Lamb v Ariss and Anor (No.2) - [2006] FMCA 765

FEDERAL MAGISTRATES COURT OF AUSTRALIA

LAMB v ARISS & ANOR (No.2)

[2006] FMCA 765

PRACTICE AND PROCEDURE – Bankruptcy – transfer of proceedings to Federal Court.

Federal Magistrates Act 1999, s.39
Federal Magistrates Court of Australia Act 1976, s.32AA

Lamb (Trustee) in the Matter of Ariss (Bankrupt) v Ariss [2006] FCA 582

Applicant:

KENNETH WAYNE LAMB (AS TRUSTEE OF THE PROPERTY OF MARIA OLGA ARISS, A BANKRUPT)

First Respondent:

STEPHEN GORDON ARISS

Second Respondent:

SIRA PROPERTIES PTY LIMITED
(ACN 007 339 460)

File Number:

MLG 1709 of 2005

Judgment of:

McInnis FM

Hearing date:

25 May 2006

Delivered at:

Melbourne

Delivered on:

25 May 2006

REPRESENTATION

Counsel for the Applicant:

Mr J. Delany SC, with Mr P. Fary

Solicitors for the Applicant:

Arnold Bloch Leibler

Counsel for the Respondent:

Mr S.A. Rosenzweig

Solicitors for the Respondent:

Charles Fice

ORDERS

THE COURT ORDERS BY CONSENT THAT:

Arnold Bloch Leibler pay the Respondents costs of the proceeding but not including the costs of the Second Respondent’s application for damages pursuant to the undertaking as to damages on an indemnity basis to be taxed according to Order 62 of the Federal Court Rules in default of agreement with a request that the Registrar, to the extent that it is possible, expedite the determination of the costs pursuant to this Order.

IT IS FURTHER ORDERED:

Pursuant to Section 39 of the Federal Magistrates Act 1999, the proceedings be transferred to the Federal Court of Australia with a request that the Federal Court list this matter, if convenient, before his Honour Sundberg J at the directions hearing currently scheduled for Monday 29 May 2006 in application VID 440 of 2006.
Costs be reserved.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MLG 1709 of 2005

KENNETH WAYNE LAMB

Applicant

and

STEPHEN GORDON ARISS

First Respondent

SIRA PROPERTIES PTY LIMITED (ACN 007 339 460)

Second Respondent

REASONS FOR JUDGMENT

(Revised from transcript)

