Lynpland Pty Ltd v De Simone Nominees Pty Ltd
[2009] NSWSC 545
•19 June 2009
CITATION: Lynpland Pty Ltd v De Simone Nominees Pty Ltd & Ors [2009] NSWSC 545 HEARING DATE(S): 27 May 2009; 12 June 2009
JUDGMENT DATE :
19 June 2009JUDGMENT OF: Schmidt AJ DECISION: 1. The plaintiff is to file and serve its further amended statement of claim within 7 days of this judgment.
2. The plaintiff is to bear the first and third defendants’ costs thrown away in meeting the amended statement of claim.
3. The plaintiff is to bear the first and third defendants’ costs of the motions of 29 July 2008 and 27 March 2009.
4. The defendants are to file and serve their defences to the plaintiff’s further amended statement of claim within 28 days of service of the further amended statement of claim.
5. The proceedings are transferred to the Supreme Court of Victoria.CATCHWORDS: Procedure - courts and judges generally - courts - concurrent jurisdiction of different courts - transfer of proceedings under cross-vesting legislation - proceedings to be transferred to the Supreme Court of Victoria - costs LEGISLATION CITED: Corporations Act 2001 (Cth)
Jurisdiction of Courts (Cross-vesting) Act 1987
Uniform Civil Procedure Rules 2005CATEGORY: Principal judgment CASES CITED: BHP Billiton Ltd v Schultz (2004) 221 CLR 400
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
James Hardie & Coy Pty Ltd v Barry and Anor (2000) 50 NSWLR 357
Legal Services Commissioner v Brereton (Legal Practice) [2008] VCAT 1723
Legal Services Commissioner v Brereton (Legal Practice) [2008] VCAT 2073PARTIES: Plaintiff - Lynpland Pty Ltd
First Defendant - De Simone Nominees Pty Ltd
Second Defendant - ZMB (Australia) Pty Ltd
Third Defendant - The Computer Supply Store (Australia) Pty LtdFILE NUMBER(S): SC 13218/2008 COUNSEL: Plaintiff - Mr T Stuart, counsel
First and Third Defendants - Mr E Reigler, counsel
Second Defendant - Mr L Byrne, counselSOLICITORS: Plaintiff - Stewart Cuddy & Mockler
First and Third Defendants - Peter S Lustig
Second Defendant - Abrahams & Associates
SCHMIDT AJIN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION
Friday, 19 June 2009
JUDGMENT13218/08 LYNPLAND PTY LTD v DE SIMONE NOMINEES PTY LTD & ORS
1 HER HONOUR: By motion filed on 29 July 2008, the first and third defendants, De Simone Nominees Pty Ltd and The Computer Supply Store (Australia) Pty Ltd, sought orders pursuant to s 5(2)(b) of the Jurisdiction of Courts (Cross-vesting) Act 1987, that the proceeding be transferred to the Supreme Court of Victoria, or alternatively that the proceedings be permanently stayed as an abuse of process, vexatious, oppressive or likely to cause injustice. In the further alternative, orders were sought that the proceeding be dismissed under Rule 13.4 of the Uniform Civil Procedure Rules 2005, on the ground that they are frivolous, or vexatious; that no reasonable cause of action is disclosed or that they are an abuse of process. In the alternative, that the proceedings be dismissed under Rule 14.28, on the ground that no reasonable cause of action is disclosed, or that they are an abuse of process.
2 By motion filed on 27 March 2009, the first and third defendants sought orders for costs thrown away by reason of the filing of the plaintiff’s amended statement of claim.
3 By amended motion of 18 May 2009, the first and third defendants sought orders restricting access to various documents produced in response to subpoenas. Questions of legal professional privilege and confidentiality were relied on. The hearing of that motion was stood over, although the question of production by the defendants of one agreement, and access to that document, being a document claimed by the plaintiff to be relevant to the motion pursued by the second defendant, was dealt with at the hearing. I concluded that the document was relevant to the matters in issue between the parties and had to be produced.
4 By further motion of 5 May 2009 the second defendant sought orders that the default judgment entered against it on 24 September 2008 be set aside and that its execution and operation be stayed.
