John Barker v Robert Barker Nominees Pty Ltd

[2011] ACTSC 73

JOHN BARKER v ROBERT BARKER NOMINEES PTY LTD
 [2011] ACTSC 73 (13 May 2011)

COURTS AND JUDICIAL SYSTEM – jurisdiction – cross-vesting legislation – action for equitable relief for failing to properly administer family trust – application by defendant to transfer proceedings to Supreme Court of Victoria – court satisfied transfer in the interests of justice – transfer ordered

Jurisdiction of Courts (Cross-Vesting) Act 1993 (ACT), s 5

White Enhancements Pty Ltd v Quick Fit Tyre Service Pty Ltd [2008] ACTSC 122
BHP Billiton Ltd v Schultz (2004) 221 CLR 400
Pugh v Morrison [2011] ACTSC 44

No.  SC 858 of 2010

Judge:             Master Harper
Supreme Court of the ACT

Date:              13 May 2011

IN THE SUPREME COURT OF THE     )
  )  No.  SC 858 of 2010
AUSTRALIAN CAPITAL TERRITORY )

BETWEEN:JOHN BARKER

Plaintiff

AND:ROBERT BARKER NOMINEES PTY LTD

Defendant

ORDER

Judge:  Master Harper
Date:  13 May 2011
Place:  Canberra

THE COURT ORDERS THAT:

the action be transferred to the Supreme Court of Victoria.

1. The defendant in this action seeks an order that the proceeding be transferred to the Supreme Court of Victoria. The transfer is opposed by the plaintiff.

1. The action was commenced in December 2010, claiming equitable relief. The defendant company is sued as trustee of the Barker family trust. The deed establishing the trust is in evidence. It was made on 29 August 1973. Grace Muriel Caughey settled $50.00 on the defendant to establish the trust, to vest ten years after the death of the later to die of Robert Barker and his wife Frances. The plaintiff is the son of Mr and Mrs Barker, who also have a daughter, Suzan. The trust deed defines the children of Mr and Mrs Barker as primary beneficiaries of the trust, with Mr and Mrs Barker themselves being additional members of the class of general beneficiaries. The trust deed made Mr Barker appointor during his lifetime, and Mrs Barker appointor after his death.

1. The plaintiff claims in the statement of claim that from 1981 to 1989 he received trust distributions from time to time. In 1989 or 1990, the trust deed was altered in handwriting, the word “children” being replaced by “daughter” in the definition of primary beneficiaries. (The trust deed in evidence shows that change, with the initials GMC beside it, these being, coincidentally or otherwise, the initials of the settlor). The plaintiff asserts in the statement of claim that the change was ineffective as an amendment to the deed. This is conceded by the defendant.

1. The plaintiff asserts that the change was made by or at the direction of Robert Barker, who was at all material times the controlling director of the defendant company.

1. The plaintiff says that by 1989-90, he had become estranged from his father, who favoured his daughter, and made a will which did not include the plaintiff as a beneficiary.

1. Robert Barker died in 1992. Later in the same year, Suzan Barker was appointed a director of the defendant company. She also became secretary of the company in 2006. Her two children became directors during 2007. Suzan Barker and her children now control the defendant company. The plaintiff says that he and his sister were and are estranged.

1. The plaintiff goes on to say that from 1990-91 the trustee company behaved as though the alteration to the trust deed had effected an amendment. The company failed to consider the plaintiff as an object for distribution of trust moneys, or at least failed to do so in good faith. The company failed to distribute moneys to him, and distributed moneys to objects other than him. In doing so, the company favoured Suzan Barker and her immediate family, at the plaintiff’s expense. This was a breach of the defendant company’s duty to administer the trust properly. It had resulted in financial loss to the plaintiff.

1. The relief sought by the plaintiff included a declaration that he remained a primary beneficiary, an order for the taking of accounts, damages including exemplary damages and removal of the defendant as trustee.

1. The grounds for removal of the proceeding to Victoria are said to be that:

(a)        the trust deed was made in Victoria

(b)        the defendant company is incorporated in Victoria

(c)        all of the current directors of the defendant company live in Victoria

(d)        the accountant for the defendant company practises in Victoria

(e)        the defendant would be prejudiced by a hearing of the action taking place in the ACT by reason of the expense of travelling and accommodation for witnesses.

1. The defence admits that the alteration to the trust deed was not effective to amend it. The defendant admits that as trustee it distributed trust moneys to beneficiaries other than the plaintiff but denies that this constituted a breach of its duty as a trustee. The defendant further says that the distribution of income each year was within its absolute discretion as trustee, and that in each year the trustee considered the plaintiff as a potential beneficiary but exercised its discretion not to distribute trust moneys to him.

1. Both the plaintiff and Suzan Barker have affirmed affidavits. Ms Barker deposes that her late father, in partnership with his brothers, managed a successful fruit and vegetable import and export business, amassing significant assets.

1. She says that in about 2004, she realised that her mother was suffering from Alzheimer’s disease and was unable to cope with living outside a nursing home. Since then, her mother’s expenses for accommodation and care have amounted to about $4,000.00 a month. She says that it was her father’s wish that the overarching purpose of the trust was to provide for her mother. The trust had been used for that purpose. Her mother had been the main object of trust distributions.

1. In January 1992, she says that her father told her that he and his wife had provided considerable financial assistance to the plaintiff. His father had decided to exclude the plaintiff from any interest under his will. Her father was then aware that he did not have long to live but was in full possession of his facilities. He told her that there were sufficient assets in the trust to provide for her mother for the rest of her life. He died the following month.

