FEDERAL COURT OF AUSTRALIA

Huntingdale Village Pty Ltd (Receiver and Managers Appointed) (ACN 085 048 531), In the matter of Huntingdale Village Pty Ltd (Receiver and Managers Appointed) (ACN 085 048 531) [2009] FCA 1323

HUNTINGDALE VILLAGE PTY LTD (RECEIVER AND MANAGERS APPOINTED) (ACN 085 048 531), SILKCHIME PTY LTD (RECEIVER AND MANAGERS APPOINTED) (ACN 066 849 429), VANNIN PTY LTD (RECEIVER AND MANAGERS APPOINTED) (ACN 067 610 271), WARWICK ENTERTAINMENT CENTRE PTY LTD (RECEIVER AND MANAGERS APPOINTED) (ACN 054 246 918) and PARAGON APARTMENTS LTD (RECEIVERS AND MANAGERS APPOINTED) (ACN 087 200 413) v PERPETUAL NOMINEES LTD (ACN 000 733 700), MARK ANTHONY KORDA, DAVID JOHN WINTERBOTTOM and WESTPOINT CORPORATION PTY LTD (IN LIQ) (ACN 009 395 751)

VID 653 of 2009

GORDON J

16 NOVEMBER 2009

MELBOURNE

IN THE MATTER OF HUNTINGDALE VILLAGE PTY LTD (RECEIVER AND MANAGERS APPOINTED) (ACN 085 048 531), SILKCHIME PTY LTD (RECEIVER AND MANAGERS APPOINTED) (ACN 066 849 429), VANNIN PTY LTD (RECEIVER AND MANAGERS APPOINTED) (ACN 067 610 271), WARWICK ENTERTAINMENT CENTRE PTY LTD (RECEIVER AND MANAGERS APPOINTED) (ACN 054 246 918) AND PARAGON APARTMENTS LTD (RECEIVERS AND MANAGERS APPOINTED) (ACN 087 200 413) V PERPETUAL NOMINEES LTD (ACN 000 733 700), MARK ANTHONY KORDA, DAVID JOHN WINTERBOTTOM AND WESTPOINT CORPORATION PTY LTD (IN LIQ) (ACN 009 395 751)

THE COURT ORDERS THAT:

1.         Pursuant to s 1337H of the Corporations Act 2001 (Cth), these proceedings be transferred to the Supreme Court of Western Australia.

2.         The Plaintiffs pay the costs of the First, Second and Third Defendants’ application to transfer the proceedings to the Supreme Court of Western Australia, such costs to be taxed in default of agreement.

3.         Subject to paragraph 2, the costs of the proceeding be costs in the cause.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

IN THE MATTER OF HUNTINGDALE VILLAGE PTY LTD (RECEIVER AND MANAGERS APPOINTED) (ACN 085 048 531), SILKCHIME PTY LTD (RECEIVER AND MANAGERS APPOINTED) (ACN 066 849 429), VANNIN PTY LTD (RECEIVER AND MANAGERS APPOINTED) (ACN 067 610 271), WARWICK ENTERTAINMENT CENTRE PTY LTD (RECEIVER AND MANAGERS APPOINTED) (ACN 054 246 918) AND PARAGON APARTMENTS LTD (RECEIVERS AND MANAGERS APPOINTED) (ACN 087 200 413) V PERPETUAL NOMINEES LTD (ACN 000 733 700), MARK ANTHONY KORDA, DAVID JOHN WINTERBOTTOM AND WESTPOINT CORPORATION PTY LTD (IN LIQ) (ACN 009 395 751)

REASONS FOR JUDGMENT

1                          These proceedings, in part, concern the continuing appointment by the first defendant (ING) of the second defendant (Mark Anthony Korda (Korda)) and the third defendant (David John Winterbottom (Winterbottom))(collectively the receivers) as the receivers and managers of the five plaintiffs and the fourth defendant.  The five plaintiffs and the fourth defendant formed part of what was commonly known as the Westpoint Group.

