Federal Court of Australia

Shepard, in the matter of Grainpro Pty Ltd (in liq) v Bonfante [2020] FCA 1618

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 1337H(2) of the Corporations Act 2001 (Cth), this proceeding be transferred to the Family Court of Australia.

2.    The plaintiffs pay the defendant’s costs of the interlocutory application filed on 18 September 2020.

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

REASONS FOR JUDGMENT

MARKOVIC J:

1    On 29 July 2020 Adam Shepard in his capacity as liquidator of Grainpro Pty Ltd (in liquidation) (Liquidator) and Grainpro Pty Ltd (in liquidation) (Grainpro) as first and second plaintiffs respectively commenced this proceeding against Mario Bonfante as defendant seeking declarations and orders pursuant to ss 180, 181, 588G, 588M and 1317H of the Corporations Act 2001 (Cth) (Corporations Act) and, in the alternative, an order for equitable compensation or damages at common law (Insolvent Trading Proceeding).

2    On 18 September 2020 Dr Bonfante filed an interlocutory application seeking an order pursuant to s 1337H of the Corporations Act that the Insolvent Trading Proceeding be transferred to the Family Court of Australia (Family Court). Dr Bonfante in fact brings his application for transfer of this proceeding to the Family Court on two bases: first, on the basis that the insolvent trading claim made in this proceeding is a matrimonial cause such that this Court has no jurisdiction to hear it; and secondly, in the alternative, on the basis that in the interests of justice the Insolvent Trading Proceeding should be transferred to the Family Court pursuant to s 1337H of the Corporations Act.

The evidence

3    In support of his application Dr Bonfante relies on two affidavits sworn by him on 17 September 2020 and 9 October 2020 respectively and two affidavits sworn by his solicitor, Anthi Balafas, on 18 September 2020 and 9 October 2020 respectively.

4    The plaintiffs rely on two affidavits sworn by the Liquidator on 27 July 2020 and 2 October 2020 respectively and an affidavit sworn by a solicitor in the employ of the Liquidator’s solicitors, Anna Kuznetsova, on 2 October 2020.

5    The affidavits relied on by Dr Bonfante comprise over 300 pages of material. In the interests of efficiency, save in one respect, the plaintiffs did not object to those affidavits but pointed out that significant parts of the material in them purported to summarise documents which were not exhibited, unnecessarily summarised some of the documents which were exhibited and contained commentary in the form of submissions and opinions. In addition, none of the evidence relied on by Dr Bonfante seems to be directly referred to in his written submissions.

6    The plaintiffs’ criticisms are well founded. Given the nature of the evidence relied on by Dr Bonfante, I do not propose to set it out in full but will refer to it and the Liquidator’s evidence insofar as it is relevant to my consideration of the issues.

Background

Grainpro

7    Grainpro was incorporated on 16 November 2007. At that time Angela Gail Hawke (who later married Dr Bonfante and who I will refer to in these reasons as Mrs Bonfante) was the sole director and secretary of Grainpro.

8    Grainpro operated as a grain merchant, purchasing and selling bulk grains domestically and internationally.

9    On 28 July 2014 Grainpro entered into a factoring finance facility (Factoring Agreement) with GE Commercial Corporation (Australia) Pty Ltd which provided Grainpro with cash to fund its day to day operations. Pursuant to the Factoring Agreement, Grainpro received finance at the rate of 80% of issued invoices.

10    On 28 August 2015 Dr Bonfante and Mrs Bonfante were married.

11    On 16 June 2016 Dr Bonfante was appointed as a director and a secretary of Grainpro. Since 18 December 2017 Dr Bonfante has been the sole director and secretary of Grainpro. Mrs Bonfante’s continued role in Grainpro after she resigned as a director and secretary and the circumstances in which Dr Bonfante says she was subsequently dismissed as an employee of Grainpro are the subject of Dr Bonfante’s evidence. It is not necessary for me to set out that evidence here.

12    On 1 August 2018 the Factoring Agreement was novated to Scottish Pacific Finance Pty Ltd (ScotPac). After August 2018 the rate of finance received by Grainpro pursuant to the Factoring Agreement decreased to 65% of issued invoices.

13    On or about 12 January 2019 Dr Bonfante and Mrs Bonfante separated.

14    On 11 July 2019 ScotPac terminated the Factoring Agreement, cutting off Grainpro’s operating capital.

15    On 27 July 2019, by resolution of Dr Bonfante, who at the time was the sole director of Grainpro, the Liquidator was appointed as voluntary administrator of Grainpro.

16    On 24 September 2019 Grainpro went into liquidation.

The Family Court Proceeding

17    On 28 February 2019 Mrs Bonfante as applicant commenced proceeding SYC 1234/2019 in the Family Court against Dr Bonfante as respondent (Family Court Proceeding).

18    According to Dr Bonfante, in that proceeding Mrs Bonfante seeks orders for a property settlement and the following relief in relation to Grainpro:

•    That in relation to the Company Grainpro Pty Ltd the Respondent Mario Bonfante shall be restrained and is hereby restrained from;

a)    entering any business premises of Grainpro Ply Ltd

b)    contacting any employee, supplier, customer, creditor or debtor of Grainpro

c)    operating any account of Grainpro

d)    giving any instruction to any financial institution where Grainpro Pty Ltd holds an account in respect of that account

e)    Causing any further shares in Grainpro to be created and/or issued to any person or entity

f)    From appointing any additional directors or officers to Grainpro

•    The Shareholders Agreement between the Husband and the Wife dated 2 December 2016 is hereby discharged.

•    That within 7 days of the date of these Order the Husband shall return to the Wife or the Wife’s lawyer undamaged and in good order all records of Grainpro that it holds containing the company records and that an injunction is hereby granted restraining the Husband from deleting, damaging or removing any records, files, electronic communications or any other electronic information.

•    That within seven (7) days of the date of this Order, the Husband return to the wife or the wife’s lawyer undamaged and in good order all keys for ant [sic] and all motor vehicles in the name of Grainpro Pty Ltd

•    That within seven (7) days the Husband resign as a Director and resign all other office holdings that he has in Grainpro.

•    That the Wife be forthwith appointed as a Director of Grainpro and commence to operate the business of Grainpro to the exclusion of the Husband.

•    That the Husband be restrained by injunction in his capacity as Director and/or shareholder of Grainpro from doing any act or thing that may cause any property of the Company to be sold, transferred, assigned, encumbered, alienated or leased in any manner pending further Order.

