Verge & Anor v Devere Holdings Pty Ltd & Ors (No.4)
[2008] FMCA 1421
•24 October 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| VERGE & ANOR v DEVERE HOLDINGS PTY LTD & ORS (No.4) | [2008] FMCA 1421 |
| PRACTICE AND PROCEDURE – Particulars – circumstances in which particulars ordered – consideration of nature of litigation – requirement to identify consideration given for alleged transfer at undervalue – whether issue as to nature and form of alleged consideration – whether necessity for particulars – informal provision of particulars – complexity of litigation. |
| PRACTICE AND PROCEDURE – Application to strike out paragraphs of statement of claim – inconsistent allegations – whether party has actual knowledge of falsity of allegations – where party trustee in bankruptcy – duties of trustee. |
| PRACTICE AND PROCEDURE – Application to strike out paragraphs of statement of claim – whether claim asserts rights under the Bankruptcy Act – nature of rights under Corporations Act to correct share register – whether trustee “a person aggrieved”. PRACTICE AND PROCEDURE – Application to strike out paragraphs of statement of claim – whether party can approbate and reprobate. |
| PRACTICE AND PROCEDURE – Application to transfer proceedings to Federal Court – factors to be considered – legislative purpose and intent of transfer provisions – whether important or exceptional point of principle – whether complex issues of law – whether complex commercial dispute. |
| BANKRUPTCY – Transfer of land at undervalue – whether particulars to be provided – whether parts of statement of claim to be struck out – whether proceedings to be transferred to the Federal Court. BANKRUPTCY – Trustee in bankruptcy – duties. |
| Acts Interpretation Act 1901 (Cth), ss.15AA, and 15AB Bankruptcy Act 1966 (Cth), ss.19(1)(b), (e), (f) and (k)), 27, 58(1), 116(1), 120(1) and (7)(b) and 176 Bankruptcy Legislation Amendment Act 1996 (Cth) Corporations Act 2001 (Cth), ss.58AA(1) and (2), 175, and 1072E(6) and (7) Federal Magistrates Act 1999 (Cth), ss.3, 39(1), (2) and (3)(a)-(d), and 42 Federal Magistrates Court Rules 2001 (Cth), rr.1.03, 4.05(2) and (3), 8.02(4)(a)-(f) and 10.01(3)(m) |
| Adsett v Berloius (1992) 37 FCR 201 Darvall & Fernon (Eds), Australian Bankruptcy Law and Practice (5th Edn) (Sydney: Thomson LawBook Co) |
| Applicants: | GEORGE AUBREY LOPEZ & EVAN ROBERT VERGE |
| First Respondent: | DEVERE HOLDINGS PTY LTD |
| Second Respondent: | PACKHAM PTY LTD |
| Third Respondent: | CASTLEWORLD PTY LTD |
| File Number: | PEG 64 of 2007 |
| Judgment of: | Lucev FM |
| Hearing date: | 1 October 2008 |
| Date of Last Submission: | 1 October 2008 |
| Delivered at: | Perth |
| Delivered on: | 24 October 2008 |
REPRESENTATION
| Counsel for the Applicants: | Ms P Cahill |
| Solicitors for the Applicants: | Jackson McDonald |
| Counsel for the First and Second Respondents: | Mr C Williams |
| Solicitors for Devere Holdings and Packham: | Solomon Brothers |
| Counsel for the Third Respondent: | Mr G Flynn |
| Solicitors for the Third Respondent: | Hotchkin Hanly |
ORDERS
The Court orders that in relation to the first and second respondents’ application in a case filed 22 September 2008:
(a)by 4.00pm on 31 October 2008 the applicants file and serve a response to paragraph 1.4 of the first and second respondents’ request for further and better particulars of the statement of claim provided to the applicants’ solicitors on 25 July 2008; otherwise, the first and second respondents’ request for further and better particulars be dismissed;
(b)the first and second respondents’ application to strike out paragraphs 41 to 53 of the statement of claim be dismissed;
(c)the first and second respondents’ application to transfer the proceeding to the Federal Court of Australia be granted;
(d)the proceeding be transferred to the Federal Court.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG 64 of 2007
| GEORGE AUBREY LOPEZ & EVAN ROBERT VERGE |
Applicants
And
| DEVERE HOLDINGS PTY LTD |
First Respondent
| PACKHAM PTY LTD |
Second Respondent
| CASTLEWORLD PTY LTD |
Third Respondent
REASONS FOR JUDGMENT
Introduction
In the substantive application in this matter the applicants allege that there has been a transfer or transfers of land at undervalue involving two former bankrupts (Mr and Mrs Andony), and that under s.120(1) of the Bankruptcy Act 1966 (Cth)[1] that the transfer or transfers are void against the applicants as the trustees of the bankrupts’ estates.[2]
[1] “Bankruptcy Act”.
[2] “Trustees”.
The application was commenced by way of an application and affidavit, but the matter has been proceeding on pleadings for some time. The Trustees filed a statement of claim on 11 October 2007. The first respondent, Devere Holdings Pty Ltd,[3] and the second respondent, Packham Pty Ltd[4] filed an amended defence on 28 May 2008, and the third defendant Castleworld Pty Ltd[5] filed an amended defence on 23 May 2008.
[3] “Devere Holdings”.
[4] “Packham”.
[5] “Castleworld”.
There is no dispute that Mrs Andony became a bankrupt on 26 August 2003 and remained a bankrupt until 8 November 2006; and that Mr Andony became a bankrupt on 3 June 2004 and remained a bankrupt until 4 June 2007.[6]
[6] Trustees’ statement of claim, paras.2 and 3; Devere Holdings and Packham’s amended defence, para.2.
The current application in a case[7] seeks:
a)particulars of paragraph 18 of the statement of claim;
b)to strike out certain paragraphs of the statement of claim; and
c)transfer of the proceeding to the Federal Court.
[7] There have been four prior applications in a case in this matter: see Verge & Anor v Devere Holdings Pty Ltd & Ors [2008] FMCA 591 (“Verge (No.1)”) (an application to strike out parts of the defence and for particulars of the defence, and a second application for leave to amend the defence and a response to particulars); Verge & Anor v Devere Holdings Pty Ltd & Ors [2008] FMCA 743 (“Verge (No.2)”) (application for a decision on a separate question); Verge & Anor v Devere Holdings Pty Ltd & Ors (No. 3) [2008] FMCA 1220 (“Verge (No.3)”) (an application against Devere Holdings and Packham for discovery, and an application for third party discovery).
The application in a case by Devere Holdings and Packham is supported by an affidavit of Giacomino Fazio sworn 19 September 2008.[8]
[8] “Fazio’s Affidavit”.
Issues
The issues to be determined in relation to the application in a case are as follows:
a)whether it is necessary for the Trustees to give the particulars sought by Devere Holdings and Packham;
b)whether the paragraphs that Devere Holdings and Packham seek to have struck out of the statement of claim ought to be struck out; and
c)whether the proceedings ought to be transferred to the Federal Court.
Particulars of paragraph 18 of statement of claim
Facts
Paragraph 18 of the applicants’ statement of claim pleads that:
“Devere gave, at the most, $45,000 as consideration for the transfer of the Andony’s one undivided third share of the Dongara Land to Devere.”
Devere Holdings and Packham seek particulars of paragraph 18. The applicants have refused to give particulars.
Devere Holdings and Packham seek particulars on the basis that the value of the consideration provided was at most, equal to $45,000, not that the consideration was a cash sum of $45,000.
Devere Holdings Pty Ltd v Lopez[9] concerned an application for leave to appeal against an order of this Court in Verge (No. 1) where this Court ordered Devere Holdings and Packham to provide to the applicants further and better particulars of parts of the defence, including particulars as to the monetary value of benefits pleaded in answer to the claim of transfer at alleged undervalue.[10] The application for leave to appeal was dismissed.[11] In relation to the monetary value of benefits pleaded the Federal Court found that:
“Where, as here, the applicants have pleaded a positive case then they have an evidentiary onus in that respect. In my opinion, the positive pleading constitutes material allegations and the Court below was correct to order that particulars, in terms of those requested, be given. This includes, relevantly, particulars as to the monetary value of the benefits pleaded. This adopts a common sense approach and ensures that the core issues directed to s 120 of the Act are fully ventilated.”[12]
[9] [2008] FCA 1901 (“Devere Holdings”).
[10] Devere Holdings at paras.10-20 per Gilmour J.
[11] Devere Holdings at para.33 per Gilmour J.
[12] Devere Holdings at para.20 per Gilmour J.
In this application in a case Devere Holdings and Packham rely particularly upon an observation by the Federal Court in Devere Holdings that:
“The effective allegation found within those paragraphs [a reference to paragraphs 17-20 of the statement of claim] as a whole is that the consideration given was at most at a value of not more than $45,000 which was less than the market value and therefore void against the trustees in the applicants bankruptcy by reason of s.120 of the Act.”[13]
[13] Devere Holdings at para.18 per Gilmour J (bolding in original).
The day after delivery of the judgment in Devere Holdings Devere Holdings and Packham’s solicitors wrote to the applicants’ solicitors referring to the above quote, and then saying:
“Consequently, it appears that we have been labouring under an erroneous reading of your clients’ statement of claim, in that we had read paragraphs 17 to 20 as alleging that the consideration provided for the transfer was the cash sum of $45,000, not consideration that had, in totality, a market value of not more than $45,000. Paragraph 5 of our clients’ defence pleaded to paragraph 18 of your clients’ statement of claim read in this erroneous way.
Consequently, we enclose a request for further and better particulars of paragraph 18 of your clients’ statement of claim. Upon service of your clients’ response to that request, our clients will consider whether paragraph 5 of their defence requires amendment.”[14]
[14] Fazio’s Affidavit” at para.6 and Annexure GF-1, Annexure GF-1 being a letter from Devere Holdings and Packham’s solicitors to the applicants’ solicitors dated 25 July 2008 (“Devere Holdings and Packham’s 25 July 2008 letter”).
Devere Holdings and Packam’s attached request for further and better particulars of statement of claim[15] was as follows:
[15] “Request”.
“1. As to paragraph 18 of the statement of claim, state all acts, facts, matters, circumstances and things relied on for the allegation that the first respondent gave, at the most, $45,000 as consideration for the transfer of the Andonys’ one undivided third share of the Dongara Land to the first respondent, including but not limited to:
1.1 identify each element of the consideration alleged to have been given by the first respondent;
1.2 state the nature of each element of consideration allegedly given by the first respondent;
1.3 state the alleged monetary value of each element of the consideration allegedly given by the first respondent;
1.4 state when and how each element of the consideration allegedly given by the first respondent accrued to each of Mr Andony and Mrs Andony; and
1.5 identify by whom each element of the consideration is alleged to have been provided.”[16]
[16] Request, see Fazio’s Affidavit at para.1 and Annexure GF-1.