2                          The receivers (together with Oren Zohar) were appointed by ING as the receivers and managers of the five plaintiffs, and the fourth defendant, on 24 January 2006 under the terms of a first ranking fixed and floating charge granted by each plaintiff in favour of ING in September 2005 (collectively the Charges).  Mr Zohar retired as a receiver on 14 February 2008. 

3                          In general terms, one of the issues in these proceedings is whether the receivers should have retired as the receivers of each plaintiff at the commencement of 2008 when the principal debt owed to ING was reduced to approximately $50,000 from the realisation of assets of the plaintiffs, the fourth defendant and other companies.  This has been described as the “mandate issue”, namely whether the receivers should continue in their role.  There are other issues in these proceedings concerning the continuation (and conduct) of the receiverships (namely the fees and expenses charged by the receivers).  The lawfulness of the commencement of the receiverships is not in issue.

4                          This is not the first time that the mandate issue has been raised.  It was raised in September 2008 by Silkchime Pty Ltd (Receiver and Managers Appointed) (ACN 066 849 429), the second plaintiff, as an interlocutory issue in proceedings in the Supreme Court of Western Australia (CIV 1094 of 2008).  A similar issue was also raised by Richstar Enterprises Ltd, another company in the Westpoint Group, in proceedings filed in the Western Australian registry of the Federal Court in WAD 60 of 2008. 

5                          The receivers objected to the mandate issue being determined on an interlocutory basis.  As a result, on 31 August 2009, the receivers made application to the Supreme Court of Western Australia (COR 173 of 2009) (the WA Directions Proceedings) for, inter alia, directions as to whether they should retire or whether they are entitled to remain as receivers.  As the plaintiffs in these proceedings submitted, in the WA Directions Proceedings the receivers seek directions.  As a result, those proceedings raise questions about the power of the Court to make orders binding upon, or affecting the rights of, third parties:  see Editions Tom Thompson Pty Limited v Pilley (1997) 77 FCR 141 at 147 and 150 per Lindgren J (Editions Tom); Deputy Commissioner of Taxation v Best & Less (Wollongong) Pty Ltd (Rec and Mgr Apptd) (1992) 7 ACSR 245 at 246; Re BG Nathan & Co Pty Limited (In Liquidation) (1991) 24 NSWLR 674; Re Media World Communications Ltd (Admin Apptd) v Naidoo (2005) 216 ALR 105 at [5]; Re Lofthouse, in the matter of Riverside Nursing Care Pty Ltd (subject to deed of company arrangement) [2004] FCA 93 at [2]; cf (in relation to ss 479(2) and 511 of the Corporations Act 2001 (Cth) (the Corporations Act)) Australian Securities Commission v Melbourne Asset Management Nominees Pty Ltd (Receiver and Manager Appointed) (1994) 49 FCR 334; Meadow Springs Fairway Resort Ltd (In Liq) (ACN 084 358 592) v Balanced Securities Ltd (ACN 083 514 685) [2007] FCA 1443.  Each plaintiff in these proceedings is now joined as a defendant in the WA Directions Proceedings. 

6                          On 4 September 2009 and after a directions hearing in the WA Directions Proceedings, the Plaintiffs commenced these proceedings in the Victorian Registry of the Federal Court.  By interlocutory application filed on 14 October 2009, ING and the receivers apply to transfer these proceedings to the Supreme Court of Western Australia.  That application is opposed by the plaintiffs.

JURISDICTION TO TRANSFER AND RELEVANT FACTORS

7                          ING and the receivers seek to have this proceeding transferred to the Supreme Court of Western Australia on alternative bases – pursuant to s 1337H(1) of the Corporations Act and, alternatively, pursuant to s 5(4) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) (the Cross-vesting Act). 

8                          The second and alternative basis for transfer may be put to one side.  By reason of s 1337A(2)(a) of the Corporations Act, this proceeding can only be transferred pursuant to s 1337H of the Corporations Act.  The plaintiffs’ reference, in this context, to s 3A of the “Jurisdiction of Courts (Cross-vesting) Act 1987” is misconceived.  That was a reference to the Victorian Act.  There is no such provision in the Cross-vesting Act. 

