Re Farley Bay Pty Ltd (in liq)

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

CORPORATIONS LIST

S ECI 2021 00229

IN THE MATTER of ss 90-15 and 90-20 of Schedule 2 Insolvency Practice Schedule (Corporations) of the Corporations Act 2001 (Cth)

AND

IN THE MATTER of Farley Bay Pty Ltd (in liquidation) (ACN 063 425 981)

BETWEEN:

FARLEY BAY PTY LTD (IN LIQUIDATION) (ACN 063 425 981)	First Plaintiff
JOSEPH LOEBENSTEIN in his capacity as Liquidator of FARLEY BAY PTY LTD (IN LIQUIDATION) (ACN 063 425 981)	Second Plaintiff
v
MICHAEL DAVIS (A PSEUDONYM)	Defendant

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JUDGE:	Gardiner AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	15 October 2021, for mention on 9 August 2022 and 9 September 2022, last submissions filed 6 October 2022
DATE OF JUDGMENT:	11 October 2022 (revised 18 October 2022)
CASE MAY BE CITED AS:	Re Farley Bay Pty Ltd (in liq)
MEDIUM NEUTRAL CITATION:	[2022] VSC 604

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CORPORATIONS — Application by liquidator of company for directions under ss 90‑15 and 90‑20 of Schedule 2 Insolvency Practice Schedule (Corporations) concerning real property registered in name of the company and other matters arising in the liquidation — Protracted proceedings in the Federal Circuit and Family Court of Australia over several years between the defendant and his former de facto spouse who was the director of the company prior to her bankruptcy — Application by defendant for transfer of the proceeding commenced by liquidator to the Federal Circuit and Family Court of Australia pursuant to s 5(1) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Vic) or in the alternative s 1337H(2) of the Corporations Act 2001 (Cth) to be heard together with an application by defendant under s 90SN of the Family Law Act 1975 (Cth) which seeks to allege among other things that the defendant has equitable interest in property registered in the name of the company — Consideration of the principles to be applied in transfer of proceeding to another court — Armstrong and Shaw Pty Ltd (in liq) v Whiteman [2020] FCA 849 and Yara Pilbara Fertilisers Pty Ltd (formerly known as Burrup Fertilisers Pty Ltd) v Oswal (No 8) [2015] FCA 49 — Liquidation unable to proceed until determination of question of defendant’s alleged equitable interest — Order made transferring liquidator’s proceeding to Federal Circuit and Family Court of Australia pursuant to s 1337H(2) of the Corporations Act 2001 (Cth).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr A G Serong, solicitor	Serong Legal
For the Defendant	Mr C Möller of counsel Mr C Möller of counsel, (10 August 2021) Mr G Efron solicitor (23 September 2021) Mr D Leggatt solicitor (15 October 2021) Mr N Pinto solicitor (9 August 2022, 9 September 2022) Mr G J Moloney of counsel (11 October 2022 for the defendant)	Efron & Associates After 1 October 2021, Coterminous Legal After 2 August 2022, Vasilaras + Co Lawyers
For Stephen John Michell, an interested party	Mr S Rubenstein of counsel Mr D Brett, solicitor (23 September 2021, 9 August 2022, 9 September 2022 and 11 October 2022)	McKean Park

TABLE OF CONTENTS

Mr Loebenstein’s application by originating process under s 90-15 of the IPSC................. 1

Mr Davis’ application by interlocutory process to transfer Mr Loebenstein’s application to the FCFCOA......................................................................................................................................... 2

Mr Loebenstein’s evidence in support of his application under s 90-15 of the IPSC.......... 3

The affidavit of Mr Michell, the trustee in bankruptcy of Ms Freeman, in support of Mr Loebenstein’s application under s 90-15 of the IPSC............................................................ 7

Mr Davis’ evidence in support of his application by interlocutory process to transfer this proceeding to the FCFCOA........................................................................................................ 9

Mr Loebenstein’s evidence in opposition to Mr Davis’ interlocutory application........... 16

Evidence of Mr Brett, the solicitor for Mr Michell, the trustee of the bankrupt estate of Ms Freeman, in opposition to Mr Davis’ interlocutory application............................... 21

The affidavit of Mr Davis’ solicitor.............................................................................................. 24

Mr Davis’ submissions in support of the application to transfer to the FCFCOA............. 28

Mr Loebenstein’s submissions in opposition to Mr Davis’ application for transfer of the proceeding to the FCFCOA...................................................................................................... 41

Submissions of the trustee of Ms Freeman’s bankrupt estate, Mr Michell......................... 49

The submissions of Mr Davis in reply........................................................................................ 51

Consideration.................................................................................................................................... 52

Orders................................................................................................................................................. 61

HIS HONOUR:

On 10 July 2019, in an application brought by the Victorian Commissioner of State Revenue, the first plaintiff, Farley Bay Pty Ltd (in liquidation) (‘Farley Bay’), was ordered to be wound up in insolvency under the Corporations Act 2001 (Cth) (‘Corporations Act’). The second plaintiff, Mr Joseph Loebenstein, was appointed liquidator in the winding up.

These reasons contain extensive reference to proceedings under the Family Law Act 1975 (Cth) (‘Family Law Act’). Cognisant of the provisions in the Family Law Act that restrict publication of proceedings under that Act and identification of the parties to such proceedings,[1] the names of the parties in this proceeding and the defendant’s interlocutory application who are involved in such proceedings, together with their associates, will be assigned pseudonyms.
[1]See s 121 of the Family Law Act 1975 (Cth).

The sole director of Farley Bay is Ms Mary Freeman (‘Ms Freeman’) and its sole shareholder is Panker Nominees (Vic) Pty Ltd (‘Panker’). Ms Freeman is the estranged partner of the defendant, Mr Michael Davis (‘Mr Davis’). Since 2013, Ms Freeman and Mr Davis have been involved in protracted proceedings in the Family Court of Australia and, when that Court was reconstituted, the Federal Circuit and Family Court of Australia (‘FCFCOA proceeding’).[2]
[2]In these reasons the Family Court, which was reconstituted on 1 September 2021 as the Federal Circuit and Family Court of Australia, will be referred to as the ‘FCFCOA’.

On 19 December 2019, a sequestration order was made against Ms Freeman by order of the Federal Circuit Court of Australia, as that Court was then named and constituted. Mr Stephen Michell was appointed trustee of her bankrupt estate.

Mr Loebenstein’s application by originating process under s 90-15 of the IPSC

On 3 February 2021, Mr Loebenstein filed this proceeding by originating process, which applies for directions under ss 90-15 and 90-20 of Schedule 2 Insolvency Practice Schedule (Corporations) (‘IPSC’). The directions sought involve properties each registered in the name of Farley Bay in Victoria (together, the ‘Properties’). Amongst the relief claimed, Mr Loebenstein sought directions that he was justified in treating any real property registered under the name of Farley Bay and any receipts from the rental from the Properties as assets of Farley Bay.

Mr Loebenstein also sought directions in respect of the sale of the Properties, renegotiation of leases for terms in excess of three months and an order that Mr Davis be required to remove any caveats registered on the Properties. In addition, Mr Loebenstein sought a direction that he would be justified and acting properly in rejecting a proof of debt lodged by Mr Davis in the winding up of Farley Bay on 26 June 2020 and in registering the transfer of shares from Panker to Mr Michell in his capacity as trustee of the bankrupt estate of Ms Freeman. The originating process also sought other associated and ancillary relief.

On 28 June 2021, Mr Loebenstein made application by interlocutory process pursuant to s 477(2B) of the Corporations Act and ss 90‑15 and 90‑20 of the IPSC in respect of the negotiation of the terms of the leases of the Properties and entering into new leases for periods in excess of three months.

The interlocutory process filed by Mr Loebenstein came on for hearing on 8 July 2021 and there was no appearance on behalf of Mr Davis. I made orders that Mr Loebenstein was justified and acting properly in proceeding to negotiate, or renegotiate as the case may be, the terms of the leases of the Properties for periods of more than three months.

Mr Davis’ application by interlocutory process to transfer Mr Loebenstein’s application to the FCFCOA

On 22 April 2021, Mr Davis filed an interlocutory process in this proceeding seeking relief under s 5(1) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Vic) and further, or in the alternative, s 1337H(2) of the Corporations Act. Mr Davis’ interlocutory process seeks orders that this proceeding be transferred to the FCFCOA for hearing together with an application by Mr Davis for orders under s 90SN of the Family Law Act.

Mr Loebenstein’s evidence in support of his application under s 90-15 of the IPSC

In his affidavit of 3 February 2021 in support of the originating process, Mr Loebenstein describes the general background to the liquidation of Farley Bay. His investigations have disclosed a small number of creditors, including the State Revenue Office (‘SRO’) and the Australian Taxation Office (‘ATO’). Mr Davis also claims to be a creditor.

The SRO claims it is owed $53,000 by Farley Bay in respect of land tax assessments. The ATO contends that the Commissioner of Taxation is a creditor but the proper calculation of Farley Bay’s taxation liabilities has been frustrated by that company’s failure to lodge income tax returns and business activity statements for a number of years prior to the commencement of the winding up. Nonetheless, the ATO has lodged three proofs of debt in the winding up of Farley Bay in respect of various taxation liabilities. For his part, Mr Loebenstein says that the task of ascertaining the liability to the ATO has been impaired because of the absence of books and records, including annual financial statements. He describes the steps he has taken to try and obtain Farley Bay’s books and records from Ms Freeman but these have been unsuccessful.

Ms Freeman ultimately provided Mr Loebenstein with a report on company activities and property (‘ROCAP’) for Farley Bay in August 2019. Mr Loebenstein believes that based on his inquiries and investigations, the ROCAP fails to disclose all the assets and liabilities of the company and that it fails to give full and complete particulars of all the creditors’ claims. Farley Bay’s only source of income according to enquiries made of Ms Freeman was the rental income from the Properties. The only trading expenses related to rental of the Properties.

In July 2019, Mr Loebenstein wrote to Mr Davis’ then solicitors, Efron & Associates, to enquire as to the basis upon which Mr Davis had lodged the caveats against the titles to the Properties. In response, Efron & Associates contended that final orders were made in the FCFCOA proceeding in August 2018, whereby the Properties were said to form part of the matrimonial pool of Mr Davis and Ms Freeman and that the Properties were therefore not capable of vesting in the trustee of Ms Freeman’s bankrupt estate. Efron & Associates also contended that orders had been made by the FCFCOA judge in 2015 restraining Ms Freeman, in her capacity as director of Farley Bay, from selling or attempting to sell any of the Properties and that the final orders made by the FCFCOA judge have been stayed pending an appeal, which was said to be currently on foot, in which Mr Davis is the appellant and Ms Freeman is the respondent.

There was no response by Efron & Associates to the enquiry by Mr Loebenstein concerning the justification for Mr Davis registering the caveats on the titles to the Properties.

Mr Loebenstein then describes a chain of correspondence that followed, either from Mr Davis or his solicitors, which made various claims concerning the Properties and the validity of Mr Loebenstein’s appointment and his power and authority to deal with the assets of Farley Bay as liquidator. In brief terms, it was asserted that the winding up order and Mr Loebenstein’s appointment by this Court was unlikely to have been made had the Court been informed that Farley Bay and its assets were the subject of ongoing legal proceedings. It was said that the SRO, as applicant in the winding up, was ‘aware of the [FCFCOA proceeding] and did not apprise the Court of the ongoing claim by the non-director [i.e. Mr Davis] upon the assets’. It was asserted that Mr Loebenstein’s appointment was therefore ’flawed’ and that Mr Loebenstein should undertake not to ‘declare, distribute or alienate the Company’s assets or property, nor take any action until ownership of those assets’ has been determined by a court. I note that Mr Davis was pressing these matters when he was not, and never had been, a director or shareholder of Farley Bay.

Significantly, in the context of Mr Davis’ interlocutory application in this proceeding, it was also asserted that Mr Davis had an equitable claim against the Properties that are the subject of the caveats based on the existence of an alleged trust and that Mr Loebenstein had no power nor authority to deal with the assets of Farley Bay. Finally, it was asserted that the FCFCOA had sole jurisdiction in relation to the affairs of Farley Bay and that Mr Loebenstein should appear before the FCFCOA for orders to be made concerning Farley Bay.

In response, Mr Loebenstein’s solicitors stated that the claims made by, or on behalf of, Mr Davis were without foundation and unsupported and demanded that the assertions be substantiated or withdrawn, failing which Mr Loebenstein would make an application to the Court seeking orders and directions, in particular, concerning his power to deal with the assets of Farley Bay.

Mr Davis’ proof of debt dated 26 June 2020 claims he is owed $2.4 million together with interest and asserts the existence of a constructive trust but there is no elaboration or substantiation of that assertion despite Mr Loebenstein’s requests that he does so.

