In the matter of Peter G Ward Industries Pty Limited

[2020] NSWSC 339

Supreme Court

New South Wales

Medium Neutral Citation:	In the matter of Peter G Ward Industries Pty Limited [2020] NSWSC 339
Hearing dates:	30 March 2020
Decision date:	01 April 2020
Jurisdiction:	Equity - Corporations List
Before:	Rees J
Decision:	Transfer proceedings to Family Court of Australia
Catchwords:	COURT – application to transfer oppression suit from Corporations List to Family Court – s. 1337H Corporations Act 2001 (Cth) – principles at [22]-[31] – whether in the interests of justice – parties same in both proceedings – proceedings equally advanced – a third proceedings not proposed to be transferred – oppression suit likely to be determined first – overlap in issues – risk of inconsistent findings– Family Court has jurisdiction to determine all issues while this Court does not – any benefit by early determination of oppression suit simplifying issues in Family Court outweighed by additional costs and dislocation of multiple proceedings – capital gains tax exemptions for Family Court orders – proceedings transferred
Legislation Cited:	Corporations Act 2001 (Cth), ss 232, 233, 1337C(1), 1337H, 1337H(1)(b)(ii), 1337H(2) Court Suppression and Non-Publication Orders Act 2010 (NSW), ss 6, 8 Family Law Act 1975 (Cth), ss 79, 79(4), 106B, 117(1), 121, 121(1) Income Tax Assessment Act 1997 (Cth), ss 101-10(1)-(2), 126-5 Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth)
Cases Cited:	BHP Billiton Limited v Schultz (2004) 221 CLR 400; [2004] HCA 61 Burman v Zillman [2017] NSWSC 229 Gallieni v Gallieni [2011] FamCA 791 Hancock Prospecting Pty Limited v 150 Investments Pty Limited (2017) 120 ACSR 495; [2017] FCA 520 In the matter of PJL Group Pty Limited [2018] NSWSC 756 In the matter of Scientific Management Associates Pty Ltd [2019] NSWSC 1643 Re Tech Universal (HK-Macau) Development Pty Ltd v Tech Universal (HK-Macau) Development Pty Ltd (2005) 53 ACSR 704; [2005] FCA 256 Roff v Aqua Distributors Pty Ltd (1996) 14 ACLC 1769; (1996) 22 ACSR 248 Vaughan v Frost [2010] NSWSC 492 Webster Consolidated (Holdings) Pty Limited [2016] NSWSC 376 Yara Pilbara Fertilisers Pty Limited v Oswal (No 8) [2015] FCA 49
Category:	Procedural and other rulings
Parties:	James Dunphy (Plaintiff) Peter G Ward Industries Pty Ltd (First Defendant) Julia Ward (Second Defendant) P Ward Management Pty Ltd (Third Defendant) JPWI Pty Limited (Fourth Defendant) Darlington Ward Pty Ltd (Fifth Defendant) Nullus Pty Ltd (Sixth Defendant) Huggenstown Pty Ltd (Seventh Defendant)
Representation:	Counsel: Mr RD Glasson (Plaintiff) Mr D Price (First Defendant) Mr May (Second and Fourth Defendants) Mr Shaw (Third, Fifth, Sixth and Seventh Defendants)   Solicitors: Pikes & Verekers Lawyers (Plaintiff) Charnock O’Brien Legal (First Defendant) Pearson Emerson Meyer Family Lawyers (Second and Fourth Defendants) Bridges Lawyers (Third, Fifth, Sixth and Seventh Defendants)
File Number(s):	2019/367094

Judgment

1. HER HONOUR: In this, the second of three proceedings between former spouses James Dunphy and Julia Ward, Ms Ward and her company JPWI Pty Limited seek to transfer these proceedings to the Family Court of Australia pursuant to section 1337H of the Corporations Act 2001 (Cth) or, alternatively, to stay these proceedings pending determination of the Family Court proceedings. The application is opposed by Mr Dunphy. The remaining five parties, being companies associated with the Ward family, essentially took a neutral position.

Facts

2. The plaintiff, Mr Dunphy, is an investment banker. The second defendant, Ms Ward, is the chief executive officer of Ward Civil & Environmental Engineering Pty Limited, a company established by her late father, Peter Ward. The holding company of Ward Civil & Environmental Engineering is the first defendant, Peter G Ward Industries Pty Limited. Mr Dunphy owns shares in Peter G Ward Industries. The second to seventh defendants are the shareholders of Peter G Ward Industries other than Mr Dunphy.

