In the Matter of SC Pty Ltd (a pseudonym)

Supreme Court of South Australia
(Civil: Application)
IN THE MATTER OF SC PTY LTD (A PSEUDONYM)
[2023] SASC 26
Judgment of the Honourable Justice Kimber
COURTS AND JUDGES - COURTS - JURISDICTION AND POWERS - CONCURRENT JURISDICTION OF DIFFERENT COURTS - TRANSFER OF PROCEEDINGS UNDER CROSS-VESTING LEGISLATION - WHERE APPROPRIATE AND IN INTERESTS OF JUSTICE - CORPORATION MATTERS
This is an application pursuant to s 1337H of the Corporations Act2001 (Cth) (CA) to transfer proceedings to the Federal Circuit and Family Court of Australia (FCFCOA).
The first applicant, VS, and the first respondent, GS, are the joint directors and shareholders of the third respondent, SC Pty Ltd. The second respondent, ES, is the wife of GS.
In July 2019, ES instituted proceedings in the FCFCOA with respect to the matrimonial property pool of ES and GS. Those proceedings remain on foot. ES contends the property pool includes GS’s 50% shareholding in SC Pty Ltd and two properties in Clarendon owned by GS and VS. VS holds the balance of the shares in SC Pty Ltd.
After the commencement of the proceedings in the FCFCOA, VS applied to bring proceedings in this Court pursuant to s 1337H of the CA and applied to join SC Pty Ltd as the second applicant pursuant to s 237 of the CA (the proposed proceedings). VS contends he is owed rent from the two properties and that he was underpaid for his work in SC Pty Ltd over several years. ES then applied in this Court to transfer VS’s proposed proceedings to the FCFCOA. VS and GS oppose that transfer.
Held, per Kimber J:
1.There being relevant overlap between the issues in the FCFCOA proceedings and the proposed proceedings, it is in the interests of justice to transfer the proposed proceedings to the FCFCOA.

Corporations Act 2001 (Cth) ss 237, 1337C, 1337H, referred to.
Yeo, in the matter of Armstrong and Shaw Pty Ltd (in liq) v Whiteman [2020] FCA 849; Peter G Ward Industries Pty Ltd (Ward Industries) [2020] NSWSC 339; Valceski v Valceski (2007) 210 FLR 387, applied.

IN THE MATTER OF SC PTY LTD (A PSEUDONYM)
[2023] SASC 26
Civil: Application

This is an application pursuant to s 1337H of the Corporations Act 2001 (Cth) (CA) to transfer proceedings to the Federal Circuit and Family Court of Australia (FCFCOA). As the parties are involved in proceedings in the FCFCOA, I will use initials.
The first applicant in this Court (VS) has filed an application (FDN 1) seeking leave to bring proceedings in the name of the third respondent (SC Pty Ltd) pursuant to s 237 of the CA (the proposed proceedings). VS is a shareholder and director of SC Pty Ltd (the company). The first respondent in the proposed proceedings (GS) is the brother of the first applicant and is also a shareholder and director of SC Pty Ltd. The second respondent in the proposed proceedings (ES) is the wife of GS. VS having sought leave to bring the proceedings in this Court, ES has applied to transfer the proceedings to the FCFCOA (FDN 6).
These are my reasons for granting the application by ES to transfer the proposed proceedings.
Background
FCFCOA Proceedings
ES and GS were married on 10 December 2000 but separated in August 2017. ES instituted proceedings in the FCFCOA on 3 July 2019. The Initiating Application was accompanied by a supporting affidavit by ES dated the same day. The respondents to the Initiating Application were GS, his mother MS and VS.
The matrimonial assets and issues to be addressed as part of the property settlement between ES and GS as identified in the supporting affidavit of ES were:
1.The matrimonial home;
2.Two properties at Clarendon owned by GS and VS as tenants in common in joint shares (the Clarendon properties) from which the business of SC Pty Ltd (the company), is conducted;
3.GS’ fifty per cent shareholding in the company (the other fifty per cent being held by VS);
4.A property located at Marino (the Marino property) owned by MS and VS as joint owners and tenants in common (in respect of which ES contends that MS holds her half share on trust for GS such that the Marino property forms part of the pool of matrimonial assets); and
5.Motor vehicles, a boat, bank accounts and superannuation.
