Neil v Reward Property Group Pty Ltd
[2008] FMCA 1583
•5 December 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| NEIL v REWARD PROPERTY GROUP PTY LTD | [2008] FMCA 1583 |
| BANKRUPTCY – Application to set aside bankruptcy notice. |
| PRACTICE AND PROCEDURE – Venue – application to change – mandatory matters for consideration – other relevant matters for consideration. |
| Bankruptcy Act 1966 (Cth), ss.40(1)(g), 41(1)(a)(ii), 121 Corporations Act 2001 (Cth), s.459G Federal Magistrates Act 1999 (Cth), ss.18, 39, 45, 52 Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth), r.3.02 Federal Magistrates Court Rules 2001 (Cth), rr.8.01, 8.02,14.02 |
| Abrahams v Qantas Airways Limited (No. 2) (2007) 210 FLR 314; [2007] FMCA 639 Australian Steel Co (Operations) Pty Ltd v Steel Foundations Limited & Anor (2003) 58 IPR 69; [2003] FCA 374 Cameron’s Unit Services Pty Limited v Kevin R Whelpton and Associates (Australia) Pty Limited & Anor (1984) 4 FCR 428 Deputy Commissioner of Taxation v Cumins [2007] FMCA 1841 Goodall v Nationwide News Pty Ltd [2007] FMCA 218 Goreng Goreng v Jennaway (2007) 164 FCR 567; [2007] FCA 2083 Kennedy v Collett [2003] FCA 1412 Menzel v Corex Plastics (Aust) Pty Ltd [1999] FCA 1218 National Mutual Holdings Pty Ltd & Ors v The Sentry Corporation & Anor (1988) 19 FCR 155 Re AWB Limited [2008] VSC 473 Schouten v Telstra Corporation Limited (1993) 49 IR 399 Shepherd v Dean & Ors [1933] QWN 26 Sherwood Overseas Co Pty Ltd v Jaymac International Pty Ltd [2008] FMCA 495 Verge & Anor v Devere Holdings Pty Ltd & Ors (No.4) [2008] FMCA 1421 WG & B Manufacturing Pty Ltd v Telsa Farad Pty Ltd [1999] FCA 859 |
| Applicant: | PETER CHRISTIAN NEIL |
| Respondent: | REWARD PROPERTY GROUP PTY LTD |
| File Number: | PEG 153 of 2008 |
| Judgment of: | Lucev FM |
| Hearing date: | 24 November 2008 |
| Date of Last Submission: | 24 November 2008 |
| Delivered at: | Perth |
| Delivered on: | 5 December 2008 |
REPRESENTATION
| Applicant: | In person |
| Counsel for the Respondent: | Mr S Senathirajah |
| Solicitors for the Respondent: | Hall and Wilcox |
ORDERS
That proceeding number PEG 153 of 2008 be transferred to the Melbourne District Registry of the Federal Magistrates Court of Australia.
That the proceedings be adjourned to a further directions hearing at a time and place to be advised before the Federal Magistrate to whom the matter is docketed in the Melbourne Registry.
That time for compliance with the Bankruptcy Notice VN 740 of 2008 be extended until further order of the Court.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG 153 of 2008
| PETER CHRISTIAN NEIL |
Applicant
And
| REWARD PROPERTY GROUP PTY LTD |
Respondent
REASONS FOR JUDGMENT
Introduction
The substantive proceedings involve an application made on 3 October 2008 seeking two final orders: first, to set aside a bankruptcy notice, No. VN 740/2008, served on the applicant, Mr Neil on 26 September 2008, and secondly, costs. The bankruptcy notice, which accompanies the application, claims that Mr Neil owes the respondent, Reward Property Group Pty Ltd,[1] $5,518.20, being an amount arising from costs orders made by the Supreme Court of Victoria.
[1] “Reward Property”.
Mr Neil also seeks, by way of interim order, that time for compliance with the bankruptcy notice be extended.
On 27 October 2008 the Court made orders to facilitate the hearing of:
a)Mr Neil’s application for an extension of time for compliance with the bankruptcy notice; and
b)any application for change of venue, such an application having been foreshadowed by Reward Property before the Court on that day.
The orders included orders for the filing of an application and response and supporting affidavits by each of Reward Property and Mr Neil in relation to the change of venue application, and set that application and the extension of time application down for hearing on 24 November 2008.
The orders also allowed for the filing of an amended application and any further affidavit by Mr Neil, and a response and supporting affidavits by Reward Property. The Court did so because, as it advised Mr Neal at the time of that directions hearing, it was the Court’s view that the application as then filed did not comply with the requirements of the Federal Magistrates Court (Bankruptcy) Rules, 2006 (Cth)[2] in relation to applications to set aside bankruptcy notices. The Court notes that although the application appears to be based on the ground that Mr Neil has a counter-claim, set-off or cross demand[3] Mr Neil’s affidavit sworn 7 October 2008[4] does not state, as required by r.3.02 of the FMC Bankruptcy Rules:
[2] “FMC Bankruptcy Rules”.
[3] Bankruptcy Act1966 (Cth), s.40(1)(g) (“Bankruptcy Act”).
[4] “Mr Neil’s First Affidavit”.
(a) the full details of the counter‑claim, set‑off or cross demand; and
(b) the amount of the counter‑claim, set‑off or cross demand and the amount by which it exceeds the amount claimed in the bankruptcy notice; and
(c) why the counter‑claim, set‑off or cross demand was not raised in the proceeding that resulted in the judgment or order in relation to which the bankruptcy notice was issued.[5]
[5] FMC Bankruptcy Rules, r.3.02(a)-(c).
On 31 October 2008 Mr Neil filed an amendment to the application, seeking a further final order in the following terms:
“3.A declaration that the purported removal of the Applicant as a director of the Respondent on or about 9 June 2004 was illegal and void as it failed to comply with the Corporations Act and with the Respondent’s constitution.”