3. The corporate defendants are, by and large, companies established by the late Peter G Ward in connection with his engineering business.

1. The sixth defendant, Nullus Pty Limited was incorporated in 1975. This company is owned by Ms Ward, her mother and two sisters. Ms Ward became a director of Nullus in 2012.

2. The first defendant, Peter G Ward Industries, and the third defendant, P Ward Management Pty Limited, were incorporated in the 1980s. Ms Ward became a director of Peter G Ward Industries in 2010 and a director of P Ward Management in 2011.

3. The seventh defendant, Huggenstown Pty Limited was incorporated in 2008. This company is owned by Brian Mahon, chief operating officer of Ward Civil & Environmental Engineering.

4. In 2016, the fourth defendant, JPWI, was incorporated and Ms Ward became a director. The fifth defendant, Darlington Ward Pty Limited, was also incorporated and Ms Ward’s sister and her husband became directors.

4. In 2010, Mr Dunphy and Ms Ward commenced a relationship. In about mid-2012, they commenced cohabitation. In June 2014, Mr Dunphy was appointed as a director of Peter G Ward Industries. In June 2016, a deed of trust was executed establishing The Tamaki Trust for the benefit of Mr Dunphy, Ms Ward and their children. In January 2017, they married and, in September 2018, separated. They did not have children.

5. In November 2018, according to Mr Dunphy, his wife asked him to resign as a director of Peter G Ward Industries. Mr Dunphy was only prepared to do so once the accounts for the financial year ended 30 June 2018 were finalised and a shareholders agreement had been executed. Numerous emails are in evidence between the parties endeavouring to reach agreement on these and other issues.

6. In March 2019, the trust deed for the Tamaki Trust was amended to appoint Mr Dunphy as trustee and, further, to remove Ms Ward and her children as beneficiaries of the trust. In April 2019, a Change to Company Details form was lodged with the Australian Securities and Investments Commission noting that Mr Dunphy had acquired shares in Peter G Ward Industries for $327,774, comprising 164 ordinary shares for $275,774 and 26 preference shares for $52,000. This shareholding comprises 8.742% of the ordinary shares and 13% of preference shares of Peter G Ward Industries respectively.

Confidentiality proceedings

7. On 30 March 2019, Ms Ward commenced proceedings 2019/170601 in the Equity Division of this Court seeking declarations that certain communications were confidential and restraining Mr Dunphy from disseminating, publishing or repeating those communications. Orders were made ex parte restraining Mr Dunphy from publishing these communications and those orders have been continued by consent ever since.

8. On 31 May 2019, Ms Ward’s solicitors requested disclosure from Mr Dunphy in relation to family law matters as Ms Ward wished to enter into negotiations with a view to resolving all issues arising from the breakdown of their marriage. Mr Dunphy retained solicitors. Amongst the material disclosed by the parties was notice of an extraordinary general meeting in respect of Peter G Ward Industries scheduled to take place on 4 October 2019, at which the removal of Mr Dunphy as a director was to be considered as well as the appointment of David Lovell in his stead. Mr Dunphy took issue with the notice of extraordinary meeting, which was withdrawn and another notice issued for a meeting to take place on 25 October 2019. In preparation for the meeting, Mr Dunphy’s solicitors complained that Mr Dunphy had not received any board packs since about September 2018 and requested this material forthwith. The meeting took place on 25 October 2019 and Mr Dunphy was removed as a director and replaced by Mr Lovell.

9. Further correspondence ensued between the parties in relation to disclosure under the Family Law Act 1975 (Cth). On 14 November 2019, Ms Ward’s solicitors wrote to Mr Dunphy’s solicitors noting that a property owned by Mr Dunphy in Mosman had been listed for sale. An undertaking was sought not to dispose of the proceeds of sale but to hold the proceeds in a bank account in the joint names of the parties. This undertaking was sought to be provided by 19 November 2019.

Oppression suit

10. On 22 November 2019, these proceedings were commenced. By the Originating Process, Mr Dunphy seeks relief under sections 232 and 233 of the Corporations Act including an order that the second to seventh defendants purchase his shares in Peter G Ward Industries at a price determined by the Court. The basis of the oppression suit is articulated in a statement of claim later filed. Mr Dunphy contends that, as a director of Peter G Ward Industries, from 2015 to September 2018 he attended board meetings of that company and its wholly owned subsidiary, Ward Civil & Environmental Engineering; was frequently consulted in relation to governance issues and operational activities of both companies; and was provided with board papers, monthly management accounts, draft consolidated financial statements and budgets for both companies. By reason of these matters, Mr Dunphy is said to have had a legitimate expectation that he would continue to participate in the management, operation and control of those companies.