5 The proceedings were commenced by a statement of claim filed in June 2008. They are going forward pursuant to an amended statement of claim filed in November 2008. There, the plaintiff sought judgment against the defendants in the sum of $2,460,000, or in the alternative, judgment for that sum, less any sum paid before judgment from the sale of a property at Lindfield, or in the further alternative, damages in that amount, or in the further alternative, orders in respect of a lesser amount of $1 million. Certain declarations were also sought in relation to the proceeds of the sale of the Lindfield property.
6 The claims advanced in the amended statement of claim concern a number of agreements. The first, a written agreement which the plaintiff claims it made in March 2006 with the first and second defendants, whereby it transferred to them its interest in a joint venture for the development of a property at Ocean Grove, Victoria, for the price of $2,460,000 ('the transfer agreement'). In the alternative, the plaintiff claims that it had made an agreement in similar terms to the transfer agreement, with the first and second defendants. This latter claim was advanced because the defendants maintain that they never executed the written transfer agreement. The plaintiff also alleges that a second written agreement was made with the third defendant in March 2006, whereby the third defendant agreed that it would purchase a property at Lindfield on certain terms ('the purchase agreement'). It is claimed that by procuring the performance of the purchase agreement, it was agreed that the first and second defendants were to be deemed to have performed their obligations under the transfer agreement. In the alternative, the plaintiff claimed that it had made an agreement in similar terms to the purchase agreement, with the third defendant. This claim was also advanced because the defendants maintain that the written transfer agreement, which the plaintiff seeks to rely on, was never executed.
7 Amongst other things, the plaintiff claims that the purchase agreement and the transfer agreement, or the agreements relied on in the alternative, were repudiated or breached. Consequential orders for a liquidated sum, or in the alternative, damages of $2,460,000 are sought against the defendants.
8 The first and third defendants comprehensively denied what was claimed against them, including that they had ever made the agreements on which the plaintiff relied. The second defendant did not file any defence to the original summons, with the result that default judgment was entered against it on 24 September 2008.
The cases advanced by the first and third defendants
9 The first and third defendants’ case was that the proceedings should be transferred to Victoria, the test being which is the more appropriate forum (see James Hardie & Coy Pty Ltd v Barry and Anor (2000) 50 NSWLR 357 at [4]). This requires a consideration of what the natural forum was, namely that with which the action has the most real and substantial connection (see BHP Billiton Ltd v Schultz (2004) 221 CLR 400 at [170]).
10 The first and third defendants argued that the proceedings concerned a joint venture in relation to the development of land located in Victoria; that the key parties and witnesses were located there, as were many of the relevant documents. The plaintiff asserts an interest in the land, pursuant to the transfer agreement, which provides that the applicable law is that of Victoria. The land was subject to a caveat lodged by the plaintiff. It was relevant that the allegations raised in these proceedings directly impact on issues being considered in proceedings before the Victorian Court of Appeal, arising out of the Ocean Grove joint venture. Allegations raised in these proceedings also directly impact on issues being considered by the Victorian Supreme Court on appeal from the Victorian Civil and Administrative Tribunal, those proceedings also arising out of events connected with the Ocean Grove joint venture.
11 The first and third defendants further argued that it was relevant that of the six subpoenas issued by the plaintiff in these proceedings to date, five were served in Victoria and one in Queensland. The only connection which the matters, the subject of the proceedings, had with New South Wales was that the director of the plaintiff, Mr David McLeod, resided in New South Wales and the property, the subject of the purchase agreement, was located there. The convenience of the plaintiff should not be permitted to prevail over that of the defendants and the witnesses.
12 As to the dismissal/strike out applications, it was argued that the plaintiff’s case was so obviously untenable, that it should be struck out, because it was based on two written agreements which were never executed. The pleading was vexatious and embarrassing. Execution of agreements claimed to be dated 17 March 2006 had been denied by all defendants. There was no evidence put forward by the plaintiff that they were executed. The plaintiff had acknowledged that it has no copies of any executed agreements.
