CNH Capital Australia Pty Ltd v Pratley (No.2)
[2009] FMCA 455
•15 May 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CNH CAPITAL AUSTRALIA PTY LTD v PRATLEY (No.2) | [2009] FMCA 455 |
| BANKRUPTCY – Creditor’s Petition – respondent debtor’s opposition to Creditor’s Petition. PRACTICE & PROCEDURE – Application by respondent debtor to transfer proceedings from the Sydney Registry to the Melbourne Registry – factors to be considered in respect of the transfer and the interest of the administration of justice – application dismissed. |
| Federal Magistrates Court Act 1999 (Cth), s.52 Federal Magistrates Court Rules 2001 (Cth), r.8.01 |
| Biron Capital Ltd v Anstee [2005] FMCA 1100 CNH Capital Australia Pty Ltd v Pratley (No 3) [2009] FMCA 456 National Mutual v Sentry Corporation (1988) 83 ALR 434 Neil v Reward Property Group Pty Ltd [2008] FMCA 1583 Sherwood Overseas Co Pty Ltd v Jaymac International Pty Ltd [2008] FMCA 495 |
| Applicant: | CNH CAPITAL AUSTRALIA PTY LTD |
| Respondent: | ANTONY JOHN PRATLEY |
| File Number: | SYG 2593 of 2008 |
| Judgment of: | Lloyd-Jones FM |
| Hearing dates: | 24 March 2009; 27 April 2009 |
| Delivered at: | Sydney |
| Delivered on: | 15 May 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr A.P. Spencer |
| Solicitors for the Applicant: | Bayside Solicitors |
| Solicitors for the Respondent: | The respondent appeared in person by telephone. |
ORDERS
The application by the respondent debtor, Antony John Pratley, to have the proceedings transferred to the Melbourne Registry is dismissed.
No order as to costs.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 2593 of 2008
| CNH CAPITAL AUSTRALIA PTY LTD |
Applicant
And
| ANTONY JOHN PRATLEY |
Respondent
REASONS FOR JUDGMENT
The proceedings
This judgment addresses the second preliminary question, which is an application by the respondent debtor, Antony John Pratley, for the proceedings to be transferred to the Melbourne Registry of the Federal Magistrates Court pursuant to s.52 of the Federal Magistrates Act 1999 (Cth) (“the Act”). The application is opposed by the applicant creditor who wishes for the proceedings to remain in the Sydney Registry.
The substantive matter in these proceedings is by way of a Creditor’s Petition. The creditor, CNH Capital Australia Pty Ltd (ACN 069 132 396) (“CNH”), seeks a sequestration order against the estate of Mr Pratley. Mr Pratley opposes the making of a sequestration order in a Notice Stating Grounds of Opposition to the Petition. This is addressed in a separate judgment: CNH Capital Australia Pty Ltd v Pratley (No.3) [2009] FMCA 456. The Registrar’s notes on 24 February 2009 and on subsequent Court dates indicate that Mr Pratley made informal requests to transfer the proceedings to Melbourne. These informal applications were denied but Mr Pratley was also advised that he was required to file a formal application for the transfer.
An interim application dated 14 April 2004 and filed in Court on 27 April 2009 states:
On the grounds stated in the supporting affidavit, the applicant Antony John Pratley seeks the following interim orders pursuant to s.52 of the Federal Magistrates Court Act:
1. The further hearing of the Creditor’s Petition SYG 2593 of 2008 be heard in the Melbourne Registry of the Court.
Submissions by applicant seeking interim orders
An affidavit in support of interim application of 27 April 2009 was filed in Court on the same date. No objections were raised to the contents of the affidavit. The affidavit states:
1. I am the Applicant for Interim Orders and the Debtor in the Creditor’s Petition SYG 2593 of 2008. I am formally applying to transfer the proceedings from New South Wales to Victoria under rule 8.01 of the Federal Magistrates Court Rules. I am a litigant in person.
2. On 5 November 2008, 28 November 2008, 21 January 2009 and 22 and 23 March 2009 I requested the Sydney Registry of this Honourable Court exercise its jurisdiction under section 52 of the Federal Magistrates Court Act. I was partly comforted as a litigant in person by the fact the Court was not intended to be highly formal. The requests were in my Notice of Appearance; Grounds of Opposition and Submissions.
3. On 24 March 2009 I learned that the Sydney Registry of this Honourable Court had declined to exercise its powers and, from Counsel for the Creditor, that I could make application under Rule 8.01 for the Court to exercise its jurisdiction under section 52. I do not believe I am required to bring this application in Sydney. I bring this application in Melbourne.
