Jessup v Ransom Walters
[2004] TASSC 121
•29 October 2004
[2004] TASSC 121
CITATION: Jessup v Ransom Walters [2004] TASSC 121
PARTIES: JESSUP, Ian David as Receiver of
DRURY MANAGEMENT PTY LTD ACN 089 253 958 and RANSOM HOUSE PTY LTD ACN 072 391 407
v
RANSOM WALTERS, Virginia Lee
JESSUP, Ian David as Receiver of
DRURY MANAGEMENT PTY LTD (ACN 089 253 958) & RANSOM HOUSE PTY LTD (ACN 072 391 407)
v
RANSOM WALTERS, Virginia LeeRECORDER OF TITLES
PLACE, Stanley James
PLACE, Valmai Joy
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO/S: 40/2003
104/2003
DELIVERED ON: 29 October 2004
DELIVERED AT: Hobart
HEARING DATES: 15 October 2004
JUDGMENT OF: Underwood J
CATCHWORDS:
Procedure – Courts and judges generally – Courts – Concurrent jurisdiction of different courts – Transfer of proceedings under cross-vesting legislation – Where appropriate and in interests of justice – Generally.
Jurisdiction of Courts (Cross-Vesting) Act 1987 (Tas), s5(2).
Bankinvest AG v Seabrook and Others (1988) 14 NSWLR 711; Bridge and Marine Engineering Pty Ltd v Taylor and Austrack Project Management Pty Ltd [2002] VSC 60 ; Mortgage Acceptance Nominees Ltd v Australian Thoroughbred Finance and Another (1996) 69 SASR 302; John Anagnostis & Con Styl v Davies Brothers Limited A43/1989, followed.
Aust Dig Procedure [26]
REPRESENTATION:
Counsel:
Plaintiff: M Martin
Defendant Ransom Walters: R W Pearce
Defendants Place: P W Tree SC
Solicitors:
Plaintiff: Dobson Mitchell & Allport
Defendant Ransom Walters: Douglas & Collins
Defendants Place Shields Heritage
Judgment Number: [2004] TASSC 121
Number of Paragraphs: 31
Serial No 121/2004
File Nos 40/2003104/2003
IAN DAVID JESSUP as Receiver of DRURY MANAGEMENT PTY LTD
ACN 089 253 958 and RANSOM HOUSE PTY LTD ACN 072 391 407
v VIRGINIA LEE RANSOM WALTERS
IAN DAVID JESSUP as Receiver of DRURY MANAGEMENT PTY LTD
(ACN 089 253 958) & RANSOM HOUSE PTY LTD (ACN 072 391 407)
v VIRGINIA LEE RANSOM WALTERS, RECORDER OF TITLES,
STANLEY JAMES PLACE and VALMAI JOY PLACE
REASONS FOR JUDGMENT UNDERWOOD J
29 October 2004
The issue
The question is whether it is in the interests of justice to transfer action No 40/2003 and action No 104/2003 from the Tasmanian Supreme Court to the Supreme Court of Queensland pursuant to the Jurisdiction of Courts (Cross-Vesting) Act 1987, s5(2), which relevantly provides:
"(2) Where ¾
(a)a proceeding (in this subsection referred to as the 'relevant proceeding') is pending in the Supreme Court (in this subsection referred to as the 'first court'); and
(b)it appears to the first court that ¾
(i) …
(ii) …
(iii) it is otherwise in the interests of justice that the relevant proceeding be determined by the Supreme Court of another State or of a Territory ¾
the first court shall transfer the relevant proceeding to that other Supreme Court."
