Tidswell Financial Services Limited as Responsible Entity for the Pooled Mortgage Managed Investment Scheme v Sovereign Capital Limited
[2009] FCA 582
•1 June 2009
FEDERAL COURT OF AUSTRALIA
Tidswell Financial Services Limited as Responsible Entity for the Pooled Mortgage Managed Investment Scheme v Sovereign Capital Limited
[2009] FCA 582
TIDSWELL FINANCIAL SERVICES LIMITED (ACN 010 810 607) AS RESPONSIBLE ENTITY FOR THE POOLED MORTGAGE MANAGED INVESTMENT SCHEME (ARSN 095 540 597) v SOVEREIGN CAPITAL LIMITED ACN 085 821 218, MARK ASHLEY PARKER, BRUCE FRANCIS SIMMONDS and PETER JOHN BENSON and BRIT UNDERWRITING LIMITED ON ITS OWN BEHALF AND ON BEHALF OF THE UNDERWRITING MEMBERS OF SYNDICATES 2987, 1096 AND 1218 AT LLOYD’S OF LONDON SUBSCRIBING TO POLICY NUMBER 51083V03A
SAD 11 of 2008
BESANKO J
1 JUNE 2009
ADELAIDE (VIA VIDEO LINK WITH SYDNEY AND BRISBANE)
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
SAD 11 of 2008
BETWEEN: TIDSWELL FINANCIAL SERVICES LIMITED (ACN 010 810 607) AS RESPONSIBLE ENTITY FOR THE POOLED MORTGAGE MANAGED INVESTMENT SCHEME (ARSN 095 540 597)
PlaintiffAND: SOVEREIGN CAPITAL LIMITED ACN 085 821 218
First DefendantMARK ASHLEY PARKER
Second DefendantBRUCE FRANCIS SIMMONDS
Third DefendantPETER JOHN BENSON
Fourth DefendantAND: BRIT UNDERWRITING LIMITED ON ITS OWN BEHALF AND ON BEHALF OF THE UNDERWRITING MEMBERS OF SYNDICATES 2987, 1096 AND 1218 AT LLOYD’S OF LONDON SUBSCRIBING TO POLICY NUMBER 51083V03A
Third Party
JUDGE:
BESANKO J
DATE OF ORDER:
1 JUNE 2009
WHERE MADE:
ADELAIDE (VIA VIDEO LINK WITH SYDNEY AND BRISBANE)
THE COURT ORDERS THAT:
1.Pursuant to s 48 of the Federal Court of Australia Act 1976 (Cth) and O 10 r 1(2)(f) of the Federal Court Rules, the proceeding between the defendants and the third party in SAD 11 of 2008 be conducted and continued in the New South Wales District Registry of the Federal Court of Australia.
2.The defendants are to pay the third party’s costs of the third party’s notice of motion dated 15 March 2009, save and except for the hearing on 7 April 2009.
3.The third party is to pay to the defendants one half of their costs of the hearing on 7 April 2009.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
SAD 11 of 2008
BETWEEN: TIDSWELL FINANCIAL SERVICES LIMITED (ACN 010 810 607) AS RESPONSIBLE ENTITY FOR THE POOLED MORTGAGE MANAGED INVESTMENT SCHEME (ARSN 095 540 597)
PlaintiffAND: SOVEREIGN CAPITAL LIMITED ACN 085 821 218
First DefendantMARK ASHLEY PARKER
Second DefendantBRUCE FRANCIS SIMMONDS
Third DefendantPETER JOHN BENSON
Fourth DefendantAND: BRIT UNDERWRITING LIMITED ON ITS OWN BEHALF AND ON BEHALF OF THE UNDERWRITING MEMBERS OF SYNDICATES 2987, 1096 AND 1218 AT LLOYD’S OF LONDON SUBSCRIBING TO POLICY NUMBER 51083V03A
Third Party
JUDGE:
BESANKO J
DATE:
1 JUNE 2009
PLACE:
ADELAIDE (VIA VIDEO LINK WITH SYDNEY AND BRISBANE)
REASONS FOR JUDGMENT
By notice of motion dated 15 March 2009, the third party to a proceeding in this Court seeks an order that the proceeding against it be transferred to the New South Wales District Registry of the Court, pursuant to s 48 of the Federal Court of Australia Act 1976 (Cth) (“Federal Court Act”). In the alternative, the third party seeks an order under O 10 r 1(2)(f) of the Federal Court Rules that the proceeding be heard in Sydney.
The plaintiff has settled its claim against the defendants. On 17 March 2009, I made an order staying, until further order, the proceeding between the plaintiff and the defendants. I made that order because the proceeding between the plaintiff and the defendants has been settled and the parties told me that they needed time to carry out the terms of settlement. I was told that if, for some reason, the terms of settlement were not carried out, that would not require the revival of the proceeding between the plaintiff and the defendants.
