Albarran & Ors v Trump Property Management (Vic) Pty Ltd [2016] QDC 285

DISTRICT COURT OF QUEENSLAND CITATION: Albarran & Ors v Trump Property Management (Vic) Pty Ltd [2016] QDC 285 PARTIES: RICHARD ALBARRAN & BLAIR PLEASH IN THEIR CAPACITY AS JOINT AND SEVERAL LIQUIDATORS OF M.P. CONSTRUCTIONS (AUST) PTY LTD (IN LIQUIDATION) (ACN 081 318 318) (respondent) v TRUMP PROPERTY MAINTENANCE (VIC) PTY LTD (ACN 063 092 017) (appellant) FILE NO/S: 85/16 DIVISION: Civil PROCEEDING: Appeal ORIGINATING COURT: Magistrates Court at Southport DELIVERED ON: 16 November 2016 DELIVERED AT: Southport HEARING DATE: 28 October 2016 JUDGE: Kent QC DCJ ORDER: 1. Appeal is dismissed; 2. Question of costs will be heard on a date to be fixed. CATCHWORDS: PROCEDURE – STATE AND TERRITORY COURTS: JURISDICTION, POWERS AND GENERALLY – INHERENT AND GENERAL STATUTORY POWERS – TO STAY OR DISMISS ORDERS OR PROCEEDINGS GENERALLY – where the Acting Magistrate refused to stay proceedings or, in the alternative, grant a transfer of those proceedings to the Melbourne Magistrates Court – where it was alleged the Acting Magistrate failed to correctly apply the relevant test – whether the Acting Magistrate erred in law Service and Execution of Process Act 1992 (Cth), s 20 Corporations Act 2001 (Cth), s 588FA, s 588FG, s 1337K, s 1337L Oceanic Sun Alliance Special Shipping Co Inc v Fay (1988) 165 CLR 197; [1988] HCA 32, 241, considered St George Bank Ltd v McTaggart & Ors [2003] 2 Qd R 568; [2003] QCA 59, considered -- 1 of 9 -- 2 Rick Cobby Pty Ltd v Podesta Transport Pty Ltd (1997) 139 FLR 54, 58-59; (1997) 191 LSJS 469, considered Willabrae Pty Ltd & Ors v Bridgestone Australia Limited [2007] QDC 7, considered COUNSEL: B P Strangman for the appellant A Joyce (sol) for the respondent SOLICITORS: Kliger Partners for the appellant Cronin Litigation Lawyers for the respondent [1] In this matter, the appellant appeals against the decision of an Acting Magistrate at Southport on 11 March 2016 whereby his Honour refused the appellant’s application for the pending proceeding to be stayed pursuant to s 20(3) of the Service and Execution of Process Act 1992 (Cth) (the ‘SEPA’), or in the alternative transferred to the Melbourne Magistrates Court pursuant to s 1337K of the Corporations Act 2001 (Cth) (the ‘Act’). The decision is challenged on the basis of an error of law and a failure to apply the correct test for determining the application. Background [2] The respondent is the liquidators of a construction company incorporated in Queensland and formerly operating from premises at Molendinar on the Gold Coast. When it was still trading, the respondent company engaged the appellant, which is a floor covering company, to perform building works at a shopping centre in Melbourne. The location of both the appellant and the place where the relevant work was carried out give rise to the appellant’s application to, in effect, remove the proceedings from the Magistrates Court at Southport to the Magistrates Court in Melbourne. Legislation [3] Section 20(3) of the SEPA provides: “20 Stay of proceedings (1) This section does not apply in relation to a proceeding in which the Supreme Court of a State is the court of issue. (2) The person served may apply to the court of issue for an order staying the proceeding. (3) The court may order that the proceeding be stayed if it is satisfied that a court of another State that has jurisdiction to determine all the matters in issue between the parties is the appropriate court to determine those matters. (4) The matters that the court is to take into account in determining whether that court of another State is the appropriate court for the proceeding include: (a) the places of residence of the parties and of the witnesses likely to be called in the proceeding; and (b) the place where the subject matter of the proceeding is situated; and -- 2 of 9 -- 3 (c) the financial circumstances of the parties, so far as the court is aware of them; and (d) any agreement between the parties about the court or place in which the proceeding should be instituted; and (e) the law that would be most appropriate to apply in the proceeding; and (f) whether a related or similar proceeding has been commenced against the person served or another person; but do not include the fact that the proceeding was commenced in the place of issue.” [4] Section 1337K(1), (2) and (3) of the Act provide: “1337K - Transfer of proceedings in lower courts (1) This section applies to a proceeding (the relevant proceeding) in a court (the transferor court) if: (a) the relevant proceeding is with respect to a civil matter arising under the Corporations legislation; and (b) the transferor court is a lower court of a State or Territory. (2) If it appears to the transferor court that, having regard to the interests of justice, it is more appropriate for: (a) the relevant proceeding; or (b) an application in the relevant proceeding; to be determined by another court that has jurisdiction in the matters for determination in the relevant proceeding or application, the transferor court may take action under whichever of subsections (3) and (4) applies. (3) If the other court is also a lower court, the transferor court may transfer the relevant proceeding or application to the other court.” [5] However, s 