Federal Court of Australia

Yang v Wong, in the matter of Axis North Pty Ltd (receiver and manager appointed) (in liquidation) [2024] FCA 1017

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to r 30.11(d) of the Federal Court Rules 2011 (Cth), this proceeding be heard together with proceeding QUD93/2022.

2.    Costs be in the proceeding.

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

REASONS FOR JUDGMENT

COLLIER J:

1    Before the Court is an interlocutory application filed on 27 June 2024, in which the respondent to those proceedings, Ms Lai Wah Wong, seeks the following relief against the applicant, Ms Yingna Yang:

1.    Pursuant to rule 30.11 of the Federal Court Rules 2011 (Cth), this proceeding be heard together with proceeding QUD 93/2022.

2.     The applicant and respondent are to confer with each other and the parties in proceeding QUD 93/2022 and use their best endeavours to agree on directions to be made in respect of ongoing case management and the management of the trial in order to minimise the involvement of the applicant insofar as is consistent with the overarching purpose of civil practice and procedure provisions set out in s 37M of the Federal Court of Australia Act 1976 (Cth).

3.    Costs in the proceeding.

2    It is convenient to continue to refer to the parties by their litigation status in the substantive proceedings.

3    Appearing before me at the hearing of the interlocutory application were Counsel for the respondent and the applicant, and Mr Alexander Psaltis as Counsel for the applicants and second to thirteenth respondents in QUD93/2022 (the Clancy entities and the Carver’s entities respectively).

4    The reason for the interlocutory application is that the respondent submits that both QUD498/2023 and QUD93/2022 should be heard together because of the overlapping factual and legal issues between the proceedings, and common parties in both matters. It appears to be common ground that the hearing of the substantive proceedings in this matter will require an estimated three days of trial, compared with the hearing in QUD93/2022 which is currently listed for four weeks in and around April 2025 before Derrington J. The applicant submits however that the prejudice she would experience should the matters be heard together warrants separate hearings.

Background

5    Justice Derrington explained the background to QUD93/2022 in CIP Group Pty Ltd v So (No 3) [2023] FCA 518, as follows:

1    The circumstances in which the present parties find themselves in dispute are set out in the earlier decision of CIP Group Pty Ltd v So [2022] FCA 1490 (CIP Group Pty Ltd v So). In very general terms, Mr Clancy and certain companies controlled by him (the Clancy interests) and Mr So and certain companies controlled by him (the So interests) were engaged in a land development business, in the course of which they incorporated a number of additional companies as vehicles to undertake a specific development called Carver’s Reach Estate. Those entities include the second to thirteenth respondents in these proceedings, which have been referred to in connection with this application as the “Carver’s entities”. It is convenient to adopt that nomenclature, notwithstanding the fact that it has otherwise been used in these proceedings to refer to the second to twelfth respondents only, and those respondents are not all in a strictly identical position for the purposes of this application. Relevantly, both Mr Clancy and Mr So were directors of each of the Carver’s entities at the material times.

2    For the reasons set out in CIP Group Pty Ltd v So, the Clancy interests were granted leave pursuant to ss 236 and 237 of the Corporations Act 2001 (Cth) to bring derivative proceedings in the name of the Carver’s entities against Mr So and the seventeenth respondent, Ultimate Investment Portfolio Pty Ltd (Ultimate), a company of which Mr So is the sole director and secretary. By an order of 10 March 2023, the grant of leave to bring derivative proceedings was extended so as to apply against the eighteenth respondent, UIP 1 Pty Ltd (UIP). Mr So was previously the sole director and secretary of UIP, but those positions have, since 1 July 2022, been held by his wife, Ms Tsang. The applicants and the Carver’s entities allege that UIP is a “related entity” of Ultimate. UIP does not admit that allegation, but recognises that it has been described as such in affidavit evidence filed in other proceedings in this Court involving certain of the present parties. The first and fourteenth to seventeenth respondents, representing the So interests, contend that the company is controlled by Ms Tsang and not Mr So.

