Sartori v BM2008 Pty Ltd

Federal Court of Australia|2009-05-08|Before: McKerracher J

BACKGROUND 12 To understand the competing considerations for the transfer motion it is necessary to consider the available evidence at this preliminary stage. Mr Wallis deposed to the fact that he had been informed by Mr MacKenzie, a director of each of the companies, that in 1978 Mr McCarter, Mr Ladd and Mr MacKenzie commenced operation of a transport business between Melbourne and Perth. That business originally operated as a partnership under the name of Perth Freightlines and was located in South Melbourne. While the transport business operated between Melbourne and Perth it did not have a Perth depot. PFL was subsequently incorporated in Victoria in 1981 and its original directors were Mr McCarter and Mr Ladd. At that stage the business moved to premises in West Footscray, Victoria. 13 PFL Properties was incorporated in 1982 in order to purchase the premises from which PFL could operate. Mr MacKenzie has informed Mr Wallis that in about 1983 PFL Properties purchased land in North Williamstown, Victoria. PFL Properties then leased that property to PFL. PFL operated from that site until it relocated to Derrimut, Victoria in 2004. 14 In about 1985, PFL Properties bought a warehouse in Perth which was also leased to PFL. PFL Properties purchased the warehouse next door which was also leased to PFL in 1999. Some additional land was subsequently purchased to expand the complex. PFL commenced operations between Melbourne and Sydney and Sydney and Perth in the mid-1990s. In 2000 PFL leased premises in Brisbane and began to operate along the East Coast and also between Brisbane and Perth. This history, while relevant as general background, is relied upon in part to support the undoubtedly correct submission that almost all the relevant events in this case took place in Victoria. 15 In relation to the share issue, Mr Wallis says that the share register of PFL was kept at PFL's head office. Records of the company were maintained by Mr McCarter until his death. He says that Ms Dianne Cox, who was Mr Ladd's assistant for many years became the company secretary from 1996 until recently. She maintained the company records at the time of the impugned share issue. 16 Mr Wallis says in late 1992 he had reason to review the share register of PFL. He cannot recall the reason for the review but he noticed that it was apparent on the review that it did not reflect his understanding of the shareholding of PFL. He said he had a discussion with Messrs Ladd and McCarter in late 1992 concerning discrepancies between the share register and the 'true position'. Messrs Ladd and McCarter agreed that the register was incorrect and should be corrected and said that they believed errors had occurred because they used to notify their previous accountant, Mr Cunneen of any changes to the shareholding by telephone. Mr Wallis explained that in those days it was only necessary to notify the Corporate Affairs Commission (as it then was) on an annual basis of any changes to the shareholding in a company. 17 Mr Wallis has reviewed the minutes of a directors' meeting of Perth Freightlines Pty Ltd recording the minutes of a meeting held on 2 October 1992 at the office of PFL in North Williamstown. Those minutes record that Messrs Ladd and McCarter were in attendance. They do not record that Mr Wallis was present. He says however, that what is recorded in the minutes is consistent with his understanding of the discussion to which he has referred. 18 In addition to outlining the circumstances in which the resolution occurred, Mr Wallis notes that the head office of PFL has always been located in Victoria as were Messrs Ladd and MacKenzie. PFL was always run from Victoria even though it eventually had depots in Perth, Sydney and Brisbane. He says the share registry for PFL was maintained in Victoria by Ms Cox who has the records for PFL. Ms Cox resides in Geelong. The accountants for PFL and PFL Properties reside in Victoria, Mr Wallis living in Mornington and Mr Cunneen living in Berwick and to the extent that Ms Christine Perkal formerly employed by Mr Wallis may have been involved with the issues in relation to the share register, she also resides in Victoria. 19 The resolution issuing the shares to PFL was, of course, passed at the directors' meeting which was held in Victoria. The solicitor for PFL is Victorian as is Mr MacKenzie and the liquidator of PFL. 20 The B class shareholders of PFL were sub-contractors retained by PFL as owner drivers. Most of those sub-contractors (including the applicants) reside in Perth. Mr Small, in addition to residing in Perth also has his own transport company which has a warehouse in Melbourne. 21 Mr Wallis clarifies in a subsequent affidavit that he cannot recall whether or not he was actually at the meeting with Messrs Ladd and McCarter on 2 October 1992 which was the subject of the minutes to which he had previously referred. He does, however, depose to the fact that minutes accurately reflect what had been discussed at some meeting that he did attend with those directors. 22 The applicants oppose the transfer from the Western Australia District Registry to the Victoria District Registry. Mr Sartori makes the point on affidavit that he and Mr Small both reside in Western Australia and may need to give evidence. While the respondents (the applicants' to the motion for transfer) focus on the fact that the applicants cannot be sure that they (or indeed any witnesses) will have to give evidence at all, they do so, as I understand it, not in any critical way. They point to the fact that the applicants make their case, if at all, on the basis of documentary evidence and argument. The respondents, in contrast, contend that the defence to the case which opposes any relief being granted may depend upon people giving evidence as to the reason why the share issue occurred. 23 Mr Sartori indicates that six other shareholders 'might be required to give evidence or might in the future seek to participate in the proceedings'. All those persons live in Western Australia. At this stage, I could draw no inference that it is likely that those persons would be giving evidence in these proceedings or would be seeking to be joined in these proceedings.