Some background material
This application concerns two companies, Drury Management Pty Ltd ("Drury") and Ransom House Pty Ltd ("Ransom"). I was informed from the bar table without objection that Drury was incorporated in about 1998 (from a pleading I note, however, that it is alleged that Drury was incorporated on 26 August 1999) and "arose out of" two accounting practices that were being carried on near Cairns in Northern Queensland. These practices were called Drury and Associates. A Mr Piet Walters and an associate of his acquired them. The associate left the practices. Subsequently, Mr Walters held himself out as being able to invest funds for clients and provide them with a substantial return by way of interest. Mr Walters and a Mr Mark Evans became the directors of Drury. Drury commenced the business of an unregistered investment scheme and raised about $18,000,000 between September 1999 and September 2002. The security offered the lenders was promissory notes.
Mrs Virginia Walters is the wife of Mr Piet Walters. She is a defendant to actions No 40/2003 and No 104/2003 pending in this Court. At all material times Mrs Walters was the sole director and shareholder of Ransom. Ransom was not involved in the business of Drury, but as will be seen, their affairs became linked to some extent.
Concerns arose that monies held by Drury for investment were not being properly invested and that funds belonging to both Drury and Ransom were used inappropriately by Mrs Walters. The Australian Securities and Investment Commission ("ASIC") became involved, and upon its application, an order was made in the Supreme Court of Queensland on 27 September 2002 appointing Mr Ian Jessup receiver of all the property of Drury and Ransom. On 29 March 2004, that court ordered that both companies be wound up and that Mr Jessup be appointed liquidator. Before he was appointed liquidator, Mr Jessup commenced certain proceedings as part of his obligation to protect assets of Drury and Ransom.
The proceedings
This application concerns five separate actions. In addition to actions No 40/2003 and No 104/2003, that I mentioned, Mr Jessup initiated two actions in the Queensland District Court and one action in the Queensland Supreme Court. To determine this application, it is necessary to look at the issues raised in each of these actions. I will deal with them in chronological order.
Action No 40/2003 in the Supreme Court of Tasmania
This action was commenced by the issue of a writ on 10 April 2003. The plaintiff is Mr Jessup as receiver of Drury and Ransom. The defendant is Mrs Walters. The statement of claim (as presently amended) alleges:
· in December 2001, Mrs Walters used a cheque for $152,147 and a cheque for $69,517, both drawn by a director of Drury on Drury's investment account to buy a Volvo sedan and a Jaguar motor vehicle respectively, from a car dealer in Cairns;
· in April 2002, Mrs Walters drew a cheque on Ransom's account for $12,500 and used it to buy a Silver Shadow Rolls Royce;
· one of the motor vehicles has been sold and Mrs Walters has since moved to Tasmania and brought the other two motor vehicles with her.
The claim, based in equity, seeks declaratory and other relief and damages. By her amended defence, Mrs Walters does not dispute the purchase of the motor vehicles, nor the provenance of the cheques but, stripped of its detail, claims:
· that, subject to certain adjustments, at the date of Mr Jessup's appointment, Ransom owed her $472,925.93 as is evidenced by the shareholders' loan account in the books of the company;
· Ransom presently owes her $529,871.88;
· a Mr and Mrs Place agreed with Mrs Walters' husband that they would lend her $863,387.66;
· this money was paid into Drury's bank account and held by it in trust for her;
· there were withdrawals from time to time. The defence proceeds to list the sums withdrawn by Drury and paid to Mrs Walters. Confusingly, it does so by reference to the statement of claim in action No 104/2003.
· there is a counterclaim for (inter alia) monies owed to Mrs Walters.
The reply puts these claims in issue.
