Clarke v ABL Nominees P/L; ABL Nominees P/L v Ivers - [2014] SASC 15

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
CLARKE & ORS v ABL NOMINEES P/L & ANOR; ABL NOMINEES P/L v IVERS & ANOR
[2014] SASC 15
Judgment of The Honourable Justice Stanley
12 February 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
The defendants in two sets of loan recovery proceedings sought orders for the transfer of those proceedings to the Supreme Court of Victoria pursuant to s 5(2) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (SA).
Whether the proceedings arise out of, or are related to, a set of group proceedings in the Supreme Court of Victoria and it is more appropriate that the proceedings be heard and determined in that Court. Whether it is otherwise in the interests of justice for the proceedings to be heard and determined by the Supreme Court of Victoria.
Held (dismissing the applications):
1. While the proceedings have some relationship to the group proceedings in Victoria, they do not arise out of and are not related to the group proceedings as is required by s 5(2)(b)(i) of the Act (at [18; 30]).
2. As the trial of the group proceedings in Victoria has concluded, it is neither appropriate nor in the interests of justice to transfer these proceedings to Victoria (at [18]).
3. It is not otherwise in the interests of justice for the proceedings to be heard in Victoria as opposed to South Australia (at [32-33]).
Jurisdiction of Courts (Cross-Vesting) Act 1987 (SA) s 5; Corporations Act 2001 (Cth) Chapter 5, Chapter 7; Australian Securities and Investments Commission Act 2001 (Cth); Fair Trading Act 2010 (WA); Australian Consumer Law and Fair Trading Act 2012 (Vic), referred to.
Cini v Pets Paradise Franchising (SA) Pty Ltd & Ors (2008) 102 SASR 177; Garra Water Investments Pty Ltd (In Liquidation) v Ourback Yard Nursery Pty Ltd and Garra [2010] SASC 326; Kranenberg v AFT Pharmaceuticals Pty Ltd [2012] SASC 98, considered.

WORDS AND PHRASES CONSIDERED/DEFINED
"cross-vesting", "interests of justice", "more appropriate forum"

CLARKE & ORS v ABL NOMINEES P/L & ANOR; ABL NOMINEES P/L v IVERS & ANOR
[2014] SASC 15
Cross-Vesting Application
STANLEY J:
Introduction

These are applications by defendants in two sets of proceedings for the transfer of those proceedings to the Supreme Court of Victoria pursuant to s 5(2) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (SA) (“the Cross-Vesting Act”).
The defendants were investors in the Great Southern Plantation project. Each took out loans in order to participate in the project. The plaintiff bank seeks to recover those loans made to the defendants.
The Great Southern Plantation project was a series of managed investment schemes, the manager of which was Great Southern Managers Australia Ltd. Receivers and managers have been appointed to that company.
The Great Southern Plantation project involved more than 20 schemes for the purpose of commercially growing various products including timber, olives, almonds and wine grapes. The schemes derived capital from investors, the majority of whom financed their investments by way of loans.
The majority of the schemes have collapsed and have been wound up. A class action has gone to trial in the Supreme Court of Victoria before Croft J, where 16 group proceedings were brought by investors against various companies and directors involved in the schemes. As part of those proceedings the investors seek declarations that the loans are void or unenforceable. Justice Croft reserved judgment in those proceedings last October.
In addition to those proceedings there are many individual proceedings throughout Australia, including the current proceedings, brought by lenders seeking to recover amounts borrowed by investors for the purpose of funding their investments in the managed investment schemes.
The parties’ submissions
The applicants claim to be group members in proceedings tried in the Victorian Supreme Court. They claim that in those group proceedings they seek declarations that the loans the subject of these proceedings are void or unenforceable. There is some issue as to whether they are members of the groups in the group proceedings in Victoria. I will return to this.
In any event, they claim that in the group proceedings in Victoria the plaintiffs seek to have the loans which have subsequently been assigned to ABL Nominees Pty Ltd declared void or unenforceable. They submit that even if they were not group members if the actual group members are successful in the Victorian proceedings heard by Croft J, as a result of which the loans are declared void or unenforceable, it is inconceivable that the plaintiff would continue to pursue them for the recovery of the loans assigned to it.
