Leda Holdings Pty Ltd v Securcorp Limited

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FEDERAL COURT OF AUSTRALIA

Leda Holdings Pty Ltd v Securcorp Limited [2013] FCA 1364

Citation: Leda Holdings Pty Ltd v Securcorp Limited [2013] FCA 1364
Parties: LEDA HOLDINGS PTY LTD v SECURCORP LIMITED ACN 088 919 377, MICHAEL GERARD ROBINSON and SHAKESPEARE HANEY LIMITED ACN 087 435 783
File number: NSD 2029 of 2013
Judge: YATES J
Date of judgment: 16 December 2013
Catchwords: PRACTICE AND PROCEDURE – application for transfer of proceeding to the Queensland District Registry
Legislation: Federal Court of Australia Act 1976 (Cth) s 48
Federal Court Rules 2011 (Cth) r 2.02
Cases cited: ESCO Corporation and Another v Wundowie Foundry Pty Ltd (2003) 58 IPR 443
Mortimer v Opes Prime Stockbroking Pty Limited (ACN 086 294 028) (Administrators Appointed) (in Liquidation) [2009] FCA 227
Mulhern v Pearce [2013] FCA 1138
National Mutual Holdings Pty Ltd and Others v The Sentry Corporation and Another (1988) 19 FCR 155
Wang v Australia China Marketing Company Pty Ltd [2001] FCA 13
Date of hearing: 9 December 2013
Place: Sydney
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 34
Counsel for the Applicant: Mr EAJ Hyde
Solicitor for the Applicant: Piper Alderman
Counsel for the First and Second Respondents: Ms D Hogan-Doran
Solicitor for the First and Second Respondents: Tucker & Cowen Solicitors
Solicitor for the Third Respondent: Mr J Innes of McCullough Robertson

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 2029 of 2013
BETWEEN:

LEDA HOLDINGS PTY LTD
Applicant
AND:

SECURCORP LIMITED ACN 088 919 377
First Respondent

MICHAEL GERARD ROBINSON
Second Respondent

SHAKESPEARE HANEY LIMITED ACN 087 435 783
Third Respondent

JUDGE:

YATES J

DATE OF ORDER:

16 DECEMBER 2013

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.Pursuant to s 48 of the Federal Court of Australia Act 1976 (Cth), the proceeding be conducted in the Queensland District Registry of the Court and, pursuant to r 2.02 of the Federal Court Rules 2011 (Cth), the proceeding be transferred to that Registry.

2.The costs of the interlocutory application filed on 14 November 2013 be the first and second respondents’ costs in the cause.

Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 2029 of 2013
BETWEEN:

LEDA HOLDINGS PTY LTD
Applicant
AND:

SECURCORP LIMITED ACN 088 919 377
First Respondent

MICHAEL GERARD ROBINSON
Second Respondent

SHAKESPEARE HANEY LIMITED ACN 087 435 783
Third Respondent

JUDGE:

YATES J

DATE:

16 DECEMBER 2013

PLACE:

SYDNEY

REASONS FOR JUDGMENT

  1. This is an application by the first and second respondents in the principal proceeding to transfer the proceeding from the New South Wales District Registry to the Queensland District Registry of the Court.

  2. The applicant in the proceeding opposes the application for transfer.  The third respondent neither supports nor opposes the application for transfer.

    Background

  3. The proceeding was commenced by an originating application supported by a statement of claim filed on 27 September 2013.  The…

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Details
Case
[2013] FCA 1364
Decision Date

CaseChat Overview and Summary

In the case of Leda Holdings Pty Ltd v Securcorp Limited, the applicant, Leda Holdings, filed an originating application against the respondents, Securcorp Limited and others, arising from an investment in the Securcorp Mortgage Income Scheme (SMIS). The applicant claims damages and compensation for the loss incurred due to the failure of the investment. The primary allegations involve the respondents' conduct in relation to the SMIS, specifically the first respondent's role as the responsible entity and its alleged breaches of the Corporations Act, trust duties, and duties of care. The third respondent has assumed the first respondent’s liabilities and obligations concerning the SMIS since 8 May 2013.

The legal issues before the court included whether the proceeding should be transferred from the New South Wales District Registry to the Queensland District Registry and the implications of such a transfer on the economical and efficient conduct of the proceeding. The court needed to consider the geographical location of the evidence and witnesses, as well as the anticipated calls on evidence from both parties. The affidavits provided by the solicitors of the parties outlined the likely witnesses and their locations, with a significant number of witnesses and evidence being based in Queensland.

In ruling on the application, the court found that the considerations positively favoured transferring the proceeding to the Queensland District Registry. The court noted that the proceeding substantially relied on Queensland-based evidence and witnesses. The court concluded that the economical and efficient conduct of the proceeding would be best promoted by transferring the proceeding to Queensland. Consequently, the court ordered the transfer and ruled that the costs of the application would be borne by the first and second respondents. The substantive issues in the proceeding, including the alleged breaches of the Corporations Act, trust duties, and duties of care, remained to be decided in the transferred proceeding.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