1337L of the Act provides: “1337L - Further matters for a court to consider when deciding whether to transfer a proceeding In deciding whether to transfer under section 1337H, 1337J or 1337K a proceeding or application, a court must have regard to: (a) the principal place of business of any body corporate concerned in the proceeding or application; and -- 3 of 9 -- 4 (b) the place or places where the events that are the subject of the proceeding or application took place; and (c) the other courts that have jurisdiction to deal with the proceeding or application.” The proceedings [6] The respondent in the action is the two liquidators standing in the shoes of the company that is in liquidation. The claim is for alleged unfair preferential payments made during the relation back period, pursuant to s 588FA(1) of the Act. [7] There is a conditional defence filed, but no defence at this stage, given that there is a dispute as to jurisdiction. The appellant’s defence is said to be disclosed in paragraph 15 of the affidavit of Mr Tom Alvin, sworn 25 February 2016. He says, in essence, the defence is twofold. Firstly, the payments identified in the statement of claim do not have the requisite preferential effect, because they were paid prior to commencement of any work by the appellant and therefore do not constitute unfair preferences. Secondly, in the alternative, the appellant is said to rely on the defences in s 588FG(2)(b) of the Act with respect to the alleged undue preference payments. That is, the appellant became a party to the transaction in good faith and had no reasonable grounds for suspecting insolvency or prospective insolvency, and a reasonable person in the appellant’s circumstances would have had no such grounds for so suspecting. Further, the appellant provided valuable consideration under the transaction. The appellant’s submissions [8] The appellant’s argument is that the Acting Magistrate erred in law by failing to apply the correct test for determining the application. What is said is, in reliance on a passage from St George Bank Ltd v McTaggart & Ors, the Acting Magistrate was required to:1 (a) firstly, identify all the matters in issue; and (b) secondly, based on the matters in issue determine which court has the most real and substantial connection. [9] It is said the learned Acting Magistrate failed to do these things, which amounts to an error of law such that his decision should be set aside; and, secondly, applying the correct test results in a stay or transfer. The application of the correct test, so it is submitted, required the Court to consider the matters that the appellant would need to establish for the purposes of the statutory defences, which are: (a) that the payments were received prior to the works being commenced; and (b) that the payment represented fair value for the works undertaken. [10] Secondly, for the alternative defence, the appellant must establish: (a) it acted in good faith; 1 [2003] QCA 59, [9]; [2003] 2 Qd R 568, [9]. -- 4 of 9 -- 5 (b) it had no reasonable grounds for suspecting insolvency; (c) a reasonable person would have had no such grounds; and (d) it has provided valuable consideration. [11] The appellant submits that matters such as whether the payments were made, that the payments were made from a bank branch on the Gold Coast, the location of the respondent’s registered office, and that the respondent was insolvent at the time of making the payments, are not currently in issue. It is submitted that relevant matters established by the evidence of Mr Alvin include: the registered office and trading address of the appellant, being in the State of Victoria; the building work taking place in Victoria; documents relating to the matters in issue being located in Melbourne; and that the witnesses likely to be relied on by the appellant reside in Victoria. [12] The appellant submits that the learned Acting Magistrate erred in referring to such features as: where the cause of action arose; the ability of witnesses to give evidence by video or telephone; the ability of witnesses to fly to Queensland; and related other proceedings having been commenced in the Southport Magistrates Court. These features, it is said, should have been regarded as irrelevant. It is also pointed out that most or all of the respondent’s witnesses reside in Sydney. Respondent’s submissions [13] The respondent submits that the issue on the appeal can be distilled to considering whether the learned Acting Magistrate incorrectly exercised his discretion under s 20(3) by taking into account that: (a) the cause of action arose in Queensland; (b) the witnesses who live in Victoria can give evidence via video link or telephone; (c) the witnesses who live in Victoria can fly to Queensland to give evidence; and (d) there is another proceeding commenced in the Southport Registry of the Magistrates Court of Queensland by the respondents to recover payments made to another creditor by M.P. Constructions Pty Ltd (in liquidation) whilst insolvent. [14] The solicitor for the respondent submits that the decision of McPherson JA in St George Bank Ltd v McTaggart & Ors outlines the following principles: (a) that it must be demonstrated before a stay can be ordered under s 20(3) is that another state court with jurisdiction to determine