Bank of Queensland Limited v Jones & Ors; Bank of Queensland Limited v Xu & Anor; Bank of Queensland Limited v Chowdhury & Ors [2010] QSC 322

SUPREME COURT OF QUEENSLAND CITATION: Bank of Queensland Limited v Jones & Ors; Bank of Queensland Limited v Xu & Anor; Bank of Queensland Limited v Chowdhury & Ors [2010] QSC 322 PARTIES: BANK OF QUEENSLAND LIMITED ACN 009 656 740 (plaintiff/applicant) v JEFFREY BRUCE JONES (defendant/cross-applicant) BANK OF QUEENSLAND LIMITED ACN 009 656 740 (plaintiff/applicant) v YUN XU (first defendant/cross-applicant) JIN YU YANG (second defendant/cross-applicant) BANK OF QUEENSLAND LIMITED ACN 009 656 740 (plaintiff/applicant) v HURUNER RACHIN CHOWDHURY (first defendant/cross-applicant) MD IFTEKHAR TAREK HASSAN (second defendant/cross-applicant) MD IKTHEDAR HASSAN MURAD (third defendant/cross-applicant) FILE NO/S: SC No 868 of 2010 SC No 13004 of 2009 SC No 13390 of 2009 DIVISION: Trial Division PROCEEDING: Application ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: 31 August 2010 DELIVERED AT: Brisbane HEARING DATE: 26 August 2010 JUDGE: Chief Justice ORDERS: 1. Each defendant’s application for transfer is refused, with costs to be assessed on the standard basis. 2. On each application by the plaintiff filed 4 August -- 1 of 9 -- 2 2010, in relation to the striking out of the defence, order in terms of paras 1, 3 and 4, with costs to be assessed on the standard basis. CATCHWORDS: PROCEDURE – COURTS AND JUDGES GENERALLY – COURTS – CONCURRENT JURISDICTION OF DIFFERENT COURTS – TRANSFER OF PROCEEDINGS UNDER CROSS-VESTING LEGISLATION – WHERE APPROPRIATE AND IN INTERESTS OF JUSTICE – GENERALLY – where the defendants in three separate proceedings seek orders under s 5(2) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Qld) transferring the proceedings to the Supreme Court of New South Wales, or alternatively staying the proceedings – where the plaintiff opposes any transfer and separately applies for orders striking out substantial parts of the defences, and judgment, or alternatively, an order that the defendant file a defence complying with the Uniform Civil Procedure Rules 1999 (Qld) – where the proceedings arise out of failed bank franchise agreements and are based on guarantees given by the defendants for business terms loans and overdraft facilities provided by the plaintiff – where there are broadly comparable proceedings in the Supreme Court of New South Wales – where the defendants seek to litigate their cases along with or parallel with the existing New South Wales cases – where the defendants contend that the cases raise common issues of fact and law in relation to dealings between the defendants and the bank – where the defendants further submit that the cases could be managed by the Supreme Court of New South Wales and transfer of the cases would avoid duplication of costs in litigating comparable matters – where the plaintiffs contend that there is no assurance that these cases would be heard at the same time as those currently in New South Wales and would likely dislocate the disposition of the New South Wales proceedings – where the plaintiffs further argue that the parties, by their guarantees and business term loans, contractually chose a Queensland forum and Queensland law as the applicable law and that witness availability and residence favour trials in Queensland – whether the proceedings should be transferred to the Supreme Court of New South Wales – whether the defences should be struck out Australian Securities and Investments Commission Act 2001 (Cth) Fair Trading Act 1987 (NSW) Jurisdiction of Courts (Cross-Vesting) Act 1987 (Qld), s 5(2) Trade Practices Act 1974 (Cth) Uniform Civil Procedure Rules 1999 (Qld), r 149, r 150, r 157, r 166 Rossmick No 1 Pty Ltd v Bank of Queensland Ltd [2008] -- 2 of 9 -- 3 FCA 1632, cited COUNSEL: J D McKenna SC, with R A Nichols, for the applicant/plaintiff N A Cotman SC for the cross-applicants/defendants SOLICITORS: HWL Ebsworth Lawyers for the applicant/plaintiff HBM Lawyers as town agent for McCabe Terrill Lawyers for the cross-applicants/defendants CHIEF JUSTICE: Introduction [1] The defendants in three separate proceedings seek orders under s 5(2) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Qld) transferring the proceedings to the Supreme Court of New South Wales, or alternatively staying the proceedings. The plaintiff opposes any transfer, and contends that the proceedings should stay in this court and be continued. [2] The plaintiff separately applies for orders striking out substantial parts of the defences, and judgment, or alternatively, an order that the defendant file a defence complying with the Uniform Civil Procedure Rules. Mr Cotman SC, who appeared for the defendants, said the defendants would deliver amended defences were the proceedings to remain