The defendants agree with the third party that the proceeding between the defendants and the third party should be transferred from the South Australia District Registry. However, they seek an order that the proceeding be transferred to the Queensland District Registry of the Court. In the alternative, they seek an order under O 30 r 6 of the Federal Court Rules that the trial of the proceeding be held in Brisbane. It is unnecessary for me to consider the provisions of O 30 r 6, as I have reached the conclusion that, pursuant to s 48 of the Federal Court Act and O 10 r 1(2)(f), the proceeding between the defendants and the third party should be conducted and continued in the New South Wales District Registry of the Court.
The test on an application under s 48 of the Federal Court Act is well known. It was stated in the following terms by the Full Court of this Court in National Mutual Holdings Pty Ltd v The Sentry Corporation (1988) 19 FCR 155 at 162:
“The power conferred by s 48 recognises the national character of this Court. The factors which the Court is entitled to take into account in considering whether one city is more appropriate than another for interlocutory hearings or for the trial itself are numerous. The Court must weigh those factors in each case. Residence of parties and of witnesses, expense to parties, the place where the cause of action arose and the convenience of the Court itself are some of the factors that may be relevant in particular circumstances.
The balance of convenience will generally be a relevant consideration, but not necessarily determinative of each case. A party commences a proceeding by filing an application in a particular registry of the Court. If that party or another party wishes to have the proceeding conducted or continued in another place he may apply to the Court for an order under s 48 or O 10, r 1(2)(f) or O 30, r 6 as the case may be. There is no onus of proof in the strict sense to be discharged by the party seeking to conduct or continue the proceedings elsewhere. It should be noted that the Court may exercise its powers under O 30, r 6 either on the application of a party or of its own motion. The Court must, however, be satisfied, after considering all relevant matters, that there is sound reason to direct that the proceeding be conducted or continued elsewhere. Its starting point is that the proceeding has been commenced at a particular place. Why should it be changed? On the one hand, if the party who commenced the proceeding chose that place capriciously the Court would be justified in giving no weight to the choice of place. At the other end of the scale, a proceeding may have continued for some time at the place of commencement with many steps having been taken there, for example, filing of pleadings and affidavits, discovery and inspection. Due weight would be given by the Court to such matters before directing that the proceeding should continue at a different place.
The balance of convenience is important, but its weight must vary from case to case. Ultimately the test is: where can the case be conducted or continued most suitably bearing in mind the interests of all the parties, the ends of justice in the determination of the issues between them, and the most efficient administration of the Court. It cannot and should not, in our opinion, be defined more closely or precisely.”
This case has a feature not often found in applications under s 48 of the Federal Court Act: both parties are agreed that the proceeding between the defendants and the third party should be transferred from this Registry and the dispute is as to the Registry to which the proceeding should be transferred.
In the third party claim, the defendants seek an indemnity from the third party in relation to the plaintiff’s claim against them. They claim such an indemnity under an insurance policy with the third party. The plaintiff’s claim against the defendants relates to specialised investment undertaken by the first defendant on behalf of investors of whom the plaintiff was one. The investment related to property at Diamond Bay, Vaucluse, Sydney, and it failed. The plaintiff made claims against the defendants under, inter alia, the Corporations Act 2001 (Cth) and the Australian Securities and Investments Commission Act 2001 (Cth) and for breach of fiduciary duty.
The third party put forward an affidavit in support of its application and the defendants filed an affidavit in response. In the case of the defendants, the second defendant, Mr Mark Ashley Parker, swore an affidavit in support of the defendants’ application that the proceeding be transferred to the Queensland District Registry. Mr Parker states that the principal place of business of the first defendant is Suite 64, 2 Arbor Avenue, Rubina, Queensland, and that he and the third and fourth defendants, and the majority of the past and present staff of the first defendant reside in the vicinity of the Gold Coast. Mr Parker states that he and the third defendant are the sole principals of a legal practice located at Broadbeach, Queensland. He and the third defendant are directly and closely involved in the day-to-day operation of the practice. The practice employs two junior solicitors, neither of whom have an open practising certificate. He refers to the Legal Profession (Solicitors) Rule 2007 issued by the Queensland Law Society. Under r 34, a practitioner is required to exercise effective control of each office maintained by the practitioner, and, under r 37, a principal is responsible for exercising reasonable supervision over solicitors and all other employees in the provision of legal services by the practice.
Mr Parker states that he has been advised that the trial of the proceeding is likely to extend over a two-week period, and that he and the third defendant will be required to attend during the hearing.
Mr Parker states that he and the third defendant are the only persons in the practice who are authorised and able to sign trust account cheques issued by the practice and he states that the practice has a significant conveyancing business, “requiring the practice to issue more than 50 trust account cheques in any given week”.