The applicants submit that transfer of the proceedings to the Supreme Court of Victoria is appropriate or in the interests of justice because the proceedings in this Court raise common questions of fact and law with the group proceedings heard by Croft J. In addition, they submit that the failure to transfer the proceedings risks inconsistent verdicts.
In the alternative to the transfer of these proceedings to the Supreme Court of Victoria, the applicants seek an order staying the proceedings pending the outcome of the group proceedings in Victoria.
The respondents oppose the orders sought by the applicants.
They submit the applicants have not sought and do not seek in any court the statutory relief which is the raison d’etre of the Victorian group proceedings. They submit the applicants are not parties to the Victorian proceedings and they have not counterclaimed in South Australia. They submit the proceedings are not related within the meaning of s 5(2)(b)(i) of the Cross-Vesting Act. Further, they submit the applicants have no genuine intention of defending the respondents’ claim. They contend the applicants have not taken necessary steps in the underlying proceedings and have not sought a stay. They submit that the failure of the applicants to seek to have these proceedings transferred to Victoria at an earlier time when they could have been heard as part of the trial before Croft J evinces the absence of any genuine intention on their part to defend the respondents’ claims. They submit that in these circumstances it is not in the interests of justice that actions that are likely to be resolved following the default of the defendants be transferred. In addition, the respondents submit that there is no other factor that would make it in the interests of justice for the transfer of the proceedings to Victoria. They submit the applicants have not identified which witnesses, if any, they would call at trial or where those witnesses are. Neither have they have put forward any information about where the applicants reside or carry on business, and they have not identified any forensic advantage or detriment conferred by the procedural law of South Australia. On the contrary, the respondents submit that it is based in Adelaide where its principal witness and records are located.
Finally, the respondents submit that the risk of inconsistent findings will not be avoided by the transfer of the proceedings to Victoria. The trial in the group proceedings has concluded. There is no chance that these actions will be added to the group proceedings so they become the subject of the same findings made in those proceedings. These actions must now be the subject of a separate trial and determination. The Court will have to consider and deliberate upon the case as is presented at a future time such that the risk of inconsistent findings will exist irrespective of whether the trial is heard here or in Victoria.
Principles relevant to cross-vesting proceedings
Section 5(2) of the Cross-Vesting Act provides:
5—Transfer of proceedings
…
(2)     Where—
(a)     a proceeding (in this subsection referred to as the relevant proceeding) is pending in the Supreme Court (in this subsection referred to as the first court); and
(b)     —
(i)it appears to the first court that the relevant proceeding arises out of, or is related to, another proceeding pending in the Supreme Court of another State or of a Territory and it is more appropriate that the relevant proceeding be determined by that other Supreme Court; or
(ii)it appears to the first court that having regard to—
(A)whether, in the opinion of the first court, apart from this Act and any law of the Commonwealth or another State relating to cross-vesting of jurisdiction, the relevant proceeding or a substantial part of the relevant proceeding would have been incapable of being instituted in the first court and capable of being instituted in the Supreme Court of another State or Territory; and
(B)the extent to which, in the opinion of the first court, the matters for determination in the relevant proceeding are matters arising under or involving questions as to the application, interpretation or validity of a law of the State or Territory referred to in subsubparagraph (A) and not within the jurisdiction of the first court apart from this Act and any law of the Commonwealth or another State relating to cross‑vesting of jurisdiction; and
(C)the interests of justice,
it is more appropriate that the relevant proceeding be determined by that other Supreme Court; or
(iii)it appears to the first court that it is otherwise in the interests of justice that the relevant proceeding be determined by the Supreme Court of another State or of a Territory,
the first court shall transfer the relevant proceeding to that other Supreme Court.
The principles governing applications of this kind are now well settled. They have been summarised in a number of judgments of this Court.[1] Those principles are:
·It is not relevant to ask whether this Court is justified in refusing to exercise the jurisdiction conferred on it. Rather, it must ensure that the case is heard in the forum dictated by the interests of justice.
·The question is not whether this Court is an inappropriate forum. It is both necessary and sufficient that, in the interests of justice, the other Court is more appropriate.