The application currently before the court has been the subject of a consent order in relation to costs which was one of two matters which remained to be determined by this court following orders made on 13 April 2006 where a mandatory injunction and other orders had been discharged.
The remaining issue is a question of damages which follow from an undertaking given to the court when it had earlier granted an ex parte mandatory injunction on 23 December 2005. The remaining issue of damages arises in relation to one item of jewellery which was in part the subject of an earlier claim by the applicant.
When the matter commenced this day, I brought to the attention of the parties the fact that there are proceedings pending in the Federal Court in application 440 of 2006 wherein the applicant, first respondent and second respondent are identical to the parties in the proceedings currently before this court. I brought that matter to the attention of the parties in order to at least seek from the parties submissions concerning the possibility that this court might of its own motion make an order pursuant to s.39 of the Federal Magistrates Act 1999 (the FM Act) that this issue remaining in this court, that is the determination of damages, being the only remaining part of this application, be transferred to the Federal Court in circumstances where it is the court's understanding that the Federal Court has listed for first directions the application number 440 of 2006 on Monday, 29 May 2006.
When considering the issue of transfer, the court is bound by s.39 of the FM Act which provides:
“(1) If a proceeding is pending in the Federal Magistrates Court, the Federal Magistrates Court may, by order, transfer the proceeding from the Federal Magistrates Court to the Federal Court or the Family Court.
(2) The Federal Magistrates Court may transfer a proceeding under this section:
(a) on the application of a party to the proceeding; or
(b) on its own initiative.
(3) In deciding whether to transfer a proceeding to the Federal Court under subsection (1), the Federal Magistrates Court must have regard to:
(a) any Rules of Court made for the purposes of subsection 40(2); and
(b) whether proceedings in respect of an associated matter are pending in the Federal Court; and
(c) whether the resources of the Federal Magistrates Court are sufficient to hear and determine the proceeding; and
(d) the interests of the administration of justice.”
Subsection 39(3) provides that when the court decides whether to transfer a proceeding to the Federal Court, there are a number of matters to which the court must have regard. One relates to the Rules of the court. The rules of the court in this instance in my view do not provide a great deal of assistance. Though it is noted that rule 8.02 does at least set out some matters which the court may take into account when considering the question of a transfer.
The other factors which in my view are more significant in the present matter set out in s.39 are those which appear in subsection 39(3)(b) and (d). Subsection 39(3)(b) requires the court to have regard to whether proceedings in respect of an associated matter are pending in the Federal Court. Subsection 39(3)(d) provides a very broad factor namely the interests of the administration of justice.
The proceedings which are pending in the Federal Court were filed in that court on 28 April 2006. To put that date into context, it is noted that on 23 December 2005, this court made certain ex parte orders which then upon further hearing on 13 April 2006 were discharged. However, the issue of damages and costs was then the subject of further hearing this day. As I have mentioned, the question of costs is now resolved, leaving only the issue of damages in relation to one item of jewellery.
An application for leave to appeal was made to the Federal Court arising out of this court's decision of 13 April 2006. That matter was heard by Sundberg J of the Federal Court on 12 May 2006, and the subject of a decision of His Honour on 18 May 2006 in the matter of Lamb (Trustee) in the Matter of Ariss (Bankrupt) v Ariss [2006] FCA 582.
It is clear from His Honour's decision in that matter that the Court was then cognisant of the proceedings which are now pending and the subject of a directions hearing before His Honour next week. So much is evident in paragraph 17 of His Honour's decision as follows:-
“17. Notwithstanding that restoration, the real issue between the parties – namely, who owns the property the subject of the mandatory injunction – has not been finally determined. On its own, the discharge of the mandatory injunction does not preclude the applicant from:
·moving the Federal Magistrates Court (or, indeed, this Court) for another mandatory injunction in the same terms; or
·commencing a proceeding in this Court claiming ownership of the property the subject of the mandatory injunction.
Indeed, the applicant has taken the latter course of action – though in that proceeding he also claims ownership of additional property not the subject of the mandatory injunction.”
The parties in this matter were invited to make submissions in relation to the question of whether or not these proceedings should be transferred. To some extent, both parties are ready to proceed subject to there being logistical issues concerning some witnesses. Both have sought to rely upon material filed in these proceedings or elsewhere, and it is fair to conclude that there is indeed voluminous material which may or may not be relevant to this issue now before this court concerning damages.
In considering the question of a transfer pursuant to s.39 of the FM Act, it is not appropriate in my view for this court to analyse in detail the facts and circumstances which may be set out in affidavit material. It is sufficient in considering the question of the interests of the administration of justice, to make what I would describe as brief observations concerning relevant facts.
Those brief observations include the fact that in the statement of claim in proceedings 440 of 2006, which are the subject of a directions hearing to be conducted next week, it is noted that in paragraph 29 and up to and including paragraph 33, reference is made, amongst other items of property, to jewellery. It is further noted that in paragraph (xi) of the particulars subjoined to paragraph 29 of that statement of claim, reference is made to a ‘three-stone diamond ring’ referred to as item 11. It is common ground that that is the item which is currently the subject of the application for damages before this court and was otherwise referred to as item 12 in a list of 12 items in earlier pleadings. The items have simply been reduced to a total of 11 items with consequential renumbering.
It is clear to me that the fact finding mission of this court in determining the question of damages will necessarily involve determination of a question of ownership. Likewise in determining the question of ownership of that item, given that the item is presently the subject of a statement of claim before the Federal Court, it is clear that that court will, amongst other things, determine ownership of the same item.
There are indeed surrounding circumstances evident from the affidavit material which I regard as common to both proceedings and which transcend what I regard as a somewhat simplistic approach when considering this one item the subject of these proceedings. It seems to me almost inevitable that this court will be required to embark upon a fact finding process which at the very least in part will be a fact finding process where the court is required to hear evidence of witnesses common to these proceedings and the pending proceedings in the Federal Court.
It is argued that in this instance there would be prejudice to the respondents if the court were not to proceed to consider the damages issue this day, and that a consideration of that claim would not of itself be of any significant detriment to the applicant in the pending Federal Court proceedings.
In my view, transferring this application to the Federal Court in the circumstances would be in the interests of the administration of justice notwithstanding the potential prejudice to the respondents. That prejudice in my view regarding damages arising out of a lost item is clearly limited. Any prejudice in relation to costs can be addressed by the costs of this day being reserved, which I would propose ordering.
I note that, for reasons which are not fully explained, the proceedings in the Federal Court were filed on 28 April 2006 which at least prima facie would appear to be in contravention of s.32AA of the Federal Court of Australia Act 1976 which provides:-
32AA (1) Proceedings must not be instituted in the Court in respect of a matter if:
(a) the Federal Magistrates Court has jurisdiction in that matter; and
(b) proceedings in respect of an associated matter are pending in the Federal Magistrates Court.
(2) If:
(a) proceedings are instituted in the Court in contravention of subsection (1); and
(b) the proceedings are subsequently transferred to the Federal Magistrates Court;
the proceedings are taken to be as valid as they would have been if subsection (1) had not been enacted.”
Nevertheless in my view there is a requirement for there to be a degree of comity between courts exercising jurisdiction in bankruptcy. Moreover in my view it is in the interests of both parties and consequentially in the interests of justice that the issues between the parties which clearly relate to property of which the subject matter of the damages claimed before this court is one factor, requires that the parties be given the opportunity to fully explore and test the evidence of each other before one court which can then make a decision based upon the evidence before it, rather than be distracted by a decision by another court in relation to at least part of that claim.
I do not believe it would be of assistance to the parties nor would it advance comity between courts if this court were to pursue its fact finding process and reach a decision on the matter now before it.
I have deliberately refrained in delivering this decision from embarking upon a close analysis of some of the factual material set out in the affidavit material. I conclude that there is sufficient material to demonstrate that there are factors common to these proceedings and to the pending Federal Court proceedings which, in the interests of justice, clearly justifies an order transferring the application to the Federal Court.

I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of McInnis FM

Associate:

Date: 25 May 2006