On 28 July 2008 the applicants’ solicitors responded to Devere Holdings and Packham’s 25 July 2008 letter as follows:
“You have not misunderstood our clients’ pleading. The allegation is that, at the most, $45,000 was paid as consideration for the transfer of the interest in the land. The applicants do not plead that consideration in a form other than dollars, but to the monetary value of $45,000, was given.
That point was made expressly in argument before His Honour Justice Gilmour.
Accordingly, the grounds articulated in your letter for seeking particulars of paragraph 18 of the statement of claim do not exist.
The import of Gilmour J’s reasons for decision at paragraph [18] is that necessarily the effect of an allegation that consideration of $45,000 was paid is that the value of that consideration was $45,000. It is not to the effect that you contend.”[17]
[17] Fazio’s Affidavit at para.8 and Annexure GF-2, being the applicants’ solicitors’ letter to Devere Holdings and Packham’s solicitors dated 28 July 2008 (“applicants’ 28 July 2008 letter”).
On 30 July 2008 Devere Holdings and Packham’s solicitors responded as follows to the applicants’ 28 July 2008 letter:
“Regardless of what you think your clients’ pleading was intended to mean, Justice Gilmour held that the ‘effect of the allegations found within [paragraphs 17 to 20 of the statement of claim] as a whole is that the consideration given was at most a value of not more than $45,000, which was less than the market value and therefore void against the Trustees in the applicants bankruptcy by reason of s.120 of the Act’: at [18].
The meaning of this is plain. Paragraph 18 of the statement of claim pleads that the value of the consideration provided was not more than $45,000, not that the monetary sum of $45,000 was the only consideration provided.
As set out in our facsimile of 25 July 2008 we have been proceeding upon the erroneous assumption that paragraph 18 of the statement of claim had the meaning set out in your facsimile. However, Justice Gilmour has held that this is not the case.
We remain of the opinion that your clients ought to provide the requested particulars to paragraph 18 prior to our clients providing any further particulars to paragraph 5 of their defence. As we have set out numerous times, paragraph 5 of the defence is intended to constitute a denial that the consideration provided was merely the monetary sum of $45,000 and, consequently, the allegation that additional consideration was provided. As Justice Gilmour has now held that paragraph 18 does not allege that the only consideration provided was the monetary sum of $45,000, paragraph 5, as it currently stands, may be misconceived. Our clients will only be able to ascertain whether paragraph 5 requires amendment and, if so, the extent of such amendment, upon provision of full particulars of paragraph 18.”[18]
[18] Fazio’s Affidavit at para.9 and Annexure GF-3, being Devere Holdings and Packham’s solicitors’ letter of 30 July 2008 to the applicants’ solicitors (“Devere Holdings and Packham’s 30 July 2008 letter”) (bolding in original).
The applicants’ solicitors responded to Devere Holdings and Packham’s solicitor’s 30 July 2008 letter on 31 July 2008, advising that they had “already told you exactly what the plea in paragraph 18 of the statement of claim means” and that they did not propose to enter into any further correspondence on the matter.[19]
[19] Fazio’s Affidavit at para. 10 and Annexure GF-4, being the applicants’ solicitors’ letter of 31 July 2008 to Devere Holdings and Packham’s solicitors (“applicants’ 31 July 2008 letter”).
Through Counsel, the applicants confirmed to the Court in oral submissions that the $45,000 was a “cash sum”.[20]
[20] Transcript at 20.
First and second respondents’ arguments
Devere Holdings and Packham argue that the basis for the applicants’ refusal to provide further and better particulars appears to be an assertion that, contrary to the judgment in Devere Holdings, paragraph 18 of the statement of claim pleads consideration was a cash sum of $45,000. Devere Holdings and Packham say that if it is the applicants’ case that the consideration pleaded in paragraph 18 of the statement of claim was only a cash sum of $45,000 then their particulars can state this.[21]
[21] Devere Holdings and Packham’s written outline of submissions, paras.1-4; transcript at 3-5.
Devere Holdings and Packham said that it was “beyond” them as to why the provision of these particulars would have been objected to.[22] They also relied upon this Court’s judgment in Verge (No.1) as to the reasons why the particulars requested ought to be ordered,[23] save that they conceded in oral submissions that paragraph 1.5 of the Request was “probably a useless request” as the statement of claim specifically alleges by whom the $45,000 consideration was provided,[24] namely, Devere Holdings.[25]
[22] Transcript at 4.
[23] Transcript at 5; Verge (No.1) at paras.19-22.
[24] Transcript at 4.
[25] Statement of claim at para.18.
Applicants’ argument
The applicants argue that paragraph 18 of the statement of claim is clear and unequivocal as to the nature and monetary value of the consideration alleged (namely, at the most, $45,000), and go onto say that they have made abundantly clear, in open correspondence, the scope and content of the plea.[26] The applicants therefore say that the Request serves no substantive purpose. The applicants argue that paragraph 18 of the judgment in Devere Holdings simply recognises that consideration given of $45,000 also has a value of $45,000.[27]
[26] See Trustees’ 28 July 2008 letter at para.14 above.
[27] Trustees’ written outline of submissions, paras.1-6; transcript at 19-21.
Consideration
In Verge (No.1) this Court dealt with the Court’s power to order particulars and the circumstances in which particulars would be ordered. In the context of litigation involving s.120(1) of the Bankruptcy Act the Court said in Verge (No.1) that:
“14. Section 120(1) of the Bankruptcy Act relevantly provides as follows:
‘A transfer of property by a person who later becomes a bankrupt (the transferor) to another person (the transferee) is void against the trustee in the transferor’s bankruptcy if:
(a) the transfer took place in the period beginning five years before the commencement of the bankruptcy and ending on the date of the bankruptcy;
(b) the transferee gave no consideration to the transfer or gave consideration of less value than the market value of the property.’
15.In relation to s.120(1) of the Bankruptcy Act it is relevant that “the court is required to assess the value of the consideration given.” Section 120(1)(b) requires the Court to identify the consideration actually given by the transferee, rather than the consideration which might have been given but was not in fact given. It must be remembered also that actions in bankruptcy are not necessarily strictly inter partes, but often actions for the benefit of creditors as a whole, and in that regard actions with an element of public and community benefit and interest.
16.It is that legislative context, and in particular the requirement for the Court to identify whether the particular transfer has been at an undervalue, that sets the broader context for consideration of the application for particulars in this case.”[28]
[28] Verge (No.1) at paras.14-16 per Lucev FM (footnotes omitted).
Of the function of particulars it was said in Verge (No.1) that:
“19. In cases where there are particulars due particularity by all parties is necessary. A defence, no less than a statement of claim, is subject to the requirement to provide particulars.
20.Put succinctly the function of particulars is to enable a party to:
a. know each material fact relied on by the other party;
b. properly prepare a brief; and
c. not be taken by surprise.
21.Only material allegations need to be particularised: but the degree of particularity depends on common sense and the circumstances of the case.
22.The primary function of particulars has been summarised as being to ensure that effect is given to the overriding principle that litigation between the parties, and particularly the trial, should be conducted fairly, openly and without surprises and incidentally to reduce costs.”[29]
[29] Verge (No.1) at paras. 19-22 per Lucev FM (footnotes omitted).
Is it necessary to order particulars in this case?
The particulars requested essentially amount to this: was the consideration with a monetary value of $45,000 provided in cash, or cash and some other form of monetary or other benefit.
It would be easy to order particulars in this instance. No doubt they would be easily answered. To do so however would avoid the essential issue: are they necessary for the proper and efficient conduct of the proceedings.
Until Devere Holdings Devere Holdings and Packham understood that the plea in paragraph 18 of the statement of claim was a plea that “the consideration provided for the transfer was the cash sum of $45,000.”[30]
[30] Devere Holdings and Packham’s 25 July 2008 letter.
Following the judgment in Devere Holdings Devere Holdings and Packham, based on their interpretation of what the Federal Court said in Devere Holdings, came to the view that the plea in paragraph 18 of the statement of claim might also mean “consideration that had, in totality, a market value of not more than $45,000.”[31] It is not necessary for the purposes of these Reasons for Judgment to try to resolve what the Federal Court meant by its comments at paragraph 18 in Devere Holdings. It suffices to say that paragraph 18 of the statement of claim does not unequivocally identify that the $45,000 consideration given to the Andonys by Packham was in cash.
[31] Devere Holdings and Packham’s 25 July 2008 letter.
In the applicants’ 28 July 2008 letter the applicants say that the nature of the consideration was $45,000 cash. The applicants:
a)confirm that Devere Holdings and Packham’s original understanding of the applicants’ pleading, that is that “the consideration provided for the transfer was the cash sum of $45,000”[32] was “not misunderstood” by Devere Holdings and Packham;[33] and
b)say that they “do not plead that consideration in a form other than dollars, but to the monetary value of $45,000, was given.”[34]
[32] Devere Holdings and Packham’s 25 July 2008 letter.
[33] Trustees’ 28 July 2008 letter.
[34] Trustees’ 28 July 2008 letter.
Whatever alternative forms consideration might have taken, and whatever meaning might be attributed to what was said by the Federal Court in Devere Holdings, there is simply no issue here that the applicants have unequivocally stated the nature of the $45,000 consideration as cash, and cash only. That being so, the particulars sought in paragraphs 1.1 to 1.3 of the Request have been provided to the respondents, albeit in correspondence and not in the form of formal particulars. Furthermore, they have been confirmed to the Court in oral submissions by Counsel for the applicants. In those circumstances, given the objects of ss.3 and 42 of the Federal Magistrates Act 1999 (Cth)[35] and r.1.03 of the Federal Magistrates Court Rules 2001 (Cth),[36] respectively, there can be no prospect of Devere Holdings and Packham:
a)not being able to properly prepare for hearing; or
b)being ambushed at hearing.
In that regard, the Court will simply not allow the applicants to resile from particulars so unequivocally and emphatically stated, albeit not formally.
[35] “FM Act”.
[36] “FMC Rules”.
In those circumstances should the Court formally order the applicants to provide Devere Holdings and Packham with particulars that have already been otherwise provided? Logic and common sense say “no”. So too does the law.