Mr Neil filed a second affidavit sworn 30 October 2008.[6] Mr Neil’s Second Affidavit also did not fulfil the requirements of r.3.02 of the FMC Bankruptcy Rules set out above.
[6] “Mr Neil’s Second Affidavit”.
On 10 November 2008 Reward Property filed an interim application to change the venue of the hearing of the substantive application from the Perth Registry of this Court to the Melbourne Registry of this Court. Reward Property’s interim application for change of venue is opposed by Mr Neil.
When the interim application for change of venue of the substantive application came on for hearing Mr Neil made an application for adjournment or stay of the proceedings, both interim and substantive. In support of that application Mr Neil commenced to make oral submissions concerning allegations of criminal conduct against two directors of Reward Insurance Limited.[7] No evidence of any alleged criminal conduct was before the Court on affidavit, save arguably for two general allegations that:
a)Mr Neil was illegally removed as a director of Reward Insurance Limited on or about 9 June 2004;[8] and
b)in excess of $1m had been illegally taken from him as a result of the conduct of Murray Nugent (the managing director of Reward Property) and his associates.[9]
[7] Reward Insurance Limited was apparently the former name of Reward Property: Mr Neil’s First Affidavit, para.3.
[8] Mr Neil’s Second Affidavit, paras.14 and 3.
[9] Mr Neil’s Second Affidavit, para.17.
It is not apparent from Mr Neil’s Second Affidavit that those allegations do actually involve criminal conduct. Mr Neil sought to tender in Court a letter sent to the respondent detailing the alleged criminal conduct, and he informed the Court, from the bar table, and notwithstanding objection by Reward Property, that the Prime Minister’s office had referred the matter on to the Australian Federal Police for investigation. The Court refused to accept the tender of the letter. In the course of his submissions concerning change of venue Mr Neil alleged both criminal conduct and fraud on the part of Reward Property and its officers. The alleged criminal conduct and fraud were not particularised in any Court documents. Mr Neil also placed considerable reliance in his oral submissions upon the fact that the Prime Minister’s office have apparently referred the matter (whatever that may be) to the Australian Federal Police for investigation, and that various State Ministers of the Crown and the State Attorney-General and some of his officers, as well as his local Federal member of parliament and various investigatory officers in statutory investigatory bodies, had looked at the allegations that he had made and indicated that his case was a very strong one. It suffices to say that the Court cannot determine matters on the basis of submissions from the bar table about expressions of view by third parties shown material by one party to a civil proceeding, that party being a person potentially adversely affected by the alleged criminal conduct or fraud. There must be evidence in proper form before the Court can draw any conclusions with respect to such serious matters, even on an interim basis.
Mr Neil endeavoured to persuade the Court that there was case law which provided that these civil proceedings must be stayed until a decision is made by relevant authorities as to whether to proceed with criminal proceedings, presumably, at least, against Mr Nugent. The Court refused to adjourn or stay the proceedings on the basis sought by Mr Neil. The Court indicated that it was not its present understanding that the possibility of future criminal proceedings must necessarily result in the adjournment or staying of proceedings.[10]
[10] As to which see Cameron’s Unit Services Pty Limited v Kevin R Whelpton and Associates(Australia) Pty Limited & Anor (1984) 4 FCR 428 at 434-435 per Wilcox J; Schouten v Telstra Corporation Limited (1993) 49 IR 399 at 402-403 per Wilcox J; Goreng Goreng v Jennaway (2007) 164 FCR 567 at 571-572 per Flick J; [2007] FCA 2083 at paras.22-26 per Flick J; Re AWB Limited [2008] VSC 473 at paras.95-101 per Robson J.
If Mr Neil makes an application for further adjournment or stay of these proceedings on the bases referred to above, supported by evidence in proper form, the Court will consider that application at an appropriate time, and having regard to the appropriate principles as set out in the relevant cases.
The Court proceeded to hear Reward Property’s interim application for change of venue from the Perth Registry of this Court to the Melbourne Registry of this Court.
Mr Nugent’s affidavit
The change of venue application by Reward Property is supported by an affidavit of Murray Francis Nugent sworn 7 November 2008.[11]
[11] “Mr Nugent’s Affidavit”.
Mr Nugent is the managing director and company secretary of Reward Property.[12]
[12] Mr Nugent’s Affidavit, para.1.
In an originating process filed in the Supreme Court of Victoria on 24 December 2004 by solicitors – Walters and Associates – for Reward Property, Reward Property applied under s.459G of the Corporations Act, 2001 (Cth) to have a statutory demand made by Mr Neil[13] set aside with costs.[14]
[13] A copy of the statutory demand is annexed as Annexure MFN4 to Mr Nugent’s Affidavit.
[14] Mr Nugent’s Affidavit, Annexure MFN3.
In an affidavit affirmed 23 December 2004 by Mr Nugent made in support of the application by Reward Property to set aside the statutory demand, Mr Nugent denied that Reward Property was indebted to Mr Neil for services rendered by him as a director for the period 10 June 2004 to 30 November 2004, and alleges that Mr Neil ceased to be a director of Reward Property on 9 June 2004.[15]
[15] Mr Nugent’s Affidavit, Annexure MFN3 in the affidavit of Mr Nugent affirmed 23 December 2004 at paras.8 and 10 in the statutory demand proceedings.
Mr Nugent also says that fees payable to Mr Neil for the period
1 October 2003to 9 June 2004 for his director’s fees were paid on
24 December 2004in the amount of $20,750.[16]
[16] Mr Nugent’s Affidavit, Annexure MFN3 in the affidavit of Mr Nugent affirmed 23 December 2004 at paras.12 and 23.