Action No 142/03 in the Queensland District Court
On 16 April 2003, six days after he commenced proceedings in Tasmania, Mr Jessup commenced proceedings in the Queensland District Court. The plaintiff is Ransom House Pty Ltd (Receiver Appointed). The first defendant is a solicitor, Mr William Royds, and the second defendant is Mrs Walters. The original statement of claim alleged that on 26 September 2002, the day before Mr Jessup was appointed receiver of Ransom, Ransom drew a cheque for $100,000 on its bank account and paid it to Mr Royds. It was alleged that Mr Jessup demanded repayment, but Mr Royds refused to comply with that demand. The original statement of claim further alleged that Mr Royds paid $20,148.50 from those funds to Mrs Walters. A judgment was sought against Mrs Walters for $20,148.50 and against Mr Royds for $79,851.50. By her first defence, Mrs Walters pleaded that Mr Royds was Ransom's solicitor and her solicitor. The basic allegations were admitted. However, she claimed that at the material time, Ransom owed her $479,757.34 and that the cheque for $100,000 was a part repayment of that loan. There was a counterclaim for repayment of the balance of the loan account totalling $472,827.93, plus interest. This defence obviously raised the same issues as Mrs Walters raised in her defence to action No 40/2003 in the Tasmanian Supreme Court.
The affidavit material discloses that this action took a dramatic turn in July this year. Drury (in liq) became a plaintiff with Ransom (in liq) and Mr Walters was made the third defendant. The statement of claim has been extensively amended. In addition to the original allegations, it is now alleged that on 25 September 2002, Drury drew a cheque for $22,000 on its account and gave it to Mr Royds. Paragraph 11 sets out a list of payments that Mr Royds allegedly made from that $22,000 and the payment of $100,000 from Ransom. They are nearly all to barristers and solicitors. Particulars of the statement of claim allege that those payments were in respect of debts incurred by Mr and Mrs Walters personally. It is alleged that these payments were made in breach of trust and in breach of the fiduciary obligations owed by Mr and Mrs Walters to Drury and Ransom. It is also alleged that as at 27 September 2002, Ransom owed its investors large sums of money and that Ransom owes Drury at least $1.4m. I did not have the benefit of any submission from counsel with respect to these amended pleadings.
Action No 104/2003 in the Tasmanian Supreme Court
By a writ dated 22 October 2003, Mr Jessup, as receiver of Drury and Ransom, commenced another action against Mrs Walters. This action concerns an historic property called Longford House. Stripped to its essentials, the claim is that Mrs Walters bought Longford House for $730,000 and that, in varying amounts, the purchase price came from trust funds held by Ransom and Drury for their investors. By her defence, Mrs Walters claims firstly, that $73,000 (used to pay the deposit) was a loan from Drury to Ransom to be repaid from money that Ransom owed her. Secondly, the sum of $100,000 that was paid by Ransom was money that it owed her. Thirdly, in effect, that the balance of the purchase price that was paid by cheques from Drury was money that Mr and Mrs Place had lent her via the agency of her husband, and, I infer, that Drury's bank account was no more than a convenient place to deposit the loan temporarily. The defence in this action sets out a list of the sums withdrawn by Drury and paid to Mrs Walters in the same terms as they are set out in action No 40/2003. The list of payments includes purchases of antiques which, as will be seen, are the subject of another action. There is a rather unusual counterclaim.
The counterclaim, which was added by way of amendment after Mr Jessup had been appointed liquidator, alleges that Mrs Walters was summonsed to attend the Magistrates Court in Queensland on a specified day to be publicly examined as is provided by the Corporations Act 2001, s596A. According to the pleadings, Mrs Walters did not attend because she was ill and, in any event, the summons was issued without lawful authority. The counterclaim alleges Mr Jessup maliciously misled the magistrate and caused the latter to unlawfully issue a summons for the arrest of Mrs Walters. Mrs Walters was arrested and incarcerated for a short period of time. She claims damages for Mr Jessup's alleged unlawful conduct.
By way of footnote to these proceedings, the Recorder of Titles was subsequently joined as a defendant. Mr Jessup sought and obtained an injunction to prevent any dealings with Longford House until further order of the Court.
