Habchi v Jayhab Development Pty Ltd

Case [2024] FCA 926

FEDERAL COURT OF AUSTRALIA

Habchi v Jayhab Development Pty Ltd [2024] FCA 926  

File number(s): QUD 259 of 2024
Judgment of: MEAGHER J
Date of judgment: 15 August 2024
Catchwords: PRACTICE AND PROCEDURE – Application for transfer of proceeding to the Supreme Court of Queensland pursuant to s 1337H(2) of the Corporations Act 2001 (Cth) – Where various proceedings before the Supreme Court of Queensland – Where there is a commonality of issues – Where there is a risk of conflicting findings – Whether, having regard to the interests of justice, it is more appropriate that the proceeding be determined by the Supreme Court of Queensland – Application granted
Legislation:

Corporations Act 2001 (Cth) ss 1337H, 1337L

Federal Court of Australia Act 1976 (Cth) s 37M
Cases cited:

BHP Billiton Ltd v Schultz (2004) 221 CLR 400

Dwyer v Hindal Corporate Pty Ltd (2005) 52 ACSR 335

Lukaszewicz v Polish Club Ltd (2019) 370 ALR 698

Re HIH Insurance Ltd (in liq) (2014) 104 ACSR 240

Thomas v HW Thomas Ltd [1984] 1 NZLR 686

Valceski v Valceski (2007) 70 NSWLR 36

Vaughan v Frost [2010] NSWSC 492

Webster (as trustee for Elcar Pty Ltd Super Fund Trust) v Murray Goulburn Co-Operative Co Ltd [2017] VSC 249

Yara Pilbara Fertilisers Pty Ltd (formerly known as Burrup Fertilisers Pty Ltd) v Oswal (No 8) [2015] FCA 49
Division: General Division
Registry: Queensland
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Number of paragraphs: 25
Date of hearing: 15 August 2024
Counsel for the Plaintiff: The Plaintiff appeared in-person
Solicitor for the Defendant: Mr AW Thompson of Bartley Cohen

ORDERS

QUD 259 of 2024
BETWEEN:

HABIB HABCHI

Plaintiff
AND:

JAYHAB DEVELOPMENT PTY LTD

Defendant

ORDER MADE BY:

MEAGHER J

DATE OF ORDER:

15 AUGUST 2024

THE COURT ORDERS THAT:

1.Pursuant to s 1337H(2) of the Corporations Act 2001 (Cth), proceeding QUD259 of 2024 be transferred to the Supreme Court of Queensland.

2.The plaintiff pay the defendant’s costs of the interlocutory process filed on 1 July 2024.

3.Any remaining costs of the proceeding up to the date of transfer be each party’s costs in the cause.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT
(REVISED FROM TRANSCRIPT)

MEAGHER J

INTRODUCTION

  1. By an interlocutory process filed on 1 July 2024, the defendant, Jayhab Developments Pty Ltd, hereafter referred to as Jayhab Developments, seeks to transfer the proceeding to the Supreme Court of Queensland pursuant to s 1337H(2) of the Corporations Act 2001 (Cth). The plaintiff, Mr Habib Habchi, to whom I will refer, with no disrespect, as Mr Habib, submitted that while he did not oppose the application, he wished to raise some reservations.

  2. For the following reasons, the application is allowed.

    BACKGROUND

  3. Mr Habib is one of two shareholders of Jayhab Developments. Mr Jason Habchi, to whom I will refer, again with no disrespect, as Mr Jason, is the brother of Mr Habib and the sole director of…

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Details
AGLC
Habchi v Jayhab Development Pty Ltd [2024] FCA 926
Case
[2024] FCA 926
Decision Date

CaseChat Overview and Summary

The matter before the Federal Court was an application by Jayhab Developments Pty Ltd, filed under section 1337H(2) of the Corporations Act 2001 (Cth), to transfer proceedings commenced by Mr Habib, a shareholder, to the Supreme Court of Queensland. Mr Habib, who appeared in person, sought various orders from the Federal Court, including the provision of documents and the removal of the sole director, Mr Jason Habchi, who is also Mr Habib’s brother. The proceedings in the Supreme Court of Queensland, which involve the same parties, relate to the ownership of properties and alleged oppressive conduct by Mr Jason Habchi. The Federal Court was asked to determine whether the interests of justice would be better served by transferring the matter to the Supreme Court of Queensland, where multiple related proceedings are already before the court.