In her affidavit, ES deposed that GS had threatened that if she sought a divorce VS would pursue proceedings against SC Pty Ltd claiming unpaid wages to denude the company of assets. ES sought orders restraining VS from pursuing proceedings against the company. Interim orders were made on 13 August 2019 requiring GS to provide a vehicle to ES, restraining GS from dealing with the various properties and providing for a timetable.
GS filed an affidavit of 1 November 2019 in response to the affidavit of ES of 3 July 2019. In that affidavit, GS relevantly set out that he denied any interest in the Marino property and appeared to accept that VS was entitled to substantial unpaid wages from the company.
Further orders were made on 1 November 2019 for a partial property settlement to ES and further timetabling. VS subsequently received extensions of time to file his responding material.
On 31 January 2020, VS filed a response to the Initiating Application and the supporting affidavit of ES. The response of VS sought orders that he obtain discovery of the accounting records of the company and that the property settlement proceedings otherwise be adjourned pending the resolution of his claims against the company, GS and ES. In VS’s supporting affidavit he:
1.Denied that GS had any interest in the Marino property and opposed orders sought by ES that a half share in the Marino property held by MS formed part of the pool of matrimonial assets; and
2.Set out at length the basis for a claim that he was owed outstanding entitlements by the company and reserved the right to pursue those proceedings in another court.
Subsequently, VS obtained an expert accounting report which was exhibited to an affidavit of his solicitor filed in the FCFCOA proceedings on 11 September 2020.
On 9 April 2021, ES filed an Amended Initiating Application which was substantially in relation to parenting issues. Relevantly, the Amended Initiating Application sought orders as part of the FCFCOA proceedings as to the entitlements of VS in relation to the company or his partnership with GS. An unsuccessful mediation was then held on 24 January 2022.
On 3 February 2022, a Directions Hearing was held in the FCFCOA before his Honour Judge McGinn which addressed the further progress of the proceedings. Orders were made and Judge McGinn gave written reasons. While his Honour noted that VS foreshadowed proceedings in another court in relation to the company, he also noted there had been no suggestion that the FCFCOA lacked jurisdiction to resolve all matters between the parties. Judge McGinn made directions for the joinder of the company to the FCFCOA proceedings and for the filing of particulars of the claim asserted by ES in respect of the Marino property and the claim asserted by VS as against the company and GS. ES filed particulars in respect to the Marino property issues on 18 March 2022.
The proposed proceedings in this Court
The proposed proceedings in this Court were commenced by VS on 11 April 2022 by way of Originating Application supported by an affidavit of VS dated the same day. As set out above, the application by VS to this Court seeks leave pursuant s 237 of the CA to pursue proceedings on behalf of SC Pty Ltd. The application also seeks leave to join SC Pty Ltd as the second applicant and leave for VS and the company to file a statement of claim.
The settlement conference
On 26 July 2022, an informal settlement conference of the FCFCOA proceedings was held. ES and GS were represented. VS was unrepresented. The parties first attempted to resolve the FCFCOA proceedings. It appears to be common ground that was unsuccessful. Nonetheless, GS has deposed that an agreement was made under the following terms:
1.GS would transfer his shares in the company to VS;
2.GS would transfer his interest in the two properties at Clarendon to VS;
3.VS would discontinue the proposed proceedings in this Court;
4.The parties would release each other from all claims arising out of the subject matter of the proceedings in this Court, including in the FCFCOA proceedings;
5.The parties would do all thing necessary to remove VS and the company from involvement in the FCFCOA proceedings; and
6.The parties would do all things necessary to give effect to the settlement agreement.
GS has further deposed that he does not believe the settlement agreement had any preconditions. GS says he considers himself bound by the terms and conditions of the settlement agreement. ES disputes any agreement was reached. I do not understand any party to suggest that any agreement was subsequently reduced to writing.