Action No 396/03 in the Queensland District Court
Still acting in his role as receiver, Mr Jessup brought proceedings in the Queensland District Court on 19 November 2003. The plaintiff is Ransom House Pty Ltd (Receiver Appointed) and the defendant is Mrs Walters. By these proceedings, Mr Jessup alleges that Ransom transferred to Mrs Walters valuable real estate for no consideration, with the intention of defrauding Ransom's creditors. As is the case with the other actions, Mrs Walters' defence is based upon a claim that she was entitled to the property because Ransom owed her a considerable amount of money, as is evidenced by the shareholders' loan account. This action has a counterclaim based on the alleged wrongful lodgement of a caveat preventing Mrs Walters from dealing with the property.
Action No BS 7016/04 in the Supreme Court of Queensland
This action was commenced on 16 August 2004 after Mr Jessup had been appointed liquidator of Drury and Ransom. The two companies (in liquidation) are the plaintiffs. Mr Walters, Mr Evans and Mrs Walters are all defendants. As against Mr Walters and Mr Evans, Drury claims more than $15,000,000. In essence, the claim is that of the $18,000,000 Drury received for investment, only $3,000,000 was appropriately invested or otherwise dealt with, and $15,000,000 has been disposed of in breach of fiduciary duties and/or as a result of negligence.
As against Mrs Walters, Drury alleges that she is in possession of more than $500,000 worth of antiques and art purchased with money lent to Drury for investment and, in consequence, she holds the antiques and art work in trust for Drury. With respect to Ransom, it is alleged that both Mr and Mrs Walters were negligent and/or acted in breach of the fiduciary duty they owed it, by allowing that company to incur $1,200,000 in debt. That sum is claimed from both of them. One of the particulars of this aspect of the action is that monies were improperly paid by Drury to Ransom and the latter accepted such payments when it was never in a financial position to make any form of repayment to Drury. At this time, no defence to this claim has been delivered.
On 1 October 2004, Mrs Walters obtained a stay of these proceedings against her pending the outcome of this application to obtain a cross-vesting order to remove the two Tasmanian cases to Brisbane.
There is uncontested affidavit evidence that Mr and Mrs Walters are now residing in Longford House with the antiques referred to in this action.
On 1 October 2004, the Queensland Supreme Court made an order that the two Queensland District Court actions be remitted to the Queensland Supreme Court. An application to hear them at the same time as the Queensland Supreme Court action is foreshadowed.
Mr and Mrs Place
Read upon this application were (inter alia) affidavits from Mr and Mrs Place who are aged 81 and 76 years respectively, and from their son, Mr Trevor Place. According to the latter's affidavit, Mr Walters was for many years his parents' accountant and Mr Walters told him and his parents that his wife wanted to buy a house and set up an antiques' business in Tasmania. The affidavit deposes that Mr Walters asked Mr and Mrs Place if they would be interested in lending his wife the money to do so. In result, Mr Trevor Place deposes that in April 2001, his parents lent Mrs Walters $863,387.66 and a further $540,000 on 7 January 2002. With this money, Mrs Walters purchased Longford House, antiques and "motor vehicles". A loan agreement was drawn up and signed by Mrs Walters, but not until 30 July 2003. The agreement provided for security by way of a mortgage over Longford House and a charge over the antiques and two motor vehicles. The mortgage was also signed on 30 July 2003, but could not be registered because, by that time, caveats had been placed upon the Longford House title to prevent Mrs Walters dealing with that property. The charge over the chattels was registered in August 2003 in accordance with the provisions of the Bills of Sale Act 1900. It is Mr Jessup's claim that there was no loan to Mrs Walters by Mr and Mrs Place, but a loan to Drury for investment, and that the security upon which Mr and Mrs Place seek to rely is void.
Application was made by Mr and Mrs Place to be joined as parties to Tasmanian action No 104/2003, as that concerned the Longford House transaction. All parties agreed that this was an appropriate step to take and I made an order that Mr and Mrs Place be made defendants in that action. It is anticipated that Drury and Ransom will seek declaratory relief against them with respect to the alleged loan to Mrs Walters and the mortgage. As the Queensland Supreme Court action No BS 7016/04 relates in part to the antiques, and as Mr and Mrs Place claim they have a registered bill of sale over them, it is only a matter of time before they are also made parties to those proceedings.