3    The derivative proceedings have been commenced by the filing of a Statement of Claim. In general terms, and amongst other things, it is alleged that a loan and associated mortgages and securities entered into by the Carver’s entities with Ultimate are each liable to be set aside and that declarations should be made to the effect that Ultimate holds its interests in those agreements and instruments, as well as any proceeds it receives or has received from the sale of the land owned by the Carver’s entities (the Carver’s Estate land) by reason of those agreements and instruments, on constructive trust for the Carver’s entities. It is also alleged that UIP has acquired a loan payable by the Carver’s entities, together with supporting mortgages and securities, by the use of certain funds in which the Carver’s entities had a proprietary interest, such that the Carver’s entities are entitled to trace into those rights. On any view, there is an element of complexity in these proceedings, arising in large part from the nebulous corporate structures used by Mr Clancy and Mr So in their business, and from the intricate web of financial dealings between the various entities involved.

6    His Honour elaborated on that background in CIP Group Pty Ltd v So [2022] FCA 1490 as follows:

2    Mr So is the controller of the fourteenth to seventeenth respondents, being SIP Group Pty Ltd, SIP Pty Ltd, MT Family Pty Ltd and Ultimate Investment Portfolio Pty Ltd (Ultimate). Between them the first three have an interest in each of the second to thirteenth respondents.

3    In very broad and general terms the action concerns a dispute between, on the one hand, Mr Clancy and his corporate interests (the Clancy interests) and, on the other, Mr So and his corporate interests (the So interests). The So and Clancy interests had been carrying on business as property developers for some time as joint venturers, but have recently fallen out. This breakdown of relations has occurred in the course of their latest project.

7    Turning now to the present proceedings as commenced in this Court, I note that on 25 March 2022, an Originating Process was filed with the Court by the CIP Group Pty Ltd ACN 610 483 577, CIP 1 Pty Ltd ACN 611 408 710 and Pyrmont Portfolio Pty Ltd ACN 608 496 617 (The CIP Group Companies) in QUD93/2022.

8    On 16 December 2022, pursuant to orders of Derrington J in QUD93/2022, the CIP Group Companies were given leave to bring proceedings in the name of the second to thirteenth respondents against the first and seventeenth respondents for claims made in that proceeding. The thirteenth respondent to QUD93/2022 is Axis North Pty Ltd (Receiver and Manager Appointed)(in Liquidation) (Axis North).

9    Ms Wong, the respondent in QUD498/2023, is the nineteenth respondent to QUD93/2022. Ms Wong was added as a respondent to QUD93/2022 by order of Derrington J on 28 July 2023.

10    The Third Further Amended Originating Process in QUD93/2022 filed on 8 September 2023 seeks the following relief:

This application is made pursuant to sections 79, 180, 181, 182, 183, 232, 233, 418A, 461, 1041H, 1041I, 1317H and 1324 of the Corporations Act 2001 (Cth) (Corporations Act) and sections 128B, 12CA, 12CB, 12DA and 12GF of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act).

On the facts stated in the amended statement of claim, and adopting the terms defined therein, the Carver's entities and Axis North apply for the following relief:

1.     An order pursuant to section 1324 of the Corporations Act preventing Mr So, Ultimate or the Receiver from continuing to enforce, as against the Carver's entities and Axis North, the purported loan, the purported guarantee, the purported security and the purported mortgages.

2.     A declaration pursuant to section 418A of the Corporations Act that the appointment of the Receiver is invalid.

3.     An order pursuant to section 1324 of the Corporations Act preventing the Receiver from continuing to carry out the receivership of the Carver's entities and Axis North.

4.     A declaration as against Ultimate, Mr So, Mrs Wong, Ms Leung and SEL that the purported loan, the purported guarantee, the purported security and the purported mortgages are invalid and unenforceable against the Carver's entities by Ultimate or the Receiver.

5.     A declaration as against Ultimate, Mr So, Mrs Wong, Ms Leung and SEL that Ultimate holds the purported loan, the purported guarantee, the purported securities and the purported mortgages as constructive trustee for the Carver's entities and Axis North.

6.     A declaration as against Ultimate, Mr So, Mrs Wong, Ms Leung and SEL that Ultimate holds the proceeds from the realisation of any of the Carver's land by reason of the purported loan, purported guarantee, purported security and purported mortgages as constructive trustee for the Carver's entities and Axis North.

6A     Such ancillary relief or orders as are necessary to give effect to declarations 4, 5 and 6 above, including to set aside any intermediate transactions.

6B     Alternatively to declarations 5 and 6 above, an order that Ultimate account to the Carver's entities as if a constructive trustee for the proceeds from the realisation of any of the Carver's land by reason of the purported loan, purported guarantee, purported security and purported mortgages.

