FEDERAL COURT OF AUSTRALIA

Tidswell Financial Services Limited (ACN 010 810 607) v Sovereign Capital Limited (ACN 085 821 218) [2008] FCA 586

PRACTICE AND PROCEDURE – application to transfer proceedings to Queensland District Registry – application for order that trial be heard at Brisbane

Corporations Act 2001 (Cth) Pt 5C.2

Australian Securities and Investments Commission Act 2001 (Cth)

Federal Court of Australia Act 1976 (Cth) s 48

Federal Court Rules O 30 r 6

National Mutual Holdings Pty Ltd v The Sentry Corporation (1988) 19 FCR 155applied

Inverness Medical Switzerland GMBH v Advance Chemical Systems Pty Limited [2002] FCA 1261 cited

Optics Online Pty Ltd v Sunland Group Ltd [2006] FCA 1389 cited  

TIDSWELL FINANCIAL SERVICES LIMITED (ACN 010 810 607) AS RESPONSIBLE ENTITY FOR THE POOLED MORTGAGE MANAGED INVESTMENT SCHEME (ARSN 095 540 597) v SOVEREIGN CAPITAL LIMITED (ACN 085 821 218), MARK ASHLEY PARKER, BRUCE FRANCIS SIMMONDS AND PETER JOHN BENSON

SAD 11 of 2008

FINN J

29 APRIL 2008

ADELAIDE

THE COURT ORDERS THAT:

1.                  The notice of motion as amended be dismissed.

2.                  The costs of the notice of motion be costs in the cause.

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

REASONS FOR JUDGMENT

1                     The applicant in this proceeding, Tidswell Financial Services Limited, carries on business only in Adelaide as an investment funds manager and is the Responsible Entity for a pooled mortgage managed investment scheme under Pt 5C.2 of the Corporations Act 2001 (Cth).

2                     The first respondent, Sovereign Capital Limited, is the Responsible Entity of a prudential fund (“the Sovereign Fund”) in accordance with Pt 5C.2 of the Corporations Act.  Its principal place of business is at Broadbeach, Queensland.  The second to fourth respondents are directors of SCL.

3                     Two of those respondents, Parker and Simmonds, are the only principals of a firm of solicitors located at Broadbeach.  They are not being sued in these proceedings by virtue of any actions taken by them in that capacity.

4                     The Sovereign Fund, according to the Statement of Claim filed in this matter, was a contributory mortgage scheme which lent moneys to borrowers secured by first and second mortgages over real property.  It had lodged a prospectus in 2002 and then in 2003 an updated prospectus with the Australian Securities and Investment Commission.

5                     In February 2003 it issued an investment proposal in respect of a mortgage loan within the fund that SCL was offering for subscription.  The loan (for $9,300,000) was to a developer to construct terrace houses at Vaucluse in Sydney.

6                     The present proceeding, which was filed in the South Australian District Registry of the Court, seeks damages at common law, under the Corporations Act and the Australian Securities and Investments Commission Act 2001 (Cth) and interest in respect of losses alleged to have been suffered by Tidswell in respect of an investment it directed to be made in the Sovereign Fund relating to the loan referred to in the previous paragraph.  The investment, on the material before me, was solicited by SCL.  The causes of action relied upon are variously for negligence, breach of statutory duty and misleading or deceptive conduct.

The Present Motion

7                     The respondents have moved to have the proceedings transferred to the Queensland District Registry of this Court under s 48 of the Federal Court of Australia Act 1976 (Cth) or else to have it ordered that the trial of it be held at Brisbane pursuant to O 30 r 6 of the Federal Court Rules.  The motion is opposed and affidavits have been filed – one by Mr Parker, supporting the motion;  the other by Max Bratton, Tidswell’s mortgage manager, favouring the status quo.  It is only necessary that I now consider the s 48 application.  That made under O 30 r 6, as I will indicate, is premature.

8                     The principles to be applied on such motions are well accepted and are not in dispute.  The discretion to make an order under s 48 is unfettered, although it must be exercised judicially and in accordance with accepted principle.  As to the latter it is only necessary that I refer to the Full Court decision in National Mutual Holdings Pty Ltd v The Sentry Corporation (1988) 19 FCR 155 which has been followed repeatedly.  The Court there indicated (at 162) that the discretion given should be exercised flexibly having regard to the circumstances of the particular case;  the factors which the Court is entitled to take into account in considering whether one city is more appropriate than another for interlocutory or final hearings are numerous and include residence of parties and witnesses, expense to parties, the place where the cause of action arose and the convenience of the Court;  the balance of convenience will be a relevant consideration, but not necessarily determinative of each case;  there is no onus of proof in the strict sense on the party seeking to have the proceedings conducted or continued in another place but the Court must be satisfied that there is sound reason to direct that the proceeding be conducted or continued elsewhere;  the test to be applied, ultimately is:

… where can the case be conducted or continued most suitably bearing in mind the interests of all the parties, the ends of justice in the determination of the issues between them, and the most efficient administration of the Court.  It cannot and should not, in our opinion, be defined more closely or precisely.

