting order to assess all the material that touches upon or concerns the litigation and the parties that are the subject of the cross-vesting application so that a proper assessment is made of "the interests of justice".

10. Having reflected on the matter, I have had no difficulty in concluding that if the cross-vesting application had been made soon after the commencement of proceedings, I would have made the necessary order transferring the proceedings to the Supreme Court of South Australia. In my opinion, the complementary cross-vesting legislation was introduced for the limited purpose of avoiding problems of jurisdiction. It should not be regarded as an invitation to litigate traditional State matters in the Federal Court (or vice versa): (vide the remarks of Northrop J. in Mansell v Cumming (1989) 86 ALR 637 at 643). The cross-vesting legislation was never intended to deprive State Supreme Courts of their traditional jurisdiction. Support for these views is found in the opening words of the preamble to the legislation:

"Whereas inconvenience and expense have occasionally been caused

to litigants by jurisdictional limitations in federal, State and

Territory courts..."

11. But there has been an unexplained delay in seeking the cross-vesting order and as a result, this Court has become heavily involved in the litigation. The Notice of Motion was only filed on 26 February 1992, some three months after the filing of the Application. It is true that counsel for the respondents had earlier foreshadowed the likelihood of such an application being made but in my opinion, the decision to transfer or retain the proceedings should be considered by having regard to the circumstances as they existed at the time when the Notice of Motion was filed. It would be unfair to the applicants to go back to November just as it would be unfair to the respondents to assess the position as at 2 April 1992 when the application was first argued. The delay between 26 February and 2 April 1992 was not the fault of the respondents: on each occasion when this issue might have been argued one or other of the parties brought forward some other urgent matter which demanded priority over the cross-vesting issue. Having regard to the facts of this case I intend to make my decision by considering the state of the litigation at 26 February 1992.

12. When the matter first came before this Court on 14 November 1991, the applicants sought and obtained orders empowering John Irving, a chartered accountant, to enter upon nominated lands for the purpose of compiling an inventory of partnership assets. A proposed application to have Mr Irving appointed a Receiver was not pursued at that stage. On the following day, enabling orders were made to allow the harvesting of crops to commence. Those orders dealt with the manner in which produce was to be delivered to the Wheat and Barley Boards. The extent of the enmity between the parties can be gauged by the fact that the order called for all produce to be delivered in the names of the solicitors for the parties.

13. On 27 November 1991, the first named respondent Geoffrey Glen Lamshed filed an affidavit in answer to his father's; broadly speaking all relevant allegations were denied. On the next day, 28 November, further enabling orders were made dealing with the disposal of crops, stock deliveries, deposits with the Wheat and Barley Boards and the provision of discovery and inspections of documents. Those orders were made, in part, as a consequence of the affidavit of Nicholas David Bampton, the solicitor for the applicants. That affidavit complained of the failure by the respondents to deliver cart-notes in respect of the delivery of grain. It also exhibited the extensive correspondence that had passed between solicitors in respect of these and other issues. That correspondence was a history of complaints from each faction about the behaviour of the other. It can therefore be seen that by the time the respondents filed their Notice of Motion seeking an order to cross-vest, much water had passed under the bridge. Several interlocutory applications had, by then, been heard and determined and a partial regime for the control of partnership assets, including the proceeds of the harvest, had been established.

14. In Perpetual Holdings Pty. Ltd. v Leviathan Pty. Ltd. (1991) 30 FCR 524 I expressed the opinion, which I still hold, that the subject of case management is a factor that is to be considered along with other relevant material when determining whether a cross-vesting order should be made. In the particular circumstances of this case, the aspect of case management had assumed, even in February, a substantial degree of importance as a result of the ongoing directions hearings and the interlocutory arguments that had occurred since the institution of the proceedings. Added to this, no arguments were advanced (in terms of costs, expenses, logistics or convenience to litigants and witnesses) that would favour one Court as against the other. Indeed, the balancing exercise can be cryptically summarised by weighing the fact that these are traditional State matters against the fact that the litigation is already substantially under way in the Federal Court. This is not one of those cases where it is necessary to consider the relevance of the principles of private international law in the administration of the cross-vesting legislation: (see, for example the decision of Higgins J. in Baffsky v John Fairfax and Sons Ltd. (1990) 97 ACTR 1 and the authorities therein referred to). But having made it clear that the litigation could have, and indeed should have, gone to the Supreme Court at the outset, it nevertheless seems to me that, because of the delay and the extent of the interlocutory processes that have been completed in the intervening span of time, it is now probably in the interests of justice that the matter stay in this Court.

15. If a cross-vesting order were to be made, there would, of necessity, be some delay and additional expense; another Judge or Master of the Supreme Court would have to assimilate a wealth of material that has been filed by each side - most of it will maintain degrees of relevance as the litigation continues. When asked to advance reasons to support the cross-vesting order, the only matter to which Mr McNamara referred, in addition to the traditional State jurisdiction, was that if the litigation proceeded to the taking of accounts and enquiries there would be four Masters in the Supreme Court who would or might be available as against two Registrars in the Federal Court. Such a bland statement cannot warrant serious consideration; it ignores the relative work loads of the two Courts and the national resources of the Federal Court.

16. I have therefore come to the conclusion that the application to transfer these proceedings to the Supreme Court should be refused. However, I wish to emphasise that my decision has been heavily influenced because of the extent of the progress that has been made in this Court in the conduct and supervision of these proceedings. For what it is worth, the claim for relief under the Trade Practices Act remains alive; it has not been challenged and, despite my disparaging remarks, it may survive a challenge if one is made. On the other hand, it should be understood that even if all references to the Trade Practices legislation are subsequently struck out, the jurisdiction of the Federal Court will survive to dispose of the partnership dispute: Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212 at 219.

17. It was suggested in Baffsky v John Fairfax and Sons Ltd (supra) that there was an onus of persuasion that required "a defendant to demonstrate some real injustice..." (p 6) before a cross-vesting order would be made. With the greatest respect, I feel that such a proposition places an unfair burden on a defendant. As I said in Perpetual Holdings v Leviathan (supra) the cross-vesting legislation allows for the court to make an appropriate transfer on its own motion. It need not await an originating process from a litigant. The determining factors will be the criteria contained in paragraph 5(4)(b) of the Cross-vesting Act; if having regard to all relevant material (irrespective of source) the Federal Court concludes that it is "more appropriate that the relevant proceeding be determined by that Supreme Court" (sub-paragraphs 5(4)(b)(i) and (ii)) or concludes (in terms of sub-paragraph 5(4)(b)(iii)) that "it is otherwise in the interests of justice that the relevant proceeding be determined by the Supreme Court", then this Court will make the cross-vesting order. In my opinion, there is not a question of any litigant carrying any onus.

18. I have concluded that as at February 1992 and as at now it is neither appropriate nor otherwise in the interests of justice to transfer these proceedings to the Supreme Court of South Australia. The application is dismissed with costs.