Pegasus Leasing Ltd v CADOROLL Pty Ltd and Ors Nos. SCGRG 92/818, SCGRG 92/821, SCGRG 92/822, SCGRG 92/1966, SCGRG 92/2504, SCGRG 92/2505, SCGRG 92/2507, SCGRG 92/2508, SCGRG 92/2568 Judgment No. 4325 Number of..

[1993] SASC 4325

COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA DEBELLE J

CWDS
Practice and procedure - jurisdiction - Cross-vesting - Actions in this Court for debt - Defendants in the Australian Capital Territory - Defence and counterclaims in this Court - Defendants institute actions in Federal Court of Australia claiming same relief as claimed in defence and counterclaim but joining other parties - Relevant factors - Application refused. Jurisdictionof Courts (Cross-Vesting) Act 1987. Bourke v State Bank of NSW (1988) 85 ALR
61; Seymour Smith v Electricity Trust of South Australia (1989) 17 NSWLR 648; Bankinvest AG v Seabrook (1988) 2 NSWLR 711 and Pegasus Leasing Ltd v Tieco International (Australia) Pty Ltd (unreported, 14 July 1993), applied.

HRNG ADELAIDE, 15 October 1993 #DATE 9:12:1993
Counsel for plaintiff:     Mr P McNamara with
   Mr M Durrant
Solicitors for plaintiff:    Kelly and Co.
Counsel for defendants (Actions 818, 821, and 822): Mr N Strawbridge
Solicitors for defendants (Actions 1966, 2504, 2505, 2507, 2508 and 2568 of 1992):        Scales and Partners

ORDER
Application refused.

JUDGE1 DEBELLE J Applications have been made by the defendants in a number of actions in this Court to transfer them to the Federal Court of Australia at its registry in the Australian Capital Territory. The applications are made pursuant to s.5(1) of the Jurisdiction of Courts (Cross-Vesting) Act, 1987. They concern a series of inter-connected actions and by consent have been heard together. 2. In 1989 the plaintiff ("Pegasus") entered into loan agreements with members of four thoroughbred bloodstock breeding partnerships. The partnerships were each called Capricorn Park Breeding Partnership and were respectively numbered 1, 2, 3 and 4. I will refer to them each as Syndicates 1, 2, 3 and 4. The liability of each of the members under the loan agreements was guaranteed by others. 3. Pegasus alleges that the members of the syndicates have defaulted in their obligations under the loan agreements. On 19 November 1991 and on 2 and 3 January 1992 Pegasus commenced six actions in the District Court against the members of Syndicate 1 and their guarantors. In those actions Pegasus claimed payment of monies alleged to be due under the loan agreements and the guarantees. Those actions had proceeded to the point where pleadings have closed, Pegasus has given discovery, and the defendants are yet to give discovery. 4. The commencement of that litigation has spawned a series of actions in the Federal Court of Australia, in this Court, in the District Court and in the Adelaide Magistrates Court. In light of all these actions and all of the applications which have been made and the enormous volume of paper which has resulted, one could only express the hope that the interests of the parties are not being overlooked. One firm of solicitors in Adelaide, instructed by another firm of solicitors in Canberra, is acting for the members of Syndicate 1 and their guarantors. Another firm, Minter Ellison, solicitors in Sydney, is acting for the members of Syndicates 2, 3 and 4 and their guarantors. That firm also is acting through solicitors in Adelaide. In late 1991 Minter Ellison were conducting negotiations with Pegasus concerning claims by Pegasus against members of Syndicates 2, 3 and 4. On 17 March 1992, Minter Ellison sent a letter to Pegasus enclosing a draft application and statement of claim intended to be issued out of the Federal Court in relation to Syndicate 2. They informed Pegasus that their clients were willing to discuss outstanding matters but added that in the event that the discussions did not resolve the issues, the proceedings would be issued. They informed Pegasus that like proceedings would be issued in relation to Syndicates 3 and 4. Pegasus did not respond to that letter. Instead, it caused a series of actions to be issued out of this Court, the District Court and Magistrates Court against members of Syndicates 2, 3 and 4 and their guarantors. Those proceedings were issued on 2 and 3 April 1992. Four actions were commenced in this Court, 23 in the District Court and four in the Magistrates Court. Pegasus did not inform Minter Ellison of its intention to issue these actions. Pegasus says that most of the persons who were members of Syndicate 1 were also members of Syndicates 2, 3 and 4. It was for that reason and for the reason also that the issues in relation to each syndicate are the same that it decided to issue the actions in South Australia. 