BETWEEN : RESOURCE EQUITIES LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) (ACN 067 748 109)

BETWEEN : RESOURCE EQUITIES LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT)

Jurisdiction - Cross-vesting - Application by defendants to transfer proceedings to the Supreme Court of New South Wales pursuant to Corporations Act 2001 (Cth) ss 1337H, 1337L and Jurisdiction of Courts (Cross-vesting) Act 1987 (WA) s 5(2)(b) - Proceedings based on events that occurred in Sydney prior to relocation of the plaintiff's offices to Western Australia - Defendants' residence and majority of witnesses outside Western Australia - Plaintiff's legal representatives based in Western Australia - Two of the three directors of the plaintiff reside in Western Australia

Corporations Act 2001 (Cth), s 1337H, s 1337L

Jurisdiction of Courts (Cross-vesting) Act 1987 (WA), s 5(2)(b)

Both proceedings transferred to the Supreme Court of New South Wales

(This judgment was delivered extemporaneously on 27 September 2007 and has been edited from the transcript)

1 There are two applications before the court for the transfer of proceedings from this court to the Supreme Court of New South Wales. I will deal with them together so the judgment which I now give will be judgment in respect of both actions, being CIV 1605 and CIV 1606 of 2006.

2 The principles that govern applications of this kind are not seriously in doubt and were not contested in argument before me.

3 The applications are brought pursuant to two alternative sources of power. The first is s 5(2)(b) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (WA) (Cross-Vesting Act) and the second is s 1337H(2) of the Corporations Act 2001 (Cth) (Corporations Act).

4 There are some differences between the two statutory provisions. For example, under the Western Australia statute, the Cross-Vesting Act, in the event that the court is satisfied that it is in the interests of justice to transfer the proceedings, the court is obliged to transfer the proceedings. However, under the Corporations Act the use of the word "may" confers a discretion as to whether or not the proceedings will be transferred.

5 The point made by the applicants for transfer in this case, which I accept, is that it will be a rare case in which the difference between the mandatory and the discretionary language will have any practical application, because it is difficult to conceive of a circumstance in which having concluded that it is in the interest of justice to transfer a case it would be appropriate to nevertheless exercise a discretion to decline transfer.

6 One of the differences between the Commonwealth and state provisions is that under s 1337L of the Corporations Act, a court considering an application for transfer under s 1337H is obliged to take account of three things - firstly, "the principal place of business of any body corporate concerned in the proceeding or application" (s 1337L(a)); secondly, "the place or places where the events that are the subject of the proceeding or application take place" (s 1337L(b)); and thirdly, "the other courts that have jurisdiction to deal with the proceeding or application" (s 1337L(c)).

7 I will of course take account of those matters in the course of these applications. It is difficult to envisage a circumstance in which a court considering an application for transfer would not take account of those matters which are so obviously relevant to the question of transfer.

8 The principles that govern applications of this kind have recently been enunciated conveniently by the High Court in the case of BHP Billiton Ltd v Schultz [2004] HCA 61; (2004) 211 ALR 523; (2004) 221 CLR 400. I will adopt without restating the principles enunciated in that case as a guide to me in the determination of these transfer applications. Succinctly put, that case establishes that the decision to be taken under transfer application is a "nuts and bolts" management decision as to which court in the pursuit of the interests of justice is the more appropriate forum to hear and determine the substantive dispute.

9 That decision is to be made as much as a matter of impression rather than, as in the words of Street CJ in Bankinvest AG v Seabrook (1988) 14 NSWLR 711 at 714, to be overly "encumbered by an encrustation of judge-made pronouncements of principles".

10 There was discussion and argument before me about the question of onus. It would, I think, be an unusual case in which the question of onus would predicate the outcome as was observed in the decision in Re Dstore Ltd; Dwyer v Hindal Corporate Pty Ltd [2005] SASC 24; (2005) 52 ACSR 335.

11 The only instance in which I can envisage onus would be relevant would be, if, after considering all the circumstances the Court concluded that there was no identifiable distinction between the two alternative fora in terms of the interests of justice in such circumstance. It may be that in such an instance the Court would conclude that it was appropriate to leave the case where it was.

12 The authorities also establish that applications for transfer of this kind are not to be approached on the basis that the forum in which the proceedings are commenced has any significance in terms of creating an onus on the other party to show that some other forum is manifestly more convenient. Rather, the application to transfer is to be approached without a presumption that the forum in which the proceedings are commenced is presumptively the more appropriate and that therefore there is some onus to be overcome in order to sustain the applications for transfer.