7.     Alternatively, an order that Ultimate account to the Carver's entities and Axis North for the profits made by it pursuant to and by reason of:

a.     the purported loan, purported guarantee, purported security and purported mortgages;

b.     the sale by, or on its behalf, of any of the Carver's land.

8.     An order that Mr So, Mr Wong and Ultimate pay compensation to the Carver's entities and Axis North pursuant to:

a.     section 1317H or alternatively 10411 of the Corporations Act;

b.     alternatively, section 12GF of the ASIC Act;

c.     alternatively, in equity,

for the 2019 loss.

9.     Alternatively, an order that Mr So and Ultimate pay compensation to the Carver's entities and Axis North pursuant to:

a.     section 1317H or alternatively 10411 of the Corporations Act:

b.     alternatively, section 12GF of the ASIC Act;

c.     alternatively, in equity,

for the 2021 loss.

An order pursuant to section 1324 of the Corporations /\et preventing Mr So, UIP or the Receiver from enforcing the IJ Financial loan and IJ Financial mortgages.

10.     A declaration as against Ultimate, UIP, Mr So, Mrs Wong and Ms Leung that the IJ Financial loan and IJ Financial mortgages are invalid and unenforceable against the Carver's entities by UIP.

11.     A declaration as against Ultimate, UIP, Mr So, Mrs Wong and Ms Leung that UIP holds the IJ Financial loan and IJ Financial mortgages as constructive trustee for the Carver's entities.

12.     A declaration as against Ultimate, UIP, Mr So, Mrs Wong and Ms Leung that UIP holds the proceeds from the realisation of any of the Carver's land by reason of the IJ Financial loan and IJ Financial mortgages as constructive trustee for the Carver's entities.

13.     A declaration as against Ultimate, UIP, Mr So, Mrs Wong and Ms Leung that UIP holds the proceeds from the realisation of any of the Carver's land by reason of the IJ Financial loan and IJ Financial mortgages as constructive trustee for the Carver's entities.

13A     Such ancillary relief or orders as are necessary to give effect to declarations 11, 12 and 13 above, including to set aside any intermediate transactions.

13B     Alternatively to declarations 12 and 13 above, an order that U IP account to the Carver's entities as if a constructive trustee for the proceeds from the realisation of any of the Carver's land by reason of the IJ Financial loan and IJ Financial mortgages.

13C     Alternatively, declarations as against Ultimate, UIP, Mr So, Mrs Wong and Ms Leung that:

a.     the receipt by UIP of an assignment of the IJ Financial loan and IJ Financial mortgages is limited to an assignment of indebtedness outstanding of $760,000 plus interest accruing on that sum;

b.     the IJ Financial loan and IJ Financial mortgages as limited to the amount outstanding of $760,000 plus interest accruing on that sum are invalid and unenforceable against the Carver's entities by UIP;

c.     UIP holds the IJ Financial loan and IJ Financial mortgages as constructive trustee for the Carver's entities;

d.     UIP holds the proceeds from the realisation of any of the Carver's land by reason of the IJ Financial loan and IJ Financial mortgages as constructive trustee for the Carver's entities.

13. 14.     Alternatively, an order that UIP account to the Carver's entities for the profits made by it pursuant to and by reason of:

e.     the IJ Financial loan and IJ Financial mortgages;

f.     the sale by, or on its behalf, of any of the Carver's land.

14A     Alternatively, an order that Mr So, Mr Wong, Ultimate and UIP pay compensation to the Carver's entities by way of equitable compensation for the 2022 loss.

15.     An order that Mr So pay compensation to the Carver's entities and Axis North pursuant to:

a. section 1317H of the Corporations Act;

b. alternatively, in equity,

for the Yang loss.

The Clancy entities seek:

14. 16. An order pursuant to section 233 of the Corporations Act that:

a.     the So entities buy out the Clancy entities' shares in the Carver's entities and Axis North for 50% of the compensation assessed as owing to the Carver's entities and Axis North in respect of the 2019 loss;

b.     alternatively, the Carver's entities and Axis North be directed to distribute 50% of the compensation assessed as owing to them in respect of the 2019 loss as a dividend to the Clancy entities;

15. 17. Alternatively, an order pursuant to section 233 of the Corporations Act that:

c.     the So entities buy out the Clancy entities' shares in the Carver's entities and Axis North for 50% of the compensation assessed as owing to the Carver's entities and Axis North in respect of the 2021 loss;

d.     alternatively, the Carver's entities and Axis North be directed to distribute 50% of the compensation assessed as owing to them in respect of the 2021 loss as a dividend to the Clancy entities;

16. 18.     Alternatively, an order pursuant to section 233 of the Corporations Act that the Carver's entities and Axis North be wound up.