here. Mr Cotman’s principal position however was that the proceedings should be transferred to the Supreme Court of New South Wales, leaving any question of the adequacy of the pleadings to that court. Adequacy of defences [3] It is convenient now to record my conclusion that the defences are inadequate to the point where they should be struck out, with leave to the defendants to re-plead. A reading of paragraph 27 of the defence in Jones (868/10), upon which that defendant relies throughout the pleading, demonstrates the inadequacy of the pleading in many respects, and there is really no need for me to deal more comprehensively with that inadequacy beyond adding reference to rules 149, 150, 157 and 166 of the Uniform Civil Procedure Rules. [4] Paragraph 27, typical of the three proceedings, provides: “27. Further, in answer to the whole of the plaintiff’s claim and statement of claim, the defendant: (a) denies that the documents and agreements referred to in the statement of claim are enforceable according to their tenor, or (b) in the alternative, the defendant says that the documents and agreements referred to in the statement of claim are voidable at the instance of the defendant and he has avoided them, or -- 3 of 9 -- 4 (c) in the alternative, the defendant says that the said agreements are liable to be set aside; and (d) further, to the extent that any financial liability arises under any of the said agreements, the defendant pleads by way of defence, that the quantum of the debt is equal to or less than the damages caused, occasioned or suffered (which damage includes the incurring of the said debt) by reason of the reliance of the defendant on representations and warranties made by the Bank to the defendant, which representations were made in breach of: (i) the Trade Practices Act 1974 (Cth); (ii) the Fair Trading Act 1987 (NSW); and (iii) Australian Securities and Investments Commission Act 2001 (Cth) and, which warranties were not performed according to their tenor (the particulars of which exceed 5 folios and will be supplied in due course); and (e) in particular the said debt was incurred by reason of the reliance of the defendant (by opening and conducting an Owner Managed Branch of the Bank in NSW) on, inter alia, representations by the Bank and by its servants and agents that there was a viable business available to be acquired and conducted in NSW (being the business of an Owner Managed Branch of the Bank), which representation was a representation in respect of a future matter, and which representation was made in breach of the Trade Practices Act 1974, Fair Trading Act 1987 and Australian Securities and Investments Commission Act 2001 in that it was false or misleading.” [5] Mr Cotman sought to support that paragraph notwithstanding its lack of particularity. In relation to (e), he referred to the provision of fair trading legislation casting the onus of establishing reasonable grounds for a representation as to a future matter onto the party making the representation. Notwithstanding that, (e) is completely inadequate. Discussion in court revealed, for example, that while the defendant’s primary position may be that the offering of the franchise itself implicitly represented its viability, there may have been other representations as well, and that would indeed be consistent with the New South Wales proceedings, where oral representations are alleged. [6] I am satisfied that if the proceeding remains in the Supreme Court of Queensland, then the defence in each case should be struck out, with leave to the defendant to re- plead in accordance with the requirements of the Uniform Civil Procedure Rules. -- 4 of 9 -- 5 Cross-vesting legislation [7] Section 5 of the Jurisdiction of Courts (Cross-vesting) Act 1987 relevantly provides: “5 Transfer of proceedings (2) Where – (a) a proceeding (the relevant proceeding) is pending in the Supreme Court (the first court); and (b) it appears to the first court that – (i) the relevant proceeding arises out of, or is related to, another proceeding pending in the Supreme Court of another State or of a Territory and it is more appropriate that the relevant proceeding be determined by that other Supreme Court; or… (iii) it is otherwise in the interests of justice that the relevant proceeding be determined by the Supreme Court of another State or of a Territory; the first court shall transfer the relevant proceeding to that other Supreme Court.” Nature of proceeding [8] The proceedings arise out of failed bank franchise agreements. The plaintiff bank entered into agreements with entities controlled by the defendants, to operate branches in New South Wales. The bank provided business term loans and overdraft facilities, with performance guaranteed by defendant directors. The present proceedings are based on the