5. Minter Ellison later issued the proceedings in the Federal Court it had foreshadowed in relation to Syndicates 2, 3 and 4. Those proceedings were issued on 26 June 1992 and on 2 July 1992 out of the registry of the Federal Court in the Australian Capital Territory. The respondents in each action are the same. There are four sets of respondents in addition to Pegasus. Three of the respondents are companies who are alleged to have been associated with Pegasus in promoting the scheme. The fourth respondents are members of a firm of accountants who, it is alleged, were also associates in promoting the scheme. Broadly speaking, the applicants in those three actions seek the same relief, namely,,
    1. An order pursuant to s.87 of the Trade Practices Act,
    1974 (Cth) and/or s.72 of the Fair Trading Act, 1987 (NSW)
    declaring the loan agreements void.
    2. An order pursuant to s.87 of the Trade Practices Act,
    1974 (Cth) and/or s.72 of the Fair Trading Act, 1987 (NSW)
    declaring the guarantees void.
    3. Damages pursuant to s.82 of the Trade Practices Act,
    1974 (Cth) and/or s.68 of the Fair Trading Act, 1987 (NSW).
    4. A declaration that the agreements and each of them are
    illegal and unenforceable being in breach of provisions of
    ss.169, 170 and 171 of the Companies (NSW) Code or the
    equivalent provisions of the Companies Code in such other
    State or Territory as may be relevant.
    5. A declaration that the guarantees and each of them are
    illegal and unenforceable being in breach of provisions of
    ss.169, 170 and 171 of the Companies Code.
    6. Damages.
    7. A declaration that the respondents and each of them are
    liable to pay equitable compensation to each of the
    applicants in respect to any loss or damage suffered by them
    in entering into the agreements or the guarantees.
    8. A declaration that the agreements and each of them are
    voidable for breach of fiduciary duty and have been avoided
    by the applicants by the commencement of the proceedings.
    9. The declaration that the guarantees and each of them are
    voidable for breach of fiduciary duty and have been avoided
    by the applicants by the commencement of these proceedings.
    10. An order occurring in the guarantees in each of them
    void pursuant to provisions of the contracts of Contracts
    Review Act, 1980 (NSW). 6. Later, on 18 August 1982, the members of Syndicate 1 commenced an action in the Federal Court seeking the same relief as had been sought in the other three actions in the Federal Court. The statement of claim in each action has not been carefully drawn and is difficult to ascertain what is alleged in respect of each respondent. The respondents in the Federal Court actions applied to strike out the statement of claim on various grounds. Those applications were heard early this year. Judgment has yet to be delivered. 7. On 13 and 27 August 1992, the members of Syndicates 2, 3 and 4 filed applications in each of the actions in this Court which relate to them seeking orders staying further proceedings in each action pending the hearing and determination of the Federal Court action and, in the alternative, that the actions in this Court be transferred to the Federal Court. It is the latter application which the members of Syndicates 2, 3 and 4 now pursue. On 26 February 1993, the members of Syndicate 1 applied for an order transferring to the Federal Court the actions in this Court relating to Syndicate 1. 8. On 3 September 1992 Pegasus made a series of applications. It applied for leave to transfer the first six actions it had commenced in the District Court to this Court and to consolidate those actions with an action commenced in the Supreme Court. It also applied for an order that the Federal Court action instituted by the members of Syndicate 1 be transferred to this Court and tried as an action in this Court, and, in the alternative, that the six District Court actions and the Federal Court action be consolidated with four actions in this Court. By 27 October 1992, Pegasus had already obtained leave to transfer twenty-two actions in the District Court to the Supreme Court. Pegasus has also applied to transfer the actions in the Magistrates Court to the District Court. 