The applicant in the proceeding opposes the application for transfer. The third respondent neither supports nor opposes the application for transfer.Background The proceeding was commenced by an originating application supported by a statement of claim filed on 27 September 2013. The interlocutory application seeking the transfer was filed on 14 November 2013. It is supported by an affidavit sworn on 14 November 2013 by David Robert Walter Tucker. Mr Tucker is a partner in Tucker & Cowen Solicitors, the first and second respondents’ solicitors in the proceeding. The applicant relies on an affidavit sworn on 25 November 2013 by Amanda Kim Banton. Ms Banton is a partner in Piper Alderman, the applicant’s solicitors. In the proceeding, the applicant claims damages, and equitable and other compensation, against the respondents arising out of the applicant’s failed investment in a registered managed investment scheme known as the Securcorp Mortgage Income Scheme (the SMIS). The principal allegations made by the applicant can be summarised as follows. At all times until 8 May 2013, the first respondent was the responsible entity for the SMIS. At all material times, the second respondent has been a director of the first respondent and was knowingly involved in the first respondent’s conduct about which complaint is made. Since about 8 May 2013, the third respondent has been the responsible entity for the SMIS and has assumed the first respondent’s liabilities and obligations in respect of the SMIS. In about June 2007, the first respondent was approached by Backpackers Australia Pty Ltd (Backpackers) to provide funding to enable it to acquire certain land at Kirra on the Gold Coast in Queensland (the Kirra development). The first respondent was provided with valuations of the land undertaken by LandMark White Gold Coast Pty Ltd (LandMark White). These valuations had been prepared for the Commonwealth Bank of Australia (the CBA), the initial financier of the development. The CBA made a loan to Backpackers in respect of the Kirra development and became registered as first mortgagee in respect of the land. During August and September 2007, the first respondent made certain offers to provide a loan to Backpackers in relation to the Kirra development. On about 1 October 2007, the applicant, which is based in New South Wales, received an information memorandum from the first respondent. The applicant says that it accepted the terms of the information memorandum and paid $11.4 million to the first respondent to acquire units in the SMIS. On about 2 October 2007, the first respondent advanced $11.4 million to Backpackers and took a second registered mortgage of the land. During November 2008, Backpackers defaulted on its loan with the CBA. Subsequently, Backpackers went into liquidation and the CBA realised its security. The applicant says that, as events have transpired, the second mortgage held by the first respondent in respect of the land is of no value and that, consequently, the units acquired by the applicant in the SMIS are of no value.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

I do not think that this is a case where the considerations are evenly balanced, thereby favouring the retention of the proceeding in the New South Wales District Registry: see ESCO Corporation and Another v Wundowie Foundry Pty Ltd (2003) 58 IPR 443 at [6]. In my view, the presently known circumstances positively favour the transfer that is sought. The case presents as one that is substantially reliant on Queensland-based evidence from a number of Queensland-based witnesses.Conclusion and disposition I am satisfied that the economical and efficient conduct of the proceeding will be best promoted by transferring the proceeding to the Queensland District Registry. An order will be made accordingly. The first and second respondents have sought their costs of this application. In my view, the appropriate order is that the costs of the application be the first and second respondents’ costs in the cause.

Ratio Decidendi

Legal Principle Established

The substantive allegations in the proceeding concern: ·whether the first respondent breached the constitution in making the loan to Backpackers;·whether the first respondent breached various provisions of the Corporations Act 2001 (Cth) (the Corporations Act) in making the loan to Backpackers;·whether the second respondent was a person knowingly involved in the first respondent’s alleged contraventions of the Corporations Act;·whether the first respondent breached certain trust duties, including those arising under the Trusts Act 1973 (Qld);·whether the first respondent breached a duty of care owed to the applicant; and·whether the first respondent or the second respondent engaged in conduct that was misleading or deceptive. Mr Tucker has expressed the view that, in light of the allegations pleaded in the statement of claim, and the answer made in the first and second respondents’ defences, it is likely that the first respondent would call evidence on:·The dealings between the first respondent, the CBA and Backpackers, involving former employees of the first respondent (located in Queensland) and employees or former employees of the CBA who were located in Queensland at the time of the alleged events.·The dealings between the first respondent and the applicant.·The valuations and dealings with the valuations of the properties that had been prepared by LandMark White.·Whether and in what circumstances the first respondent would have made a loan to Backpackers if it had known that the LVR respecting its loan to Backpackers exceeded 80%.·The steps taken by the first respondent to ascertain the financial position of the two directors of Backpackers who guaranteed repayment of the loan to the first respondent.·The feasibility of the Kirra development. Mr Tucker said that he anticipates receiving instructions from the first and second respondents to call the three current directors (including the second respondent) and one former director of the first respondent, all of whom reside in Queensland. He said that he also anticipates that the first respondent would seek to call evidence from the current director and secretary of Backpackers and a former director of Backpackers (the two guarantors), both of whom reside in Queensland. He also anticipates that expert witnesses, who have expertise in the Gold Coast property market, and who reside on the Gold Coast or in Brisbane, will give evidence. Mr Tucker said that reliance would be placed on the first respondent’s records that are held electronically or in hard copy form at Surfers Paradise in Queensland. Mr Tucker described these records as “extensive documentation”. The first respondent’s principal place of business is recorded as being at Miami in Queensland. Its registered office is recorded as being at Bundall in Queensland. Ms Banton has given evidence that, while the applicant’s position has not been finalised, she anticipates that the applicant will call evidence from the current directors of the applicant, Robert John Ell and William Robert Ell (Bob Ell); a former director, Colin Allerdice; the applicant’s former development manager, Phillip O’Callaghan; an executive assistant of the applicant, Craig Cornish; and Howard Schmiede, who formerly worked in the applicant’s Sydney office, but who no longer works for the applicant.