guarantees. [9] The proceedings were commenced in November 2009 in two cases, and in January 2010 in the other. In each case following the provision of particulars, the defendant served the inadequate defence, and then responded to the plaintiff’s request for a proper defence (and a Rule 444 letter), by asserting that the proceeding should be transferred to the Supreme Court of New South Wales. [10] There are various broadly comparable proceedings in the Supreme Court of New South Wales. They are being managed by Ward J. Those cases were commenced between 2006 and 2008. The current directions envisage that on 17 December 2010 those proceedings will be set down for a 15 week trial. One of those proceedings, Traderight, was cross-vested by consent from the Supreme Court of Queensland to the Supreme Court of New South Wales in June 2007. In another, SME, Byrne J ordered a transfer from this court on 12 December 2007. -- 5 of 9 -- 6 [11] In the New South Wales proceedings, the defendants allege misleading conduct by bank agents, in relation to forecasts of the viability of the franchise businesses. The matter proceeded before me on the basis that the instant defendants would seek to make similar cases – albeit adequate defences have not yet been filed. These defendants wish to litigate their cases in New South Wales, along with or parallel with the existing New South Wales cases, and claiming relief under the Fair Trading Act, the Trade Practices Act and at, common law. The parties’ respective positions [12] The defendants contend that the cases raise common issues of fact and law in relation to dealings between the defendants and the bank. Mr Cotman emphasized the desirability of avoiding conflicting determinations of credibility and on matters of fact, a circumstance which strongly engaged Byrne J in December 2007 in the SME matter. [13] Relevant to the matter of disparate rulings is the fact that the respective New South Wales defendants allege oral representations made particularly to them. There will need to be separate findings in relation to each case, obviously enough, although the credibility of some witnesses will be common to at least a number of the proceedings. [14] A major thrust of Mr McKenna SC’s submission was that transferring these cases to New South Wales would likely dislocate the disposition of the New South Wales proceedings, with no assurance these would be heard at the same time, whereas these cases could be progressed to a conclusion with facility here. Mr Cotman’s response was that were these cases transferred, their management could be left confidently to the Supreme Court of New South Wales (cf. Rossmick No 1 Pty Ltd v Bank of Queensland Ltd [2008] FCA 1632, paras 16-18). [15] As to the appropriateness of the respective jurisdictions, Mr Cotman submitted that transferring these cases to New South Wales would avoid duplication of costs in litigating comparable matters: disclosure for example could be limited, and that proceeding here as well as in New South Wales would involve “an inefficient use of the resources…of the court”. He submitted that: “…it represents an efficient use of the resources of the Court and the administration of justice to have all of the related proceedings heard and determined in the one forum by the one judicial officer, which officer can determine to what extent and how economy of scale can be achieved and how to achieve efficient use of resources by, for example, adopting the existing NSW discovery and supplementing it for the, using common evidence (both from witnesses and experts) and ordering of and use of witnesses’ evidence at trial(s).” [16] On the other hand, Mr McKenna emphasized the parties’ having contractually chosen a Queensland forum, non-exclusively under the guarantees, and exclusively under the business term loans; that they have chosen Queensland law as the applicable law under all instruments; and that witness availability and residence would appear to favour trials in Queensland. While one can probably only surmise in the absence of concluded pleadings, Mr McKenna offered this forecast as to witnesses, assuming comparability between the approaches taken in the New South Wales proceedings and these: -- 6 of 9 -- 7 “(a) 3 of the 4 persons who are said to have made oral representations (in the Chowdhury draft statement of claim), who are now private citizens (in that they are no longer Bank employees) and who are living in Queensland; (b) 18 Bank employees, 15 of which are presently based, or predominantly based, in the Bank’s head office in Brisbane are live in or around Brisbane; (c) 3 owner manages of the Bank who reside or manage OMBs in Queensland; (d) 3 witnesses who reside in New South Wales; and (e) 5 witnesses (including expert witness) who either work or reside in States other than Queensland or