11. However, this has not been the case. Mr Dunphy says following the end of his marriage, he has been excluded from participation in the management, operation and control of these companies. As a result of this, together with his removal as a director and a proposal that Peter G Ward Industries pay no further dividends for the financial year ended 30 June 2019, it is said that the affairs of Peter G Ward Industries have been conducted in a manner contrary to the interests of the members as a whole and in a manner that is oppressive to, unfairly prejudicial to or discriminatory against him in his capacity as a member of the company.

Family Court proceedings

12. Further correspondence ensued between the parties in respect of the proposed sale of Mr Dunphy’s Mosman property and, on 6 December 2019, Ms Ward filed an Initiating Application in the Sydney registry of the Family Court of Australia seeking financial orders including that Mr Dunphy transfer his shares in Peter G Ward Industries to her. Interlocutory orders were also sought restraining Mr Dunphy from disposing of the net proceeds of sale of the Mosman property. The corporate defendants in these proceedings were joined to the Family Court proceedings as respondents.

13. In Ms Ward’s affidavit in support of the Initiating Application, Ms Ward described alterations in Mr Dunphy’s shareholding in Peter G Ward Industries between 2014 and 2019 and anticipated seeking relief pursuant to section 106B of the Family Law Act in relation to those transactions. In her Financial Statement, Ms Ward disclosed a number of assets of which her shareholding in Peter G Ward Industries was but one. Ms Ward estimated the value of her 11.6% shareholding at $3.3 million.

Further progress of the three proceedings

14. The three proceedings have since run in parallel. On 9 and 13 December 2019, Black J made directions in these proceedings including for pleadings and the progress of any application to transfer these proceedings to the Family Court.

15. On 10 January 2020, Mr Dunphy filed his documents in the Family Court proceedings including his Response. The final orders sought by Mr Dunphy included a transfer of Ms Ward’s shares in Peter G Ward Industries to him. Ms Ward’s counsel relied heavily on this pleading as inconsistent with Mr Dunphy’s request for relief in these proceedings that his shares in the company be bought out. In his Financial Statement and supporting affidavit, Mr Dunphy attributed a value of $9,808,021 to his shares in Peter G Ward Industries, a figure derived from a valuation prepared in 2010. Mr Dunphy disclosed a number of assets of which his shares in Peter G Ward Industries was but one.

16. On 12 February 2020, a statement of claim was filed in these proceedings. On 13 February 2020, Ms Ward filed a motion to transfer these proceedings to the Family Court, supported by an affidavit of her solicitor, Sheridan Emerson. Mr Dunphy’s solicitor in the Family Court proceedings, Justine Walter, has also filed an affidavit deposing that a final hearing of the Family Court proceedings is likely at least two years away. Ms Emerson does not disagree.

17. On 19 February 2020, Ms Ward’s solicitors wrote to Mr Dunphy’s solicitors suggesting that his Response in the Family Court proceedings was inconsistent with the oppression suit and an abuse of process. On 20 February 2020, an Amended Response was filed by Mr Dunphy, withdrawing the prayer for relief seeking a transfer of shares in Peter G Ward Industries to him.

18. In defences filed in these proceedings in March 2020, Ms Ward and her company admit that Mr Dunphy, in his capacity as a director of Peter G Ward Industries, attended meetings of the board and was provided with board packs; Mr Dunphy was also separately engaged from time to time as a consultant of Ward Civil & Environmental Engineering and attended some meetings of that board in his capacity as a consultant. Further, Ms Ward contends that, from about July 2018, Mr Dunphy engaged in conduct which demonstrated that the extent of his previous involvement with Peter G Ward Industries and Ward Civil & Environmental Engineering was no longer appropriate and denies that Mr Dunphy had a legitimate expectation that he would continue to participate in the management, operation and control of those companies.

19. Ms Ward admits that, after their separation, Mr Dunphy was not invited to participate in further board meetings nor provided with board packs nor to attend board meetings but denies that he was thereby excluded from participation in the management, operation and control of the companies; denies any oppressive conduct; and, positively asserts that these proceedings are an abuse of process brought for the collateral purpose of causing distress and anxiety to Ms Ward following the breakdown of their marriage. The other corporate defendants essentially deny Mr Dunphy’s allegations.