3. No reasons have been provided by the Registrars or His Honour Federal Magistrates Lloyd-Jones as to why my informal requests of 5 November and 28 November 2008 and subsequently in January and March this year, did not result in this Honourable Court exercising its jurisdiction to transfer the proceeding to the State I live in.
4. At the first directions in November the Creditor denied it held interests in real estate owned by me in Victoria. That might have been why the first Registrar did not exercise the jurisdiction under section 52 of the Act as he was not convinced of the connection to this State. I was ordered by the Registrar to supply further proof than the title search of CNH’s Victorian caveat that I had produced to the Court.
5. On 21 January 2008 I filed an affidavit sworn by a solicitor practising in Victoria that exhibited a title search of land owned in Victoria and the then still registered caveat of the Creditor showing that here in Victoria, as that date, the Creditor was still claiming security over several Victorian titles in my name. The affidavit concluded:
It is not possible to reconcile the Applicant Creditor in Victoria claiming it has a caveatable interest in land by way of a Deed of Secured Guarantee – with the Applicant Creditor in New South Wales claiming it has no security.
6. In response the Petitioning Creditor sought more time at the next directions hearing to file answering material. Again, perhaps the Registrar was awaiting the response before determining the link between Victoria and the Petition. If he was, no reasons were provided.
7. On 17th February 2009 the Petitioning Creditor admitted it had held security over my titles in Victoria and also admitted serious mistakes in the obtaining of the default judgment on which the Bankruptcy Notice and subsequent petition relied.
8. The Petitioning Creditor then said in written submissions that: -
8.1 the obtaining of a default judgment by negligence or fraud and
8.2 obtaining of a Bankruptcy Notice by negligently asserting no security was held,
8.3 obtaining a Bankruptcy Notice for substantially more than any sum properly due;
8.4 obtaining a Petition by negligently swearing no security was held when it was;
could all be cured by amendment and without fresh affidavit explaining the errors.
9. I disagreed, citing Kyriackou v Shield Mercantile Pty Ltd [2004] FCA 490; (2004) 138 FCR 324, Weinberg J concluded at [36] and [37].
10. On 23 March 2009 I filed submissions preparatory to the directions scheduled for the next day. By those submissions what I said about the transfer of the Petition to the Melbourne Registry:-
The Respondent opposes any further consideration of the Petition until the Registrar makes a decision under section 52 of the Federal Magistrates Court Act as to whether the proceeding is to remain within the Sydney registry of the Federal Magistrates Court or to be transferred to the Melbourne registry.
The Respondent resides in Victoria; the charge held by the Applicant is over lands in Victoria; the contract the subject of the claim was entered into in Victoria with a Victorian agent. The only connections with New South Wales are the convenience of the solicitors representing the Applicant. The Registrar ought transfer the case to Melbourne on the doctrine of Forums non conveniens.
The Respondent faces significant increases in costs to defend the petition in New South Wales; caused by having to pay air fares and accommodation expenses when briefing and instructing New South Wales lawyers and attending hearings.
The Melbourne registry would be familiar with the law relating to land in Victoria and immediately see that “caveat” and “charge” denote “security” in Victoria. Documents proving the security claimed by the Applicant would only have required production of a $7.00 search as opposed to the need for a solicitor to interpret the document for the Applicant in New South Wales, which is what was required.
11. The Creditor had never supplied any reason as to why it believes the Petition ought particularly be heard in Sydney.
12. On 24 March 2009 the transcript of the hearing that day before Federal Magistrate Lloyd Jones, page 2, records at 12 to 26, yet still did not put any fact, matter or circumstances before the Court to demonstrate why the case ought stay in Sydney: -
FEDERAL MAGISTRATE: Yes. I presume that this matter is going to – it would be your position that this matter stay in this Court and not be transferred to Victoria?
MR SPENCER: Well that’s correctly certainly in the absence of any formal application. Can I say that the issue of its transfer has been raised on a number of occasions informally by the debtor and on each occasion, as I understand it, the registrar has advised the debtor that it’s open to him to put on an application before the Court. He hasn’t done so. I accept that there may be some basis on which what he put before the Court yesterday could be entertained as an informal application but I’d like to be heard on that application if need be. Of course there’s a tension between what he says in his 78B notice and the fact that he says that the matter should properly be in Victoria. And I don’t want to canvass that too fully before the debtor is on the line.