On 2 February 2005 Senior Master Mahony in the Supreme Court of Victoria made an order setting aside a statutory demand by Mr Neil seeking payment of director’s fees, and ordering Mr Neil to pay Reward Property’s costs.[17] On 6 December 2005 Master Bruce in the Supreme Court of Victoria taxed those costs and allowed them in the sum of $5,518.20.[18] Both orders record that there was no appearance for Mr Neil.[19]
[17] Mr Nugent’s Affidavit, Annexure MFN2.
[18] Mr Nugent’s Affidavit, Annexure MFN2.
[19] Mr Nugent’s Affidavit, Annexure MFN2.
The bankruptcy notice sought to be set aside, which is annexed to Mr Nugent’s affidavit, was issued from the Melbourne office of the Official Receiver for Victoria, in the Bankruptcy District of Victoria on 23 April 2008.[20] The total debt said to be owing by Mr Neil to Reward Property is $5,518.20.[21]
[20] Mr Nugent’s Affidavit, para.3 and Annexure MFN1.
[21] Mr Nugent’s Affidavit, Annexure MFN1.
Mr Nugent says it was necessary for Reward Property to make an application for substituted service to this Court, in the Melbourne Registry, which was granted, because Mr Neil “appeared to be taking steps to avoid service”.[22] This Court issued an order, on 29 August 2008, varied on 9 September 2008, out of the Melbourne Registry, for substituted service of the bankruptcy notice on Mr Neil at three separate addresses, namely:
a)23/40 Mount Street, West Perth, Western Australia 6005;
b)202 Park Street, Fitzroy North, Victoria, 3068; and
c)602 Minns Road, Toolern Vale, Victoria, 3337.[23]
[22] Mr Nugent’s Affidavit, para.4(a).
[23] Mr Nugent’s Affidavit, Annexure MFN2.
Mr Nugent’s Affidavit goes on to say that:
a)Reward Property’s registered address is in Williamstown, Victoria;
b)Mr Nugent is resident in Victoria; and
c)Reward Property’s solicitors in the statutory demand proceedings are Victorian solicitors, and the solicitor who had the conduct of that matter is still resident in Melbourne, Victoria.[24]
[24] Mr Nugent’s Affidavit, para.6.
The Court notes that the current solicitors for Reward Property are also Victorian solicitors.
Mr Nugent goes on to say that he believes both he and Mr Walters, the solicitor who had the carriage of the statutory demand proceedings, will have to give evidence in the application to set aside the bankruptcy notice and that it will entail greater expense and inconvenience if that evidence has to be given in Perth.[25]
[25] Mr Nugent’s Affidavit, para.7.
Mr Nugent says that he has been informed by his previous solicitor, Mr Walters, that the solicitor then acting for Mr Neil (Ms Saraceni of Cocks MacNish) told him (Mr Walters) that Mr Neil would accept the sum of $20,750 in settlement of the claim made in the statutory demand, and consent to the statutory demand being set aside on condition that there was no order as to costs.[26] Mr Nugent says that Mr Walters told Mr Neil’s solicitor that Reward Property would not accept the no costs condition and that Reward Property would proceed with its application for costs.[27] It is said that these events occurred on the morning of 2 February 2005, the day that Senior Master Mahony in the Supreme Court of Victoria issued the first costs order.[28] Subsequently, Mr Nugent says that Mr Neil’s then solicitors were put on notice of a summons for taxation of costs, but no objections were received in relation to the summons, and the order for costs which forms the basis of the judgment debt was subsequently made by Master Bruce in the Supreme Court of Victoria on 6 December 2005, and Mr Neil did not appear.[29]
[26] Mr Nugent’s Affidavit, para.9(c).
[27] Mr Nugent’s Affidavit, para.9(d).
[28] Mr Nugent’s Affidavit, para.9(c).
[29] Mr Nugent’s Affidavit, para.9(e) and (f) an Annexure MFN2.
Mr Nugent says that in any event Mr Neil is not presently entitled to reimbursement of expenses incurred as a director because he has not submitted receipts for the amounts that he claims to be entitled to, and therefore, in accordance with Reward Property’s policies, is not entitled to be reimbursed.[30]
[30] Mr Nugent’s Affidavit, para.10.
Reward Property say that Mr Neil, and companies wholly owned by him, have been litigating against Reward Property in the Supreme Court of Western Australia in five sets of proceedings, but in relation to those proceedings:
a)one has been dismissed for want of prosecution (CIV 1157 of 2005);
b)two have been withdrawn as without foundation (CACV 17 of 2005 and CACV 18 of 2005); and
c)no steps have been taken to prosecute the remaining two sets of proceedings for some years (COR 9 of 2005 and CIV 1232 of 2004).[31]
[31] Mr Nugent’s Affidavit, para.11.
It is also said as to costs:
a)that in respect of the withdrawn proceedings that the costs are estimated at $7,000; and
b)that it is estimated that costs will be higher for the proceedings dismissed for want of prosecution but that no estimate is able to be provided at this time.[32]
Further, it is said that no costs have been paid to date in respect of the proceedings in the Supreme Court of Western Australia.[33]
[32] Mr Nugent’s Affidavit, para.11.
[33] Mr Nugent’s Affidavit, para.11.
Mr Neil’s first affidavit
The substantive application to set aside the bankruptcy notice is supported by Mr Neil’s First Affidavit. Mr Neil says that he believes that he has a good defence and set-off to the bankruptcy notice.[34]
[34] Mr Neil’s First Affidavit, para.2.
Mr Neil says that from 29 June 2001 he was a director of Reward Property,[35] and that as part of his directorship Reward Property agreed to pay his travelling and other expenses incurred in the performance of his duties as a director of Reward Property.[36] Mr Neil sets out those expenses and annexes what he says are true copies of invoices rendered by him to Reward Property in relation to those expenses, which are in the sum of $12,086.23.[37]
[35] Mr Neil’s First Affidavit, para.3.