APPLICATION OF THE PRINCIPLES 24 No indication has been given as to why the applicants have waited for 16 years before attempting to set aside the allotment of shares to the respondents. There is no indication of the basis for the framing of the relief that only sets aside part of the shares allotted under the resolution attacked in the proceedings. Mr Sartori does not seek to set aside the allotment of the shares in his favour as a result of the resolution that he now attacks. But this does not appear to bear significantly on the actual transfer motion. As to the first point, if the delay complaint is advanced in a way that requires the applicants to explain it, then this, almost certainly would require the applicants either personally, or through others, to go into evidence. The delay, then, in fact works against granting the transfer motion. 25 The respondents contend the proceedings can best be conducted to meet the ends of justice by being determined in Victoria. All the connections with Victoria are reiterated in the written submissions of the respondents and also by Mr Abbott for the respondents in oral submissions. In particular, the central point is made that circumstances surrounding the resolution will be important. The respondents argue that the witnesses including Ms Cox, employee of PFL, Mr Wallis, Ms Perkal and the previous accountant, Mr Cunneen all reside in Victoria. To this the applicants respond and reiterate through Mr Hancy, counsel for the applicants that precisely what evidence each of these people could give is far from clear. Further, that each of them would indeed actually need to give evidence surrounding the resolution is also unclear. Nevertheless, it is accepted that it is likely that Mr Wallis would be required to give evidence. 26 In the course of argument, reference was also made to the location of bank accounts for PFL in the Melbourne branches of the ANZ and the resolution making reference to inquiries by an ANZ bank officer about the state of the shareholdings in PFL and that Mr Small has business interests in Melbourne. It is contended that there is an overwhelming connection to Victoria and continuation of the proceedings in Western Australia 'will cause great expense and inconvenience to witnesses and to the parties'. 27 Taking the first point, there are certainly a number of factors connecting the litigation to Victoria but at the moment I can only conceive of a realistic probability that one Victorian resident will need to give evidence. That circumstance may change but on the basis of the facts as they are currently known, that is my impression. As to the 'great expense and inconvenience to witnesses and to the parties' by proceedings being continued in Western Australia, once again it is unclear to me how this is so. There is no evidence to support the contention. Should that evidence emerge, it is not inconceivable that the trial could be conducted in Victoria with interlocutory steps conducted in Western Australia or some other combination of such possibilities, including the possibility of video evidence. 28 The specific issues which have been denied by the respondents are the ownership of shares by Mr Sartori at the relevant times pleaded in the statement of claim. Ownership of the shares claimed by Mr Small are also not admitted. While it may be possible for these matters to be proven by public record, equally it may be necessary for the applicants to give evidence on those facts. It is simply unclear, given the denial and non-admissions at this stage. 29 The specific break-up of the shareholdings in PFL is also denied by the respondents. Again, the respondents say that they will rely on production of the share register but it is certainly conceivable that the applicants may need to give evidence as to the circumstances under which they held the shares which they allege that they held. There is a denial as to any breach or any oppression but the applicants concede that is a matter of argument. On the present pleadings (putting aside the delay point), it is not certain that the applicants will have to give evidence in person but for the respondents, it seems only Mr Wallis could firmly be predicted to be a likely witness. Most of the other factors such as documents, place of incorporation and place of bank accounts in terms of commonsense and practicality are quite neutral. 30 The applicants accept that it may ultimately be necessary to transfer the proceedings to the Victoria District Registry but at present contend that there is no sound reason to do so. The issues arising in the case are very confined. The national character of the Court including its capacity to make flexible arrangements for the taking of evidence and receipt of submissions by video-link or otherwise weigh against a transfer at this stage.

