FEDERAL COURT OF AUSTRALIA
Ann Street Mezzanine Pty Ltd (In Liquidation) (ACN 102 854 866) v Beck
[2010] FCA 260
Citation: Ann Street Mezzanine Pty Ltd (In Liquidation)
(ACN 102 854 866) v Beck [2010] FCA 260Parties: ANN STREET MEZZANINE PTY LTD (IN LIQUIDATION) (ACN 102 854 866) v CEDRIC RICHARD PALMER BECK, JOHN NORMAN DIXON, GRAEME JOHN RUNDLE, NORMAN PHILLIP CAREY, LYNETTE ROCHELLE SCHIFTAN, NEEDLERS END NOMINEES PTY LTD (ACN 008 828 324), KEBBEL CAPITAL PTY LTD (ACN 106 196 481), PALENTIA PTY LTD (ACN 099 289 326), CONICAL HILL NOMINEES PTY LTD (ACN 103 113 999), HESTER BROOK PTY LTD (ACN 072 686 914), ANNA HARRIS, TURTLE BAY NOMINEES PTY LTD (ACN 199 633 457) and SUGARLOAF HILL NOMINEES PTY LTD (ACN 130 302 859); NORMAN PHILLIP CAREY, QUARTZ NOMINEES PTY LTD (ACN 008 859 103) ATF THE QUARTZ TRUST, HECA NOMINEES PTY LTD (ACN 053 581 874), ACEBID PTY LTD (ACN 074 566 046), ANDRIANNI PTY LTD (ACN 005 458 720) ATF THE ANDRIANNI TRUST, ANN STREET BRISBANE PTY LTD (ACN 101 943 711) ATF THE ANN STREET BRISBANE TRUST, BENNALONG HOLDINGS PTY LTD (ACN 008 741 008), DOSIUS PTY LTD (ACN 009 449 450), EARLMIST PTY LTD (RECEIVER & MANAGER APPOINTED) (CONTROLLER APPOINTED) (ACN 069 056 926) ATF THE EARLMIST UNIT TRUST, ETNAS PTY LTD (ACN 056 599 350) ATF THE ETNAS TRUST, HEALTHCARE PROPERTIES PTY LTD (ACN 074 501 955) ATF THE HEALTHCARE PROPERTIES TRUST, HUNTINGDALE VILLAGE PTY LTD (RECEIVER & MANAGER APPOINTED) (ACN 085 048 531) ATF THE HUNTINGDALE VILLAGE UNIT TRUST, JEVWOOD PTY LTD (ACN 074 525 321), K.I.S. REALTY PTY LTD (ACN 100 871 314), KEEP IT SIMPLE INVESTMENTS (GLOBAL) PTY LTD (ACN 100 871 270), NORTH SYDNEY DEVELOPMENT PTY LTD (CONTROLLER APPOINTED) (ACN 107 037 838) ATF THE NORTH SYDNEY DEVELOPMENT TRUST, PAQUERO PTY LTD (ACN 003 540 556), PARAGON APARTMENTS LTD (RECEIVER & MANAGER APPOINTED) (ACN 087 200 413), RENAISSANCE MEZZANINE PTY LTD (ACN 110 978 491), ROMPRIDE PTY LTD (ACN 074 524 824) ATF THE ERLEY UNIT TRUST, SCOTS CHURCH DEVELOPMENT LTD (RECEIVER & MANAGER APPOINTED) (ACN 091 686 323), SILKCHIME PTY LTD (RECEIVER & MANAGER APPOINTED) (ACN 066 849 429) ATF THE SILKCHIME UNIT TRUST, VANNIN PTY LTD (RECEIVER & MANAGER APPOINTED) (ACN 067 610 271) ATF THE HAY FAMILY TRUST, WARWICK ENTERTAINMENT CENTRE PTY LTD (RECEIVER & MANAGER APPOINTED) (ACN 054 246 918) ATF THE WARWICK ENTERTAINMENT CENTRE UNIT TRUST, WESTPOINT FINANCIAL SERVICES PTY LTD (ACN 074 148 324) and WESTPOINT MANAGEMENT (CENTREWAYS) PTY LTD (ACN 082 349 068) ATF THE CENTREWAYS REFURBISHMENT SYNDICATION TRUST; FREEHILLS and AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION File number: VID 485 of 2008 Judge: DODDS-STREETON J Date of judgment: 22 March 2010 Catchwords: PRACTICE and PROCEDURE – Application for transfer pursuant to s 1337H Corporations Act 2001 of proceedings commenced in Federal Court to Supreme Court of Victoria where interconnected proceeding issued - other related proceedings managed as group in Federal Court – transfer would not eliminate risk of inconsistent findings…
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- AGLC
- (ACN 102 854 866) v Beck [2010] FCA 260
- Case
- [2010] FCA 260
- Decision Date
CaseChat Overview and Summary
The parties involved in the case were (ACN 102 854 866) and Beck, who were involved in a dispute concerning the transfer of proceedings from the Federal Court to the Supreme Court of Victoria. The legal issues that the court needed to decide were whether the transfer would eliminate the risk of inconsistent findings and whether the Federal Court proceedings were more advanced and whether it would be more convenient for particular defendants. The court considered the evidence presented by the parties and concluded that the transfer would not eliminate the risk of inconsistent findings and that the Federal Court proceedings were more advanced. Additionally, the court found that the transfer would be substantially inconvenient for some of the defendants.