[36] Mr Neil’s First Affidavit, para.4.
[37] Mr Neil’s First Affidavit, paras.5-7 and Annexures PCN1-5. Whether the documents attached are invoices might be open to debate. The Court notes that they are headed “Business Expenses Claims” and refer to a “Total to be reimbursed”. An invoice is a “list of…services performed, with prices and charges” while reimbursement is the repayment of money expended on a person’s expenses: see The Concise Oxford Dictionary of Current English pp.528 (invoice) and 875 (reimbursement). Resolution of that debate is not presently required.
Mr Neil says that by an email dated 13 April 2006 from solicitors for Reward Property reference was made to monies owing to him. Mr Neil says that this is an acknowledgment that Reward Property owes him costs, travelling costs and associated expenses billed by him to Reward Property, and that these can be set-off against the debt in the bankruptcy notice.[38] The 13 April 2006 email provides, in the relevant part, as follows:
“Finally, there is your claim for reimbursement of expenses of $3,446.70. My client is happy to provide that amount subject to satisfactory invoices.”[39]
[38] Mr Neil’s First Affidavit, para.8.
[39] Mr Neil’s First Affidavit, Annexure PCN6.
Reward Property’s solicitors go on in the 13 April 2006 email to refer to the judgment debt of $5,518.20, being the judgment debt the subject of the bankruptcy and suggest that the two sums be set off against each other, and that Mr Neil forward receipts and a cheque for the remaining balance to Reward Property.[40]
[40] Mr Neil’s First Affidavit, Annexure PCN 6.
The Court notes in passing that the remaining balance is $2,071.50, a sum exceeding the $2,000 minimum limit required for issuance of a bankruptcy notice.[41]
[41] Bankruptcy Act, s.41(1)(a)(ii).
Mr Neil says he is not aware that Reward Property has any defence to his claims for the sum of $12,086.23, plus interest and costs.[42]
[42] Mr Neil’s First Affidavit, para.9.
Mr Neil’s second affidavit
Mr Neil’s Second Affidavit appears to be in support of:
a)the application to set aside the bankruptcy; and
b)the amended application seeking a declaration concerning Mr Neil’s directorship of Reward Property,
and might also have some relevance to any change of venue application, although it does not expressly purport to be in opposition to Reward Property’s change of venue application.
Mr Neil’s Second Affidavit essentially alleges that:
a)he was removed illegally as a director of Reward Property on 9 June 2004;[43]
b)there are various proceedings ongoing in the Supreme Court of Western Australia dating back to 2004-2005 in relation to Mr Neil’s access to the books of Reward Property and seeking injunctive relief in relation to his voting rights as a director of Reward Property;[44]
c)Reward Property evinced an intention in about February 2005 to seek to transfer the proceedings in the Supreme Court of Western Australia to the Supreme Court of Victoria, but have not taken any further steps to do so;[45]
d)he obtained orders in March 2005 granting him access to the books of Reward Property, and since that time he has been inspecting Reward Property’s books, and that has been “a time consuming and expensive exercise”;[46]
e)in a very generalised way, he has suffered “substantial financial loss and damage…as a result of the conduct of Murray Nugent and his associates”, and that more than $1m has been illegally taken from him by Murray Nugent (a director of Reward Property) and his associates and he therefore has a good defence, set-off and counterclaim against Reward Property;[47]
f)he was paid $20,750 by Reward Property on condition that a statutory demand that he had issued would be withdrawn, and that it was withdrawn on the basis that there be no order as to costs, and that the order in relation to the judgment debt is an order for costs contrary to the agreement reached in relation to the withdrawal of the statutory demand;[48] and
g)Reward Property still owes Mr Neil in excess of $14,250 for director’s fees.[49]
[43] Mr Neil’s Second Affidavit, paras.3-4 and 13-14.
[44] Mr Neil’s Second Affidavit, paras.7-9.
[45] Mr Neil’s Second Affidavit, para.10.
[46] Mr Neil’s Second Affidavit, paras.11 and 12 (the quote is from para.12).
[47] Mr Neil’s Second Affidavit, paras.14 and 17.
[48] Mr Neil’s Second Affidavit, paras.15.1 and 16 and Annexure PN5.
[49] Mr Neil’s Second Affidavit, para.16.
Mr Neil’s Second Affidavit indicates that:
a)Mr Neil obtained an order (against a number of respondents – including reward Property and Mr Nugent) on 10 March 2005 from a Registrar of the Supreme Court of Western Australia granting him access to documents held by Reward Property (essentially it’s books);[50]
b)the above order was obtained in proceedings numbered CIV 1157 of 2005,[51] which are proceedings that Reward Property say (and Mr Neil does not deny) have been discontinued for want of prosecution,[52] although it is not apparent when it is said that that occurred;
c)in an affidavit sworn on 10 February 2005 in the proceedings numbered CIV 1157 of 2005 Mr Neil says:
i)that in or about February 2004 he commenced proceedings in his own name, and in the name of entities associated with him that are associates in a company known as Reward Associates, against Mr Nugent and entities associated with him with nresepct to losses suffered as a result of Mr Nugent’s conduct as Managing Director of Reward Property (and at least one other associated company), those proceedings being CIV 1232 of 2004,[53] which are proceedings in respect of which Reward Property say no steps have been taken for some (unspecified) years;[54]
ii)on a date not given commenced by originating process in the Supreme Court of Western Australia, numbered COR 9 of 2005, an application for leave to begin a statutory derivative action on behalf of Reward Property (amongst others) against Mr Nugent and interests associated with him, which essentially seeks compensation from Mr Nugent and his associated entities for losses allegedly suffered as a result of his mismanagement and breach of fiduciary, statutory, common law and tortious obligations to entities described as the “Reward Companies”,[55] the proceedings again being ones in respect of which Reward Property say no steps have been taken for some (unspecified) years.[56]
[50] Mr Neil’s Second Affidavit, para.11 and Annexure PN4.
