Genesis Insight Pty Ltd v Minichiello - [2009] SASC 403

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
GENESIS INSIGHT PTY LTD v MINICHIELLO
[2009] SASC 403
Reasons of Judge Lunn a Master of the Supreme Court
23 December 2009
CORPORATIONS
Application issued in Adelaide to set aside statutory demand - statutory demand gave Adelaide address for service of application on defendant - interlocutory application by defendant to transfer proceedings to Supreme Court of Victoria - ss 1337H and 1337L of Corporations Act - held not shown Supreme Court of Victoria was a more appropriate Court for the determination of the proceedings - application for transfer dismissed.

GENESIS INSIGHT PTY LTD v MINICHIELLO
[2009] SASC 403
Reasons on defendant’s application to transfer proceedings to the Supreme Court of Victoria.

JUDGE LUNN: In 2005 two documents entitled “Loan Agreements” were entered into between the plaintiff and the defendant. (The defendant is a natural person). Between 28 September 2009 and 27 October 2009 there was an exchange of correspondence between solicitors in Adelaide, acting for the plaintiff, and solicitors in Melbourne, acting for the defendant. On 29 October 2009 the defendant served a statutory demand under s 459E of the Commonwealth Corporations Act 2001 (“the Act”) at the registered office of the plaintiff, which is situated in Adelaide, demanding payment of $411,639 for principal and interest due and payable under the loan agreement. The demand gave an address for service which was the Adelaide office of the Melbourne solicitors who were acting for the defendant.
On 13 November 2009 the plaintiff, acting through its Adelaide solicitors, issued in this Court an originating process under s 459G of the Act, seeking to set aside the statutory demand. It was served at the Adelaide office of the defendant’s solicitors, being the address for service given in the demand. In the supporting affidavit the plaintiff’s director deposed that there was a genuine dispute about the debt claimed in the demand under s 459H of the Act on the grounds that by virtue of the correspondence passing between the solicitors for the parties there had been a tender by the plaintiff of any moneys due for payment, which had been rejected by the defendant, and that no other moneys payable under the agreements were due for payment until 31 December 2009.
On 24 November 2009 the defendant applied for these proceedings to be transferred to the Supreme Court of Victoria. The application was supported by an affidavit from his Victorian solicitor. The plaintiff elected not to file any affidavit on the application. The application is made under ss 1337H and 1337L of the Act which are quoted in the Judgment of Debelle J below.
There was no dispute that the plaintiff’s only director lives in a suburb of Melbourne and its principal place of business is his home address. The defendant resides in Warragul in Victoria, which is approximately 100 kilometres from Melbourne. The loan agreements were entered into in Victoria. The only connection with this State is that for some unexplained reason the registered office of the plaintiff is situated in Adelaide and since September 2009 it has been represented in its dispute with the defendant by a solicitor who practices in Adelaide.
The relevant principles to be applied in an application under s 1337H of the Act were explained in the following passage from the Reasons of Debelle J in re D-Store Ltd: Dwyer v Hindal Corporate Pty Ltd [2005] 52 ACSR 335 at 338-340:
Transfer of proceedings – relevant factors
[11]Section 1337H of the Corporations Act authorises a court to transfer a civil matter arising under the Corporations legislation to another court. …..
[12]Section 1337H(2) prescribes when a matter may be transferred. It reads:
Subject to subsections (3), (4) and (5), if it appears to the transferor court that, having regard to the interests of justice, it is more appropriate for:
(a) the relevant proceeding; or
(b) an application in the relevant proceeding;
to be determined by another court that has jurisdiction in the matters for determination in the relevant proceeding or application, the transferor court may transfer the relevant proceeding or application to that other court.
The question for the court to determine is whether the court to which it is sought to transfer the proceeding is more appropriate than the transferor court for the determination of the relevant proceeding. The question is to be determined by having regard to the interests of justice.