·The Court is required to ensure that cases are heard in the forum dictated by the interests of justice. It is not a question of the exercise of a discretion.
·The interests of justice are not necessarily the same as the interests of any one party.
·Because it is necessary to identify the more appropriate forum, no specific emphasis can be given in favour of the choice of forum made by the plaintiff.
·It is inapt to speak of the applicant for an order for transfer as bearing a burden of persuasion analogous to an onus of proof.
[1] Cini v Pets Paradise Franchising (SA) Pty Ltd & Ors [2008] SASC 287 at [8], (2008) 102 SASR 177 at 183 - 184; Garra Water Investments Pty Ltd (In Liquidation) v Ourback Yard Nursery Pty Ltd and Garra [2010] SASC 326 at [10]; Kranenberg v AFT Pharmaceuticals Pty Ltd [2012] SASC 98 at [4].
Pursuant to s 5(2) of the Cross-Vesting Act the Court must order the transfer of proceedings if satisfied of specified matters. The Court must be satisfied that the proceedings in this Court arise out of, or are related to, the group proceedings in the Supreme Court of Victoria and that it is more appropriate for these proceedings to be heard by the Supreme Court of Victoria. Alternatively, the Court must be satisfied that it is otherwise in the interests of justice for these proceedings to be heard and determined in the Supreme Court of Victoria.
Consideration
In my view the application for transfer of these proceedings to Victoria should be refused.
While I accept that the current proceedings have some relationship to the group proceedings in Victoria and involve some common questions of fact and law, I am not satisfied that they arise out of, or are related to the group proceedings as is required by s 5(2). If I am wrong in this view, in any event, I am satisfied that given the trial of the group proceedings has concluded, it is not appropriate to transfer these proceedings to Victoria. Neither is it in the interests of justice to do so.
The applicants do not submit that these proceedings arise out of the group proceedings. They submit that these proceedings are related to the group proceedings. The basis upon which the applicants submit that the proceedings in this Court are related to the group proceedings is that they are members of the defined group in the group proceedings and there are common issues of fact and law involved.
In my view the applicants are not members of the defined group in the group proceedings.
It is asserted that Mr Irvin is a member of the group of plaintiffs in Supreme Court of Victoria action No. 5062 of 2011 where the lead plaintiff is Murray. However, that action only concerns investors who borrowed from Great Southern Finance Ltd. The bank is only a party to that action in respect of loans that were assigned to it and not in respect to loans that it made directly. Mr Irvin’s loan was made to him directly by the bank. Accordingly, Mr Irvin is not a party to that group proceeding. No other basis is asserted for the claim that Mr Irvin is a group member in the Victorian proceedings.
It is asserted that Mr and Mrs Ivers are group members in the following group proceedings:
·Action 4135 of 2011 where the lead plaintiff is Drummond;
·Action 4207 of 2011 where the lead plaintiff is Ford;
·Action 4476 of 2011 where the lead plaintiff is Murray;
·Action 4071 of 2011 where the lead plaintiff is Murray; and
·Action 4001 of 2011 where the lead plaintiff is Prasad.
However, the definitions of the group members in all of those group proceedings do not include Mr and Mrs Ivers because those proceedings exclude borrowers whose loans were assigned to the bank. No other basis is asserted for the claim that Mr and Mrs Ivers are group members in the group proceedings.
In addition, the bank is not a party to actions 4135 of 2011 and 4207 of 2011.
Further, in my view, these proceedings, while they raise some common questions of fact and law, are not sufficiently related to the group proceedings by that fact alone. A closer analysis of the basis of these proceedings and the group proceedings discloses clear differences in the basis of the defences mounted in these proceedings and the basis of the relief sought by the plaintiffs in the group proceedings.
The applicants have not sought and do not seek in these proceedings the statutory relief which is the basis of the plaintiffs’ claimed remedies in the group proceedings in Victoria. The plaintiffs in the Victorian group proceedings rely exclusively on statutory entitlements to remedial orders under the Corporations Act, ASIC Act and Fair Trading Acts of Western Australia and Victoria. The basis of those statutory entitlements is alleged to be conduct that is non-compliant with chapters 5 and 7 of the Corporations Act and unconscionable or misleading and deceptive conduct contrary to the ASIC Act and/or Fair Trading Acts.