The legal issues before the court were whether the mandatory considerations under section 1337L of the Act supported a transfer, whether there was a risk of conflicting findings, and whether, overall, it was more appropriate for the Supreme Court of Queensland to determine the proceedings. The court considered the principal place of business of Jayhab Developments in Queensland, the commonality of issues between the proceedings, and the potential for conflicting findings if the matters were not determined together. The court also noted the Supreme Court’s intention to manage the related proceedings collectively.

The court accepted Jayhab Developments’ submissions that the mandatory considerations supported a transfer to the Supreme Court of Queensland, as the company’s principal place of business was in Queensland, and the events in question occurred there. The court also found that there was a significant commonality of issues between the proceedings and that transferring the matter would prevent conflicting findings. The court recognised that the Supreme Court was aware of the potential transfer and was managing the related proceedings together. Having considered these factors, the court exercised its discretion under section 1337H(2) of the Act to transfer the proceeding to the Supreme Court of Queensland, noting that this would facilitate the efficient, expeditious, and inexpensive resolution of the dispute.

Accordingly, the Federal Court granted the application and ordered that the proceeding be transferred to the Supreme Court of Queensland. Mr Habib was ordered to pay the costs of the interlocutory process filed on 1 July 2024, and any remaining costs up to the date of the transfer were to be costs in the cause.

Orders

Orders of the court

1. Pursuant to s 1337H(2) of the Corporations Act 2001 (Cth), proceeding QUD259 of 2024 be transferred to the Supreme Court of Queensland.

2. The plaintiff pay the defendant’s costs of the interlocutory process filed on 1 July 2024.

3. Any remaining costs of the proceeding up to the date of transfer be each party’s costs in the cause.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

For the following reasons, the application is allowed. BACKGROUND Mr Habib is one of two shareholders of Jayhab Developments. Mr Jason Habchi, to whom I will refer, again with no disrespect, as Mr Jason, is the brother of Mr Habib and the sole director of Jayhab Developments. This proceeding is commenced by an originating process filed on 20 May 2024 wherein Mr Habib, who appeared in person, seeks the following relief: 1.s139 of the Corporations Act 2001 (Cth) the Respondent provide a copy of the Constitution of the Respondent; and2.s173 of the Corporations Act 2001 (Cth) the Respondent provide registers of the Respondent; and3.s233 of the Corporations Act 2001 (Cth)a. The Director be removed, and the Applicant be appointed in his staid [sic]; orb. That the Applicant be appointed as co-director; and4.s251B of the Corporations Act 2001 (Cth) the Respondent provide all minutes of the meetings; and5.s247A of the Corporations Act 2001 (Cth) the Respondent provide financial records of the Respondent including financial documents, service agreements, and any shareholders agreements. It appears that Mr Habib alleges that Mr Jason has engaged in oppressive conduct and has misappropriated over $6 million in assets from Jayhab Developments and other related entities. As is deposed to in the affidavit of Mr Benjamin Timothy Cohen filed on 22 May 2024, there are a number of proceedings before the Supreme Court of Queensland which involve Mr Habib and Mr Jason or entities related to them. The matter of Jason Habchi v Habib Habchi, which relates to the ownership of properties in Redbank Plains, has been heard and judgment is reserved as at the date of the filing of Mr Cohen’s affidavit. As to the proceedings which have not yet been heard, the defendant referred to the following: (1)The Habib Habchi & Anor v Jason H Pty Ltd as trustee & Ors proceeding, which relates to the ownership of properties in Beenleigh and Sherwood (City and Sherwood Road proceeding). The proceeding comprises three Supreme Court of Queensland proceedings which were commenced in 2022 and have been consolidated. (2)The Habib Habchi v Peter Habchi & Anor proceeding, which was commenced in February 2024 and relates to the ownership of property located at Oxley (Cook Street proceeding); and (3)The Habib Habchi v Lantona Pty Ltd & Ors proceeding, which was commenced in March 2024 and claims an entitlement by Mr Habib to a shareholding in two of the respondents in that matter (Lantona proceeding). Mr Jason is one of four respondents in the matter. On 18 April 2024, Jayhab Developments, which was included as the second applicant in the matter, was removed from the proceedings. These proceedings will be collectively referred to as the Supreme Court proceedings. It appears that the City and Sherwood Road proceeding, the Lantona proceeding and the Cook Street proceeding are presently being case managed by Freeburn J in the Supreme Court of Queensland. His Honour has indicated his intention for all the relevant proceedings to be case managed and dealt with together.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Further, consistent with the overarching principle of civil practice as set out in s 37M of the Federal Court of Australia Act 1976 (Cth), it is appropriate that the matter be transferred to the Supreme Court of Queensland as this will assist in facilitating the efficient, expeditious and inexpensive resolution of the dispute.CONCLUSION For the above reasons, the application is allowed. While Mr Habib said that he did not oppose the application, he expressed some concerns about it at the hearing. Mr Habib should pay Jayhab Developments’ costs of the interlocutory process filed on 1 July 2024. Any remaining costs of the proceeding up to the date of the transfer ought to be each party’s costs in the cause.

