Moss v Contracoin Pty Ltd

Case [2023] FCA 125

FEDERAL COURT OF AUSTRALIA

Moss v Contracoin Pty Ltd [2023] FCA 125

File number: NSD 676 of 2022
Judgment of: CHEESEMAN J
Date of judgment: 27 February 2023
Catchwords: PRACTICE AND PROCEDURE – application to transfer proceedings from the New South Wales Registry of the Court to the Queensland Registry pursuant to r 2.02 of the Federal Court Rules 2011 (Cth) and s 48 of the Federal Court of Australia Act 1976 (Cth) – where applicants commenced proceedings in New South Wales – where respondents based in Queensland – where facts alleged have connection with both New South Wales and Queensland – whether application premature – whether proceedings should be transferred – Held: application dismissed with costs.
Legislation: Federal Court of Australia Act 1976 (Cth) s 48
Cases cited:

Lamb v Hog’s Breath Company Pty Ltd (No 1) [2007] FCA 49

National Mutual Holdings Pty Ltd v Sentry Corporation (1988) 19 FCR 155

Division: General Division
Registry: New South Wales
National Practice Area: Commercial and Corporations
Sub-area: Commercial Contracts, Banking, Finance and Insurance
Number of paragraphs: 23
Date of last submissions: 28 November 2022
Date of hearing: Determined on the papers
Counsel for Applicants: Mr J M Wheeldon
Solicitor for Applicants: Solve Legal
Counsel for Respondents: Mr I A Erskine
Solicitor for Respondents: Delaneys Lawyers

ORDERS

NSD 676 of 2022
BETWEEN:

STEPHEN MOSS

First Applicant

DANIEL MURRAY HARDEN

Second Applicant

CHRISTOPHER JOHN DUTTON (and others named in the Schedule)

Third Applicant
AND:

CONTRACOIN PTY LTD ACN 626 613 812

First Respondent

BARRY STEPHEN LIPSCOMBE

Second Respondent

ORDER MADE BY:

CHEESEMAN J

DATE OF ORDER:

27 FEBRUARY 2023

THE COURT ORDERS THAT:

1.The respondents’ application filed on 20 October 2022 for the proceeding to be transferred to the Queensland Registry be dismissed with costs. 

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


REASONS FOR JUDGMENT

CHEESEMAN J:

INTRODUCTION

  1. This is a contested application for an order transferring this proceeding from the New South Wales Registry of the Court to the Queensland Registry pursuant to s 48 of the Federal Court of Australia Act 1976 (Cth) and r 2.02 of the Federal Court Rules 2011 (Cth). The application is brought by the respondents, Contracoin Pty Ltd (ACN 626 613 812) and Barry Stephen Lipscombe, a director of Contracoin.

  2. The interlocutory application originally included a prayer for an order that the applicants provide certain further and better particulars which has since fallen away.

  3. For the reasons which follow, the application to transfer the proceedings to the Queensland Registry is dismissed. Costs should follow the event. The application is premature. It is based on matters that are speculative at this stage. It is not appropriate to accede to the respondents’ request to simply adjourn the interlocutory application with a view to the application perhaps being revived at a later stage depending on whether the speculative matters relied upon crystallise. The respondents are not precluded from bringing a further application to transfer the proceedings to the…

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Moss v Contracoin Pty Ltd [2023] FCA 125
Case
[2023] FCA 125
Decision Date

CaseChat Overview and Summary

Moss v Contracoin Pty Ltd concerned an application by the respondents, Contracoin Pty Ltd, to transfer proceedings from the New South Wales Registry of the Federal Court to the Queensland Registry. The applicants, Stephen Moss, Daniel Murray Harden, Christopher John Dutton, Christopher Ashman and Julio De Laffitte e Freitas, commenced proceedings against the respondents alleging misleading and deceptive conduct in relation to the sale of cryptocurrency tokens. The respondents sought to transfer the proceedings on the basis that they were based in Queensland and that the alleged facts of the case had connections with both New South Wales and Queensland. The legal issues before the court were whether the application was premature and whether there were sound reasons to transfer the proceedings.

The court found that the application was premature as it was based on speculative matters and the proceedings were at an early stage. The court also held that there were no sound reasons to transfer the proceedings to the Queensland Registry. The balance of convenience was found to be even between the parties, and the court was satisfied that the proceedings could be managed effectively in the New South Wales Registry using available technology. The court dismissed the application with costs.

The court ordered that the respondents' application filed on 20 October 2022 for the proceeding to be transferred to the Queensland Registry be dismissed with costs. The court also noted that the respondents were not precluded from bringing a further application to transfer the proceedings to the Queensland Registry at a later stage if so instructed.

Orders

Orders of the court

1. The respondents’ application filed on 20 October 2022 for the proceeding to be transferred to the Queensland Registry be dismissed with costs.

