IN THE MATTER OF THE OLD KIAMA WHARF COMPANY PTY LIMITED (IN LIQUIDATION) ACN 096 227 477

REASONS FOR JUDGMENT

1                     Before me today is an interlocutory application by the plaintiff applying for orders that a receiver be appointed over certain Crown leases and the businesses conducted at the leased premises, known as the Old Kiama Wharf.  The interlocutory application was filed on 1 October 2010.  There is also before me a notice of motion filed on 1 November 2010 by the first respondent to the proceedings, Betohuwisa Investments Pty Limited (Betohuwisa).  By that notice of motion Betohuwisa seeks an order that pursuant to s 5(4) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) the whole proceeding be transferred to the Supreme Court of New South Wales.  The third process before me is another notice of motion filed by Betohuwisa on 1 November 2010 seeking orders in relation to the removal of the fourth respondent from the proceedings. 

2                     At the outset of this hearing a question was raised as to which of the three processes should be dealt with first.  I acceded to Betohuwisa’s submission that I should deal first with the notice of motion to transfer the proceedings to the Supreme Court.  It seems to me that this notice of motion is logically anterior to the other applications.  The basis upon which Betohuwisa seeks transfer of the proceedings to the Supreme Court is twofold.  First, that this Court lacks the jurisdiction to deal with the interlocutory process.  Second, that it is in the interests of justice that there be an order for transfer.

3                     Betohuwisa’s submission regarding the first basis (that this Court has no jurisdiction to deal with the interlocutory process in any event) is that the mere fact the plaintiff company is subject to a liquidation does not mean that the interlocutory process relevantly involves any “civil [matter] arising under the Corporations legislation” within the meaning of s 1337B(1) of the Corporations Act 2001 (Cth). 

4                     The plaintiff disputed the lack of jurisdiction.  The plaintiff submitted that the interlocutory process involved issues which were “at the heart of the liquidation” and therefore s 1337B(1) of the Corporations Act was satisfied.  Alternatively, the plaintiff pointed to s 57 of the Federal Court of Australia Act 1976 (Cth) and O 25 r 1 of the Federal Court Rules which contemplate that in an urgent case an application by a person who intends to commence a proceeding to appoint a receiver may be granted, but the applicant must give an undertaking to commence proceedings in relation to the subject matter of that application within 14 days.  According to the plaintiff the subject matter of the application would be another proceeding foreshadowed under s 474 of the Corporations Act.  This is a provision that the liquidator must take into his or her custody or under his or her control all the property to which the company is or appears to be entitled, with the capacity in s 474(2) for the Court to make a vesting order in respect of the property of the company.  It is said by the plaintiff that an examination of Samantha Hamilton, at one time a director of Betohuwisa, discloses a question about Betohuwisa’s ownership of the Crown leases and business in question. 

5                     The question of the jurisdiction of this Court in respect of the interlocutory process was first raised at the commencement of this hearing without notice to the plaintiff.  I indicated that it involved an important issue of principle.  As such, I was reluctant to determine the transfer of motion on this basis particularly given that the motion (at least as filed and as contemplated at all times up until this morning) was to be prosecuted on the basis that it was appropriate and in the interests of justice that there be an order for transfer having regard to the circumstances of the case.  I will now describe those circumstances. 

6                     As noted, the interlocutory process was filed on 1 October 2010.  At present there are four defendants to that process: Betohuwisa (the first defendant), Warwick Colbron (the second defendant), Christina Jackman (the third defendant), and Samantha Hamilton (the fourth defendant).  The filing of the interlocutory process followed the plaintiff filing summonses for examination on 30 June 2010 and the examination of one of the recipients, Samantha Hamilton (the fourth defendant in these proceedings), on 29 July 2010. 