The court's reasoning was based on the evidence presented by the parties. The court found that the proceedings were interconnected and that there was a significant overlap between them. The court also found that the Federal Court proceedings were more advanced and that the defendants would be substantially inconvenienced by the transfer. The court noted that the majority of the defendants in the Director’s actions resided or had their registered offices in Western Australia and had greater access to the Federal Court via its Western Australia registry, which they had already regularly used. The court also noted that the Westpoint Group was primarily based in Western Australia and many potential witnesses resided there. The Federal Court in Western Australia had video conferencing facilities.
The final orders of the court were to dismiss the Notice of Motion dated 21 January 2010, and filed with the Court on 25 January 2010, and to make no orders as to costs. The court found that the transfer would not eliminate the risk of inconsistent findings and that the Federal Court proceedings were more advanced and that it would be substantially inconvenient for particular defendants. Therefore, the court dismissed the application for transfer.
The court's reasoning was based on the evidence presented by the parties. The court found that the proceedings were interconnected and that there was a significant overlap between them. The court also found that the Federal Court proceedings were more advanced and that the defendants would be substantially inconvenienced by the transfer. The court noted that the majority of the defendants in the Director’s actions resided or had their registered offices in Western Australia and had greater access to the Federal Court via its Western Australia registry, which they had already regularly used. The court also noted that the Westpoint Group was primarily based in Western Australia and many potential witnesses resided there. The Federal Court in Western Australia had video conferencing facilities.
The final orders of the court were to dismiss the Notice of Motion dated 21 January 2010, and filed with the Court on 25 January 2010, and to make no orders as to costs. The court found that the transfer would not eliminate the risk of inconsistent findings and that the Federal Court proceedings were more advanced and that it would be substantially inconvenient for particular defendants. Therefore, the court dismissed the application for transfer.
Orders
Orders of the court
1. That the Notice of Motion dated 21 January 2010, and filed with the Court on 25 January 2010, be dismissed.
2. That there be no orders as to costs.
Note:
Background
Background to the litigation
The following affidavits were sworn in opposition to the application:(a)the affidavit of Daniel Joseph Hirsh of the solicitors for the fourth defendant and the cross-claimants, sworn 15 February 2010 (“first Hirsh affidavit”);(b)the affidavit of Daniel Joseph Hirsh sworn 5 March 2010 (“second Hirsh affidavit”); and(c)the affidavit of Stephen John Lemonis of the solicitors for the third defendants, sworn 12 February 2010.BACKGROUND The background to the application, as set out in the first Connor affidavit, was not disputed. In relation to the commencement, conduct of, parties to, pleadings and cross‑claim in the Directors’ actions, Mr Connor deposed:6During 2007, proceedings in this Court, being proceeding numbers VID 351 and 386 of 2007, were commenced by Ann Street and York Street and their liquidators against the directors of those companies and entities associated with the First Respondent, Mr Beck.7In April 2008, ASIC took over the conduct of the former Ann Street and York Street proceedings in the name of the plaintiff companies pursuant to s.50 of the ASIC Act. However, following the judgment of the Court on 26 June 2008, the former Ann Street and York Street proceedings were discontinued by ASIC and the current proceedings were commenced. In particular:(a)The current Ann Street and York Street proceedings were commenced on 30 June 2008;(b)The proceedings by the remaining plaintiff companies (other than North Sydney Finance), were commenced on 1 August 2008; and(c)The proceedings by North Sydney Finance were commenced on 21 April 2009.8Statements of Claim in each of the