The Clancy entities, the Carver's entities and Axis North seek:

17. 19.     Such further or other orders as the court considers appropriate.

18. 20.     Interest on any sums awarded.

19. 21.     Costs.

(tracking in original)

QUD498/2023

11    On 26 April 2022, on the application of Ms Yang as creditor, liquidators were appointed to Axis North pursuant to an order of the Supreme Court of Queensland.

12    On 25 June 2023 Ms Yang executed a deed of assignment with the liquidators of Axis North. Ms Yang submitted that, pursuant to that deed, the rights of the liquidators to sue on behalf of Axis North were assigned to her.

13    On 15 November 2023, an Originating Process and Statement of Claim in QUD498/2023 were filed by Ms Yang. On the facts stated in the Originating ProcessMs Yang sought relief as follows:

A. DETAILS OF APPLICATION

This application is made under section 588FF(1) of the Corporations Act 2001 (Cth) (“Act”).

The nature of the proceedings is a claim for orders that a transaction/s be declared voidable pursuant to the Act and that corollary orders be made, including orders pursuant to section 588FF(1) of the Act.

On the facts stated in the supporting statement of claim, the Applicant claims:

1.     A declaration that the Payment to the Respondent is an unreasonable director related transaction under section 588FDA of the Corporations Act (Cth) (“Act”) and is voidable against the liquidators of Axis North Pty Ltd (Receiver and Manager Appointed) (In Liquidation) ACN 609 653 821 (“Axis North”) by operation of section 588FE of the Act.

2.     A declaration that pursuant to section 100-5 of the Insolvency Practice Schedule (Corporations) to the Act, the liquidators of Axis North have assigned to the Applicant all of Axis North's right, title and interest in benefiting from any orders against the Respondent for payment pursuant to section 588FF(1)(a) of the Act.

3.     Upon the declarations in order 1 and 2, pursuant to section 588FF(1)(a) of the Act, the Respondent pay the Applicant $2,800,000.

4.    Interest pursuant to section 51A of the Federal Court of Australia Act 1976 (Cth).

5.    Costs on the standard basis

6.    …

14    In the Statement of Claim Ms Yang claimed, inter alia:

Relevant Entities

3.     Axis North Pty Ltd (Receiver and Manager Appointed) (In Liquidation) ACN 609 653 821 (“Axis North”):

(a)     was duly incorporated and registered on 3 December 2015;

(b)     had Marc Andrew Clancy (“Mr Clancy”) as its registered director and secretary from registration;

(c)     had Shan Ngai (Terence) So (“Mr So”) as its other registered director from 1 July 2016; and

(d)     had as shareholders in equal proportion:

(i)    MT Family Pty Ltd ACN 605 720 947 which at all material times had Mr So as its sole director, secretary and shareholder; and

(ii)     Pyrmont Portfolio Pty Ltd ACN 608 496 617 which at all material times had Mr Clancy as its sole director, secretary and shareholder.

4.    Wharf Road Surfers Paradise Pty Ltd ACN 609 964 552 (“Wharf Road"):

(a)     was duly incorporated and registered on 23 December 2015;

(b)     had Mr Clancy as its registered director and secretary from registration;

(c)     had Mr So as Its other registered director from registration; and

(d)     had Mr So and Mr Clancy personally, or companies controlled by Mr So or Mr Clancy, as shareholders in equal proportion.

5.     The Respondent:

(a)     is the mother of Mr So; and

(b)     a close associate of Mr So as defined in section 9 of the Corporations Act 2011 (Cth) (“Act”).

6.     On 14 March 2022, the Applicant filed an originating application in the Supreme Court of Queensland seeking orders, amongst others, that Axis North be wound up in insolvency under the provisions of the Act, with proceedings No. 3015/22 allocated to the proceedings (“Winding Up Proceedings”).