all the matters in issue is “the appropriate court to determine those matters”;2 (b) identifying all the matters in issue is a prerequisite to deciding on the appropriate court; (c) the expression “appropriate court” in s 20 of SEPA is “the one which the action has the most real and substantial connection, and which can therefore be regarded as the natural forum”; 2 Ibid, [9]. -- 5 of 9 -- 6 (d) here the question, whether another State court is the appropriate court to determine all the matters in issue between the parties, fell to be decided in the context of s 20(4);3 (e) in view of the presence of the word “include”, it is not correct to regard the provisions of s 20(4) as a complete code of the factors to be considered in deciding an application under s 20(3) to stay proceedings;4 (f) the applicant for a stay must demonstrate a “clear and compelling” basis for the relief sought;5 (g) a determination under s 20(3) involved the exercise of a discretionary judgment, which on general principles would not readily be disturbed on appeal unless some clear error in its exercise was demonstrated.6 [15] The respondent also submits that the appropriate test for this type of application was enunciated by Kingham DCJ in Willabrae Pty Ltd & Ors v Bridgestone Australia Limited as follows:7 “Section 20 recites a non-exhaustive list of matters for the witness to take into account in making its decision for an application for a stay. None is given any particular weight. Other matters not mentioned may be relevant in a particular case … what is required is that the court is satisfied that:  a court of another state has jurisdiction to determine all matters in issue between the parties; and  taking into account, at least, those matters specified in s 20(4), the court of that State is the most appropriate court for the proceeding.” [16] Her Honour also noted that there was no dispute that the onus rests with the applicant for a stay. [17] The respondent also submits that, in determining the appropriate court or forum, connecting factors such as convenience and expense should be taken into account when determining whether a particular jurisdiction has a “real and substantial connection” to the action.8 [18] The respondent in essence submits that there was no clear error by the learned Acting Magistrate and certainly none that demonstrate an error in the exercise of a discretion. It is submitted that the learned Acting Magistrate correctly: (a) made a finding that both States have jurisdiction to hear all matters in issue between the parties; and 3 Ibid, [11]. 4 Ibid. 5 Ibid, [17], citing the decision of Olsen J in Rick Cobby Pty Ltd v Padesta Transport Pty Ltd (1997) 139 FLR 54, 58; (1997) 191 LSJS 469, 58. 6 Ibid, [17]. 7 [2007] QDC 7, [17]. 8 Referring to Spiliada Maritime Corp v Cansulex Ltd (1987) 1 AC 460, 483 and 487; referred to in Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 79 ALR 9, 46 (Deane J) and in Bankinvest AG v Seabrook (1988) 90 ALR 407; 14 NSW LR 711, 728 (Rogers AJA). -- 6 of 9 -- 7 (b) took into account matters, including those set out in s 20(4), in reaching a decision that his Honour was not satisfied that a court in Victoria was the appropriate court for the proceeding. [19] The respondent points, in particular, to the following factors: (a) the cause of action arose in Queensland; (b) the witnesses who live in Victoria can give evidence by video or audio link; (c) that the witnesses who live in Victoria can fly to Queensland to give evidence; and (d) that there is another proceeding commencing in the Southport Registry of the Magistrates Court of Queensland by the respondents to recover payments made to another creditor by M.P. Constructions Pty Ltd (in liquidation) whilst insolvent. The decision [20] In his decision, the learned Acting Magistrate set out s 20 of SEPA. At page 3 of the decision, he outlined the test of which court has the most real and substantial connection with the action and which can be regarded as the natural forum. He set out that the onus was on the applicant. He referred to St George Bank v McTaggart. He noted that the appellant argued: 1. the Magistrates Court of Victoria was the more appropriate forum having regard to the matters which were truly in issue; 2. this is because the matters required for the respondent to establish are not in issue; 3. the work involved was undertaken in Victoria; 4. the relevant documents were in Melbourne and the witnesses reside in Melbourne. [21] He noted at page 4 of the judgment the appellant’s submission that it had a large number of witnesses to call and thus the costs of hearing the matter in Queensland would be greater. He noted the respondent’s arguments that: the number of witnesses was unclear; the applicable law identified in the contract is Commonwealth Law; the respondent’s financial position as liquidator was that a shift to Victoria would be detrimental to other debtors; the cause of action arose in Queensland; and there was another related proceeding on foot in Southport. [22] The Acting Magistrate quoted from a judgment of Chief Magistrate Carmody as his Honour then was in Advantage Retail Management Proprietary Limited v Security Dynamics Australia and Anor quoting from some observations by Justice Debelle as follows:9 “However, in D Store Limited (in liquidation) (2005) SASC 24 refusing the appellant’s applications to transfer an application by a liquidator in South Australia to Victoria, Debelle J observed: 9 [2014] QMC 14, at [50]. -- 7 of 9 -- 8 ‘In these days of quick and efficient transport and communication, questions of convenience have less force than hitherto. The speed and facility of both electronic and telephonic communication enables ready contact with the court while a party is interstate.’” [23] His Honour thus considered it was open to consider the availability of video conferencing and telephone evidence. [24] At page 5 his Honour noted, appropriately in my view, that he was cautious as to indications at this early stage of the action as to numbers of witnesses in various jurisdictions. His Honour referred, in that context, to Taurus Funds Management Proprietary Limited v Aurox Resources Limited and relevant observations to that effect by Einstein J.10 The judgment also referred to the ease of interstate travel and electronic communication. To that end, his Honour referred to Bioag Pty Ltd v Hickey [2007] NSWSC 286 at [14] per Brereton J: “Ultimately, I think the natural forum for proceedings, particularly in this day and age of electronic communication and interstate travel, usually falls to be determined by more principled issues than where the preponderance of the witnesses reside and I do not consider that there is any significant preponderance of convenience such as to resolve the question of more appropriate forum on the facts in this particular case.” [25] His Honour also set out at page 6 of the judgment: considerations of the cost of witnesses, which could be relieved by video link; the applicable law; and the elements of s 20(4). He concluded that the applicant had not satisfied its onus to demonstrate that there should be a stay or transfer. Discussion [26] In my view, in this case, the appellant faces the normal difficulties in establishing that a discretion has been wrongly exercised such that it should be set aside on appeal. I have also considered some of the statements of principle from the relevant authorities. [27] This case is not perfectly clear in identifying a natural forum. There are connecting factors to both Queensland and Victoria. However, the cause of action arose in Queensland. The registered office and place of business of the respondent, when it was trading, were in Queensland. Its documentary records are held in Queensland and at least one potential witness resides here. There is a related proceeding on foot in the Southport Magistrates Court, although this is not, standing alone, a large factor. Conversely, the appellant certainly has logical claims to assert a connection to Victoria, mainly in the residence of potential witnesses. As outlined above, however, this does not appear to be a decisive factor. [28] As submitted by the respondent, it is not clear to me that the learned Acting Magistrate applied an incorrect test. In my view, he turned his mind to the question of the appropriate court as being the one with which the action has the most real and substantial connection and can therefore be regarded as the natural forum. Further, in my view, the state of the law is that, having regard to the significance of a stay 10 [2010] NSWSC 1223, [43]. -- 8 of 9 -- 9 order, an applicant bears the onus of demonstrating a clear and compelling basis for relief.11 In Oceanic Sun Alliance Special Shipping Co Inc v Fay, Deane J said that a party who has regularly invoked the jurisdiction of a competent court has a prima facie right to insist on its exercise and to have its claim heard and determined;12 although I acknowledge and give full force to the closing words of s 20(4) that the mere fact of issuing in a particular jurisdiction is not of itself a relevant factor. [29] Taking account of the tests as enunciated in St George Bank Ltd v McTaggart and Willabrae Pty Ltd & Ors v Bridgestone Australia Limited,13 it is not demonstrated to me that the learned Acting Magistrate applied a wrong test or reached a wrong conclusion. In my view, it is a proper approach to note that: (a) the cause of action arose in Queensland; (b) the respondent’s former registered office and place of business are in Queensland, as are its records and at least one potential witness; (c) the appellant’s witnesses who live in Victoria can give evidence by video link or telephone or can alternatively fly to Queensland to give evidence; (d) the appellant’s documents can be made accessible in Queensland without great difficulty; and (e) there is another proceeding commenced in Southport Registry of the Magistrates Court of Queensland by the respondents to recover payments made to another creditor. [30] Approaching the matter in this way, it is not demonstrated that the Acting Magistrate applied a wrong test or was otherwise in error, nor is it demonstrated that the Magistrates Court of Victoria is the court with the most real and substantial connection to the action having regard to the matters in issue. [31] In the circumstances, the appeal is dismissed. I will hear the parties as to costs. 11 See Rick Cobby Pty Ltd v Podesta Transport Pty Ltd (1997) 139 FLR 54, 58-59; (1997) 191 LSJS 469, 58-59. 12 (1988) 165 CLR 197; [1988] HCA 32, 241. 13 [2007] QDC 7. -- 9 of 9 --