9                          Moreover, there is no dispute that for the purposes of s 1337H of the Corporations Act, the Federal Court has jurisdiction to transfer a proceeding with respect to a civil matter arising under the Corporations Act and that this proceeding is a civil matter arising under the Corporations Act. 

10                        Section 1337H(2) of the Corporations Act goes on to provide that:

… if it appears to the [Federal 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 [Federal Court] may transfer the relevant proceeding or application to that other court.

(Emphasis added).

11                        In BHP Billiton Limited v Schultz (2004) 221 CLR 400 at [15]-[19] (BHP Billiton), the phrase “interests of justice” was considered.  The “interests of justice” are not the same as the “interests of the parties”:  see [15].

12                        What then, in this case, are the factors relevant to the “interests of justice”?  The parties identified the following factors as relevant to the determination of the application:

1.         the receiverships have largely been conducted in Western Australia and largely relate to property located in Western Australia and the books and records are voluminous and located in Western Australia;

2.         the location of the witnesses;

3.         the existence of a jurisdiction clause in each of the Charges;

4.         the existence of two separate proceedings (the WA Directions Proceedings and these proceedings) running concurrently which effectively raise the same issue;

5.         an application by the plaintiffs in this proceeding to stay the WA Directions Proceedings was dismissed by consent and Le Miere J of the Supreme Court of Western Australia is prepared to accept a transfer of these proceedings; and

6.         the identity and location of legal representation and related proceedings. 

I will deal with each of these factors in turn.

ANALYSIS OF FACTORS

Receiverships conducted and books and records located in Western Australia

13                        The receiverships have largely been conducted in Western Australia and largely relate to property located in Western Australia.  The evidence disclosed that none of the plaintiffs in this proceeding has had property located in Victoria sold.

14                        ING and the receivers provided sworn evidence that the books and records concerning the conduct of the receiverships are voluminous (some 460 lever arch files and a further 575 boxes of documents) and they are located in Western Australia.  On the other hand, the plaintiffs contend that their preference is for “discovery” to occur electronically in accordance with Federal Court Practice Note CM6. 

15                        In my view, where the receiverships have been conducted and the number and location of documents are factors that can be put to one side.  Given the nature of the issues raised in both the WA Directions Proceedings and the mandate issue in these proceedings, I do not accept that the documents relevant to the disputed issues would be all of the documents identified and necessarily voluminous. 

Location of witnesses

16                        ING and the receivers submitted that the only witness whose evidence seems likely to be relevant and who resides in Melbourne is one of the receivers – Mr Korda – and he is of the view that it is in the best interests of the parties that this proceeding be transferred to Western Australia.  As the plaintiffs submitted, that analysis is incomplete.  The plaintiffs identified 10 potential witnesses.  Four witnesses (including Mr Zohar) are located in Western Australia.  Two of those witnesses (Mr Carey and Mr Rundle) have expressed a strong preference that the proceeding not be transferred.  Three other witnesses or groups of witnesses are located in New South Wales including Mr Winterbottom, one of the remaining receivers.  The other witnesses are located in Victoria or overseas.  Again, given modern trial techniques, I do not consider that the location of the witnesses is a determinative factor.  Evidence can be and is often given by video link or telephone.  Moreover, it is by no means certain given the nature of the likely issues in dispute that each of the witnesses or groups of witnesses will be required to give evidence at any trial.

Jurisdiction clause

17                        These proceedings concern the conduct of the receivers appointed “under and in pursuance of” the Charges.  By clause 21.16 of each Charge, the plaintiffs and ING agreed that:

(a)        [The relevant Charge] is governed by and is to be construed in accordance with the laws applicable in [Victoria].

(b)        Each party irrevocably and unconditionally submits to the non exclusive jurisdiction of the courts of [Victoria] and any courts which have jurisdiction to hear appeals from any of those courts and waives any right to object to any proceedings being brought in those courts.