[13]Notwithstanding that they are expressed in different terms, the issues for consideration on an application under s 1337H are, broadly speaking, the same as those which must be considered on an application to transfer proceedings made pursuant to s 5(2)(b)(iii) of the Jurisdiction of Court (Cross-vesting) Acts 1987 of the states and territories. Although para (iii) of s 52(2)(b) differs from paras (i) and (ii) of that subsection in that it does not expressly require the transferor court to consider the more appropriate forum, that is what para (iii) requires. The reasons are explained by Rogers AJA in Bankinvest AG v Seabrook (1988) 14 NSWLR 711 at 730; 90 ALR 407 at 425. It is now well established that the terms of para (iii) of s 5(2)(b) of the Cross-vesting legislation of the states and territories require the transferor court to determine what is the more appropriate forum and that it is not necessary that the transferor court be a “clearly inappropriate” forum: BHP Billiton Ltd v Schultz (2004) 211 CLR 523; …..
[14]However, there is one important difference between para (iii) of s 5(2)(b) and s 1337H. In the case of s 5(2)(b)(iii), if the transferor court is satisfied that it is in the interests of justice that proceedings be transferred to another court as the more appropriate court, the court has no alternative but to transfer the proceedings: BHP Billiton Ltd v Schultz at [14], [63], and [169]. No question of discretion arises. However, under s 1337H(2), even if another court is the more appropriate forum, the transferor court retains a discretion whether to transfer the proceedings. That is apparent from the use of the word “may” in the concluding words of s 12337H(2).
[15] Section 1337L lists other matters to be taken into account by the court when deciding whether to transfer a proceeding. They are:
(a)the principal place of business of any body corporate concerned in the proceeding or application;
(b)the place or places where the events that are the subject of the proceedings or application took place; and
(c)the other courts that have jurisdiction to deal with the proceeding or application.
[16]The expression “the interests of justice” is to be interpreted broadly. That is apparent from the very terms of the expression and that interpretation of the expression has been repeatedly re-affirmed. …..
Counsel did not dispute that these were the relevant principles. However, the proceedings in that case were not under s 459G of the Act and some special factors apply in s 459G proceedings. Neither counsel nor I were able to find any reported decision of an application under s 1337H of the Act on proceedings to set aside a statutory demand.
S 459E(2)(e) of the Act requires that the statutory demand “must be in the prescribed form”. That form is Form 509H to the Corporations Regulations 2001 Schedule 2. That form relevantly prescribes:
6The address of the creditor for service of copies of any application and affidavit is (insert the address for service of the documents in the State or Territory in which the demand is served on the company, being, if solicitors are acting for the creditor, the address of the solicitors).
There is no other provision in the Act or Regulations, or in the Rules of Court, expressly dealing with how and where proceedings to set aside statutory demands are to be served. It is a special means for service of an originating process under s 459G of the Act to set aside statutory demands which does not apply to any other type of originating process for relief under the Act. It is a permissive alternative for the mode of service of such an originating process: re Marlan Financial Services Pty Ltd (1999) 33 ACSR 259, although it does not apparently preclude service on the defendant by other authorised means.
By its terms, paragraph 6 of Form 509H requires such an address for service to be in the State in which the demand was served. As the defendant chose to serve the demand at the registered office of the plaintiff which is in South Australia, it was that choice which obliged him to insert into the demand an address for service in South Australia. It correctly gave as the address for service the Adelaide office of his lawyers. Fortuitously it was a firm that has offices in both Melbourne and Adelaide. If the defendant had chosen to serve the statutory demand under s 109X of the Act on the director of the plaintiff, and that service had been effected on him in Victoria, the defendant could have properly included the Melbourne address of his solicitor as the address for service in the demand. However, by electing to serve at the registered office he was compelled to show a South Australian address. In those circumstances the demand would have been ineffective if it had shown a Victorian address as the address for service: re Marlan Financial Services Pty Ltd above; Elan Copra Trading Pty Ltd v J K International Pty Ltd (2005) 56 ACSR 416.
Under s 459G of the Act the plaintiff was required to serve the originating process and the supporting affidavit on the defendant within 21 days after the demand had been served on it. If it had failed to effect such service within that time limit, it would have been precluded from challenging the demand: David Grant & Co Pty Ltd v Westpac Banking Corp (1995) 184 CLR 265. Paragraph 6 of Form 509H provides a quick and expeditious means of readily effecting service within the strict time limit provided by s 459G. A plaintiff under s 459G could be in serious difficulties in complying with the strict time limit if it had to serve the originating process on the creditor personally by the usual means of personal service.