19    Ms Balafas provides additional information about the relief sought by Mrs Bonfante in the Family Court Proceeding, noting that she also seeks orders under s 79 of the Family Law Act 1975 (Cth) (Family Law Act) that the legal and equitable interests of the parties’ property be altered in her favour arising from the breakdown of the marriage.

20    On 5 April 2019 Dr Bonfante filed a response to initiating application and an affidavit in support opposing the application made by Mrs Bonfante for restraining orders relating to his interests in Grainpro and that he resign as a director of Grainpro as well as seeking orders for their net assets to be divided equally and for injunctive relief against Mrs Bonfante, including as follows:

a)    That the wife be restrained by way of interlocutory injunction from dealing with in any manner whatsoever in her shareholding and and/or preventing or interfering in any way with the Husband’s role as a managing director of Grainpro subject to the Husband providing a full accounting to the wife each quarter in relation to monies received and disbursed by Grainpro; and

b)    That the wife be restrained by way of Interlocutory injunction from contacting and dealing with in any manner whatsoever with any employee, customer, supplier, contractors, business associates, affiliates or partners of Grainpro.

21    The Family Court Proceeding was first listed before the Family Court on 8 April 2019 at which time it was adjourned to 15 April 2019.

22    On 11 April 2019 Dr Bonfante filed an amended response to initiating application and a further affidavit.

23    On 12 April 2019 Mrs Bonfante filed an amended initiating application and a further affidavit. According to Ms Balafas, at that time Mrs Bonfante had established a new grain trading business and sought additional orders permitting her to contact Grainpro’s customers, suppliers, agents, trade merchants and buyers and for access to customer transactions, customer lists and debtor reports.

24    The matter was next before the Family Court on 15 April 2019 at which time consent orders were made in relation to a number of matters and the balance of the parties’ interim applications, which according to Dr Bonfante were primarily concerned with Grainpro, were adjourned for hearing to 13 June 2019 before Berman J.

25    On 13 June 2019 the Family Court Proceeding was listed before Berman J for hearing of the interim applications filed by each of Dr Bonfante and Mrs Bonfante. By that time it seems that Dr Bonfante sought the following additional orders:

•    That the Wife be restrained from disclosing to any third party any information about Grainpro disclosed by the Husband in these proceedings; and

•    That the Wife be restrained from attending any premises at which Grainpro carries on business;

•    The contract report, the aged creditors and debtors report, and balance sheet of Grainpro be provided to the Wife in redacted form.

26    On 10 July 2019 Berman J made orders in relation to the interim applications.

27    By letter dated 23 August 2019 from Ms Balafas to the Liquidator’s then solicitors, among other things, Ms Balafas noted:

We understand that the Administrator has made certain claims against our client’s Wife, Mrs Angela Bonfante, our client and related entities of the parties in respect of company loans and other claims.

We take this opportunity to put you on notice of the current family law proceedings between our client and Mrs Angela Bonfante in the Family Court of Australia as stated above. We advise that Mrs Angela Bonfante commenced the family law proceedings on 28 February 2019.

In view of the Orders sought by Mrs Bonfante in the family law proceedings your client’s claims may be inadvertently affected. We therefore invite you to consider as to whether or not your client may wish to seek to intervene as a third party in the proceedings.

We will advise you of the future return date in the family law proceedings in due course.

28    On 11 November 2019 orders were made by consent between Dr Bonfante and Mrs Bonfante and the Liquidator as intervenor in the Family Court Proceeding including:

1.    That Adam Shephard, Liquidator for Grainpro Pty Ltd, file and serve a Notice of Intervention by Person Entitled to Intervene by 12 November 2019.

2.    That Adam Shephard, Liquidator for Grainpro Pty Ltd, file and serve a supporting affidavit in respect of the Notice of Intervention by Person Entitled to Intervene by 12 November 2019.

3.    That the Applicant Wife file and serve a Further Amended Initiating Application and supporting affidavits by 2 December 2019.

4.    That the Respondent Husband file and serve a Further Amended Response to Initiating Application and supporting affidavits by 15 January 2020.

The proceeding was stood over to 20 January 2020 for further directions.

29    On 12 November 2019 the Liquidator caused a notice of intervention by person entitled to intervene (Intervention Notice) to be filed in the Family Court Proceeding together with his affidavit in support (Intervention Affidavit) in which the Liquidator explained his reasons for seeking to intervene in the Family Court Proceeding. At [7] of the Intervention Affidavit the Liquidator deposed that:

Following my appointment as the voluntary administrator, I and my staff conducted investigations into the Company’s business, property and affairs. The Company’s records disclose that the Applicant and the Respondent are related party debtors of the Company for loan advances in the amount of $131,884 and $73,411 respectively. The Applicant and the Respondent are also partners in A & M Bonfante Partnership which is also a debtor of the Company for the loan advances in the amount of $242,410. In addition, the Applicant is the sole trustee and beneficiary of the Enterprise Trust (formerly the Greenhalgh Family Trust). The Company’s records disclose that as at 27 February 2019 the Trust was indebted to the Company for $403,531. The Company’s records also disclose that prior to the cessation of the Applicant’s employment with the Company in December 2018, she caused the Company to transfer to her funds in the sum of $136,000. My investigations have also revealed that the Applicant and the Respondent used Company’s funds to acquire an interest in real property at 3934 Sturt Highway, Gumly Gumly NSW 2652 in the name of the Applicant and/or the Respondent which property may form a matrimonial asset and be the subject to the Family Law Proceedings. Annexed hereto and marked “B” is a copy of my Report to Creditors dated 22 August 2019 reflecting same.

30    Annexed to the Intervention Affidavit was a schedule setting out the orders that the Liquidator would seek if he was granted permission to intervene in the Family Court Proceeding, namely:

1.    By way of final property settlement or order as between the parties and prior to the distribution of such property to the Applicant and the Respondent or either of them this Court:

(a)    Take into account the debt of the Applicant to the Company (Intervener) in the amount of $131,884 and $136,000;

(b)    Take into account the debt of the Respondent to the Company (Intervener) in the amount of $73,411;

(c)    Take into account the debt of the Applicant as trustee for the Enterprise Trust to the Company (Intervener) in the amount of $403,531;

(d)    Take into account the partnership debt of the Applicant and Respondent as partners of A & M Bonfante Partnership to the Company (Intervener) in the amount of $242,410;

(e)    Take into account the debt of the Applicant and/or Respondent to the Company (Intervener) in relation to the acquisition of 3934 Sturt Highway, Gumly Gumly NSW 2652 property in the amount of $75,000; and

(f)    First make provision for the payment of the debts of the Applicant, the Respondent, the Applicant as trustee for the Enterprise Trustee and the Applicant and Respondent as partners of A & M Bonfante Partnership to the Company (Intervener) prior to any distribution to the Applicant and the Respondent.

