Camm v Linke Nominees Pty Ltd

[2009] FMCA 1254

FEDERAL MAGISTRATES COURT OF AUSTRALIA

CAMM v LINKE NOMINEES PTY LTD [2009] FMCA 1254

PRACTICE AND PROCEDURE – Transfer to Federal Court of Australia – whether standing of trustee in second bankruptcy to bring s.121 application for transactions that occurred prior to the first bankruptcy a question of general importance – whether a Federal Magistrate can order transfer to a particular registry of the Federal Court of Australia.

Federal Magistrates Act 1999 (Cth), ss.39(1), 79
Federal Magistrates Court Rules 2001 (Cth), rr.8.02, 21.15
Bankruptcy Act 1966 (Cth), ss.59, 81, 121

McIntosh & Anor as Trustees of the Estate of Camm (A Bankrupt) v Linke Nominees Pty Ltd at (2008) QSC 79

Applicant: THE TRUSTEES OF THE PROPERTY OF GARY STIRLING CAMM (A BANKRUPT)

Respondent: LINKE NOMINEES PTY LTD

File Number: MLG 1119 of 2009

Judgment of: Phipps FM

Hearing date: 16 November 2009

Date of Last Submission: 16 November 2009

Delivered at: Melbourne

Delivered on: 16 November 2009

REPRESENTATION

Counsel for the Applicant: Mr Ribbands

Solicitors for the Applicant: Maitland Lawyers

Counsel for the Respondent: Mr Amerena

Solicitors for the Respondent: Broadley Rees Hogan Lawyers

ORDERS

1. Pursuant to s.39(1) of the Federal Magistrates Act 1999 (Cth), Federal Magistrates Court of Australia proceedings number MLG 1119 of 2009 be transferred to the Federal Court of Australia.

2. The parties’ costs are reserved.

3. Pursuant to r.21.15 of the Federal Magistrates Court Rules 2001 (Cth), the Court certifies that it was reasonable for each party to employ an advocate.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MLG 1119 of 2009

THE TRUSTEES OF THE PROPERTY OF GARY STIRLING CAMM (A BANKRUPT)

Applicant

And

LINKE NOMINEES PTY LTD

Respondent

REASONS FOR JUDGMENT

1. This is an application to transfer this proceeding to the Federal Court of Australia, and, if the Court does that, this Court to order that it be transferred to the Brisbane Registry of the Federal Court of Australia.

2. Dealing first with the question of transfer, the application is filed by the trustees of the bankrupt estate of Gary Stirling Camm, who is a bankrupt. The respondent, Linke Nominees Pty Ltd, is the registered proprietor of a property in the Noosa area in Queensland, which is said to have a value of in excess of $1 million, about $1.3 million. That property was transferred by the bankrupt to Linke Nominees in 1995, and now the application by the trustee is under s.121 of the Bankruptcy Act 1966 (Cth) seeking to set aside the transfer from the bankrupt to Linke Nominees.

3. In the course of the current bankruptcy, the bankrupt, that is Mr Camm, and Mr Linke, who is a director of Linke Nominees Pty Ltd, were examined pursuant to s.81, and, part way through that examination, a handwritten document, described as a deed, was executed between the trustees and purported to be executed by Mr Linke on behalf of Linke Nominees Pty Ltd, and also by Mr Linke himself. What that document purported to do was to settle the dispute, bring to a conclusion the dispute, or potential dispute, between the trustees and Linke Nominees Pty Ltd over the transfer of the Queensland land by the bankrupt to Linke Nominees. That is, settle any potential s.121 claim by the trustees.

4. Following that settlement, there was then a dispute between the trustees, Linke Nominees and Linke over the enforceability of that handwritten deed.  That was determined by Dutney J in the Supreme Court of Queensland in McIntosh & Anor as Trustees of the Estate of Camm (A Bankrupt) v Linke Nominees Pty Ltd at (2008) QSC 79.  In that proceeding, Dutney J dismissed the claim against Linke Nominees Pty Ltd.  I have not read the whole case, but I am informed by counsel that the basis for that was that Mr Linke did not have the authority to enter into that agreement on behalf of Linke Nominees Pty Ltd, he being one of only three directors. 

5. Claims for misleading and deceptive conduct were dealt with by Dutney J. He found Mr Linke himself liable for breach of warranty of authority. That decision against Mr Linke personally went on appeal. The appeal was allowed by the Queensland Court of Appeal. Again, I am told by counsel, on the basis that the applicants, that is the trustees, had not proved any loss. Their loss was the value of the s.121 proceeding.

