Roff, Vianne Carol v Aqua Distributors Pty Ltd [1996] FCA 966

On 6 August 1966 the applicant commenced a proceeding against Aqua Distributors Pty. Ltd. ("Aqua") in the Federal Court under the Corporations Law which is a law of Tasmania under s.7 of the Corporations (Tasmania) Act 1990. The applicant relied on s.260(a)(1) of the Corporations Law in seeking orders regulating the conduct or winding up of Aqua, essentially on the ground of oppression, unfair prejudice and deadlock. Aqua is an operating family company which is wholly owned and controlled by the applicant and the respondent. The shareholding in and future conduct of Aqua will be a significant issue in the Family Court proceeding. That court will be required to consider what is an appropriate outcome in relation to these matters in resolving the dispute before it under s.79 of the Family Law Act 1975. Similar matters will arise for determination in the Federal Court proceeding. The respondent has applied to the Court to transfer the Federal Court proceeding to the Family Court. The applicant opposes the transfer and seeks the urgent appointment of a provisional liquidator. Jurisdiction In BP Australia Ltd. v. Amann Aviation Pty. Ltd. (1996) 137 ALR 447 the Full Court, in the course of upholding the constitutional validity of the national cross-vesting scheme under the Corporations Laws of the Commonwealth and the States gave detailed consideration to the operation of the scheme. Under the scheme - . the Corporations Law cross-vesting and transfer provisions was similar to, but operated to the exclusion of the cross-vesting and transfer provisions under the Jurisdiction of Courts (Cross-Vesting) Acts of the Commonwealth and the States: see s.40(1) Corporations (Tasmania) Act 1990 and s.49(1) Corporations Act 1989 (Cth). . under State and Commonwealth legislation passed pursuant to the scheme the Federal Court and State and Territory Supreme Courts have jurisdiction in matters arising under the Corporations Law; see s.42 Corporations (Tasmania) Act 1990 and ss.51 and 56(2) Corporations Act 1989 (Cth). . the Family Court of Australia has jurisdiction in matters arising under the Corporations Law including matters transferred to it: see s.42A Corporations (Tasmania) Act 1990 and ss.51A and 56(2) Corporations Act 1989 (Cth). . a proceeding "may" be transferred to another Court, including the Family Court of Australia, if - "having regard to the interests of justice it is more appropriate for the proceeding, or an application in the proceeding to be determined by another Court having jurisdiction in the matter for determination in the proceeding or application: see s.44(2) Corporations (Tasmania) Act 1990 and s.53(2) Corporations Act 1989 (Cth). . the transfer of a proceeding may be made at any stage on the application of a party or of the Court's own motion: see s.44C Corporations (Tasmania) Act 1990 and s.53C Corporations Act 1989 (Cth). The initial issue arising for determination is whether having regard to the interests of justice it is more appropriate for the Federal Court proceeding to be determined in the Family Court. Preliminary matters During August 1996 the respondent requested that the Federal Court, of its own motion, transfer the proceeding to the Family Court. He also applied to the Family Court to restrain the applicant from prosecuting the Federal Court proceeding. Both applications failed. I am satisfied that the matters ventilated and considered on the two interlocutory applications were different to those now arising for determination. In order to ensure that the Court has jurisdiction to order the transfer sought by the respondent he applied to be made a party to the Federal Court proceeding. Clearly, in a situation in which Aqua is in a situation of deadlock, the issues arising can only be determined properly if both the applicant and the respondent, as the only members and directors of Aqua, are heard by the Court. The joinder of the respondent is necessary to ensure that the matters in dispute will be effectually and completely determined and adjudicated upon. Accordingly, I propose to order that the respondent be joined as an additional respondent in the Federal Court proceeding. The interests of justice The present case is not one in which there are third party shareholders or creditors before the Court who claim that their interests may be adversely affected by being compelled to become actively involved in a private property settlement dispute between the applicant and the respondent in the Family Court. Aqua is the corporate alter ego of the applicant and the respondent. There are no third parties involved, or wishing to participate, in the dispute between them. That dispute, in so far as it involves the present and future ownership and control of the company, is a dispute that arises out of and is intimately connected with the previous matrimonial relationship between the applicant and the respondent. It is clearly part of the matter to be resolved in the Family Court. In those circumstances the following factors have led me to the conclusion that a transfer of the Federal Court proceedings to the Family Court is more appropriate having regard to the interests of justice - . although the issues in each proceeding are not identical there will be a substantial overlap; . it will be more efficient, less time consuming and less costly for the issues arising to be resolved in the one court; . the risk of inconsistent findings will be removed if the proceedings are heard and determined in the one court; . the matter can be resolved with greater expedition in the Family Court as the final hearing of the matter in the Family Court is imminent; on the other hand there is no realistic prospect of a final hearing in the Federal Court until well into 1997; . the Family Court, with its wide powers under Part VIII of the Family Law Act 1975 in respect of property settlements, is well equipped to resolve the ultimate dispute between the parties being the future conduct, ownership and control of Aqua; the resolution of that issue will be a critical element in determining the matters arising under the Corporations Law; . the Family Court, as opposed to the Federal Court, will be able to consider, and if thought appropriate, deal with the applicant's application for a provisional liquidator having regard to the rights and obligations of the parties under the Corporations Law and the Family Law Act 1975. In my view it is no answer to the above factors to contend that the Federal Court is the more experienced and appropriate forum for resolution of the commercial issues arising under the Corporations Law or that the Family Court will be more focussed on the family, rather than the corporate, law issues arising in the matter. Whilst those matters may have some relevance where third party interests are directly involved, in my view they have little, if any, force when the company is a family company owned and controlled by the parties to the marriage. I should add that even where third party interests are involved a transfer to the Family Court may nevertheless be appropriate in the interests of justice: see Re John Lawrence Sharpe, unreported, Lindgren J Federal Court of Australia 17 October 1996. In that case, notwithstanding that the transfer of a bankruptcy proceeding to the Family Court was opposed by the trustee in bankruptcy and some third party creditors, Lindgren J concluded that considerations of "efficiency and economy" and ultimately the "justice of the case" required its transfer to the Family Court. The issues arising on the present application to transfer have some similarity to those arising in Fox Enterprises Pty. Ltd. v. Garnett Alan Fox and Anor, unreported, Williams J Supreme Court of Queensland, 24 February 1995. Williams J in ordering that a proceeding arising under the Corporations Law be transferred to the Family Court concluded at 4 - Bearing in mind the approach suggested in Bankinvest AG v. Seabrook (1988) 14 NSWLR 711 I have come to the conclusion that the appropriate order to make in this case is one transferring this proceeding to the Family Court pursuant to the provisions of the cross-vesting legislation. The issues to be determined primarily relate to the matrimonial affairs of the parties and involve the question as to what extent the interests of the former husband and wife in the subject property are diminished because of an interest held by a company in which at all material times they were the sole directors and shareholders. Conclusion For the reasons outlined by me there will be an order that the Federal Court proceeding be transferred to the Family Court of Australia. As the matter is to be heard in the Family Court it is clearly appropriate that that court, rather than the Federal Court, consider the applicant's application for the appointment of a provisional liquidator. I certify that this and the preceding 7 pages are a true copy of the Reasons for Judgment of the Honourable Justice Merkel