Mr Loebenstein states that he has become aware of the proceeding in the FCFCOA between Ms Freeman, as applicant and de facto wife, and Mr Davis, as de facto husband, and he believes this to be the proceeding referred to by Mr Davis’ solicitors in their letter of 29 July 2019.

In September 2019, Mr Davis’ solicitors filed an Initiating Application in the FCFCOA proceeding, in which Mr Davis sought, amongst other things, an order joining Mr Loebenstein to that proceeding. That application was served on 8 October 2019.

In February 2020, Mr Davis’ solicitors served Mr Loebenstein with an amended Initiating Application in the FCFCOA proceeding, in which the orders sought by Mr Davis were amended. The order seeking Mr Loebenstein’s joinder was no longer sought in the amended Initiating Application. Mr Loebenstein states that to the best of his knowledge and that of his solicitors, no order has been made joining him to the FCFCOA proceeding.

Mr Loebenstein states that Mr Davis, by making unsubstantiated claims concerning the existence of an alleged trust, has called into question his power and authority as liquidator of Farley Bay, in particular his power and authority:

(a) to adjudicate on creditors’ claims in the winding up, including, in particular, the claim of the ATO;

(b) to negotiate with the ATO with respect to income taxation liabilities;

(c) to incur expenses in the course of the winding up, including the expense of reconstructing the financial statements of Farley Bay for the purpose of properly determining the taxation liability; and

(d) to meet the claims of creditors from assets under his control.

In addition, Mr Davis raised questions as to Mr Loebenstein’s ability to take remuneration and expenses from the assets under his control, deal with the Properties and, in particular, to negotiate the terms of leases and, if necessary, to sell any one or more of the Properties to meet creditors’ claims. Finally, Mr Davis has raised questions concerning Mr Loebenstein’s ability to deal with Farley Bay’s assets as liquidator.

Mr Loebenstein deposes that on 4 August 2020, Ms Freeman’s trustee in bankruptcy, Mr Michell emailed a copy of a share transfer form to him and requested that Mr Loebenstein transfer the shares in Farley Bay from Panker to Mr Michell as trustee ‘pursuant to a [FCFCOA] order made 18 August 2018 [sic]’. Mr Loebenstein believes that the reference to the order of 18 August 2018 was to the order of the FCFCOA judge in the FCFCOA proceeding of August 2018. That order provides, in part as follows:

That Panker Nominees and/or Panker Admin do all such acts and execute all such documents as are required to transfer within fourteen (14) days of orders being made the shares in Farley Bay Pty Ltd (ACN 063425981) held in their names to the wife;

Mr Loebenstein is yet to formally respond to the request for the transfer of the shares from Panker to Mr Michell but he has sought a direction from the Court in this regard in his originating process.

On 15 October 2020, Mr Loebenstein published a notice on the Australian Securities and Investments Commission’s website, inviting formal proofs of debt or claims in the winding up of Farley Bay. The only creditors to lodge a claim in the winding up are the SRO, ATO and Mr Davis.

On 19 January 2021, Mr Loebenstein again wrote to Mr Davis in respect of the claims that he contended he had in the winding up, requiring Mr Davis to substantiate any such claims within 14 days. In that letter, it was indicated to Mr Davis that while Mr Loebenstein was still to formally adjudicate on his proof of debt, it would remain within his power to reject any claim that was not properly substantiated. As at the date of his affidavit, Mr Loebenstein had received no response.

Mr Loebenstein states that if he is justified and acting reasonably in rejecting the proof of debt lodged by Mr Davis, at the conclusion of the winding up, Farley Bay will be solvent. He anticipates there will be a surplus remaining after meeting all creditors’ claims, the costs and expenses of the winding up, and after payment of interest on those creditors’ claims, in respect of which a right to interest accrues. In that event, any surplus remaining will be available for distribution to Farley Bay’s shareholder, in accordance with the requirements of the Corporations Act.

The affidavit of Mr Michell, the trustee in bankruptcy of Ms Freeman, in support of Mr Loebenstein’s application under s 90-15 of the IPSC

On 1 April 2021, Mr Michell filed an affidavit directed to the relief sought by Mr Loebenstein in the originating process.

Mr Michell makes reference to the orders in the FCFCOA proceeding of August 2018 and in particular, those relating to the transfer of shares in Farley Bay to Ms Freeman. Mr Michell states that as trustee in bankruptcy of Ms Freeman’s estate, he is ‘currently registered or entitled to be registered’ as the sole shareholder in Farley Bay. He deposes that the orders also required Mr Davis to withdraw caveats lodged by him against any and all real property owned by Ms Freeman or Farley Bay.

The FCFCOA orders also provided Mr Davis with the first right of refusal to purchase the Properties at a set price but Mr Michell was unaware of Mr Loebenstein’s intention to sell the Properties or whether Mr Davis had indicated his willingness to purchase them.

Mr Michell indicates that as such, he has an interest in the liquidation of Farley Bay and the costs and expenses being incurred as a result of the actions of Mr Davis. He observes that Mr Davis was yet to provide any justification for the lodging of the caveats over the Properties, nor has he lodged a formal proof of debt in the liquidation.

Mr Michell contends that Mr Davis, in adopting the position of claiming an interest in the Properties, is acting contrary to the position adopted by him in other proceedings and in different situations. In this regard, he observes that Mr Davis was declared bankrupt in 2010. In his bankruptcy, Mr Davis filed a statement of affairs in December 2010 with his trustee in bankruptcy, Mr Marchesi, in which he makes no claim that he holds any interest in the Properties. Mr Michell observes that if Mr Davis had such a claim, it is likely to have vested in Mr Davis’ trustee in bankruptcy under the Bankruptcy Act 1966 (Cth).[3] Mr Michell notes that the trustee in bankruptcy did not identify any such claim in his reports to creditors of 21 December 2010, 17 March 2011 or 18 August 2011.
[3]See Bankruptcy Act 1966 (Cth) ss 58(1), 115, 116.

Mr Michell states that Mr Davis and Ms Freeman have been involved in substantial litigation over a period of many years. Mr Michell refers to the orders and reasons that were made and published by the FCFCOA judge in the FCFCOA proceeding in August 2018. In his reasons, the FCFCOA judge identified the assets that were the subject of the FCFCOA proceeding and the orders he made. The FCFCOA judge observed that the details of the assets referred to were agreed upon by Mr Davis and Ms Freeman. The reasons do not disclose any claim by Mr Davis in relation to the Properties. Mr Michell states that he is not aware of any claim that Mr Davis has sought to make in respect of any interest in any of the Properties in the FCFCOA proceeding pursuant to a constructive or resulting trust or on any other basis.

Mr Michell states that on 17 April 2018, Mr Davis filed a document headed ‘Updated Balance Sheet of assets and liabilities’ in the FCFCOA proceeding. In the updated balance sheet, he made no claim that he held any interest in the Properties.

As such, Mr Michell contends that Mr Davis has no claim in relation to the Properties and asserts that, as stated by Mr Loebenstein, Mr Davis is seeking to merely delay or interfere with the proper liquidation of Farley Bay.

Mr Michell states that as the sole shareholder of Farley Bay, by reason of being the trustee of Ms Freeman’s bankrupt estate (or at least being entitled to be registered as such), he is concerned that assets of Farley Bay are being eroded by the continued action of Mr Davis and this has resulted in the understandable delay by Mr Loebenstein in realising the assets of Farley Bay.

Mr Michell supports Mr Loebenstein’s application for directions that he is entitled to undertake the realisation of the assets of Farley Bay, including the sale of the Properties. He also supports Mr Loebenstein’s quest to undertake the necessary reconstruction of the accounts and reconciliations to enable returns to be lodged to ascertain the liability of Farley Bay to the ATO.

Mr Davis’ evidence in support of his application by interlocutory process to transfer this proceeding to the FCFCOA

Mr Davis’ application is supported by an affidavit of Graeme David Efron (Mr Davis’ then solicitor) affirmed 22 April 2021. Mr Efron describes the background to the FCFCOA proceeding. He states that from 1987 until 2013, Mr Davis was in a de facto relationship with Ms Freeman. They had several children from the relationship. He states that at the time of the commencement of their relationship, Ms Freeman did not have any assets of value. During the relationship, she did not work in paid employment but did assist with secretarial matters at Mr Davis’ workplace and assisted in a business that Mr Davis had purchased before the commencement of the relationship. Mr Efron states that the assets purchased during the relationship were paid from Mr Davis’ earnings.

In 2013, Ms Freeman commenced proceedings in the FCFCOA seeking, amongst other things, orders for a property settlement. Mr Efron asserts that at all times, the assets of Farley Bay ‘have been before the [FCFCOA]’ as part of the assets divisible between Mr Davis and Ms Freeman.

Mr Efron’s evidence in respect of the shareholding in Farley Bay is confusing. Mr Efron states that Farley Bay was established by PKF Accountants (‘PKF’) to hold ownership of 50% of the Properties. Mr Davis purchased the Properties in partnership with a business associate. The business associate’s shareholding was held by a nominee corporate entity, Panker, which was established by his accountants, PKF. As has been mentioned, Panker remains the sole shareholder in Farley Bay. Ms Freeman became the sole director of Farley Bay from 17 October 2001 and she also had access to its bank accounts. Somewhat remarkably, the involvement of the business associate and his interests are not otherwise mentioned by any party in the evidence.

The assets divisible between Ms Freeman and Mr Davis were identified by Mr Efron as consisting of the following:

(a) the family home which was registered in Ms Freeman’s name;

(b) a property in South Yarra, which was held in a trust of another corporate entity (but which Mr Efron states Ms Freeman sold privately when the FCFCOA litigation was on foot without notice to the Court or to Mr Davis);

(c) properties of which Farley Bay is the registered proprietor, which include the Properties together with nearby car parks;

(d) approximately $2.3 million in Farley Bay’s bank account;

(e) assigned debts and work in progress of Mr Davis’ former business;

(f) various personal items including jewellery, artwork and motor vehicles; and

(g) the proceeds of a proceeding before the Victorian Civil and Administrative Tribunal (‘VCAT proceeding’) related to builders’ defects at the residential home.

Mr Efron deposes that other than contingent liabilities such as for taxation (for which there were no assessments), school fees, and general utilities, there were no liabilities, encumbrances, mortgages or securitisation over the properties.

Mr Efron states that the FCFCOA proceeding was contested and lengthy. From the date it was commenced until judgment was delivered in 2018, 22 applications were made by the parties and the FCFCOA has made 39 sets of orders. One of the orders, made in October 2015, required Ms Freeman’s solicitors to retain monies in an investment account pending final orders in the proceeding. Mr Efron states that following the judgment of August 2018 and after receiving notice of Mr Davis’ appeal, Ms Freeman’s solicitors, without notice to Mr Efron, dispersed the entire contents of the bank account to Ms Freeman in what he describes as ’arrears of her fees’.

Mr Efron states that after Mr Davis and Ms Freeman separated, the funds in Farley Bay’s bank account, to which Ms Freeman had exclusive and unencumbered access, ’disappeared’. This account was also the bank account into which rental payments for the Properties were paid. He states that from the date of separation until Ms Freeman’s bankruptcy in 2019, the rents from the Properties owned by Farley Bay amounted to approximately $1.05 million and during that period, Ms Freeman received all rents.

Mr Efron states that Ms Freeman had stated in her sworn financial statement filed in the FCFCOA proceeding that her weekly expenses were $21,513.00. Mr Efron understands that Ms Freeman currently receives unemployment benefits. From 2013, Mr Davis had the sole care for the youngest child of the relationship until the child turned 18 in 2018. From 2009 to 2013, Mr Davis was very ill and had to undergo several surgical procedures.

Mr Efron states that Mr Davis held illness and income protection policies that responded to his medical condition. Ms Freeman received payments of approximately $20,000 a month from MLC for income protection and $1,040,000 from OnePath for trauma insurance and deposited them into Farley Bay’s bank account. Mr Efron states that that money has also ’disappeared’.

Mr Efron alleges various other delinquencies on Ms Freeman’s part concerning the conduct of the financial affairs which are not relevant in the present context.

Mr Efron states that in 2013, Mr Davis lodged caveats to protect his interests in the Properties and those caveats were substituted by caveats lodged by a solicitor on his behalf in November 2015.

Mr Efron deposes to the financial position of Farley Bay. He states that Charter Keck Cramer valued the Properties in March 2017 at $3.345 million. The FCFCOA ordered a valuation of the residential property in 2017.

Mr Efron says that the continued ownership of the shares in Farley Bay by Panker is the result of a failure by the solicitors or accountants acting for Mr Davis’ business associate to effect their transfer. In the FCFCOA proceeding, Ms Freeman’s solicitors served Panker with notice of the proceedings and Panker’s response was that it would abide by the orders of the FCFCOA.