The contentions
On behalf of the liquidator, Mr Warrick of the Brisbane bar submitted that having regard to what he called the commonality between the actions, it was in the interests of justice that all the proceedings be tried together in the Supreme Court of Queensland. He contended that the commonality was:
· allegations that loans from Mr and Mrs Place provided the funds to buy the motor vehicles and Longford House (actions No 40/2003 and 104/2003, Tas);
· an allegation that loans from Mr and Mrs Place provided the funds to buy the antiques (action No BS 7016/04, Qld);
· in four of the five actions, it is alleged by Mrs Walters that she was owed a considerable amount of money by Ransom, as is evidenced by the shareholders' loan account.
Mr Pearce, counsel for Mrs Walters, and Mr Tree SC, counsel for Mr and Mrs Place, submitted that the Tasmanian actions should not be cross-vested to Queensland because:
· the issue of whether Mr and Mrs Place made a loan to Mrs Walters personally or to Drury is a discrete issue which depends upon the oral evidence of Mr and Mrs Walters, Mr and Mrs Place, and Mr Trevor Place;
· although it is true that the Ransom shareholders' loan account is a central feature in four of the five actions, by far the largest litigation is BS 7016/04 (Qld) and the pursuit of $15,000,000 from Mr Walters and Mr Evans. Consequently, it would be unfair and unjust to tie Mrs Walters and Mr and Mrs Place to that action, as the major aspect of it is no concern of theirs;
· a reconstruction of the books of account of Ransom do not involve a reconstruction of the books of account of Drury;
· the Tasmanian litigation is well advanced and is a convenient vehicle to determine any Ransom loan account issues and the issue of whether there was a loan to Mrs Walters from Mr and Mrs Place;
· as far as Mr and Mrs Place are concerned, their only connection with proceedings in Queensland is their claimed security over the antiques.
The law
The following passage from the judgment of Street CJ at 714, in Bankinvest AG v Seabrook and Others (1988) 14 NSWLR 711 has since been adopted in most jurisdictions in this country:
"As a very broad generality it can be said that the ordinary day to day administration of the cross–vesting scheme in its operation on a given proceeding is placed in the hands of whatever court it may be in which they are commenced. Ordinarily it could be expected that a single judge of that court would decide whether it is in the interests of justice to transfer the proceedings to one of the other nine courts. If such an order be made then in practical terms it effects what might be likened to an administrative re–direction of the proceedings to the other court selected. In the hands of that other court the proceedings will continue to attract the Australiawide jurisdiction and law which would have been exercisable and applicable by the court from which they were transferred.
Viewed from this standpoint it can be seen to be highly desirable that the judicial administration of the day to day working of the cross–vesting scheme is not encumbered by an encrustation of judge–made pronouncements of principles to be applied when considering making a transfer order. It calls for what I might describe as 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."
See, for example, Activate No 1 Pty Ltd v Equuscorp Pty Ltd (1999) FCA 619; James Hardie and Coy Pty Ltd v Barry and Another (2000) 50 NSWLR 357, in which case Spigelman CJ noted the issue was which forum was "the most convenient"; Bridge and Marine Engineering Pty Ltd v Taylor and Austrack Project Management Pty Ltd [2002] VSC 60; Mortgage Acceptance Nominees Ltd v Australian Thoroughbred Finance and Another (1996) 69 SASR 302; John Anagnostis & Con Styl v Davies Brothers Limited A43/1989.
In Bankinvest, Rogers A-JA dismissed a submission that the applicant for a cross-vesting order carries an onus of proof and said, at 727:
"The cross-vesting legislation does not call for this approach. Indeed, it positively rejects it. The only lodestar that a judge may steer by is, what do the interests of justice dictate should be done? It is inapt to speak in terms of onus."
I direct myself in accordance with the foregoing.