[51] Mr Neil’s Second Affidavit, para.11 and Annexure PN4.
[52] See para.27(a) above.
[53] Mr Neil’s Second Affidavit, para.8 and Annexure PN3 in the affidavit of Mr Neil sworn 10 February 2005 in proceedings in the Supreme Court of Western Australia, CIV 1157 of 2005.
[54] See para.27 above.
[55] Mr Neil’s Second Affidavit, para.8 and Annexure PN3 in the affidavit of Mr Neil sworn 10 February 2005 in proceedings in the Supreme Court of Western Australia, CIV 1157 of 2005.
[56] See para.27 above.
No evidence has been given by Mr Neil to deny the allegations concerning the dismissal or lack of action in respect of these actions or whether any steps have in fact been taken, save to say that in CIV 1232 of 2004 and COR 9 of 2005 he says there are applications by Reward Property to transfer those proceedings to the Supreme Court of Victoria, which applications have not been progressed by Reward Property.
Law
Legislation
Section 52 of the Federal Magistrates Act, 1999 (Cth)[57] provides as follows:
[57] “FM Act”.
(1)The Federal Magistrates Court may sit at any place in Australia.
(2)The Federal Magistrates Court or a Federal Magistrate may, at any stage of a proceeding in the Federal Magistrates Court, order that:
(a) the proceeding; or
(b) a part of the proceeding;
be conducted or continued at a place specified in the order, subject to such conditions (if any) as the Federal Magistrates Court or Federal Magistrate imposes.
Rule 8.01 of the Federal Magistrates Court Rules 2001 (Cth)[58] provides as follows:
(1)A party who files an application or response in a proceeding may apply to have the proceeding heard in another registry of the Court.
(2)In considering an application, the Court must have regard to:
(a) the convenience of the parties; and
(b) the limiting of expense and the cost of the proceeding; and
(c)whether the matter has been listed for final hearing; and
(d) any other relevant matter.
[58] “FMC Rules”.
Consideration of legislation and case law
The relevant case law is set out in detail in Sherwood Overseas Co Pty Ltd v Jaymac International Pty Ltd[59] and the Court adopts what was said in that case at paras.7 to 19 of the Reasons for Judgment. Having set out the case law in Sherwood Overseas the Court concluded that:
[59] [2008] FMCA 495 (“Sherwood Overseas”).
“20. In determining a change of venue application this Court is constrained by the mandatory requirements of rule 8.01(2) of the FMC Rules. The Court must have regard to those matters identified in paragraphs (a), (b) and (c) of rule 8.01(2), and must then consider any other relevant matter by reason of paragraph (d) of rule 8.01(2) of the FMC Rules. In that respect, this Court’s considerations are different to those of the Federal Court, insofar as the Federal Court has unfettered discretion as to which factors it will consider. That said, the Federal Court authorities on change of venue set out above are relevant insofar as they consider the three mandatory factors in rule 8.01(2)(a)-(c), and other factors considered by the Federal Court in those cases might well be other relevant matters for the purpose of rule 8.01(2)(d) of the FMC Rules.
Consideration
21. Consideration of the matter must proceed on the basis of the mandatory considerations set out in r.8.01(2) of the FMC Rules.”[60]
[60] Sherwood Overseas at paras.20-21 per Lucev FM.
Primary amongst the Federal Court authorities referred to in Sherwood Overseas was, of course, National Mutual Holdings Pty Ltd & Ors v The Sentry Corporation & Anor.[61]
[61] (1988) 19 FCR 155.
Reward Property referred to Shepherd v Dean & Ors.[62] The Full Court of the Supreme Court of Queensland there held that the trial judge had applied his mind to the “manifest preponderance of convenience”[63] when determining that a trial be held in Townsville rather than Brisbane. Shepherd was a case where the plaintiff sought a declaration that he was the true and lawful owner of certain Commonwealth bonds, and an order for deliver of the bonds to the plaintiff, or, in the alternative, damages for wrongful detention of the bonds. A further claim was made against a company for a declaration that the company was trustee of certain monies for the plaintiff. In the writ of summons Brisbane was named as the place of trial. In making an order changing the venue to Townsville the Supreme Court at first instance had regard to the evidence which indicated that:
a)the plaintiff and the defendants resided in Townsville;
b)the company carried on its business and had its registered office in Townsville;
c)the cause of action arose at Townsville;
d)the bonds were at Townsville where demand for recovery was made by the plaintiff; and
e)twelve witnesses were to be called at trial, eight of whom resided in Townsville, two in Brisbane and two in Sydney.
[62] [1933] QWN 26, note 20 (“Shepherd”).
[63] Shepherd at 27 per Macrossan SPJ.
In retrospect it might, with respect, be observed that based on the facts it was inevitable that the case would be heard in Townsville, and that the appeal against the change of venue order would be dismissed in short order, as it was.
In Menzel v Corex Plastics (Aust) Pty Ltd[64] a creditor of the applicant, Corex Plastics, had applied to set aside a composition entered into by the bankrupt, or to have the composition terminated. That application had been brought in the Victoria District Registry of the Federal Court. Mr Menzel asked for an order changing the venue of the proceeding to set aside or terminate the composition to the South Australia Registry of the Federal Court.[65] The only facts relied upon to support the application for a transfer were that:
a)the applicant was resident in Adelaide;
b)the trustee conducted his business in Adelaide;
c)the assets of the applicant were situated in Adelaide; and
d)the meeting of creditors took place in Adelaide, and of the 23 creditors listed in the applicant’s statement of affairs, 14 were located in South Australia.[66]
Corex Plastics resisted the application for a change of venue because of the existence of another proceeding involving a deed of arrangement between Mr Menzel and his brother who had entered into a deed of arrangement which Corex Plastics sought to have declared void or terminated. The relevance of the second proceeding was that both Mr Menzel and his brother were directors of Menzel Plastics Pty Ltd and each had executed a guarantee in favour of Corex Plastics in respect of debts due by Menzel Plastics to Corex Plastics for goods sold and delivered. Menzel Plastics was in liquidation and the composition and arrangement of the two brothers, if it had remained in place, would have resulted in significant loss to Corex Plastics. Corex Plastics contended that it was appropriate that the proceeding in respect of the applicant’s composition should be determined contemporaneously by the same judge, and that therefore the proceedings should remain in the Victoria District Registry.[67]
[64] [1999] FCA 1218 (“Menzel”).