In Olsen v Wellard Feeds Pty Ltd[37] this Court observed that:
[37] [2007] FMCA 1885 (“Wellard Feeds”).
a)the Court had the power to order particulars;[38]
b)the context in which the power to order particulars had to be exercised and considered included that outlined by the Court in Goodall v Nationwide News Pty Ltd[39] where the Court said, as to its objects and mode of operation and having regard to ss.3 and 42 of the FM Act and r1.03 of the FMC Rules, that:
[38] Wellard Feeds at paras.3, 5 and 8 per Lucev FM; FMC Rules, r.10.01(3)(m).
[39] [2007] FMCA 218 (“Goodall”).
“ … the Court is intended to operate in a manner:
(a) as informal as possible in the exercise of judicial power;
(b) which is not protracted in its proceedings;
(c) which resolves proceedings justly, efficiently and economically;
(d) uses streamlined procedures; and
(e) avoids undue delay, expense and technicality”;[40]
c)it is not inconsistent with modern principles of case management to determine the necessity for particulars by having regard to the totality of the pleadings and the evidence already filed;[41] and
d)the case (Wellard Feeds) was not a complex one falling “at the simple end of the simple-complex spectrum of cases which come before this Court”,[42] and that:
“a.sufficient particulars are already contained in the statement of claim or the affidavit evidence read as a whole;
b.in any event, these are matters, generally speaking, which are properly dealt with on the evidence and Counsel properly instructed will be able to deal with them in evidence and subsequently in submissions; and
c.it is not appropriate in this Court in a case of this type, which as indicated, is a simple workplace relations claim, to necessarily order particulars”.[43]
[40] Goodall at para.21 per Lucev FM.
[41] Wellard Feeds at para.7 per Lucev FM citing the observation of the Full Court of the Federal Court that “modern techniques of case management suggest a more pragmatic and flexible approach than the structured, royal-laden regime proposed by the applicants”: Bailey & Ors v Beagle Management Pty Ltd & Ors (2001) 182 ALR 264 at 272 per Heerey, Branson and Merkel JJ; [2001] FCA 60 at para.34 per Heerey, Branson and Merkel JJ, cited at footnote 5 of Wellard Feeds.
[42] Wellard Feeds at para.9 per Lucev FM.
[43] Wellard Feeds at para.16 per Lucev FM.
The Court determined in Wellard Feeds that there would be no order for particulars in those circumstances.
In Doukidis v Williamson & Anor[44] this Court ordered the provision of particulars because:
a)of the relative complexity of the case (a constructive trust on behalf of a bankrupt’s wife being alleged in circumstances where the trustee in bankruptcy asserted that a transfer was at an alleged undervalue);
b)of the quasi-pleading nature of the amended application (the application proceeding on the basis of an application in response and affidavits, not formal pleadings as such); and
c)the particulars were confined and would assist in narrowing and clarifying issues. [45]
[44] [2008] FMCA 1352 (“Doukidis”).
[45] Doukidis at para.34 per Lucev FM.
In Wellard Feeds the Court noted that:
“…the time and effort of the parties, the cost that the parties have clearly incurred, and the Court resources that have been expended in the determination of this issue, are completely disproportionate to any benefit which might be gained by either the parties or the Court. This is a classic but small example – or example on a small scale – of the sort of litigious and procedural one-upmanship which this Court was set up to, and should avoid, and which has been much criticised, particularly in recent times, both judicially and extra-judicially, by various courts and judges.”[46]
[46] Wellard Feeds at para.17 per Lucev FM. In Police & Nurses Credit Society Ltd v Burgess Rawson (WA) Pty Ltd [2006] FCA 1395 at para.17 per French J (“Burgess Rawson”) it was said:
Devere Holdings and Packham dogged pursuit of particulars of paragraphs 1.1 to 1.3 of the Request is of similar ilk. The Request was simply unnecessary in all the circumstances.
Once the applicants confirmed that Devere Holdings and Packham’s original understanding of the plea in paragraph 18 of the statement of claim was correct that should have been an end to the matter.[47] Accordingly, the application for the particulars in paragraphs 1.1 to 1.3 of the Request will be dismissed.
[47] See CTC Resources NL v Australian Stock Exchange Ltd [2004] WASCA 281 where the Full Court of the Supreme Court of Western Australia held that a Master’s refusal to order particulars which had been provided in correspondence was not a miscarriage of the discretion to order particulars, and in any event the Full Court were not persuaded that there was any relevant prejudice arising from the refusal: at paras.9-17 per McKechnie J (with whom Simmonds J agreed at para.18).
Paragraph 1.4 of the Request seeks particulars as to when and how the $45,000 cash was allegedly given by Packham to each of Mr and Mrs Andony.
Paragraph 18 of the statement of claim does not say when or how the $45,000 cash was allegedly given to each of Mr and Mrs Andony. The plea in paragraph 18 of the statement of claim is denied at paragraph 5 of the amended defence of Devere Holdings and Packham.
It was not suggested that the particulars sought in paragraph 1.4 of the Request were contained in any evidence presently before the Court.[48]
[48] Rana v University of South Australia (2004) 136 FCR 344 at 349-350 and 353-354 per Lander J; [2004] FCA 559 at paras.34-41 and 73-75 per Lander J (“Rana”); Wellard Feeds at para.5 per Lucev FM.
In those circumstances it is appropriate that particulars of when and how the $45,000 cash was allegedly given to each of the Andonys be given to Devere Holdings and Packham, so as to allow Devere Holdings and Packham to prepare for the hearing and not be taken by surprise.[49] It is also appropriate having particular regard to the nature of the proceedings, which are, as the Court has previously observed, at the top end of complexity for this Court in its bankruptcy jurisdiction.[50]
[49] Verge (No.1) at paras.19-22 per Lucev FM.
[50] Verge (No.1) at para.17 per Lucev FM; also cited in Verge (No 3) at para.29 per Lucev FM.
In less complex proceedings in this Court the affidavit evidence provides both evidence and particulars,[51] and particulars of this type might not be granted.[52] However, given that:
a)the matter overall is one of some complexity;[53]
b)the Court is required to assess the value of the consideration given and identify the consideration actually given by the transferee;[54] and
c)the particulars are necessary for Devere Holdings and Packham to prepare to meet the applicants’ case at hearing,[55]
the Request for the further and better particulars contained in paragraph 1.4 of the Request will be granted.
[51] Rana FCR at 349-350 and 353-354 per Lander J; FCA at paras.34-41 and 73-75 per Lander J; Wellard Feeds at para.5 per Lucev FM.
[52] Wellard Feeds at para.16(c) per Lucev FM.
[53] See cases cited at footnote 50 above.
[54] Verge (No.1) at para.15 per Lucev FM, citing Victorian Producers Cooperative Co Ltd v Kenneth (1999) 1 ABC(NS) 198 at 201-202 per Merkel J; [1999] FCA 1488 at paras.11 and 18 per Merkel J; Sutherland v Brien (1999) 149 FLR 321 at 327 per Austin J; [1999] NSWSC 155 at para.21 per Austin J.
[55] Verge (No.1) at paras.19-22 per Lucev FM.
Devere Holdings and Packham conceded that paragraph 1.5 of the Request was “probably a useless request”.[56] Given that paragraph 18 of the statement of claim specifically states by whom the consideration was allegedly provided it is a useless request, and one which never should have been made. The request for particulars in paragraph 1.5 of the Request will be dismissed.
Application to strike out paragraphs 41 to 53 of statement of claim
[56] See para.19 above.
Application
Devere Holdings and Packham’s application in the case seeks to strike out paragraphs 41 to 53 of the statement of claim.
Statement of claim – paragraphs 41 to 53
Paragraphs 41 to 53 of the statement of claim provide as follows:
41.Mrs Andony did not execute the Second Agreement.
42.Mrs Andony did not execute a share transfer form for the transfer of her interest in the joint shares to Packham, nor did she authorise any person to sign such a form on her behalf.
43.Mrs Andony did not at any relevant time agree or consent to the transfer of her interest in the joint shares to Packham or anyone else.
44.On or about 20 January 2004, Packham became registered as the holder of the whole of the interest in the joint shares.
45.By reason of the matters pleaded in paragraphs 41-44 above:
(a)Mrs Andony at all relevant times prior to 26 August 2003 retained her interest in the joint shares;
(b)Mrs Andony at all relevant times prior to 26 August 2003 was entitled to apply for an order pursuant to section 175 of the Corporations Act 2001 (Cth) for the correction of Devere’s register of members to record Mrs Andony as the joint registered holder of the joint shares;
(c)On 28 May 2004 Mrs Andony’s interest in the joint shares vested in the applicants;
(d)The applicants are entitled to an order pursuant to section 175 and section 1072E of the Corporations Act 2001 for the correction of Devere’s register of members and the registration of the applicants as the holder of Mrs Andony’s interest in the joint shares.
Transfer of Mrs Andony’s Interest in the Joint Shareholding
46.Alternatively to paragraphs 34-45 above, the applicants plead the matters set out in paragraphs 47-53 below.
47.Mrs Andony was a party to and executed the Second Agreement pleaded in paragraph 34 above.
48.There were terms of the Second Agreement that:
(a)The Andonys would pay within 12 months of settlement of the sale of the Unit certain monies and/or purported liabilities;
(b)The Andonys would make certain repayments to Statewest Credit Society (“Statewest”) in respect of monies borrowed from Statewest by Packham;
(c)Packham would hold a share transfer form executed by Mr Andony and Mr Andony [sic] to transfer to Packham the whole of their interest in the joint shares as security for the Andonys’ obligation pleaded in paragraph 48(b) above;
(d)In the event that Statewest issued a notice because the Andonys had failed to make the repayments pleaded in paragraph 48(b) above or the Andonys failed to make the payments pleaded in paragraph 48(a) above, the Andonys authorised Packham to immediately register the share transfer form to transfer the whole of their interest in the joint shares to Packham;
(e)The registration of the share transfer form to transfer the whole of the Andonys’ interest in the joint shares to Packham would operate to fully satisfy and discharge:
(i) The Andonys debts to Mr Fazio and Packham;
(ii) All of the claims and liabilities that any party to the Second Agreement (and their related companies) may have against any other party to the Second Agreement (or their related company).
49.In about April 2003 the Andonys, purportedly pursuant to the term of the Second Agreement pleaded at paragraph 48(c) above, executed the share transfer form for the transfer of the whole of their interest in the joint shares to Packham.
50.On about 17 June 2003 and purportedly pursuant to the term of the Second Agreement pleaded at paragraph 48(d) above, Packham executed the share transfer form and then subsequently caused to be registered the transfer of the whole of the interest in the joint shares to Packham.