The application made by VS in this Court
As set out above, the proposed proceedings in this Court were filed on 11 April 2022. In summary, the proposed proceedings allege that VS was underpaid for his work for the company over many years and the company did not pay rent in respect of the Clarendon properties owned in partnership between VS and GS. The effect of the proposed derivative action is to claw back for SC Pty Ltd alleged overpaid entitlements to GS and ES, so that the company would then be able to pay VS. On 29 April 2022 ES filed the application to transfer the proposed proceedings (FDN 6).
The Corporations Act 2001 (Cth)
The FCFCOA has jurisdiction with respect to the proposed proceedings. Section 1337C(1) of the CA provides:
(1)Jurisdiction is conferred on the Federal Circuit and Family Court of Australia (Division 1) with respect to civil matters arising under the Corporations legislation.
This Court has the power to transfer proceedings to the FCFCOA in the exercise of its discretion. Section 1337H relevantly provides:
(1) This section applies to a proceeding (the relevant proceeding) in a court (the transferor court) if:
(a)the relevant proceeding is:
(i)a proceeding with respect to a civil matter arising under the Corporations legislation; or
(ii)a subsection 1337B(3) proceeding; and
(b)the transferor court is:
(i)the Federal court; or
(ii)a State or Territory Supreme Court.
(2) 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.
Section 1337H(3), (4) and (5) are not relevant to the application before me.
The interests of justice
In Yeo, in the matter of Armstrong and Shaw Pty Ltd (in liq) v Whiteman [2020] FCA 849 (Yeo), Anderson J summarised the principles with respect to the exercise of the power conferred by s 1337H(2) of the CA and the concept of the ‘interests of justice’. Anderson J held:
Section 1337H(2) confers a wide discretion to transfer proceedings where, “having regard to the interests of justice”, it is “more appropriate” for the proceeding to be heard by the other court. The meaning of “the interests of justice” in the context of the transfer of proceedings has been considered on many occasions in different statutory schemes: see, in particular, BHP Billiton Ltd v Schultz [2004] HCA 61; 221 CLR 400.
Recent examples of the consideration of the transfer of proceedings from this Court to other courts under s 1337H(2) of the Corporations Act include Hancock Prospecting Pty Ltd v 150 Investments Pty Ltd [2017] FCA 520; 120 ACSR 495 per Yates J and Bell Group NV v Bell Group Finance Pty Ltd, Re Western Interstate Pty Ltd [2018] FCA 1440; 130 ACSR 586 per McKerracher J. Both of those decisions referred to the following guiding principles summarised by McKerracher J in Yara Pilbara Fertilisers Pty Ltd (formerly known as Burrup Fertilisers Pty Ltd) v Oswal (No 8) [2015] FCA 49 (in which his Honour transferred a proceeding to the Supreme Court of Victoria):
The leading authority which canvasses many of the issues to be taken into account is BHP Billiton Limited v Schultz (2004) 221 CLR 400. As the case law reflects, it is necessary to conduct a balancing exercise between relevant factors that inform as to whether or not it is in the interests of justice to transfer a proceeding. The weighing of considerations, such as cost, expense and convenience, even when they conflict, is a familiar aspect of the kind of case management involved in many cross-vesting applications: BHP per Gleeson CJ, McHugh and Heydon JJ (at [19]). While BHP considered the cross-vesting regime, for practical purposes the criteria for determining whether a proceeding should be transferred are broadly consistent with the criteria for determining cross-vesting: see Dwyer v Hindal Corporate Pty Ltd (2005) 52 ACSR 335 per Debelle J (at [13]). The question is essentially practical, or in the words used in BHP, it is essentially a 'nuts and bolts' management decision as to which court, in the pursuit of the interests of justice, is the more appropriate to hear and determine the substantive dispute: BHP per Gleeson CJ, McHugh and Heydon JJ (at [13]); Bankinvest AG v Seabrook (1988) 14 NSWLR 711 per Street CJ (at 713-714). The ‘interests of justice’ is an expression to be interpreted broadly: BHP per Gleeson CJ, McHugh and Heydon JJ (at [15]).
