FEDERAL COURT OF AUSTRALIA

Interleasing (Australia) Limited v Tieman Industries (in liq) [2015] FCA 1120

THE COURT ORDERS THAT:

1.    The applicant be granted leave nunc pro tunc pursuant to s 500(2) of the Corporations Act 2001 (Cth) to commence and proceed with this proceeding against the first respondent on condition that no step be taken to enforce any judgment which might be obtained against the first respondent without the prior leave of the Court.

2.    The interlocutory application dated 9 October 2015 be dismissed.

3.    The costs of the application be the applicant’s costs in the cause.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    The proceeding concerns a dispute over the ownership of 68 vehicles. The applicant (“Interleasing”) claims to have valid, enforceable and perfected security interests in the vehicles pursuant to the Personal Property Securities Act 2009 (Cth) (“PPSA”), ranking ahead of any interest any of the respondents may have in the vehicles.

2    Interleasing seeks declaratory relief to vindicate its alleged security interests and injunctive relief restraining the respondents from selling or otherwise dealing with the vehicles and requiring them to deliver possession of the vehicles to the applicant.

3    The proceeding was commenced on 24 September 2015 and no defences have yet been filed. The third respondent (“Wastech”) has filed a notice submitting to any order of the Court save as to costs.

Interlocutory applications

4    This decision addresses two matters:

(1)    The applicant’s application for leave to proceed nunc pro tunc against the first respondent (“Tieman Industries”) pursuant to s 500(2) of the Corporations Act 2001 (Cth) (“Corporations Act”); and

(2)    The application by Tieman Industries and the second respondent (“liquidators”) for the proceeding to be transferred to the Victorian District Registry.

5    The liquidators contend that leave to proceed should only be granted if the proceeding is transferred to the Victorian District Registry.

6    Interleasing opposes the transfer of the proceeding to the Victorian District Registry.

7    The third, fourth and fifth respondents consent to the proposed transfer but did not wish to be heard on the applications.

8    For the following reasons, I have concluded that the applicant should be granted leave to proceed. The matter should not be transferred to the Victorian District Registry.

Background to interlocutory applications

9    According to Interleasing’s solicitor, Mr Whatley, the primary and substantive issue to be determined by the Court is whether Tieman Industries contracted with Interleasing in its own capacity or in its capacity as trustee when it entered into various contractual agreements for the vehicles.

10    According to Interleasing’s solicitor, the primary dispute will turn upon the proper construction of a document called the “Master Agreement” dated 14 December 2011 including the “Standard Terms and Conditions for Leases, Commercial Hire Purchase Agreements and Asset Management Services” (“Master Agreement”), and a document called the “Related Corporation Nomination Form” (“RCN Form”) executed on or about 14 December 2011.

11    The liquidators will contend that:

(a)    The grantor of the security interests was Tieman Industries in its capacity as trustee of the Tieman Unit Trust;

(b)    Interleasing had registered its security interests on the Personal Property Securities Register against the ACN of Tieman Industries and not the ABN of the Tieman Unit Trust, and registration against the ABN of the Trust was required by s 153 of the PPSA;

(c)    As Interleasing registered its security interests against the wrong grantor, Interleasing’s security interests were unperfected at the time of the appointment of the administrators; and

(d)    By s 267 of the PPSA, the unperfected security interests vested in Tieman Industries immediately prior to the appointment of the administrators.

12    There is likely to be a factual question about whether Tieman Industries traded only in its capacity as trustee of the Tieman Unit Trust.

13    There is a deed of agreement dated 3 September 2015 between Tieman Industries, in its own capacity and as trustee of the Tieman Unit Trust, the administrators of Tieman Industries, Wastech, ANZ and Interleasing (“deed of agreement”). The recitals to the deed of agreement provide that the parties agreed to enter into the deed to protect Interleasing’s asserted interest in 40 of the 68 vehicles to the extent that it is found, either by agreement or determination of the Court, to be valid. The deed of agreement contains the following provisions:

2.1 Resolution of Dispute

The parties irrevocably and unconditionally agree and acknowledge that:

(a)    the dispute between Interleasing, the Vendor and the Administrators concerning the Asserted Interest is to be determined either by:

(i)    written agreement between Interleasing, the Vendor and the Administrators; or

(ii)    final determination by a Court of competent jurisdiction which:

    (A)    is not subject to an appeal; and/or

(B)    which does not fall within any period in which that determination can be appealed…

And

3.4 Governing law and jurisdiction

(a)    This deed is governed by the laws in force in Victoria.