Ratio Decidendi

Legal Principle Established

The power to transfer the proceedings is discretionary and remains so even if the other court is the more appropriate forum: Dwyer at [14]. However, it has been observed that it is rare for the Court to decline to transfer proceedings in circumstances where the other court is the more appropriate forum: Re HIH Insurance Ltd (in liq) (2014) 104 ACSR 240; [2014] NSWSC 545 at [6]. CONSIDERATION First, Jayhab Developments submitted, in relation to the mandatory considerations set out in s 1337L of the Act, Jayhab Developments’ principal place of business is in Queensland, and accordingly, the events the subject of the proceedings can be inferred to have occurred in Queensland. As to s 1337L(c), Jayhab Developments noted that the Supreme Court of Queensland is the only court to which a transfer is suggested. As referred to by Jayhab Developments, while the issues will be “thrown into sharper focus” on a contested application for transfer, the Court is nevertheless required to have regard to the considerations in s 1337L of the Act in exercising the discretion pursuant to s 1337H: Webster (as trustee for Elcar Pty Ltd Super Fund Trust) v Murray Goulburn Co-Operative Co Ltd [2017] VSC 249 at [15]. I have had regard to the mandatory considerations set out in s 1337L of the Act and accept the defendant’s submissions in that regard. Jayhab Developments’ principal place of business is in Queensland and I am satisfied that it may be inferred that the events the subject of the proceedings occurred in Queensland. Further, the Supreme Court of Queensland has jurisdiction to determine the matter and it is the court suggested for transfer for reasons which will be considered further below. In relation to the relative stages of the proceedings, Jayhab Developments noted that the proceedings in the Supreme Court of Queensland are at varying stages, having been commenced at various times. Jayhab Developments also noted that the transfer of the proceeding would not compromise any trial dates as none have yet been listed. Jayhab Developments submitted that the Supreme Court is alive to the possibility of this matter being transferred and has indicated its intention that all relevant proceedings be dealt with together. As well, it was submitted that the Supreme Court proceedings are still at the interlocutory stage and, with respect to the City and Sherwood Road proceeding, further pleadings are still to be filed. As to the commonality of issues between the proceedings, Jayhab Developments referred to the City and Sherwood Road proceeding in which Mr Habib claims that Jayhab Developments effected a transfer of a property to another company for no consideration and did not account to Mr Habib for profits generated by a property owned by Jayhab Developments. To that end, Jayhab Developments submitted that these matters will be relevant to the determination of the issues brought in this Court with respect to oppressive conduct. Jayhab Developments submitted that so much is clear from the fact that the affidavit of Mr Habib refers to the property and development agreement, which is crucial to the City and Sherwood Road proceedings, as can be seen from the plaintiffs’ substituted statement of claim filed in that matter in the Supreme Court of Queensland. Jayhab Developments also submitted that the oppression action as it relates to “commercial unfairness”, “cannot be assessed in a vacuum or simply from one member’s point of view”: Lukaszewicz v Polish Club Ltd (2019) 370 ALR 698; [2019] NSWSC 446 at [8] – [9], citing Thomas v HW Thomas Ltd [1984] 1 NZLR 686; (1984) 2 ACLC 610 at 618, and, therefore, the dealings and affairs of the relevant parties in the Supreme Court proceedings would also need to be examined in the matter before this Court.