2.    Such further or other order as the Court deems just.

31    The Liquidator explains that the claims he seeks to make in the Family Court Proceeding (referred to as the Loan Claims) comprise five discrete debts, each of which is referred to in the proposed orders set out in the preceding paragraph. The Liquidator also explains that the Loan Claims relate to the following:

(1)    prior to Mrs Bonfante’s employment with Grainpro ceasing in December 2018, she caused Grainpro to transfer an amount of $136,000 to her (proposed order 1(a));

(2)    Grainpro’s records disclose that Dr Bonfante and Mrs Bonfante are related party debtors of Grainpro for loan advances of $131,884 and $73,411 respectively (proposed orders 1(a) and 1(b));

(3)    Mrs Bonfante is the sole trustee and beneficiary of the Enterprise Trust (formerly the Greenhalgh Family Trust) which, as at 27 February 2019, was indebted to Grainpro for $403,531 (proposed order 1(c));

(4)    Dr Bonfante and Mrs Bonfante are partners in A & M Bonfante Partnership which is a debtor of Grainpro for loan advances in the amount of $242,410 (proposed order 1(d)); and

(5)    Dr Bonfante and Mrs Bonfante used Grainpro funds to acquire an interest in property located at Gumly Gumly, NSW (Gumly Gumly Property) which may be a matrimonial asset subject to the Family Court Proceeding (proposed order 1(e)).

32    In determining which claims were appropriate for the Intervention Notice and in deciding to intervene in the Family Court Proceeding, the Liquidator says that he had regard to the following factors:

(1)    a preference to select claims that would return substantial assets to creditors and which could be proved relatively easily, quickly and inexpensively. The Loan Claims have a total value of approximately $1 million, which the Liquidator considers to be substantial, are essentially transactional and can be proved by scrutinising various accounts and ledgers;

(2)    based on correspondence received by his solicitors, the Liquidator’s understanding is that Dr Bonfante has largely accepted the loan amounts (and that he is a debtor) which Grainpro would allege as part of the Loan Claims;

(3)    Dr Bonfante and Mrs Bonfante were already parties to the Family Court Proceeding. This factor was relevant to the Liquidator’s selection of which claims to bring because, in his view, the Family Court could efficiently deal with claims that involved both of them and entities in which they were involved such as A & M Bonfante Partnership; and

(4)    the Liquidator was conscious that the Gumly Gumly Property might already be a matrimonial asset subject to the Family Court Proceeding.

33    On 15 January 2020 Mrs Bonfante filed a further amended initiating application in which she seeks, amongst others, the following order:

12.    That pursuant to section 79 and section 79(A)(E) of the Family Law Act 1975:-

12.1    The Husband shall indemnify and keep the Wife and the Enterprise Trust and Pure Seeds Australasia Pty Ltd indemnified in respect of the following liabilities to the extent that they may exist:-

(a)    Any liability of the A&M Bonfante Partnership to Grainpro Pty Limited in Liquidation;

(b)    Any liability of the Wife to Grainpro Pty Limited in Liquidation in relation to the acquisition of the property known as 3934 Sturt Highway, Gumly Gumly;

(c)    In the amount that the Wife may be ordered to pay in respect of the debts of the Wife, the Enterprise Trust or the A&M Bonfante Patnership to Grainpro Pty Limited in Liquidation.

In submissions Dr Bonfante indicated that the reference to “section 79(A)(E)” should be understood as a reference to s 90AE of the Family Law Act.

34    The Family Court Proceeding was next listed before the Family Court on 20 January 2020. At that time the following orders were made by consent between the parties:

1.    That the Applicant Wife file and serve supporting affidavits by 21 February 2020.

2.    That the Respondent Husband file and serve a Further Amended Response to Initiating Application and supporting affidavits by 27 March 2020.

3.    That the matter be stood over for further directions on 22 June 2020 at 10:45am.

35    On 10 March 2020 Mrs Bonfante filed an affidavit in the Family Court Proceeding.

36    On 12 June 2020 orders relating to the sale of the Gumly Gumly Property were made by consent between the parties in the Family Court Proceeding.

37    On 22 June 2020 the Family Court Proceeding was listed for directions. At that time a number of orders were made including an order that, given his default with order 2 made on 20 January 2020, Dr Bonfante file and serve a further amended response to initiating application and a single consolidated affidavit.

38    On 3 July 2020 Dr Bonfante filed his further amended response to initiating application in the Family Court Proceeding (Further Amended Response). At annexure B to the Further Amended Response Dr Bonfante sets out the interim orders he seeks including, in relation to the Loan Claims, the following orders:

1.    That within fourteen (14) days of the Respondent Husband serving his affidavits on the Applicant Wife and the Liquidator, the Applicant Wife and the Liquidator shall:

1.1    If they agree with the quantum of the Reconciled Loan Claims they shall each serve on all other parties a Notice Admitting the Reconciled Loan Claims.

1.2    If they dispute the quantum of the Reconciled Loan Claims they shall each serve on all other parties a Notice Disputing the Reconciled Loan Claims.

2.    Within seven (7) days or the Applicant Wife and/or the Liquidator serving a Notice Disputing the Reconciled Loan Claims they each must provide full particulars and supporting documentation outlining all the Disputed Items from the Reconciled Loan Claims to the other parties as well as the revised quantum of liability in respect of each Disputed Item.

3.    Within fourteen (14) days of either the Applicant Wife and/or the Liquidator serving particulars and supporting documentation of the Disputed items in accordance with Order 2 herein, the other parties shall provide written notice of:

3.1    Their acceptance of the revised quantum of the liability of the Disputed Items, or

3.2.    Their rejection of the revised quantum of the liability of the disputed items.

4.    In the event no agreement is reached by the parties with regards to the quantum of the liability of the Disputed Items, then within twenty-eight (28) days of each party receiving the Notice in Order 3 herein, the parties shall do all acts and things to appoint a Forensic Accountant to determine and the quantum of the Disputed Items of the Reconciled Loan Claims.