13 The agreements relate to the acquisition of land at Ocean Grove in Victoria. Such agreements are required to be in writing and no action may be brought upon a contract for the disposition of an interest in land, unless the agreement, or a memorandum or note of the agreement, is in writing and signed. Further, in order to be bound by a written agreement, a party must execute that agreement, signifying its intention to be bound. In the case of a company, it had to be shown that the appropriate steps to effect execution were taken, namely the affixing of a seal and in the case of a document executed without affixing a seal, compliance with the provisions of s 127 of the Corporations Act 2001 (Cth).
14 In the absence of proof of an executed written agreement, the proceedings must fail. The case was beyond saving by pleading amendment and was properly characterised as hopeless. For the same reasons the case was also an abuse of process, frivolous, vexatious and oppressive.
15 In addition, it was argued that the amended statement of claim should be struck out, as it was impossible to discern what allegations were there being made against each defendant and no allegation was made that the plaintiff had suffered any loss. Numerous other alleged flaws in the pleadings were relied on, to make good this submission.
16 The plaintiff opposed the application to transfer the proceedings to Victoria. Its case was that the relevant cause of action accrued in New South Wales, where the plaintiff and its witnesses reside and where the property, the subject of the purchase agreement, is located.
17 While it was correct that a number of parties and witnesses are located in Victoria, many documents have been subpoenaed already and are in New South Wales. While the land, the subject of the joint venture, was located in Victoria, there was no dispute about the land. The dispute concerned whether the first and second defendants purchased a joint venture interest in the land and whether the third defendant entered into a second agreement, in order to meet the financial obligation in the first agreement.
18 The clause relied on in the agreement did not vest jurisdiction in Victoria, it merely required the agreement to be determined in accordance with the applicable law of Victoria. There was no contractual impediment to the matter being heard in New South Wales.
19 Both the first and third defendants denied the agreements in whole. The plaintiff expected to prove either the existence of an executed copy of the agreements, or to prove that they were execucted, including by way of admissions. An affidavit sworn by Mr McLeod in April 2009, in which evidence was given as to the execution of a deed and a declaration of trust in relation to the aquisition of the Lindfield property, was relied on. Evidence in the proceedings in the Victorian Supreme Court would also be relied on.
20 The plaintiff's case was that it was provided with draft agreements which it executed and returned to the three defendants for execution. Afterwards, the defendants performed certain of the obligations imposed by those agreements.
21 The transfer agreement did not relate to the transfer of an interest in land, but an interest in a joint venture. The interest in the land was held by another entity, Seachange Management Pty Ltd. The contractual term relied on was that the third defendant would purchase land in New South Wales for the plaintiff or associated interests. The plaintiff claimed that the third defendant did so, thereby constituting part performance of the agreements. The defendants admitted the purchase, but denied that it was related to the agreement. The plaintiff did not seek to enforce any interest in land.
22 It followed that it could not be concluded that the plaintiff’s claims were hopeless. They could be proven either by production of an executed document, which would be pursued by subpoena, or by admission, estoppels and/or performance. It also followed that there was no abuse of process.
23 If the issue was simply that there was no specific pleading that the plaintiff had suffered loss, a pleading amendment could easily rectify that problem. As to the other alleged defects in the pleadings, in some cases it was argued that they had no foundation, or were readily rectified by the provision of particulars. In others, it was accepted that errors had been made and that the paragraph would be omitted, or that particular words would be omitted by further amendment of the statement of claim.
Further amendment of the statement of claim
Consideration
24 It was apparent from the plaintiff's submissions that there are still problems with its statement of claim, which requires further amendment, before the case may proceed. The plaintiff asked for a period of seven days to further amend the amended statement of claim. I am satisfied that it must be given that opportunity.
Dismissal/strike out
25 Otherwise, the questions to be resolved, so far as the first and third defendants’ motions are concerned, are whether the proceedings should be dismissed, or struck out, or, if they are to proceed, whether they should be heard in this Court, or in the Supreme Court of Victoria.
26 I am satisfied that the proceedings may not be struck out. The test which the plaintiff must meet is that discussed by the High Court in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129. That test is particularly stringent. An application may only be dismissed at this early stage, where it is established by a defendant that there is no reasonable cause of action disclosed on the pleadings and where it is clear that the plaintiff’s case is so untenable, that it cannot possibly succeed. The power must be exercised with great care, in cases which are doomed to fail and where no pleading amendment could cure the defect.
