Vanis Capital Investments Pty Ltd (as trustee of the Vanis Capital Investment Trust) v Morris

LEGAL PRINCIPLES

Section 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; or (ii) a subsection 1337B(3) proceeding; and (b) the transferor court is: (i) the Federal court; or (ii) a State or Territory Supreme Court. (2) Subject to subsections (3), (4) and (5), 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.
None of ss 1337H(3)-(5) have any relevance to the present application.
Section 1337L of the Corporations Act identifies particular further matters to which I must give consideration in determining an application under s 1337H, providing 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.
Section 1337L(a) and (b) have no relevance to the present application. As to s 1337L(c), by virtue of s 1337B(1) of the Corporations Act the Federal Court of Australia has jurisdiction with respect to civil matters arising under the Corporations legislation.
Further, s 1337G of the Corporations Act relevantly provides that: All courts having jurisdiction in: (a) civil matters arising under the Corporations legislation; or … and the officers of, or under the control of, those courts must severally act in aid of, and be auxiliary to, each other in all those matters.
The authorities on the application of s 1337H are uncontroversial. In Re Sumo Australia Ltd [2020] NSWSC 1142; (2020) 147 ACSR 561, Black J summarised them at [28]-[29] as follows: 28 Matters relevant to the exercise of the discretion whether to transfer the proceedings to another Court also include the existence of a substantial overlap between the issues arising in proceedings in a different Court, whether it would be more efficient or less time-consuming or less costly for the proceedings or issues to be resolved in another Court, and whether the risk of inconsistent findings will be removed if proceedings are heard in that other Court: Roff v Aqua Distributors Pty Ltd (1996) 22 ACSR 248; Zhu v Tech Universal (HK Macau) Development Pty Ltd [2005] FCA 256; (2005) 53 ACSR 704; Re Tasmanian Botanics Pty Ltd [2019] NSWSC 885 at [11]ff. 29 In Hancock Prospecting Pty Ltd v 150 Investments Pty Ltd [2017] FCA 520; (2017) 120 ACSR 495, Yates J in turn observed, by reference to authority, that the application of the section involves a balancing exercise between relevant factors that inform the question whether it is or is not in the interests of justice to transfer a proceeding; and that the question involves an essential practical management decision as to which Court, in the pursuit of the interests of justice, is more appropriate to hear and determine the relevant question, here, the compulsory acquisition question. His Honour also there emphasised the significance of the risk of conflicting findings of fact or conflicting orders, and the potentially unnecessary drain on judicial and other public or private resources, in determining that question. I followed that approach in Re Tasmanian Botanics Ltd above at [13].
The principles were also recently summarised by Anderson J in Vanis Capital Investments Pty Ltd (as trustee of the Vanis Capital Investment Trust) v Morris [2023] FCA 359 at [29] as follows: The reasoning of McKerracher J in Yara Pilbara Fertilisers Pty Ltd v Oswal (No 8) [2015] FCA 49 is instructive as to the principles relevant to determining a cross-vesting application under s 1337H. McKerracher J observed that there is a reasonably wide discretion involved: at [23]. McKerracher J stated that the Court must conduct a balancing exercise between relevant factors that inform as to whether or not it is in the interests of justice to transfer a proceeding: at [24]. McKerracher J identified the following non-exhaustive list of factors potentially relevant to a court's decision (at [26]): (1) the stage of the proceedings in the respective courts; (2) the commonality or diversity of the parties; (3) the nature of the proceedings; (4) the commonality or diversity of issues; (5) the risk of conflicting findings of fact or conflicting orders; (6) a costs benefit analysis; (7) the potential unnecessary drain on judicial and other public and private resources; and (8) whether there is any particular judicial expertise residing in one court of the other.

CONSIDERATION

This is an architype case in which this court should act in aid of the Federal Court of Australia in exercise of its jurisdiction in a civil matter under the Corporations Act, a national scheme of legislation in which the courts of the Commonwealth should cooperate with each other and ensure that there is harmony of operation.
There have been considerable serious steps already taken in the Federal Court proceedings concerning the control of the affairs of DCA Capital and Digital Commodity Assets by way of the appointment of the Provisional Liquidators as receivers and managers and also as provisional liquidators. In addition, public examinations of the directors of DCA Capital and Digital Commodity Assets have already been fixed to occur within the very near future and shortly there will be orders sought for the production of documents.
Further, the Federal Court plaintiffs are now also parties to the DCA Capital proceedings and the Digital Commodity Assets proceedings. Any rights of those parties can be conveniently exercised in the DCA Capital proceedings and the Digital Commodity Assets proceedings upon the transfer of them to the Federal Court of Australia.
Similarly, whatever rights Pubdin and Corpsand wish to exercise in the various proceedings can be done within the one court if they are transferred to the Federal Court of Australia.
In my view, requiring the parties to appear in two different jurisdictions to pursue precisely the same primary outcome, being the winding up of each of DCA Capital and Digital Commodity Assets, is both a waste of time and costs for all parties.
Submissions were made to me by both sides in agreement about the applicable "relation-back day". Because a voluntary administrator was appointed to DCA Capital and Digital Commodity Assets on 5 April 2024 pursuant to section 436A of the Corporations Act, and the Provisional Liquidators were appointed by the Federal Court on 10 April 2024, if winding up orders are made in the future it would appear that the "relation back day" will be the day on which the administration began, being 5 April 2024 (by reason of item 23 of s 91 and ss 513A and 513C of the Corporations Act). If the Provisional Liquidators had not been appointed and winding up orders had instead been made in the DCA Capital proceedings and the Digital Commodity Assets proceedings, then the "relation-back day" would appear to be the date on which each application to commence the DCA Capital proceedings and the Digital Commodity Assets proceedings was filed, being 16 January 2024 (item 2 of s 91 of the Corporations Act).
The issue of the "relation-back day" is complicated. It will have to be dealt with at some future time, when the applications to wind up DCA Capital and Digital Commodity Assets are heard and determined. At the present time there is no "relation-back day" which has been fixed because no winding up orders have been made. It is, however, a neutral factor in whether there should be a transfer of the DCA Capital proceedings and the Digital Commodity Assets proceedings to the Federal Court of Australia. But clearly, if there is to be any application in relation to matters which might have an effect on the "relation-back day" and arguments made in respect of them, they should occur in the one jurisdiction.
Submissions were made to me by the Provisional Liquidators that the appointment of liquidators to DCA Capital and Digital Commodity Assets in this court may undermine the basis on which the asset preservation orders were made in the Federal Court proceedings and may cause a discharge of those orders to the detriment of the creditors of DCA Capital and Digital Commodity Assets. I express no view on that issue. It is, however, another issue which will have to be confronted at some stage and any party who wishes to make submissions in respect of it should have the opportunity to do so. But it is preferable to have that debate in the one forum. To my mind that is more appropriately the Federal Court of Australia in the present case because it is already considerably seized of the matters concerning DCA Capital and Digital Commodity Assets.
In my view, taking all of the relevant factors into account, it is entirely in the interests of justice that all matters concerning the common issues of the prospective winding up of each of DCA Capital and Digital Commodity Assets should be resolved in the Federal Court of Australia.

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Cases Cited (6)