CIBC Australia Limited v Parkston Limited (in liquidation)

[1993] FCA 90

JUDGMENT NO. 90 1 1423 ~S.-.O.O..~

IN THE FEDERAL COURT OF AUSTRALIA	) )
NEW SOUTH WALES DISTRICT REGISTRY	) No. NG 3 2 8 3 of 1992
)
GENERAL DIVISION	)

BETWEEN:	CIBC AUSTRALIA LIMITED
Applicant

AND	PARKSTON LIMITED (IN LIOUIDATIONL
Respondent

L R A M	:	Beaumont J.
m:	5 February 1 9 9 3

- 2 MAR I993

REASONS FOR JUDGMENT

Before the Court is a notice of motion that pursuant to the Jurisdiction of Courts (Cross-vestina) Act 1 9 8 7 the proceedings herein be transferred to the Supreme Court of Victoria at Melbourne.

The background to the litigation is described in an

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affidavit oi Dennis Mentzines, sworn on 28 January 1 9 9 3 and an affidavit of Phillip David Corbett, 3 February 1993, they being respectively the solicitors for the parties to the present application.

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In essence the claim made ln the principal proceedings is for a negative declaration that a party claiming to have an entitlement to a fund now held by a receiver resident in this state has no such entitlement. The

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.I ,,,reason for the seeking of such a negative declaration is itself complicated. It arises out of previous disputes between a number of parties some of which disputes have been dealt with by lengthy proceedings brought in two suits in the Supreme Court of Victoria.

The matter arises in this Court in the first
instance in an incidental fashion. This is because inter alia

applications had been made under the Corporations Law in relation to the judicial management of certain corporations. A question arose in the course of argument in the present application as to the nature of this Court's jurisdiction to entertain the application for negative declaration that has been made.

It is common ground that this Court's jurisdiction to entertain such an application is itself a matter of some complexity. One source of jurisdiction may be the Court's accrued or associated jurisdiction incidental to the	application, in connection with the judicial management of one	of the corporations involved to which reference has already
been made. Another possible source of jurisdiction is the cross-vesting legislation itself.
However, it is not necessary that I express any concluded view or, for that matter, even a provisional view on the exact source of the Court's jurisdiction. In my opinion, this is a matter which should be dealt with by a Supreme Court of a State in the exercise of the traditional equitable jurisdiction of that of one of those courts.
It will not be posslble to summarise in any brief way the nature of the deallngs that have occurred which give rise to the claim for the negative declaration. Stating the matter in terms of a cause of actlon, and, of course, it should be borne in mind that what is sought is a negative declaration, there is no such cause of action.
Expressing the matter in positive terms, the cause of action relied upon, that is the cause of action claimed, but denied by CIBC Australia Ltd, is that by reason of a series of complicated dealings between other parties breaches of trust or fiduciary duty occurred and the important point, so far as CIBC Australia Ltd is concerned, at a later stage CIBC knowingly participated in or assisted in the breach of trust.
The case sought to be made but denied by CIBC Australia Ltd is that it became a constructive trustee of the funds in question in the sense described in the authorities of which the origin is the decision of the House of Lords in Barnes v [l8741 9 Ch. App. 244. On that assumption,
which I think is reasonable to make, any such claim would, as a matter of substance, require there to be established the two ingredients I have mentioned first that there was a breach of trust and second that CIBC Australia Ltd knowingly assisted in that breach of trust.
The material before me suggests that the conduct relied upon to make good the first aspect of the cause of action that is the breach of trust itself, occurred in the state of Victoria. However, the conduct relating to the second alleged aspect of the cause of action, the knowing participation by CIBC Australia, occurred in this State. As I have said, on any view of the matter, the claims raised in the principal proceedings are complex, and it is not practicable to even attempt to summarise the history of the dealings relied upon.
However, what does emerge Crom the material before me at this stage suggests that the evidence to be given with respect to the first aspect of the cause of action will, in the first instance, at least, be in a documentary form. So
payments were made that on their face were not for the benefit far as I can judge that material will seek to establish that
or for any legitimate purpose of the payer in each case. If that is right, the evidence required to make good the breach of trust should be, in large part, in a documentary form. It: will consist, I would think, of material which may well be common ground between the parties.
There has been foreshadowed, as one would expect, a contest between the parties as to the true inferences to be drawn with respect to the purposes of the payments challenged. I am not convinced on the materlal before me at the moment that the scope of any oral evidence on this issue will itself be substantial. On the other hand, the evidence before me at this stage on the second aspect of the alleged cause of action, that is the claim that CIBC knowingly participated in the breach of trust, will be not only contentious but will consist of evidence from witnesses who are said to have participated in discussions, dealings, and the acquisition of information which took place in New South Wales.
Not only did the dealings as alleged take place in New South Wales, so far as CIBC Australia is concerned, but the evidence available in this application indicates that the primary witnesses who may be expected to be called on this second aspect of the cause of action are themselves resident in this State. On the balance of convenience on this aspect of the matter, the material I have suggests that most of the evidence that will be called on the real questions in contest
in the proceedings will be from witnesses resident in New South Wales.
As I have already indicated, the claim made and the issue raised in the form of a negatlve declaration is of a kind which is traditionally dealt with by a Court of Equity. This Court is not such a court, although, of course, equitable questions can be dealt with incidentally in the course of the exercise of the Court's statutory jurisdiction. In my view, a claim of the kind the subject of the application for negative declaration is of a classic type of equitable relief which, in my view, is more appropriately dealt with by a court, a specialist court, of equitable jurisdiction. I have already said that I have come to the conclusion that I should remit the matter to a Supreme Court of a State having a specialist equitable jurisdiction. The Supreme Court of New South Wales has such a specialist jurisdiction.
The bulk of the evidence in the case that is likely to be of a contentious nature will be, in my opinion, evidence from witnesses who are resident in this state. It follows, in my view, that within the meaning of the cross-vesting legislation, it is in the interests of justice that these proceedings be transferred to the Supreme Court of New South Wales in its equitable jurisdiction, and I propose so to order. It should be noted that the respondents have foreshadowed their intention to make a cross-cla'im in the
present proceedings.
A cross-claim is a lengthy document which, again, would not be practicable to summarise. It may be noted, however, that the draft cross claim seeks declaratory and other relief not only against CIBC but against other parties. That cross-claim will also require leave to proceed against one company, namely Arnsberg Proprietary Limited, in liquidation. Neither that company nor its liquidator have appeared today but, as I have already indicated to counsel, although it is open to a party, of course, to seek leave to proceed before the institution of proceedings of this kind, it is quite common provided the matter is attended to
expeditiously to seek leave to proceed nunc pro tunc.
I do not, however, see the application for leave to proceed against a company in liquidation as having any bearing upon the present application seeking that the proceedings be cross-vested to the Supreme Court of Victoria. I merely note that to this point of time no proceedings have been instituted on behalf of the present respondent in that Gourt although it would have been undoubtedly open for them to do so accepting as I do the possibility that an application for the stay of those proceedings may have been made.
I mention the dralt cross-claim merely for the sake of completeness. Once, as I envisage, the matter is transferred to the Supreme Court of New South Wales in its equitable jurisdiction it will be a matter entirely before that Court to determine first of all whether the cross-claim should be allowed to be ralsed in the present proceedings, and if so, upon what terms and conditions that cross-claim should proceed. In the circumstances, the order I make i.s that the proceedings be transferred to the Supreme Court of New South
Wales in its equitable jurisdiction.
In all the circumstances, I think the appropriate order is that there be no order as to costs.

I hereby certify that this and the preceding seven (7) pages are a true copy

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