Mr Efron states the trial in the FCFCOA was held before the FCFCOA judge in 2017. In August 2018, the FCFCOA judge published reasons and made orders in the proceeding. Those orders included the following:

(a) that within 14 days of the order, Ms Freeman sign a settlement agreement with the ATO with respect to the taxation liabilities in the sum of $2,513,773. Those liabilities were those of Farley Bay and a number of other entities, including Ms Freeman personally. Ms Freeman was ordered to indemnify Mr Davis in respect of any taxation liability arising in respect of the entities identified.

(b) Mr Davis was required within 30 days to withdraw the caveats lodged by him or on his behalf against any property owned by Ms Freeman or Farley Bay;

(c) Panker and an associated entity (described as ‘Panker Admin’) execute transfers of the shares held by them in Farley Bay to Ms Freeman;

(d) if Ms Freeman proposed to sell any of the real property held by Farley Bay, then she was required to give 30 days’ notice of any intention to sell the properties and Mr Davis would have the right of first refusal to purchase the properties. Mr Davis’ right of first refusal was said to be ‘discharged within 18 months of the date of the order’; and

(e) Ms Freeman retained ‘to the exclusion of [Mr Davis] Farley Bay Pty Ltd subject to [Mr Davis’] first right of refusal and option to purchase’ together with certain other identified items.

Mr Efron states that the order concerning the settlement agreement with the ATO was made because during the trial, the FCFCOA judge was informed that Ms Freeman had reached a settlement with the ATO in respect of her personal outstanding tax liabilities and those of related companies, including Farley Bay, totalling $2,513,773. Mr Efron asserts that the orders were predicated on her signing that agreement and the only principal assets available to meet that liability were those held by Farley Bay. Despite the orders of the FCFCOA judge, Ms Freeman did not sign the deed of settlement with the ATO and she denied there was any such agreement. She again denied its existence at a later hearing before another FCFCOA judge on 5 May 2020.

Mr Efron states that no final or executed agreement with the ATO has ever been produced. To Mr Efron’s knowledge, the ATO has not issued any assessments for the relevant taxation liabilities.

Mr Efron then deposes to events that have occurred since judgment in the FCFCOA proceeding in August 2018. He states that in September 2018, Efron & Associates filed an appeal on behalf of Mr Davis from the judgment of the FCFCOA judge. Several days later, Efron & Associates filed an application for a stay of the judgment. Shortly after that, Efron & Associates filed an application seeking a stay pending the appeal.

In September 2018, the FCFCOA judge made orders staying the decision pending the final hearing of the appeal.

On 10 July 2019, Farley Bay went into liquidation.

In September 2019, counsel engaged on Mr Davis’ behalf appeared before another judge of the FCFCOA and requested a stay of the appeal. Counsel explained that it was intended to make an application under s 90SN of the Family Law Act to set aside or vary the orders made by the FCFCOA judge. Mr Efron states the judge stated that for administrative reasons, it was preferable to ‘delete the matter from the list’, and ‘he would assist by granting a right of reinstatement without prejudice’ and orders were made to that effect.

Mr Efron states that in September 2019, he made the Initiating Application on behalf of Mr Davis under s 90SN of the Family Law Act to set aside or vary the orders made by the FCFCOA judge. In that application, Mr Efron states he has served several subpoenas, including on Ms Freeman’s lawyers in the FCFCOA proceeding, PKF, and the other companies whose tax liabilities were the subject of orders made by the FCFCOA judge. Those subpoenas were the subject of objections, which Mr Efron states were subsequently dismissed.

In December 2019, a sequestration order was made against Ms Freeman. In January 2020, Efron & Associates filed an amended Initiating Application in the s 90SN application.

Mr Efron then refers to matters in respect of his client’s application to transfer this matter to the FCFCOA. He states that the principal source of funds to pay the liabilities referred to in the orders made by the FCFCOA in August 2018 are the assets of Farley Bay. Those assets are the same assets that were the subject of the trial in the FCFCOA and are also the same assets ‘before the [FCFCOA]’ in the s 90SN application (i.e. the Properties). Mr Efron asserts that the Properties have always been and are still a significant asset before the FCFCOA for adjudication. Mr Efron deposes that many of the issues that will be raised in the s 90SN application concern funds received by Farley Bay or into its bank account, including the proceeds of Mr Davis’ insurance policies. He states that there are also issues about the extent of Mr Davis’ interest in the Properties which were purchased with funds that he provided. Additionally, there will be issues about the use of the funds that have been, or appear to have been, applied in breach of orders of the FCFCOA.

Mr Efron contends that these issues will be the subject of, or further clarified by, the s 90SN application before the FCFCOA. He also states that a number of these issues will be raised in the appeal from the FCFCOA judge’s orders, if that appeal, in respect of which a right of reinstatement is provided by orders made in September 2019, is reinstated. Mr Efron contends that is therefore a commonality between many of the issues raised in this proceeding commenced by Mr Loebenstein and the FCFCOA proceedings. He states that there is also a risk of conflicting findings and the making of contradictory orders if this proceeding is determined in the Supreme Court and there is also a prospect that, if this Court makes the orders sought by the liquidator in this proceeding, that will likely make the extant s 90SN application and what he describes as the ‘envisaged or likely appeal’ in the FCFCOA ‘redundant’.

Mr Efron states that in April 2021, Efron & Associates wrote to Mr Loebenstein’s solicitors, Serong Legal, explaining the relevant background and requesting that they agree to transfer this proceeding to the FCFCOA. The same day, Mr Loebenstein’s solicitors wrote to Efron & Associates concerning the funds presently held by Mr Loebenstein and future rental payments for the Properties.

On 5 May 2021, Mr Efron filed a further affidavit making corrections to his earlier affidavit. He states that the amendment in relation to the s 90SN application filed in January 2020 omitted to seek an order that Mr Loebenstein be joined to the FCFCOA proceeding.

In April 2021, a Senior Registrar of the FCFCOA ordered that the s 90SN amended Initiating Application be further amended to include an application for an order that Mr Loebenstein, as liquidator of Farley Bay, be joined to the FCFCOA proceedings and ordered that the s 90SN application proceed to mediation in June 2021.

Mr Loebenstein’s evidence in opposition to Mr Davis’ interlocutory application

Mr Loebenstein filed an affidavit on 21 May 2021 in opposition to the orders sought by Mr Davis in his interlocutory application. Mr Loebenstein states that he first became aware of the order amending the s 90SN application to include a claim that joined him to the FCFCOA proceeding when his solicitors provided him with a copy of Mr Efron’s second affidavit exhibiting the order on 4 May 2021.

Mr Loebenstein states that he became aware of the existence of the FCFCOA proceeding in July 2019 and in particular that:

(a) in September 2019, Mr Davis filed his application for an order under s 90SN of the Family Law Act that the order made by the FCFCOA judge in August 2018 be set aside or varied and that an order be made under s 90SM in substitution. In that application, Mr Davis also sought further interim and procedural orders that Mr Loebenstein be joined to the FCFCOA proceeding but that part of the application was not pursued at that point. Mr Loebenstein deposes that the order of the FCFCOA judge of August 2018 makes no order dealing with the assets and undertaking of Farley Bay but does include an order relating to possible settlement of some of the taxation liabilities of various individuals and companies (including Farley Bay). It also includes orders directing Panker to transfer the shares in Farley Bay to Ms Freeman; and

(b) the orders made by the FCFCOA judge in August 2018 provide that if Ms Freeman wishes to sell any of the Properties to discharge her liability to the ATO or other liabilities then Mr Davis would have the right of first refusal which ’shall be discharged within [18] months of the date of [the] order’.

Mr Loebenstein states that the Initiating Application was made returnable before a Registrar of the FCFCOA in October 2019. His solicitor, Mr Serong, appeared on his behalf and Mr Serong has informed him and he believes that Mr Davis was represented by counsel but there was no appearance for Ms Freeman. He is informed by Mr Serong that orders were made at that hearing which did not include an order that Mr Loebenstein be joined to the FCFCOA proceeding. The Registrar did note, however, Mr Serong had indicated on behalf of Mr Loebenstein that he did not see the utility at that time of being joined to the FCFCOA proceeding but sought to be informed of the progress of the proceeding. The Registrar noted that Mr Davis did not seek the joinder of Mr Loebenstein at that time.

Mr Loebenstein states that in January 2020, Mr Davis filed the amended Initiating Application seeking further orders together with a supporting affidavit of Mr Davis. These documents were served on Mr Loebenstein on 5 February 2020 but the amended Initiating Application did not include any request for relief seeking an order that Mr Loebenstein be joined.

In February 2020, on the instructions of Mr Loebenstein, Mr Serong sent a letter to each of Efron & Associates (who then acted for Mr Davis), Ms Freeman and Mr Michell, as trustee of Ms Freeman’s estate, to provide the parties to the FCFCOA proceeding and Mr Michell with details as to Mr Loebenstein’s position on various matters relating to the winding up of Farley Bay. In that letter, Mr Loebenstein’s solicitors stated that while the FCFCOA proceeding may be anticipated to result in orders being made concerning the disposition of the shares in Farley Bay, Mr Loebenstein was of the view that any such change in the shareholding as a consequence of the order of the FCFCOA did not require Mr Loebenstein to be actively involved in any court proceeding between the parties provided he was made aware of any order made by the Court.

Mr Serong informed Mr Loebenstein that since that letter and until being provided with a copy of the order of the Senior Registrar made in April 2021, he was unaware of any steps being taken by Mr Davis to further seek to have him joined as a party to the FCFCOA proceeding.

Mr Loebenstein states that notwithstanding Mr Davis now intends to seek an order that he be joined to the FCFCOA proceeding, he is not aware of any relief being sought against him or Farley Bay in the amended Initiating Application. Mr Loebenstein states that he has had no involvement with that proceeding since October 2019 and he will oppose the making of any order that he be joined as a party to the FCFCOA proceeding as being unnecessary and not in the interests of the creditors of Farley Bay.

As to the evidence of Mr Efron that Mr Davis lodged caveats to protect his interests in the Properties, Mr Loebenstein states that shortly after the commencement of the winding up on 10 July 2019, he searched the records of Land Titles Victoria to determine if there were any properties registered in the name of the Farley Bay and that searches revealed that Farley Bay was the registered proprietor of the Properties. The searches also revealed that all but one title was subject to a caveat lodged on behalf of Mr Davis, whereby Mr Davis claimed to have an equitable interest in the Properties arising from an ‘implied, resulting or constructive trust’ and by which he purported to prohibit any dealings with the land.

Mr Loebenstein states that on 26 June 2020, Mr Davis lodged a proof of debt in the winding up claiming the sum of $2.4 million together with interest as a creditor of Farley Bay and asserts the existence of a constructive trust without elaborating or providing any details of the basis for that assertion.

Mr Loebenstein states that both he and his solicitors have, at various times since the commencement of the winding up on 10 July 2019, corresponded with Efron & Associates and directly with Mr Davis upon being informed that Efron & Associates were no longer engaged by Mr Davis on what was described as ‘Farley Bay matters’. This correspondence was in relation to both the claim to an equitable interest in the Properties arising under an alleged constructive trust and the claim by Mr Davis in his proof of debt to be a creditor.

Mr Loebenstein states that he instructed his solicitors to correspond with Efron & Associates seeking that they substantiate Mr Davis’ claim to an equitable interest to the Properties or to withdraw any such claim and caveats in the event that a claim could not be supported. Mr Loebenstein also instructed his solicitors to correspond with Efron & Associates in relation to the claim in the proof of debt and to seek evidence in support of that claim. He states however, that his solicitors have not to date received any evidence to properly substantiate Mr Davis’ claim to an equitable interest nor any evidence to support any contention that the Properties were purchased with funds provided by Mr Davis. Mr Loebenstein states that notwithstanding this failure, Mr Davis has failed to withdraw the claim to an equitable interest and to withdraw the caveat over the Properties.

Mr Loebenstein also states that he has been informed by Mr Serong and believes he has not received any evidence to properly substantiate the claim by Mr Davis alleging to be a creditor of Farley Bay as asserted in the proof of debt.

By reason of these matters, Mr Loebenstein contends that on the basis of his investigation and enquiries to date, and in the absence of any evidence to support the claim to have an equitable interest in the Properties and the further claim to the sum of $2.4 million excluding interest, Mr Davis has no valid and enforceable claim in equity to any of the Properties and no claim to be a creditor of Farley Bay.

Mr Loebenstein states that in December 2010, Mr Davis presented his own petition and was made bankrupt that same day. A private trustee was appointed trustee of the bankrupt estate and, on being made bankrupt, all of Mr Davis’ divisible assets vested in his trustee in bankruptcy. The statement of affairs of 15 December 2010 completed by Mr Davis and provided to his trustee in bankruptcy did not disclose any claim or interest in the assets of Farley Bay and in particular, any interest in the Properties. In addition, in the statement of affairs, Mr Davis responded to the following questions as follows:

28.      Do you own, or are you buying, any land or buildings in Australia or overseas
No
34.      Do you own any assets which are not currently in your possession:
No
35.      Have you contributed or otherwise assist [sic] in the purchase or improvement of any asset value [sic] over $1000 which is held by someone else?
No

Mr Loebenstein states that on the basis of the evidence currently available to him in support of the claim contained in the proof of debt lodged by Mr Davis, it was his intention to reject the claim in full.