7.    On 26 April 2022, orders were made In the Winding Up Proceedings, amongst others, that:

(a)     Axis North be wound up in Insolvency under the provisions of the Act; and

(b)     David James Hambleton and Kally Lyn Chua, c/- Rodgers Reidy (QLD), Level 2A, 181 Elizabeth Street, Brisbane in the State of Queensland be appointed to act as the Joint and Several Liquidators of Axis North (“Liquidators”).

8.     By reason of the matters pleaded in paragraphs 6 and 7, for the purposes of Part 5.7B of the Act, the relation back day of the winding up of Axis North is 14 March 2022 (“Relation Back Day”).

The Payments

9.    Between 15 March 2018 and 22 March 2018, Mr So in his capacity as director of both Axis North and Wharf Road authorised and directed:

(a)    the payment and receipt of $200,000 from Axis North as trustee for the Axis North Unit Trust (“AN Trust”) to Wharf Road as trustee for the Wharf Road Surfers Paradise Unit Trust (“WR Trust”) on 15 March 2018;

(b)     the payment and receipt of $1,000,000 from Axis North ATF the AN Trust to Wharf Road ATF the WR Trust on 18 March 2018;

(c)     the payment and receipt of $400,000 from Axis North ATF the AN Trust to Wharf Road ATF the WR Trust on 19 March 2018;

(d)     the payment and receipt of $1,000,000 from Wharf Road ATF the WR Trust to the Respondent on 19 March 2018;

(e)     the payment and receipt of $400,000 from Wharf Road ATF the WR Trust to the Respondent on 19 March 2018;

(f)     the payment and receipt of $1,000,000 from Axis North ATF the AN Trust to Wharf Road ATF the WR Trust on 19 March 2018;

(g)     the payment and receipt of $500,000 from Axis North ATF the AN Trust to Wharf Road ATF the WR Trust on 20 March 2018;

(h)     the payment and receipt of $1,400,000 from Wharf Road ATF the WR Trust to the Respondent on 20 March 2018; and

(i)     the payment and receipt of $400,000 from Axis North ATF the AN Trust to Wharf Road ATF the WR Trust on 22 March 2018.

(“Payments”)

10.    The Payments from Axis North ATF the AN Trust to Wharf Road ATF the WR Trust totalled $3,500,000 (“Total Payment”).

11.     Between 15 March 2018 and 20 March 2018, Mr So in his capacity as director of Axis North and Wharf Road authorised and directed the amount of $2,800,000 of the Total Payment to be paid to the Respondent. (“Payment to the Respondent”)

12.     The Payments and the Payment to the Respondent were:

(a)     a single transaction to the Respondent; or

(b)    alternatively, a composite transaction to the Respondent by reason that in totality the Payments and the Payment to the Respondent were made up of a series of inter-related dealings between Axis North and the Respondent.

Voidable Transaction: Unreasonable Director-Related Transaction

13.    For the purposes of section 588FDA of the Act, the Payment to the Respondent are unreasonable director-related transactions of Axis North because the Payment to the Respondent:

(a)     was a payment made by Axis North;

(b)     were made to the Respondent, whom is a close associate of Mr So;

(c)     it may be expected that a reasonable person in Axis North's circumstances would not have made the Payment to the Respondent because:

(i)     there was no benefit to Axis North by making the Payment to the Respondent;

(ii)     the Payment to the Respondent caused a detriment to Axis North because:

(A)     no repayments of the $2,800,000 were made to Axis North by Wharf Road or the Respondent;

(B)    Axis North made the Payment to the Respondent on interest free and security free terms, whereas, these funds could have been applied to generate a return for the benefit of Axis North by other, more commercial and secure means;

(C)     Axis North exposed itself to a high degree of commercial risk given the Payment to the Respondent were advanced on interest free and security free terms; and

(D)     Axis North had other liabilities to meet; and

…

(E)    Axis North received no consideration;

(iii)    there was a significant benefit to the Respondent because she obtained $2,800,000 on Interest free and security free terms and for no consideration; and

(iv)     Axis North:

(A)     was not in the business of lending money, especially not funds in the vicinity of $2,800,000, and was in fact in the business of buying and selling rare cars; and

(B)     advanced $2,800,000 on terms not recorded anywhere.

14.     Pursuant to section 588FE(6A) of the Act, the Payment to the Respondent is voidable because:

(a)    for the reasons pleaded in paragraph 13 above, the Payment to the Respondent was unreasonable director-related transactions pursuant to section 588FDA of the Act; and

(b)     the Payment to the Respondent were entered into during the 4 years ending on the Relation Back Day.