9. There have already been a number of attendances before a Master in chambers dealing with different aspects all of these applications by both Pegasus and the defendants. In the result, the applications have been stood over pending judgment on the application of the respondents in the Federal Court to strike out the statement of claim. Although judgment has not been delivered in respect of that application, the parties in the actions in this Court now seek a determination of the applications of the syndicates to transfer the actions in this Court to the Federal Court in the Australian Capital Territory. 10. Mr Strawbridge, who appeared for members of Syndicates 2, 3 and 4, submitted that all of the issues between Pegasus and the members of the syndicates would be determined in the actions in the Federal Court. He submitted also that the convenience of the members of the syndicates required that the applications be granted. Almost all of the members of the syndicates and the guarantors resided or carried on business in the Australian Capital Territory or in New South Wales at points close to the Australian Capital Territory. The members of the syndicates and the guarantors number some 60 persons. He submitted that it would be a great imposition and an inconvenience if they all had to come to Adelaide to give evidence. The representations on which the members of the syndicates relied in their defence in the various actions were made in the Australian Capital Territory. The only connection with South Australia, he said, is that Pegasus carried on business in South Australia, it executed the agreements in South Australia and the debts the subject of the loan agreements are payable, if at all, in South Australia. The interests of justice therefore required, he said, that the actions be conducted in the Australian Capital Territory. He added that the second series of Pegasus actions were only prior in time because it had anticipated the Federal Court actions of which Minter Ellison had given notice. 11. Mr Redford, for members of Syndicate 1, referred to the decision of this Court in Pegasus Leasing Ltd v Tieco International (Australia) Pty Ltd (unreported, 14 July 1993) and said that his clients would abide the order of the Court. Mr McNamara, who appeared for Pegasus, submitted that the Pegasus actions which were instituted first, were well advanced, and should be permitted to proceed in this Court. In particular, the first six actions had been instituted before the Federal Court actions were contemplated and at least eight months before the Federal Court action instituted by Syndicate 1, an action which was obviously intended, he said, to mirror the other Federal Court actions and delay the prosecution of the first six actions commenced by Pegasus. The pleadings have closed in those actions and, but for discovery by the defendants, could be set down for trial. By contrast, the actions in the Federal Court were, he said, at a very early stage with the respondents in those actions attacking the statement of claim on various fronts. Pegasus should not be required to submit to any delay in the hearing of those actions. 12. In other circumstances, Mr McNamara's submissions would be entitled to considerable weight. But the concern of Pegasus to prosecute the actions promptly must be weighed against the fact that Pegasus has itself applied to transfer those six actions into this Court and consolidate them with actions in this Court. The actions in the Supreme Court are still at an early stage, little having been done to advance the pre-trial procedures pending the hearing and determination of the cross-vesting applications. Pegasus is not to be criticised for seeking to transfer the first six actions into this Court but the fact of those applications detracts from the force of Mr McNamara's submission. 13. I do not think that any great weight should be attached to the fact that Pegasus was first to commence proceedings in relation to the issues concerning the members of Syndicates 2, 3 and 4. Both Pegasus and members of the syndicates were ready to commence proceedings if negotiations failed. Pegasus was just a little quicker off the mark and plainly intended to forestall the proceedings in the Federal Court of which Minter Ellison had given notice. 