In the Matter of Re Moranowa Pty Ltd (in Liq): John Sheahan, Moranowa Pty Ltd (in Liquidation) Formerly Trading as Scott Russell Distribution Services v Circuit Finance Pty Ltd No. SCGRG 93/198 Judgment No. 3966

[1993] SASC 3966

COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA DEBELLE J

CWDS
Practice and procedure - Jurisdiction - Cross-Vesting - Action by liquidator of company registered and carrying on business in Victoria - Defendant company in Victoria - Relevant transaction in Victoria - All witnesses in Victoria - Whether appropriate to transfer action to Supreme Court of Victoria - Application granted
Corporations (South Australia) Act 1990s.44. Seymour-Smith v Electricity Trust of South Australia (1989) 17 NSWLR 648, at 662; Bourke v State Bank of New South Wales (1988) 85 ALR 61, at 77; State Bank of South Australia v Clockwork Motors Pty Ltd (1991) 101 ALR 402, at 404 and 406; Acton Enqineerinq Pty Ltd v Campbell (1991) 103 ALR 437 and Re Phoenix Oil and Transport Co Ltd (No. 2) (1958) 1 Ch 565, at 570, applied.

HRNG ADELAIDE, 14,19 May 1993 #DATE 19:5:1993
Counsel for plaintiffs:     Mr P Geyer
Solicitors for plaintiffs:    Ward and Partners
Counsel for defendant:        Mr D Greenwell
Solicitors for defendant:     Knox and Hargraves

ORDER
Proceedings transferred.