20. On 24 March 2020, Registrar Ryan of the Family Court was informed of related proceedings in the Supreme Court. Orders were made to appoint a single valuer, including to value the parties’ interests in Peter G Ward Industries. Orders were made for relevant documents to be provided to the valuers together with a joint letter of instruction. The matter is next listed before the Registrar on 4 June 2020 for mention. The progress of the matter in the Family Court accords with Ms Walters’ expectation that the Family Law proceedings would not be ready by 24 March 2020 for the allocation of a conciliation conference as it was likely that single expert valuations would need to be obtained which would take at least a few months by the time all relevant documentation and information was provided to the expert and the expert prepared and released their report.

21. The confidentiality proceedings and these proceedings are no further advanced. The confidentiality proceedings are at the pleadings stage and, in these proceedings, the next stage after determining this application would be for the defendants to file their evidence. It is not proposed to transfer the confidentiality proceedings to the Family Court of Australia.

Transfer of proceedings from Corporations List

22. Section 1337H(2) of the Corporations Act applies to a proceeding with respect to a civil matter arising under the corporations legislation and where the transferor court is a State Supreme Court. Such a proceeding is called “the relevant proceeding”: section 1337H(1)(b)(ii). In respect of relevant proceedings, section 1337H(2) of the Corporations Act provides:

Transfer of proceedings by the Federal Court and State and Territory Supreme Courts

…

(2)   … 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.

23. It should be noted immediately that section 1337C(1) of the Corporations Act provides:

Jurisdiction of Family Court and State Family Courts

(1)   Jurisdiction is conferred on the Family Court with respect to civil matters arising under the Corporations legislation.

As Brereton J observed in In the matter of PJL Group Pty Limited [2018] NSWSC 756 at [21], it needs to be recognised that by reason of section 1337C the Family Court of Australia is a corporations court. Thus, the Family Court of Australia has jurisdiction in the matters for determination in the relevant proceeding. The Family Court also has accrued jurisdiction to make orders in relation to civil matters arising under the Corporations Act: Gallieni v Gallieni [2011] FamCA 791 per Benjamin J at [30]-[32].

24. Section 1337L specifies further matters for the Court to consider when deciding whether to transfer proceedings under section 1337H:

Further matters for a court to consider when deciding whether to transfer a proceeding

In deciding whether to transfer under section 1337H, … a proceeding or application, a court must have regard to:

(a)   the principal place of business of any body corporate concerned in the proceeding or application; and

(b)   the place or places where the events that are the subject of the proceeding or application took place; and

(c)   the other courts that have jurisdiction to deal with the proceeding or application.

It is not suggested by the parties that any of these matters are relevant in this case. Thus the only question is whether it appears, having regard to the interests of justice, that it is more appropriate for these proceedings to be determined by the Family Court of Australia.

25. Perhaps the most pithy summary of relevant factors to be considered on an application such as this is that of McKerracher J in Yara Pilbara Fertilisers Pty Limited v Oswal (No 8) [2015] FCA 49, where his Honour noted that this is a balancing exercise between relevant factors, essentially a practical question or a ‘nuts and bolts’ management decision as to which court is the most appropriate to hear and determine the substantive dispute, and where the applicant does not have an onus of persuasion nor is weight given to the plaintiff’s choice of forum: at [24] citing BHP Billiton Limited v Schultz (2004) 221 CLR 400; [2004] HCA 61. His Honour provided an informative list of factors which may be relevant to such an exercise, at [26]:

… this Court has previously recognised many factors as being relevant to the decision, which will vary in weight from case to case, including:

(1)   the stage of the proceedings in the respective courts;

(2)   the commonality or diversity of the parties;

(3)   the nature of the proceedings;

(4)   the commonality or diversity of issues;

(5)   the risk of conflicting findings of fact or conflicting orders;

(6)   a costs benefit analysis;

(7)   the potential unnecessary drain on judicial and other public and private resources; and

(8)   whether there is any particular judicial expertise residing in one court of the other.

26. In that case, his Honour transferred proceedings in the Federal Court Registry in Western Australia to the Supreme Court in Victoria where there was a substantial overlap between the issues in each of the proceedings and amalgamation of the proceedings in one court or other would promote the efficient use of that court and the parties’ resources: at [70]. Importantly, the parties to the Western Australian proceedings were also parties to the Victorian proceedings, but the reverse was not true. The issues in the Western Australian proceedings had become a subset of, or subsumed by, the Victorian proceedings. Most of the affected parties preferred that the proceedings be managed and heard in Victoria. A trial date had been fixed in Victoria.

