Commonwealth Bank of Australia v Begonia Pty Ltd Commonwealth Bank of Australia v Redlock Pty Ltd Commonwealth Bank of Australia v Lamina Pty Ltd
[1993] FCA 666
•01 SEPTEMBER 1993
COMMONWEALTH BANK OF AUSTRALIA v. BEGONIA PTY LTD (Receiver and Manager
Appointed); REDLOCK PTY LTD (Receiver and Manager Appointed) and LAMINA PTY
LTD (Receiver and Manager Appointed)
Nos. VG3193, VG3194 and VG3195 of 1993
FED No. 666
Number of pages - 4
Corporations Law - Cross-Vesting
COURT
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
HEEREY J
CATCHWORDS
Corporations Law - winding-up - cross-vesting - related proceedings in Victorian Supreme Court - appropriate forum - absence of affidavit verifying grounds of opposition to winding-up.
Cross-Vesting - costs - whether case on merits must be established.
Corporations Law s.459C(2)(c)(e)
Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) s.5(4)
Federal Court Rules O.71 r.37(11)
Sterling Pharmaceuticals Pty Limited v The Boots Company (Australia) Pty Limited (1992) 39 FCR 287
Brinds Ltd v Offshore Oil NL (1985) 63 ALR 94
HEARING
MELBOURNE, 1 September 1993
#DATE 1:9:1993
Counsel for the applicant: Mr S Rosenweig
Solicitor for the applicant: Phillips Fox
Counsel for the respondent: Mr D Beach
Solicitor for the respondent: Blake Dawson Waldron
Counsel for first supporting
creditor: Mr B Schied
Solicitor for first supporting
creditor: Hannebery Boyle and Partners
Counsel for second supporting
creditor: Ms R Kumaran
Solicitor for second supporting T D Weerappah, Solicitor to
creditor: the Commissioner of State
Revenues Victoria.
ORDER
The Court Orders that:
1. The winding-up proceedings VG3193 of 1993, VG3194 of 1993 and VG3195 of 1993 be cross-vested to the Supreme Court of Victoria.
2. The costs of the respondents in the motions to cross-vest be paid by the applicant.
3. The costs of the supporting creditors be reserved.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules
JUDGE1
HEEREY J The Commonwealth Bank of Australia (the bank) seeks to wind up Begonia Pty Ltd, Redlock Pty Ltd and Lamina Pty Ltd which are all companies connected with Mr David Marriner.
The respondents seek an order that the winding-up proceedings be cross-vested to the Supreme Court of Victoria under s.5(4) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) or alternatively a stay of these proceedings pending the determination of certain litigation in the Supreme Court.
The bank's claim is based on an allegation that under a facility granted in May 1990 some $81 million was owing by the respondents in July 1993. The bank appointed receivers and managers on 13 July. The bank's winding-up applications are based on the presumption of insolvency established by s.459C(2)(c) and (e) of the Corporations Law. The applications were filed in this court on 20 July.
On the same day as the receivers and managers were appointed the bank commenced proceedings in the Commercial List of the Supreme Court of Victoria against the respondents claiming $81 million. On 25 August the respondents filed defences in those proceedings. The defences included a plea that there had been on 7 June 1993 an accord and satisfaction reached with the bank which involved the payment of $25 million and the sale of certain properties. The respondents say that if that defence is made out there was no amount owing to the bank in July and the appointment of the receivers and managers was invalid.
This court has jurisdiction to grant a stay of proceedings where it is, speaking for the moment very generally, more just and convenient that litigation commenced in another jurisdiction should proceed first: see Sterling Pharmaceuticals Pty Limited v The Boots Company (Australia) Pty Limited (1992) 34 FCR 287. The Supreme Court proceedings are in essence claims for the repayment of moneys lent to Victorian companies by a bank carrying on business in Victoria. The Supreme Court of Victoria is clearly the appropriate forum.