JUDGE1 DEBELLE J This is an application to transfer proceedings from this court to the Supreme Court of Victoria. The application is made pursuant to ss.44 and 44(b) of the Corporations (South Australia) Act 1990. The plaintiff is the liquidator of a company called Moranowa Pty Ltd ("Moranowa"). He was appointed on 22 January 1992 when an order was made in this court winding up Moranowa. 2. In this action, the plaintiff claims that a payment of $30,000 made by Moranowa to the defendant on 20 November 1991 was a preferential payment and, as such, is void as against the liquidator by virtue of s.565 of the Corporations Law. 3. The defendant applies to transfer this action on the following grounds. Moranowa is a company registered in Victoria. It operated a haulage and carrying business out of premises in North Geelong. To all intents and purposes, its trading operations were based at the premises at North Geelong. The defendant is a credit provider licensed under the Credit Act, 1986 (Vic). It conducts its business out of an office in Geelong. On 15 November 1991, a finance broker made a proposal to the defendant on behalf of Moranowa to purchase and lease a motor truck. It was represented to the defendant that the purchase price for the truck was $52,021. It was also represented to the defendant that there was considerable urgency in that the transaction had to be completed by no later than 20 November 1991. The defendant agreed that it would purchase the truck and lease it to Moranowa. 4. The terms of the lease agreement were that Moranowa would make an initial payment of $30,000 and thereafter make 48 monthly payments of $773.77 cents. The residual value of the truck at the expiry of the lease was agreed at $1.00. The payment of $30,000 was to be paid on the same day as the completion of the purchase of the truck. The vendor of the truck was E.M. Monaghan. It was agreed that the defendant would, on 20 November 1991, draw a cheque payable to E.M. Monaghan for $52,021, the amount of the purchase price. The defendant also agreed with the broker acting on behalf of Moranowa that the broker would arrange completion of the purchase of the truck and would deliver to the defendant the registration and transfer papers signed by Monaghan. The truck was to be delivered direct to Moranowa. The broker was also to arrange that Moranowa would, on 20 November 1991, execute the lease agreement and arrange for payment of the initial sum of $30,000 to the defendant. 5. On the morning of 20 November 1991, the defendant drew a cheque payable to E.M. Monaghan for $52,021. It handed the cheque to the broker. The defendant alleges that the cheque was not paid to E.M. Monaghan. It alleges that the broker fraudulently endorsed the cheque to Kezuri Pty Ltd, a company of which the broker and his wife are directors. The defendant alleges that the broker then paid the cheque into the account of Kezuri Pty Ltd at the Commonwealth Bank in Ryrie Street, Geelong; that on 20 November 1991, a cheque for $30,000 was drawn on the account of Kezuri Pty Ltd and paid to the credit of Moranowa; and that, on the same day, a cheque for $30,000 was drawn on the account of Moranowa and paid to the defendant. The defendant alleges that the payment of $30,000 made to it on 20 November 1991 by Moranowa was made with its own funds and is, therefore, not a preference. 6. The defendant further says that E.M. Monaghan, the vendor of the truck, received only $20,000, leaving a balance due to E.M. Monaghan of some $32,201. The defendant also says that the broker retained the sum of $2,201 on account of commission and other expenses. 7. The defendant has issued proceedings against the Commonwealth Bank claiming conversion of its cheque and against the broker for misrepresentation. Those proceedings have been instituted in the Geelong Magistrates Court. 8. In support of its application to transfer this action to the Supreme Court of Victoria, the defendant says it will be necessary to call a number of witnesses in order to prove the several steps in the round- robin transaction which led to the payment to it of $30,000. They will include officers of the defendant, officers of the bank, the broker, and the vendor of the truck. All of the witnesses reside or carry on business in or near Geelong. It will be noted from the above narrative that almost all of the dealings occurred in Geelong. The defendant says that it is a small company and cannot afford the cost of bringing these witnesses to Adelaide to defend this action. 9. The plaintiff opposes the application. The plaintiff says that all of the books and records of Moranowa are now stored in Adelaide and that it will be necessary to transport them to Melbourne for the purpose of proving the insolvency of Moranowa, a cost it wishes to avoid. The plaintiff says that there is a very substantial number of such books and records and the cost of transporting them back to Melbourne would be quite prohibitive. Further, he says, the removal of those books and records would interfere with the administration of the winding up, particularly given that there are some 35 matters where proceedings have been issued or where proceedings are contemplated. The plaintiff also says that it would be necessary to have resort to the books and records for the purpose of proving whether there was a preference and for the purpose of proving a debtor/creditor relationship between Moranowa and the defendant and whether the payment was made by the company. 10. In order to answer the contentions of the plaintiff, the defendant has stated that, if these proceedings are transferred to the Supreme Court of Victoria, it would admit, for the purpose of the proceedings, that at all material times Moranowa was insolvent. The admission will be made for the purpose of obviating the necessity on the part of the plaintiff to prove insolvency. The admission is not made against the defendant so as to prejudice its argument that it was not aware of the plaintiff's insolvency or could have been aware of that fact at the material time. 11. Although the admission is a qualified one, it does, in my view, very substantially remove whatever force might have been in the plaintiff's arguments as to the cost or inconvenience of transporting books and records to Melbourne. It is possible, in my view, for the question of the proof of the preference to be made without the necessity of transporting these books and records. There are steps which can be taken by the parties to obviate that course. In any event, a substantial fact which would have had to have been proved by the plaintiff has been admitted, namely, the insolvency of the plaintiff. 12. The factors which are relevant for consideration of whether this action should be transferred to the Supreme Court of Victoria include the place where the parties reside or carry on business, the place where the witnesses reside or carry on business, the place where other evidence is located, the desirability of avoiding unnecessary costs and the law governing the questions which fall for determination in the action. The aim is to select the court which, in all the circumstances, most facilitates the course of the litigation: Seymour-Smith v Electricity Trust of South Australia (1989) 17 NSWLR 648, at 662. Another material fact is the interests of justice. As Wilcox J observed in Bourke v State Bank of New South Wales (1988) 85 ALR 61 at 77, the phrase "the interests of justice" should be read widely. 13. In my view, the interests of justice require this action to be transferred to the Supreme Court of Victoria. The amount at stake is relatively small, particularly given the costs likely to be incurred in bringing the defendant's witnesses to Adelaide. The admission which the defendant is prepared to make has the consequence that the insolvency of Moranowa is not in issue and the bulk of the evidence will be directed to the circumstances in which the payment of $30,000 was made. 14. If regard is had to the convenience of the parties and witnesses, and, in particular, to what will be involved if the action proceeds in this court rather than the Supreme Court of Victoria, it is plain that, not only is the Supreme Court of Victoria the court which will facilitate the course of the litigation, but also that the interests of justice require that the action be heard by the Supreme Court of Victoria. The only connection that this action has with South Australia is that the order winding up Moranowa was made in this court and that the documents have now been transferred from Geelong to Adelaide. In all other respects, the issues in this action are concerned with parties and witnesses who reside or carry on business in and about Geelong. The transaction occurred in and about Geelong. 15. I, therefore, find that the interests of justice require that the action be heard in the Supreme Court of Victoria. 16. Mr Geyer, who appears for the plaintiff, has emphasised that the liquidator is conducting an administration which is subject to the jurisdiction of this court. That is perfectly true. He refers to the observations of Von Doussa J in State Bank of South Australia v Clockwork Motors Pty Ltd (1991) 101 ALR 402 at 404, observations which were approved in Acton Engineering Pty Ltd v Campbell (1991) 103 ALR 437. Von Doussa J said:
    "Under former companies legislation, a compulsory winding up has
    been recognised as an administration conducted by the court
    which made the winding-up order: Re Phoenix Oil and Transport Co
Ltd (No.2) (1958) 1 Ch 565, at 570. An official liquidator
    appointed to conduct that administration was an officer of the
    court which made the appointment. There is, in my opinion,
    nothing in the new package of corporations legislation which
    alters the validity of these propositions." 17. I would not in any way wish to dissent from what His Honour there said, but, with all respect to Mr Geyer, I do not think those observations are pertinent to the issue of whether this action should be transferred to the Supreme Court of Victoria. Indeed, in State Bank of South Australia v Clockwork Motors Pty Ltd (supra) at 406, Von Doussa J recognised that in an appropriate case, an order transferring proceedings to another jurisdiction might have to be made. 18. I acknowledge also that the national operation of the Corporations Law enables a creditor in one State to obtain an order in that State winding up a company registered in another State. One consequence of proceeding in that way may well be that a liquidator might find that actions commenced in the State where the winding up order was made will be transferred to a court in the State in which the company was carrying on business particularly where the relevant transaction concerns events in the State in which the company was carrying on business. 19. For all of these reasons, I allow the application. I order that these proceedings be transferred to the Geelong Registry of the Supreme Court of Victoria. I order that the plaintiff shall pay the defendant's costs of and incidental to the application. That order, of course, excludes the costs of the application on 26 March which were payable by the defendant in any event. I stay the execution of this order for a period of 21 days. Fit for counsel.