The Court should not approach the transfer question with any presumption as to where the interests of justice lie: BHP per Gleeson CJ, McHugh and Heydon JJ (at [25]). It is not a circumstance in which an applicant has an onus of persuasion analogous to an onus of proof: BHP per Gummow J (at [71]). The disposition of an application for transfer of a proceeding does not require weight to be given to the plaintiff's choice of forum, which is essentially a neutral factor: BHP per Kirby J (at [168]) and per Gummow J (at 77).
As I noted in Commissioner of Taxation v Residence Riverside Proprietary Limited as Trustee for the D& J Discretionary Trust and as Trustee for the D& J Investment Trust [2013] FCA 720 (at [17]), 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.
In the matter of Re Peter G Ward Industries Pty Ltd (Ward Industries),[1] Rees J considered an application pursuant to s 1337H of the CA to transfer an oppression suit from the Supreme Court of New South Wales to the Family Court. In doing so, her Honour considered the principles relevant to the meaning of the ‘interests of justice’. After referring to the decision in Yara Pilbara Fertilisers Pty Ltd (formerly known as Burrup Fertilisers Pty Ltd) v Oswal (No 8) [2015] FCA 49, her Honour said:[2]
…
… 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].
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.
[1] Peter G Ward Industries Pty Ltd [2020] NSWSC 339 (Ward Industries).
[2] Ibid, [27]-[31].
The submissions
ES submits it is in the interest of justice for the proposed proceedings to be transferred to the FCFCOA. ES directs particular attention to the following matters: VS has been a party to the FCFCOA proceedings since the commencement of those proceedings in April 2019; that permitting the proposed proceedings to proceed in this Court risks further delay to the FCFCOA proceedings as those proceedings may be delayed pending resolution of the proposed proceedings in this Court; the proposed claim of VS in this Court does not involve issues of particular expertise which might be held by this Court (ES characterises the proposed claim as an allegation that VS did not receive his due entitlements for work for the company over many years which it is submitted is a primarily factual dispute that the FCFCOA can readily address) and the risks of increased costs and inconsistent findings.
VS concedes that the failure to transfer these proceedings would result in two trials and risk conflicting findings of fact. Notwithstanding those concessions, VS submits it is not in the interests of justice to grant the application to transfer the proposed proceedings. That submission is made on the following grounds: the proceedings would be resolved more quickly in this Court; that VS would not have to participate in aspects of the FCFCOA proceedings which do not relate to him, which will in turn, relieve him of the burden of costs; the resolution of the proposed claim in this Court will benefit the FCFCOA proceedings as it will remove the need for that Court to determine certain matters; and that this Court is better able to determine the issues efficiently than the FCFCOA.

GS adopts the submissions of VS and further submits there would be a benefit to the FCFCOA proceedings if the proposed proceedings proceeded in this Court. GS submitted that benefit would be the crystallisation of an aspect of pool of property available to ES and GS.
Discussion
The proposed proceedings in this Court go directly to the identification and valuation of the pool of property available to ES and GS. As to that pool, there is no agreement between ES and GS. As Brereton J identified in Valceski v Valceski (Valceski):[3]
It is well established that in such proceedings a three stage approach is applicable: first, the identification and valuation of the pool of property of the parties; second, the identification, evaluation and balancing of the parties' respective contributions of the types referred to in s 79(4) [of the Family Law Act 1975 (Cth)], being financial and non-financial, direct and indirect contributions to the acquisition, conservation and improvement of their property, and contributions to the welfare of their family (including in the capacity as homemaker and parent); and third, the determination of what adjustment is required to the contribution-based assessment having regard to the matters referred to In Family Law Act, s 75(2) — which relate generally to the respective means and needs of the parties — to produce a just and equitable result.
[3] Valceski v Valceski (2007) 210 FLR 387, [27] (Valceski).