13 With those principles in mind I turn to the evidence which has been adduced in support of the applications for transfer, starting firstly with the affidavit of the first defendant in CIV 1605 of 2006, who is Mr Carr. He deposes that he is the first defendant in CIV 1605 and he is one of the applicants for transfer along with the second defendant in CIV 1605, Mr Purves. They are both also defendants in CIV 1606 of 2006.

14 Mr Carr deposes that he lives in Sydney, New South Wales as does the fourth defendant in CIV 1605, Mr Garrett. Mr Purves lives in Brisbane, Queensland and Mr Thomas who is the third defendant in both CIV 1605 and CIV 1606 also lives in Sydney, New South Wales. The proceedings against Mr Thomas have been resolved but it is suggested that Mr Thomas may nevertheless be a potential witness in the proceedings because his conduct may fall into question.

15 In CIV 1606, the defendants to the proceedings are the same parties but with the addition of Mrs Garrett who also lives in Sydney, New South Wales. The situation is that in both matters all defendants live in Sydney, New South Wales except for Mr Purves who lives in Brisbane, Queensland.

16 Mr Carr also deposes to the fact that the matters raised in the proceedings in both matters arise in relation to events which occurred between March 2003 and March 2005. During that period of time the operations of the plaintiff, which is a corporate entity of course, were conducted from offices in Sydney. It was only after March 2005 that the plaintiff relocated the offices from which it conducted its business, to Perth.

17 Since a time after the issues in these proceedings arose, the plaintiff has conducted its business from Perth. Two of the three of its directors are resident in Perth. The third, a Mr Johnson, is resident in Sydney, New South Wales, although Mr Carr deposes that board meetings of the plaintiff take place in Perth.

18 Mr Carr goes on to refer to the claims that have been advanced in the proceedings and I will start with CIV 1605. He refers to the first claim in those proceedings which relates to the overpayment of director's fees. The allegation essentially is that there was a breach of duty by Mr Carr and Mr Purves amongst others in that they procured fees to be paid to themselves to which they were not entitled.

19 It is I think clear from the nature of that claim that the primary evidence that would be relevant to the disposition of that claim would be the evidence of the defendants themselves. That is what Mr Carr deposes, which I accept.

20 The second claim is a claim which can conveniently be summarised as the Fox Technology investment claim. That claim arises from a number of transactions that were undertaken in Sydney over the period prior to the transfer of the plaintiff's activities to Western Australia. The proprietary of the transactions are challenged on a number of grounds.

21 Again it seems from the very nature of the claims that the bulk of the evidence that would be given at trial will be evidence from the defendants as to their undertaking of the transaction. Mr Carr deposes to the fact that evidence might also be given by a number of others, including the persons with whom negotiations for those transactions took place, being a Mr Nagy and his sister, Ms Bryant, both of whom reside in Sydney; that the solicitors involved in the transaction may be relevant witnesses and they are all resident in Sydney; that the accountants who gave advice in relation to the transaction might also be relevant witnesses and that they are resident in Sydney; that a valuation that was relied upon might also be relevant evidence and that the valuer is resident in Sydney.

22 Mr Carr also deposes that evidence of discussions with the board of the Pool Development Fund which took place in Canberra might be given, and that the representatives of that board, who presumably reside in Canberra, might have to be called, and also that representatives of Keycorp Ltd, which is a company which ultimately acquired the plaintiff's interests in the Fox Technology investment, might also have to be called and that that company is based in Sydney.

23 At this stage of the proceedings it is impossible for me to be satisfied that all the persons to whom reference is made in Mr Carr's affidavit would be necessary witnesses in these proceedings. There is however, I think, a reasonable basis for me to assume that instructions would properly be taken from at least some of those persons by solicitors acting on behalf of the defendants to ascertain the extent to which their evidence would corroborate the evidence to be given by the defendants.

24 I proceed on the basis that it is highly likely that the bulk of the evidence to be given in relation to this claim will be the evidence to be given by the defendants and that the case will turn largely upon their evidence but that it may also be necessary and appropriate for solicitors acting on behalf of the defendants to at least confer with the various other parties to whom I have referred; who were involved in the transaction for the purposes of ascertaining whether or not their evidence would assist the defendants. As I have observed, all of those other parties are resident in Sydney or Canberra.

25 The next claim advanced in relation to CIV 1605 of 2006 is a claim for recovery of legal expenses that were incurred by the engagement of Christensen Vaughan, a Perth firm of solicitors, to defend proceedings which took place in this court, being COR 357 of 2004. The proposition advanced by the plaintiff in CIV 1605 is that those costs were improperly incurred because those proceedings should not have been defended.