51.Packham gave as consideration for the transfer of the whole of the interest in the joint shares, at the most, a discharge of liabilities to the net value of $263,208.50.
Particulars
Pursuant to the term of the Second Agreement pleaded in paragraph 34(e) above:
(a) Packham discharged the Andonys’ liability to Packham in respect of the loan to the Andonys of $120,000 pleaded at paragraph 29(b) above
(b) Packham discharged the Andonys’ liability to Packham in respect of a further loan by Packham to the Andonys in the sum of $25,000; and
(c) Packham discharged the Andonys’ liability to Packham in the sum of $120,979 being monies borrowed by Packham from Statewest in about May 2002 of which the Andonys received the benefit.
52.The market value at 17 June 2003 of the whole of the Andonys’ interest in the joint shares was approximately $748,500.
Particulars
(a) The market value of the Dongara Land in June 2003 was $1,500,000;
(b) The debt owed by the Andonys to Devere of $180,000 was discharged pursuant to the Second Agreement and the transfer of the Andonys’ interest in the joint shares to Packham;
(c) The balance of the debt owed by Devere to the Andonys of $137,770.50 was discharged pursuant to the Second Agreement and the transfer of the Andonys’ interest in the joint shares to Packham;
(d) Accordingly, the market value of the whole of the shares in Devere was $1,500,000;
(e) Therefore, the market value of the whole of the interest in the joint shares was 49.9% of the value of the whole of the shares, being $748,500.
53.By reason of the matters pleaded in paragraphs 46-52 above pursuant to subsection 120(1) of the Act, the transfer by the Andonys to Packham of their interest in the joint shares is void against the applicants.
Paragraphs 41 to 45 of the statement of claim allege that Mrs Andony did not execute an agreement or a share transfer form and did not agree or consent to the transfer of her interest in the joint shares to the second respondent, Packham.[57]
[57] “Packham”.
Paragraphs 46 to 53 of the statement of claim allege, in the alternative, that Mrs Andony did sign the abovementioned documents, and did agree to transfer her interest in the joint shares.
It is not in dispute that:
a)the allegations in paragraphs 41 to 45 and paragraphs 46 to 53 are inconsistent; and
b)as a general rule parties may plead inconsistent sets of facts in the alternative.[58]
[58] Issitch v Worrell & Ors (2000) 172 ALR 586 at 594 per Drummond J; [2000] FCA 477 at para.32 per Drummond J (“Issitch”).
First and second respondents’ arguments
There is also, generally, agreement that if a party knows that one of the alternative sets of facts is false, the pleading is embarrassing and is liable to be struck out.[59]
[59] Brailsford v Tobie (1888) 10 ALT 194 at 195-196 per Holroyd J (“Brailsford”); Issitch ALR at 594 per Drummond J; FCA at para.32 per Drummond J; CGU Insurance v Lawless [2008] VSCA 38 at para.27 per Redlich JA (“Lawless”), with whom Neave JA agreed generally at para.9 and Maxwell P agreed on this point at para.1.
Devere Holdings and Packham say that Mrs Andony must know whether she signed the documents and whether she agreed to the transfer of her interest in the joint shares.
Devere Holdings and Packham seek to counter an anticipated argument by the applicants that as trustees they do not “know” what Mrs Andony signed or agreed to, by arguing that:
a)the claim in paragraphs 41-45 of the statement of claim asserts rights of Mrs Andony (seemingly the “rights” under ss.175 and 1072E of the Corporations Act) which do not arise under any provision of the Bankruptcy Act, and is in fact a claim brought by the applicants effectively standing in Mrs Andony’s shoes;[60] and
b)in proceedings in the Supreme Court of Western Australia[61] involving the same parties the applicants there relied on an affidavit of Mrs Andony in which she deposed to not having executed the agreement or share transfer form.[62]
[60] Devere Holdings and Packham’s written outline of submissions, paras.9-10.
[61] Devere Holdings Pty Ltd v Verge & Ors, CIV 2019 of 2006 (“the Supreme Court proceedings”).
[62] Fazio’s Affidavit, para.14, Annexure GF-7 being a copy of an affidavit sworn by Mrs Andony in the Supreme Court proceedings (“Mrs Andony’s Supreme Court Affidavit”).
Devere Holdings and Packham argue that it is embarrassing for both claims pleaded in paragraphs 41 to 45 and paragraphs 46 to 53 respectively to be advanced in the alternative, and that all these paragraphs should be struck out.[63]
[63] Devere Holdings and Packham’s written outline of submissions, para.12.
Applicants’ arguments
The applicants say that they rely upon the assertion made by Mrs Andony, that she did not execute the agreement, to found the plea at paragraphs 41 to 45 of the statement of claim.[64]
[64] Trustees’ written outline of submissions, para.10.
The applicants say that what Mrs Andony “knows”, as opposed to what she asserts, cannot be something actually known by the applicants as trustees in bankruptcy. The applicants therefore say that what is true or false cannot be known personally by them, and therefore they are entitled to advance the alternative plea in paragraphs 46 to 53 of the statement of claim.[65]
[65] Trustees’ written outline of submissions, paras.9-10.
The applicants say, self-evidently, that they and not Mrs Andony are the applicants, and that as trustees in bankruptcy they hold Mrs Andony’s property on trust for the creditors of the bankrupt estate. As such, the applicants say that the claim is not brought on behalf of Mrs Andony, nor do the trustees stand in her shoes. The applicants say that any duties or obligations owed by them are owed to the creditors.[66]
[66] Trusteess’ written outline of submissions, para.11, citing Bankruptcy Act, ss.116 and 176.
Consideration
In Brailsford the defendant pleaded mistake or fraud in response to a claim in contract for the balance of the purchase price of a property. The Court there held that the alternative pleas could not be allowed because:
“The actual facts must be within her own knowledge, and that being so she has set out two sets of facts inconsistent with one another. If this were to be allowed it would be permitting a party knowing the facts to deliberately place on the record statements, one or other of which must be known to be a lie.”[67]
[67] Brailsford at 194-195 per Holroyd J.
The critical point in Brailsford was that one of the pleas “must be known to be a lie” because “the actual facts must be within … [the party’s] own knowledge”.[68] Put shortly, the party asserting the facts must know the actual facts within their own knowledge before an inconsistent plea will be struck out.
[68] Brailsford at 194-195 per Holroyd J.
Issitch involved an appeal against orders of the Federal Court (at first instance):
a)refusing to annul a bankruptcy; and
b)in favour of the trustee against the appellant.
In Issitch the trustee pleaded that monies withdrawn from the bankrupt’s account by the appellant (the bankrupt’s wife), including a sum of $90,167 which the trustee alleged the appellant had spent on the construction of a new house, constituted a settlement under s.120 of the Bankruptcy Act;[69] and that the withdrawal was void against the trustee.[70] The appellant asserted that she used the funds for purposes other than the construction of the new house: it was “a case factually inconsistent in a radical way” with the money having been spent on the new house.[71]
[69] Section 120 of the Bankruptcy Act historically sought to avoid settlements of property, but this changed under the Bankruptcy Legislation Amendment Act 1996 (Cth) which introduced the concepts of transfer of property and the market value of the property: Darvall & Fernon (Eds), Australian Bankruptcy Law and Practice (5th Edn) (Sydney: Thomson LawBook Co) para.20.0.20 (“Australian Bankruptcy Law and Practice”).
[70] Issitch ALR at 594 per Drummond J; FCA at para.29 per Drummond J.
[71] Issitch ALR at 594 per Drummond J; FCA at para.31 per Drummond J.
On appeal the appellant asserted that had the trustee pleaded the case differently at first instance by asserting a want of consideration for the money spent on the house, the appellant would then have pleaded that she did not receive most of the money, nor did she spend it on the construction of the house, but spent a large part on the bankrupt himself, and alternatively if she did receive the money and did apply it to the construction of the new house, she gave particular benefits to the bankrupt that constituted good consideration.[72]
[72] Issitch ALR at 594 per Drummond J; FCA at para.31 per Drummond J.
The Federal Court held that the appellant was not entitled to set up the alternative inconsistent answer “where one of these sets [of facts] must be known to the party to be false.”[73]
[73] Issitch ALR at 594 per Drummond J; FCA at para.32 per Drummond J.
The Federal Court in Issitch said a party was not to set up facts of which that party had direct knowledge, and which must be known to be false.
In Lawless a third party, CGU Insurance, appealed against a personal injuries damages judgment in favour of the plaintiff. The plaintiff was the grandson of the respondent, Mr Lawless. The then 10 year old grandson had been injured when his left hand became caught between a post driver and a fence post, crushing that hand. The post driver was being operated by Lawless (the grandfather) on a farming property that Lawless leased to a fourth party, who had taken out a public risk policy indemnifying Lawless against public liability. At first instance the Victorian Supreme Court gave judgment for the grandson, and CGU Insurance was ordered to indemnify Lawless. CGU Insurance appealed on the basis that the trial judge should have found that Lawless was in breach of a special condition of the policy requiring Lawless to take all reasonable precautions to prevent personal injury, and therefore CGU Insurance was entitled not to indemnify him.[74]
[74] Lawless at paras.10, 11 and 19 per Redlich JA.
At first instance Lawless had contended that he did not know his grandson was holding the fence post, a contention which the trial judge rejected.[75] The trial judge found that Lawless had in any event, not failed to take reasonable precaution, because on all the available evidence:
a)Lawless did not recognise the relevant danger or at least the extent of it;
b)the grandson’s injury was not due to a lack of desire on the part of Lawless to prevent bodily injury to his grandson by taking reasonable precaution; and
c)there was no deliberate decision to endanger the grandson by Lawless.[76]
[75] Lawless at paras.21 and 26 per Redlich JA.
[76] Lawless at paras.24-25 per Redlich JA, applying the test as to reasonable precautions identified by the Victorian Supreme Court in Albion Insurance Co Ltd v Body Corporate Strata Plan [1983] 2VR 339.
Thus, Lawless was not precluded from relying on the alternative case to that which he had positively and expressly disclaimed, to support an argument that he had taken reasonable precaution.[77] In so doing the Victorian Court of Appeal found that:
a)the trial judge had been confronted with the divergent cases of the grandson as plaintiff and his grandfather Lawless as respondent from the outset; and
b)CGU Insurance had put in issue the question of compliance with the reasonable precaution special condition in the public risk policy, which gave rise to the indemnity.[78]
[77] Lawless at paras.26-34 per Redlich JA.
[78] Lawless at paras.30-34 per Redlich JA.