New South Wales.” (The reference to the “Chowdhury draft statement of claim” is to a document provided to the bank’s solicitors on 24 August 2010, setting out the case which Mr Chowdhury would wish to make in proceedings he would prefer take place in New South Wales.) [17] By way of contrast, Mr McKenna submitted, “it is likely the defendants will call few witnesses apart from the parties themselves to the proceedings together with their former employees (if any)”. [18] Mr Cotman relied on the bank’s representatives not having previously raised issues such as the inconvenience to prospective witnesses, but that does not deny the bank’s representatives the right to raise those issues where the lapse of time and the developing situation in New South Wales raises clearly the viability of now adding to the stable of cases being managed there. [19] As to Mr Cotman’s reliance on the approach taken by Byrne J in SME in December 2007, Mr McKenna offered this comparison between the situation confronting His Honour and the present: “(a) the defendant (SME) had fully particularised proceedings already filed in NSW which it states formed the basis of its counterclaim for the purposes of the Qld proceedings; (b) the proceedings in NSW pleaded factual matters which were accepted as raising common issues and questions to the factual matters pleaded in the NSW OMB [owner managed bank] Proceedings; (c) there was no suggestion at that time of the NSW OMB Proceedings being cross-vested to Queensland – the SME proceedings were one of a cluster of proceedings all at a similar stage; (d) the NSW OMB Proceedings were not as advanced at that stage as they are now (ie none of the evidence had been filed -- 7 of 9 -- 8 and served and the parties did not have directions in place to set dates for hearing.)” Analysis [20] I am satisfied that the instant proceedings are broadly “related to” the New South Wales proceedings. One party is common to all and the proceedings potentially raise similar factual issues. [21] But I am not satisfied that it is more “appropriate”, or in the interests of justice, that the Supreme Court of New Wales determine these cases. [22] The New South Wales proceedings are on the verge of being set down for trial. These Queensland proceedings are in their infancy. Notwithstanding what Mr Cotman told me, to the effect that a New South Wales trial would be unlikely next year, it is highly unlikely that these proceedings could be progressed to a point where they could be tried with the New South Wales proceedings as presently envisaged. [23] The preliminary forecast offered by Mr McKenna, additionally, suggested that inconvenience to prospective witnesses would be minimized were the trials to proceed in Queensland. Further, the parties’ choice of forum and law provisions is of some significance, favouring Queensland. [24] Mr McKenna’s position is that were Ward J prepared to add these cases to those she is currently managing in New South Wales, the bank would not oppose cross- vesting. The bank’s representative raised before Her Honour on 14 July 2010 whether the Queensland cases might be added to those currently in New South Wales. At one stage Her Honour said that she did not wish to encourage the parties to add cases to those she was managing. [25] Mr McKenna pointed out the apparent difficulty of getting the New South Wales cases to their present point, over some years, and the improbability that these Queensland cases could seamlessly be added to those in New South Wales without dislocating the New South Wales timetable. Especially absent any indication of preparedness on the part of Ward J to add these cases to the stable of New South Wales cases, Mr McKenna submitted these cases should remain here. I agree with that. [26] Mr Cotman relied on the desirability of having Ward J hear these cases, to avoid possibly inconsistent findings, whenever these might be heard in New South Wales. Of course I could not direct a particular judge of the Supreme Court of New South Wales to hear these cases, and I could not make an order on the premise that if these cases were transferred to the Supreme Court of New South Wales, the case management or allocation system which obtains in that court would lead to their being heard by Ward J. [27] In all these circumstances, I am not persuaded that it is either appropriate or generally in the interests of justice to order that these cases at this stage be transferred to the Supreme Court of New South Wales. -- 8 of 9 -- 9 Orders [28] Each defendant’s application for transfer is refused, with costs to be assessed on the standard basis. [29] On each application by the plaintiff filed 4 August 2010, in relation to the striking out of the defence, order in terms of paras 1, 3 and 4, with the costs to be assessed on the standard basis. -- 9 of 9 --