Mr Loebenstein responds to the evidence of Mr Efron where he deposes that the Properties are the principal source to discharge the liabilities referred to in the orders made by the FCFCOA in August 2018. Mr Loebenstein states that in the normal course of a winding up of a company, as liquidator, he is required to consider and then to either accept or reject any creditors’ proofs of debt and repeats his earlier evidence in this regard that proofs of debt have been already submitted by Mr Davis, the SRO and the ATO. To the extent that any surplus remains after the creditors’ claims have been paid out, then, before the finalisation of the winding up, he will apply to the Court for leave to pay any surplus funds into Court or for such surplus to be dealt with in such other manner at the Court determines. Such an order is sought to this effect in the originating process commencing this proceeding.

Mr Loebenstein states that since the commencement of the winding up, he has been receiving rental payments in respect of the Properties and attending to the payment of expenses incurred in the winding up, including expenses related to the Properties. He exhibits a copy of his records of receipts and payments for the administration for the period from his appointment until 20 May 2021. Mr Loebenstein states that shortly after his appointment on 10 July 2019, he took control of Farley Bay’s bank account maintained in its name at the William Street branch of the Commonwealth Bank of Australia. At the time of his appointment, Mr Loebenstein states that the balance of the account was approximately $260. He is not aware of any other bank accounts held by Farley Bay.

Mr Loebenstein concludes his affidavit with the observation that he is concerned that if the proceeding is transferred to the FCFCOA, he will nonetheless be required to seek orders of a like nature to those orders being sought by him in the originating process in this proceeding from that Court. Mr Loebenstein observes that this will potentially occasion delay and expense that otherwise may be avoided. In particular, he has a concern that the transfer of this proceeding to the FCFCOA has the potential to unnecessarily delay the steps identified by him as being necessary for the proper conduct of the winding up and its finalisation.

Evidence of Mr Brett, the solicitor for Mr Michell, the trustee of the bankrupt estate of Ms Freeman, in opposition to Mr Davis’ interlocutory application

Mr David Brett is the solicitor for Mr Michell, the trustee in bankruptcy of Ms Freeman. In his affidavit sworn 21 May 2021, Mr Brett contends that Mr Michell is an interested party in these proceedings as the proceedings affect funds which will ultimately be available to the bankrupt estate of Ms Freeman pursuant to FCFCOA orders between Mr Davis and Ms Freeman and I accept that contention.

Mr Brett responds to Mr Efron’s affidavits affirmed 22 April 2021 and 4 May 2021. Mr Brett refers to the reasons for judgment of the FCFCOA judge, where he identifies the assets and liabilities that were agreed to by Mr Davis and Ms Freeman. He notes that there is no reference to the items referred to in Mr Efron’s affidavit, in particular, the items mentioned at paragraphs 9(d), (e) and (g). Mr Brett surmises that the reason for this is that they were no longer available for distribution between the parties.

Mr Brett states that in the FCFCOA proceeding, there have been 24 applications made by the parties, 18 of which were made by Mr Davis and six by Ms Freeman. Since December 2016, Mr Davis has issued 12 applications and Ms Freeman has issued none.

As to the evidence in Mr Efron’s affidavit relating to the ’disappearance’ of money in Farley Bay’s bank account, Mr Brett states that this was the subject of consideration in the FCFCOA judge’s reasons and dealt with in the FCFCOA proceeding. Similarly, the rents from the Properties are considered in the FCFCOA judge’s reasons, but, rather than being $1.05 million as referred to in Mr Efron’s affidavit, are noted to be $850,000.

Mr Brett refers to the FCFCOA judge’s reasons, where reference is made to Mr Davis and Ms Freeman’s youngest child, where his Honour stated that given the proximity of the child’s 18^th birthday, his Honour did not consider that Mr Davis’ care of that child should be a relevant factor. The reasons also noted that Ms Freeman has the permanent care of another child who resides with Ms Freeman who has special needs. In addition, the ill health of Mr Davis was the subject of consideration by the FCFCOA judge in his reasons.

As to the income protection payments referred to by Mr Efron, Mr Brett refers to various paragraphs of the FCFCOA judge’s reasons that considered that issue. The income protection payments ceased in March 2014. The FCFCOA judge observes in his reasons that ’the wife alleges that the insurer was obliged to continue payments until the husband turned 65 years of age’ and that would occur in 2017. The reason given by the insurer for the termination of payments was that the insurance agreement was void by reason of non‑disclosure and the suggestion had been made that the insurer may seek to recover $1,265,707 paid under the policy.

Mr Brett refers to the settlement of the VCAT proceeding in respect of the claim for faulty workmanship at the Caulfield North house and states that they are considered in detail by the FCFCOA judge in his reasons, where it was noted that, of the $90,000 settlement funds, after payment of legal fees, only $26,502 was paid into an account in the name of Ms Freeman. The FCFCOA judge concluded that Ms Freeman was entitled to conduct and conclude the VCAT proceeding.

Mr Brett observes that Mr Davis was declared bankrupt in December 2010 and was discharged from bankruptcy in December 2013 and that, by operation of the Bankruptcy Act 1966 (Cth), any assets of Mr Davis vested in his trustee in bankruptcy upon his bankruptcy.

Mr Brett states there is no indication in Mr Efron’s affidavit as to how Mr Davis had contributed any funds subsequent to the discharge from his bankruptcy in December 2013 and prior to the lodgement of a caveat by him on 31 January 2014, which would have given rise to an entitlement on Mr Davis’ part to have any claim to the Properties pursuant to any implied, resulting or constructive trust, the grounds referred to in the caveat lodged by Mr Davis.

Mr Brett observes that in his statement of affairs to his trustee in bankruptcy, Mr Marchesi, Mr Davis does not disclose any interest in the Properties nor does he do so in the agreed statement of assets and liabilities which are referred to by the FCFCOA judge. The Properties are noted in the FCFCOA judge’s reasons as being the property of Farley Bay. Mr Brett contends there is no basis for any claim by Mr Davis in relation to the Properties.

Mr Brett contends that in Mr Efron’s affidavit, there are no matters which relate to the liquidation of Farley Bay or the realisation of assets of Farley Bay’s property or to the payment of creditors in accordance with the provisions of the Corporations Act. As such, Mr Brett contends there are no issues which ought to affect the continuation of the liquidation pursuant to the Corporations Act. As to Mr Efron’s contention as to a commonality of many of the issues raised in this proceeding and the FCFCOA proceedings, he notes that Mr Efron does not detail any such commonality or identify any potential conflicting findings that may warrant a transfer of the proceedings.

In a subsequent affidavit sworn 6 August 2021, Mr Brett makes reference to a mediation which was proposed to be conducted in the FCFCOA proceeding in July 2021. Mr Brett states that that mediation was vacated the day prior by an order of a Senior Registrar of the FCFCOA. Subsequently, in July 2021, Mr Brett received a call‑over notice from the FCFCOA indicating that the matter was to be called over again and that the matter may be referred to further judicial mediation. As of the date of Mr Brett’s affidavit, no fixed date had been appointed for the conduct of the mediation.

The affidavit of Mr Davis’ solicitor

On 14 October 2021 Mr David Leggatt swore an affidavit indicating that he was now retained by Mr Davis in the proceeding. Mr Leggatt also acts for Mr Davis in the FCFCOA proceeding where he is the applicant under s 90SN, Ms Freeman is the respondent and Mr Michell is Ms Freeman’s trustee in bankruptcy.

Mr Leggatt exhibits a copy of Mr Davis’ amended Initiating Application pursuant to s 90SN in the FCFCOA. Because of its significance to Mr Davis’ application by interlocutory process in this proceeding, I shall set out the terms of the interlocutory and final relief which it seeks:

Final orders sought
1.Leave be granted for the Applicant De Facto husband to seek orders under Section 90 SN(1).
2.That the final property Orders made by [the FCFCOA judge] on … August 2018 (“the Final Orders”) be set aside or varied under Section 90 SN(1) and the Court make such other order as it thinks fit under Section 90 SM in substitution for the Final Orders or such part thereof as may be set aside.
3.That the Respondent Wife do all acts and things and sign all documents necessary as may be required to transfer to the Applicant Husband the property situated at [the residential address].
4.That forthwith upon registration of the [the residential address] property in the name of the Applicant Husband pursuant to paragraph 3 above, the Respondent Wife do all acts and things and sign all documents necessary as may be required to transfer all rights, title and interest in the [the residential address] property to the Applicant Husband, free of any encumbrance, at her expense.
5.That the Respondent wife pay such further sum and/or transfer such further property to the Applicant Husband as the Court deems just and equitable pursuant to Section 90 SM of the Family Law Act 1975 (Cth).
6.Any other orders as this Honourable Court deems fit.
7.That the Respondent Wife pay all costs of this application which this Honourable Court may order to be paid to the Applicant Husband or any other party to this application or to any other person.

Interim or procedural orders sought
1.Leave be granted for the Applicant De facto husband to seek orders under Section 90 SN(1).
2.That the final property Orders made by his [the FCFCOA judge] on … August 2018 (“the Final Orders”) be set aside or varied under Section 90 SN(1) and the Court make such other orders as it thinks fit under Section 90 SM in substitution for the Final Orders or such part thereof as may be set aside.
3.That the Respondent wife provide authority to the Liquidator of Farley Bay Pty Ltd (“Farley Bay”) to provide to the Applicant’s Solicitor all documents that pertain to the liquidation of Farley Bay.
4.That pursuant to Section 90 SM of the Family Law Act 1975 (Cth) the Trustee of the Bankrupt Estate of the Respondent Wife, Stephen John Michell be joined as a party to this proceeding.
5.That the Respondent wife make discovery of all documents in her possession or power referable to the liability of Farley Bay to the State revenue Office of Victoria (“the SRO”) or to the application of the SRO to the Supreme Court of Victoria for an order that Farley Bay be wound up and any communication between the Respondent wife and the Liquidator after the making of the said winding up order.
6.That the Respondent wife make discovery of all documents in relation to her dealing with the Trustee in Bankruptcy as of the date of this Order and ongoing.
7.That the Respondent wife personally or in her capacity as director of Farley Bay Pty Ltd or through her servants, or agents make discovery by sworn Affidavit within 7 days of the date of the Court making this Order of all documents in her possession or power relating to the alleged settlement with the Australian Tax Office (“ATO”) the subject to paragraph 1 (c) of the final Orders.
8.That the Respondent wife and/or her current or former solicitor account for the balance of the funds ordered by [the FCFCOA judge] on 08/02/16 to remain in an interest bearing trust account operated by the Respondent Wife’s solicitor.
9.That the Respondent Wife return within seven days all of the funds taken by her on 21 September 2019 from the interest bearing trust account (050218), operated by her former solicitors, [name of solicitors] and that the funds returned be held in a new interest bearing trust account held by the Applicant Husband’s Solicitor or alternatively be paid into this Honourable Court to the credit of the present proceedings.
10.That [the former solicitors of Ms Freeman] return forthwith all of the funds taken by them either at the direction of the Respondent Wife or otherwise between 14 September 2018 and 1st October 2018 from the interest bearing trust [sic] … held by them at that time and that the funds returned to be held in a new interest bearing trust account held by the Applicant Husband Solicitor (“New Trust Account”) or alternatively be paid into this Honourable Court to the credit of the present proceedings. And further the said [former solicitors of Ms Freeman] communicate in writing and confirm to the applicant Husbands [sic] solicitor no later than two days from the making of this Order by the Court compliance [sic] with the terms of this Order.
11.That the Respondent Wife forthwith do all such acts and things and sign all such documents as may be required to transfer to the Applicant Husband the Respondent Wife’s rights and entitlements under the MLC policy previously held by the Applicant Husband.
12.That this Amended application be heard by a Judge on an urgent basis.
13.That the Applicant Husband be paid $100,000.00 for spousal maintenance from the New Trust.

Mr Leggatt states that a judicial mediation was conducted in October 2021 before a Senior Registrar of the FCFCOA and the matter did not resolve, but that settlement discussions were continuing. Ms Freeman did not personally participate in the mediation and Mr Leggatt does not anticipate she will take part in the FCFCOA proceeding.

Mr Leggatt states that the parties to the FCFCOA proceeding requested the Senior Registrar to provide a hearing date for an application by Mr Davis under s 90SN of the Family Law Act for variation of the orders of the FCFCOA judge.