26. In respect of matters concerning the Corporations Act particularly, the Court may have regard to whether third parties are involved, such as creditors or shareholders, whose interests may be adversely affected by being compelling to become actively involved in a private dispute between spouses in the Family Court: Roff v Aqua Distributors Pty Ltd (1996) 14 ACLC 1769; (1996) 22 ACSR 248 at 250 per Merkel J. In that case, Merkel J transferred an oppression suit from the Federal Court to the Family Court where the corporation was a family company owned and operated by the former husband and wife, no third parties were involved, and the hearing in the Family Court proceedings was imminent.

27. This approach was followed by Gyles J in Re Tech Universal (HK-Macau) Development Pty Ltd v Tech Universal (HK-Macau) Development Pty Ltd (2005) 53 ACSR 704; [2005] FCA 256, where an application to wind up a dormant family company was transferred to the Family Court where proceedings had already been on foot for about five years. Gyles J noted at [9]:

… Where a company is trading actively on a substantial scale or where a real question of insolvency arises serious consideration would be required before a winding-up proceeding would be transferred to the Family Court.

However, Gyles J considered that the basis of the application to appoint a liquidator was “very much entwined with the kind of claims and counter-claims between the parties which will fall for assessment by the Family Court” and concluded that a transfer was in the interests of justice: at [10]. The same approach was taken by Black J in In the matter of Webster Consolidated (Holdings) Pty Limited [2016] NSWSC 376, where his Honour transferred an application to set aside a statutory demand to the Family Court.

29. Similarly, in Vaughan v Frost [2010] NSWSC 492, the parents of the wife opposed the transfer of proceedings from the Equity Division of this Court to the Family Court. In this Court, the parents sought a declaration that property held in the name of their daughter was held on trust for them. The parents said that their costs would be increased if they were compelled to participate in the wider matrimonial cause in the Family Court which concerned issues with which the parents were not concerned. Further, valuations of the properties in question would be required in the Family Court but were irrelevant to the claims in the Equity Division. Nonetheless, White J observed at [13]:

However, when the position of all parties is taken into account the general principle is, and experience teaches, that a single proceeding dealing with all issues is likely to minimise the overall burden of costs for all parties. If proceedings continue separately the defendants will be required to incur costs on matters of which there will be duplication.

The proceedings were transferred to the Family Court.

30. Also of central importance is whether one court has the power to determine all matters in issue, whilst the other court does not: Roff v Aqua Distributors at 250; Burman v Zillman [2017] NSWSC 229 per Darke J at [15]-[20]; PJL Group at [24], [31] and [35].

31. Finally, relevant to the case at hand, in Hancock Prospecting Pty Limited v 150 Investments Pty Limited (2017) 120 ACSR 495; [2017] FCA 520, Bianca Rinehart applied to transfer Federal Court proceedings to the Supreme Court of New South Wales. Of pivotal importance to Yates J was that the Federal Court proceedings raised a discrete question concerning the construction of the articles of association of a corporation whilst the Supreme Court proceedings concerned a much broader dispute. Whilst his Honour accepted that determination of the discrete question in the Federal Court proceedings may narrow the issues in dispute in the Supreme Court proceedings, his Honour concluded at [70]:

… But assuming those observations to be correct, as they well might be, it does not follow that those advantages can only be secured by the present proceeding remaining in this Court. If those advantages are real and capable of attainment, they can just as readily be realised by transferring the present proceeding to the Supreme Court, where the standard principles of case management can be equally deployed to ensure that the Trust proceeding is conducted as quickly, inexpensively and as efficiently as the just determination of the case requires. Indeed, to my mind, it makes no sense that an apparently anterior but nevertheless central question in a case raising a broad range of issues for determination in one court should be treated, effectively, as a separate question for resolution in another court having the same jurisdiction as the first court to hear and determine that separate question. It seems to me that fragmentation of that kind can only lead to manifest inefficiency and certainly greater cost brought about by the inevitable and unnecessary duplication of work. … There is also the real likelihood of delay arising from an inability to co-ordinate court events optimally while (what is essentially) one dispute straddles two courts. Such fragmentation is not conducive to efficient case management or to outcomes that serve the interests of justice.

The proceedings were transferred to the Supreme Court of New South Wales.