In Lawless the Victorian Court of Appeal said:
“It would be an abuse of the Court’s processes to permit facts to be pleaded which deliberately place on the record positive statement of fact, one or other of which must be known by the pleading party to be untruthful.”[79]
[79] Lawless at para.27 per Redlich JA.
The Victorian Court of Appeal thus had regard to the pleading principle identified in Brailsford and Issitch. The common element in the rationale behind the pleading principle is that the pleading party must know one of the versions of the facts to be untruthful. It is not enough that one of the versions of the fact is, or must be, or will be found to be, untruthful.
In this case the only person or persons with actual knowledge of whether Mrs Andony executed the agreement, or not, is Mrs Andony, and any other person who might have been present if she did execute the agreement. Obviously, any such person does not include the applicants, the trustees in bankruptcy. It follows therefore that the applicants cannot “know” which of the alternative sets of “facts” is true, and which is false, and are not therefore putting on to the record facts which they “know” to be false. It follows that the argument put by Devere Holdings and Packham must fail on this issue.
The Trustees also responded to this point by arguing that under the Bankruptcy Act they were answerable to the creditors for the performance of various duties and obligations.[80] Counsel for the Trustees put it neatly: “[The Trustees] are entitled to assert the legal consequences that benefit the creditors”.[81]
[80] Trustees’ written outline of submissions at para.11.
[81] Transcript at 21.
The duties of the Trustees include the following:
a)“determining whether the estate includes property that can be realised to pay a dividend to creditors”;[82]
b)“determining whether the bankrupt has made a transfer of property that is void against the trustee”;[83]
c)“taking appropriate steps to recover property for the benefit of the estate”;[84] and
d)“exercising powers and performing functions in a commercially sound way”.[85]
[82] Bankruptcy Act, s.19(1)(b).
[83] Bankruptcy Act, s.19(1)(e).
[84] Bankruptcy Act, s.19(1)(f).
[85] Bankruptcy Act, s.19(1)(k).
Each of the above duties overlap in this proceeding. These duties are not an exhaustive list, either under s.19(1) of the Bankruptcy Act[86] or generally,[87] because a trustee in bankruptcy is governed by the general law relating to trustees, except where bankruptcy or other legislation provides otherwise.[88] The duties must be exercised so as to maximise returns to the creditors and obtain the best surplus for the bankrupt.[89] The duties must also be exercised as public duties for the public welfare.[90] Any proceedings taken by a trustee in bankruptcy are accordingly not strictly inter partes, and have an element of public and community benefit and interest.[91]
[86] A number of other statutory duties are listed in s.19(1) of the Bankruptcy Act.
[87] In Adsett v Berloius (1992) 37 FCR 201 at 208-209 per Northrop, Wilcox and Cooper JJ (“Adsett”) the Full Court of the Federal Court set out a series of duties, conduct and principles in relation to how a trustee in bankruptcy ought to act.
[88] Re Ladyman (1981) 55 FLR 383 at 397 per Rogerson J; Adsett at 209 per Northrop, Wilcox and Cooper JJ; Wakim v HIH Casualty & General Insurance Ltd (2001) 111 FCR 58 at 73 per Einfeld J; [2001] FCA 103 at para.50 per Einfeld J (“Wakim”).
[89] Mannigel v Aitken (1983) 77 FLR 406 at 408 per Smithers J (“Mannigel”) (affirmed, but without dealing with this issue in Mannigel & Others v Aitken (1985) 9 FCR 1); Adsett at 209 per Northrop, Wilcox and Cooper JJ; Citicorp Australia Ltd v Official Trustee in Bankruptcy (1996) 71 FCR 550 at 560-561 per Foster, von Doussa and Sundberg JJ.
[90] Adsett at 209 per Northrop, Wilcox and Cooper JJ; Re Campbell; Ex parte Official Trustee (1987) 13 FCR 326 at 329 per Jenkinson J.
[91] Verge (No. 1) at para.15 per Lucev FM; La Pegna v Commissioner of Taxation (2006) 204 FLR 364 at 369; [2006] FMCA 1643 at para.24 per Lucev FM citing Australian Securities and Investments Commission v Forge (2003) 133 FCR 487 at 489 and 490-491 per Branson and Stone JJ and 492-493 per Emmett J; [2003] FCAFC 474 at paras.9 and 15 per Branson and Stone JJ, and paras.27, 29 and 30 per Emmett J (“Forge”). For a helpful and more detailed exposition of cases concerning the duties of a trustee in bankruptcy see Foyster v Prentice [2008] FMCA 757 at paras185-202 per Wilson FM. Forge is discussed in Australian Bankruptcy Law and Practice at para.1.0 in similar terms, but in the context of the overall statutory purpose and scheme of the Bankruptcy Act.
Having regard to the nature of the Trustees’ duties the Court considers that, absent personal knowledge of the falsity of one of the sets of inconsistently pleaded facts, it is consistent with the legislature’s expression of those duties in the Bankruptcy Act and the exposition of those duties by the Federal Court, to allow the Trustee to maintain the inconsistent factual pleas in paragraphs 41 to 45 and paragraphs 46 to 53 of the statement of claim. To do otherwise would unduly restrict the Trustees in the exercise of their duties, and in particular:
a)deprive the Trustees of the opportunity to have this Court determine whether the Mr and Mrs Andony have made a transfer or transfers of property which are void against the Trustee; and
b)seriously impede the Trustees’ endeavours to maximise returns to creditors and provide the best surplus to Mr and Mrs Andony.
For these further reasons the application by Devere Holdings and Packham to strike out paragraphs 41 to 45 and paragraphs 46 to 53 of the statement of claim fails.
Further arguments of Devere Holdings and Packham
Devere Holdings and Packham also argue that:
a)the applicants must know the facts, and whether the facts are true or false, or be taken to so know, and
b)the applicants cannot advance inconsistent claims,
because:
c)the claim advanced in paragraphs 41 to 45 of the statement of claim asserts rights of Mrs Andony, and was not a claim arising pursuant to “any provision” of the Bankruptcy Act;[92] and
d)the applicants cannot “approbate and reprobate” by relying in the Supreme Court proceedings on the evidence in Mrs Andony’s Supreme Court affidavit where she says that she did not execute the Second Agreement, and then saying in these proceedings that they do not know whether that evidence is true.[93]
[92] Devere Holdings and Packham’s written outline of submissions at para.10.
[93] Devere Holdings and Packham’s written outline of submissions at para.11.
The factual claim advanced in paragraphs 41 to 44 of the statement of claim is that:
a)Mrs Andony did not:
i)execute the Second Agreement;
ii)execute a share transfer for the transfer of her interest in the shares to Packham, nor authorise any person to sign such a transfer for her; and
iii)agree or consent to the transfer of her interest in the joint shares to Packham or anyone else;
and
b)Packham became registered as the holder of the whole interest in the joint shares on or about 20 January 2004.
The applicants say that Mrs Andony was entitled under s.175 of the Corporations Act 2001 (Cth)[94] to apply for an order to correct Devere’s share register, to show Mrs Andony as the joint registered holder of the shares, and that the applicants are similarly entitled, under ss.175 and 1072E of the Corporations Act, to a correction order for Devere’s share register to show the applicants as holders of Mrs Andony’s interest in the joint shares.
[94] “Corporations Act”.
Section 175(1) of the Corporations Act provides that:
“A person aggrieved may apply to the Court to have a register kept by the company … corrected.”
The “Court” in s.175(1) is defined in s.58AA(1) of the Corporations Act, which is subject to s.58AA(2) of the Corporations Act, and which together provide as follows:
(1) Subject to subsection (2), in this Act:
court means any court.
Court means any of the following courts:
(a) the Federal Court;
(b) the Supreme Court of a State or Territory;
(c) the Family Court of Australia;
(d) a court to which section 41 of the Family Law Act 1975 applies because of a Proclamation made under subsection 41(2) of that Act.
(2) Except where there is a clear expression of a contrary intention (for example, by use of the expression “the Court”), proceedings in relation to a matter under this Act may, subject to Part 9.7, be brought in any court.
Section 1072E(6) and (7) of the Corporations Act provide as follows:
(6) If:
(a) by virtue of the Bankruptcy Act 1966, a share in a body corporate, being the property of a bankrupt, vests in the Official Trustee in Bankruptcy; and
(b) the bankrupt is the registered holder of that share;
the Official Trustee may be registered as the holder of that share as the Official Trustee in Bankruptcy.
(7) If:
(a) by virtue of the Bankruptcy Act 1966, a share in a body corporate, being the property of a bankrupt, vests in the Official Trustee in Bankruptcy; and
(b) the bankrupt is entitled in equity to that share;
the Official Trustee may, with the consent of the body and of the registered holder of that share, be registered as the holder of that share as the Official Trustee in Bankruptcy.
Whatever potential rights arise under s.1072(6) and (7) of the Corporations Act for a trustee in bankruptcy to be registered as a holder of a share in a body corporate it is clear that they only arise “by virtue of” the Bankruptcy Act, and that they are rights of a trustee in bankruptcy, not the bankrupt. By virtue of s.58(1) of the Bankruptcy Act when a debtor becomes a bankrupt the property of, or vested in, the bankrupt is statutorily vested in the trustee in bankruptcy, and is property divisible amongst the creditors.[95] Therefore, so far as the Trustees assert a right to be registered as the holders of Mrs Andony’s interest in the joint shares that is a right personal to them and not to Mrs Andony, and it is a right which arises by virtue of the Bankruptcy Act.
[95] Bankruptcy Act, s.116(1).
Under s.175(1) of the Corporations Act a “person aggrieved” may apply to correct a share register kept by a company. The Trustees are arguably persons aggrieved because, on their argument, Mrs Andony’s joint interest in the shares, vested in them, is not reflected in the register. If the Trustees are correct (and for present purposes that need not be resolved) they have a recognised interest in the shares created by statute which a court will protect.[96] That interest, created by s.58(1) of the Bankruptcy Act, is the Trustees’ interest, not that of Mrs Andony.
[96] Grant v John Grant & Sons (1950) 82 CLR 2 at 51 per Fullagar J; Bon McArthur Transport v Lange [2007] NSWSC 1371 at paras.13-15 per Austin J.
The assertion of Devere Holdings and Packham that the claim advanced in paragraphs 41 to 45 of the statement of claim asserts rights of Mrs Andony, and was not a claim arising pursuant to “any provision” of the Bankruptcy Act, is not, fails for the reasons set out in the preceding two paragraphs.