Following the first return of this application, despite several adjournments for the purposes of negotiating a resolution of Mr Davis’ transfer application and the application by Mr Loebenstein, the parties are at an impasse. Mr Leggatt apparently assumed conduct of the matter on behalf of Mr Davis after 22 September 2021, when Efron & Associates wrote to Mr Serong, solicitor for the liquidator. On 22 September 2021, Efron & Associates detailed a proposal for resolution in the form of an open letter, which is exhibited to Mr Leggatt’s affidavit. Mr Leggatt states that Mr Davis has made an offer to Mr Loebenstein that if he agreed to the transfer to the FCFCOA, he will make various concessions.

In that letter, Mr Efron outlines, on an open basis, the position being adopted by Mr Davis in regard to the various issues arising. He begins by identifying the matters about which there appears to be no disagreement:

(a) Mr Davis accepts the appointment of Mr Loebenstein to Farley Bay and Mr Loebenstein charging his reasonable fees against the assets of Farley Bay;

(b) Mr Davis accepts Mr Loebenstein is responsible for determining third party claims and he seeks that Mr Loebenstein consult with Mr Davis and his advisors before determining the claims of the ATO against Farley Bay for the financial years 2017 to date;

(c) Mr Davis accepts the proof of debt for approximately $246,000 that the ATO has lodged in the liquidation of Farley Bay. He also accepts that Mr Loebenstein will prepare and lodge Farley Bay’s tax returns for the financial years 2017 to date;

(d) Mr Davis accepts that there will be a continuity of the liquidation when the matter is transferred to the FCFCOA pending either discharge of the liquidator by resolution and/or determination and orders made by the FCFCOA; and

(e) Mr Davis also recognises and accepts that all bona fide creditors of Farley Bay will be paid from its assets.

Mr Leggatt then states that there is disagreement as to the timing and source of the funds from which the creditors and Mr Loebenstein will be paid. In that regard he states that Mr Davis’ preferred course is that no properties of Farley Bay are sold by reason that the sale of any property will not only attract considerable capital gains tax (which an apportionment of assets by the FCFCOA would not) and additional costs and expenses such as advertising, agent’s commissions, legal fees and the like, but would also entail delay before any settlement which would consequently delay the FCFCOA proceeding.

Instead, it is proposed that the Properties be dealt with by the FCFCOA and in accordance with its orders. If it is dealt with in that way, it is contended this will be more efficient and not result in additional expenses, such as capital gains tax and sales costs. Further, it is said that this course will not ’pre-empt’ the orders of the FCFCOA and will leave that Court with more flexibility to fashion appropriate orders that accommodate the interests of all the stakeholders and interested parties.

As to the claims of creditors and Mr Loebenstein’s remuneration, Mr Davis’ position is that he cannot agree that they be paid before the transfer to the FCFCOA. With respect to remuneration, it is Mr Leggatt’s understanding that Mr Loebenstein has already received approximately $350,000 in rental income during the liquidation, that none of this money has been used to discharge creditors’ claims and it is therefore assumed that the remuneration has been paid thus far from the rental. Mr Leggatt states that considering that there will be a continuity of rental income, Mr Davis has no basis for objecting to payments from those funds being made to defray creditors’ claims either.

In submissions filed on behalf of Mr Davis on 6 October 2022, it was stated that such concessions were made with the intention that if certain matters were agreed to by Mr Loebenstein, such concession would be made by Mr Davis with the result that the application would not need to proceed.

Mr Davis’ submissions in support of the application to transfer to the FCFCOA

Mr Davis’ counsel, Mr Möller, observed that in his judgment, the FCFCOA judge, in identifying Ms Freeman’s assets, included the Properties (valuing them at $3.345 million). His Honour also identified liabilities to the ATO of $2,513,773 and school fees of $30,852.

In concluding his reasons, as regards the Properties, the FCFCOA judge observed as follows:

[364]The wife seeks to retain her interest in Farley Bay. However, given the ATO liability and the money outstanding to her solicitors it is likely that the sale of various Farley Bay properties will be necessary.
[365]Given the competing claims of the parties to Farley Bay, it is reasonable if the wife intends to sell any of the Farley Bay properties that the husband has the first option to purchase at the valuation amount.
[366]The wife will be obliged to complete the settlement declaration with the ATO and will indemnify the husband in respect of any outstanding ATO liability.

Mr Möller observes that the FCFCOA judge proceeded to make orders for the distribution of assets between Mr Davis and Ms Freeman providing that:

(a) Mr Davis pay Ms Freeman $614,197;

(b) Ms Freeman was to execute a settlement agreement with the ATO in respect of the taxation liabilities including those of Farley Bay and other companies, and to indemnify Mr Davis in respect of any taxation liabilities in relation to the companies;

(c) Mr Davis was to withdraw the caveats lodged over all property owned by Ms Freeman or Farley Bay;

(d) the shares in Farley Bay be transferred to Ms Freeman;

(e) if in discharge of Ms Freeman’s liability to the ATO or in respect of her other liabilities, she proposed to sell any or all of the properties held by Farley Bay, then Mr Davis was to have an option and right of first refusal to purchase the property or properties at values specified by the Court; and

(f) the FCFCOA judge had stated that the order about the settlement agreement with the ATO was made because ‘during the trial the [FCFCOA] was informed that Ms Freeman had reached the settlement with the [ATO] to meet outstanding tax liabilities of herself and related companies totalling $2,513,773’.

Mr Möller contended that the orders were predicated on her signing that agreement. The only principal assets available to meet that liability were those held by Farley Bay.

Mr Möller referred to Mr Davis’ appeal from the judgment of the FCFCOA judge and the stay of the FCFCOA judge’s orders. In September 2019, by orders made by a judge in the FCFCOA proceeding, Mr Davis was given leave to withdraw the appeal without prejudice to his right to reinstate it. Mr Möller contended that the reason for Mr Davis making application under s 90SN of the Family Law Act seeking to set aside or vary the FCFCOA judge’s orders was because Ms Freeman had failed or refused to sign the settlement agreement with the ATO.

Mr Möller says that the application under s 90SN will canvass several issues including what became of monies, including rent from the Properties and payments from insurance policies taken out by Mr Davis for trauma and income protection that were paid into and disbursed from Farley Bay’s bank accounts. Mr Möller says that the application under s 90SN will also consider the question of Mr Davis’ interest in the Properties which, it is contended, were purchased from funds he provided as well as the alleged disbursement of funds in breach of orders of the FCFCOA.

Mr Möller states that Mr Davis has served subpoenas in the s 90SN application, including on Ms Freeman’s former solicitors and Farley Bay’s former accountants, PKF. PKF were also the Court’s sanctioned experts in the FCFCOA proceeding tasked with determining the relevant taxation liabilities. It was contended that the documents which have been produced pursuant to subpoena suggest that no final agreement was ever reached between Ms Freeman and the ATO.

Mr Möller then moved to the subject of the liquidation of Farley Bay, submitting that the claims in the winding up are relatively small, being a liability of approximately $250,000 to the ATO up until 2016 (with its claim for the period since then not yet being quantified); to the SRO claiming approximately $53,000; and other claims for council rates, utilities, and body corporate fees totalling $55,000. As against this, Mr Davis asserts claims of approximately $2.4 million against Farley Bay and an interest by way of constructive trust in its assets. He notes that in 2013, and again in 2015, before the liquidation of Farley Bay, Mr Davis lodged caveats over the Properties to protect his interest.

Mr Möller submits that there is no dispute that the Properties owned by Farley Bay are worth an amount in the order of several million dollars and that the liquidation is therefore likely to produce a surplus. Indeed, Mr Loebenstein has indicated that to the extent that any surplus remains after the creditors’ claims have been paid out, he will apply to the Court for leave to distribute any surplus by payment into Court or be otherwise dealt with as the Court determines. He notes that Mr Davis had sought to amend his s 90SN application to seek an order that Farley Bay’s liquidator, Mr Loebenstein, be joined to the FCFCOA proceeding.

Mr Möller’s submissions then considered to the relevant statutory provisions in respect of the transfer of proceedings and the authorities applying those provisions. While Mr Davis’ interlocutory process makes reference s 5(1) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Vic), which provides for the transfer by a Supreme Court to the Federal Court of Australia or the FCFCOA, the application essentially relied on s 1337H of the Corporations Act.

Section 1337H of the Corporations Act empowers the Federal Court of Australia or a State Supreme Court to transfer ‘a civil matter arising under the Corporations legislation’ to another court. Subsection 1337H(1) and (2) provides:

(1)This section applies to a proceeding (the relevant proceeding) in a court (the transferor court) if:
(a) the relevant proceeding is:
(i)a proceeding with respect to a civil matter arising under the Corporations legislation; or

(ii) a subsection 1337B(3) proceeding; and

(b)       the transferor court is:
(i)        the Federal court; or
(ii)       a State or Territory Supreme Court.

(2)Subject to subsections (3), (4) and (5), if it appears to the transferor court that, having regard to the interests of justice, it is more appropriate for:
(a) the relevant proceeding; or
(b) an application in the relevant proceeding;
to be determined by another court that has jurisdiction in the matters for determination in the relevant proceeding or application, the transferor court may transfer the relevant proceeding or application to that other court.[4]

[4]Subsections (3)–(5) relate to ‘subsection 1337B(3) proceedings’, which are concerned with applications for review of administrative decisions made by Commonwealth authorities or officers and have no application in this case.

Section 1337L provides that, in deciding whether to transfer a proceeding under s 1337H, a court must have regard to:

(a) the principal place of business of any body corporate concerned in the proceeding or application;

(b) the place or places where the events that are the subject of the proceeding or application took place; and

(c) the other courts that have jurisdiction to deal with the proceeding or application.

Section 1337M provides:

A court may transfer under section 1337H, 1337J or 1337K a proceeding or application:
(a) on the application of a party made at any stage; or
(b) of the court’s own motion

Mr Möller made reference to the decision of Anderson J of the Federal Court in Yeo, Armstrong and Shaw Pty Ltd (in liq) v Whiteman (‘Armstrong and Shaw’).[5] Armstrong and Shaw involved an application under ss 90-15 and 90-20 of the IPSC. That case bears some similarities to the scenario in this proceeding. The liquidators of several companies commenced a proceeding in the Federal Court alleging the entitlement of the liquidated companies to the proceeds of sale of certain properties in the name of the first defendant, Mr Whiteman, who was alleged to be a de facto director of each company. The liquidators alleged that funds from the companies were used to finance the purchase of the properties. The second and third defendants were former de facto partners of the first defendant and had commenced proceedings in the FCFCOA alleging that they had an interest in the properties. The question for consideration was whether, ‘having regard to the interests of justice’, it was more appropriate that the liquidators’ proceeding be determined in the FCFCOA.
[5][2020] FCA 849 (‘Armstrong and Shaw’).

Anderson J stated that the proceeding involved a ‘civil matter arising under the Corporations legislation’ for the purpose of s 1337H. His Honour stated:

The present proceeding, which involves an application under, primarily, ss 90‑15 and 90‑20 of the Insolvency Practice Schedule (Corporations) (IPS) (being Sch 2 to the Corporations Act), relates to a “civil matter arising under the Corporations legislation” for the purposes of s 1337H(1)(a)(i). (Section 9 of the Corporations Act defines a “civil matter” as “a matter other than a criminal matter”. Also, although the s 9 definition of “Corporations legislation” does not refer to the IPS by name, the IPS forms part of the Corporations Act: see s 600K of the Corporations Act.)[6]

[6]Ibid [27].

Mr Möller noted that the power under s 1337H(2) may only be exercised to transfer a proceeding to ‘another court that has jurisdiction in the matters for determination in the relevant proceeding or application’. He referred to s 1337C(1) which provides that the FCFCOA has jurisdiction to hear matters under the Corporations Act.[7]
[7]Ibid [28].

Mr Möller then referred to Anderson J’s summary of the principles relating to the exercise of a power under s 1337H(2) and the concept of ‘the interests of justice’. In identifying the relevant factors for consideration in determining whether a proceeding should be transferred, Anderson J referred to the decision of McKerracher J in Yara Pilbara Fertilisers Pty Ltd:[8]
[8]Yara Pilbara Fertilisers Pty Ltd (formerly known as Burrup Fertilisers Pty Ltd) v Oswal (No 8) [2015] FCA 49 (‘Yara Fertilisers’).