Relevant factors in this case

32. The parties pointed to five factors as being potentially relevant to whether, having regard to the interests of justice, these proceedings should be transferred to the Family Court. First, Ms Ward submitted that the wide powers conferred by section 79 of the Family Law Act 1975 (Cth) enabled the Family Court to make property settlement orders in respect of all of the property of the marital parties, including Mr Dunphy and Ms Ward’s shares in Peter G Ward Industries whilst the relief sought in these proceedings was limited to resolving the issue of Mr Dunphy’s ownership of those shares. The family law proceedings could finally and completely resolve the dispute between the marital parties whilst these proceedings cannot. Further, if Mr Dunphy was unsuccessful in establishing oppression, then these proceedings will have been in vain whereas the Family Court can make orders that Mr Dunphy transfer his shares to Ms Ward without there being any finding of oppression.

33. Mr Dunphy accepted that determination of these proceedings would not determine everything in the Family Court proceedings but, as the primary assets of the husband and wife are these shares, an earlier resolution of these proceedings would nonetheless assist a more expeditious determination of the remaining issues in the Family Court proceedings. Mr Dunphy also submitted that, in circumstances where the confidentiality proceedings remain separate in any event, transferring these proceedings to the Family Court would not finally and completely resolve the disputes between the parties.

34. Mr Dunphy submitted that determination of the oppression suit would be more efficient and less costly in this Court, which deals with such matters as a specialist list in relation to the Corporations Act and would likely do so much more quickly than the Family Court. Thus, if these proceedings continue, it will result in a more efficient and timely determination of the value of the shares in Peter G Ward Industries in advance of the balance of the matrimonial property dispute in the Family Court. An early determination of the value of the most substantial matrimonial assets was said to be in the interests of justice as the Family Court proceedings would be able to take that value or order for transfer of Mr Dunphy’s shares into account. Ms Ward re-joined by submitting that any valuation determined in these proceedings was said to be of no assistance in the family law proceedings which would be heard sometime later and thus would need to be revisited in any event. The Family Court has already made orders directing Mr Dunphy to nominate a valuer in any event.

35. Whilst this Court could have jurisdiction vested under the Jurisdiction ofCourts (Cross-vesting) Act 1987 (Cth) to hear the whole of the family law proceedings, Mr Dunphy has not filed an application to transfer the Family Court proceedings here and for this Court to be cross-vested with jurisdiction under the Family Law Act. Thus, the fact that the Family Court has jurisdiction to determine all issues between the parties – whilst this Court will not – favours a transfer of these proceedings to the Family Court. As to Mr Dunphy’s submission that an earlier determination of the oppression suit will have benefits for the remaining issues in the Family Court, I note that a similar argument was rejected in Hancock Prospecting. For essentially the same reasons as expressed by Yates J, I consider that whilst determining the oppression suit in this Court may simplify other issues in the Family Court proceedings, such a possibility is a minor consideration when balanced against the additional costs and dislocation inherent in the parties progressing two (or three) pieces of litigation. The fact that the confidentiality proceedings will remain on foot in this Court does diminish Ms Ward’s argument but, in circumstances where the confidentiality proceedings are separate to these proceedings, I can only decide whether it is in the interests of justice to transfer these proceedings to the Family Court.

36. Second, Ms Ward submitted that there is a substantial overlap in the issues to be determined in the oppression suit and the Family Court proceedings such as the alleged conduct by the parties the subject of these proceedings as well as valuation of shares in Peter G Ward Industries. Ms Ward submitted that there was a risk of inconsistent findings as a central issue in both proceedings was the nature and extent of Mr Dunphy’s involvement in Peter G Ward Industries. In the family law proceedings, Mr Dunphy claims that his involvement in the company is a contribution that he made during the marriage. His involvement with the company is also central to his claim in these proceedings that he had a legitimate expectation that he would continue to participate in the management, operation and control of Peter G Ward Industries and Ward Civil & Environmental Engineering.

37. Mr Dunphy submitted that there was no risk of inconsistent findings as to the share value of Peter G Ward Industries, because the parties to both proceedings were the same and thus would be bound by any finding. Otherwise, it was said that there was no overlap in the issues between the proceedings: the oppression suit involves narrow factual issues relating to the failure to provide Mr Dunphy with information and his removal as a director. It was said that Ms Ward essentially admitted these allegations, which were not relevant to the family law proceedings where valuation of matrimonial assets and subsequent division between the spouses are the primary issues rather than the conduct of the business of Peter G Ward Industries. Nor are issues of adequacy of financial disclosure relevant to these proceedings.

