Ausfert Pty Ltd v Superfert Dongbu Pty Ltd - [2014] SASC 157

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
AUSFERT PTY LTD & ANOR v SUPERFERT DONGBU PTY LTD & ANOR
[2014] SASC 157
Reasons for Decision of The Honourable Justice Parker
24 October 2014
PROCEDURE - COURTS AND JUDGES GENERALLY - COURTS - CONCURRENT JURISDICTION OF DIFFERENT COURTS - TRANSFER OF PROCEEDINGS UNDER CROSS-VESTING LEGISLATION - WHERE APPROPRIATE AND IN INTERESTS OF JUSTICE - GENERALLY
Application by second defendant for transfer of proceedings under s 5(2)(b)(iii) of the Jurisdiction of Courts (Cross-vesting) Act 1987 to the Supreme Court of Western Australia.
Held (Parker J):
Application granted. It is in the interests of justice that the proceedings be determined in the Supreme Court of Western Australia.
Jurisdiction of Courts (Cross-vesting) Act 1987 s 5(2)(b)(iii), referred to.
BHP Billiton Ltd v Schultz (2012) 221 CLR 400; Cini v Pets Paradise Franchising (SA) Pty Ltd [2008] SASC 287; Australian Rail Track Corp Ltd v Mineral Commodoties Ltd [2006] SASC 27, considered.

WORDS AND PHRASES CONSIDERED/DEFINED
"interests of justice"

AUSFERT PTY LTD & ANOR v SUPERFERT DONGBU PTY LTD & ANOR
[2014] SASC 157

PARKER J: These are the reasons for the orders made on 17 October 2014 that, on the application of the second defendant, the proceedings be transferred to the Supreme Court of Western Australia under s 5(2)(b)(iii) of the Jurisdiction of Courts (Cross-vesting) Act 1987.
Before that order was made the second defendant gave an undertaking that until such time as the application of the first and second plaintiffs for an interlocutory injunction could be heard and determined by the Supreme Court of Western Australia it would not take any step to enforce a specified debt or securities.
Background
Each of the parties is involved in the business of manufacturing and supplying fertiliser products. In essence, the proceedings arise out of a joint venture relating to the fertiliser industry.
The first plaintiff, Ausfert Pty Ltd (Ausfert), and the second defendant Dongbu Farm Hannong Pty Ltd (Dongbu Australia), each own 50% of the first defendant, Superfert Dongbu Pty Ltd (SFDB). The second defendant, Dongbu Farm Hannong Co Ltd (Dongbu Korea), is based in the Republic of Korea and is the parent company of Dongbu Australia.
SFDB was incorporated on 30 August 2011 in furtherance of a joint venture agreement made and entered between Jacob Hendrik Beyers, Dongbu Australia, Ausfert, Valefox Pty Ltd and Superfert Pty Ltd. Dongbu Australia and Ausfert each owns 50% of the issued capital of SFDB.
In the negotiation of the joint venture Dongbu Korea acted on behalf of Dongbu Australia.
Jacob Beyers is the sole director of the second plaintiff, Valefox. The latter company owns 51% of the issued capital of Ausfert and is also the sole shareholder in Superfert.
Before SFDB was formed, Superfert conducted a fertiliser business in Australia and regularly purchased fertiliser products from Dongbu Korea. Superfert has since changed its name to Interpact Pty Ltd. Following the incorporation of SFDB, that company effectively took over the business of Superfert (now Interpact)…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2014] SASC 157
Decision Date: 24 October 2014

CaseChat Overview and Summary

Ausfert Pty Ltd and Valefox Pty Ltd filed proceedings against Superfert Dongbu Pty Ltd and Dongbu Farm Hannong Co Ltd, seeking declarations about the enforceability of certain documents and an interlocutory injunction to restrain the defendants from enforcing a security interest over certain property. The defendants opposed the application for the interlocutory injunction and filed an application to transfer the proceedings to the Supreme Court of Western Australia under s 5(2)(b)(iii) of the Jurisdiction of Courts (Cross-vesting) Act 1987. This application raised questions about the appropriate forum for the proceedings, and whether the interests of justice would be best served by transferring the proceedings to the Supreme Court. The court considered the submissions of both parties and ultimately determined that the matter should be transferred to the Supreme Court of Western Australia. The court reasoned that it was appropriate to transfer the proceedings because the Supreme Court had jurisdiction over the matter, and because it would be in the interests of justice to do so. The court noted that the plaintiffs had not provided a compelling reason why the proceedings should not be transferred, and that the Supreme Court would be able to hear the matter more quickly than the Federal Circuit Court.

The court also considered the submissions of the parties regarding the application for an interlocutory injunction. However, the court did not need to determine this application because the second defendant had given an undertaking not to enforce the security interest over the Kwinana property until the interlocutory injunction application could be heard and determined by the Supreme Court of Western Australia. The court noted that this undertaking removed the need for the Court to determine the application for an interlocutory injunction at that time. The court ordered that the proceeding be transferred to the Supreme Court of Western Australia and that the costs of the proceedings in the Federal Circuit Court be reserved to that court for determination. The court did not make any further orders regarding the application for an interlocutory injunction.