5.    For the purposes of implementing Order 4 herein:

5.1    the Liquidator shall nominate three (3) Forensic Accountants and shall provide their names, Curriculum Vitae and associated costs to the parties; and

5.2     Within seven days (7) of the Liquidator nominating the three (3) Forensic Accountants pursuant to Order 5.1 herein, the Applicant Wife and the Respondent Husband shall nominate one (1) of those Forensic Accountants and each of them shall serve on the other parties a Notice of Appointment (“the Notice of Appointment”);

6.    If no agreement is reached on the appointment of a Forensic Accountant pursuant to Order 5 herein, then within seven (7) days of the Liquidator receiving Notices of Appointment from the Applicant Wife and the Respondent Husband, he shall appoint one of the three (3) accountants (“Default Notice of Appointment”);

7.    Within seven (7) days of the Notice of Appointment or a Default Notice of Appointment being served amongst all parties (as the case may be), then within seven (7) days thereafter the parties shall prepare a joint letter of instructions to the Forensic Accountant to:

7.1    determine the quantum of the Disputed items on the Reconciled Loan Claims.

8.    Within seven days (7) days of the parties serving the Joint Letter of instructions on the Forensic Accountant, the parties shall serve copies of all affidavits filed by all parties in these proceedings.

9.    The parties shall do all acts and things to provide any additional documents and/or additional information as deemed necessary by the Forensic Accountant to undertake the work referred to in Order 7.1 herein.

10.    The Liquidator and the Applicant Wife shall equally pay the costs of the Forensic Accountant’s Expert Report.

39    The Family Court Proceeding was next listed before the Family Court on 4 August 2020. At that time Ms Kuznetsova appeared on behalf of the Liquidator. Ms Kuznetsova recalls that Mrs Bonfante’s legal representatives wished to engage in settlement discussions with the Liquidator and Dr Bonfante in relation to accounting and financial reconciliations necessary to resolve the Loan Claims and the need for the appointment of a forensic expert, that Mrs Bonfante’s legal representatives sought directions to that effect and that she was instructed by the Liquidator to consent to that course. On that occasion the following notations and orders were made:

1.    I note that this matter was listed before me today for a procedural hearing.

2.    I further note in relation to this matter:

•    The intervener has filed an insolvent trading claim proceedings in the Federal Court of Australia;

•    The Applicant and Respondent are going to liaise with the Intervener prior to the adjourned date.

Listing

3.    All applications are listed before Registrar McGrath at 11am on 12 October 2020 for procedural hearing.

40    On 21 August 2020 Dr Bonfante filed an application in a case in the Family Court Proceeding, seeking an order that the Liquidator be restrained from taking any steps in the Insolvent Trading Proceeding other than transferring that proceeding to the Family Court and other orders to progress the Family Court Proceeding to final hearing.

41    On 27 August 2020 the Family Court Proceeding was listed for mention before Berman J. At that time an order was made standing over the application in a case filed by Dr Bonfante and the matter generally for mention or directions to 6 November 2020 with liberty to vacate or to relist to a date convenient to the parties and the court.

The Insolvent Trading Proceeding

42    As set out above, the Liquidator and Grainpro commenced the Insolvent Trading Proceeding on 29 July 2020 against Dr Bonfante as defendant by the filing of an originating process.

43    The Liquidator says that by about late March 2020 he had largely concluded his investigations relating to insolvent trading and was prepared to commence a proceeding in relation to, among others, such claims. The Liquidator had regard to the following factors in making his decision to commence the Insolvent Trading Proceeding:

(1)    his duty as liquidator to recover monies due to Grainpro for the benefit of its creditors;

(2)    in order to maximise the return to Grainpro’s creditors, he wished to avoid litigation or at least limit its scope and duration in order, in turn, to minimise costs. The Liquidator was conscious of this because Grainpro has intervened in the Family Court Proceeding which already has numerous issues extraneous to the Loan Claims made by him in that proceeding; and

(3)    the Liquidator was of the opinion that Grainpro’s insolvent trading claims against Dr Bonfante were relatively simpler to prosecute and required less evidence to prove than potential claims against Mrs Bonfante, which would require proof of her status as a shadow or de facto director, a consideration which applied equally to any claim by Grainpro for breaches of director’s duties against Mrs Bonfante.

44    At the time of filing the originating process and commencing the Insolvent Trading Proceeding, the Liquidator filed an affidavit sworn on 27 July 2020. In that affidavit the Liquidator gives evidence that:

(1)    he has formed the view that Grainpro was insolvent since at least 30 April 2019, referred to as the Insolvency Period, and sets out the reasons for forming that view which, the Liquidator notes, are also included in his report to creditors dated 18 December 2019. It is not necessary to repeat those matters here save to note that, based on them, the Liquidator says that he has reasonable grounds for suspecting that Grainpro was insolvent or would become insolvent as at 30 April 2019;

(2)    Grainpro incurred debts that were wholly or partially unsecured during the Insolvency Period in the amount of at least $2,491,543.22 and those debts remained outstanding at the commencement of the winding up;

(3)    taking into account a first dividend paid to unsecured creditors on 17 February 2020, he is of the view that Dr Bonfante engaged in insolvent trading in breach of s 588G(2) of the Corporations Act and Grainpro is entitled to recover from him as a debt due to it the amount of $1,720,080.26 pursuant to s 588M of the Corporations Act; and

(4)    he has formed the view that Dr Bonfante has breached his duties owed to Grainpro pursuant to s 180 and s 181(1)(a) of the Corporations Act by causing and allowing Grainpro to continue to trade after 30 April 2019 when it was insolvent, permitting creditors to advance credit to Grainpro and allowing Grainpro to continue to expend funds when it was insolvent, incurring further debts and making payments after 30 April 2019 when Grainpro was insolvent, and failing to act for the benefit of Grainpro taking into account the interests of its creditors.

45    The Liquidator notes that the Insolvent Trading Proceeding relates to Dr Bonfante’s conduct, in particular during the Insolvency Period. As part of his evidence, an insolvency report will be prepared to address the date of Grainpro’s insolvency. The Liquidator says that it is unclear how issues relating to Mrs Bonfante’s conduct could impact on this Court’s determination of the date of Grainpro’s insolvency but, if relevant, that evidence can be adduced in due course.

Other matters

46    Dr Bonfante’s evidence is that he is currently experiencing severe financial hardship and that he does not have the financial capacity to run two concurrent proceedings.

47    The Liquidator requested Mrs Bonfante to indicate her attitude to the transfer of the Insolvent Trading Proceeding to the Family Court. A letter dated 2 October 2020 from the solicitors for Mrs Bonfante relevantly includes:

The Applicant Wife’s Position

The Applicant Wife does not wish to participate in the Federal Court of Australia proceedings and wishes to pursue her Application in the Family Court of Australia and to do so as quickly as is possible. The claim being made by the Liquidator against Mario Bonfante is a discreet [sic] claim and does not involve the Applicant Wife.