Section 1337H(2) confers a wide discretion to transfer proceedings where, “having regard to the interests of justice”, it is “more appropriate” for the proceeding to be heard by the other court. The meaning of “the interests of justice” in the context of the transfer of proceedings has been considered on many occasions in different statutory schemes: see, in particular, BHP Billiton Ltd v Schultz [2004] HCA 61; 221 CLR 400.
Recent examples of the consideration of the transfer of proceedings from this Court to other courts under s 1337H(2) of the Corporations Act include Hancock Prospecting Pty Ltd v 150 Investments Pty Ltd [2017] FCA 520; 120 ACSR 495 per Yates J and Bell Group NV v Bell Group Finance Pty Ltd, Re Western Interstate Pty Ltd [2018] FCA 1440; 130 ACSR 586 per McKerracher J. Both of those decisions referred to the following guiding principles summarised by McKerracher J in Yara Pilbara Fertilisers Pty Ltd (formerly known as Burrup Fertilisers Pty Ltd) v Oswal (No 8) [2015] FCA 49 (in which his Honour transferred a proceeding to the Supreme Court of Victoria):
[24]The leading authority which canvasses many of the issues to be taken into account is BHP Billiton Ltd v Schultz (2004) 221 CLR 400. As the case law reflects, it is necessary to conduct a balancing exercise between relevant factors that inform as to whether or not it is in the interests of justice to transfer a proceeding. The weighing of considerations, such as cost, expense and convenience, even when they conflict, is a familiar aspect of the kind of case management involved in many cross‑vesting applications: BHP per Gleeson CJ, McHugh and Heydon JJ (at [19]). While BHP considered the cross-vesting regime, for practical purposes the criteria for determining whether a proceeding should be transferred are broadly consistent with the criteria for determining cross-vesting: see Dwyer v Hindal Corporate Pty Ltd (2005) 52 ACSR 335 per Debelle J (at [13]). The question is essentially practical, or in the words used in BHP, it is essentially a ‘nuts and bolts’ management decision as to which court, in the pursuit of the interests of justice, is the more appropriate to hear and determine the substantive dispute: BHP per Gleeson CJ, McHugh and Heydon JJ (at [13]); Bankinvest AG v Seabrook (1988) 14 NSWLR 711 per Street CJ (at 713–714). The ‘interests of justice’ is an expression to be interpreted broadly: BHP per Gleeson CJ, McHugh and Heydon JJ (at [15]).
[25]The Court should not approach the transfer question with any presumption as to where the interests of justice lie: BHP per Gleeson CJ, McHugh and Heydon JJ (at [25]). It is not a circumstance in which an applicant has an onus of persuasion analogous to an onus of proof: BHP per Gummow J (at [71]). The disposition of an application for transfer of a proceeding does not require weight to be given to the plaintiff’s choice of forum, which is essentially a neutral factor: BHP per Kirby J (at [168]) and per Gummow J (at 77).
[26]As I noted in Cmr of Taxation v Residence Riverside Proprietary Ltd as Trustee for the D& J Discretionary Trust and as Trustee for the D&J Investment Trust [2013] FCA 720 (at [17]), this Court has previously recognised many factors as being relevant to the decision, which will vary in weight from case to case, including:
(1)the stage of the proceedings in the respective courts;
(2)the commonality or diversity of the parties;
(3)the nature of the proceedings;
(4)the commonality or diversity of issues;
(5)the risk of conflicting findings of fact or conflicting orders;
(6)a costs benefit analysis;
(7)the potential unnecessary drain on judicial and other public and private resources; and
(8)whether there is any particular judicial expertise residing in one court of the other.[9]

[9]Armstrong and Shaw (n 5) [29]–[30].

The principles identified were applied by Markovic J in Shepard, Re Grainpro Pty Ltd (in liq) v Bonfante,[10] in circumstances where an insolvent trading claim was transferred to the FCFCOA.
[10][2020] FCA 1618.

Mr Möller also referred to the decision of Rees J in Re Peter G Ward Industries Pty Ltd,[11] in which her Honour considered several authorities on cases where corporations proceedings had been transferred to the FCFCOA. At [27]–[31], her Honour stated:
[11][2020] NSWSC 339 (‘Re Peter G Ward Industries’).

In respect of matters concerning the Corporations Act particularly, the Court may have regard to whether third parties are involved, such as creditors or shareholders, whose interests may be adversely affected by being compelling to become actively involved in a private dispute between spouses in the Family Court: Roff v Aqua Distributors Pty Ltd (1996) 14 ACLC 1769; (1996) 22 ACSR 248 at 250 per Merkel J. In that case, Merkel J transferred an oppression suit from the Federal Court to the Family Court where the corporation was a family company owned and operated by the former husband and wife, no third parties were involved, and the hearing in the Family Court proceedings was imminent.
This approach was followed by Gyles J in Re Tech Universal (HK-Macau) Development Pty Ltd v Tech Universal (HK-Macau) Development Pty Ltd (2005) 53 ACSR 704; [2005] FCA 256 , where an application to wind up a dormant family company was transferred to the Family Court where proceedings had already been on foot for about five years. Gyles J noted at [9]:
… Where a company is trading actively on a substantial scale or where a real question of insolvency arises serious consideration would be required before a winding-up proceeding would be transferred to the Family Court.

However, Gyles J considered that the basis of the application to appoint a liquidator was “very much entwined with the kind of claims and counter-claims between the parties which will fall for assessment by the Family Court” and concluded that a transfer was in the interests of justice: at [10]. The same approach was taken by Black J in Re Webster Consolidated (Holdings) Pty Ltd [2016] NSWSC 376 , where his Honour transferred an application to set aside a statutory demand to the Family Court.

Third factor: the nature of proceedings

Mr Serong observes that the FCFCOA proceeding is a proceeding between the de facto husband and the de facto wife concerning entitlements arising out of their relationship. On the other hand, Mr Loebenstein’s application is a proceeding seeking orders and directions in connection with the winding up of Farley Bay in order that the winding up may proceed with greater certainty.

Fourth factor: the commonality or diversity of the issues

Mr Serong observes that the matters to be resolved in the FCFCOA proceeding involve the determination of Mr Davis’ entitlements arising out of that relationship. He states that it is apparent from the judgment of the FCFCOA judge and the orders made by the judge that the matter before the FCFCOA involved claims by the parties arising out of their relationship, including any claim one or either of them had to the other’s matrimonial property and any interest arising out of Farley Bay represented by the shares. In the FCFCOA proceeding it was noted that shares were held by a third party and an order was made for the transfer of those shares to Ms Freeman after consideration of the respective assets and liabilities of the de facto spouses. This entailed a consideration of the entitlement of the parties to the benefits of their involvement in Farley Bay as represented by the shares in the company. Mr Serong contends that it is implicit that the company was in surplus, the creditors were to be paid, and the proper resolution of the de facto spouses’ claims would proceed on a basis which included a transfer of any surplus as represented by the shares. Accordingly, he contended, the assets of Farley Bay are not an issue in the FCFCOA proceeding, whereas the shares and the capital of the company (which reflect any surplus) are in issue.

Mr Serong observes that Mr Loebenstein is required to undertake the winding up and to deal with the assets of Farley Bay as provided for by the Corporations Act and to pay out creditors their claims and hold any surplus for its member or members. In the unusual but not unprecedented event of there being a surplus, Mr Loebenstein is required to obtain a court order before distributing any surplus to members by application of s 488(2) of the Corporations Act.

Mr Serong submits his client’s application for orders and directions to facilitate the winding up requires resolution of the following issues:

(a) the validity of Mr Loebenstein’s appointment as liquidator to Farley Bay and his right to deal with Farley Bay’s assets, including selling and leasing real property;

(b) the creation or reconstruction of the accounts of Farley Bay;

(c) determination of Mr Davis’ claim to an equitable interest in the assets of Farley Bay and consideration of his proof of debt;

(d) a transfer of shares in Farley Bay; and

(e) the application of the assets of Farley Bay to meet the costs of the winding up and distribution of any remaining surplus.

Mr Serong contends that there is no commonality of issues between the two proceedings and that this Court is the appropriate forum to determine the issues above in respect of which Mr Loebenstein seeks orders and directions in his originating process.

Fifth factor: risk of conflicting findings of fact or conflicting orders

Mr Serong contended that as there is no commonality of issues between the two proceedings, there is no risk of conflicting findings of fact or conflicting orders. In this regard, insofar as Mr Davis contends that the assets of Farley Bay are the subject of the FCFCOA proceeding, this is not accepted by Mr Loebenstein for the reasons outlined earlier. Mr Serong submits that, insofar as Mr Davis contends that his claims to the assets of Farley Bay should be determined by the FCFCOA, those matters are already before the FCFCOA. Again, this is not accepted by Mr Loebenstein for the reasons put forward earlier. Mr Loebenstein submits that there is, on this basis, no risk of conflicting findings of fact or conflicting orders.

Therefore, Mr Serong submitted, this Court is the appropriate jurisdiction to resolve those issues between Mr Loebenstein and Mr Davis, namely Mr Davis’ claim to an equitable interest in the Properties and his apparently conflicting claim to rank as a creditor in Farley Bay. In this regard, Mr Loebenstein again observes that:

(a) to date, Mr Davis has taken no steps to join Farley Bay to the FCFCOA proceeding and did not seek to vary his amended Interlocutory Application in the FCFCOA proceeding seeking leave to join Mr Loebenstein until April 2021;

(b) the proof of debt process is the appropriate process to deal with Mr Davis’ claim to be a creditor of the company and this Court can properly consider the claim by Mr Davis to have an equitable interest in the assets of Farley Bay; and

(c) the resolution of these matters by this Court does not prejudice the parties to the FCFCOA proceeding and indeed is consistent with the manner in which that that proceeding has been conducted to date or at least until 29 April 2021 when the amended Initiating Application was further amended to seek an order joining Mr Loebenstein.

Sixth factor: the cost/benefit analysis

Mr Serong contends that the Corporations Act provides a mechanism for the cost effective and efficient winding up of companies, including the proof of debt process and the ability of a liquidator to seek orders and directions from the Court to facilitate the winding up where the liquidator considers it appropriate to do so. He observes that these processes enable the rights of any claimants to be considered, including creditors of a company and would in the normal course result in a more prompt and cost‑effective resolution of issues confronting the company than would otherwise be the case.

Mr Serong states that those issues involving Farley Bay are between the company and Mr Davis and do not involve, in the first instance, Ms Freeman or her trustee in bankruptcy and are not the subject of the FCFCOA proceeding. He contends that this Court is the appropriate forum for these issues to be resolved under the Corporations Act and any transfer of the proceeding to the FCFCOA runs the risk of additional cost, expense and delay as Farley Bay and Mr Loebenstein risk becoming embroiled in a wider range of issues that are not relevant to the winding up of Farley Bay.

Mr Serong states that prior to the winding up Farley Bay made no real attempt to address its outstanding taxation obligations or to attend to lodgement of taxation returns. He contends there it is a significant sum of money owing to the ATO from at least 2013 up to the commencement of the winding up and Mr Loebenstein has a liability to pay tax in respect of the period after the commencement of the winding up and taxation liabilities continue to accrue. Mr Serong observes there is also a potential liability for capital gains tax in the event of a sale of one or more of the Properties. A transfer of the proceeding to the FCFCOA may benefit one or both of the de facto spouses but will likely unduly delay any resolution of creditors’ claims and the payment to creditors.

Mr Serong contends that a transfer of the proceeding to the FCFCOA will not result in a prompt resolution of Mr Davis’ claim in respect of the any equitable interest in the assets of Farley Bay nor his proof of debt but may prolong it to the prejudice of the creditors and Mr Loebenstein who remains under a duty to continue with the winding up and to incur the expenses of it.

Seventh factor: potentially unnecessary drain on judicial and other public and private resources

Mr Serong observes for the reasons advanced in respect of the sixth factor, Mr Loebenstein contends that there is no unnecessary drain on judicial or other public or private resources as a consequence of the application to transfer the proceeding being refused, but rather that the reverse is true.

Eighth factor: whether there is any particular judicial expertise residing in one court or the other

Mr Serong acknowledges that the FCFCOA is a Chapter III court for the purpose of the Corporations Act. Nonetheless, he contends for the reasons advanced in respect of the sixth factor, that the courts primarily responsible for the administration of the Corporations Act (ie, this Court and the Federal Court of Australia) are more directly acquainted on a day-to-day basis with the supervision of external administrations and that this Court is the appropriate court to deal with matters arising in the course of the winding up of Farley Bay.

Mr Serong concludes with the observation that the transfer application should be refused and that it is interests of creditors for this proceeding to be heard and determined by this Court. He contends further that the orders and directions that Mr Loebenstein seeks should be considered by this Court as soon as the circumstances of the Court permit so that Mr Loebenstein can proceed with certainty with the winding up.

Submissions of the trustee of Ms Freeman’s bankrupt estate, Mr Michell

Mr Rubenstein of counsel, who appeared on behalf of Mr Michell, supported the position being put on behalf of Mr Loebenstein by Mr Serong. He placed much emphasis on the elements of delay and cost raised in Mr Loebenstein’s application in the event that the proceeding was transferred for hearing to the FCFCOA.

As to delay, Mr Rubenstein referred to the chronology identifying various events in the timeline commencing with Mr Davis’ bankruptcy in December 2010 and his discharge from bankruptcy in December 2013. The proceeding in the FCFCOA commenced in 2013 and sometime during that year, Mr Davis placed the first set of caveats on the Properties. New caveats were lodged on his behalf on 28 October 2015.