27 Here what is at issue between the parties is whether or not the alleged agreements were ever made. While the defendants have put on evidence denying that written agreements were ever executed, the plaintiff has put on evidence which seeks to establish performance. It is also seeking to locate copies of the written agreements, which it executed and which it believes were executed by the defendants. The plaintiff must clearly have that opportunity. Even on the evidence relied on by the first and third defendants, it is apparent that at one time, they too understood that, at the least, the transfer agreement had been executed by the second defendant. They subsequently took various steps, in reliance on that understanding.
28 It was also argued by the defendants that the claimed transfer agreement concerned an interest in land, which must be evidenced in writing. As was properly accepted in argument, whether that is so, depends on the proper construction of the joint venture agreement. That follows because it is the plaintiff’s interest in the joint venture, which it claims was transferred to the first and second defendants under the transfer agreement. The purchase agreement was concerned with how the price agreed for the acquisition of that interest, was to be satisfied.
29 In those circumstances, it follows that it must be concluded that the General Steel test has not been satisfied by the first and third defendants. The proceedings may not be struck out, or dismissed at this stage, the defendants not having met the onus which falls upon them. The plaintiff may not be deprived of the ordinary opportunity to put its case at trial.
Transfer of proceedings
30 Turning to the application to transfer the proceedings to Victoria, it is convenient to begin by noting that s 5(2)(b) of the Jurisdiction of Courts (Cross-vesting) Act provides:
2) Where:
(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:
- (i) the relevant proceeding arises out of, or is related to, another proceeding pending in the Supreme Court of another State or of a Territory and it is more appropriate that the relevant proceeding be determined by that other Supreme Court,
(ii) having regard to:
(A) whether, in the opinion of the first court, apart from this Act and any law of the Commonwealth or another State relating to cross-vesting of jurisdiction, the relevant proceeding or a substantial part of the relevant proceeding would have been incapable of being instituted in the first court and capable of being instituted in the Supreme Court of another State or Territory,
(B) the extent to which, in the opinion of the first court, the matters for determination in the relevant proceeding are matters arising under or involving questions as to the application, interpretation or validity of a law of the State or Territory referred to in sub-subparagraph (A) and not within the jurisdiction of the first court apart from this Act and any law of the Commonwealth or another State relating to cross-vesting of jurisdiction, and
(C) the interests of justice,
it is more appropriate that the relevant proceeding be determined by that other Supreme Court, or
(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,
the first court shall transfer the relevant proceeding to that other Supreme Court.
31 In James Hardie & Coy Pty Ltd it was observed by Mason P:
- 95 The judgment of Higgins J (with whom Gallop J agreed) in Dawson contains a summary of the case law relating to “the interests of justice” , a reappraisal of Waterhouse (see at 22), and a useful checklist of factors relevant to the decision to order a transfer of category (iii) cases, namely:
- • application of substantive law;
• forensic advantage or detriment conferred by procedural law;
• the choice made by a plaintiff or a forum and the reasons for that choice;
• substantive connections with the forum;
• balance of convenience to parties and witnesses; and
• convenience to the court system.
96 Other decisions support this broad approach to the “interests of justice” inquiry. Thus, in Bourke v State Bank of New South Wales (1988) 22 FCR 378, Wilcox J said (at 394):
- In my opinion this phrase ought to be read widely. Under that rubric, as it seems to me, the Court is entitled to consider not only the ability of a particular court to deal with all aspects of a matter, and to make and to enforce all the orders to which a party may be entitled, but also adjectival matters such as the availability of particular evidence, the procedures to be adopted, the desirable venue for trial and the likely hearing date. It is not in “the interests of justice” to adopt a course, in relation to those matters, which places unnecessary burdens and delays upon the parties to the litigation
32 In BHP Billiton, Kirby J observed at [169] - [170]:
[169] Whether the case falls within the more particular provisions of s 5(2)(b)(ii) of the NSW Cross-vesting Act or the more general provisions of s 5(2)(b)(iii) of that Act, in each instance the competition of potential fora is a given. In each case, "the interests of justice" must be taken into account, as a general consideration. In each case, if the criteria are established, the court in which the proceeding is pending is required (shall) to transfer it to the other Supreme Court. The "interests of justice" necessarily include justice to all parties. It would be incompatible with our notions of justice to apply the NSW Cross-vesting Act in a way that favoured the rights of one party to litigation over others, rewarding the party selecting the initial venue with significant substantive (as distinct from purely procedural) advantages for doing so [The International Covenant on Civil and Political Rights, done at New York on 19 December 1966, [1980] Australian Treaty Series No 23 provides in Art 14.1: "All persons shall be equal before the courts and tribunals." Australia is a party to the Covenant and to the First Optional Protocol referred to in Art 41.1. The influence of such provisions on the statements of Australian law has been acknowledged by this Court: Mabo v Queensland [No 2] (1992) 175 CLR 1 at 42.]