Orders

Orders of the court

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Background

Background to the litigation

Before that order was made the second defendant gave an undertaking that until such time as the application of the first and second plaintiffs for an interlocutory injunction could be heard and determined by the Supreme Court of Western Australia it would not take any step to enforce a specified debt or securities. Background Each of the parties is involved in the business of manufacturing and supplying fertiliser products. In essence, the proceedings arise out of a joint venture relating to the fertiliser industry. The first plaintiff, Ausfert Pty Ltd (Ausfert), and the second defendant Dongbu Farm Hannong Pty Ltd (Dongbu Australia), each own 50% of the first defendant, Superfert Dongbu Pty Ltd (SFDB). The second defendant, Dongbu Farm Hannong Co Ltd (Dongbu Korea), is based in the Republic of Korea and is the parent company of Dongbu Australia. SFDB was incorporated on 30 August 2011 in furtherance of a joint venture agreement made and entered between Jacob Hendrik Beyers, Dongbu Australia, Ausfert, Valefox Pty Ltd and Superfert Pty Ltd. Dongbu Australia and Ausfert each owns 50% of the issued capital of SFDB. In the negotiation of the joint venture Dongbu Korea acted on behalf of Dongbu Australia. Jacob Beyers is the sole director of the second plaintiff, Valefox. The latter company owns 51% of the issued capital of Ausfert and is also the sole shareholder in Superfert. Before SFDB was formed, Superfert conducted a fertiliser business in Australia and regularly purchased fertiliser products from Dongbu Korea. Superfert has since changed its name to Interpact Pty Ltd. Following the incorporation of SFDB, that company effectively took over the business of Superfert (now Interpact) and continues to conduct the business. The joint venture agreement provided for Ausfert and Dongbu Australia to each nominate two directors to the board of SFDB. Jacob Beyers and his son, Leroux Beyers, were directors of SFDB from the date of its incorporation. Jacob Beyers resigned on 4 July 2014. His son remains a director. While Dongbu Australia has nominated various directors, the affidavit sworn by Jacob Beyers and filed in these proceedings states that the directors relevant to this matter are Mr Jin Ho Park and Mr Kwang Chul Kim. For many ventures Valefox has owned land at Kwinana in Western Australia. The joint venture agreement, and also a property joint venture agreement annexed to the joint venture agreement, provided that Valefox would transfer a 50% interest in the Kwinana property to Dongbu Australia on the basis that the business of the joint venture company, SFDB, would be conducted at the Kwinana property under a registered lease. That 50% interest in the land has been transferred to Dongbu Australia. On 1 September 2011 Valefox and Dongbu Australia (as guarantors) and Dongbu Korea (as financier) executed a deed of guarantee and indemnity. Under that arrangement the guarantors agreed to guarantee all money owing, whether presently or in the future, by SFDB “under or in relation to sales contracts from time to time entered into between [Dongbu Korea] as seller and [SFDB] as buyer for the sale of the supply of fertiliser products”. Contemporaneously with the execution of the guarantee, Valefox and Dongbu Australia granted Dongbu Korea a mortgage over the Kwinana property.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

Jacob Beyers has also deposed that SFDB has not paid rent to Valefox under the lease of the Kwinana land that was due on 1 October 2014. Consideration The affidavits sworn by Jacob Beyers and Leroux Beyers were filed in support of the application by the first and second plaintiffs for an interim or interlocutory injunction filed to restrain the defendants from enforcing the security over the Kwinana land. The second defendant, Dongbu Korea, filed an interlocutory application dated 16 October 2014 seeking that the proceeding be transferred to the Supreme Court of Western Australia under s 5(2)(b)(iii) of the Jurisdiction of Courts (Cross-vesting) Act 1987. Mr Park has sworn an affidavit in support of that application. The matter came before me on 17 October 2014. The second defendant gave an undertaking until such time as the application of the first and second plaintiffs for an interlocutory injunction could be heard and determined by the Supreme Court of Western Australia it would not take any step to enforce the debt or securities in furtherance of the notice of demand referred to in the affidavit of Leroux Beyers. The Court ordered that the proceeding be transferred to the Supreme Court of Western Australia and the costs of the proceedings in this court be reserved to that court for determination. That undertaking removed the need for the Court to determine the application for an interlocutory injunction. The parties’ submissions therefore focussed on the cross-vesting application. Counsel for the second defendant summarised the relief sought by the plaintiffs as being:a.A declaration that the relevant clause of the deed was void;b.A declaration that the assets and undertakings of SFDB were not subject to any charge in favour of Dongbu Australia;c.Removal of a registered security interest from the PPS register;d.A declaration that the notice of demand issued by Dongbu Australia to SFDB and Valefox was invalid in certain respects;e.A declaration that Valefox had no liability to Dongbu Korea in respect of the guarantee and indemnity given by it and Dongbu Australia;f.Alternatively, the liability of Valefox under the guarantee should be limited;g.The guarantee should be discharged;h.Dongbu Korea should release the mortgage from the Kwinana land and have it removed from the Western Australian certificate of title; andi.An order for payment of rent in respect of the Kwinana land. It is clear that this Court does have jurisdiction under the Cross-vesting Act to determine the application for an interlocutory injunction and to determine the dispute between the parties. It has not been contended otherwise. The parties also accept that this Court must transfer the matter to the Supreme Court of Western Australia under 5(2)(b)(iii) of the Cross-vesting Act if it considers it to be in the interest of justice to do so. The plaintiffs contend that it would be contrary to the interests of justice to transfer the proceedings to Western Australia if the Supreme Court of that State would be unable to hear the claim for final relief for some time. Their solicitor expressed confidence that this Court could accommodate an early trial. However, after consulting with the Chief Justice, I informed counsel that it would not be possible to list the matter for trial before January 2015. The plaintiffs then indicated that they were content with that.