WU v Roufeil as trustee of the Bankrupt Estate of WU

[2018] FCCA 3348

FEDERAL CIRCUIT COURT OF AUSTRALIA

WU v ROUFEIL AS TRUSTEE OF THE BANKRUPT ESTATE OF WU [2018] FCCA 3348

Catchwords:
PRACTICE & PROCEDURE – Application for transfer of matter to the Federal Court of Australia – relevant considerations – meaning of “associated matter” in s.39(3)(b) of the Federal Circuit Court of Australia Act 1999 (“FCCA Act”) – relationship of s.39(3)(b) with ss.18 and 19 of the FCCA Act.

WORDS & PHRASES – “Associated matter”.

Legislation:

Federal Circuit Court of Australia Act 1999, ss.18, 19, 39

Federal Court of Australia Act 1976, s.32
Federal Magistrates Act 1999
Federal Circuit Court Rules 2001, r.8.02

Cases cited:
PCS Operations Pty Ltd & Ors v Maritime Union of Australia & Ors (1998) 153 ALR 520

Applicant: YAN WU

Respondent: MARK DAMIAN CHARLES ROUFEIL AS TRUSTEE OF THE BANKRUPT ESTATE OF YAN WU

File Number: SYG 2676 of 2018

Judgment of: Judge Cameron

Hearing date: 9 and 14 November 2018

Date of Last Submission: 14 November 2018

Delivered at: Sydney

Delivered on: 14 November 2018

REPRESENTATION

Counsel for the Applicant: Mr J. Svehla

Solicitors for the Applicant: Antunes Lawyers

Solicitors for the Respondent: Mr N. Dale of Gillis Delaney Lawyers

ORDERS

1. Pursuant to subsection 39(3) of the Federal Circuit Court of Australia Act 1999 (Cth) and rule 8.02(1) of the Federal Circuit Court Rules 2001, this proceeding be transferred to the Federal Court of Australia.

2. The applicant pay the respondent’s costs of and incidental to the respondent’s interlocutory application dated 6 November 2018 and filed 9 November 2018.

3. The quantification of those costs be addressed by further order in respect of which the parties have liberty to apply.

FEDERAL CIRCUIT COURT OF AUSTRALIA

AT SYDNEY

SYG 2676 of 2018

YAN WU

Applicant

And

MARK DAMIAN CHARLES ROUFEIL AS TRUSTEE OF THE BANKRUPT ESTATE OF YAN WU

Respondent

REASONS FOR JUDGMENT

1. The applicant is a bankrupt and the respondent is the trustee of her bankrupt estate.  This proceeding concerns the applicant’s application to replace the respondent as trustee and is presently before the Court on the respondent’s application to transfer the matter to the Federal Court of Australia. 

Background facts

1. The relevant factual background appears to be this:

   a)the principal creditor of the applicant’s bankrupt estate is owed something in excess of $2 million;

   b)on 15 November 2017 Robertson J in the Federal Court ordered the respondent to list for sale a property in Strathfield where it appears the applicant resided and still resides;

   c)the applicant has failed to give the respondent vacant possession of the property which is preventing the completion of a sale of the property following an auction;

   d)the completion of the sale of the Strathfield property will lead to a company associated with the applicant receiving a material financial benefit and the respondent states that he will seek to enforce against that company certain rights allegedly connected with borrowings it made which the applicant guaranteed;

   e)the respondent has commenced a proceeding in the Federal Court in which he seeks orders for:

   i)the winding up of the company;  and

   ii)the appointment of him as receiver of the property of a trust of which the company had been trustee;

   f)the respondent has filed an interlocutory application in that case seeking possession of the Strathfield property.

   g)the respondent’s Federal Court proceeding was commenced on 6 September 2018.  On 19 September 2018 the applicant’s sister, who was the appointer of the trust of which the company was the trustee, removed the company as the trustee and appointed herself in that role;

   h)on 21 September 2018 Jagot J appointed the respondent provisional liquidator of the company.  The applicant has failed to provide the respondent with the books of the trust as required by one of Jagot J’s orders;

   i)on 15 October 2018 this proceeding came before the Registrar for a first court date at which time the Court was advised by counsel appearing for the respondent, according to exhibit 2 in this application, that an application to transfer the proceeding to the Federal Court would be made; and

   j)the Registrar ordered the applicant to file and serve, on or before 2 November 2018, any affidavit on which she will rely but nothing of that sort has been filed.

Submissions

1. The respondent submitted that the issue in this proceeding, namely his appointment as the trustee of the applicant’s bankrupt estate, was associated with the issues he seeks to ventilate in the Federal Court and that this proceeding is holding up the administration of the estate.  The respondent submitted that there was a significant overlap between the various pieces of litigation and that if this case were to be transferred to the Federal Court, and presumably docketed to the judge before whom the Federal Court proceeding is listed, it would be heard at lesser cost and more conveniently than if it remained in this Court.