26 Presuming a prima facie case is made out, obviously evidence in defence of that claim will have to be given by the defendants who will need to give evidence justifying their conduct in providing instructions to defend the claim.

27 It is possible that the solicitors who were engaged, namely Mr Christensen and Mr Cobby, might also need to be called. Again, one cannot be certain at this relatively early stage in the proceedings that their evidence will in fact be necessary but one can be certain, I think, that the evidence of the defendants will be central to the resolution of that claim.

28 The next claim advanced in CIV 1605 relates to the sale and distribution of the plaintiff's shares in Asia Iron Pty Ltd. The complaint is that the defendants acted improperly by distributing funds that were received from the sale of an asset to the plaintiff's shareholders. Those events all occurred in New South Wales. It seems highly likely that the focus of the case will be upon the conduct of the defendants in deciding to distribute the revenue to the shareholders and so again the focus will be upon their evidence.

29 Mr Carr also deposes to the fact that there is a relationship between this claim and the circumstances relating to the Fox Technology investment and so therefore the evidentiary issues that arise in relation to that aspect of the claim will be relevant also to this claim.

30 The next claim is a relatively minor one being a claim for only some $25,000 being the amount paid to Mr Crouch as administrator of the plaintiff. Mr Crouch is resident in Sydney, so to the extent that any evidence is given in relation to this claim it is likely that it would come from him.

31 The next claim relates to the appointment of Mr Carrello who is based in Perth as administrator of the plaintiff. The issues there will again concern primarily whether or not the defendants breached their duties in respect of the payments of directors' fees and in relation to the Fox Technology transaction.

32 Again, therefore it seems likely that the focus of the evidence will be upon the conduct of the defendants and that therefore it is their evidence that will be most critical. Although it is accepted, I think, that it is distinctly likely that Mr Carrello will also have to give evidence to establish and justify the extent of the work which he did and the fees which he was paid, and so to that extent it seems likely that Mr Carrello, who is based in Perth, will be a necessary witness in the proceedings.

33 Mr Carr goes on then to depose to other matters that are relevant to the ascertainment of where the interests of justice lie. He refers to the fact that he and his co-defendant, Mr Purves, are currently represented by a Perth firm of solicitors, as indeed is the plaintiff. There are various points raised by the parties as to the possible prejudice that each might suffer in relation to legal representation.

34 In general, it seems to me that this is an issue which does not particularly favour one course over another in this case, in that in this day and age all legal practitioners in Australia are entitled to appear in any other jurisdiction within the country pursuant to the national mutual recognition legislation.

35 In this case, the plaintiff is based in Perth and the defendants are based in New South Wales. Necessarily one or other of the parties will be required to conduct these proceedings outside their home base of operations. They can do so using solicitors from their home base of operations operating externally in whichever jurisdiction these proceedings are ultimately conducted. So it will be possible for the plaintiff to instruct Mr Bennett or Mr Shepherd, who are currently acting on its behalf, to appear in New South Wales supported by Sydney agents.

36 Equally it would be possible for the defendants to give primary instructions to Sydney solicitors who could engage Perth agents. Therefore, it seems to me that this is not a matter that weighs significantly in the balance one way or the other, save for the fact that the plaintiff is significantly further advanced in the preparation of these proceedings than the defendants, in that the plaintiff has caused detailed statements of claim to be prepared.

37 That means that if, for example, Mr Bennett or Mr Shepherd, to the extent that they have been involved were no longer able to act on behalf of the plaintiff, the plaintiff would, I think, suffer prejudice. However, in the circumstances which I have described and given the national structure of the legal profession, I am far from satisfied that the money that the plaintiff has invested in instructing Mr Shepherd and Mr Bennett would be lost in the event that these proceedings were transferred to Sydney because there is no reason why those two persons could not continue to be significantly involved in the conduct of the case on behalf of the plaintiff.

38 In relation to CIV 1606 of 2006, Mr Carr has sworn another affidavit in which he deposes to the fact that the witnesses in those proceedings would be essentially the same as those he has identified in CIV 1605; that is to say, persons primarily resident in New South Wales.

39 The affidavit in opposition to the applications for transfer has been provided by Angela Mary Dent who is the secretary of the plaintiff and is resident in Western Australia.

40 She has knowledge of the matters that are the subject of these proceedings but does not depose to the proposition that she is likely to be a witness in the proceedings. She was not personally involved in the transactions which are impugned in the course of these proceedings.

41 On the material before me it seems most likely that the plaintiff's case would primarily be made out by the tender of documents. That is because the principal players involved in the transactions which the plaintiff impugns are the defendants.