[65] Menzel at paras.1-2 per Finkelstein J.
[66] Menzel at para.5 per Finkelstein J.
[67] Menzel at paras.6-8 per Finkelstein J.
In Menzel the Federal Court determined that:
a)it did not know enough about the proceedings extant in Victoria to form an opinion on whether it was likely that an order would be made that they be heard together;[68] and
b)the material relied upon in support of the application for change of venue did not establish a good reason why the order should be made.[69]
The Court did accept the possibility that further material might be supplemented to show a more compelling case and that the application to transfer might be renewed at a later date.[70]
[68] Menzel at para.10 per Finkelstein J.
[69] Menzel at para.11 per Finkelstein J.
[70] Menzel at para.11 per Finkelstein J.
Kennedy v Collett[71] was a case involving an application for a declaration under s.121 of the Bankruptcy Act that certain mortgages were void as against the applicant trustee in bankruptcy. In making an order transferring the proceedings from the South Australia District Registry to the New South Wales District Registry of the Federal Court regard was had to a number of facts including:
[71] [2003] FCA 1412 (“Kennedy”).
a)that the sequestration order was made in New South Wales;[72]
b)the practical administration of the trusteeship was in Adelaide, but there was no requirement for the trusteeship to continue in Adelaide and it could be conducted wherever the trustee wished it to be conducted;[73]
c)the relevant mortgages over land were over land in New South Wales and registered in the New South Wales Lands Titles Office;[74]
d)the principal witnesses were both resident in New South Wales, but one was in poor health and would have encountered difficulty in attending a hearing in Adelaide;[75]
e)there was no information about other witnesses;[76]
f)the matter had proceeded to the point of close of pleadings and there was no reason why further interlocutory matters could not be addressed by telephone directions if necessary;[77]
g)whilst it was possible that evidence could be taken by video link from New South Wales the nature of the allegations were such that there may have been a need to measure the credibility of the first respondent as well as the bankrupt and in those circumstances it was preferable that the hearing take place with the first respondent present in person;[78]
h)the applicant was prepared to pay the costs of the South Australian solicitors already instructed to attend the hearing in New South Wales if the Federal Court ordered that that is where the hearing ought to take place;[79]
i)the place where the cause of action arose;[80] and
j)the convenience of the Federal Court and the interests of justice.[81]
[72] Kennedy at para.2 per Mansfield J.
[73] Kennedy at para.3 per Mansfield J.
[74] Kennedy at para.4 per Mansfield J.
[75] Kennedy at para.4 per Mansfield J.
[76] Kennedy at para.5 per Mansfield J.
[77] Kennedy at para.6 per Mansfield J.
[78] Kennedy at para.7 per Mansfield J.
[79] Kennedy at para.9 per Mansfield J.
[80] Kennedy at para.10 per Mansfield J.
[81] Kennedy at para.10 per Mansfield J.
Consideration
Consideration of the matter must proceed on the basis of the mandatory considerations set out in r.8.01(2) of the FMC Rules, including any other relevant matter under r.8.01(2)(d).
Convenience of the parties
In dealing with the convenience of the parties it is necessary to have regard first to the various proceedings already on foot.
Bankruptcy notice proceedings
It is relevant that:
a)the bankruptcy notice was issued in Melbourne by the Official Receiver, Victoria for the Bankruptcy District of Victoria;
b)the order with respect to substituted service of the bankruptcy notice issued from this Court’s Melbourne Registry; and
c)the costs orders in relation to the debt the subject of the bankruptcy notice are orders of the Supreme Court of Victoria.
Thus the proceedings in relation to the bankruptcy notice thus far have been issued and conducted in Victoria. In circumstances where the debt arose in respect of a Victorian domiciled company, and the relevant orders are orders of the Supreme Court of Victoria, the conduct of the proceedings thus far being in Victoria is entirely appropriate and unexceptional.
The fact that the bankruptcy proceedings have thus far been conducted in Victoria is a factor which weighs in favour of a change of venue.
Proceedings in the Supreme Court of Western Australian
It is relevant that each of the parties (and other parties associated with them) are parties to proceedings in the Supreme Court of Western Australia which appear to have some relevance, if not directly then certainly indirectly, to the bankruptcy proceedings, especially the judgment debt, but more particularly Mr Neil’s asserted but not yet particularised counter-claim, set off or counter demand.
It is not however possible for the Court to properly assess the relevance of the proceedings in the Supreme Court of Western Australia because there is a lack of evidence about the precise nature of those proceedings, and in particular there are no pleadings in evidence, and it is actually unclear which proceedings are still on foot. What can be said about whatever proceedings that are still on foot is this:
a)there is no evidence of any steps being taken by any party to any of the proceedings for more than three and one half years; and
b)there is no evidence that an alleged application by Reward Property to transfer the remaining proceedings in the Supreme Court of Western Australia to Victoria has delayed or halted the proceedings, and, even if there was some evidence to that effect, there is, significantly, no evidence that Mr Neil, or parties associated with him, have taken any steps whatever to have the transfer applications dismissed for want of prosecution.
