GGPG Pty Ltd v Golden Eagle Property Group Pty Ltd

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SUPREME COURT OF QUEENSLAND

CITATION:

GGPG Pty Ltd v Golden Eagle Property Group Pty Ltd [2022] QSC 205

PARTIES:

GGPG PTY LTD ACN 609 675 505 (RECEIVERS & MANAGERS APPOINTED)

(plaintiff)

v
GOLDEN EAGLE PROPERTY GROUP PTY LTD ACN 614 218 852

(first defendant)
AND
DAVID ALEXANDER JOHN WHITEMAN
(second defendant)
AND
MARC ANDREW CLANCY

(third defendant)

FILE NO/S:

3647 of 2022

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court

DELIVERED ON:

28 September 2022

DELIVERED AT:

Brisbane

HEARING DATE:

8 July 2022

JUDGE:

Freeburn J

ORDER:

1.   The defendants file and serve their defence on or before 12 October 2022;

2.   This Supreme Court proceeding be transferred to the Federal Court of Australia (at Brisbane); and

3.   The parties be heard on costs.

CATCHWORDS:

PRACTICE AND PROCEDURE – TRANSFER OF PROCEEDINGS – CROSS-VESTING – where the transfer is opposed – where a breach of fiduciary and statutory duties proceeding commenced in the Supreme Court – whether the Supreme Court proceeding arose out of or was related to the Federal Court proceeding – whether there is a real risk of duplication and inconsistent findings – whether it is in the interests of justice for the proceeding to be cross-vested

Corporations Act 2001 (Cth) s 1337H
Jurisdiction of Courts (Cross-Vesting) Act 1987 (Qld) s 5(1)

Uniform Civil Procedure Rules 1999 (Qld) chp 9 pt 1

Commissioner of Taxation v Residence Riverside Pty Ltd [2013] FCA 720, considered

Valceski v Valceski (2007) 70 NSWLR 36, considered

COUNSEL:

MJ Downes (plaintiff)

AG Psaltis (defendants)

SOLICITORS:

Thynne + Macartney (plaintiff)

Bartley Cohen (defendants)

REASONS

  1. This is an application by the defendants to transfer this proceeding to the Federal Court and a cross-application by the plaintiff for judgment in default of pleading.

    The Background

  2. The dispute in this case is part of a broad dispute between Mr So and Mr Clancy. Both men were jointly involved in property developments. Their principal work together involved a residential property development called Carver’s Reach at Park Ridge, a southern suburb of Brisbane. Golden Gate Property Group Pty Ltd (GGPG) was the corporate developer of the residential subdivisions, although there were a number of different corporate entities that were involved, including several special purpose vehicles for different stages of the project.

  3. Mr So’s role was broadly that of Chief Financial Officer, although he also arranged finance including a loan of $7m through Ultimate Investment Portfolio Pty Ltd (Ultimate), an entity associated with Mr So. Mr Clancy was responsible for the development side of the business. Mr Whiteman was an employee of GGPG who worked closely with Mr Clancy.

  4. The Carver’s Reach project was developed in stages along Park Ridge Road. According to Mr Clancy, he and Mr So had high hopes. They intended to develop nearly 600 lots, in 11 stages, and generate a profit of $30m at completion. The project continued through to 16 December 2021. On that day, Mr Watters was appointed as receiver and manager of the GGPG group.…

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Details
Case
[2022] QSC 205
Decision Date

CaseChat Overview and Summary

The case of GGPG Pty Ltd v Golden Eagle Property Group Pty Ltd involves a dispute between two companies, GGPG and Golden Eagle, which are involved in property development. The dispute stems from allegations of breach of fiduciary and statutory duties by Golden Eagle, with the proceeding initially commenced in the Supreme Court. The defendants have applied to transfer the proceeding to the Federal Court, while the plaintiff has cross-applied for judgment in default of pleading due to the defendants' failure to file and serve a defence. The central legal issue before the court was whether the Supreme Court proceeding should be transferred to the Federal Court, considering the potential for duplication and inconsistent findings. Additionally, the court had to determine the appropriate action regarding the defendants' failure to file and serve a defence, and whether default judgment was warranted.

In deciding the matter, the court considered the overlap of issues between the Supreme Court and Federal Court proceedings, as well as the desirability of consolidating the cases into one proceeding. The court found that there was a real risk of duplication and inconsistent findings if the proceedings were not transferred to the Federal Court. Furthermore, the court considered the defendants' failure to file and serve a defence, and while it recognised that there was no utility in entering default judgment, it emphasised the importance of the defendants fulfilling their obligation to proceed with the case in an expeditious manner. The court ordered the defendants to file and serve their defence within 14 days, transferred the proceeding to the Federal Court, and directed the parties to be heard on costs.