9                     Given this test it is unsurprising that judges have observed that authorities on such motions tend not to be very helpful given the fact specific character of the question the s 48 discretion raised:  see eg Inverness Medical Switzerland GMBH v Advance Chemical Systems Pty Limited [2002] FCA 1261 at [2]. 

10                  The matters relied upon in Mr Parker’s affidavit in support of the motion are (i) the first respondent’s principal place of business is at Broadbeach as is the place of residence of the majority of staff (past and present) who can be expected to be called to give evidence at trial;  (ii) the legal practice conducted by Mr Parker and Mr Simmonds will be significantly affected if the trial (estimated by both sides to take two weeks) at which they necessarily must attend, is to be held in Adelaide –

(a)        they are the firm’s only principals;

(b)        their employees are junior solicitors without open practising certificates;

(c)        the practice consists predominantly of conveyancing and typically issues more than fifty trust cheques per week; 

(d)        no employee of the firm has authority to execute a trust account cheque (in accordance with the Queensland Law Society Rules);  and

(e)        the practice needs at least one of the partners to be readily accessible to clients and staff and for administrative matters.

(iii)  SCL employs three persons on a full-time basis and, if these are required to give evidence in Adelaide, there would be major disruption to the business;  (iv)  there would be far greater costs incurred in respect of the conduct of a trial in Adelaide than in Brisbane in respect of flights, accommodation etc;  (v) the respondents’ documentation is located in Queensland. 

11                  Save for the issues arising from Mr Parker’s and Mr Simmonds’ professional practice, the matters relied upon by Mr Bratton in his affidavit opposing the transfer mirror in considerable degree those referred to by Mr Parker, save in one important respect.  That exceptional matter, to which I earlier referred, is that Tidswell’s investment was solicited by the respondent Mr Benson who sought out Mr Bratton in South Australia with the consequence that the causes of action advanced arose in that State.  Of itself, this not only makes Tidswell’s choice of the South Australian District Registry an appropriate one in which to file its proceedings, it also provides real reason for pause in too readily acceding to a request to transfer the proceedings to Brisbane particularly at this stage:  cf Optics Online Pty Ltd v Sunland Group Ltd [2006] FCA 1389 at [8]-[9].

12                  Otherwise Mr Bratton relies upon (i) Adelaide being Tidswell’s place of business;  (ii) the four witnesses – two lay (himself and the company’s managing director) and two expert – all reside in South Australia;  (iii) for him and the managing director to go to Brisbane for two weeks would cause significant disruption to the day-to-day management of Tidswell’s business;  and (iv) Tidswell’s documentation is all in Adelaide.

13                  Bearing in mind that I need a sound or good reason for ordering that the proceeding be conducted in Brisbane, I do not consider that such has been made out at this stage of the proceeding particularly when one has regard to the fact that the proceeding itself was properly and appropriately instituted in South Australia. 

14                  It is clear, as the hearing of the motion demonstrated, that interlocutory matters and the timetabling of the proceeding for trial can readily be dealt with by use of videoconferencing facilities.  Having explored the likely dimensions of discovery with the parties – it is of no great magnitude – I do not consider that it is a factor of significance in the exercise of my discretion.

15                  I have not been provided with useful information as to the number and significance of witnesses likely to be called by the respondents and the reasons for their being called – the suggestion is that there will possibly be up to eight persons who may need to be called.  While I accept that there is evidence of likely prejudice to Mr Parker and Mr Simmonds in respect of the legal practice were both to be absent from it for two weeks, I am not prepared at this stage to now make an order for that reason. 

16                  I have accordingly decided that I will not at this stage make the orders sought and have set a timetable for the trial of the matter.  This, of course, does not preclude the making of a later application under O 30 r 6 to have the trial conducted in Brisbane.  If, or when, such an application is made, I will be in a better position to make an informed decision as to where the trial should be had.  For the moment, though, I am satisfied it can and should properly be prepared for trial in the South Australian District Registry.

17                  I will order that the notice of motion as amended be dismissed and that the costs of it be costs in the cause.

Associate:

Dated:         30 April 2008