(Emphasis added).

A similar clause (except for the waiver of the right to object) exists in the Loan Agreement and the Deed of Guarantee and Indemnity. 

18                        The plaintiffs submit that the documents in issue (the Charges, the Loan Agreement and the Deed of Guarantee and Indemnity) were prepared in Melbourne and the transaction recorded in those documents was brokered in Melbourne.  Moreover, the plaintiffs submitted that ING and the receivers are sophisticated and experienced litigants who must have been aware of the need to connect the proceedings to Western Australia.  As a result, the plaintiffs contend that the jurisdiction clause is a critical factor against granting the application to transfer these proceedings to the Supreme Court of Western Australia:  see Slater & Gordon Pty Ltd v Porteous [2005] VSC 398 at [26], [33] and [34].

19                        In support of that proposition, Mr Wheelahan, Counsel for the plaintiffs, relied on a number of authorities.  Mr Wheelahan argued that these authorities established that parties ought to be held to their bargain as to the form of a jurisdiction clause and that the existence of such a clause is a “significant” or “overwhelming” factor: National Dairies WA Ltd & Ors v Wesfarmers Ltd [1996] FCA 603;West’s Process Engineering Pty Ltd (Administrator Appointed) v Westralian Sands Ltd (unreported, Sup Ct, NSW, Rolfe J, 50147 of 1997, 6 August 1997); KC Park Safe (SA) Pty Ltd & Ors v Adelaide Terrace Investment Pty Ltd [1998] FCA 601; Jovista Pty Ltd v Bateman Project Engineering Pty Ltd (unreported, Sup Ct, WA, Wheeler J, CIV 2154 of 1997, 19 May 1998) (Jovista Pty Ltd); Slater & Gordon Pty Ltd v Porteous [2005] VSC 398.  Accordingly, “strong grounds” would need to exist to override a jurisdiction clause:  Jovista Pty Ltd.

20                        On the other hand, ING and the receivers submitted that in light of the decision of the High Court in BHP Billiton 221 CLR 400, a jurisdiction clause is only one relevant factor which may influence a Court in determining whether to transfer a case, but is not decisive or overwhelming. 

21                        There are a number of points to be made.  First, the jurisdiction clause in issue here (see [17]) is non exclusive.  Each of the authorities referred to by the plaintiffs concerned an exclusive jurisdiction clause.  There is no doubt a stronger basis in those circumstances to hold the parties to their bargain.

22                        Secondly, even if it was an exclusive jurisdiction clause (and it is not), at its highest it would be a relevant factor in deciding whether a transfer of the proceeding was in the “interests of justice”.  This requires some explanation.  Section 1337H of the Corporation Act establishes that the Court must have regard to the “interests of justice” in determining whether a proceeding should be transferred to a more “appropriate” court.  The Court undertakes a balancing exercise between a number of relevant factors that inform it as to whether it is in the interests of justice to transfer a proceeding: Slater & Gordon Pty Ltd v Porteous [2005] VSC 398 at [38].

23                        In each of the cases referred to by the plaintiffs, the Court undertook this exercise and considered the existence of an exclusive jurisdiction clause to be a significant factor.  However, while it may be the critical factor in a particular case, it is not always decisive:  Slater & Gordon Pty Ltd v Porteous [2005] VSC 398 at [26]; World Firefighters Games Brisbane v World Firefighters Games Western Australia Inc (2001) 161 FLR 355 at [33] and [60] (World Firefighters Games Brisbane)and Safe Effect Technologies Ltd v Hood Group Holdings (2006) 24 ACLC 684 at [25].  As stated by Philippides J in World Firefighters Games Brisbane 161 FLR at [38]:

The authorities favour the view that under the cross-vesting legislation, the exclusive jurisdiction clause remains a relevant consideration, on the basis that the “interests of justice” require that due acknowledgment be accorded to such a clause as representing the bargain between the parties and that proper regard be given to the need to hold parties to their bargain.  Nevertheless … one should not start from the position that such clauses should be viewed with the “strong bias” in their favour previously accorded to them at common law.  The weight to be given to such clauses will vary depending on the other surrounding and countervailing circumstances.