Counsel for the plaintiff submitted that paragraph 6 of Form 509H justified the plaintiff in instituting these proceedings in this Court, being the Court nearest to the address for service. I do not accept this is a complete answer to the defendant’s application but, as I will state later, it would be relevant to the exercise of the Court’s discretion under s 1337H.
I do not accept on the evidence before me that the Supreme Court of Victoria is shown to be a more appropriate Court than this Court for the determination of these proceedings.
The defendant says he wishes to be present in Court during the argument. I accept that it would be considerably more convenient him to attend at a Court in Melbourne, although it is not impossible for him to attend at a Court in Adelaide. However, the proceedings will be determined on affidavit evidence. Having dealt with many applications to set aside statutory demands it has been my experience that it is quite rare for parties to attend. If the defendant attended, it would only be as an observer. There is no suggestion that he would be needed to give instructions or to play any other positive role in the conduct of the hearing. His expenses in attending would certainly not be allowed as part of party and party costs if he is successful, and probably not even as part of indemnity costs, if he was to be awarded those. There is no weight in this factor.
The defendant suggested that it may be necessary for his Melbourne solicitors to be cross-examined on their affidavits. It would be highly unusual for any cross-examination on affidavits to be allowed on determining whether a plaintiff has made out a genuine dispute about all of the amount claimed. The plaintiff’s affidavit indicated that the evidence about any dispute is contained in the written correspondence between the Adelaide and the Melbourne solicitors. While the defendant has not yet filed any affidavits on whether there is a genuine dispute, in the affidavit in support of this interlocutory application it has not been suggested that there is any dispute over oral communications which are of such a nature that the Court might order cross-examination on the affidavits in order to resolve whether there was a genuine dispute. There is no weight in this factor.
Counsel for the defendant did not suggest that the “events” for the purposes of s 1337L(b), which are the communications between the respective solicitors, could be characterised as any more Victorian than South Australian.
While there is obviously some inconvenience and additional expense for the defendant to have to litigate in another State, there would be corresponding inconvenience and additional expense for the plaintiff if the proceedings were now to be transferred to the Supreme Court of Victoria for determination. It was not suggested that the proceedings would be determined any more quickly in the Supreme Court of Victoria than they would be in this Court.
Accordingly, I do not find it has been shown that it is more appropriate that these proceedings should now continue in the Supreme Court of Victoria.
If it had been necessary to consider the exercise of the general judicial discretion conferred by s 1337H of the Act, I would have held that the address for service in the demand being an Adelaide address was a significant consideration in allowing the proceedings to continue in this Court. It would have been possible for the plaintiff to have instituted these proceedings in the Supreme Court of Victoria. Under s 15(1) and (2) of the Commonwealth Service and Execution of Process Act 1992 it could then have served those proceedings at the Adelaide address for service shown the demand. However, that probably would have involved the plaintiff’s Adelaide solicitor, who was already instructed in, and familiar with, the matter, having to instruct agents in Melbourne to issue the originating process, get the originating process back from those Melbourne agents and serve it, together with the required notices under s 16 of the Service and Execution of Process Act, at the address for service in Adelaide. This of necessity would occupy more time than if the plaintiff’s solicitors issued the originating proceedings out of this Court. While in the circumstances of this matter the plaintiff did institute and serve its originating process well within the 21 days, it is not infrequently the case that the originating proceedings is served very close to the expiration of the 21 day period. There are risks of unexpected delays occurring. The intention of paragraph 6 of Form 509H to provide a simple and expeditious means of service is compromised if the plaintiff cannot issue out of the nearest Court having jurisdiction to the address for service. Of course this does not mean that proceedings to set aside a statutory demand instituted in the nearest Court cannot be transferred to another Court if there is a strong case for it, but it seems implicit that the norm should be that it can be issued out of the nearest Court.
The defendant’s application is dismissed. The proceeding will continue in this Court, in accordance with the directions already given. I will hear the parties on the costs of the defendant’s application when I deal with the overall order for the costs of the proceedings.