Determination by the Family Court of Australia of the Insolvent Trading Claim - Costs

In the event that the matter was transferred to the Family Court of Australia the Applicant Wife would by reason of the Family Court of Australia be required to determine the insolvent trading claim against Mario Bonfante. The Applicant would be put to additional expense by reason to increased complexity and length of Hearing.

Delay

The Applicant Wife’s position is that the determination of the claim for insolvent trading by the Liquidator against Mario Bonfante would need to be dealt with as a preliminary issue and that there would need to be a discrete hearing of the claims already before the Family Court of Australia.

It is likely that the Federal Court would be in a position to hear and determine the insolvent trading claim sooner than the Family Court of Australia. It is apprehended that if the insolvent trading claim was transferred to the Family Court that Court might appointment [sic] of two separate Hearing dates which would cause further expense and additional delay. There may be a significant period of time between those two hearing dates.

Our estimation of the time when the Family Court of Australia (Sydney Registry) could determine the matter is that it would not likely be until potentially 2021. There may be an earlier Hearing available in other Registry's [sic] but all parties are located in NSW.

The Applicant Wife opposes and objects to the transfer of the Federal Court proceedings in the Family Court of Australia for determination.

Should the Insolvent Trading Proceeding be transferred to the Family Court?

48    Given the view to which I have come to, it is convenient first to address the alternative relief sought by Dr Bonfante, namely that this proceeding be transferred to the Family Court pursuant to s 1337H of the Corporations Act.

Statutory framework and legal principles

49    Section 1337H of the Corporations Act relevantly applies to a proceeding in a court, referred to as the transferor court, if the proceeding concerns a civil matter arising under the Corporations legislation and the transferor court is the Federal Court: see s 1337H(1). A “civil matter” means a matter other than a criminal matter and “Corporations legislation” means, among other things, the Corporations Act: see s 9 of the Corporations Act.

50    Plainly, the Insolvent Trading Proceeding, which concerns a claim for damages for alleged insolvent trading and alleged breaches of director’s duties owed to Grainpro by Dr Bonfante pursuant to s 180 and s 181 of the Corporations Act arising from the alleged insolvent trading, is a proceeding to which s 1337H applies.

51    Section 1337H(2) sets out the circumstances in which a court may transfer a proceeding to which the section applies. It provides:

(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.

52    Section 1337H(3), (4) and (5) are not relevant to the application presently before me. They relate to matters arising under s 1337B(3) of the Corporations Act, which has no application to this proceeding.

53    The Family Court has jurisdiction with respect to civil matters arising under the Corporations legislation: see s 1337C(1) of the Corporations Act.

54    Section 1337L of the Corporations Act prescribes the further matters for a court to consider in deciding whether to transfer a proceeding. It provides:

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.

55    There is no appeal from a decision in relation to the transfer of a proceeding made pursuant to s 1337H(2) of the Corporations Act: see s 1337R(a) of the Corporations Act.

56    In Yeo, in the matter of Armstrong and Shaw Pty Ltd (in liq) v Whiteman [2020] FCA 849 (Yeo) at [29]-[30] Anderson J summarised the principles relating to the exercise of the power conferred by s 1337H(2) of the Corporations Act and the concept of the “interests of justice” as follows:

29    Section 1337H(2) confers a wide discretion to transfer proceedings where, “having regard to the interests of justice”, it is “more appropriate” for the proceeding to be heard by the other court. The meaning of “the interests of justice” in the context of the transfer of proceedings has been considered on many occasions in different statutory schemes: see, in particular, BHP Billiton Ltd v Schultz [2004] HCA 61; 221 CLR 400.

30    Recent examples of the consideration of the transfer of proceedings from this Court to other courts under s 1337H(2) of the Corporations Act include Hancock Prospecting Pty Ltd v 150 Investments Pty Ltd [2017] FCA 520; 120 ACSR 495 per Yates J and Bell Group NV v Bell Group Finance Pty Ltd, Re Western Interstate Pty Ltd [2018] FCA 1440; 130 ACSR 586 per McKerracher J. Both of those decisions referred to the following guiding principles summarised by McKerracher J in Yara Pilbara Fertilisers Pty Ltd (formerly known as Burrup Fertilisers Pty Ltd) v Oswal (No 8) [2015] FCA 49 (in which his Honour transferred a proceeding to the Supreme Court of Victoria):

[24]    The leading authority which canvasses many of the issues to be taken into account is BHP Billiton Limited v Schultz (2004) 221 CLR 400. As the case law reflects, it is necessary to 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. The weighing of considerations, such as cost, expense and convenience, even when they conflict, is a familiar aspect of the kind of case management involved in many cross-vesting applications: BHP per Gleeson CJ, McHugh and Heydon JJ (at [19]). While BHP considered the cross-vesting regime, for practical purposes the criteria for determining whether a proceeding should be transferred are broadly consistent with the criteria for determining cross-vesting: see Dwyer v Hindal Corporate Pty Ltd (2005) 52 ACSR 335 per Debelle J (at [13]). The question is essentially practical, or in the words used in BHP, it is essentially a 'nuts and bolts' management decision as to which court, in the pursuit of the interests of justice, is the more appropriate to hear and determine the substantive dispute: BHP per Gleeson CJ, McHugh and Heydon JJ (at [13]); Bankinvest AG v Seabrook (1988) 14 NSWLR 711 per Street CJ (at 713-714). The ‘interests of justice’ is an expression to be interpreted broadly: BHP per Gleeson CJ, McHugh and Heydon JJ (at [15]).

[25]    The Court should not approach the transfer question with any presumption as to where the interests of justice lie: BHP per Gleeson CJ, McHugh and Heydon JJ (at [25]). It is not a circumstance in which an applicant has an onus of persuasion analogous to an onus of proof: BHP per Gummow J (at [71]). The disposition of an application for transfer of a proceeding does not require weight to be given to the plaintiff's choice of forum, which is essentially a neutral factor: BHP per Kirby J (at [168]) and per Gummow J (at 77).

[26]    As I noted in Commissioner of Taxation v Residence Riverside Proprietary Limited as Trustee for the D& J Discretionary Trust and as Trustee for the D& J Investment Trust [2013] FCA 720 (at [17]), this Court has previously recognised many factors as being relevant to the decision, which will vary in weight from case to case, including:

(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.