The final orders of the court were as follows: the defendants were required to file and serve their defence on or before 12 October 2022; the Supreme Court proceeding was transferred to the Federal Court of Australia (at Brisbane); and the parties were to be heard on costs. This decision ensures that the matter is dealt with efficiently and appropriately by the Federal Court, while also addressing the defendants' failure to comply with their procedural obligations.

Orders

Orders of the court

1. The defendants file and serve their defence on or before 12 October 2022;

2. This Supreme Court proceeding be transferred to the Federal Court of Australia (at Brisbane); and

3. The parties be heard on costs.

Background

Background to the litigation

This is an application by the defendants to transfer this proceeding to the Federal Court and a cross-application by the plaintiff for judgment in default of pleading. The Background The dispute in this case is part of a broad dispute between Mr So and Mr Clancy. Both men were jointly involved in property developments. Their principal work together involved a residential property development called Carver’s Reach at Park Ridge, a southern suburb of Brisbane. Golden Gate Property Group Pty Ltd (GGPG) was the corporate developer of the residential subdivisions, although there were a number of different corporate entities that were involved, including several special purpose vehicles for different stages of the project. Mr So’s role was broadly that of Chief Financial Officer, although he also arranged finance including a loan of $7m through Ultimate Investment Portfolio Pty Ltd (Ultimate), an entity associated with Mr So. Mr Clancy was responsible for the development side of the business. Mr Whiteman was an employee of GGPG who worked closely with Mr Clancy. The Carver’s Reach project was developed in stages along Park Ridge Road. According to Mr Clancy, he and Mr So had high hopes. They intended to develop nearly 600 lots, in 11 stages, and generate a profit of $30m at completion. The project continued through to 16 December 2021. On that day, Mr Watters was appointed as receiver and manager of the GGPG group. Presently, the receiver and manager is completing stage 6 of the project. According to Mr So, the relationship between he and Mr Clancy soured when Mr So engaged lawyers to document the loan of $7m in November 2019. It may be that Mr Clancy agrees that Mr So’s desire to record the loan was a source of irritation.[1] However, Mr Clancy appears to say that he and Mr So only fell out when ‘out of the blue’ Mr So’s company, Ultimate, issued notices of loan default to GGPG in December 2021. [1]A section of Mr Clancy’s affidavit in the Federal Court is headed ‘Insistence by Mr So that the funds advanced by Ultimate be documented’. The proposed statement of claim in the Federal Court speaks of a purported loan of $7m and some misrepresentations which occurred in the negotiations leading up to the execution of the documents. The affidavits filed by the three protagonists also speak of another cause of friction. To progress the development, parcels of land were acquired along Park Ridge Road. One of the parcels investigated was 202 Park Ridge Road (202). Mr So says that he identified the site and in 2018 tried to negotiate to buy it but the approach went nowhere. He says that subsequently, in April 2020, he received an email from Mr Whiteman which discussed the potential purchase of 202. Mr So says that he left that acquisition to Mr Whiteman and Mr Clancy. He says that he has subsequently discovered that Mr Whiteman and Mr Clancy have acquired an interest in 202 for themselves via a put and call option in favour of Golden Eagle Property Group Pty Ltd (Golden Eagle).

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The above combination of factors, particularly the likelihood that there will be an overlap of some issues and thus a real risk of different conclusions, and the desirability of one proceeding, means that it is appropriate to transfer the Supreme Court proceeding to the Federal Court.The Cross-Application: Judgment in Default of Pleading The defendants’ defence was due on 10 June 2022. Judgment in default of a defence would normally be given under UCPR Chapter 9 Part 1, where a defendant fails to file and serve a defence. Here, though, the defendants have refused to file and serve a defence. In the circumstances there is no utility in entering default judgment. Any default judgment would be susceptible to being set aside under UCPR rule 290. That said, as GGPG submitted, there is no good reason for the defendants to not have filed their defence. Even in the event of a transfer, the work in preparing the defence would not be wasted. In fact, as explained, a defence would have assisted in defining the issues. More than that, the defendants were bound by their implied undertaking to the court and to the other parties to proceed in an expeditious way.[17][17]UCPR rule 5(3). The defendants’ conduct in refusing to file and serve their defence can hardly be said to be consistent with that obligation. The question is what this court should do about it. In my view, the appropriate course is to order that the defendants file and serve their defence within 14 days of today. It is true that the proceeding will also be transferred. That means that this court will have no capacity to ensure that the order be complied with. However, the Federal Court will be able to take into account the order and any breach of it. It is important that, to use counsel for GGPG’s language, the ‘state of inertia’ presently infecting the proceeding not continue and that the Federal Court be able to manage the case with the benefit of pleadings from both parties.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.