24                        Put simply, the significance of the existence of a jurisdiction clause is to be determined in the particular circumstances of the case having regard first and foremost to the interests of justice. 

25                        Further, the authorities must be read in light of the decision in BHP Billiton 221 CLR 400.  In that case, the High Court found that the trial judge erred in taking into account the plaintiff’s choice of forum as a matter not to be lightly overridden.  In other words, the High Court reinforced the type of balancing exercise necessary to establish whether the transfer of proceedings to a more appropriate forum is in the interests of justice:  BHP Billiton 221 CLR at [15] and [19] per Gleeson CJ, McHugh and Heydon JJ; at [77] per Gummow J (Hayne J agreeing); at [168]-[169] per Kirby J.

26                        As Gleeson CJ, McHugh and Heydon JJ stated (at [19]):

In many cases, there will be such a preponderance of connecting factors with one forum that it can readily be identified as the most appropriate, or natural forum.  In other cases, there might be significant connecting factors with each of two different forums.  Some of the factors might cancel each other out … Weighing considerations of cost, expense, and convenience, even when they conflict, is a familiar aspect of the kind of case management involved in many [transfer] applications.

27                        Accordingly, the existence of a non-exclusive jurisdiction clause is a relevant factor to be weighed against other relevant factors, and the significance or otherwise of such a factor is to be determined in the circumstances of the case at hand.  It is one factor among many and not immediately overwhelming simply because of its existence.

28                        Thirdly, contrary to the submissions of the plaintiffs, although the parties’ choice as to applicable law remains (see cl (a)), the express terms of the Charge reflect a choice, one assumes a conscious choice, that the jurisdiction of the Courts of Victoria is non exclusive.  That decision is not that surprising.  The properties caught by the Charges were located throughout Australia.  It would be an odd result if the receivers were required to commence litigation in Victoria in relation to property located, for example, in Western Australia.  These facts stand in contradistinction to World Firefighters Games Brisbane 161 FLR 355 and Slater & Gordon Pty Ltd v Porteous [2005] VSC 398 where the Court found the existence of an exclusive jurisdiction clause highlighted that the parties understood the potential inconvenience of conducting litigation where the appropriateness of the selected forum was not immediately apparent.  Finally, the view expressed in World Firefighters Games Brisbane 161 FLR 355 (see [23] above) that since the introduction of cross vesting legislation,such a clause becomes just another factor to be considered on the question of transfer, is directly applicable here where the issues in dispute primarily concern a Commonwealth Act – the Corporations Act.  There is no doubt that the Supreme Court of Western Australia can and does deal with issues arising under the Corporations Act.  

Concurrent proceedings

29                        The interests of justice are not served by two separate proceedings in two Courts dealing with the same issue being run concurrently:  see Henry v Henry (1996) 185 CLR 571 at 590-1.  If that situation was allowed to continue, it would have the potential of inconsistent factual findings and determinations on the same issues.  Moreover it has the potential of generating wasted costs if both proceedings are being prepared at the same time. 

30                        So far as it is relevant, the WA Directions Proceedings were the first in time and once a Court is seized of an issue, it is desirable that the issue be determined by that Court:  Acehill Investments Pty Ltd v Incitec Ltd [2002] SASC 344 at [19] (Acehill) and the authorities cited.  However, as Debelle J said in Acehill [2002] SASC 344 at [19], “other specific considerations might arise in particular cases which prevail over the interests of comity and courtesy” and “the court which is being asked to transfer the matter retains an overriding discretion and must have regard to the wider consideration of the interests of justice”.