The remedial orders sought in the Victorian proceedings use the language of declaration of voidness but the pleadings do not allege that the consequence of the impugned conduct is that the transactions entered into are void absent the remedial orders sought. Not only is it not alleged in the group proceedings in Victoria that any loan agreement is void absent a remedial order, such a result would be contrary to the express provisions of s 1101H(1) of the Corporations Act. That provision is to the effect that where a transaction is entered into as a result of conduct that does not comply with Chapter 7 of the Corporations Act the transaction is nevertheless valid until a remedial order is made. The mischief to which s 1101H(1) is directed is obvious. It is to ensure that an investor who is adversely affected as a result of inaccurate or incomplete information concerning an investment does not by automatic operation of a draconian provision lose the entire benefit of his or her investment.
While there may be common factual and legal issues raised in the group proceedings in Victoria and these proceedings, for the answers to those factual and legal questions in the Victorian proceedings to be an answer to the claims made by the respondents in these proceedings, the applicants either must have sought the same statutory remedial orders as have been sought in the Victorian proceedings, or allege some other non-statutory contractual defence based on the same facts.
The applicants could have sought the same statutory remedial orders either by applying to be joined as plaintiffs in the Victorian proceedings or by seeking in these proceedings those same orders by counterclaim. They have done neither. Neither have they alleged any other non-statutory contractual defence.
Accordingly, I am not satisfied that the proceedings in this Court are related to the group proceedings in Victoria. Plainly, they do not arise out of the group proceedings. Even if they were related to the group proceedings, I am not satisfied now that it is more appropriate for these proceedings to be heard by the Supreme Court of Victoria. As I have said, the trial in the Supreme Court of Victoria has concluded and judgment is reserved. If these matters are to proceed to trial, a court, whether here or in Victoria, will need to receive evidence and hear submissions and decide the issues in each trial on that basis.
To my mind, this supports the respondents’ submission that to order a transfer of proceedings to Victoria in these circumstances will not avoid the risk of inconsistent verdicts.
Further, the applicants have not identified any reason why Victoria would be a more convenient forum. They have not identified which witnesses, if any, they wish to call or where those witnesses reside. They have not put forward any information about where the applicants reside or carry on business, although I note that the addresses in the summonses suggest that Mr Irvin is resident in Western Australia and Mr and Mrs Ivers are resident in Queensland. They have not identified any forensic advantage or detriment conferred by the procedural law of South Australia. On the other hand, the respondent bank is based in Adelaide and carries on its business here. The bank’s principal witness is located in Adelaide as are its relevant books and records. Finally, I note that the bank has instructed South Australian solicitors, while the applicants have instructed solicitors who are not based in Victoria.
These matters concern loans made for the purpose of investment in managed investment schemes. The schemes were promoted by the Great Southern Group which was based in Western Australia, not Victoria. The loan contracts in each case contain a proper law clause that designates Western Australian law as the proper law. In short, I am satisfied there is no particular connection with Victoria as to either legal or factual issues. In the circumstances, I am not persuaded it is more appropriate for these proceedings to be heard by the Supreme Court of Victoria. On the contrary, given the fact that the trial of the group proceedings in Victoria has concluded and judgment is awaited, I am satisfied that it is in the interests of justice for the proceedings to be heard and determined by this Court.

No doubt this Court will be assisted in the determination of these proceedings by the judgment of Croft J in the group proceedings.
For these reasons I would dismiss the application for orders transferring these proceedings to the Supreme Court of Victoria.
Stay of proceedings?
In the alternative, the applicants sought orders staying the proceedings pending the outcome of the group proceedings in Victoria.
The interlocutory applications do not formally seek orders by way of a stay of these proceedings. While the applicants raised an application for a stay, as an alternative to transfer, by their written and oral submissions, no formal application was made to amend the interlocutory application to apply for such orders as an alternative to the orders sought on the interlocutory application. Further, at the hearing of the application, neither counsel developed any submission in relation to the question of the grant of a stay.
In the circumstances, I propose to permit the applicants to apply formally to seek a stay, if they wish, and to afford the parties an opportunity to address me on the same.
In addition, I will hear the parties as to costs.