6. The application to transfer to the Federal Court of Australia is put on several bases, but a significant one is Mr Amerena for Linke Nominees Pty Ltd says that an issue Linke Nominees Pty Ltd will argue, and, indeed, it is in their notice of objection, is that the current trustees, who are the second trustees, cannot bring this proceeding under s.121 because the transfer of the property was prior to the first bankruptcy. That means that he argues that it is a question of the proper interpretation of s.59 of the Bankruptcy Act 1966 (Cth) which deals with vesting of property for subsequent bankruptcies.

7. In the case before Dutney J, his Honour determined that the trustees were competent to commence the proceeding against Linke Nominees Pty Ltd pursuant to s.121. His Honour’s finding may be obiter dicta, or it may have been part of his ratio decidendi, but, in any event, that is what his Honour determined.

8. The point that Linke Nominees wishes to argue is not, I am told, the subject of any direct authority.  Therefore this case has some unusual aspects about it.  Unusual in this sense.  That it is concerned with a transfer of property which occurred 14 years ago.  There has been an intervening bankruptcy where that transfer was not challenged by the trustee, and there have been proceedings in relation to that transaction in the Supreme Court of Queensland, that is, in a superior court. 

9. If I was not to transfer this application to the Federal Court of Australia, or not transfer it to the Brisbane Registry, which is the second part of the application, the application, on behalf of Linke Nominees Pty Ltd is for directions which would include an order that the issue of the standing of the trustees, or to bring the s.121 proceeding, be tried as a separate issue.

10. Transfer to the Federal Court of Australia is dealt with in s.39 of the Federal Magistrates Act 1999 (Cth). It provides that:

    If a proceeding is pending in the Federal Magistrates Court, the Federal Magistrates Court may, by order, transfer the proceeding from the Federal Magistrates Court to the Federal Court.

11. Subsection (3) sets out matters which the court must have regard to.  They are the rules of court which deal with transfers:

    Whether the proceeding is in respect of any associated matter pending in the Federal Court; Whether the resources of the Federal Magistrates Court are sufficient to hear and determine the proceeding, and the interests of the administration of justice.

12. There are no associated proceedings in the Federal Court of Australia on the question of whether the resources of the Federal Magistrates Court of Australia are sufficient to hear and determine the proceeding, the issue is the length of time the proceeding might take. The Federal Magistrates Court of Australia is generally concerned with dealing with shorter and less complicated matters. There are differing estimates of the length of time this proceeding might take. Mr Ribbands, on behalf of the trustee, has given an estimate of three to five days. I have not asked Mr Amerena for his estimate, but it is in his submissions that it could be up to two weeks. Two weeks is about the outer limit of what the Federal Magistrates Court of Australia can cope with in this type of case. If the preliminary point about s.121 was decided in favour of the respondent, that would finish the proceeding, and that is probably an argument of only a day or so.

13. There is an issue between the parties about what witnesses might need to be called.  Mr Ribbands says that the principal witnesses will be

    
    

    Mr Camm and Mr Linke, they being the two people who negotiated the sale in 1995. In the submissions from Mr Amerena there are another half dozen or so witnesses referred to. There will be an issue about the proper valuation of the property, that being a matter which arises under s.121. That is, whether it was transferred at an undervalue or not. It is not apparent at the moment whether there might be a dispute about its valuation in 1995. There has been s.81 examination, and there have been proceedings in the Supreme Court of Queensland. What appears on those transcripts may be relevant to cross-examination for the purposes of credit, if not on the substantive issues. If it was heard from start to finish without any preliminary issues being decided, it does have the potential to extend for some time, and potentially it may be a case which would stretch the resources of the Federal Magistrates Court of Australia.

14. More significant though is the question of the interests of the administration of justice, and also the rules of the Federal Magistrates Court of Australia. Matters to be considered, in addition to those in s.79, are set out in R.8.02 of the Federal Magistrates Court Rules 2001 (Cth), and they include whether the proceeding is likely to involve questions of general importance such that it would be desirable for there to be a decision of the Federal Court on one or more of the points in issue. In this case, I consider that in conjunction with the s.39 consideration of the interests of the administration of justice.

15. One of the parties here, that is Linke Nominees Pty Ltd, wishes to argue a point of law which it says is a matter of importance, and about which it says there is no direct authority. That is whether the subsequent trustee - in this case the second trustee – does have the standing to challenge a transaction which occurred prior to a previous bankruptcy, in this case, the first bankruptcy. Mr Ribbands submits that that has been decided in the Supreme Court of Queensland by Dutney J. There are two considerations here. One is that it is a significant point of law. One party, that is the trustee, will argue that there is nothing in the argument. That s.59 of the Bankruptcy Act 1966 (Cth), which deals with property in subsequent trustees, is the short answer. The other party says, no, that is not the case, that it is a more complicated matter. That is a matter of general importance which would be better decided by a Federal Court Judge.