[170] The judge's error in this case: When these considerations inherent in the criteria stated in the NSW Cross-vesting Act are so understood, the assignment by Sully J of the weight that he gave to the regular invocation of the jurisdiction of the Tribunal by the first respondent constituted an error in a consideration that informed his exercise of the Supreme Court's powers. It is unnecessary to decide whether there were other errors, for this one is sufficient to vitiate the resulting decision. Normally, the "interests of justice" of all parties within Australia will require the transfer of proceedings to be determined by the Supreme Court of another State or of a Territory where that Court, rather than the court of the forum selected by the plaintiff, is the "natural forum" being that "with which the action has the most real and substantial connection". Usually that will be the place of the wrong, or of the contract or of the operation of the statutes sued upon and particularly where that is also the place of the residence of the parties [For an overview of relevant factors to consider in such proceedings, see Miller and Nicholls, " Cross-Vesting Civil Proceedings -- A Practical Analysis of the Interests of Justice in the Determination of Cross-Vesting Applications ", Monash University Law Review, vol 30 (2004) 95.]
33 Gummow J, with whom Hayne J agreed, observed:
- [77] The phrase "otherwise in the interests of justice" in sub-para (iii) of s 5(2)(b) of the Cross-vesting Act requires the Supreme Court to determine a transfer application by identifying the more appropriate forum without any specific emphasis in favour of the choice of forum made by the plaintiff.
34 Callinan J observed:
- [259] As I have already pointed out, the primary judge, whilst accepting that the tort arose in substance in South Australia, in the end failed to give this matter much, if any weight at all. In my opinion it will always be an important matter. In some of the cases the expression "natural forum" has been used Dow Jones & Co Inc v Gutnick (2002) 210 CLR 575 at 641 [157], per Kirby J; Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538; Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 at 478, per Lord Goff of Chieveley; Airbus Industrie GIE v Patel [1999] 1 AC 119. I would take the expression to mean in most cases the forum of the jurisdiction in which the tort was committed. It seems to me to be only logical that at least prima facie that forum will be better equipped to deal with the issues. The events have taken place there. Some, if not most of the parties have had, and are likely to continue to have a presence there. Proximity to the courts there is likely to lead to both expedition, and savings in expense. But of at least equal importance to all of these is the fact that the events giving rise to the claim were at the time subject to, and regulated by the law of the jurisdiction where they occurred, and in respect of the evaluation of which the court of that place should be the most experienced and efficient. One relevant law will usually be the law relating to insurance. Policies are likely to have been implemented on the basis of the law there relating to damages, remedies, court and appeals. In other ways also, with respect, for example, to relations between employers and employees, the revenue laws and commercial laws, and compliance with safety and environmental standards, it may be assumed that the parties have organised their affairs with an eye to the State laws governing them. The parties' reasonable expectation would almost certainly be that in the event of a dispute about any of these matters, it would be resolved according to those laws as interpreted and applied by the court of that State. To these important matters the primary judge has made no reference.
35 In this case, it was not suggested by any party that there were any procedural advantages flowing from whether the proceedings were heard by this Court, or by the Supreme Court of Victoria. The plaintiff has elected to commence the proceedings in New South Wales, but the defendants argue that the interests of justice require that the matter be heard in Victoria. On the High Court’s approach, the fact that the plaintiff, located in New South Wales, has elected to commence the proceedings here, is not determinative. That the three defendants are located in Victoria, is another and perhaps even more important consideration to be weighed in the balance.