2. The applicant queried why the possession proceedings were brought in the Federal Court rather than this Court.  She also argued that the removal of the respondent as trustee by a decision of this Court some time down the track would have no effect on the validity of acts done by him while still trustee.  Moreover, she offered to vacate the Strathfield premises seven days before settlement, which she said would give the trustee some comfort.

3. Submissions were also made concerning the criteria to be applied when considering whether to order the transfer of a matter from this Court to the Federal Court. Those criteria are found in s.39(3) of the Federal Circuit Court of Australia Act 1999 (“FCCA Act”) and r.8.02 of the Federal Circuit Court Rules 2001 (“FCC Rules”).

Legislation

1. Section 39 of the FCCA Act relevantly provides:

   39  Discretionary transfer of proceedings to the Federal Court or the Family Court

   (1)     If a proceeding is pending in the Federal Circuit Court of Australia, the Federal Circuit Court of Australia may, by order, transfer the proceeding from the Federal Circuit Court of Australia to the Federal Court or the Family Court.

   …

   (3)     In deciding whether to transfer a proceeding to the Federal Court under subsection (1), the Federal Circuit Court of Australia must have regard to:

   (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 Circuit Court of Australia are sufficient to hear and determine the proceeding; and

   (d)     the interests of the administration of justice.

   …

2. Rule 8.02 of the FCC Rules relevantly provides:

   8.02  Transfer to Federal Court or Family Court

   (1)     The Court may, at the request of a party or of its own motion, transfer a proceeding to the Federal Court or the Family Court.

   (2)     Unless the Court otherwise orders, a request for transfer must be made on or before the first court date for the proceeding.

   (3)     Unless the Court otherwise orders, the request must be included in a response or made by application supported by an affidavit.

   (4)     In addition to the factors required to be considered by the Court under subsections 39(3) and (4) of the Act for transfer of proceedings to the Federal Court or the Family Court, the following factors are relevant:

   (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 proceeding is not transferred;

   (c)      whether the proceeding will be heard earlier in the Court;

   (d)     the availability of particular procedures appropriate for the class of proceeding;

   (e)     the wishes of the parties.

Late application for transfer – Rule 8.02(2)

1. The applicant observed that the request for transfer of the matter was made when the matter came before the Court on the second occasion, 9 November 2018, rather than when the matter first came before the Registrar on 15 October 2018. 

2. It has to be observed that, although an application for transfer was not made at the first court date, one was foreshadowed by counsel at that time.  Raising the question of transfer as a substantive interlocutory application on the second occasion the matter was before the Court could not be said to amount to dilatory conduct.  Importantly, it was not suggested that the applicant suffered any prejudice from the fact that the application was not made until the matter came before the Court on the second occasion.  

3. To refuse leave to make the application by reason of the fact that it was not formally made on the first court date would be to place form over substance and fairness.

Criteria relevant to exercise of discretion to transfer

Section 39(3)(b) – Associated matter

1. Section 39(3)(b) of the FCCA Act says that a matter to be taken into account when considering an application such as this is whether there are proceedings in respect of an associated matter pending in the Federal Court. It is not obvious from that section what the expression “associated matter” means, but there is reason to believe that it has the same meaning as it has in ss.18 and 19 of the FCCA Act which relevantly provide:

   18     Jurisdiction in associated matters

   To the extent that the Constitution permits, jurisdiction is conferred on the Federal Circuit Court of Australia in respect of matters not otherwise within its jurisdiction that are associated with matters in which the jurisdiction of the Federal Circuit Court of Australia is invoked.

   19     Proceedings not to be instituted in Federal Circuit Court if associated matter before Federal Court or Family Court

   (1)     Proceedings must not be instituted in the Federal Circuit Court of Australia in respect of a particular matter if proceedings in respect of an associated matter are pending in the Family Court or the Federal Court.

   …

   (3)    If:

   (a)     proceedings are instituted in the Federal Circuit Court of Australia in contravention of subsection (1); and

   (b)     the proceedings are subsequently transferred to the Federal Court or the Family Court;

   the proceedings are taken to be as valid as they would have been if subsection (1) had not been enacted.

2. It would seem that the FCCA Act seeks to ensure that related matters will be heard together and not result in multiple proceedings. The explanatory memorandum to the Bill which became the Federal Magistrates Act1999, and then the FCCA Act, says in relation to the provisions which became ss.18 and 19:

   Clause 18 – Jurisdiction in associated matters

   30. Clause 18 gives the Federal Magistrates Court jurisdiction to deal with all matters associated with any matter that is within the jurisdiction of the Court. The purpose of this provision is to avoid multiple proceedings by conferring jurisdiction on the Court in associated matters, which may be outside the jurisdiction of the Court, which must be disposed of at the same time as the matter before the Court so that the matter may be completely and finally determined. This provision is based on section 32 of the Federal Court of Australia Act 1976.