13. By reason of regulation 8.01 of the Federal Magistrates Court Rules I re-state as follows: -
Convenience of the parties & limiting expense: -
· The balance of convenience favours me. The presumption is that the correct venue is the venue closest to the residence of the respondent to the Court proceeding or the venue closest to where the facts of the claim occurred. Both locations are Victoria.
· Contractually any dispute between the Creditor and I was meant to be heard in Victoria, applying Victorian Law. The Creditor, in breach of Contract, issued in New South Wales. Even so, the Creditor is a company who trades in Victoria, with agencies in Victoria and who has a Victorian Law Firm (Dibbs, Abbot Stillman) carrying out work for it in this State.
· I can only be in one place at one time and cannot earn income while I attend Court. The cost to defend in New South Wales is up to four to five times greater than the cost to defend in Victoria because of air fares, accommodation, and loss of up to a day and a half of income. The Creditor would not suffer any loss of income if the case was heard in Victoria as its agents and Victorian law firm could attend.
· If I engage an expert real estate valuer to value the security held by the Creditor and thereby challenge the so called “valuation evidence” given by the Creditor’s officer – who is wholly unqualified to value Victorian Real Estate – I will also have to pay extra for the expert’s transport, accommodation and extended “away from office” hours involved if the case remains in New South Wales.
· The Creditor displayed a willingness to take unconscionable advantage of its claim for security being in another state to the State where it claims it did not hold security.
Has it been set down for final hearing?
o As a lay person I am unable to clearly answer this question.
o The transcript of 24 March 2009 seems to indicate the Petition has been set down for final hearing and has not been set down for a final hearing but that is not logical as it assumes
§ The issue of the s.78B Judiciary Act Notices will be decided against me so the hearing can proceed;
§ The issue of leave to amend the Petition will be decided against me so my amended opposition will fall to be determined
and the case has been pre-determined. In the circumstances I am of the belief that His Honour made further directions and has not yet set down the Petition for a final hearing and the next directions in Sydney is listed for 27 April 2009. This is the more logical view as it allows for the possibility that the Judiciary Act Notices may have an operation or that leave to amend the Petition may not be given.
14. There is nothing in section 52 of the Federal Magistrates Court Act or Regulation 8.01 of the Rules, that requires this application to be made in the Sydney Registry. As I reside in Victoria; as the land the Creditor claims security over is in Victoria as the contract I had with the Creditor promised any disputes would be heard in Victoria, I humbly request this Honourable Court exercise its power under Section 52 of the Act and direct the transfer of the further hearing of this Petition to Melbourne.
In oral submissions, Mr Pratley substantially restated his argument set out at [3] above. His main contention was that the contract he signed was in Victoria and subject to Victorian law. Accordingly, he submits the dispute between the parties should have been brought before a Court in Melbourne. Mr Pratley claims that in the circumstances, any witnesses called by him would be required to travel from Victoria to Sydney. Mr Pratley also claims that he would be required to employ a solicitor and/or a barrister in Sydney to represent him and travel to Sydney himself to co-ordinate these arrangements.
Mr Pratley argued that he would incur considerable expense if the hearing were to take place in Sydney rather than in Melbourne. He also stated that he would need valuers who had valued the Victorian properties to come to Sydney to give evidence in respect to those valuations and that all of these additional costs to have interstate people attend the Sydney hearing was making the matter much more expensive to run in Sydney rather than in Melbourne.
Submissions by respondent in interim orders
Mr Spencer, appearing for CNH, indicated that the valuations referred to by Mr Pratley in the amended application had valued the security held by CNH as being of zero value. He submits that a valuation that is required to be a genuine estimate, which is supported by the affidavit of Anne Vojcena filed on 24 April 2009. In summary that evidence was contained in a number of letters from the National Australia Bank or its lawyers. Annexure I to the affidavit of Ms Vojcena is a letter dated 3 April 2009 which states:
The Bank has now sold the above Properties as Mortgagee in Possession under Mortgage Numbers AD496857R and AD496859M (“Mortgages”) settlement due on 25 May 2009.
We advise that under the Mortgages, the combined total owed to the Bank is in excess of $683,000… The Bank will therefore suffer a shortfall in regard to covering outstanding debts under respective Mortgages.
The NAB Legal Australia letter dated 18 November 2008 (Annexure L to the affidavit of Ms Vojcena of 23 April 2008) states:
Due to privacy laws, we are unable to provide you with details of amounts owed to each other encumbrance holders. You should make your own enquiries in this regard.