15    On 24 November 2023, Sarah C Derrington J ordered that Ms Wong file and serve an application for stay of the proceedings in QUD498/2023 pending the determination of QUD93/2022. Her Honour further ordered that any application for stay be listed for hearing in the week commencing 5 February 2024.

16    Ms Yang submitted that Ms Wong notified Ms Yang that Ms Wong would not be making an application for a stay of the proceedings in QUD498/2023 pursuant to the 24 November orders. By further order of Sarah C Derrington J, on 10 January 2024, the hearing listed for the week of 5 February 2024 was vacated.

17    On 28 June 2024, the present interlocutory application was filed.

SUBMISSIONS OF THE PARTIES

18    In summary, the respondent submitted that:

    the transactions the subject of QUD498/2023 involved a loan from Ms Yang to Axis North, and the use of those funds to repay another loan Ms Wong had made to a related entity of Axis North;

    one aspect of the various claims in QUD93/2022 concerns the application of the funds received by way of loan from Ms Yang to Axis North. Mr Clancy in QUD93/2022 claims that Mr So’s decision to pay the proceeds of that loan to Ms Wong was a breach of his duties as a director of Axis North. Ms Wong is also a respondent to QUD93/2022;

    if the proceedings are not heard together, there is a real risk of inconsistent findings on the central issue in QUD498/2023, notwithstanding any inconvenience and delay in the determination of QUD498/2023; and

    the fact that the causes of action in the two proceedings did not precisely correspond does not preclude inconsistent findings.

19    Submissions were also filed in QUD498/2023 by the Clancy entities and the Carver’s entities. They submitted that it was appropriate for QUD498/2023 to be heard together with QUD93/2022 because, in summary:

    there are clearly overlapping factual circumstances;

    the clear overlap of facts outweighs any disadvantages which might be suffered by individual parties to the two proceedings in having them heard together; and

    any prejudice to the applicant can be ameliorated by case management orders.

20    The applicant however submitted, in summary:

    there are no common issues of law to be decided between the proceedings;

    the limited factual circumstances do not justify the inconvenience and costs which would be imposed on Ms Yang from an order that the two proceedings be heard together; and

    the interlocutory application should be dismissed with costs.

CONSIDERATION

21    Rule 30.11 of the Federal Court Rules 2011 (Cth) (Federal Court Rules) provides as follows:

30.11 Consolidation of proceedings before trial

If several proceedings are pending in the Court and the proceedings:

(a) involve some common question of law or fact; or

(b) are the subject of claims arising out of the same transaction or series of transactions;

any party to any of the proceedings may apply to the Court for an order that the proceedings be:

(c) consolidated; or

(d) heard together; or

(e) heard immediately after one another; or

(f) stayed until after the determination of any of the other proceedings.

22    While r 30.11 contemplates a variety of possible orders, as observed by Kerr J in Varasdi as Litigation Representative for Mimi Varasdi v State of Victoria (Department of Education and Training) [2019] FCA 1785 at [41], an order for matters to be heard together is less constraining than an order for consolidation. Factors relevant to the application of r 30.11 were set out by Greenwood J in Walsh, Liquidator of D&R Community Services Pty Ltd (Receivers & Managers Appointed) (In Liq) v Commissioner of Taxation [2018] FCA 1739 (Walsh) (in turn applying principles explained by Besanko J in Humphries v Newport Quays Stage 2A Pty Ltd [2009] FCA 699):

18.    The precursor of r 30.11 under the former Federal Court Rules, O 29 r 5, was considered by Besanko J in Humphries v Newport Quays Stage 2A Pty Ltd [2009] FCA 699. His Honour at [11] in that case set out nine factors to be considered by the Court when making an order for proceedings to be heard together:

1.    Are the proceedings broadly of a similar nature?

2.    Are there issues of fact and law common to each proceeding?

3.    Will witnesses (lay and expert) in one proceeding be witnesses in one or more of the other proceedings?

4.    Has there been an alternative proposal put forward that there be a test case and have the parties agreed to abide the outcome, or, at least, the determination of common issues of fact and law?

5.    Is there a prospect of multiple appeals with substantial delays if the proceedings are not tried at the same time?

6.    Will there be a substantial saving of time if the proceedings are tried at the same time, compared with each proceeding being tried separately?