Directors' Actions (other than that brought by North Sydney Finance) were filed on 11 August 2008.9Subsequently, on 22 May 2009, pursuant to Orders made by Justice Finkelstein on 9 April 2009, the proceedings in each of the Directors' Actions were amended to join a number of additional parties (referred to in more detail below) and each of the Statements of Claim were amended.10The current Statement of Claim in the Ann Street proceeding is the Amended Statement of Claim dated 22 May 2009. This is representative of, and raises identical issues to, each of the claims made by the other plaintiff companies in the Directors' Actions. For the sake of convenience, I will refer in this my Affidavit to the issues in the Directors' Actions by reference to the Ann Street Amended Statement of Claim (Ann Street Directors' SOC). Unless indicated, my observations with respect to the Ann Street pleading apply mutatis mutandis to the other Directors' Actions.11 The Defendants to the Directors' Actions are:(a)The directors or alleged shadow/de facto directors of the Plaintiff Mezzanine Companies being Messrs Beck, Dixon, Rundle and Carey and Mrs Schiftan. (In this regard, I note that Mr Dixon and Mrs Schiftan were not at any time directors of Mount Street and North Sydney Finance and, as a result, are not Defendants in the proceedings commenced by those companies. In addition, I note that on 21 October 2004 Mrs Schiftan resigned as a director of the remaining mezzanine companies.)(b)Persons and companies associated with Mr Beck, being the remaining Defendants in each proceeding including Needlers End Nominees Pty Ltd, Kebbel Capital Pty Ltd, Palentia Pty Ltd, Conical Hill Nominees Pty Ltd, Hester Brook Pty Ltd, Anna Harris, Turtle Bay Nominees Pty Ltd and Sugarloaf Hill Nominees Pty Ltd.12Defences have been filed by most of the Director Defendants in most of the Directors' Actions. In particular:(a)Defences were filed in the latter part of 2008 to the original versions of the Statements of Claim in the Directors' Actions (other than North Sydney Finance) by Mr Beck, Needlers End Nominees Pty Ltd, Kebbel Capital Pty Ltd, Mr Dixon, Mr Rundle, Mr Carey and Mrs Schiftan. However, no Defences have been filed by any Defendants to the Amended Statements of Claim filed in 2009;(b)Palentia Pty Ltd is not actively defending any of the Directors' Actions and has not filed any Defences in any of them;(c)None of the Defendants to the proceedings commenced by North Sydney Finance have filed a Defence; and(d)The parties joined to the proceedings in April 2009 (Conical Hill Nominees Pty Ltd, Hester Brook Pty Ltd, Anna Harris, Turtle Bay Nominees Pty Ltd and Sugarloaf Hill Nominees Pty Ltd), have not filed Defences to any of the Directors' Actions.13On 5 May 2009, Mr Carey and twenty five companies associated with him (Cross-Claimants) filed a Cross-Claim against Freehills (Freehills Cross‑Claim) in each of the Directors' Actions. A Defence to this was filed by Freehills on 3 June 2009.14On 8 May 2009 the Cross-Claimants filed an Amended Cross-Claim against ASIC and the Commonwealth of Australia (ASIC Cross-Claim) in the Ann Street proceeding only. This followed an earlier version of that Cross-Claim which was filed during 2008. A Defence to the ASIC Cross-Claim is due to be filed by ASIC and the Commonwealth of Australia on 5 February 2010.15By an amended Notice of Motion dated 22 April 2009, Mr Carey and the thirty-three companies associated with him (which include the Cross Claimants to the Freehills Cross-Claim and the ASIC Cross-Claim) sought orders for leave to bring a Cross-Claim against KPMG in each of the Directors' Actions. An affidavit of Mr Hirsh sworn on 22 April 2009 was filed in support of that application and exhibited the proposed form of the Cross‑Claims sought to be filed by Mr Carey against KPMG in each of the Directors' Actions.16However the Notice of Motion referred to above was later adjourned to a date to be fixed on the basis that Mr Carey and the proposed cross-claimants to the claim against KPMG were re-considering the form of the proposed pleading. At the present time, no further step has been taken by Mr Carey and the proposed Cross-Claimants to advance a claim against KPMG as part of the Directors' Actions, although it is possible that could occur in the future.