57    In In the matter of Peter G Ward Industries Pty Limited [2020] NSWSC 339 (Ward Industries) Rees J considered an application pursuant to s 1337H of the Corporations Act to transfer an oppression suit from the Supreme Court of New South Wales to the Family Court. In doing so her Honour considered the principles relevant to the meaning of the “interests of justice”. At [27]-[31], after referring to the decision in Yara Pilbara Fertilisers Pty Ltd (formerly known as Burrup Fertilisers Pty Ltd) v Oswal (No 8) [2015] FCA 49, her Honour said:

27    In respect of matters concerning the Corporations Act particularly, the Court may have regard to whether third parties are involved, such as creditors or shareholders, whose interests may be adversely affected by being compelling to become actively involved in a private dispute between spouses in the Family Court: Roff v Aqua Distributors Pty Ltd (1996) 14 ACLC 1769; (1996) 22 ACSR 248 at 250 per Merkel J. In that case, Merkel J transferred an oppression suit from the Federal Court to the Family Court where the corporation was a family company owned and operated by the former husband and wife, no third parties were involved, and the hearing in the Family Court proceedings was imminent.

28    This approach was followed by Gyles J in Re Tech Universal (HK-Macau) Development Pty Ltd v Tech Universal (HK-Macau) Development Pty Ltd (2005) 53 ACSR 704; [2005] FCA 256, where an application to wind up a dormant family company was transferred to the Family Court where proceedings had already been on foot for about five years. Gyles J noted at [9]:

… Where a company is trading actively on a substantial scale or where a real question of insolvency arises serious consideration would be required before a winding-up proceeding would be transferred to the Family Court.

However, Gyles J considered that the basis of the application to appoint a liquidator was “very much entwined with the kind of claims and counter-claims between the parties which will fall for assessment by the Family Court” and concluded that a transfer was in the interests of justice: at [10]. The same approach was taken by Black J in In the matter of Webster Consolidated (Holdings) Pty Limited [2016] NSWSC 376, where his Honour transferred an application to set aside a statutory demand to the Family Court.

29    Similarly, in Vaughan v Frost [2010] NSWSC 492, the parents of the wife opposed the transfer of proceedings from the Equity Division of this Court to the Family Court. In this Court, the parents sought a declaration that property held in the name of their daughter was held on trust for them. The parents said that their costs would be increased if they were compelled to participate in the wider matrimonial cause in the Family Court which concerned issues with which the parents were not concerned. Further, valuations of the properties in question would be required in the Family Court but were irrelevant to the claims in the Equity Division. Nonetheless, White J observed at [13]:

However, when the position of all parties is taken into account the general principle is, and experience teaches, that a single proceeding dealing with all issues is likely to minimise the overall burden of costs for all parties. If proceedings continue separately the defendants will be required to incur costs on matters of which there will be duplication.

The proceedings were transferred to the Family Court.

30    Also of central importance is whether one court has the power to determine all matters in issue, whilst the other court does not: Roff v Aqua Distributors at 250; Burman v Zillman [2017] NSWSC 229 per Darke J at [15]-[20]; PJL Group at [24], [31] and [35].

31    Finally, relevant to the case at hand, in Hancock Prospecting Pty Limited v 150 Investments Pty Limited (2017) 120 ACSR 495; [2017] FCA 520, Bianca Rinehart applied to transfer Federal Court proceedings to the Supreme Court of New South Wales. Of pivotal importance to Yates J was that the Federal Court proceedings raised a discrete question concerning the construction of the articles of association of a corporation whilst the Supreme Court proceedings concerned a much broader dispute. Whilst his Honour accepted that determination of the discrete question in the Federal Court proceedings may narrow the issues in dispute in the Supreme Court proceedings, his Honour concluded at [70]:

… But assuming those observations to be correct, as they well might be, it does not follow that those advantages can only be secured by the present proceeding remaining in this Court. If those advantages are real and capable of attainment, they can just as readily be realised by transferring the present proceeding to the Supreme Court, where the standard principles of case management can be equally deployed to ensure that the Trust proceeding is conducted as quickly, inexpensively and as efficiently as the just determination of the case requires. Indeed, to my mind, it makes no sense that an apparently anterior but nevertheless central question in a case raising a broad range of issues for determination in one court should be treated, effectively, as a separate question for resolution in another court having the same jurisdiction as the first court to hear and determine that separate question. It seems to me that fragmentation of that kind can only lead to manifest inefficiency and certainly greater cost brought about by the inevitable and unnecessary duplication of work. … There is also the real likelihood of delay arising from an inability to co-ordinate court events optimally while (what is essentially) one dispute straddles two courts. Such fragmentation is not conducive to efficient case management or to outcomes that serve the interests of justice.

The proceedings were transferred to the Supreme Court of New South Wales.

58    The plaintiffs rely on the decision in Liquidators of UUB Pty Ltd v NWO [2020] SASC 121 (UUB). In that case, the plaintiff liquidators had intervened in the defendants’ Family Court proceeding. A month later the liquidators filed a claim in the Supreme Court of South Australia alleging that funds of the company had been applied to purchase a series of residential properties for the defendant husband and wife and to cover their personal and household expenditure. The Liquidators alleged that these payments were unreasonable director-related transactions and voidable pursuant to the Corporations Act. The second defendant sought a transfer of the liquidators’ application to the Family Court. In doing so she raised three grounds, the first of which was that the proceeding should be transferred pursuant to s 1337H of the Corporations Act in the interests of justice to avoid the conduct of parallel proceedings.

59    Justice Parker dismissed the second defendant’s application for a transfer of the proceeding to the Family Court. At [102]-[106], in addressing the ground based on s 1337H of the Corporations Act, his Honour said:

102    It is undoubtedly the case that the Family Court has jurisdiction to make any orders found to be appropriate under the Corporations Act. That Court could also deal with the equitable claims advanced by the liquidators in its ancillary or associated jurisdiction. Nevertheless, deciding matters under the Corporations Act and claims for equitable relief is part of the core functions of this Court but not of the Family Court. That consideration supports the dismissal of the application for transfer to the Family Court.

103    I acknowledge the correctness of the second defendant’s submission that it is commonplace to use a corporate structure to hold matrimonial assets. However, the issue in these proceedings is whether the use of company funds to purchase a series of matrimonial homes and to cover personal or household expenditure gives rise to a liability to repay under the Corporations Act or a valid claim for equitable relief.