Mr Parker states that if the proceeding is heard in Brisbane then he and the third defendant will be able to attend at the practice before and after the hearing each day. He and the third defendant will not be able to do this if the proceeding is heard in Sydney.
Mr Parker states that, in his opinion, all of the defendants and witnesses who are likely to be called by them to give evidence at the hearing reside in or about the Gold Coast or Brisbane. He also states that all of the books and records of the defendants are held by them or their agents in the Brisbane and Gold Coast region. He states that the third party is a London-based insurer and that, in terms of cost and expense, it is likely to be less affected if the proceeding is heard in Brisbane than the defendants will be if the proceeding is heard in Sydney.
The third party relies on an affidavit of Mr David Amentas, who is a member of the firm of solicitors acting for the third party. Mr Amentas states that the defendants, by the third party claim, seek a declaration that they are entitled to an indemnity under a policy of professional indemnity insurance held with the third party. He refers to the defence to the third party claim. It is necessary for me to say something about the defence to the third party claim.
The defence pleads a failure by the defendants to give proper notice under the insurance policy, misrepresentations in the proposal form, the fact that any claim arose before the inception of the policy and that the circumstances of the claim fall outside the indemnity provided by the policy. The defence alleges misrepresentations by the defendants in connection with the Diamond Bay development and an awareness by them that the borrower would have insufficient funds to repay the loan or complete the project. The third party also pleads conduct in connection with what is referred to as the Metro Ink Loan, a loan relating to a development in Victoria. The third party alleges knowledge by the defendants of false and misleading statements in the investment proposal.
Mr Amentas states that the primary proceeding relates to the alleged mismanagement of mortgage funds provided by the first defendant to Diamond Bay Construction Pty Ltd for the purchase and development of properties at Vaucluse, Sydney. In the third party action, the third party alleges misrepresentations by the defendants with respect to the development. Mr Amentas states that the directors of Diamond Bay Construction Pty Ltd resided in Sydney at all relevant times, the solicitors retained to act in the purchase of a number of the relevant properties, Sid Hawach & Associates, practised in Sydney, and the finance broker involved in the purchases, AAA Finance Services Pty Ltd was located in Sydney. In addition, the builder involved in the construction of the development was located in Sydney at all relevant times. Mr Amentas states that, although the third party has not yet decided which, if any, of the witnesses involved in the Diamond Bay development may be called to give evidence, to the best of his knowledge all such potential witnesses reside in Sydney. Furthermore, Mr Amentas states that it is likely that expert evidence, which the third party presently intends to call, will involve an expert located in Sydney.
Mr Amentas states that the loan to Metro Ink related to a property in Victoria, and that witnesses may be required to give evidence with respect to this development and, he expressed the opinion that Sydney was a more appropriate venue in terms of the convenience of such witnesses.
It seems to me that the question of the place to which the third party proceedings should be transferred is finely balanced. It is not at all clear at this stage who will be called as witnesses at the trial. However, by a narrow margin, I think the fact that the proceeding raises, or may raise, issues concerning a transaction and development in Sydney and, of much less importance, a transaction and development in Victoria, means that the New South Wales District Registry, rather than the Queensland District Registry, is the more convenient place for the proceeding to be conducted and continued.
Subject to one matter, the defendants should pay the third party’s costs of its notice of motion dated 15 March 2009. In paragraph 12 of his affidavit, Mr Amentas deposed as follows:
“Although as I understand it the three personal defendants all reside in Queensland, I note it is likely that they will each be attending the trial in any event, and it is submitted that the convenience of witnesses who are not parties to the proceedings ought to be given greater consideration.”
The defendants objected to that paragraph, and I ruled that I would not receive it. It is in the nature of a submission and not a statement of fact. The hearing on 7 April 2009 was in part necessitated by a dispute as to the admissibility of paragraph 12 of Mr Amentas’ affidavit. The third party was unsuccessful on that issue and I think it should pay the defendants one half of their costs of the hearing on that date.
The appropriate orders are as follows:
1.Pursuant to s 48 of the Federal Court of Australia Act 1976 (Cth) and O 10 r 1(2)(f) of the Federal Court Rules, the proceeding between the defendants and the third party in SAD 11 of 2008 be conducted and continued in the New South Wales District Registry of the Federal Court of Australia.
2.The defendants are to pay the third party’s costs of the third party’s notice of motion dated 15 March 2009, save and except for the hearing on 7 April 2009.
3.The third party is to pay to the defendants one half of their costs of the hearing on 7 April 2009.
I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko. Associate:
Dated: 1 June 2009
The Plaintiff did not appear Counsel for the Defendants: Mr A Collins Solicitor for the Defendants: McInnes Wilson Lawyers Counsel for the Third Party: Mr D Priestley Solicitor for the Third Party: Lee & Lyons Lawyers
Date of Hearing: 7 April 2009 Date of Judgment: 1 June 2009
0
1
0