(b)    The parties submit to the exclusive jurisdiction of the courts of Victoria and the Federal Court of Australia and any courts that may hear appeals from those courts about any proceedings in connection with this deed.

Legal framework

Leave to proceed

14    Section 500(2) of the Corporations Act provides that, after the passing of the resolution for voluntary winding up, no action or other civil proceeding is to be proceeded with or commenced against the company except by leave of the Court and subject to such terms as the Court imposes.

15    The liquidators acknowledge that the present case involves a proprietary claim in respect of which the Court would ordinarily grant leave: Richardson v Lo Pilato (liquidator), in the matter of Trojan Hospitality (ACT) Pty Limited (in liq) [2014] FCA 888; Pozzebon (Trustee) v Australian Gaming and Entertainment Ltd, in the matter of Australian Gaming and Entertainment Ltd (in liq) [2014] FCA 1034; (2014) 225 FCR 305; In the matter of Bigdeal Artist Management Pty Ltd (in liquidation) [2015] NSWSC 936 at [16].

16    However, they observe that the purpose of s 500(2) is to prevent a company’s assets being dissipated by unnecessary litigation: Oliveri v PM Sulcs & Associates Pty Ltd [2012] NSWSC 1311 at [9] and argue that the costs of the liquidation will be reduced if the proceeding is transferred to the Victorian Registry of this Court.

Transfer of proceedings

17    Section 48 of the Federal Court of Australia Act 1976 (Cth) provides that the Court or a Judge may, at any stage of a proceeding in the Court, direct that the proceeding or a part of the proceeding be conducted or continued at a place specified in the order, subject to such conditions (if any) as the Court or Judge imposes.

18    Rule 2.02 of the Federal Court Rules 2011 (Cth) provides that a party may apply at the proper place for an order that the proceeding be transferred to another place. In this case, the proper place is the place where the proceeding is started.

19    I respectfully adopt the following summary of relevant principles, based on the decision in National Mutual Holdings Pty Ltd v The Sentry Corporation (1988) 19 FCR 155, by Robertson J in Mulhern v Pearce [2013] FCA 1138 at [14]:

•    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).

Leave to proceed

20    This is an appropriate case for the grant of leave to proceed. The only question is whether that leave should be refused if the matter is not transferred to the Victorian District Registry because proceeding in the New South Wales District Registry would cause the assets of the liquidation to be unnecessarily or unreasonably dissipated.

21    The liquidators relied upon an affidavit of their solicitor Mr Watkins sworn 9 October 2015. Interleasing relied on an affidavit of Mr Whatley sworn 14 October 2015.

Should the proceeding be transferred to the Victorian District Registry?

22    It is not suggested that Interleasing has acted capriciously in commencing the action in the New South Wales District Registry. Interleasing’s primary place of business is in North Ryde, New South Wales. Interleasing’s credit risk manager, who has dealt with the liquidators concerning the disputed vehicles, is located in Sydney. Interleasing’s lawyers are located in Sydney.

23    The 68 vehicles that are the subject matter of the proceedings are apparently located throughout Australia. Their precise whereabouts is not known. However, Mr Heron, the Group Treasurer and Head of Credit of Interleasing, believes that the majority of the vehicles “should be located and operated in New South Wales”.

24    Clause 10.15 of the Master Agreement provides:

The Agreement and each Fleet Agreement will be governed by and construed in accordance with the laws of New South Wales.

25    The RCN Form also states:

This agreement will be governed by and construed in accordance with the laws of New South Wales.

26    These are matters that justify the commencement of the proceedings in the New South Wales District Registry.

27    The liquidators identify the following factors supporting the proposed transfer:

(a)    the first, third, fourth and fifth respondents are each companies registered in Victoria with their registered offices, principal place of business and directors located there;

(b)    two of the three liquidators are located in Melbourne and all of their staff are located in Melbourne;

(c)    the applicant has its registered office in Victoria and all its directors are located there, although its principal place of business is New South Wales;

(d)    the person instructing the applicant’s solicitor, Mr Heron, is located in Victoria;

(e)    the “Master Agreement” was negotiated in Victoria. It was also executed by directors of both companies located in Victoria;

(f)    the likely witnesses for both the applicant and the first and second respondents are all located in Victoria. While Mr Whatley submits that the evidence will be “largely documentary”, he does not dispute that there will be witnesses nor does he dispute Mr Watkins' assessment that they will be based in Victoria. Clearly there will need to be evidence from witnesses (see Re Interwest Hotels Pty Ltd (in liq) (1993) 12 ACSR 78) and communications to date suggest it will be disputed at least in part;

(g)    the vast majority of the first and second respondents’ relevant documents are located in Victoria;

(h)    the solicitors for each party other than the applicant are located in Victoria. In particular, the solicitors for the first and second respondents were retained to act generally for the administrators following their appointment. While Minter Ellison is a national firm (as is HWL Ebsworth), all work to date has been done in Melbourne.