In this case, both VS and GS were parties to the proceedings in the FCFCOA and had been directed to particularise relevant claims before the proposed proceedings were commenced in this Court. The proposed claim of VS in this Court is that he be paid money which he is owed. As I understand both VS and GS to accept, the proposed claim in this Court will have a direct impact upon the assets available in the proceedings in the FCFCOA. In my view, that factor alone weighs heavily in favour of the application. In the identification and resolution of issues surrounding the property pool, it is only the FCFCOA which can resolve the whole controversy. As Brereton J observed in Valceski:[4]
The fact that one court can resolve the whole justiciable controversy and the other cannot will usually indicate that the former is the more appropriate court.
[4] Ibid, [76].
I am not satisfied the nature of the proposed proceedings in this Court is a matter with respect to which this Court has significantly greater expertise than the FCFCOA. The proposed proceedings in this Court, at their heart, appear to involve factual disputes with respect to whether VS received due consideration for work done for SC Pty Ltd. The issues which are likely to arise are matters which I am satisfied the FCFCOA has the expertise to determine.
There is no evidence before me with respect to delays in the FCFCOA. That said, it may be observed that the proceedings in that Court commenced in April 2019 and do not appear to have been significantly advanced by April 2022 when the proposed proceedings commenced in this Court. Nonetheless, even assuming the proposed proceedings can be dealt with more efficiently in this Court, that consideration must be evaluated mindful of the risk of the proposed proceedings causing delay to the proceedings in the FCFCOA. I am satisfied that risk exists as, if the proposed proceedings continue in this Court, the property pool will not be able to be determined in the FCFCOA until the proceedings in this Court are concluded.
For the purposes of the application before me, I accept VS may be drawn into aspects of the FCFCOA proceedings in which he has no interest and that he may occasion costs which he may not recover in the FCFCOA. Nonetheless, that consideration is outweighed by other matters. As I have said, the natural forum for the proposed claim by VS is the FCFCOA given that, if successful, it will impact upon the property pool available to ES and GS, and, for practical purposes, the FCFCOA can resolve the whole controversy. As Brereton J further observed in Valceski:[5]
… where strangers to a marriage use the occasion of its demise to assert a right against the property of one or other (or both) of the spouses, they cannot reasonably complain if they become entwined in the matrimonial dispute. Third parties who intervene in matrimonial disputes in this way — especially associates, such as parents and private companies, of one or other of the spouses — cannot complain if their dispute is treated as part of the larger matrimonial dispute which it normally is. Where third parties who assert rights against matrimonial property do so concurrently with pending matrimonial property proceedings, it will ordinarily be appropriate for those issues to be resolved in the matrimonial proceedings, and for the third party to join in those proceedings for that purpose, rather than to commence separate litigation, in another court, which almost inevitably results in duplication of evidence, issues, time and costs.
[5] Ibid, [77].
Further, this is not a case in which the resolution of the proposed proceedings in this Court will end the involvement of VS in the FCFCOA proceedings. Even were the proposed proceedings resolved in this Court, there will remain, at least, the issue of the Marino property. On the material before me, VS is involved in the issues surrounding the Marino property and those issues can only be resolved in the FCFCOA.
Conclusion
It is in the interests of justice the proposed proceedings in this Court be transferred to the FCFCOA.
I am satisfied there is relevant overlap between the issues in the FCFCOA and the proposed proceedings in this Court. That overlap relates to issues surrounding the property which is said to be part of the matrimonial pool of property available to GS and ES. I am not satisfied the issues in the proposed proceedings are of a complexity necessitating this Court assuming responsibility. Assuming VS may incur costs in the FCFCOA which he might not incur if the proposed proceedings were resolved in this Court, that is not a consideration which outweighs the interests in limiting the risk of further delay; the risk of conflicting findings of fact and the ability of the FCFCOA to resolve all potential issues.
Orders
1.The proposed proceeding in this Court (FDN 1) is transferred to the FCFCOA pursuant to s 1337H of the CA.
2.I will hear the parties as to any further orders.

[2023] SASC 26

1 March 2023