Mr Rubenstein observed that the hearing before the FCFCOA judge was conducted in 2017 and his Honour’s judgment, as well as final orders in the matter, were consequently delivered in 2018. The winding up of Farley Bay occurred in July 2019 but because of various impediments faced by Mr Loebenstein, there has been very little progress in the administration with substantial steps still required to be conducted, including realising of property to pay creditors.

Mr Rubenstein made reference to the FCFCOA judge’s reasons for judgment where he identified what he described as the existing legal and equitable interests of Ms Freeman and Mr Davis, including in respect of the Properties.[18] Mr Rubenstein contended that what Mr Davis contested in the proceeding before the FCFCOA judge is how the asset pool should be determined or divided; he did not contend that he had claims in respect of the Properties. The proceeding did not pertain to the ownership of the Properties and Mr Rubenstein contended that the reason for this would be that for the period between 2010 and 2013, during Mr Davis’ bankruptcy, if there was a claim by him for equitable entitlements or interests in those Properties, those interests would have vested in his trustee in bankruptcy.
[18]Exhibit ‘GDE-2B’ to the affidavit of Graeme David Efron affirmed 4 May 2021, 51 [285].

Mr Rubenstein referred to the orders which were made by the FCFCOA judge in August 2018 which implemented a determination by his Honour that there should be a 57% split to Mr Davis and 43% to Ms Freeman. The FCFCOA judge dealt with each item of property in turn. He first ordered that Mr Davis pay Ms Freeman $614,197 but Mr Davis has not paid that sum. Secondly, he ordered that the family home was to go to Mr Davis and Mr Davis apparently currently resides at that property. Mr Rubenstein then referred to the settlement agreement with the ATO the subject of paragraph 1(c) of the FCFCOA judge’s order concerning the requirement by Ms Freeman to sign the settlement agreement with the ATO in respect of discharge of taxation liabilities of $2,513,773 for various entities, including Farley Bay. There is also an order relating to withdrawal of caveats by Mr Davis against any property owned by Ms Freeman or Farley Bay but Mr Davis has not complied with that order. The orders then requires Panker Nominees and/or Panker Admin to transfer the shares in Farley Bay to Ms Freeman; this has not occurred. The balance of the orders deal with other items of property.

Mr Rubenstein focused on the factor of commonality in the issues before the FCFCOA and this Court. He referred to the languid pace at which the matters were being pursued in the FCFCOA by Mr Davis and contended that it would be in the interests of justice to have the matters which Mr Loebenstein sought to have determined be resolved by this Court.

Mr Rubenstein contended that Mr Davis does not appear to contend that the FCFCOA judge’s decision should be revisited by reason that he has an interest in Farley Bay. The only suggestion of it is a reference made in Mr Efron’s affidavit, where he states:

Many of the issues that will be raised in the section 90SN application concern funds received by Farley Bay or into its bank account, including the proceeds of Mr Davis’ insurance policies. There are also issues about the extent of Mr Davis’ interest in the properties owned by Farley Bay, which were purchased with funds that he provided.[19]

[19]Affidavit of Graeme David Efron affirmed 22 April 2021, [33].

Mr Rubenstein submitted that the position outlined by Mr Efron was never taken by Mr Davis in the FCFCOA proceeding before the FCFCOA judge and Mr Rubenstein is not aware of it being raised by Mr Davis as an issue in the s 90SN application.

In substance, Mr Rubenstein contended there is no necessity for the matters which are the subject of Mr Loebenstein’s proceeding to be considered by the FCFCOA. The FCFCOA proceeding involves an application to revisit the order made by the FCFCOA judge to consider other matters which might have occurred of more recent times since the handing down of the judgment. Mr Rubenstein contended that there is no reason to interfere with Mr Loebenstein’s process of resolving creditors’ claims, realising assets to pay creditors’ claims and then determining what assets remain.

When asked as to what Mr Michell’s prejudice was in the capacity as trustee of Ms Freeman’s estate, Mr Rubenstein responded that the nature of prejudice was cost and delay. As to cost, the longer that the liquidation continues the more costs are incurred. The effect of the delay in the liquidation has a direct financial impact upon the estate of Ms Freeman because the longer that the liquidation continues the more remuneration is incurred by the liquidator in the winding up of Farley Bay, the longer it will take to finalise its affairs and those of Ms Freeman.

The submissions of Mr Davis in reply

Mr Möller, responding to Mr Rubenstein’s submission concerning delay and prejudice, contended that the prejudice that Mr Michell as the trustee of Ms Freeman’s estate suffers arises from the delay in determination of the FCFCOA proceeding. If it was assumed that Mr Loebenstein was able to produce a surplus in the near future and it was paid into Court, there could be no distribution to the creditors of Ms Freeman’s bankrupt estate until the FCFCOA proceeding is determined one way or the other. The FCFCOA judge’s judgment assumed resolution of the position in respect of the ATO debt but this has not occurred. He observed that the ATO is the biggest creditor and the position of the ATO needs to be resolved. Part of that debt is comprised of liabilities owed by Farley Bay and Mr Möller contended that the participation of the liquidator in the FCFCOA proceeding will be assisted by a determination of those liabilities. It is only when the FCFCOA proceeding has been heard and determined, Mr Michell as Ms Freeman’s trustee will know how much money he has to distribute.

Mr Möller contended that Mr Loebenstein, if he is involved in the FCFCOA proceeding, will assist because he can indicate to the FCFCOA what the position is as to Farley Bay’s taxation liability and that can be brought to account in determining the liabilities of Ms Freeman and Mr Davis when it deals with the s 90SN application.

As to Mr Davis’ proof of debt, the FCFCOA as a Chapter III court is capable of dealing with that issue.

Consideration

The history of the litigation between Ms Freeman and Mr Davis in the FCFCOA has been extraordinarily protracted. It commenced in 2013 and, after numerous interlocutory applications, proceeded to hearing with judgment being delivered and orders being made in August 2018. Neither Ms Freeman nor Mr Davis have complied with their respective obligations under those orders since that time.

These reasons were originally intended to be published and orders made on 5 August 2022, but after hearing from the parties, the publication of my reasons and the making of orders has been stood over on two occasions for the purpose of the parties consulting and identifying aspects of Mr Loebenstein’s application which can be the subject of the agreement before the transfer to the FCFCOA. The purpose of this was to minimise the complexity of the matter to be transferred and enabling Mr Loebenstein to proceed with aspects of the liquidation of Farley Bay which are not the subject of controversy. Unfortunately, this has been to no avail.

Mr Davis has now embarked upon an application to revisit the FCFCOA judge’s orders under s 90SN of the Family Law Act. Although it is not expressly articulated in his s 90SN application, he has indicated that he wishes to agitate a proprietary claim in respect of the Properties on the basis that he has an implied, resulting, or constructive trust. Mr Davis also contends that he has a provable debt in a substantial sum in the administration of Farley Bay. Despite being pressed for particulars of those claims by Mr Loebenstein, no particulars have been provided.

Mr Loebenstein’s performance of his functions as liquidator has been stymied and frustrated by Mr Davis’ claims and have created an impasse in the progress and finalisation of the insolvency administration of Farley Bay. At the centre of the impasse is the fact that the Properties are the source of funds from which Mr Loebenstein is to meet the claims of creditors of Farley Bay.

Although the claims of Mr Davis in the current context can only be assessed on a prima facie level, I consider them to be weak and to face very significant obstacles. His asserted claim in respect of the Properties is not detailed or substantiated in his evidence, but is said to arise by reason that the Properties were purchased by Farley Bay on his behalf from funds derived by him in his former occupation. Mr Davis went bankrupt in 2010. He was discharged from bankruptcy in 2013, but those alleged interests were not disclosed to his trustee in bankruptcy. As has been observed by the representatives of Mr Loebenstein and Mr Michell, any interest which Mr Davis held in the Properties at or prior to that period would have vested in his trustee in bankruptcy and no claim to the Properties would now be available to him. Shortly after his discharge from bankruptcy, Mr Davis lodged the first series of caveats over the Properties, which asserted he had equitable interests in them. It is not explained how such interests could have survived his bankruptcy, or could have come into existence in such a short time after the conclusion of his bankruptcy. Further, Mr Davis’ claim to have a provable debt in the winding up of Farley Bay for $2.4 million is completely unparticularised and is unsubstantiated.

Although Mr Davis relied on both s 5(1) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Vic) together with s 1337H of the Corporations Act, the latter provision is the most apt for application in this application. Clearly, Mr Loebenstein’s application is a ‘civil matter arising under the Corporations legislation’ within the meaning of s 1337H.[20] Section 1337H of the Corporations Act provides a specific regime for the transfer of proceedings under the Corporations Act to, among other venues, the FCFCOA.[21] Section 1337H(2) provides that the power to transfer a proceeding can only be to a court which has jurisdiction in respect of the matters being transferred. Section 1337C(1) provides that the FCFCOA has jurisdiction to hear matters under the Corporations Act.
[20]See Armstrong and Shaw (n 5) [27].
[21]See the observations of Black J in ReWebster Consolidated (Holdings) Pty Ltd [2016] NSWSC 376, [5] (‘Webster Consolidated’) where he observed that little turns upon that, because the principles which will be applicable to a transfer of proceedings under s 5 of the Jurisdiction of Courts (Cross‑Vesting) Act 1987 (Vic) and s 1337H of the Corporations Act are substantially the same.

In my view, in the context of considering what is in the ‘interests of justice’ within the meaning of s 1337H(2) of the Corporations Act in the context of Mr Davis’ application, a predominate consideration is the necessity to break the impasse which has prevented Mr Loebenstein from conducting the winding up of Farley Bay to its conclusion.

In Valceski v Valceski,[22] Brereton J observed:

The question is simply whether, assuming the jurisdiction of the transferor court has been regularly invoked, it is in the interests of justice that the proceedings be heard and determined in the transferee court, there being a statutory obligation to transfer the proceedings to that court whenever it appears to be in the interests of justice to do so — for which purpose it is both necessary and sufficient that the transferee court be the “more appropriate” forum.[23]

[22](2007) 70 NSWLR 36.

[23]Ibid [69].

Black J, in Webster Consolidated,[24] a matter involving an application to transfer an application to set aside a statutory demand under s 459G of the Corporations Act to the then Family Court of Australia, observed as follows:

The power to transfer proceedings under s 1337H of the Corporations Act is discretionary rather than mandatory. That section applies to a proceeding which is a proceeding with respect to a civil matter arising under the Corporations legislation, and an application to set aside a creditor’s statutory demand plainly falls within that description. Section 1337H(2) provides that a matter may be transferred if it appears to the transferor court that, having regard to the interests of justice, it is more appropriate for the relevant proceeding to be determined by another court that has jurisdiction in the matters for determination in the relevant proceeding. It is common ground between the parties that the Family Court of Australia is a Court for the purposes of s 58AA of the Corporations Act and therefore has jurisdiction in the matter, as does this Court. Section 1337L of the Corporations Act in turn specifies further matters for the Court to consider in deciding whether to transfer proceedings under s 1337H, and requires a court to have regard to, relevantly, the other courts that have jurisdiction to deal with the proceeding or application.
The authorities have considered the matters which should be considered in determining a transfer of proceedings under s 1337H. In this case, no question arises, as would often be the case, as to transfer of proceedings to another state, since it is likely that proceedings would be heard in New South Wales in any event. However, relevant matters include which court is the most natural forum, which will often but not always involve a geographical test, and also convenience to the court system. Matters which will support a transfer include a substantial overlap between issues arising in proceedings in a different court, that it will be more efficient or less time consuming or less costly for the proceedings or issues to be resolved in another court, and that the risks of inconsistent findings will be removed if proceedings are heard or determined in another court: Roff v Aqua Distributors Pty Ltd (1996) 22 ACSR 248 (“Roff v Aqua Distributors”); Zhu v Tech Universal (HK-Macau) Development Pty Ltd [2005] FCA 256; (2005) 53 ACSR 704 (“Tech Universal”). In the latter decision, Giles J referred to observations of Merkel J in Roff v Aqua Distributors above in identifying relevant matters including overlap of issues in the relevant proceedings; the risk of inconsistent findings; and the width of the powers of the Family Court of Australia under the Family Law Act 1975 (Cth) in respect of property settlements, which equip it to resolve the ultimate dispute between the parties as to a particular company. Both of those proceedings involved the transfer of proceedings, in those circumstances from the Federal Court of Australia to the Family Court of Australia, although each is relevant here for its identification of the relevant factors, rather than for the result in the particular case.
The courts have recognised, in respect of the transfer of winding up applications, which was a matter considered in Tech Universal above, that it is desirable that all matters of controversy be determined in the one proceeding and a multiplicity of proceedings be avoided, but also recognised that it is less likely that winding up proceedings will be transferred if third party creditors’ or shareholders’ rights are involved. It is not clear on the evidence before me, whether the Company has substantial third party creditors, but it seems that its shareholding is closely held, between the parties to the Family Court proceedings.[25]

[24][2016] NSWSC 376.