Although not an issue it is now necessary to resolve, nor a point addressed by any party, it seems clearly arguable by reason of:
a)the definition of “Court” in s.58AA(1) of the Corporations Act;
b)the use of the expression “the Court” in s.175(1) of the Corporations Act when read with s.58AA(2) of the Corporations Act,
that it is, for relevant purposes (namely the exercise of jurisdiction in bankruptcy in which only the Federal Court and this Court have jurisdiction under s.27 of the Bankruptcy Act), only the Federal Court which may make any correction order in relation to the share register.[97]
[97] Gordon v Tolcher (in his capacity as liquidator of Senafield Pty Ltd (in liq)) & Anor (2006) 231 ALR 582 at pages 582, 583 and 584 per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ; [2006] HCA 62 at paras.6, 8 and 15 per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ. As to the meaning of “the Court” in s.58AA(1) of the Corporations Act see also Sihota v Pacific Sands Motel [2003] NSWSC 119.
Devere Holdings and Packham assert that the applicants cannot “approbate and reprobate” by relying in the Supreme Court proceedings on the evidence in Mrs Andony’s Supreme Court affidavit where she says that she did not execute the Second Agreement, and then saying in these proceedings that they do not know whether that evidence is true.
This assertion seems to be another way of submitting that the alternative factual pleas in paragraphs 41 to 45 of the statement of claim and paragraphs 46 to 53 of the statement of claim are inconsistent and ought to be struck out. For reasons set out above the Court has rejected the strike out application made on that basis, and to the extent that the “approbate and reprobate” argument relies on the same rationale it cannot succeed.
The origins of the doctrine of approbation and reprobation are in the law of Scotland.[98] The English law equivalent was the doctrine of election.[99] Originally applied to equitable election, or election between estates, approbation and reprobation has come to be applied to election between rights, and arguably that cross-over has become “a potent source of confusion”,[100] the “notion” being “used interchangeably in the case law with election, waiver and estoppel” making it “difficult to confidently identify from the cases the material elements of any independent doctrine of approbation and reprobation.”[101] Nevertheless an independent doctrine of approbation and reprobation appears to be recognised in Australian law.[102] The Court adopts the full and erudite exposition of the case law in Mandurah Enterprises[103] which relieves it of the need for extended exposition in these Reasons for Judgment.
[98] Lissenden v CAV Bosch Ltd [1940] AC 412 at 417 per Viscount Maugham – “The phrase comes to us from north of the Tweed.”; and 435 per Lord Wright (“Lissenden”); Banque Des Marchands De Moscou (Koupetschesky) v Kindersley [1951] 1 Ch 112 at 119 per Lord Evershed MR – (Lord Evershed MR cited the judgment of Harman J which was under appeal: “the Scottish lawyers have it, approbating and reprobating, or, in the more homely English phrase, blowing hot and cold”) (“Kindersley”); Mandurah Enterprises Pty Ltd v Western Australian Planning Commission [2008] WASCA 211 at para.108 per McLure JA (“Mandurah Enterprises”).
[99] Lissenden at 417 per Viscount Maugham.
[100] Handley, Estoppel by Conduct and Election (London: Sweet & Maxwell, 2006) at 231-232 (para.14-004). Some years earlier the author, in his judicial capacity, described a party’s challenge to the validity of delegated legislation, that party in other proceedings having relied on the validity of the legislation to obtain orders, as “conduct [which] may be described as approbating and reprobating, election, waiver or estoppel … [but preferring] to regard it as a form of estoppel by convention”: Australian Workers Union New South Wales Branch v Minister for Natural Resources (1991) 26 ALD 461 at 469 per Handley JA.
[101] Mandurah Enterprises at para.108 per McLure JA.
[102] Mandurah Enterprises at para.118 per McLure JA.
[103] Mandurah Enterprises at paras.108-125 per McLure JA (and the cases there cited), with whom Buss JA agreed at para.127. Murray AJA at para.143 accepted, “without deciding”, that there is a doctrine of approbation and reprobation.
What the case law appears to says is that:
a)having obtained the benefit of a judgment or order arising from the making of a choice between two inconsistent claims, a party cannot pursue a claim on the basis of the inconsistent claim forgone, that is, it is impossible to allow a party in the position of applicant to pursue alternative remedies concurrently;[104]
b)approbation and reprobation does not apply where the claims are not inconsistent and the circumstances do not show an intention to abandon one of the claims;[105]
c)having chosen to treat legislation or delegated legislation as valid and having thereby obtained a benefit in litigation concerning that legislation or delegated legislation a party cannot in separate proceedings allege that the legislation or delegated legislation is invalid;[106]
d)in making a choice between two inconsistent rights the party making that choice must have knowledge of the material facts,[107] although in most cases of approbation and reprobation judgment has been entered and the knowledge of the factual bases for alternative and inconsistent claims and the right to choose do not arise;[108]
e)the mere making of two alternative inconsistent claims is not sufficient, there being no binding choice made until judgment is entered;[109]
f)the first claim must give rise to some benefit,[110] and
g)the taking from a statutory authority of an advance payment liable to be forfeited upon the making of a court order or declaration was not a benefit because it was something liable to be forfeited.[111]
[104] Mandurah Enterprises at paras.109, 111-112 and 115 per McLure JA.
[105] Mandurah Enterprises at para.110 per McLure JA.
[106] Mandurah Enterprises at paras.113-114 per McLure JA.
[107] Mandurah Enterprises at paras.116 and 122 per McLure JA.
[108] Mandurah Enterprises at paras.117 and 121 per McLure JA.
[109] Mandurah Enterprises at para.119 per McLure JA.
[110] Mandurah Enterprises at paras.109 and 124 per McLure JA; Kindersley at 119 per Lord Evershed MR.
[111] Mandurah Enterprises at para.124 per McLure JA.
Devere Holdings and Packam’s submissions amount to this: that the Trustees “cannot approbate and reprobate by relying on Mrs Andony’s evidence when it suits them and then saying that they do not know whether it is true.”[112] No authority was cited in support. The only evidence relied on was Fazio’s Affidavit, and in particular those parts referring to:
a)parts of Mrs Andony’s Supreme Court Affidavit where she denied signing the Second Agreement and the share transfer form;[113] and
b)information provided to him by his solicitor, Mr Solomon, that the trustees relied on Mrs Andony’s Supreme Court Affidavit in the Supreme Court Proceedings.[114]
[112] Devere Holdings and Packam’s written outline of submissions, para.11 (italicised emphasis added).
[113] Fazio’s Affidavit at para.14, specifically referring to paras. 8 and 12 of Mrs Andony’s Supreme Court Affidavit.
[114] Fazio’s Affidavit at para.14.
Mrs Andony’s Supreme Court Affidavit refers to the Dongara Land,[115] but contains no sworn evidence as to the exact nature of the Supreme Court proceedings, save that in the header (which is not evidence) it indicates that it is in opposition to an application for the removal of a caveat. The nature of the caveat sought to be removed is not disclosed or discussed, nor does it expressly say that the caveat is in relation to the Dongara Land (although that might be inferred). There is no other evidence as to the nature of the caveat, nor the outcome of the application for the removal of the caveat. The caveat was not otherwise adverted to in the written or oral submissions of Devere Holdings and Packham or the Trustees. The caveat is seemingly not referred to in the Trustees statement of claim, nor in Devere Holdings and Packham’s amended defence.
[115] Mrs Andony’s Supreme Court Affidavit at para.2.
Based on the case law the assertion that the Trustees have approbated and reprobated must fail because:
a)there is no evidence of the alternative right or claim said to arise from the Supreme Court Proceedings, and no evidence of any judgment or order arising from the Supreme Court proceedings or made by reference to the Mrs Andony’s Supreme Court Affidavit;
b)in any event, opposition to removal of a caveat over the Dongara land cannot necessarily be said to be inconsistent with the content of the claim made in these proceedings by the Trustees that an alleged transfer of the Dongara Land at undervalue is void;
c)further to (b), the Trustees’ actions do not show an intention to abandon any claim (and particularly the claim that an alleged transfer of the Dongara Land at undervalue is void), and, without knowing the nature of the caveat, it is entirely conceivable that a caveat on the Dongara Land might be to protect the Trustees alleged interest in that land, and therefore be consistent with the claims made in these proceedings;
d)for reasons set out above[116] it cannot be said that the Trustees have actual knowledge of the material facts;
e)even if two contrary claims are being advanced (and the Court does not consider that to be the case), that is not sufficient of itself to constitute approbation and reprobation;
f)there is no evidence of a benefit to the Trustees; and
g)even if a caveat is still in place, or there was successful opposition to the removal of a caveat, it may not be a benefit to the Trustees, in the relevant sense, because it can be removed.
[116] See paras.55-72 above.
Finally, the Court observes that there are not two inconsistent claims at issue in these proceedings. Approbation and reprobation is about inconsistent claims and courses of conduct, not potential reliance on different versions of the facts which might emerge in evidence. Setting aside the evidentiary difficulties for Devere Holdings and Packham arising from the conclusions in the previous paragraph, it can be said that the Trustees here make one relevant claim: that a particular transfer is void against them, no matter which version of the facts emerges at the hearing. The Court considers that a proper and prudent position for the Trustee to adopt, particularly when regard is had for the duties of the Trustee, which are discussed above.[117] For the Trustee to do otherwise might be imprudent, and, in certain circumstances, might ultimately give rise to an action against the Trustees.[118]
[117] See paras.68-71 above.
[118] Bankruptcy Act, s.176.
For the above reasons the Court finds that the Trustees have not approbated and reprobated as asserted by Devere Holdings and Packham.
The application in a case to strike out paragraphs 41 to 53 of the statement of claim is therefore dismissed.
Transfer of proceedings to Federal Court
Application
The application in a case seeks the transfer of these proceedings to the Federal Court under s.39 of the FM Act.
Legislative provisions in relation to consideration of transfer
The making of an order to transfer proceedings from this Court to the Federal Court is discretionary.[119] Any order made is not one in respect of which an appeal lies.[120] There are mandatory factors for the Court to take into account under s.39(3)(a)-(d) of the FM Act, as follows:
[119] FM Act, s.39(1) and (2).
[120] FM Act, s.39(6).
(a) any Rules of Court made for the purposes of subsection 40(2); and
(b) whether proceedings in respect of an associated matter are pending in the Federal Court; and
(c) whether the resources of the Federal Magistrates Court are sufficient to hear and determine the proceeding; and
(d) the interests of the administration of justice.