38. If these proceedings and the Family Court proceedings continue to run separately, then this Court will be examining the nature and extent of Mr Dunphy’s involvement in Peter G Ward Industries and Ward Civil & Environmental Engineering over some four years through the prism of the Corporations Act with a view to identifying whether Mr Dunphy had a legitimate expectation that he would continue to be involved in the management of those companies in the events which have occurred and whether, in light of those events, he is entitled to relief from oppression in the form of a buy-out order.

39. In the event that oppression is established and a buy-out order considered the appropriate remedy, then this Court would value Mr Dunphy’s shares, not necessarily in accordance with strict valuation principles, but as explained in In the matter of Scientific Management Associates Pty Ltd [2019] NSWSC 1643 at [309]:

But in an oppression suit, it is not necessary to value shares with this level of specificity. The basic requirement is that the valuation must be fair on the facts of the particular case: Re Quest Exploration Pty Limited (1992) 6 ACSR 659; Dynasty Pty Limited v Coombs; Short v Crawley (No 30) at [1246]. The Court has a broad discretion as to the mode of valuation. The Court’s task is to fix a price that is fair in all the circumstances having regard to the value that the shares would have had, but for the oppressive conduct. The price to be paid is compensatory in nature, aimed at redressing the wrong done, so the price is not confined to ordinary valuation principles and will not always reflect the real worth of the shares: Smith Martis Cork & Rajan Pty Limited v Benjamin Corp Pty Limited; Shirim Pty Limited v Fesena Pty Limited [2002] NSWSC 10; In the matter Cheal Industries Pty Limited [2012] NSWSC 595. …

40. The task of the Family Court will be to view Mr Dunphy’s involvement with Peter G Ward Industries through the prism of section 79(4) of the Family Law Act including having regard to Mr Dunphy’s direct or indirect financial or non-financial contributions to the property of the parties to the marriage. The valuation methods will be different to those in an oppression suit. Thus, it is possible that this Court and Family Court may come to different conclusions, both as to Mr Dunphy’s role and as to value of his shares, such that there is a risk of conflicting findings and orders.

41. True it is that the parties to both proceedings are the same and thus, assuming this Court concluded these proceedings before the Family Court, then complicated arguments may ensue in the Family Court as to whether the parties are precluded by the findings of this Court from agitating similar issues in the Family Court or calling further or different evidence than that which was before this Court. But that is the point. The parties should be spared these complicated arguments and the uncertainty of outcome which may result if these two proceedings continue separately. Nor do I think the factual issues in these proceedings are as narrow as was submitted, nor that Ms Ward has essentially admitted these allegations, noting of course that the other defendants have not. Thus the overlap of issues and the risk of inconsistent findings points in favour of transferring these proceedings to the Family Court.

42. Third, Ms Ward submitted that capital gains tax roll-over relief is available under section 126-5 of the Income Tax Assessment Act 1997 (Cth) for orders made pursuant to the Family Law Act whereas there is no equivalent provision in respect of orders made pursuant to sections 232 and 233 of the Corporations Act. On the face of it, there is a substantial capital gains tax exposure here; if a buy-out order was made in these proceedings it may have adverse capital gains tax implications which may reduce the total amount of marital property available to be distributed.

43. Mr Dunphy submitted that capital gains tax relief was entirely speculative, unsupported by evidence. Mr Dunphy was a resident of New Zealand since December 2019 and contended that New Zealand does not have a capital gains tax regime. Further, both parties have substantial assets apart from the shares in Peter G Ward Industries and thus any liability for capital gains tax could easily be met. Ms Ward replied that a capital gains tax event will occur if there was a change in ownership of the shares by reason of the relief sought in the oppression suit: section 104-10(1) and (2) of the Income Tax Assessment Act. A capital gain would be made if the capital proceeds from the disposal of the shares are more than the cost base of the shares: section 104-10(4).

44. It is not for me on this application to delve into the intricacies of the capital gains tax regime of Australia as compared with New Zealand, suffice to say that, on the face of it, if Mr Dunphy is successful in these proceedings, he may well be faced with a substantial bill for capital gains tax. If, instead, final orders are made in the Family Court which have the result that Mr Dunphy receives a property settlement, including in respect of these shares, without being obliged to pay capital gains tax then that is a benefit which should be taken into account as it prevents the marital pool of assets being unnecessarily depleted by the payment of tax which would otherwise not be payable. This factor appears to me to point in favour of a transfer of these proceedings to the Family Court.