7                     There are two proceedings in the Supreme Court of New South Wales which found the basis for Betohuwisa’s application for transfer.  On 15 April 2010 Cliffshaw Pty Limited (Cliffshaw) commenced proceedings against various parties, the remaining parties being: Betohuwisa (the first defendant), The Old Kiama Wharf Company Pty Limited (Old Kiama Wharf) (the second defendant) and Warwick Colbron (the fourth defendant).  In those proceedings, Cliffshaw seeks a declaration that it is an unpaid vendor with a lien over the property the subject of the sale transaction between Cliffshaw and Old Kiama Wharf.  The property in question is the same property the subject of the interlocutory process before me today, namely, the Crown leases and the businesses conducted at the leased premises.  The essence of the Cliffshaw proceedings is that Betohuwisa was not a bona fide purchaser for value without notice from Old Kiama Wharf.  Therefore, the lien is sought, or alternatively other orders, including an order that Betohuwisa holds the sale property on constructive trust for Cliffshaw.  Those proceedings also include the seeking of relief against Warwick Colbron including a declaration that he was and is a de facto director of both Betohuwisa and Old Kiama Wharf within the meaning of s 9 of the Corporations Act.  As I understand it, Old Kiama Wharf has filed a submitting appearance in the Cliffshaw proceedings and Betohuwisa has filed a defence to the amended statement of claim on or about 16 July 2010. 

8                     Additionally, the plaintiff company in this proceeding (Old Kiama Wharf) commenced proceedings in the Supreme Court on 22 September 2010.  The plaintiff’s proceedings in the Supreme Court are brought against two defendants, the first defendant being Betohuwisa and the second being Warwick Colbron.  In those Supreme Court proceedings, the plaintiff seeks, amongst other things, a declaration that the property the subject of the sale transaction between Old Kiama Wharf and Betohuwisa is a voidable transaction under s 588FE of the Corporations Act and, alternatively, a declaration that the lease transfers are voidable under the provisions of s 37A of the Conveyancing Act 1919 (NSW), as well as a declaration that Warwick Colbron was and is a de facto director of both Old Kiama Wharf and Betohuwisa within the meaning of s 9 of the Corporations Act (that is, the same declarations that are sought in the Cliffshaw proceedings). 

9                     The Old Kiama Wharf proceedings in the Supreme Court accordingly involve the same property as the Cliffshaw proceedings, being precisely the same property the subject of the interlocutory process before me today. 

10                  According to Betohuwisa, if this Court has jurisdiction under the Corporations Act then there is power to order the transfer of these proceedings to the Supreme Court under s 1337H(2) of the Corporations Act, namely:

… 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…

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.

11                  In any event, and as set out in Betohuwisa’s notice of motion, s 5(4) of the Jurisdiction of Courts (Cross-Vesting) Act applies where a proceeding is pending in the Federal Court and it appears to that Court that the relevant proceeding arises out of, or is related to, another proceeding pending in the Supreme Court of a State or Territory.  If it is more appropriate that the relevant proceeding be determined by the Supreme Court having regard to the four factors set out in subs (b)(ii)(A) to (D) or is otherwise in the interests of justice that the relevant proceeding be determined by that Supreme Court, the Federal Court, according to s 5(4), shall transfer the relevant proceeding to the Supreme Court. 

12                  In terms of the four factors in s 5(4)(b)(ii)(A) to (D), it is the case that the interlocutory process (which is the relevant proceeding for the purposes of those subsections) would not have been “incapable of being instituted” in the Supreme Court of New South Wales within the meaning of subs (A), would have been “capable of being instituted” in that Court within the meaning of subs (B), and involves no question relating to the “application, interpretation or validity” of a State law within the meaning of subs (C).  This leaves the question of the interests of justice in subs (d) and the appropriateness of the interlocutory process being determined by the Supreme Court as otherwise referred to in the section. 