Rule 8.02(4)(a)-(f) of the FMC Rules provides for other factors to be considered as follows:
(a) whether the proceeding is likely to involve questions of general importance, such that it would be desirable for there to be a decision of the Federal Court or the Family Court on one or more of the points in issue;
(b) whether, if the proceeding is transferred, it is likely to be heard and determined at less cost and more convenience to the parties than if the proceedings is not transferred;
(c) whether the proceeding will be heard earlier in the Federal Magistrates Court;
(d) the availability of particular procedures appropriate for the class of proceeding;
(e) the wishes of the parties; and
(f) for family law or child support proceedings, whether the hearing of the proceeding is likely to take longer than 2 days.
In construing the FM Act and FMC Rules the Court must adopt a construction promoting the purpose or object of the FM Act and FMC Rules, and preferring that to a construction which does not promote purpose or object.[121] Regard may be had to any second reading speech and explanatory memorandum in construing the FM Act.[122]
[121] Acts Interpretation Act 1901 (Cth), s.15AA.
[122] Acts Interpretation Act 1901 (Cth), s.15AB.
Having regard to:
a)s.39 of the FM Act;
b)r.8.02 of the FMC Rules; and
c)the second reading speech and explanatory memorandum to the Federal Magistrates Bill 1999 (Cth),
the Court accepts that the purpose and object of s.39 of the FM Act (and likewise r.8.02 of the FMC Rules) is to:
d)enable the Court to deal with less complex matters previously dealt with by the Federal Court;
e)ease the workload of the Federal Court by having this Court deal with less complex matters;
f)enable “more complex matters” filed in this Court to be transferred to the Federal Court; and
g)allow more time for the Federal Court to deal with more complex matters.
There can be no doubt that this Court was established with the purpose of hearing the simpler, less complex, smaller and high volume cases, thus leaving the Federal Court[123] to hear more complex and longer cases. However, this Court now exercises jurisdiction, often concurrent (including concurrent but limited) jurisdiction with the Federal Court in a number of areas of federal law including various aspects of administrative law, admiralty, bankruptcy, consumer protection (trade practices), copyright, human rights and equal opportunity, migration, privacy and workplace relations. This Court also has “has associated jurisdiction to deal with common law claims which, were it not for the primary federal matter, would, in many cases, be within the jurisdiction (including any inherent jurisdiction) of the state common law superior courts of record.”[124] And whilst traditionally the FM Court was not a court of pleadings,[125] the FMC Rules were amended in 2007 to provide that no affidavit was required where a person commences an application by filing a statement of claim or points of claim, and if that occurs a respondent may file a defence or points of defence instead of an affidavit and may file a cross-claim.[126] Thus, many of the cases now heard by this Court, particularly in its copyright, workplace relations, trade practices and human rights jurisdictions, may take a week or more to hear. Since this Court’s inception in 2000 the jurisdiction of the Court has increased and there can be little doubt that the complexity of matters heard by it has also increased as a consequence of the expansion of jurisdiction, and generally.
[123] And the Family Court in relation to family law matters.
[124] Skipworth v State of Western Australia (No. 2) (2008) 218 FLR 16 at 27-28 per Lucev FM; [2008] FMCA 544 at para.37 per Lucev FM; FM Act, s.18.
[125] Rana FCR at 355 per Lander J; FCA at para.75 per Lander J.
[126] FMC Rules, r.4.05(2) and (3).
It is against that background that consideration must be given to each of the factors outlined above.[127]
[127] See paras.94-95 above.
Pending proceedings in an associated matter in the Federal Court
There are no pending proceedings in any associated matter in the Federal Court.
Sufficiency of resources of this Court to hear and determine the proceeding
There is no dispute that this Court has sufficient resources to hear and determine this matter which is presently listed for hearing for five days between 10 and 16 December 2008.
Question of general importance
On the question of what constitutes a question of general importance this Court has said:
A question of general importance might arise where:
(a) the issue to be determined is of general importance to the public at large or a significant class of persons or type or series of cases: MZXJR v The Minister for Immigration [2006] FMCA 652 at par [38] per McInnis FM;
(b) the case relates to the revenues of a Commonwealth or State: Noble v Cotton in Dowling, Proceedings of the Supreme Court, Vol 34 1 at p.10 per Dowling and Stephen JJ (and in that case relating to revenues of the then colony of New South Wales);
(c) significant human rights issues are at stake such as in Karner v Austria (2003) ECHR 395, where the European Court of Human Rights had to deal with differential treatment of homosexuals in succession to tenants under Austrian law as involving a question of general importance not just for Austria but for other state parties to the relevant convention;
(d) an issue as to the proper construction of legislation arises: Baumer v R (1988) 166 CLR 51;
(e) some important or exceptional point of principle arises: Veen v R (1979) 143 CLR 458 at p.461 per Stephen J, p.468 per Mason J and pp.497-498 per Aickin J;
(f) the particular area of law or the case law concerning that area is, "an area of some complexity": Spencer & Rutherford v Horizon Holidays & Ors [2006] FMCA 386 at par [7] per Connolly FM, or is a “substantial commercial dispute which involves a number of complex issues”: Spencer & Rutherford at par [10] per Connolly FM.[128]
[128] Genovese v BGC Construction Pty Ltd [2006] FMCA 1507 at para.13 per Lucev FM (“Genovese”).
Complexity
Complexity is a fluid concept, not necessarily determined by length or size of case. Whatever changes there have been in this Court’s jurisdiction and practice in more recent times[129] s.39 of the FM Act has not been amended since enactment, and there have been only minor amendments, in 2002, to r.8.02(4) of the FMC Rules. The issue was addressed by the Federal Court in Y v Australian Postal Corporation:
“Another purpose [of s.39 of the FM Act] … was to ensure that the Federal Magistrates Court did not deal with important or difficult cases that were best determined by a superior court of record.”[130]
[129] See para.98 above.
[130] [2005] FCA 1936 at para.23 per Finkelstein J (“Australian Postal Corporation”).
It therefore remains the case that “more complex matters” ought to be transferred by this Court to the Federal Court. [131] That course has been regularly adopted by this Court:
[131] Genovese at para.13(f) per Lucev FM.
a)in Spencer & Rutherford v Horizon Holidays & Ors the Court transferred a matter citing the case law as an area of some complexity and noting there was a substantial commercial dispute involving a number of complex issues in trade practices, passing off and copyright; [132]
b)in King v Office National Limited & Ors the Court transferred a matter citing notable complexity as to causes of action, numbers of active respondents and a multiplicity of legal and factual issues, plus extensive interlocutory issues; [133]
c)in Van Efferen v CMA Corporation Limited the Court transferred a matter citing:
“many of the questions in this case involve determination for the first time of issues in the W[orkplace] R[elations] Act which is said to be of considerable complexity. The parties identified … "novel" issues that will arise for determination. … there are a number of those issues that make it desirable there be a decision of the Federal Court on those issues.”[134]
d)in Deputy Commissioner of Taxation v Cumins the Court transferred the matter but before doing so observed that:
“where both the Supreme Court of Western Australia Court of Appeal and the Federal Court have characterised the issues sought to be agitated by the Respondent as revealing no arguable case and having “very low” prospects of success respectively it is unlikely that this Court will find the matter is complex, or alternatively, sufficiently important, to warrant transfer of the proceedings to the Federal Court, other than on the basis of the amount of Commonwealth revenue involved in relation to a single non-corporate taxpayer.”[135]
[132] [2006] FMCA 386 at paras.7 and 10 per Connolly FM.
[133] [2007] FMCA 1840 at para.13 per Smith FM.
[134] (2008) 173 IR 456 at 461 per O’Sullivan FM; [2008] FMCA 875 at para.30 per O’Sullivan FM (“Van Efferen”).
[135] [2007] FMCA 1841 at para.33 per Lucev FM(“Cumins”).
It must however be borne in mind that complexity is but one factor to be considered, although it is apparent from the cases that it is often the decisive factor.
Is this a more complex matter?
The Court has previously observed that the proceedings are “relatively complex”,[136] and further that it is:
a case which because of the number of parties involved, and the nature of the transactions involved, cannot be said to be a case in the general run of cases dealt with by this Court under s.120 of the Bankruptcy Act.[137]
[136] Verge (No. 1) at para.17 per Lucev FM.
[137] Verge (No. 3) at para.34 per Lucev FM.
That observation is arguably a sufficient basis for the Court to find that this is a more complex matter. It is an observation borne out by an examination of the detail of the matter, which includes but is not limited to:
a)the interest (an undivided one third interest) in the Dongara Land of the Andonys, the two former bankrupts;
b)three respondents: two of whom are alleged to have been involved in multiple transactions affecting the Andonys’ interest in the Dongara Land, and a third who has more recently purchased the Dongara Land;
c)the impugning of at least five transactions involving:
i)the transfer of the Andonys’ interest in the Dongara Land to Devere Holdings in May 2001;
ii)the issuance of shares in, and the transfer of shares from, Devere Holdings over the period May 2001 to January 2004;
iii)the transfer of the Dongara Land from Devere Holdings to Castleworld in July 2007;
d)identifying the precise transaction giving rise to the transfer of the Andonys’ interest in the Dongara Land, and the consideration (and nature of the consideration) given;
e)valuation of the Dongara land and an undivided one-third share in that land;
f)valuation of the shares at the relevant times, and identifying and valuing the consideration provided for the issue and transfer of the shares.
The remedies sought also demonstrate the complexity of the matter. The remedies sought include the following:
a)declarations against Devere Holdings that the relevant transfer of the Dongara Land is void against the Trustees and that the Andonys’ interest in the Dongara land vested in the Trustees at the time of each of their bankruptcies;
b)four declarations against Packham (and two additional alternative declarations) concerning the issuance of shares in Devere Holdings to Packham, and the transfer of the Andonys’ jointly held shares in Devere, being void against the Trustees and that the Andonys’ interests in those shares vested in then Trustees; and
c)nine declarations and three orders against both Devere Holdings and Packham in relation to the Andonys’ interests in shares held in Devere Holdings, including:
i)declarations that interests in the shares vested in the Trustees; and
ii)orders under ss.175 and 1072 of the Corporations Act for correction of Devere Holdings’ share register to reflect, in particular, the Trustees’ alleged interests in the shares. The orders sought in this regard might give rise, if the matter were to remain in this Court, to an issue as to whether this Court can make the orders sought. Because the issue of this Court’s power to make the orders was not raised in argument the Court has not considered the issue for the purposes of these Reasons for Judgment. That does not however otherwise detract from the potential complexity of the orders sought.
A novel issue appears to arise in relation to s.120(7)(b) of the Bankruptcy Act as to the claim that the issue of shares in Devere Holdings to Packham constitutes a transfer of property. It is a matter apparently devoid of authority, and given that fact, and the importance of that issue in the matter it might arguably benefit from consideration by the Federal Court rather than this Court.