16. The second is that there has been a decision on this point between these parties by a superior court judge, that is Dutney J of the Supreme Court of Queensland. He was deciding a different case. He was not determining the s.121 case. But it may well be argued that his Honour’s decision is influential in the determination of these proceedings, either as a matter of general principle, that is, that it is a decision by a superior court judge on the point in issue, or because he has considered that issue in the context of determining a dispute between the same parties, which has the same general subject matter, that is, the piece of land in Queensland. The piece of land in Noosa.

17. It is correct, as Mr Ribbands submits, that this court is given jurisdiction under s.121, and, generally, in exercising this court’s discretion, it does have to consider both the authorities which bind this court, and authorities which do bind it. In the ordinary course of exercising its jurisdiction, that this court may be faced with situations where there may be and are conflicting, but not binding, authorities of superior court judges. That is not, in itself, a reason for transferring the proceedings to the Federal Court of Australia. This proceeding is different because the Queensland Supreme Court proceedings were between the same parties over the same general subject matter.

18. There is a third matter under this heading, not so important, but it is still a matter which l take into account, and that is the amount of money which is involved.  The property was sold in 1995 for $400,000.  It is said on the respondent’s side, the side of Linke Nominees Pty Ltd, that it is now worth $1.3 million.  So that this is a $900,000 dispute which, in this court’s trade practices jurisdiction, or consumer protection, or general commercial jurisdiction, whichever way it is described, would be outside this court’s $750,000 limit.  It is not outside the limit in the bankruptcy proceedings, but I consider that I should take that into account. 

19. Another matter under the rules is whether the proceeding will be heard earlier in the Federal Magistrates Court of Australia.  I cannot answer that.  I do not know whether it will be or not. 

20. Another consideration is the availability of particular procedures appropriate for the class of proceeding. I do not see that that is a consideration. Mr Amerena’s submissions contain references to the Federal Court Rules. This court has power to apply Federal Court Rules if they are appropriate. So far as bankruptcy is concerned, there are common rules between the Federal Court of Australia and the Federal Magistrates Court of Australia. The significant considerations are the ones I have referred to. The length of time, and the issue concerning the second trustee’s ability to bring this claim under s.121. I consider, taking all those matters together I should transfer the matter to the Federal Court of Australia.

21. The second issue that arises then is whether I can specifically say it should go to the Brisbane Registry of the Federal Court of Australia. Section 39 says nothing about the actual venue of the proceeding if it is transferred from the Federal Magistrates to the Federal Court. Rule 8.03 of the Federal Magistrates Court rules provide:

    If a proceeding is transferred to the Federal Court, the Registrar must:

    (a) send to the proper officer of that court all documents filed and orders made in the proceeding; and

    (b) retain in the court a copy of all orders made in the proceeding.

22. Mr Amerena argues that the Federal Magistrates Court of Australia has implied incidental power to transfer to a particular registry of the Federal Court of Australia. The Federal Court of Australia is a single court. It is not divided into parts or divisions for each registry. He submits that it is necessarily incidental to the power under s.39 that a Federal Magistrate can decide which registry of the Federal Court of Australia to transfer to. I do not consider that argument is correct. The power in s.39 says that it may be transferred to the Federal Court of Australia or the Family Court of Australia. It goes no further than that. Within the Federal Court of Australia and the Family Court of Australia are provisions in their rules dealing with transfer between registries. If a Federal Magistrate does have an implied incidental power, it would be, in effect, an implied incidental power to exercise powers which are contained within the Federal Court Rules. That cannot be correct. The transfer rules in the Federal Court of Australia and the Family Court of Australia may be similar to the transfer rules in the Federal Magistrates Court of Australia, but they are not the same rules.

23. It would be a surprising result for the Federal Magistrates Court of Australia to have an implied incidental power which allowed it to, in effect, regulate the administration of a matter in the Federal Court of Australia.  That is taking the implied incidental power too far.

24. Application is made on behalf of the respondent, Linke Nominees Pty Ltd, for an order for the costs of this transfer application.  Mr Amerena argues that costs should follow the event.  I do not consider that is the appropriate way of dealing with the costs.  The matters which persuaded me to transfer may turn out to be wrong.  A Federal Court Judge may determine that it is a relatively straightforward point, also determines that the case is a relatively straight forward case once that point is determined, make the decision on the preliminary point and transfer the matter back to the Federal Magistrates Court of Australia.

25. The other argument that is put by Mr Amerena is that I should deal with the costs because this matter will now go out of the Federal Magistrates Court of Australia, and, if I do not determine them now, they will never be determined.  I do not consider that is correct.  If the matter gets transferred to the Federal Court of Australia, it becomes a Federal Court of Australia matter.  The Federal Court of Australia will have the power to deal with all matters of costs from the inception of the proceedings.  The appropriate course is to reserve costs. 

I certify that the preceding twenty-five (25) paragraphs are a true copy of the reasons for judgment of Phipps FM

Associate:  Jan Smith

Date:  14 December 2009