Application of the facts to the law
There cannot be any doubt that it is most desirable that one judge make one set of findings with respect to the claim by Mrs Walters that Ransom owes her money. Resolution of this claim will no doubt involve reconstruction of the books of account of that company. Findings of fact with respect to the claimed loans will have to be made in four of the five actions. These findings will affect the interests of Mr and Mrs Place, as well as the interests of Ransom and Mrs Walters. It would be very unsatisfactory to risk two tribunals reaching different findings with respect to the same question.
Mr and Mrs Place and Mr Trevor Place, all live in Queensland. As mentioned earlier, Mr and Mrs Place will inevitably become a party to action No BS 7016/03 (Qld) and, upon their application, have now become a party to action No 104/2003. Mr and Mrs Walters now live in Tasmania. At the time Drury and Ransom were carrying on business, they lived in Queensland. Mr Walters is, of course, already a party to action No BS 7016/03. According to the pleadings annexed to an affidavit, Mrs Walters has already instructed solicitors in Brisbane, Cairns, Melbourne and Launceston with respect to this plethora of litigation. It would no doubt be far more economic and convenient for her to engage one firm of solicitors to act for her in all five actions.
All the indicators, bar one, point in favour of collecting all this litigation together for determination in the Supreme Court of Queensland. The contrary indicator is that upon the face of it, Mrs Walters and Mr and Mrs Place have no involvement in what might be called the principal litigation (action No BS 7016/03), except insofar as it concerns the purchase of the antiques. It was submitted on behalf of Mrs Walters that she was never a director of Drury. That appears to be correct. However, when considering that proposition, it must not be overlooked that Mr and Mrs Walters are married, and presently live together. Also, I infer that they were living together in Queensland at the time Drury and Ransom carried on business in that State. Mrs Walters claims that Mr Walters acted as her agent and negotiated the loan to her from Mr and Mrs Place. He presumably agreed to the loan and payments being made to, and withdrawn from, Drury's bank account. In action No 104/2003 (Tas), Mrs Walters alleges that the $73,000 used to pay the deposit on the purchase of Longford House was a loan from Drury to Ransom, such loan to be repaid from money that Ransom owed her. In action No BS 7016/04 (Qld) it is alleged that monies were improperly paid by Drury to Ransom and the latter accepted such payments, when it was never in a financial position to make any form of repayment to Drury. The latest set of amendments to the pleadings in action No 142/03 (Qld) clearly indicate that the affairs of Drury and Ransom are closely linked.
So far as Mr and Mrs Place are concerned, unless a cross-vesting order is made, the likely result for them is that they will be parties to one proceeding in this State and one proceeding in Queensland. On their behalf, it was put to me that the essence of the case involving them is whether their payments to Drury were loans to Mrs Walters personally, or loans to Drury for investment, and that resolution of that issue will depend on the oral evidence of the parties to the conversations. However, this may not be the case. I have no material to suggest that there is no relevant documentary evidence in the books of account of both Drury and Ransom. The ordinary course of business would suggest to the contrary. Common to both the actions that concern Mr and Mrs Place are the books of account of Ransom, and for the reasons just mentioned, it appears likely that the books of account of Drury will be relevant to the former. Common sense dictates that the likely starting point for all actions is a reconstruction of the books of account and dealings by Drury. Action No BS 7016/04 (Qld) is clearly the best vehicle for this. That exercise is likely to assist a reconstruction of the books of account of, and dealings by, Ransom. I am confident that case-management directions can, and will, be given to minimise the involvement of Mr and Mrs Place in pre-trial work and time at trial on issues that do not affect their interests.
For these reasons, I have come to the conclusion that the most convenient course to take is to send the Tasmanian actions to the Queensland Supreme Court. It is in the interests of justice to make an order to that effect. The application is granted. There will be an order that action No 40/2003 and action No 104/2003, pending in this Court, be transferred to the Supreme Court of Queensland.
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