104    The liquidators complain that if they are required to participate in the Family Court proceedings so as to pursue their claim for repayment of monies appropriated from the company, that will result in them incurring significant additional costs. The second defendant has responded with the observation that the Family Court could readily arrange for the determination of the liquidators’ claims to be quarantined from the broader family law issues. While that may well be possible, and there is certainly no information before this Court to indicate otherwise, the acknowledgement that it would be appropriate to quarantine the liquidators’ claim from the general family law matters provides strong support for the liquidators’ contention that their claim would be more appropriately dealt with in this Court.

105    The second defendant has also contended that if this Court were to make orders concerning the disposition of the funds held in the term deposits in favour of the liquidators, such orders might be effectively set aside by a Family Court order requiring the funds to be treated as part of the matrimonial assets and paid to the second defendant. I have absolutely no reason to expect that if this Court were to determine that some or all of the funds held in the term deposits were properly recoverable by the liquidators, that the Family Court would not give appropriate recognition to such an order with the result that the pool of matrimonial assets is to that extent reduced.

106    On balance, I consider that the interests of justice would be best served by the proceedings initiated by the liquidators remaining in this Court rather than being transferred to the Family Court. I have reached that conclusion because, first, it is part of the core business of this Court to determine claims under the Corporations Act and in equity. Secondly, the suggestion by the second defendant that the liquidators’ claim could be quarantined within the Family Court recognises that the claims advanced by the liquidators and the proceedings to apportion the matrimonial assets are, in truth, discrete matters. Moreover, it seems that if this claim is to be transferred to the Family Court that will inevitably expose the liquidators to some additional legal costs to give effect to that transition and the quarantining proposed by the second defendant.

Consideration

60    The issue to be determined is whether it appears, having regard to the interests of justice, it is more appropriate for the Insolvent Trading Proceeding to be determined by the Family Court.

61    Before proceeding further, I note that the matters set out in s 1337L of the Corporations Act have a neutral impact on the issue of whether the Insolvent Trading Proceeding should be transferred. The principal place of business and the place where the events the subject of the Insolvent Trading Proceeding took place are the same, namely New South Wales. All parties to this proceeding and to the Family Court Proceeding are located in New South Wales. Dr Bonfante’s application is for the Insolvent Trading Proceeding to be transferred to the Family Court to be heard with the Family Court Proceeding which I understand was commenced in the Sydney registry of that court. Like this Court, the Family Court has jurisdiction to determine the Insolvent Trading Proceeding.

62    I turn then to consider the factors raised by Dr Bonfante and the plaintiffs which may impact on the determination of the issue as identified at [60] above.

63    Dr Bonfante submits that the following considerations weigh in his favour:

(1)    the Family Court has jurisdiction to quell the whole controversy between the parties;

(2)    the entire dispute should be determined in one court to avoid multiplicity of proceedings, promote efficient management and procedural fairness for all parties, save on unnecessary duplication of costs and judicial and other public resources, and avoid the risk of conflicting findings and inconsistent orders about the same question of liability;

(3)    if the Insolvent Trading Proceeding is transferred to the Family Court then Dr Bonfante’s liability for a claim for insolvent trading will be considered against the statutory provisions under the Corporations Act and also through the prism of s 79 and s 90AE of the Family Law Act;

(4)    his lack of financial capacity to defend two sets of proceedings. Related to that, is the elimination of the real risk of prejudice to his legitimate property entitlements and his right to prosecute his family law case by reason of any res judicata considerations which may arise from the entry of a default judgment in the Insolvent Trading Proceeding before the conclusion of the Family Court Proceeding given his financial circumstances; and

(5)    the avoidance of any potential Anshun and issue estoppel considerations arising as a result of the parties running separate proceedings about common issues and the same question of liability.

64    The plaintiffs submit that the following considerations weigh in their favour:

(1)    it is part of this Court’s “core business” to determine claims under the Corporations Act, such as insolvent trading and director’s duties claims, relying on UUB at [106];

(2)    the Court should have regard to the involvement of third parties “such as creditors … whose interests may be adversely affected by being [compelled] to become actively involved in a private dispute between spouses”, quoting from Ward Industries at [27];

(3)    relevant factors in assessing the transfer application include the potential burden and expense to all parties including Mrs Bonfante and Grainpro’s unsecured creditors (via the Liquidator) who oppose a transfer. Similarly, the unsecured creditors, who have claims totalling approximately $2.5 million, should not have to bear the burden of becoming involved in a protracted dispute in the Family Court;

(4)    Dr Bonfante’s Further Amended Response filed in the Family Court Proceeding proposes that the Loan Claims be “quarantined from the broader family law issues”, relying on UUB at [104], such that those claims are relatively circumscribed within the Family Court Proceeding and do not implicate the insolvent trading claims which will proceed in this Court;

(5)    the Insolvent Trading Proceeding does not involve Mrs Bonfante or necessitate her involvement nor will any prejudice be caused to her by it being determined in this Court. This is supported by Mrs Bonfante’s position that the insolvent trading claim would require a separate hearing in the Family Court which would cause further delay and additional expense; and

(6)    the issue of insolvent trading is a discrete one which would, in the ordinary course of events, be resolved before it could then be taken into account as a matter of substance in the Family Court.

65    I have carefully considered the parties’ respective submissions and their impact on where the interests of justice lie. Having done so, although the matter is somewhat finely balanced, for the reasons that follow I am of the opinion that, having regard to the interests of justice, it is more appropriate for the Insolvent Trading Proceeding to be determined by the Family Court.

66    First, the Family Court has jurisdiction to determine all of the issues raised by the parties. That is, the claims made under the Corporations Act in the Insolvent Trading Proceeding as well as the claims made in the Family Law Proceeding.

67    While I accept the plaintiffs’ submission that the only matter that the Liquidator has raised for determination in the Family Court Proceeding concerns the Loan Claims, that factor is not conclusive of whether, having regard to the interests of justice, it is more appropriate for the Insolvent Trading Proceeding to be determined by the Family Court.

68    Despite the limited claim made by the Liquidator in the Family Court Proceeding, Dr Bonfante and Mrs Bonfante, who are party to that proceeding, appear to have led evidence in that proceeding about various issues raised by the Liquidator in his report to creditors dated 22 August 2019 (August 2019 Creditors Report) and more generally about the management and affairs of Grainpro. It is apparent that in the determination of Mrs Bonfante’s application made pursuant to s 79 of the Family Law Act and the Further Amended Response filed by Dr Bonfante, issues concerning the management of Grainpro and its financial state may be, or become, relevant and the subject of consideration by the Family Court.