13                  According to the plaintiff, its position is that all three proceedings should be heard together.  To this end the plaintiff foreshadowed an application in the Supreme Court for the transfer of the two existing Supreme Court proceedings to this Court.  It also foreshadowed another set of proceedings, presumably in this Court, under s 474 of the Corporations Act.  The plaintiff pointed to the fact that there are three examination summonses outstanding in this Court, with one examination having already been conducted.  According to the plaintiff, and contrary to Betohuwisa’s submissions, there is a federal element in the Cliffshaw proceedings relating to the role of Warwick Colbron as a director.  The plaintiff also submitted that the liquidation of the Old Kiama Wharf affects all the proceedings.  Finally, the plaintiff noted that there is no pressing reason of convenience such as geography or location of witnesses which would make the Supreme Court a more appropriate place to dispose of all of the proceedings.  Therefore, according to the plaintiff, this Court is the appropriate vehicle to dispose of all issues. 

14                  Betohuwisa (a defendant to all of the proceedings), on the other hand, submitted as follows.  First, the position of Cliffshaw in the Supreme Court proceedings is unknown in respect of the foreshadowed application by Old Kiama Wharf for transfer of those proceedings to this Court.  Second, the examination summonses involve an entirely independent exercise and the results of those summonses are capable of being used for whatever purpose the liquidator sees fit.  Third, and importantly, the liquidator commenced proceedings in the Supreme Court at some time before 22 September 2010 and it did so before commencing the interlocutory process in this Court.  Fourth, the two proceedings in the Supreme Court are further advanced than the proceedings in this Court.  Fifth, in substance the Supreme Court proceedings involve real property and conveyancing issues with the only real federal element in the Supreme Court proceedings being the alleged voidable sale transaction under s 588FE of the Corporations Act, which Betohuwisa described as “equivocal” at best.

15                  I am persuaded by Betohuwisa’s submissions.  The fact is that when the plaintiff filed the interlocutory process in this Court, it had already commenced substantive proceedings in relation to the same property in the Supreme Court.  Moreover, it did so in circumstances where other proceedings also had been commenced in the Supreme Court which concerned both the plaintiff and Betohuwisa, such proceedings having been on foot since 15 April 2010.  The two proceedings in the Supreme Court both involve the same property as the interlocutory process filed in this Court.  All three proceedings are clearly related as, indeed, the plaintiff in this proceeding appears to acknowledge by its foreshadowed application for transfer of the Supreme Court proceedings to this Court.  However, there has been no such application for transfer of the Supreme Court proceedings despite the fact that those proceedings have been on foot, at least in the case of the Cliffshaw proceedings, for more than six months and, in the case of the Old Kiama Wharf proceedings, for not less than three months.  It is not difficult to infer that that foreshadowed application for transfer to this Court is made in response to the notice of motion filed by Betohuwisa for transfer of this proceeding to the Supreme Court. 

16                  The proceedings in the Supreme Court have been on foot for far longer than the interlocutory process in this case.  The mere fact that there are examination summonses outstanding in this Court is an insufficient reason to refuse to transfer the proceedings in circumstances where the plaintiff’s own position on its interlocutory process is that it should be dealt with by the same Court which deals with the two substantive proceedings in the Supreme Court.  In terms of reasons of convenience to which the plaintiff referred, that consideration applies equally to both the Supreme Court and the Federal Court and the proceedings in the Supreme Court are more advanced and have been on foot for some time, in contrast to the proceedings in this Court.  It is clear to me that it is in the interest of justice and appropriate that there be an order of transfer of the interlocutory process from this Court to the Supreme Court.

17                  The plaintiff submitted that even if I determined it appropriate to transfer the proceedings, I should nevertheless deal with the interlocutory process filed by the plaintiff.  However, in my view it would be inappropriate in the circumstances which I have described for this Court to deal with the interlocutory process.  The interlocutory process should be dealt with as part and parcel of the related proceedings in the Supreme Court.

18                  Similarly, I consider it inappropriate to deal with the third process before me today, being the notice of motion filed by Betohuwisa seeking orders in relation to the removal of the fourth respondent from the proceedings. 

19                  Accordingly, I propose to make orders as sought in Betohuwisa’s notice of motion filed on 1 November 2010 transferring the proceedings to the Supreme Court.

Associate:

Dated:         22 November 2010