45. Fourth, it was submitted that section 121 of the Family Law Act provides for a restriction on the publication of court proceedings which was said to confer a valuable protection given the inclusion of certain material in Mr Dunphy’s affidavit in these proceedings and the subject matter of the confidentiality proceedings. Mr Dunphy submitted that the Supreme Court has power to make orders restricting access or publication of material including under the Court Suppression and Non-Publication Orders Act 2010 (NSW) and any material in Mr Dunphy’s affidavit which was said to be irrelevant or scandalous could be rejected by a trial judge. Section 121 of the Family Law Act was said to add nothing material in the circumstances.

46. Ms Ward submitted in reply that section 121 of the Family Law Act concerning restrictions on publishing information in family court proceedings is more beneficial in its operation than the Court Suppression and Non-publication Orders Act 2010 (NSW) applicable to the Supreme Court, as parties in the proceedings do not need to take steps to be afforded with the protections under section 121 of the Family Law Act. Section 121(1) of the Family Law Act creates an offence for a person who publishes or otherwise disseminates to the public or a section of the public any account of any proceeding or part of any proceeding that identifies a party to the proceedings. Unlike section 121, for parties to be afforded similar protections under the Court Suppression and Non-publication Orders Act, an order must first be made and an order can only be made if the grounds set out in section 8 of that Act are satisfied. In deciding whether to make an order, section 6 of the Court Suppression and Non-publication Orders Act requires the Court to take into account that its primary objective of the administration of justice is to safeguard the public interest in open justice.

47. It may well that section 121 of the Family Law Act confers greater protection on Ms Ward more easily than the Court Suppression and Non-publication Orders Act. On this application, I am not minded to conduct a detailed comparison of each regime. Suffice to say that I consider that this Court has ample powers to restrain litigants from behaving badly and I consider this to be a neutral factor on this application.

48. Finally, Ms Ward acknowledged that the hearing of the Family Court proceedings was likely to occur much later than a hearing in these proceedings. However, whilst it was undesirable to have Mr Dunphy remain as a shareholder of Peter G Ward Industries in circumstances in which he contends that he has been oppressed, it was submitted that the Court should not be overly concerned about this in circumstances where Mr Dunphy, initially at least, sought orders in the Family Court proceedings that Ms Ward’s shares in Peter G Ward Industries be transferred to him and where Mr Dunphy is a sophisticated investor. It was also submitted that the oppression suit was weak.

49. Mr Dunphy submitted that, in circumstances where Mr Dunphy no longer has access to any information as to the management of the company, this situation ought not to be left undisturbed for two years where both parties seek the transfer of shares in the company.

50. I am not prepared on this application to opine on the merits of Mr Dunphy’s oppression suit suffice to say that he has a prima facie case. Both parties accept that these proceedings will be determined well in advance of the Family Court proceedings and this is a factor which points towards refusing to transfer these proceedings. But, overall, this factor does not outweigh the other factors to which I have referred and, in the long run, would I think have the result of causing additional costs to both parties in seeking to resolve the issues which remain between them.

40. On balance, it seems to me to be in the interests of justice for these proceedings to be transferred to the Family Court of Australia. All three proceedings are at an early stage. The parties to these proceedings and those in the Family Court are identical. There is an overlap of issues, in particular, Mr Dunphy’s role in Peter G Ward Industries and the value of his shares, which gives rise to a risk of conflicting findings. On a costs benefit analysis, leaving two proceedings on foot where one would do is likely to unnecessarily drain judicial resources as well as those of the parties. Whilst third parties are involved, they are already joined to both proceedings and, in any event, appear to be, by and large, related companies associated with Ms Ward. The Family Court has the power to determine all issues between the parties whilst this Court presently does not in the absence of an application by Mr Dunphy to transfer the Family Court proceedings here and for this Court to be cross-vested with jurisdiction under the Family Law Act. Thus, I will transfer these proceedings to the Family Court of Australia.

Costs

52. Both parties sought their costs of this motion if they were successful and, if they lost, that the successful party’s costs be their costs in the cause. Having regard to the fact that the Family Court is ordinarily a cost-free jurisdiction under section 117(1) of the Family Law Act 1975 (Cth), and that these proceedings were commenced before the Family Court proceedings (albeit, only just), I consider it appropriate to order that the costs of this motion be each party’s costs in their respective causes.

53. For these reasons, I make the following orders:

1. Order pursuant to section 1337H of the Corporations Act 2001 (Cth) that these proceedings be transferred to the Sydney Registry of the Family Court of Australia to be heard with Family Court of Australia proceedings SYC8338/2019.

2. Order that the parties’ costs of the Notice of Motion filed on 13 February 2020 be each party’s costs in their respective causes.

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Decision last updated: 01 April 2020