28    In my view, the factors connecting Interleasing with Victoria are not of significant weight where Interleasing has chosen, no doubt for sound commercial reasons, to commence the proceeding in New South Wales.

29    Similarly, the factors connecting the third, fourth and fifth respondents to Victoria are not of significant weight where they have chosen not to be heard on the application for transfer.

30    It is significant that the liquidation of Tieman Industries is being substantially conducted in Melbourne. However, one of the three liquidators is working on the liquidation from his office in Sydney. To that extent, the liquidation has an apparent connection with Sydney.

Likely witnesses

31    Mr Watkins’ evidence is that the likely witnesses are located in Victoria. On the liquidators’ case, these witnesses are the Chief Financial Officer of Tieman Industries and one or more administrative staff of Tieman Industries.

32    Mr Whatley apparently accepts that Interleasing may call witnesses who are located in Victoria. Interleasing has offered to alleviate the costs of Tieman Industries and the liquidators by not seeking costs associated with the travel of any witnesses from Melbourne to Sydney in the event that the proceedings remain in New South Wales and Interleasing is ultimately successful in the proceeding.

33    However, Mr Whatley’s assessment is that the determination of the primary dispute will be largely based on documents and is unlikely to involve substantial disputed questions of fact that will require any extensive cross-examination.

34    At this early stage of the proceeding, I am not able to reach a firm view about the extent to which the convenience of witnesses warrants that the proceeding be transferred to the Victorian District Registry. However, I accept that the location of likely witnesses in Victoria is a relevant factor.

Costs

35    Mr Watkins’ evidence is that he believes the costs of the proceeding will be minimised if the proceeding were to be transferred to Victoria. On information and belief from Mr Hams, Mr Watkins also gives evidence that the cost of the liquidation of Tieman Industries would be reduced if the proceeding were to be transferred to Victoria.

36    Mr Whatley’s view is that neither Tieman Industries nor any other party will be significantly prejudiced by the costs involved in running the proceeding in New South Wales as opposed to Victoria.

37    The evidence given about the relative costs was expressed at a high level of generality. At this stage, the ambit of the dispute seems relatively confined. I accept Mr Watkins’ evidence about the various steps that are likely to be necessary to conduct the litigation, however, I am not satisfied that the costs of the proceeding will be significantly higher if the proceeding is not transferred to Victoria. Particularly given that one of the liquidators is working on the liquidation from Sydney, and that the solicitors for the liquidators are a national firm, in my view, it should be possible for the liquidators to defend the proceedings in a cost effective way in the New South Wales Registry that is not materially different from the cost of defending the proceeding in the Victorian Registry.

Deed of agreement

38    The liquidators contended that clause 3.4 of the deed of agreement requires the proceeding (at least so far as it concerns 40 of the 68 disputed vehicles) to be brought in Victoria. In support of this contention, the liquidators referred to a letter from Mr Watkins dated 13 October 2015 which, they argued, contained an acknowledgement that proceedings in connection with the deed are required to be brought in Victoria.

39    I do not accept the liquidators’ construction of clause 3.4 of the deed of agreement. Assuming (without deciding) that clause 3.4 applies to the proceeding, a reasonable person would understand that clause to provide for disputes to be determined in the Federal Court of Australia, and not to the Victorian Registry of the Court: cf Toll (FGCT) Pty Limited v Alphapharm Pty Limited [2004] HCA 52; (2004) 219 CLR 165 at [40]. Accordingly, I do not accept that the deed of agreement points towards the Victorian Registry as the appropriate venue for the litigation

Conclusions

40    I do not agree that the present case has an “intensely strong Victorian flavour”: cf Leda Holdings Pty Ltd v Securcorp Ltd [2013] FCA 1364. The convenience of the applicant and the liquidators points in different directions, but the circumstances do not warrant a transfer of the proceeding, at least not at this stage of the litigation.

41    I do not consider that, having decided that the proceeding should not be transferred, the applicant should not be granted leave to proceed. It plainly has a case to be argued that it has security interests that justify the relief it seeks.

Associate:

Dated:    22 October 2015