[25]Ibid [7]–[9].

McKerracher J observed in Yara Fertilisers[26] that the court is required perform a balancing exercise between relevant factors that inform as to whether or not it is in the interests of justice to transfer a proceeding:

The question is essentially practical, or in the words used in [BHP Billiton Ltd v Schultz],[27] it is essentially a ‘nuts and bolts’ management decision as to which court, in the pursuit of the interests of justice, is the more appropriate to hear and determine the substantive dispute.[28]

[26]Yara Fertilisers (n 8).

[27](2004) 221 CLR 400.

[28]Yara Fertilisers (n 8) [24].

McKerracher J notes that an applicant bears no onus of persuasion analogous to that of an onus of proof; the disposition of an application for transfer of a proceeding does not require weight to be given to the plaintiff’s choice of forum which is essentially a neutral factor.

In Yara Fertilisers, McKerracher J identified eight factors which are relevant for consideration.[29] While those factors do not constitute anything in the nature of a code, I consider it is convenient to assess the position in respect of this proceeding and interlocutory application in the context of those factors as I consider that they are apt in the current context. I will consider each in turn.
[29]Which are extracted earlier in these reasons in paragraph 122.

First factor: the stage of the proceedings in the respective courts

The proceeding in the FCFCOA was commenced in 2013 and was the subject of a judgment by the FCFCOA judge in 2018 and is now the subject of the application by Mr Davis under s 90SN which was commenced in April 2021.

The proceeding, which is the subject of the application for transfer to the FCFCOA, was commenced in February 2021 in respect of a winding up in insolvency ordered by this Court in July 2019. Mr Loebenstein’s application in this proceeding is necessitated because Mr Davis takes up a position in respect of the Properties, which is at odds with Farley Bay being the beneficial owner of the Properties.

In submissions filed on behalf of Mr Davis on 6 October 2022, it was indicated that on 19 August 2022 and 24 August 2022, a FCFCOA judge made orders and directions in the FCFCOA proceeding, including a timetable for serving the amended application and affidavit material and consequential steps to be carried out by the parties in the period from 28 October 2022 to 30 January 2023. An order was made that the FCFCOA proceeding be listed before an FCFCOA judge for an estimated hearing time of two days commencing on 28 February 2023, with the proceeding to be bifurcated to hear the preliminary issue as to s 90SN of the Family Law Act.[30]
[30]Defendant’s counsel submissions filed 6 October 2022.

Second factor: the commonality or diversity of the party to undertake this process

Ms Freeman is a party to the FCFCOA proceeding and was a director of Farley Bay prior to her being declared bankrupt. Mr Michell is her trustee in bankruptcy and is involved in the FCFCOA proceeding, and is peripherally involved in Mr Loebenstein’s application. He supports Mr Loebenstein’s application for the matter to be resolved in this Court and has requested Mr Loebenstein to transfer the shares in Farley Bay to him in his capacity as trustee of Ms Freeman’s bankrupt estate. Mr Davis is one of the parties to the FCFCOA proceeding and is the defendant to Mr Loebenstein’s application.

Third factor: the nature of proceedings

This factor is the subject of detailed discussion above. In essence, Mr Loebenstein’s application seeks the protection of orders from this Court under ss 90‑15 and 90‑20 of the IPSC to enable him to realise the Properties in order to satisfy the claims of creditors. He has joined Mr Davis as the defendant to his application in order to obtain orders against him removing the impediments put up by Mr Davis to such a course, including removal of caveats and other relief. In the FCFCOA proceeding it is said that Mr Davis, when revisiting the orders of the FCFCOA judge of 2018, will contend that he has a proprietary claim in respect of the Properties, notice of which has been given under the caveats lodged by him.

Fourth factor: the commonality or diversity of the issues

The commonality of issues central in both the proceeding in this Court and the application by Mr Davis under s 90SN is the question of the beneficial ownership of the Properties. Mr Davis has only taken the position he now adopts of recent times the effect of which is to frustrate Mr Loebenstein’s interest as liquidator to realise the Properties. The position being contended for by Mr Davis in the tension with that adopted by Mr Loebenstein in respect of the beneficial ownership of the properties.

Fifth factor: risk of conflicting findings of fact or conflicting orders

It is conceivable that, if this Court proceeds to determine that Mr Davis has no interest in the Properties if Mr Loebenstein’s application proceeds in this Court, that the FCFCOA may come to a different view in that regard, which will obviously conflict with the findings of this Court.

Sixth factor: the costs benefit analysis

If this proceeding is not transferred to the FCFCOA and proceeds in this Court and the proceeding involving Mr Davis, Ms Freeman and her bankruptcy trustee proceeds in the FCFCOA and Mr Loebenstein is joined to that proceeding, there will be a duplication of costs.

Seventh factor: potentially unnecessary drain on judicial and other public and private resources

This factor is related to the factor involving the cost/benefit analysis. If Mr Davis continues to take the position he presently adopts and opposes Mr Loebenstein’s application in this Court while at the same time pursuing his application in the FCFCOA, it will involve what I would consider to be an unnecessary and unjustifiable duplication of judicial resources in both courts. If Mr Davis does not succeed in establishing that he has a proprietary interest in the Properties in his application in the FCFCOA, his primary basis for preventing Mr Loebenstein from proceeding to satisfy the claims of creditors by sale of one or other of the Properties and conclude the winding up of Farley Bay falls away. The FCFCOA also has jurisdiction to determine the position as to Mr Davis’ proof of debt and caveats which he has placed on the Properties.

Eighth factor: whether there is any particular judicial expertise residing in one court or the other

This Court has no jurisdiction under the Family Law Act and Mr Davis’ application under s 90SN will need to be dealt with by the FCFCOA. Both this Court and the FCFCOA have jurisdiction to deal with matters under the Corporations Act, although this Court exercises that jurisdiction far more frequently than the FCFCOA.

Mr Loebenstein, has stated that, putting aside to one side Mr Davis’ claim, Farley Bay will be solvent at the conclusion of the winding up. I consider the most practical way in which Mr Davis’ claims in respect of the Properties can be ‘put to one side’ is that they be dealt with in the s 90SN application. Prima facie, the position being contended for by Mr Davis in respect of his interest in the Properties is a weak one, but I consider that the impasse confronting Mr Loebenstein in proceeding with the finalisation of the liquidation of Farley Bay can only be resolved if Mr Davis’ alleged claim in respect of a proprietary interest in the Properties is determined. Mr Davis’ claim in respect of the Properties will need to overcome the fact that he was made bankrupt and any interest he had would have vested in his bankruptcy trustee, Mr Marchesi.

In my view, if one weighs the factors to which I have referred, this results in a conclusion that Mr Loebenstein’s application should be transferred to the FCFCOA. That Court has the power to hear Mr Loebenstein’s application for directions in the liquidation of Farley Bay consequent to determining Mr Davis’ application under s 90SN. The FCFCOA regularly deals with matters involving constructive and resulting trusts and also has jurisdiction to make orders in respect to matters arising under the Corporations Act. This Court is without power to make orders under the Family Law Act. If Mr Loebenstein’s application is transferred, Mr Loebenstein will be placed to represent the interests of creditors which are clearly in tension with the position being contended for by Mr Davis. The FCFCOA will also have jurisdiction to determine the position in regard to Mr Davis’ proof of debt and the caveats which he has placed on the Properties. It would not be appropriate for this Court to determine Mr Loebenstein’s application in this Court if the very same issues will be the subject of consideration of the FCFCOA early in the new year.

On 9 August 2022, the matter was listed for judgment but for reasons which are revealed in the transcript of that hearing, the matter was stood over until 9 September 2022.

On 9 September 2022, Mr Pinto, a solicitor who now appeared on behalf of Mr Davis, indicated that his client’s application under s 90SN of the Family Law Act had been before a judge of the FCFCOA. Directions were made by that judge for further conduct of the application and it was set down for hearing on 28 February 2023. Mr Pinto indicated that the FCFCOA judge had split Mr Davis’ application and would deal first with whether Mr Davis met the criteria in s 90SN of the Family Law Act. If Mr Davis was successful in convincing the Court that the orders made in 2018 ought be amended, then the second part of the trial would then take place which would involve considering what adjustments ought to be made to the orders.

The legal representatives of Mr Loebenstein and Mr Davis sought an adjournment to 11 October 2022 for the purpose, among other things, of determining whether there could be some agreement reached in respect of certain matters so that the complexity and volume of the matters transferred could be reduced. In that regard, reference was made to Mr Efron’s letter of 22 September 2021, which is referred to in paragraphs 100 to 104 above in the context of identifying the matters which could be the subject of a consensus.

In his 6 October 2022 submissions, Mr Davis contended[31] that the context of the letter of 22 September 2021 was that the statements made in it were not in the nature of concessions, but the terms form part of an open offer to resolve the disputes between Mr Loebenstein and Mr Davis.
[31]See footnote 4 of Mr Davis’ submissions filed 6 October 2022.

In the course of the hearing on 9 September 2022, I conveyed to the parties that it was with considerable reluctance that I was making the transfer order having regard to the history of the matter, and requested the parties to consider whether there was a mechanism whereby if Mr Davis did not conscientiously prosecute his claim in the FCFCOA, that this proceeding could again be taken up by this Court. The 6 October 2022 submissions filed on behalf of Mr Davis and prepared by Mr Moloney of counsel address this issue. It is submitted that once the transfer order is made and the orders are transferred to the Family Court, this Court is no longer seized of the transferred proceeding and it has no power to deal further with it. It is submitted that this Court cannot make a conditional or contingent transfer order such that if a certain event occurs, it must be returned to the transferor court. It is said that such an approach would constitute an impermissible restriction on the transferee court exercising its jurisdiction over the transferred proceeding and it would offend the principles of comity between courts. It is submitted that once Mr Loebenstein’s application is transferred to the FCFCOA, it is for that court and that court alone to further hear and determine the transferred proceeding and how that part of the matter should be judicially managed; if Mr Loebenstein considered that circumstances warranted it, such as, for example, that the s 90SN proceeding was not being diligently prosecuted, he could make application to ‘retransfer’ his proceeding back to this Court pursuant to s 1337J(1) and (2)(c) of the Corporations Act.

In my opinion, the submissions have much force and I accept that once the Court transfers a proceeding under s 1337H of the Corporations Act, it has no power to deal with the matter in any way. It seems clear that once Mr Loebenstein’s application has been transferred, it is entirely a matter for the FCFCOA to determine the future course of the matter.

Orders

I will make orders pursuant to s 1337H of the Corporations Act that proceeding S ECI 2021 00229 be transferred to Division 1 of the Federal Circuit and Family Court of Australia.

Section 1337N of the Corporations Act requires the Registry of the Court to transmit to the Registry of the FCAFOC all documents filed in the Court in this proceeding. My associate will inform the Registry of the Court of the making of these orders.

For completeness, I set out the orders that I made on the occasion of publishing my reasons in this matter on 11 October 2022.

Pursuant to r 9.06 of the Rules, the name of the second plaintiff in the title of the proceeding be amended to ‘Joseph Loebenstein in his capacity as Liquidator of Farley Bay Pty Ltd (In Liquidation) (ACN 063 425 981)’.
This proceeding be transferred to Division 1 of the Federal Circuit and Family Court of Australia pursuant to s 1337H of the Corporations Act 2001 (Cth).
This proceeding be henceforth referred to as Re Farley Bay Pty Ltd & Anor v Michael Davis (a pseudonym).
All documents filed in this proceeding subsequent to this order shall identify the defendant by the pseudonym Michael Davis.
Subject to any further order of the Court, pursuant to rr 28.05(2) and 28A.06 of the Rules, all documents filed in or in relation to this proceeding in Redcrest, save for these orders and the reasons for judgment published 11 October 2022, shall remain confidential to the parties and their respective legal representatives and shall not otherwise be made available for inspection or copying.
The costs of this proceeding, including the costs of the defendant’s application by interlocutory process filed 22 April 2021 (including costs reserved on 23 April 2021, 27 July 2021, 10 August 2021, 8 September 2021, 23 September 2021, 15 October 2021, 9 August 2022 and 9 September 2022) be reserved and be determined by the judge hearing the proceeding in the Federal Circuit and Family Court of Australia.

SCHEDULE OF PARTIES

S ECI 2021 00229
BETWEEN:
FARLEY BAY PTY LTD (IN LIQUIDATION) (ACN 063 425 981)	First Plaintiff
JOSEPH LOEBENSTEIN in his capacity as liquidator of FARLEY BAY PTY LTD (IN LIQUIDATION) (ACN 063 425 981)	Second Plaintiff
- v -
MICHAEL DAVIS (A PSEUDONYM)	Defendant

[2022] VSC 604

11 October 2022 (revised 18 October 2022)