42 Ms Dent deposes to the background of the proceedings and the relationship between Western Ventures Pty Ltd, a company of which she was then and now is a director and company secretary, and in particular that company's status as a shareholder of the plaintiff in these proceedings. She also deposes as to the proceedings in this Court in COR 357 of 2004. Those proceedings ultimately resulted in orders of the court, which I infer had the effect of changing control of the plaintiff.

43 Ms Dent deposes also to the fact that since April 2005 the registered office and principal place of the business of the plaintiff has been in Western Australia, and also as to the residence of the directors of the plaintiff. She also deposes to the fact that all the plaintiff's books and records are held in Western Australia and that those books and records might comprise around 50 lever arch files.

44 She does not depose to how many of those books and records are relevant to the proceedings but I would infer that a significant portion of them may be relevant to these proceedings. But even on the assumption that all 50 lever arch files are of some relevance, this is not documentation of a magnitude that would cause any significant problem in terms of the relocation of those documents to New South Wales, nor is it of a quantity that one is unused to seeing in the courts in commercial litigation these days.

45 Ms Dent also deposes to the fact that Mr Carrello is a likely witness, which I accept. She also refers to the location of the legal representatives of the plaintiff. As to that, I have formed the views that I have already expressed. She also refers to the possibility that proceedings might be commenced by the plaintiff against Christensen Vaughan for recovery of fees paid to that firm.

46 Whilst I accept that the possibility of other proceedings can be a matter properly taken into account in an application for transfer, the fact is that these proceedings have not yet commenced, and whilst I take into account the possibility that they may commence, it is not a matter to which I give significant weight.

47 So bringing all those matters together for the purpose of forming a "nuts and bolts" case management view as to where the interests of justice lie in the choice of forum, it seems to me that the evidence establishes that the focus of the two cases will be upon the conduct of the defendants and that the primary matter for forensic investigation will be their conduct.

48 I would expect that their evidence will occupy the bulk of the trial and that it may be augmented by other witnesses to whom I have referred including Mr Carrello, who is based in Western Australia, and perhaps some of the other witnesses relating to the transactions to which I have referred - all of whom are based in either Sydney or Canberra.

49 The extent to which those other witnesses will be required at trial is at this stage speculative. But as I have observed it can reasonably be inferred that it will be necessary for instructions to be taken from them, and for the extent to which their evidence might corroborate that to be given by the defendants to be evaluated by those advising the defendants.

50 Therefore it seems to me that the primary focus of the preparation of the case will be upon the defendants and that extensive liaison between them and their legal advisers will be a pre-requisite for the proper trial and resolution of these issues. Conversely the case for the plaintiff, I think, will most likely be made out by the tender of documents. That being so, there does not seem to me to be any significant prejudice to the plaintiff if it is required to make out its case in Sydney with its legal representatives of choice, who may well be Mr Bennett and Mr Shepherd, both of whom could easily appear in New South Wales.

51 I do take into account the delay which has preceded the making of these applications for transfer. That is a factor that will ordinarily weigh heavily against the grant of applications of this kind because of the significant prospect that the other party who is opposing the application for transfer will have incurred significant legal costs during the period of delay.

52 I further take into account that in this case there was in fact a direction requiring any application for transfer to have been made in January of this year which was not complied with. However, the significance of that failure is mitigated by the fact that at the time that direction was not complied with, no statement of claim had in fact been filed. It is difficult to see how any such application could properly have been brought without the issues having been identified by the filing of a statement of claim.

53 Nevertheless, I do take into account the fact that the plaintiff has incurred expense by continuing to engage legal representatives in Western Australia during the period in which the defendants have delayed bringing these applications.

54 However, because of the view which I take as to the capacity of the plaintiff to retain the benefit of the services of those legal advisers, that does not seem to me to be a factor which, of itself, outweighs the convenience to the interests of justice that would be served by these cases being litigated in the place in which the transactions, which are the subject of the proceedings, took place, and the place in which the defendants, whose conduct is the focus of these proceedings, reside.

55 Because it seems to me that the focus of this case is upon the conduct of the defendants, and because the defendants are resident in New South Wales, and because the plaintiff will, I think, suffer little inconvenience or prejudice by being required to conduct its case in New South Wales, it seems to me that the "nuts and bolts" case management decision favours transfer of these proceedings to New South Wales.

56 Neither party has led any evidence as to any difference in procedure that would be applied in the courts of this state as compared to the courts of New South Wales and so that is not a factor that has been relied upon by either party in these applications and therefore not a factor which I bring to account. For these reasons, it seems to me, that weighing the various competing considerations, as I have, this is a case in which the interests of justice favour the transfer of both proceedings to the Supreme Court of New South Wales, and I will make orders accordingly.