In the matter of the Corporations Law (Section 471 (2)) In the matter of Farrow Mortgage Services Pty. Ltd. (in liquidation) In the matter of Pyramid Building Society (in liquidation) In the matter of an..
[1992] FCA 998
•7 Dec 1992
998 1 \ss%
JUDGMENT NO. .m . . . .m . . . . . , . . . .. .a.*.om.m.m.
IN THE FEDERAL COURT OF AUSTRALIA ) NO. QG 3026 of 1992 QUEENSLAND DISTRICT REGISTRY ) GENERAL DIVISION 1
IN THE MATTER of the Corporations Law (Section
471(2)
- and -
IN THE MATTER of FARROW MORTGAGE SERVICES PTY. LTD.
I IN LIOUIDATIONL
- and -
IN THE MATTER of PYRAMID BUILDING SOCIETY (IN
LIOUIDATION)
- and -
IN THE MATTER of an application by VEREZI PTY. LTD.,
MAHALINGAM SINNATHAMBY and ROBERT JAMES SWLRPLESS
MINUTES OF ORDERS
JUDGE MAKING ORDER: Drummond J DATE OF ORDER: 7 December, WHERE MADE: Brisbane THE COURT ORDERS THAT:
Matheson filed 27 November, 1992.
1. The costs of the proceedings on 1 December, 1992 are the applicants' costs in the proceedings.
2. The costs of today are costs in the proceedings.
3. The applicants have leave to amend the application to correct the name of the first respondent.
4. The applicants have leave under S. 471(2) of the Cor~orations Law to commence an action against Farrow Mortgage Services Pty. Ltd. (in liquidation) and Pyramid Building Society (in liquidation) in the terms contained in the draft application and statement of claim exhibited to the affidavit of
THE COURT DIRECTS THAT:
The applicants file and serve their statement of claim by Wednesday, 9 December, 1992.
The respondents deliver any request for particulars of the statement of claim by Wednesday, 23 December, 1992.
The applicants deliver their response to any request for further particulars by Friday, 29 January, 1993.
Both respondents file and serve a defence and cross- claim, if any, by Friday, 12 February, 1993.
5. The matter is adjourned for further directions to Wednesday, 17 February, 1993 at 9.15 a.m..
NOTE : - Settlement and entry of orders is dealt with in
Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA ) No. QG 3026 of 1992 QUEENSLAND DISTRICT REGISTRY 1 GENERAL DIVISION 1
IN THE MATTER of the Corporations Law (Section
471(2)
- and -
IN THE MATTER of FARROW MORTGAGE SERVICES PTY. LTD.
(IN LIOUIDATIONL
- and -
IN THE MATTER of PYRAMID BUILDING SOCIETY [IN
LIOUIDATIONL
- and -
IN THE MATTER of an application by VEREZI PTY. LTD.,
-1NGAM SINNATHAMBY and ROBERT JAMES SHARPLESS
Corm: Drummond J
Place: Brisbane
Date: 7 December, 1992
EX TEMPORE REASONS FOR JUDGMENT
This is an application under S. 471(2) of the corporations, Farrow Mortgage Services Pty. Ltd. and Pyramid
Corporations Law for leave to commence proceedings against two
Building Society, both of which are in liquidation. The companies were formed in Victoria and the winding-up orders were made by the Victorian Supreme Court.
Notwithstanding that, this Court has jurisdiction under S. 471(2) to grant the leave sought: Acton Enaineerinq Pty. Limited v Campbell (1991) 31 F.C.R. 1.
The proposed action by the applicants is designed to attack the validity of the mortgage transactions in respect of which a guarantee was given, the validity of the guarantee also being attacked in consequence of the challenge made to the mortgage.
The attack made on the security documentation, mortgage and guarantee, is based upon the proposition that the loan moneys were advanced, the securities were granted and the guarantee was taken in contravention of the provisions of the Buildina Societies Act 1986 (Vic.1.
The liquidators of both corporations are represented before me and there is no objection advanced to leave being granted even though the critical issue that will be involved in the proposed litigation has already been raised with respect to a different transaction in an action pending in the Supreme Court of Queensland and which involves some of the parties on each side of the record here, as well as other
parties. I will therefore grant leave under S. 471(2) to commence the action. An issue that concerned me was that arising under S. 53 of the Corporations Act 1989 (Cth1 which entitles the court of its own motion to transfer the proceeding, or an application in the proceeding, to another court where, having regard to the various matters identified in sub-section (3), it is appropriate to do that. It seems to me that the material before me requires consideration to be given to that section.
The choices are between transferring the proceeding to the Victorian Supreme Court where the winding-up orders were made; allowing the matter to proceed in this court, or cross-vesting the matter to the Queensland Supreme Court in which related proceedings involving some but not all of the parties and some but not all of the issues are presently being litigated.
There seems to be no good reason why the matter should be transferred to the Victorian Supreme Court. The liquidators have not sought to put any material or to advance any arguments to this Court as to why such an order would be appropriate.
The only connection with New South Wales is that the
primary mortgage security was granted over New South Wales
mortgage was taken over land in Queensland. The land in New land belonging to the first applicant, although a collateral South Wales has, however, now been sold by the mortgagee first respondent. The only other connection with New South Wales is that it is a provision of both the mortgage, on which of course the first applicant remains liable on its personal covenant, and the guarantee, upon which the second applicants are sought to be made liable, that the transactions are to be governed by New South Wales law and that the parties to those transactions submit to the "non-exclusive jurisdiction" of the New South Wales Supreme Court.
However, the material indicates that the loan transaction itself, which was the foundation agreement from which all these other transactions arose, was made in Queensland and is governed by, it appears, Queensland law. The core issue is, as I have said, the illegality issue which depends upon the construction of a Victorian statute. Both the corporate and natural applicants are essentially resident and carry on business in Queensland and have no real connection with either Victoria or New South Wales, so far as is presently relevant. The liquidators do not object to the action proceeding in Queensland. Taking into account those various matters, I think it is appropriate that the action should stay in Queensland.
The remaining question is whether it should be
cross-vested to the Queensland Supreme Court which is already
I have taken into account what appears as to the nature of the seized of similar although by no means identical litigation. litigation in the Queensland Supreme Court and, in particular, what appears in paragraph 7 of Mr. Matheson's affidavit filed
4 December, 1992. It seems to me that there is such a difference between the issues arising to be litigated in the Queensland court and those which will fall to be litigated here as to make it appropriate for the matter to remain in this court. I say that, placing particular weight upon the fact that the liquidators have not sought to raise any objection to the prospect of being confronted with further litigation in the Federal Court, which does involve an important core issue, that of illegality, which is already being litigated in the Queensland Supreme Court in proceedings which involve, as I say, some but not all of the parties.
I certify that this and the preceding four pages is a true copy of the
reasons for judgment herein of the
Honourable Mr. Justice Drummond.
Associate: $""""-o" Date: 7 December, 1992
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