36 I am satisfied that this, together with the other matters which must be considered in this case, lead to the conclusion that the orders sought by the defendants must be made. The plaintiff’s claims concern a claimed interest in a joint venture in relation to the development of land situated in Victoria; how that interest was disposed of and whether the agreements in question were breached or repudiated.
37 The joint venture was originally between two parties, the plaintiff and the second defendant. There were about 90 other investors, who invested some $6.5million in the joint venture. The first defendant gained an interest in the joint venture, after the payment of over $4 million. The question of what has happened with certain of the joint venture funds, is a question which led to the proceedings in the Victorian Civil and Administrative Tribunal in relation to the conduct of Mr Michael Brereton, a solicitor who acted for the joint venture (See Legal Services Commissioner v Brereton (Legal Practice) [2008] VCAT 2073).
38 It is not in issue that many of the witnesses and relevant documents are in Victoria, although some of the documents are now in New South Wales, having been produced under subpoena.
39 It is relevant to consider that the joint venture has given rise to other proceedings in Victoria. Robson J has given judgment in Legal Services Commissioner v Brereton (Legal Practice) [2008] VCAT 1723. That decision is under appeal. The first defendant is a party to those proceedings and some of the documents subpoenaed in these proceedings, are documents which have either been produced in, or have become evidence in the first instance proceedings.
40 The conduct of Mr Michael Brereton in relation to moneys invested in the joint venture, was the subject of the proceedings in the Victorian Civil and Administrative Tribunal. Judgment has been given in those proceedings, which is on appeal to the Victorian Supreme Court. Again, the first and third defendants are parties to those proceedings. There are also other proceedings which have been taken in the Victorian Registry of the Federal Court, which may have some impact on the claims which the plaintiff seeks to advance in these proceedings, as they apparently concern the title of the plaintiff’s predecessor in the joint venture.
41 It is also relevant that the transfer agreement specifies that the applicable law is that of Victoria. Also to be considered is the view expressed by Kirby J in BHP Billiton at [170], that the place "with which the action has the most real and substantial connection" will usually be the place of the wrong, or of the contract. As the defendants argued, while there is some connection here with New South Wales, given that the purchase of the Lindfield property under the purchase agreement was to be the mechanism by which what was owed under the transfer agreement was to be satisfied, overall, on all of the facts of this case, Victoria is the place with the most real and substantial connection with what here lies in issue between the parties.
42 I am satisfied, in all of those circumstances, that it is in the interests of justice that the defendants' application for transfer be granted.
Costs thrown away order
43 Also to be dealt with is the first and third defendants’ claim for an order for costs thrown away as the result of the filing and serving of the amended statement of claim of 4 November 2008. While the plaintiff argued that there would be no such order made, because the statement of claim had only been amended in order to meet the defendants' case that the transfer and purchase agreements had never been executed by the defendants, I am satisfied that the defendants must have the order sought.
44 That conclusion flows from the plaintiff’s concession that various of the difficulties identified by the defendants with the amended statement of claim have force and that they must be met by the filing of yet a further amended statement of claim. While I have concluded that the plaintiff must have leave to further amend its pleadings, I am also satisfied that justice demands that the defendants' costs thrown away in meeting the amended statement of claim, must be costs which the plaintiff must bear, in the circumstances.
Default judgment against the second defendant.
45 At the hearing of the second defendant’s motion, it was agreed that consent orders should be made setting aside the default judgment, with an order for costs in favour of the plaintiff. Those orders were made and directions were given that the second defendant should file an amended defence within 28 days of the plaintiff filing its further amended statement of claim, or by further order of the Court.
- Orders
46 For the reasons given, I make the following orders:
1. The plaintiff is to file and serve its further amended statement of claim within 7 days of this judgment.
2. The plaintiff is to bear the first and third defendants’ costs thrown away in meeting the amended statement of claim.
3. The plaintiff is to bear the first and third defendants’ costs of the motions of 29 July 2008 and 27 March 2009.
5. The proceedings are transferred to the Supreme Court of Victoria.4. The defendants are to file and serve their defences to the plaintiff’s further amended statement of claim within 28 days of service of the further amended statement of claim.
0
7
3