1. She says in her affidavit that in November 2007 the plaintiff was made bankrupt on his own application. His trustee in bankruptcy required the defendant company to provide extensive documentation. This was done at significant cost. The trustee in bankruptcy did not institute any proceedings against the defendant company.

1. Ms Barker further says that she knows as a director of the defendant company that the trust has made a number of loans to the plaintiff over the years which he has not repaid. By 1992 the plaintiff had the benefit of loans from the trust of some $105,000.00. Her legal advice is that action to recover the loans is now statute-barred.

1. In her affidavit, Ms Barker identifies a number of witnesses who live in Melbourne, who would be likely to be required to give evidence at the hearing of the action, and who could do so at much less expense in Melbourne than in Canberra.

1. The plaintiff in his affidavit says that he last received any benefit from the trust in 1990. He moved to Canberra in 1992. He works as a school janitor, earning $42,000.00 per annum, or about $1,100.00 per fortnight after deductions. He says that he was “bankrupted by Westpac” in November 2007, and discharged in November 2010, still owing about $45,000.00. He is sixty-two years of age. He contributes to the maintenance of his daughter who is fifteen. He lives in a rented government house. He says that he lives from week to week and from pay to pay, and cannot afford a Victorian lawyer. His last visit to Melbourne was in October 2010 to see his mother. He has no realisable assets.

1. He says that while he was bankrupt, one of the partners in the accounting firm managing his bankrupt estate, Mr Rangott, told him that he had spoken to Mr Bruce Robertson, a previous accountant to the defendant company. Mr Robertson had told Mr Rangott that the amendment to the trust deed had been made by the plaintiff’s father. Mr Robertson is now dead. Mr Rangott has retired from practice and lives in Northern NSW.

1. The power to transfer proceedings to an interstate Supreme Court is conferred by section 5 of the Jurisdiction of Courts (Cross-Vesting) Act 1993. The section relevantly provides that if it appears to the court in which a proceeding has been commenced that it is in the interests of justice that the proceeding be determined by the Supreme Court of another State or Territory, the court shall transfer the proceeding to that other Supreme Court.

1. Section 5 also contains provisions dealing with proceedings which have been instituted in a court which would not have had jurisdiction to determine them in the absence of cross-vesting legislation. It has not been suggested that the present action falls into that category, notwithstanding that the defendant initially filed a conditional notice of intention to respond stating that it proposed to challenge this court’s jurisdiction. That notice was filed on 31 January 2011, and has since become an unconditional notice of intention to respond, no application to set aside the originating process having been made within 28 days: rule 111. The effect of an unconditional notice of intention to respond is to concede valid service. Where the process of this court is validly served on a defendant in Australia, the court has jurisdiction to hear and determine the proceeding, for reasons which I explained in White Enhancements Pty Ltd v Quick Fit Tyre Service Pty Ltd [2008] ACTSC 122.

1. The principles to be applied in determining an application for transfer under the cross-vesting legislation were expounded by the High Court of Australia in BHP Billiton Ltd v Schultz (2004) 221 CLR 400. The legislation does not confer a discretion on the court. If satisfied that it is in the interests of justice that the action be determined by another Supreme Court, this court must order a transfer. The interests of justice are not limited to the interests of the parties, although these must be considered. The fact that the plaintiff has chosen to bring the action in a particular court is not a factor to be given any weight. The choice of a plaintiff to bring an action in a court where he may gain an advantage at the expense of the defendant, whereas on transfer he would lose that benefit to the defendant’s advantage, is generally a neutral factor. Each case depends on its own facts. Convenience to a majority of witnesses can be a factor, as can relative expense of conducting the trial at one venue rather than another. A court can be expected to lean towards a forum which best gives effect to the reasonable expectations of the parties.

1. The only nexus with the Australian Capital Territory in the present case is that the plaintiff resides here. The defendant is a company having its registered office in the suburbs of Melbourne. Its directors all live in Melbourne. The parties to the trust deed all had addresses in the Melbourne region at the time it was executed in 1973. Evidence for the defendant identifies some potential witnesses in the defendant’s case who live in and around Melbourne.

1. Counsel for the defendant has not submitted that there is any Victorian legislation which might bear on the issues to be determined. Nevertheless it appears to me that all of the connecting factors, with the exception of the residence of the plaintiff, point to Victoria as the State one would expect to be the natural forum for the proceeding.

1. The major consideration militating against a transfer is the plaintiff’s evidence as to his financial position. He goes beyond an assertion that a transfer would cause him financial hardship to the extreme of saying that he cannot afford to fund Victorian-based lawyers. He does not explain this assertion in any greater detail. It is not clear to me why a Victorian solicitor or firm of solicitors would be likely to charge the plaintiff any more than a Canberra solicitor or firm, although I accept that the plaintiff might need to incur some expense in travelling to Melbourne to give instructions. I would have thought that thereafter, most contact could be by telephone and in writing rather than by personal attendance.

1. The impecuniosity of the plaintiff may be a matter for regret but will not generally be enough to stand in the way of an order for transfer where in every other respect, it is apparent that the interstate court is the more appropriate court to determine the action: see, for example, Pugh v Morrison [2011] ACTSC 44.

1. I am satisfied that the Supreme Court of Victoria is the more appropriate court to hear and determine the present action, rather than this court. I am persuaded that it is in the interests of justice that the action be determined by the Supreme Court of Victoria. The action will be transferred to that court.

I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Master.

Associate:

Date:                13 May 2011

Counsel for the plaintiff:  Mr C J Ryan
Solicitors for the plaintiff:  Lander & Co
Counsel for the defendant:  Mr R J Arthur

Solicitors for the defendant:  Bradley Allen as agents for

John Conquest Lawyers
Date of hearing:  29 April 2011

Date of judgment:  13 May 2011