69    In the Insolvent Trading Proceeding, insofar as the plaintiffs seek damages for breach of s 588G of the Corporations Act, the Liquidator will need to establish that Grainpro was, or would become, insolvent as at a particular date and that there were reasonable grounds for suspecting Grainpro was, or would become, insolvent, and that at that time Dr Bonfante was aware that there were such grounds for so suspecting or that a reasonable person in Dr Bonfante’s position would be so aware. It relies on the same or similar conduct to make good its allegations of breaches of s 180 and s 181 of the Corporations Act.

70    Dr Bonfante has not filed any evidence in the Insolvent Trading Proceeding but, on this application, denies the allegations made by the plaintiffs. He says that there were aspects of Mrs Bonfante’s conduct that affected Grainpro’s financial position and its solvency. In the circumstance of this case, relating as they do to a company held and managed from time to time by Dr Bonfante and Mrs Bonfante, issues relating to Mrs Bonfante’s conduct may be relevant in the determination of the Insolvent Trading Proceeding.

71    I also accept Dr Bonfante’s submission that he should have the benefit of a consideration of the Insolvent Trading Proceeding having regard to the legislative scheme in the Corporations Act and in the context of the relevant provisions of the Family Law Act.

72    Secondly, I accept that the potential burden and expense to all parties should be considered in assessing whether a proceeding should be transferred. In this case the relevant parties are Dr Bonfante, the Liquidator (and through him, the unsecured creditors) and Grainpro, and Mrs Bonfante. On the one hand, the plaintiffs and, based on her solicitors’ letter, Mrs Bonfante oppose the transfer of the Insolvent Trading Proceeding to the Family Court because it will cause additional complexity and cost in the Family Court Proceeding. On the other hand, Dr Bonfante says that he does not have sufficient resources to defend both proceedings and may be prejudiced by the entry of a default judgment against him in the Insolvent Trading Proceeding.

73    In some circumstances, as the Liquidator points out, third parties’ interests, for example those of creditors, may be adversely affected by a requirement that they become involved in a private dispute between spouses in the Family Court: see Roff v Aqua Distributors Pty Ltd [1996] FCA 966 at 5; (1996) 22 ACSR 248 (Roff). However, in this instance the Liquidator, and thus the creditors, are already involved in the Family Court Proceeding, at least in relation to the Loan Claims. True it is that there appears to be a proposal that the Loan Claims be dealt with discretely by way of the appointment of a forensic accountant to assist in their determination. Whether that occurs will ultimately be a matter for the parties to that proceeding and the Family Court. If the Insolvent Trading Proceeding is transferred to the Family Court, the parties could, subject to the issues raised and the views of the Family Court, through appropriate case management propose ways in which aspects of that claim would be dealt with more expeditiously.

74    In UUB, Parker J considered that the second defendant’s submission that it would be appropriate to quarantine the liquidators’ claims from the broader family law issues lent support to the result that the Supreme Court of South Australia proceeding should not be transferred. But here, given the issues that might arise about the management of Grainpro, it is difficult to predict how the Family Court Proceeding and the Insolvent Trading Proceeding might be managed and heard. That will ultimately depend on the issues to be determined, once defined by the parties, and the extent of any overlap.

75    On the other hand, if the Insolvent Trading Proceeding remains in this Court, Dr Bonfante may be deprived of an ability to defend that proceeding. That is a serious matter which, in my view, outweighs the current objections raised by the Liquidator and, through him the creditors, and Mrs Bonfante.

76    Thirdly, a transfer of the Insolvent Trading Proceeding will save unnecessary duplication of costs and valuable judicial and other public and private resources: see Yeo at [33(6)].

77    Fourthly, the transfer of the Insolvent Trading Proceeding to the Family Court will guard against the risk of two courts determining the same or similar factual issues and thus avoid any potential Anshun or issue estoppel considerations arising against the parties to the two proceedings.

78    Fifthly, the evidence before me as to when the Insolvent Trading Proceeding and the Family Court Proceeding may be heard is inconclusive and their relative states of readiness for hearing do not persuade me that an order for transfer should not be made.

79    Insofar as the Family Court Proceeding is concerned, it appears that Dr Bonfante and Mrs Bonfante have filed their evidence. However, the Liquidator has, to date, only filed the Intervention Affidavit. Based on the evidence before me it seems that the earliest time at which the Family Court Proceeding might be listed for final hearing is May 2021.

80    The Insolvent Trading Proceeding has not progressed beyond the filing of the originating process and the Liquidator’s affidavit in support. The Liquidator anticipates that, in order to progress that proceeding, a report in relation to Grainpro’s solvency will need to be prepared and filed. It is not clear what evidence Dr Bonfante will wish to lead. The Insolvent Trading Proceeding sits in the provisional docket of the Court and is yet to be allocated to a docket judge. Thus the date on which that proceeding might be heard is unknown but, given its state of readiness and the time of the year, it would likely be heard at some stage in 2021. There is no apparent timing advantage to the Liquidator and Grainpro, and ultimately the creditors, in the Insolvent Trading Proceeding remaining in this Court. It may be equally expeditiously dealt with in the Family Court as it might be in this Court.

81    To the extent that the Liquidator and Grainpro contend that they may find themselves involved in a lengthy proceeding, as opposed to what they anticipate would be a one to two day hearing in this Court absent a transfer, once again the principles of case management may mean that the Family Court can arrange the hearing of the issues such that the Liquidator and Grainpro need only be present for a part of the hearing. Ultimately, that will be a matter for case management and the Family Court.

82    Finally, I do not think that the application in this case turns on whether this Court’s “core business” includes the determination of claims under the Corporations Act, such as insolvent trading and director’s duties claims. The Family Court has jurisdiction to deal with disputes of this nature arising under the Corporations Act and, as I have already observed, given the circumstances of Grainpro as a company held by Dr Bonfante and Mrs Bonfante and the issues raised by them, the Insolvent Trading Proceeding should be transferred: see Roff at 6-7.

Conclusion

83    Given my conclusion in relation to the application to transfer the Insolvent Trading Proceeding to the Family Court pursuant to s 1337H(2) pf the Corporations Act, it is not necessary for me to consider the first basis upon which Dr Bonfante seeks to have this proceeding transferred, namely because the insolvent trading claim in this proceeding is a matrimonial cause such that this Court has no jurisdiction to hear it.

84    As Dr Bonfante has been successful in his application, it follows that the plaintiffs should pay his costs of that application.

85    I will make an order pursuant to s 1337H(2) of the Corporations Act transferring this proceeding to the Family Court and for the plaintiffs to pay Dr Bonfante’s costs of this application.

Associate:

Dated:    9 November 2020