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

Background

Background to the litigation

For the reasons which follow, the application to transfer the proceedings to the Queensland Registry is dismissed. Costs should follow the event. The application is premature. It is based on matters that are speculative at this stage. It is not appropriate to accede to the respondents’ request to simply adjourn the interlocutory application with a view to the application perhaps being revived at a later stage depending on whether the speculative matters relied upon crystallise. The respondents are not precluded from bringing a further application to transfer the proceedings to the Queensland Registry at a later stage, if so instructed. BACKGROUND The proceedings are at a relatively early stage in that the pleadings have not yet closed. A timetable for the filing of an amended defence and reply is in place and time is still running on that timetable. The applicants are Stephen Moss, Daniel Murray Harden, Christopher John Dutton, Christopher Ashman and Julio De Laffitte e Freitas. In the substantive proceedings, the applicants seek relief in relation to alleged misleading and deceptive conduct by the respondents which is alleged to have induced the applicants to acquire certain cryptocurrency tokens known as CTCN Tokens. The applicants contend, inter alia, that the respondents have contravened various provisions of Sch 2 to the Competition and Consumer Act 2010 (Cth). By their statement of claim the applicants allege that, in about April 2021, the following representations were “expressly conveyed to each Applicant by Contracoin’s sales agent” and were “conveyed orally and in writing”:(1)That the CTCN Token was a valuable token that could be leveraged to purchase real property;(2)That the CTCN Token had been approved for listing on the Binance blockchain trading platform;(3)That Contracoin had received written confirmation from Binance in respect of the approval of CTCN for listing on the Binance platform;(4)That there was a liquid market for CTCN Tokens on a blockchain trading platform referred to in the statement of claim as Probit; and (5)That CTCN Tokens traded at prices in excess of US$0.80 per token on the Probit platform at an unspecified time period. The applicants allege that each representation was false and misleading, and that the respondents “authorised and procured” Contracoin’s sales agent to make each of the abovementioned representations to the applicants. Contracoin’s sales agent is not identified in the material filed by the applicants to date. The applicants further allege that, in around April 2021, Contracoin’s sales agent provided each applicant with a letter purportedly from the “Binance Charity Foundation” dated 20 April 2021 which stated that the CTCN Token had been approved for listing on the Binance exchange. The applicants allege that, on about 1 June 2022, Mr Lipscombe and Mr Moss participated in a Zoom conference call for the purpose of discussing the applicants’ purchase of CTCN Tokens and the value of the tokens. The applicants allege that Mr Lipscombe said that the price of CTCN Tokens would increase to over $2 per token, and that Mr Lipscombe would cause the price of CTCN Tokens to increase by freezing sales on exchanges and using a small sum of money to “pump” the price (the price pump allegation).

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

To be clear, it may be appropriate at a later stage of the proceedings for the parties to bring a further application seeking to transfer the proceedings. Any such application will be determined on the evidence available at that time. The respondents sought to have their application adjourned if it was considered to be premature. I do not think it is appropriate to accede to that course. The application has been determined. In my view, there is no reason why costs should not follow the event. CONCLUSION I will order that the respondents’ application to transfer the proceedings to the Queensland Registry be dismissed with costs.

Ratio Decidendi

Legal Principle Established

There must be sound reason to make an order to transfer proceedings. No one factor is determinative of whether an order to transfer the proceedings should be made. The decision falls to be made in the context of the national character of the Court and taking into account the capacity of the Court to make arrangements to facilitate case management, interlocutory hearings and, where appropriate, aspects of the final hearing being conducted via electronic platforms which enable remote appearances or attendances. It is well recognised that the Court should be flexible in exercising its discretion under s 48 of the Act and that it may be appropriate depending on the particular circumstances and context for one Registry to conduct pre-trial management while allocating the trial to a judge in another Registry: National Mutual at 162; Lamb v Hog’s Breath Company Pty Ltd (No 1) [2007] FCA 49 at [10]. CONSIDERATION Having regard to the applicable principles and the submissions of the parties, I am not satisfied that there are sound reasons to transfer the proceedings for the following reasons. The proceedings are at an early stage. The parties acknowledge that the balance of convenience is more or less even. I do not find the respondents’ submissions in relation to prejudice persuasive. The only substantive point raised in relation to prejudice is with respect to the location of the respondents’ solicitors, potential counsel and some potential witnesses. The prejudice said to flow from these matters is counterbalanced by that the applicants would face by reference to the same matters if the proceedings were transferred to Queensland. Many of the matters advanced in support of the application are necessarily speculative given the stage at which the application is made. The respondents’ pursuit of the application is, at this stage, premature. Another feature of the application at this time which militates against granting the relief sought is that it is made without appropriate regard to the capacity of the Court to manage the proceedings using the technology available to it to promote the overarching purpose. For these reasons, the application to transfer the proceedings is dismissed. At this time I am satisfied that the continuance of the proceedings in the New South Wales Registry is the most suitable venue having regard to the relevant matters identified by the Full Court in National Mutual. To be clear, it may be appropriate at a later stage of the proceedings for the parties to bring a further application seeking to transfer the proceedings. Any such application will be determined on the evidence available at that time. The respondents sought to have their application adjourned if it was considered to be premature. I do not think it is appropriate to accede to that course. The application has been determined. In my view, there is no reason why costs should not follow the event. CONCLUSION I will order that the respondents’ application to transfer the proceedings to the Queensland Registry be dismissed with costs.