CONCLUSION 31 This is a relatively simple case in which the extent of oral evidence, in all likelihood would seem to be very limited. In my view, while it was entirely appropriate to bring this transfer motion at an early stage in the proceeding, it can by no means be said at this stage that it would be desirable to transfer the proceeding to the Victoria District Registry now, at a later time or at all. 32 I do not intend to allow the transfer motion at this stage but, I do not preclude the motion being brought again at a later time when circumstances may differ. Although the motion will be dismissed, my view at this stage is that if such a motion were to be brought at all, it was proper to be brought at this time and I would be disinclined to make any costs order other than that the cost of the motion be in the proceeding. If any party wishes to argue to the contrary, submissions not exceeding two pages should be filed and served within 10 days, failing which the following orders will take effect: 1. the motion to transfer the proceeding to the Victoria District Registry of the Court is dismissed. 2. the cost of the motion be costs in the proceeding. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.

Associate: Dated: 8 May 2009 Counsel for the Applicants: GR Hancy

Solicitor for the Applicants: Tottle Partners

Counsel for the Second - Fifth Respondents: GM Abbott

Solicitor for the Second - Fifth Respondents: Obst Legal

Corporations Act 2001(Cth)ss 232, 233, 1400

THE PRINCIPLES APPLICABLE TO A TRANSFER 11 I recently set out my understanding of the relevant principles in Mortimer v Opes Prime Stockbroking Limited (ACN 086 294 028) (Administrators Appointed) (In Liquidation) [2009] FCA 227 at [15]-[17] in the following terms. The parties have not suggested that the principles are contentious: • There must be sound reason to direct that the proceeding be conducted or continued elsewhere. If the party commencing the proceeding chose the place capriciously the Court would be justified in giving no weight to the choice of place. The balance of convenience is important but its weight must vary from case to case. What needs to be ascertained is where the case can be conducted or continued most suitably bearing in mind the interests of the parties, the ends of justice and determination of the issues between them, and the most efficient administration of the Court (National Mutual Holdings Pty Ltd v The Sentry Corporation (1988) 19 FCR 155 at 162). • The location of parties and witnesses, the place where the cause of action arose and the convenience of the Court are all factors (National Mutual 19 FCR 155 at 162, Wang v Australian China Marketing Co Pty Ltd [2001] FCA 13 at [21], Aquila Resources Ltd v Pasminco Ltd [2004] FCA 39 at [27]-[34] and [42]-[43]. • Typically there is no factor that is determinative but rather it is necessary to weigh all the relevant factors that might connect the proceedings to one jurisdiction or the other (Australian Competition and Consumer Commission v Fila Sport Oceania Pty Ltd [2003] FCA 430 at [19]). • The national character of the Court including its capacity to make flexible arrangements for the taking of evidence and the receipt of submissions is relevant. (Australian Competition and Consumer Commission v Virgin Mobile Australia Pty Ltd [2002] FCA 1239). • The question of which District Registry should conduct the proceedings does not raise matters of high principle. Essentially it is a matter of case management and proper recognition of the legitimate interests of each of the parties reflected in the balance of convenience as between them and the convenience of the Court and any economies and efficiencies which may attach to one choice or the other (Lamb v Hog's Breath Company Pty Ltd (No 1) [2007] FCA 49). • There may be flexibility - one Registry could conduct pre-trial management while allocating the trial to a judge in another Registry (Hog's Breath at [10]). • There is no burden of proof governing the exercise of the discretion in s 48 of the Act (National Mutual 19 FCR 155 at 162). • The existence of related proceedings which may be case managed jointly may be important (Wyllie Group Pty Ltd [2000] FCA 1382 at [14]-[19]). 16 Factors which may be relevant for consideration include: • the residence of the parties, the residence of the witnesses, the expense and prejudice likely to the respective parties, the likelihood of delay being a significant consideration, whether there is, in respect of the competing suggestions as to venue, any possibility of an interference with a fair trial of the hearing, the balance of convenience in regard to all considerations (Jacobs v Claudius Enterprises Pty Ltd [1985] ATPR 40-511). 17 To these points I would add, perhaps an obvious point, that a judge to whom management of a case has been allocated will be reluctant to transfer that duty to another judge unless there is good reason to do so.

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