   Clause 19 – Proceedings not to be instituted in the Federal Magistrates Court if an associated matter is before the Federal Court or the Family Court

   31.    Subclause 19(1) provides that proceedings must not be instituted in the Federal Magistrates Court if associated proceedings have been commenced in the superior Court.  This is to ensure that matters are completed in the Court in which they have been commenced and the parties do not seek to have the same matter dealt with in the Federal Magistrates Court by filing similar proceedings in that Court.

   …

   33.    Subclause 19(3) ensures that inappropriate proceedings commenced in the Federal Magistrates Court may be validly transferred to the relevant superior Court.  For example, if associated proceedings are commenced in the Federal Magistrates Court, the Court will be able to transfer them to the Federal Court or the Family Court, and the proceedings will be deemed to have been validly commenced in the superior Court.

3. It appears to me that s.39(3)(b) exists to give effect to the purposes identifiable from the terms of ss.18 and 19 of the FCCA Act and the explanatory memorandum.

4. There is little authority on how associated matters are to be identified.  However, in PCS Operations Pty Ltd & Ors v Maritime Union of Australia & Ors (1998) 153 ALR 520, Gaudron J said in relation s.32 of the Federal Court of Australia Act 1976, the analogue of s.18 of the FCCA Act:

   The second source of jurisdiction is s 32(1) of the Federal Court of Australia Act 1976 (Cth). That subsection confers additional powers in these terms:

   To the extent that the Constitution permits, jurisdiction is conferred on the court in respect of matters not otherwise within its jurisdiction that are associated with the matters in which the jurisdiction of the court is invoked.

   In Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd, Barwick CJ expressed the view that “the word ‘associated’ [in s 32] embraces matters which may be disparate from each other”, a view which is implicit in other judgments in that case. (at 523 [6]) (References omitted)

5. Her Honour next discussed the accrued jurisdiction of a court exercising federal jurisdiction, which depends on matters being part of the one controversy, and then proceeded:

   Accordingly, the question whether, if the conspiracy claims are not part of the one controversy, they fall within s 32(1) of the Federal Court Act involves no more than a question of practical judgment as to whether they are associated with the claims alleging the breaches and contraventions earlier referred to. (at 525 [12])

6. It seems, therefore, that matters do not have to meet the accrued jurisdiction “one controversy” test for them to be associated with each other. It is enough that they are sufficiently connected that, as a matter of practical judgement, they are properly characterised as being associated with each other. 

7. In this case, it does seem to me that the various matters, arising as they do out of the applicant’s bankruptcy and the consequences of that, are linked to each other in a material way and so should be considered to be associated with each other. Given, as I have found, that s.39(3)(b) exists to give effect to the objects of ss.18 and 19 of the FCCA Act and to ensure that related matters will be heard together, this conclusion favours transfer of the matter to the Federal Court.

Transfer

Section 39(3)(c)

1. Section 39(3)(c) of the FCCA Act talks about this Court’s resources. It is notorious that this Court is under the most extreme workload pressure. However, it is unlikely that this case would place an impossible burden on this Court and I think that this consideration is not sufficient to tip the balance in any particular direction.

Rule 8.02(4)

1. In relation to r.8.02(4)(a), it does not appear to me that matters of general importance requiring a statement of the law by the Federal Court are apparent in this matter.

2. In relation r.8.02(4)(c), I cannot say whether the matter would be disposed of more quickly in the Federal Court if transferred there than it would be if it remained in this Court, but I suspect that there would be little difference between the courts given that the matter is unlikely to be of wide scope or take very long to address.

3. In relation to r.8.02(4)(d), there are no particular procedures appropriate for this class of proceeding which would appear to be more available to the Federal Court than this Court.

4. In relation to r.8.02(4)(e), I note that the respondent seeks the transfer of the matter and that the applicant opposes it.

5. None of those considerations weigh in favour of a transfer of this matter to the Federal Court.

Section 39(3)(d), rule 8.02(4)(b)

1. The avoidance of multiple proceedings is a goal to be reached for.  I cannot see how splitting the proceedings could be more conducive to the swift and economic resolution of the parties’ issues than having them all in one court.  By reference to those considerations, I find that the interests of the administration of justice favour transfer.  

Conclusion

1. On balance, I conclude that it is appropriate to make the transfer order which the respondent seeks. 

Costs

1. I think it is appropriate that costs follow the event.  I accept that the decision that I have made was discretionary in nature and not one which the parties could have been obtained simply by consenting to proposed orders.  Nevertheless, the fact is that the matter was hard fought, which did not need to be the case.  The applicant could have agreed to the transfer and, although I would still have needed to be satisfied that that was an appropriate step, no doubt the parties would have been able to present an agreed argument which would have taken much less time than the arguments which were mounted.

I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of Judge Cameron

Date: 29 November 2018