In this case there is the additional feature that a winding-up order is sought by a creditor whose debt is disputed. The applicable principles were stated by the Privy Council in Brinds Ltd v Offshore Oil NL (1985) 63 ALR 94 at 99:
"It is a matter for the discretion of the judge whether a winding-up order should be made on a disputed debt, and it is also a matter of discretion whether he decides the substantive question of debt or no debt. Their Lordships agree with the observations of Gibbs J in Re QBS Pty Ltd
(1967) Qd R 218 at 225: 'It seems to me that in every case it becomes necessary for the court to exercise its discretion as to how far it will allow the question whether or not the dispute is bona fide to be explored. In some cases it may be very easy to decide this question on the petition and affidavits in reply. In other cases, however, it may be difficult to determine whether or not the dispute is bona fide without determining the merits of the dispute itself. In some such cases convenience may require that the court decide the question whether or not a debt exists, but in other such cases it may appear better to allow that question to be determined in other proceedings before the petition for winding up is heard.'
The same line of reasoning was adopted by this Board in an appeal from New Zealand, Bateman Television Ltd v Coleridge Finance Co Ltd (1971) NZLR 929 at 932: '... the general rule is, no doubt, that no order will be made on a petition founded on such debts. But each case must depend upon its own circumstances judicially, which is not open to review unless it is shown to be exercised on some wrong principle, or that the judge relied on some fact irrelevant for the purpose, or omitted consideration of a relevant fact or finally that he was wholly wrong. As their Lordships have already pointed out, the disputed questions of indebtedness were fully investigated in a lengthy hearing before the learned judge with oral and documentary evidence and he held that both the appellant companies were insolvent. Their Lordships add the very important fact that from start to finish neither side ever suggested to Macarthur J that the petitions should be dismissed or even stayed on the ground of disputed debts pending the bringing of appropriate proceedings at law to determine these matters.'"
Again, the Supreme Court is the appropriate forum for the discretionary decision as to whether, and to what extent, the bona fides of the dispute should be investigated or whether the question of actual indebtedness should be tried before a winding-up order is made. The Supreme Court is the forum the bank itself chose for the enforcement of its debt. Indeed the commencement of winding-up proceedings a week later in another court is on the face of it, a surprising step, for which no explanation was proffered.
For those reasons I think the appropriate order is for the winding-up proceedings to be cross-vested to the Supreme Court: see s.5(4)(b)(i) and (iii). I find that the winding-up applications are related to the Supreme Court proceedings and that it is in the interests of justice that they be determined by that court.
Counsel for the bank stressed that there was no verification on oath of the accord and satisfaction defence. He refer to O.71 r.37(11) of the Federal Court Rules which require an affidavit verifying the grounds of opposition to a winding-up application. It is true that no such affidavit has been filed, although I note that Form 93A does not appear to require the affidavit to be sworn as to matters within the personal knowledge of the deponent.
More fundamentally, counsel for the respondents says, and I think correctly, that the discretion to make a cross-vesting order raises the question: which of two courts provides the more just and convenient forum for trying the particular dispute? As soon as it emerges that a case exists for the exercise of that discretion, the matter should be cross-vested to the more appropriate court.
I am not hearing an application for the winding-up of these companies, but a motion that this proceeding should be cross-vested. In my opinion there is no essential prerequisite of an affidavit of the kind suggested by counsel for the bank. There have been detailed pleadings filed in the Supreme Court which appear to raise serious issues. If those defences are thought to be so lacking in merit as to warrant summary judgment being entered for the bank, there are appropriate procedures available in the Supreme Court for such an application.
There were two supporting creditors, Melbourne Water which claims $373,495.60 against Lamina for arrears of rates and another, the Commissioner of Land Tax (Victoria), who claims $836,000, also against Lamina.
In the latter case, there was an application that the Commissioner be substituted as petitioning creditor. However, I could not do that unless the bank withdrew or were otherwise removed from its present position as petitioning creditor. I do not see any ground on which that could be done. As to whether the claims of these two creditors create sufficient evidence of insolvency that is an issue best dealt with in the context of the winding-up proceedings conducted in the Supreme Court. The respondents will need to keep in mind of course that the non-payment of a supporting creditor's debt may establish insolvency: see Brinds, 63 ALR at 101-2.
As to costs, I think the issue here was substantially whether this matter should be cross-vested. The order I make does not involve any determination of the merits of the defence of accord and satisfaction. That will be dealt with in the Supreme Court and the costs no doubt will follow accordingly. There is also the feature that the bank commenced proceedings in the Supreme Court and then also commenced the winding-up, based on essentially the same debt, in this court. It was likely that a cross-vesting application might be made.
There will be an order that the costs of the motion to cross-vest be paid by the bank.
The costs of the supporting creditors will be reserved.
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