Evidence
Evidence Before The Court
Mr Connor deposed that Pagone J of the Supreme Court of Victoria had expressed his willingness to enter the Directors’ actions, if transferred, into the Supreme Court Commercial List and to manage them together with the KPMG action.Evidence In the second Connor affidavit, Mr Connor:(a)concluded that on the basis of his enquiries, video-link and video conferencing facilities for use in Supreme Court of Victoria proceedings were available, regularly used and virtually identical to those of the Federal Court;(b)deposed that the majority of relevant documents held by ASIC were stored at Traralgon, Victoria, and noted that their physical location was unlikely to be very significant, as discovery and inspection would take place electronically.(c)deposed to a number of other parties who have commenced proceedings in Victoria, New South Wales, Queensland and Western Australia seeking relief associated with the collapse of the Westpoint Group. In the third Connor affidavit, Mr Connor deposed that:(a)In the State Trustees action, a settlement had been approved between the applicant and State Trustees on 26 February 2010. There were also settlements of State Trustees’ cross-claims against Mr Beck, his related entities, Market Street, Mr Dixon and Ms Lynette Schiftan;(b)electronic filing is available in both the Federal and Supreme Courts; and(c)Mr Dixon, Freehills and the Commonwealth (now removed as a respondent to the cross‑claim) did not oppose a transfer to the Supreme Court. Several director defendants and a large number of associated companies opposed the application. Stephen Lemonis, of Mr Rundle’s solicitors, deposed that the transfer would substantially inconvenience Mr Rundle because:(a)Mr Rundle faces two charges in New South Wales under the Crimes Act and a prosecution in Western Australia under the Fair Trading Act;(b)Mr Rundle has limited funds;(c)Mr Lemonis is experienced in Federal Court practice and procedure, but not those of the Supreme Court of Victoria. Melbourne agents are retained only as an address for service;(d)the majority of ASIC’s relevant documents are held in Western Australia;(e)the majority of Westpoint Group employees and advisers are located in Western Australia;(f)while potential witnesses in the proceedings had not been identified, the Westpoint Group was primarily located in Western Australia and a trial or certain hearing days in Western Australia could be required, in which case, the Federal Court had jurisdiction, and video and other appropriate facilities. In the first Hirsh affidavit, Daniel Hirsh, of the solicitors for Mr Carey, deposed that:(a)Mr Carey considered that the Director’s and KPMG actions should be consolidated and heard and managed together;(b)Mr Carey undertook to invite the KPMG parties to consent to the transfer of the KPMG action to the Federal Court, and if they did not, he and the other cross‑claimants would apply for its transfer;(c)the attitude of other parties to the proposed alternative course of seeking the transfer of the KPMG action to the Federal Court was as follows:(i)Mr Rundle and Mr Beck and his related entities would consent;(ii)KPMG would not oppose the transfer of the KPMG action to the Federal Court. It had no preference, but agreed that the actions should be heard together; and(iii)Mr Dixon and Ms Schiftan had not expressed a view.(d)The Director’s actions were commenced earlier and were more advanced than the KPMG action. The pleadings were more advanced and there had been some discovery and legal professional privilege determinations.(e)Some related actions carried on by ASIC in relation to the Westpoint collapse were being managed by Finkelstein J in the Federal Court.(f)There has been a global mediation in recognition of the great inter‑relatedness of the proceedings.(g)In the KPMG action, ASIC sought to recover the same losses from KPMG as it sought in the Director’s actions. ASIC had not explained why it caused only the KPMG action to be commenced outside the Federal Court.(h)The KPMG action, which was begun on 13 October 2008, has had only three directions hearings and no interlocutory applications.(i)In the State Trustees proceeding (managed by Finkelstein J in the Federal Court) there were cross‑claims by State Trustees against the Directors and KPMG, with a substantial overlap of allegations. Mr Carey was a respondent to the cross‑claim of State Trustees and that action had not settled as against him or, as far as he knew, KPMG. There was no application to transfer the State Trustees proceeding to the Supreme Court;(j)There was also an overlap with issues in the Dukes action which was managed by Finkelstein J. No application to transfer the Dukes action to the Supreme Court had been made.(k)ASIC conceded that there was a significant overlap and interconnectedness with the other Federal Court Westpoint actions and the Directors and KPMG could be joined or named as concurrent wrongdoers in those proceedings.(l)The majority of the defendants in the Director’s actions resided or had their registered offices in Western Australia and had greater access to the Federal Court via its Western Australia registry, which they had already regularly used. Mr Hirsh had also used the Federal Court electronic filing system.(m)The Westpoint Group was primarily based in Western Australia and many potential witnesses resided there. The Federal Court in Western Australia had video conferencing facilities.
Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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