7.    Will an order that the proceedings be tried at the same time create difficulties in terms of trial management, complexity of procedural issues and difficulties in determining cross-admissibility of evidence?

8.    Is one proceeding further advanced in terms of preparation for trial than the others?

9.    Are there parties to one or some only of the proceedings who will be inconvenienced if all of the proceedings are tried at the same time?

23    Justice Greenwood continued in Walsh:

20.    A fundamentally important consideration in an application of this kind is the question of whether there is a real risk of inconsistent findings being made on contested questions of fact common to both proceedings if each proceeding is not heard together (Smit v J Smit & Sons Contracting Pty Ltd, in the matter of J Smith & Sons Contracting Pty Ltd [2018] FCA 581 at [24]; [2012] VSC 299 at [10]).

24    At the hearing before me, Mr Russell for the respondent submitted that his client was not seeking consolidation of the proceedings. Rather, the respondent would be content if I were to order either that QUD 498/2023 and QUD 93/2022 be heard together pursuant to r 30.11(d), or that QUD 498/2023 be heard immediately after QUD 93/2022 pursuant to r 30.11(e). However I also note the submission of Mr Psaltis that, even if I were prepared to make an order essentially joining the two matters pursuant to r 30.11, the order in which the proceedings should be heard was a matter for the primary Judge, and to that extent it would be inappropriate for me to make an order pursuant to r 30.11(e).

25    I agree with the submission of Mr Psaltis. If the proceedings were to be heard together, the order of proceedings is a matter of case management for Derrington J.

26    Having considered the submissions of all parties in light of relevant principles, I am satisfied for the following reasons that an order should be made pursuant to r 30.11(d) of the Federal Court Rules.

27    First, while QUD93/2022 broadly concerns questions of alleged breach of director’s duties under the Corporations Act 2001 (Cth) (Corporations Act) in respect of disposition of monies, and QUD498/2023 concerns a discrete issue of clawback of corporate funds claimed to have been the subject of a voidable disposition under the Corporations Act, there is a clear common thread in both cases. This common thread concerns the transfer of the sum of $2.8 million (out of the amount of $3.5 million loaned by Ms Yang to Axis North) to Ms Wong (or related entities) at the direction of Mr So as a director of Axis North and related entity Wharf Road Surfers Paradise Pty Ltd (Wharf Road).

28    The applicant contended that the limited common factual circumstances did not justify an order under r 30.11(d). However, I note the submission of the applicant that the factual overlap was referable to paras [165]-[183] of the Amended Statement of Claim filed in QUD93/2022 on 8 September 2023.

29    On its face, this represents a significant factual overlap.

30    Second, I consider that there is a high risk of the prospect of conflicting findings of fact if the two proceedings are not heard together. Even at its lowest point, the applicant acknowledges that the following factual disputes are common to both proceedings, namely whether:

(a)    Wharf Road was indebted to Axis North, and the characterisation of the payments between them;

(b)    Wharf Road was indebted to Ms Wong, and the characterisation of the payments between them;

(c)    Axis North was indebted to Ms Yang, and the relevance of this as a defence to the claim under s 588FDA; and

(d)    $1,400,000 was paid to Ms Wong or to another related entity, Ultimate Investment Portfolio Pty Ltd ACN 611 531 778.

31    The respondent contends that there are further substantive issues likely to arise in both proceedings, including in respect of holding entity Golden Gate Property Group. In particular, the respondent contends that the Court will also be required to make findings in relation to:

(a)    the division of labour in respect of the Golden Gate Property Group’s financial affairs, specifically whether Mr Clancy also authorised relevant payments to Ms Wong;

(b)    whether the payments to Ms Wong were within the scope of permissible uses of the amount of $3.5 million loaned from Ms Yang to Axis North;

(c)    whether any, and if so which, of the entities within the Golden Gate Property Group were indebted to Ms Wong and on what terms;

(d)    whether the payments to Ms Wong were detrimental, or disadvantageous, to the interests of Axis North, assessed in the context of the position of the Golden Gate Property Group as a whole; and

(e)    ultimately, whether it was reasonable for the amount of $2.8 million to be transferred to Ms Wong or related entities.

32    Third, the respondent submitted that Mr So will be the central witness in both proceedings, and that both he and Ms Wong will be called as witnesses. I agree that this is likely.

33    It is further likely that the consistency of their evidence will be promoted by both proceedings being heard together.