Although the matter is proceeding on the pleadings, and there have been various interlocutory skirmishes resulting in orders for discovery (including third party discovery) and the exchange of expert reports, those facts alone would not now[138] of themselves constitute a basis for this Court finding that the proceedings are complex.
[138] See para.98 above.
What matters is whether the legal and factual subject matter is complex, and in this case the matters outlined above indicate that the legal and factual subject matter is complex and far removed from the general run of s.120 Bankruptcy Act cases dealt with by the Court.
The complexity of this matter is a factor which weighs significantly and heavily in favour of a transfer of the proceeding to the Federal Court.
Issue of general importance to the public at large or a significant class of persons or type or series of cases
There does not appear to be an issue of general importance to the public at large or to a significant class of persons.
The nature of the legal and factual matters involved in the proceedings, particularly the nature of the transactions sought to be impugned by the Trustees, and the issue which arises in relation to s.120(7)(b) of the Bankruptcy Act, are however such as to possibly be of general importance to this type of case, that is, cases where it is alleged that a transfer of property at under market value is void.
This factor weighs in favour of a transfer to the Federal Court.
Relating to the revenues of a Commonwealth or State
This issue does not arise in this case.[139]
[139] Compare Cumins where a bankruptcy notice in the amount of $38,051,066.24 was a factor in the Court’s decision to transfer the proceedings in that matter to the Federal Court: Cumins at paras. 4, 33 and 47 per Lucev FM.
Significant human rights issues
This is not an issue in this matter.
Proper construction of legislation
As indicated above[140] an issue does appear to arise in relation to the proper construction of s.120(7)(b) of the Bankruptcy Act. This factor therefore weighs in favour of a transfer to the Federal Court.
[140] See para.110 above.
Important or exceptional point of principle
Much was said on behalf of Devere Holdings and Packham about important principles arising in this case. There are a number of important issues which arise, which are discussed above, but the Court does not consider that any important (or exceptional) principle arises. This factor does not therefore weigh in favour of a transfer to the Federal Court.
Costs and convenience of hearing and determination
The actual costs of hearing and determination will be less in this Court than in the Federal Court, both for the parties, and overall in terms of the amount that it will cost each court to conduct proceedings.
In terms of convenience there is probably no real difference, given that the proceedings will still be before a Chapter III Court, will be heard before a Chapter III Justice, and will be heard in the same Commonwealth Courts Building, whether heard in this Court or in the Federal Court. The relevant procedures with respect to hearing will essentially be the same.[141] The only factor of convenience which might have some operative effect is the fact that the proceedings are likely to be heard earlier in this Court than the Federal Court.[142]
[141] See para.127 below.
[142] See para.125 below.
On balance, this factor may, albeit marginally, not favour transfer of the proceedings to the Federal Court.
Earlier hearing of proceedings
The matter is listed for hearing in this Court on five days spread between 10 and 16 December 2008.
As indicated to Counsel for the parties during the course of the hearing of this application in a case the Court caused enquiries to be made with the District Registrar of the Federal Court who indicated that there is no prospect of this matter being heard in the Federal Court before the Federal Court recommences in 2009. That puts a hearing of this matter back to February 2009, at the earliest.
It follows that the proceedings will be heard earlier in this Court, and therefore this factor does not favour transfer to the Federal Court.
Availability of particular procedures appropriate for the class of proceedings
Given the concurrent jurisdiction in bankruptcy of the Federal Court and this Court[143] and the harmonisation of the Bankruptcy Rules between the two courts, this factor is neutral in relation to a transfer of the proceedings to the Federal Court.
[143] Save for jury trials under s.30(3) of the Bankruptcy Act.
Wishes of the parties
Devere Holdings and Packham wish the proceedings to be transferred. Castleworld takes no position on the matter.[144] The applicants do not wish the proceedings to be transferred to the Federal Court.
[144] See transcript at 2.
This factor is neutral in the consideration of whether to transfer the matter to the Federal Court.
The interests of the administration of justice
In Genovese this Court dealt with the issue of the interests of the administration of justice in the following terms:
24. In BHP Billiton Ltd v Schultz (2004) 221 CLR 400, [2004] HCA 61, (“Schultz”) the High Court considered the nature of the “interests of justice”: Gleeson CJ, McHugh and Heydon JJ CLR at p.421, HCA at par [15] said:
The interests of justice are not the same as the interests of one party, and there may be interests wider than those of either party to be considered. Even so, the interests of the respective parties, which might in some respects be common (as, for example, cost and efficiency), and in other respects conflicting, will arise for consideration. The justice referred to in s.5 is not disembodied, or divorced from practical reality.
25. Gummow J observed that the interests of justice “are even-handed”; CLR at p.445, HCA at par [100] while Callinan J referred to the requirement to “do equal justice”: CLR at p.492, HCA at par [258].
26. Some of the factors ordinarily considered when assessing the interests of justice are factors which it is mandatory for this Court to take into account under the Federal Magistrates Act and Federal Magistrates Court Rules: for example, costs and convenience of hearing and determination, earlier hearing of proceedings, availability of particular proceedings and pending proceedings in another court (in this case the Federal Court). [145]
28. In assessing the “interests of the administration of justice” similar considerations to those in Schultz apply, with the qualification related to “administration of justice”. Administration means “management”: Concise Oxford Dictionary, 7th Edition (Oxford: Oxford University Press, 1984) at p.13. Thus, s.39(3)(d) of the Federal Magistrates Act is directed to a consideration of the interests of the management of justice, which must mean management by the Court of the proceedings pending before the Court.
29. Pursuant to the Federal Magistrates Court Rules, specifically r.1.03(1), proceedings are to be resolved as efficiently and economically as possible.[146]
[145] Genovese, paras.24-26 per Lucev FM.
[146] Genovese , paras.28-29 per Lucev FM.
It is also in the interests of the administration of justice to have regard to the objects of the FM Act and FMC Rules insofar as they relate to the management of cases before this Court as set out in the extract cited from Goodall above.[147]
[147] See para.31(b) above.
Devere Holdings and Packham took issue with the Court’s observations as to the meaning of the interests of the administration of justice in Genovese. It is unnecessary to deal with that issue at this point in time.
A number of factors, some of which have already been considered, relate to the interests of the administration of justice, namely:
a)that the matter be heard as soon as possible, which would be best achieved by the proceedings remaining in this Court where they are listed for hearing in December 2008, and so listed because the Court has actively case managed the proceedings to achieve that outcome;
b)that the matter has presently been listed for hearing in December 2008 since directions to that effect were made on 31 July 2008 date, and further directions on 29 August 2008 date changing the hearing dates, but maintaining them within December 2008;
c)that this Court hears the vast majority of bankruptcy cases at first instance, and is therefore, generally speaking, the appropriate first instance court for bankruptcy proceedings; and
d)that more complex matters ought to be transferred to the Federal Court, it being the Court best equipped and intended to deal with more complex matters. In that regard the fact that this Court has dealt with the interlocutory stages of this matter, satisfactorily according to Counsel, is not itself a reason why a more complex matter ought not to be transferred. There is a significant difference in dealing with, and managing, interlocutory proceedings of the type that have been dealt with to date by this Court, and a legally and factually complex final hearing.
On an overall assessment this factor is probably neutral in relation to the transfer of proceedings to the Federal Court.
Timing of request
Finally, the Court notes that unless the Court otherwise orders, a request for transfer must be made on or before the first court date for the proceedings.[148] Ordinarily, this is a factor to which not much weight might be attributed, particularly where other more substantive factors weigh in favour of transferring proceedings.[149]
[148] FMC Rules, r.8.02(2).
[149] Compare Genovese at para.33 per Lucev FM.
In this case although the application for transfer has come very late, and against a background of recently intensive case management by the Court in order to get the matter listed for final hearing, other substantial factors carry far more weight in the final analysis than this essentially procedural factor.
Consideration of transfer factors
The Court has carefully considered and weighed all of the factors relating to the application to transfer the proceedings to the Federal Court. The decision to transfer or not is discretionary, and the exercise of the discretion does not require the Court to give equal weight to each factor. In this case the factor to which most weight must be given is complexity which weighs heavily in favour of an order for transfer to the Federal Court. Other factors weigh both for and against a transfer, and possibly those other factors might be marginally in favour of not ordering a transfer. But overall, complexity dictates that this matter be transferred to the Federal Court, and there will be an order to that effect.
If the Federal Court takes a different view it can always transfer the matter back to this Court.[150]
[150] Australian Postal Corporation at para.27 per Finkelstein J; Van Efferen IR at 462 per O’Sullivan FM; FMCA at para.31 per O’Sullivan FM.
Conclusion and orders
For the reasons set out above there will be orders:
a)that the Trustees provide particulars of paragraph 1.4 of the Request, but otherwise dismissing the Request;
b)dismissing the application to strike out paragraphs 41 to 53 of the statement of claim; and
c)granting the application to transfer the proceeding to the Federal Court.
The Court will hear the parties as to costs.
I certify that the preceding one hundred and forty (140) paragraphs are a true copy of the reasons for judgment of Lucev FM
Deputy Associate: Michele Lord
Date: 24 October 2008
“What are "necessary" particulars of any claim, defence or other matter pleaded is a matter of judgment. The underlying principle is that the case of each of the parties is adequately exposed to the other. It is important to maintain a sense of balance in the detail of particulars sought and ordered. The provision of particulars should not be allowed unduly to increase the cost and delay associated with litigation. In contemporary commercial litigation where, frequently, the court will direct the filing of witness statements or affidavits on either side subject to the right to cross examination, the necessity for elaborate particulars and lengthy debates about them is even more questionable.”
Citing Burgess Rawson McKerracher J observed in Keshi Pty Ltd v Firefly Press (Australia) Pty Ltd [2008] FCA 440 at para.23 that “it is important to maintain a sense of balance in the details of particulars sought or ordered.” In Chapman v Australian and New Zealand Banking Group Ltd [2008] FCA 86 Lindgren J at para.78 cited Burgess Rawson and said: “It has been suggested that in contemporary commercial litigation, where there will inevitably be a direction for the filing and service of affidavits or witness statements, the necessity for lengthy particulars may be viewed with disfavour”. See also Allianz Australia Insurance Ltd v Newcastle Formwork Constructions Pty Ltd [2007] NSWCA 144 at para.29 per Giles JA: “the parties have a duty to assist the court to further the just, quick and cheap resolution of the real issues in proceedings … It is to be hoped that the present case’s unfortunate combination of an excessive request for particulars and an intransigent response is an aberration.”
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