Based on the current value of property, NAB anticipates there will be a shortfall with respect to the amounts outstanding to it. Accordingly there will be no equity available for the client.
Mr Spencer submits that all the properties are in the possession of the NAB and it is difficult to identify what else CNH could do to find out whether there is any equity in the properties which might fall under the ambit of its security.
Mr Spencer referred to Biron Capital Ltd v Anstee [2005] FMCA 1100 per Driver FM which reiterates the law since at least 1905, in that a valuation required by a petitioning creditor has to be genuine. Whether the valuation is correct or not is not a matter that is debated on a Petition. Mr Spencer submits that insofar as a hearing of a Creditor’s Petition is concerned, a party may be called to give evidence as to whether there is a basis on which an argument could be established to say that a genuine mistake in the valuation has occurred. In the absence of other evidence it is not sufficient to ground a Petition. Mr Spencer also submits that without further evidence, the matters raised by Mr Pratley in his Notice of Opposition do not support the proposition that witnesses would need to be called during the hearing of the Petition.
Mr Spencer submits that from the submissions Mr Pratley has prepared and submitted to the Court, he appears to have a good grasp of the provisions of the Act and the Bankruptcy Act 1966 (Cth), or is aided by someone who does. In either case, he is not significantly disadvantaged by having to conduct his hearing over the telephone rather than in person.
Mr Spencer submits that if there is to be no cross-examination of witnesses, it is therefore not open to Mr Pratley to claim disadvantage because he will appear by telephone. Further, it does not explain why the lawyers he claims to have access to in Victoria do not appear by telephone.
Consideration
The test to be applied in respect of an application to transfer the hearing between Registries in the Federal Magistrates Court was laid down in National Mutual v Sentry Corporation (1988) 83 ALR 434 per Bowen CJ, Woodward and Lockhart JJ where the Full Court said at 437:
The balance of convenience will generally be a relevant consideration, but not necessarily determinative of each case. A party commences a proceeding by filing an application in a particular registry of the court. If that party or another party wishes to have the proceeding conducted or continued in another place he may apply to the court for an order under s 48 or O 10, r 1(2)(f) or O 30, r 6 as the case may be. There is no onus of proof in the strict sense to be discharged by the party seeking to conduct or continue the proceedings elsewhere. It should be noted that the court may exercise its powers under O 30, r 6 either on the application of a party or of its own motion. The court must, however, be satisfied, after considering all relevant matters, that there is sound reason to direct that the proceeding be conducted or continued elsewhere. Its starting point is that the proceeding has been commenced at a particular place. Why should it be changed? On the one hand, if the party who commenced the proceeding chose that place capriciously the court would be justified in giving no weight to the choice of place. At the other end of the scale, a proceeding may have continued for some time at the place of commencement with many steps having been taken there, for example, filing of pleadings and affidavits, discovery and inspection. Due weight would be given by the court to such matters before directing that the proceeding should continue at a different place..
The relevant legislation covering the transfer of proceedings between Registries are as follows:
a)Section 52 of the Act which states:
(1) The Federal Magistrates Court may sit at any place in Australia.
(2) The Federal Magistrates Court or a Federal Magistrate may, at any stage of a proceeding in the Federal Magistrates Court, order that:
(a) the proceeding; or
(b) a part of the proceeding;
be conducted or continued at a place specified in the order, subject to such conditions (if any) as the Federal Magistrates Court or Federal Magistrate imposes.
Rule 8.01 of the Federal Magistrates Court Rules 2001 (Cth) (“the Rules”) provides that:
(1) A party who files an application or response in a proceeding may apply to have the proceeding heard in another registry of the Court.
(2) In considering an application, the Court must have regard to:
(a) the convenience of the parties; and
(b) the limiting of expense and the cost of the proceeding; and
(c) whether the matter has been listed for final hearing; and
(d) any other relevant matter.
I refer to Sherwood Overseas Co Pty Ltd v Jaymac International Pty Ltd [2008] FMCA 495 at [7]-[19] where Lucev FM sets out the relevant principles and authorities and then concludes at [20]:
[20] In determining a change of venue application this court is constrained by the mandatory requirements of r 8.01(2) of the FMC Rules. The court must have regard to those matters identified in paras (a), (b) and (c) of r 8.01(2), and must then consider any other relevant matter by reason of para (d) of r 8.01(2) of the FMC Rules. In that respect, this court’s considerations are different to those of the Federal Court, insofar as the Federal Court has unfettered discretion as to which factors it will consider. That said, the Federal Court authorities on change of venue set out above are relevant insofar as they consider the three mandatory factors in r 8.01(2)(a)-(c), and other factors considered by the Federal Court in those cases might well be other relevant matters for the purpose of r 8.01(2)(d) of the FMC Rules.