34    I understand from material before the Court that Ms Wong is located overseas. It would plainly be preferable for Ms Wong to be present in Australia to give her evidence in both proceedings at the same time.

35    Fourth, I consider that, in the event that the matters are not listed for hearing together, there is the prospect of a multiplicity of appeals from different decisions emerging from the separate cases. In particular, I note the submission of the applicant at the hearing that QUD498/2023 should properly be listed for hearing forthwith, and prior to the trial in QUD93/2022 which is presently listed for April 2025. However, as the respondent correctly submitted, in the event that QUD498/2023 is heard and determined before the end of 2024, it is possible that any appeal from that decision could be commenced at the same time as the trial in QUD93/2022. In my view, this would be undesirable.

36    Fifth, the applicant submitted that the respondent had delayed in bringing the interlocutory application before the Court. The applicant relied on the affidavit of her lawyer Mr Timothy Elliot filed 25 July 2024 to that effect, and in particular that the respondent did not file the interlocutory application until around three and a half months after the filing of Ms Wong’s defence in QUD498/2023. In my view any delay on the part of the respondent in filing the interlocutory application is unremarkable. In any event, to the extent that any issue of delay was made before Derrington J, it did not prevent his Honour making timetabling orders on 6 June 2024 including the following:

…

3.    By 27 June 2024, the respondent is to file and serve any application pursuant to r 30.11 of the Federal Court Rules 2011 (Cth) (the Rule 30.11 Application), any affidavit in support of the Rule 30.11 Application and an outline of submissions.

37    It is not in dispute that the respondent filed and served the present interlocutory application in accordance with those Orders of his Honour.

38    Sixth, I note the submission of the applicant that she would experience prejudice if an order were made in terms of r 30.11(d). In particular, the applicant contended that she would be subject to prejudice in the nature of:

    delay in having the proceedings in QUD498/2023 not heard and determined until April 2025; and

    the prospect of the applicant being required to participate in or observe the entirety of the proceedings in QUD93/2022, rather than being confined to a three day hearing in QUD498/2023, with an associated expansion in costs.

39    The potential prejudice identified by the applicant is real. However, in respect of the delay in having the proceedings in QUD498/2023 heard and determined, I am satisfied that such prejudice to the applicant is outweighed by the benefits I have already identified, in having all common issues heard and determined by the same judge in QUD498/2023 and QUD93/2022 at or around the same time.

40    In respect of the requirement of the applicant to participate in or observe the entirety of the proceedings in QUD93/2022, again I am persuaded that any prejudice to the applicant would be outweighed by the benefits I have identified in having the two proceedings heard together. I further note that, to the extent that the proceedings are to be heard together, it is open to the trial judge to make case management orders referable to the order in which the proceedings are to be heard, including the giving of evidence and the delivery of submissions, which could limit the involvement of the applicant in QUD498/2023 in the lengthier trial in QUD93/2022.

41    Seventh, I note that the Clancy entities and the Carver’s entities in QUD93/2022, represented by Mr Psaltis, support an order being made in terms of r 30.11. In my view, the support of those parties for such an order is a relevant consideration for me in determining the present interlocutory application.

42    Finally, it appears on the material before me that, at most, the trial in QUD93/2022 (which is currently set down for four weeks) will be extended by no more than three days should it be heard together with QUD498/2023. It is possible that, given the overlapping issues, facts and evidence, an additional three days of trial may not actually be required. This will of course be a matter for the trial judge, the parties in the conduct of their respective cases, and the manner in which the hearings proceed.

CONCLUSION

43    It is appropriate that the proceeding in QUD498/2023 be heard together with proceeding QUD93/2022 pursuant to r 30.11(d) of the Federal Court Rules.

44    The second prayer for relief in the interlocutory application was for an order that the applicant and the respondent confer with each other and the parties in proceeding QUD93/2022, and to use their best endeavours to agree on directions to be made in respect of ongoing case management and the management of the trial in order to minimise the involvement of the applicant. In my view, it is for the trial judge in both matters to determine the appropriateness of such case management orders.

45    Finally, the respondent has been successful in respect of the interlocutory application. Ms Wong however has sought that costs be ordered in the proceeding rather than against the applicant referable to the interlocutory application. I am satisfied that costs be in the proceeding.

Associate:

Dated:    4 September 2024

SCHEDULE OF PARTIES