It is therefore the case that proceedings which might have carried some, and perhaps even significant weight, as a factor in assessment of the convenience of the parties, are much diminished by a lack of evidence and a patent lack of prosecution by Mr Neil, and parties associated with him, who are evidently the applicants in those proceedings.
A further factor to be considered in relation to the proceedings in the Supreme Court of Western Australia is that they can continue to run, and be prosecuted, if the applicants in those proceedings wish to do so, and that that can be done wholly independently of the bankruptcy proceedings whether the bankruptcy proceedings are conducted in Western Australia or Victoria.
In all the circumstances the proceedings in the Supreme Court of Western Australia cannot be afforded much weight in considering whether to change the venue of the proceedings in this Court.
Residence of the parties
Reward Property as a corporation resides in Victoria, having its corporate office there.
Mr Neil is resident in Western Australia.
Reward Property rely upon the fact that two of the three addresses upon which substituted service could be effected in accordance with orders of this Court were Victorian addresses. One of the those addresses (202 Park Street, Fitzroy North) is an address listed for Mr Neil in his capacity as a director on Reward Property’s corporate documents. Further, the fact that Mr Neil still seemingly has connections with two Victorian properties (there was no averment to the contrary in Mr Neil’s Second Affidavit which was filed after Mr Nugent’s Affidavit) is a relevant, albeit minor, factor for consideration, however, in the absence of other evidence (for example as to whether the properties are rented or vacant, or occupied by Mr Neil when he visits Victoria) it attracts very little weight.
The Court notes that in relation to the access to documents proceedings in the Supreme Court of Western Australia Mr Neil has, despite it being time consuming and expensive,[82] been prepared to go to Victoria to examine the relevant documents.
[82] See para.36(d) above.
The Court considers that residence of the parties is not a factor which, of itself, weighs in favour of one party or the other as to change of venue.
Residence of the parties officers, representatives and witnesses
Reward Property’s managing director Mr Nugent lives in Victoria.
Although it would appear that Mr Szuch, a director of Reward Property, remains resident in Victoria, it is not apparent from the evidence which, if any, of the other officers, if any, of Reward Property are presently resident in Victoria.
The question of officers of corporations is irrelevant to Mr Neil’s case: except to the extent that any officers of corporations associated with Mr Neil, and which are party to the proceedings in Supreme Court of Western Australian, might be required to give evidence about those proceedings or their subject matter, in the proceedings in this Court. However, once again there is no evidence before the Court as to the identity of those corporations, or the officers of those corporations, or where those officers are resident, and it is therefore not possible for this Court to draw conclusions about this issue.[83]
[83] The only court papers before the Court are in CIV 1157 of 2005 in which there is one plaintiff: Mr Neil.
Reward Property’s representatives, counsel and solicitors are all resident in Victoria. By contrast Mr Neil is a litigant in person resident in Western Australia.
Reward Property says that it has two witnesses in respect to the application to set aside the bankruptcy notice: Mr Nugent and Reward Property’s former solicitor, Mr Walters. At its simplest, it is apparent that Mr Neil will give evidence in support of his application, and it is likely that his former solicitor, Ms Saraceni, will have to give evidence also in relation to the events surrounding the making of the costs orders by the Supreme Court of Victoria. If the application to set aside the bankruptcy notice were likely to be this straightforward it is possible that any witnesses, might appear by video-link from either Perth or Melbourne as required.[84]
[84] Goodall v Nationwide News Pty Ltd [2007] FMCA 218.
On the basis of the matters now seemingly put in issue by Mr Neil, it is apparent that even for interim matters the proceedings are not likely to be straightforward.
In submissions Mr Neil indicated that numerous other witnesses might be called in support of his allegations concerning fraud and criminal conduct by Reward Property. It is not possible to draw any conclusions with respect to the number of witnesses who might be called as a consequence of those submissions, because:
a)to the extent that they might be relevant, the pleadings in the proceedings in the Supreme Court of Western Australia are not in evidence;
b)the exact nature of any proceedings current or future concerning alleged fraud and criminal conduct are not expressly set forth in Mr Neil’s affidavits, and in any event there is insufficient detail in the evidence of the allegations to enable proper conclusions to be drawn about them for present purposes;
c)the precise nature of the criminal conduct and fraud alleged is not in evidence on affidavit before the Court, except in the most generalised allegatory form, and even then only arguably;[85] and
d)Mr Neil has not put on evidence about who, or how many witnesses would be called, or why those witnesses would be called.
[85] See para.9 above.
Were the matter a straight forward application to set aside a bankruptcy notice a change of venue might not be appropriate as, in the Court’s view, it would be possible for those proceedings to be properly conducted either in whole or in part by video link, or, alternatively, with Western Australian solicitors and Counsel instructed for Reward Property, or at least, Western Australian Counsel instructed by Victorian solicitors for Reward Property. However, the matter is complicated by the matters now raised by Mr Neil as to:
a)alleged fraud and criminal conduct; and
b)his alleged illegal removal as a director of Reward Property.
With respect to Mr Neil’s alleged illegal removal as a director it is clear that the relevant meeting which resulted in his removal occurred in Melbourne. Evidence before the Court indicates that the managing director and another director, Mr Szuch, who both reside in Victoria, were both present at the meeting. Further, at the time of his removal as a director Mr Neil was listed as having a Victorian address, 202 Park Street, Fitzroy North, being one of the addressed upon which substituted service was ordered to be allowed by this Court, although it would appear that at the time of his removal he was actually in Perth.