14. The actions in this Court and in the Federal Court are related. It is, therefore, necessary to consider whether it is more appropriate that these actions be heard in the Federal Court. Although it is s.5(1)(b)(iii) which requires regard to be had to the interests of justice, I do not think that the interests of justice can fairly be excluded from the factors to which regard should be had when determining which is the more appropriate court. The interests of justice is a phrase which should be read widely: Bourke v State Bank of NSW (1988) 85 ALR 61, 75 and 78. In my view, what is significant is that the issues as between Pegasus and members of the syndicates and the guarantees are relatively straightforward and capable of prompt and ready prosecution. There is no plea that the defendants have rescinded or repudiated the loan agreements. The defendants will be able to set aside the agreements only if they are able to establish one or more of the statutory defences on which they rely. All that Pegasus has to do is to prove the loan agreements, which are in the main admitted, the amount owing, and the guarantees. In short, proof of the claim of Pegasus is capable of being relatively straightforward. The defences in each of the actions in the South Australian courts raise almost all of the issues which are raised as between Pegasus and the syndicate members in the Federal Court actions. The only issues not raised in the South Australian actions are the defences under the provisions of ss.169, 170 and 171 of the Companies (NSW) Code and under the Contracts Review Act, 1980 (NSW), defences which can be readily included in the actions in this Court by amendment. Although the actions in South Australia can be prosecuted without any undue delay, the actions in the Federal Court might be delayed by issues arising as between the syndicate members and the other four sets of parties in the Federal Court actions. Those actions have already been delayed by the applications to strike out the statements of claim. The fact that Pegasus also applied to strike out the statement of claim is not, I think, relevant. Further, if the actions are transferred, Pegasus will no longer be dux litis which could render it more vulnerable to delays caused by applications by the other parties in the Federal Court actions. 15. The application to transfer these actions is not grounded on any want of jurisdictions in this Court. Instead, it is grounded on what is said to be a greater convenience and lesser cost than having the action heard in Victoria. One can readily appreciate the inconvenience to each of the defendants in having to defend these actions in this State instead of in the Australian Capital Territory. However, apart from the question of the representations alleged to have been made to each of the defendants by Pegasus, the issues are the same in each action. It would appear also that there may be common issues as to the representations which Pegasus is alleged to have made. It may be that a decision in one of the actions will resolve a good number, if not all, of the remaining actions. I do not think that in these days of quick and efficient transport and communication, the arguments of inconvenience are sufficient to outweigh the interests of Pegasus being able promptly to prosecute its claims to judgment. I have also considered the likelihood that all of the issues between the parties are capable of being determined in the one action in the Federal Court and the advantages which might, therefore, accrue. However, given that there are five sets of respondents to those actions and the separate issues as between the applicants and respondents, it is likely that it will be some time before those actions will be heard and determined. By contrast, proof of the claim of Pegasus is likely to be relatively straightforward. I do not think Pegasus should be liable to the possible delays in the Federal Court actions to which I have referred and be denied the opportunity promptly to prosecute its actions to judgment in this Court. 16. Further, Pegasus has properly commenced these actions in the court of the State in which it principally carries on business. The action is in respect of debts payable in South Australia. The cause of action arose in South Australia. Pegasus has regularly invoked the jurisdiction of the courts of this State and there is no challenge to their jurisdiction to be able to determine all issues as between the parties. I do not think that there is a risk of inconsistent findings if the actions in this State proceed as well as the Federal Court action. The greater likelihood is that the Federal Court will be concerned only with the issues as between the members of the respective syndicates and the respondents other than Pegasus. 17. In reaching this conclusion I have had regard to a number of authorities including Seymour-Smith v Electricity Trust of South Australia (1989) 17 NSWLR
648; Bankinvest AG v Seabrook (1988) 2 NSWLR 711 and Pegasus Leasing Limited v Tieco International (Australia) Pty Ltd (supra). 18. For all of these reasons, the applications to transfer these actions to the Federal Court in its registry in the Australian Capital Territory is refused.