This issue was again considered in Neil v Reward Property Group Pty Ltd [2008] FMCA 1583 per Lucev FM where further examples were considered. His Honour concluded:
[48] Consideration of the matter must proceed on the basis of the mandatory considerations set out in r 8.01(2) of the FMC Rules, including any other relevant matter under r 8.01(2)(d).
Convenience of the parties
In dealing with the convenience of the parties, it is necessary to have regard first to the various proceedings already on foot at the time of the filing of the transfer application. It is relevant that the Bankruptcy Notice was issued in Sydney by the Official Receiver for the bankruptcy district of New South Wales. It is also relevant that the judgment/order in relation to the debt the subject of the Bankruptcy Notice is that of the District Court of New South Wales, Parramatta Registry. Thus, the proceedings in relation to the Bankruptcy Notice have been issued and conducted in New South Wales.
The Creditor’s Petition was presented on 8 October 2008 and listed for initial hearing on 13 November 2008. All subsequent filings and directions hearings have been conducted in the Sydney Registry of the Federal Magistrates Court.
In circumstances where the debt arose in respect of a relevant order of the District Court of New South Wales and the conduct of the proceedings thus far has been in New South Wales, it is entirely appropriate and unexceptional for the proceedings to be conducted in Sydney. This is a factor which weighs in favour of the proceedings remaining in that Registry.
Residence of the parties
CNH is a corporation which resides and has its corporate head office in New South Wales. However, it is acknowledged that branch offices do exist in Victoria. Mr Pratley is resident in Victoria. He has demonstrated in his submissions that he is either a person who has a competency in the provisions of the Act and the Bankruptcy Act or alternatively has been aided by someone who possesses those skills. Consequently, he is not significantly disadvantaged by conducting his appearance in these proceedings by phone rather than in person. As there has not been any formal request by Mr Pratley to cross examine any of the Creditor’s deponents nor has there been any affidavits filed by deponents for Mr Pratley there does not appear to be any requirement Mr Pratley be present or have any of his witnesses present for the purpose of cross-examination.
If Mr Pratley is being assisted by a legal practitioner in Melbourne then that person could be available in Victoria to appear by telephone. Should this not be the case Mr Pratley has demonstrated before this Court his ability to conduct the proceedings himself via telephone and would not be severely disadvantaged if he was required to pursue this course. The Court considers that the residency of the respective parties is not a factor which would appear to weigh in favour of one party or the other to warrant the change of venue.
Limiting expense and cost of proceedings
It is acknowledged that wherever the proceedings are to be heard one of the parties will have to incur additional expense in costs. There is no legitimate ground requiring the cross examination of any witnesses in these proceedings which means significant travel expenses are saved. If there is a change of venue from the Sydney Registry to the Melbourne Registry of this Court the Crediting Petitioner would be put to considerable expense. However, if the venue was to remain unchanged and Mr Pratley continued his appearance by telephone considerable costs could be saved.
Whether listed for final hearing
This action has been previously listed before a Registrar of this Court on five separate occasions before being transferred to the docket of the Duty Federal Magistrate and the matter has been before the Court on two occasions since that transfer. It is known that Mr Pratley has made a number of informal applications to the Duty Registrar requesting the matter be transferred to the Melbourne Registry. However, he has been informed that he is required to file a formal application seeking a transfer. This instruction was only complied with by filing an interim application seeking to transfer in Court on 27 April 2009.
The transcript of the hearing held on 24 March 2009 clearly established that the matter was set down for final hearing on Monday 27 April 2009 at 10.15am. A sealed copy of those orders forwarded to Mr Pratley (transcript p.14-15) confirmed this. It is noted that Mr Pratley made submissions based on various incorrect assumptions as to the nature of the proceedings scheduled for that date. However, this does not change the fact that this case has proceeded all the way to a final hearing in the absence of a formal application on the part of Mr Pratley seeking a transfer of the hearing venue.
There is no evidence of caprice on the part of CNH in filing these proceedings in the New South Wales registry. The Court has also considered the interests of the administration of justice and it is my view that the interest is not served by a change of venue from the Sydney Registry to the Melbourne Registry.
I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of Lloyd-Jones FM.
Associate:
15 May 2009
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