The allegations of fraud and criminal conduct are at this stage unparticularised. They appear to be being set up as part of a counter-claim, set-off or counter demand to the amount of the judgment debt referred to in the bankruptcy notice. It is not apparent from the evidence precisely what the legal basis for Mr Neil’s allegations of fraud and criminal conduct is, and in the absence of particulars it is not possible to ascertain or speculate on the matter. What is clear is that if such matters are to be pursued that they will involve access to relevant documents by Mr Neil and Reward Property, and, possibly, the removal of many of those documents to this Court. There does not appear to be any dispute that the relevant documents are located in Melbourne in or about Reward Property’s offices as Mr Neil has had to make many trips to Melbourne to inspect them as a consequence of the access to documents proceedings in the Supreme Court of Western Australia.
It is also clear that Reward Property will assert that these issues, Mr Neil’s illegal removal as a director and the unparticularised allegations of fraud and criminal conduct are not justiciable in this Court in these proceedings. Determining whether the issues are justiciable in this Court may involve access to relevant documents held by Reward Property. If it is determined that the issues are justiciable in this Court further access to documents will probably be required. In the circumstances, it is apparent that there is likely to be significant inconvenience if the documents are required to be removed from Melbourne to Perth for a hearing in Perth. Even having regard to the interim issue as to whether the issues are justiciable in this Court, or, if it arises, whether discovery ought to be ordered,[86] and if so, in what form and to what extent, are all issues which might be better determined in Melbourne with more immediate access to the relevant documents.
[86] As to which see FM Act, s.45, FMC Rules, r.14.02 and Abrahams vQantas Airways Limited (No. 2) (2007) 210 FLR 314; [2007] FMCA 639.
Finally, the Court notes that the question of whether the issues of alleged illegal removal as a director, and alleged fraud and criminal conduct, are justiciable are issues which will require consideration as to whether this Court has jurisdiction to determine those matters, whether under the Corporations Act or, possibly, the Court’s associated jurisdiction.[87] Further, those jurisdictional issues, and the potential complexity of other issues, notably the alleged fraud and criminal conduct, might be such as to warrant consideration, either by the parties or on this Court’s own motion, of a transfer of the proceedings to the Federal Court.[88]
[87] FM Act, s.18.
[88] FM Act, s.39 and FMC Rules, r.8.02. For recent examples of cases transferred by this Court to the Federal Court see Deputy Commissioner of Taxation v Cumins [2007] FMCA 1841 (Bankruptcy Notice in the amount of $38,051,066.24 – transferred in the interests of the administration of justice and the important issue of the extraordinary amount of money owing to the Commonwealth by the individual non-corporate taxpayer: at para.47 per Lucev FM)and Verge & Anor v Devere Holdings Pty Ltd & Ors(No.4) [2008] FMCA 1421 (application transferred because of complexity: at para.137 per Lucev FM).
In general terms it is clear that one or other of the parties will be affected by a level of inconvenience whether future hearings are in Perth or Melbourne. However, having regard to the matters discussed above the evidence establishes that the convenience of the majority of the persons involved in the litigation (they being persons associated with one party – Reward Property) would, in the Court’s view be better served by a hearing of this matter, both in relation to any further interim hearings and final hearing, in Melbourne. The convenience of the parties factor favours change of venue from the Perth Registry to the Melbourne Registry of this Court.
Limiting the expense and cost of the proceedings
Wherever future proceedings be heard, be it in Perth or Melbourne, one of the parties will have to incur additional expense and cost.
It is evident from the reasons set out above concerning the convenience of the parties that, overall, significant expense is likely to be saved, and the cost of the proceedings is likely to be less, particularly with respect to the locality of representatives of the parties and relevant documents and their travel and transport, if there is a change of venue from the Perth Registry to the Melbourne Registry of this Court, and thus this factor favours the application for change of venue.
Whether listed for final hearing
The action has not proceeded beyond the filing of the application and the interim applications referred to above.[89] Thus, the Court has not made, at this stage, the usual directions that it would make at a first court date, including listing the matter for final hearing.
[89] See paras.2 and 8 above.
Given the number of interlocutory processes still to be completed, it is unlikely that there will be any difference in the timing of a final hearing, whether it be in Perth or Melbourne. At this stage there has been no indication from the parties as to an approximate length of hearing. However, the length of any final hearing may depend upon the scope of justiciable matters to be argued in this Court.
In any event, the fact that there has been no listing for final hearing means that there is no impediment on this account to a change of venue.
Any other relevant matter
Mr Neil’s health was mentioned by him in submissions. There is however no evidence in relation to his health before the Court and, in any event, the evidence is that he has been travelling back and forth to Melbourne to access documents and the only complaint is that that is time consuming and expensive.
There is no evidence of caprice on the part of reward Property in making the change of venue application.
The Court has also considered the interests of the administration of justice, and in the Court’s view, and taking a necessarily broad view, the interests of the administration of justice tend to favour a change of venue from the Perth Registry to the Melbourne Registry.
Conclusions
In this matter:
a)the convenience of the parties is a significant factor in favour of a change in venue;
b)limiting the cost and expense of the proceedings favours a change in venue;
c)the fact that the matter has not been listed for final hearing is not an impediment to a change in venue; and
d)In relation to other relevant matters:
i)there is no evidence before the Court of any health issues for Mr Neil which might inhibit a change in venue;
ii)there is no evidence of caprice in the making of the change of venue application; and
iii)the interests of the administration of justice favour a change in venue.
Orders
Having regard to the conclusions set out above, the Court makes the following orders:
a)That proceeding number PEG 153 of 2008 be transferred to the Melbourne District Registry of the Federal Magistrates Court of Australia.
b)That the proceedings be adjourned to a further directions hearing at a time and place to be advised before the Federal Magistrate to whom the matter is docketed in the Melbourne Registry.
c)That time for compliance with the Bankruptcy Notice VN 740 of 2008 be extended until further order of the Court.
Costs
The Court will hear the parties as to costs.
I certify that the preceding eighty-six (86) paragraphs are a true copy of the reasons for judgment of Lucev FM
Associate: Sandra Gough
Date: 5 December 2008
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