31                        The plaintiffs submitted that by reason of the nature of the WA Directions Proceedings (see [5] above), the existence of the WA Directions Proceedings was not a significant factor because, as Lindgren J said in Editions Toms 77 FCR 141, there is at least a real possibility of the need for the substantive inter parties proceedings (these proceedings) to be determined in relation to the mandate issue.  On the other hand, the receivers submitted that even if the application was approached on the basis that the WA Directions Proceedings did not exist, it was in the interests of justice that these proceedings be transferred to the Supreme Court of Western Australia. 

32                        In my view, the existence of the WA Directions Proceedings is a relevant factor.  The mandate issue is an important issue and one which must be resolved as soon as practicable.  It was common ground between the parties that resolution of that issue requires assessment of the receivers’ contention that they are entitled to remain as receivers by reason of the need to maintain retentions for priority creditors under s 433 of the Corporations Act and to meet the costs of defending claims against the receivers and that the documentary material required to resolve those disputes is not extensive. 

33                        On 22 October 2009, the WA Directions Proceeding was entered into the Commercial and Managed Cases List (the CMC List) of the Supreme Court of Western Australia.  The WA Directions Proceedings are scheduled to return to the Supreme Court of Western Australia for further directions on 1 December 2009.  The solicitors for ING and the receivers are instructed to seek a trial date as soon as possible after 11 January 2010, when the Court vacation period for the Supreme Court of Western Australia ends.  The Supreme Court of Western Australia is in a position to list the WA Directions Proceedings for trial on an estimate of two to three days from mid-January 2010, subject to the parties’ availability and the completion of the necessary interlocutory steps. 

34                        In that context, it must be noted that the plaintiffs initially objected to the continuation of the WA Directions Proceedings.  That objection has been withdrawn.  Moreover, as noted earlier, they accept that the interests of justice are not served by two separate proceedings in two courts dealing with the same issue being run concurrently. 

Identity and location of legal representation

35                        The plaintiffs’ solicitor is a sole practitioner who practises in Victoria.  The solicitors for ING and the receivers are a national firm.  The plaintiffs submit that the solicitors for ING and the receivers are better placed to conduct litigation remotely.  Moreover, the plaintiffs submit that the both legal teams are involved in related proceedings in their respective States.  I do not accept that these factors are determinative or significant. 

36                        As the solicitors for ING and the receivers submitted, on closer examination neither ING nor the receivers are parties to any of the “related proceedings” identified by the plaintiffs’ solicitor.  Moreover, I do not accept that, if requested to do so, the Supreme Court of Western Australia would not take all reasonable steps to ensure that the plaintiffs’ solicitors were able to manage and conduct the litigation from Melbourne.  As I noted earlier, interlocutory and substantive proceedings can be and are conducted by video and telephone.  Moreover, conduct of all modern day litigation is directed at dealing with litigation as “quickly, inexpensively and efficiently” as possible.  That requires not only the Court but also the parties and their legal teams to identify the real factual and legal issues in dispute, to minimise the number of court hearings and to prepare for and conduct the hearing of the disputed issues in an appropriate manner.  That is consistent with the stated objectives of the CMC List.

CONCLUSION

37                        As these reasons for decision reflect, there are factors for and some factors against the transfer of these proceedings to the Supreme Court of Western Australia.  On balance, I consider that it is in the interests of justice that I grant ING and the receivers their application and transfer this proceeding to the Supreme Court of Western Australia.  The factors in favour of the transfer outweigh those against transfer.  On any view, both proceedings should not continue concurrently.  The Supreme Court of Western Australia has indicated that it will be in a position to list the WA Directions Proceedings for trial on an estimate of two to three days from mid-January 2010 and by transferring these proceedings to the Supreme Court of Western Australia, any outstanding concern about the lack of finality attracted to the WA Directions Proceedings will be able to be dealt with by the Supreme Court of Western Australia.  I will further order that the plaintiffs pay the costs of ING and the receivers’ application to transfer the proceedings.  Other than those costs, the remaining costs will be costs in the cause.

38                        The manner in which these proceedings are to be managed to trial is, of course, a matter for the Supreme Court of Western Australia.

Associate:

Dated:         16 November 2009