FEDERAL COURT OF AUSTRALIA Menzel v Corex Plastics (Aust) Pty Ltd [1999] FCA 1218 PRACTICE AND PROCEDURE – transfer of proceedings – balance of convenience Federal Court of Australia Act 1976 (Cth) s 48 National Mutual Holdings Pty Ltd v The Sentry Corporation (1988) 19 FCR 155 applied GREGORY JAMES MENZEL V COREX PLASTICS (AUST) PTY LTD S 7154 OF 1999 JUDGE: FINKELSTEIN J DATE: 1 SEPTEMBER 1999 PLACE: ADELAIDE IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY S 7154 OF 1999 BETWEEN: GREGORY JAMES MENZEL Applicant AND: COREX PLASTICS (AUST) PTY LTD Respondent JUDGE: FINKELSTEIN J DATE OF ORDER: 1 SEPTEMBER 1999 WHERE MADE: ADELAIDE THE COURT ORDERS THAT: 1. The application be dismissed. 2. The applicant to pay the respondent's costs of and incidental to the application. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY S 7154 OF 1999 BETWEEN: GREGORY JAMES MENZEL Applicant AND: COREX PLASTICS (AUST) PTY LTD Respondent JUDGE: FINKELSTEIN J DATE: 1 SEPTEMBER 1999 PLACE: ADELAIDE REASONS FOR JUDGMENT 1 The applicant, Gregory James Menzel, entered into a composition under Part X of the Bankruptcy Act 1966 (Cth) on 1 July 1999. A creditor of the applicant, Corex Plastics (Aust) Pty Ltd ("Corex Plastics"), has applied to set aside the composition or to have it terminated. That application has been brought in the Victoria District Registry of the Court. 2 The applicant asks for an order that the proceeding to set aside or terminate the composition be transferred to the South Australia Registry of the Court. The power to make such an order is to be found in s 48 of the Federal Court of Australia Act 1976 (Cth) which provides: "The Court or a Judge may, at any stage of a proceeding in the Court, direct that the proceeding or a part of the proceeding be conducted or continued at a place specified in the order, subject to such conditions (if any) as the Court or Judge imposes." 3 It is also necessary to refer to O 10 r 1(2)(f) and O 30 r 6 of the Federal Court Rules. The first of these rules gives the Court power to direct that a proceeding be transferred from one registry to another, and the second rule permits the Court to direct the trial of a proceeding to take place at a particular place. 4 The test to be applied on an application to transfer a proceeding is that stated by the Full Court in National Mutual Holdings Pty Ltd v The Sentry Corporation (1988) 19 FCR 155. In that case the Full Court said the discretion whether to transfer a proceedings "should be exercised flexibly having regard to the circumstances of the particular case." The Full Court said (at 162) that the test was: " … where can the case be conducted or continued most suitably bearing in mind the interests of all the parties, the ends of justice in the determination of the issues between them, and the most efficient administration of the Court. It cannot and should not, in our opinion, be defined more closely or precisely." 5 The applicant has supported his application by an affidavit sworn by his solicitor. After setting out the events giving rise to the composition, and a short history of the relationship between the applicant and Corex Plastics, the solicitor said in his affidavit that: "The applicant is resident in Adelaide. The trustee conducts his business in Adelaide. The assets of the applicant are situated in Adelaide. The meeting of creditors took place in Adelaide. Of the 23 creditors listed in the applicant's statement of affairs, 14 are located in South Australia." These are the only facts that support the application for a transfer. 6 Corex Plastics resists the application. It has also filed material that bears on the exercise of my discretion. The principal matter adverted to by Corex Plastics is the existence of another proceeding pending in the Victoria District Registry of the Court, which it is said should be taken into account. That proceeding concerns the brother of the applicant, Andrew Menzel, who had entered into a deed of arrangement on 12 July 1999. Corex Plastics has made an application to have that deed declared void or terminated. 7 The relevance of this second proceeding is as follows. Apparently both the applicant and his brother were directors of Menzel Plastics Pty Ltd. Each of them purportedly executed a guarantee in favour of Corex Plastics in respect of debts due by Menzel Plastics Pty Ltd to Corex Plastics for goods sold and delivered. Menzel Plastics Pty Ltd is now in liquidation and the composition and arrangement of the two brothers, if they remain in place, will result in significant loss to Corex Plastics. 8 The point of referring to the proceeding in respect of Andrew Menzel is that Corex Plastics contends it is appropriate that that proceeding and the proceeding in respect of the applicant's composition should be determined contemporaneously, by the same judge. Corex Plastics has indicated that it will seek an order to that effect. I note that both proceedings are returnable for a directions hearing in Melbourne on 6 September 1999. 9 The question that I must decide is whether, on the material presently before me, there is good reason why I should direct that the composition proceeding be conducted in South Australia. In other words, the question is whether there is a good reason why I should vary the location of the conduct of the proceedings from that chosen by Corex Plastics. 10 In my view there is no warrant for making such an order, at least at the present time. I do not know enough about the two proceedings that are extant in Victoria to form an opinion on whether it is likely that an order will be made that they be heard together. If such an order will be made, then there would be no reason to transfer the proceeding concerning the applicant to South Australia. On the contrary, a transfer may well frustrate the anticipated application that the two proceedings be heard together. 11 Further, I should say that in any event I do not regard the material presently put forward in support of the application for a transfer as establishing a good reason why the order should be made. I accept the possibility that the material might be supplemented to show a more compelling case for making the order and I would grant leave to the applicant, if leave was required, to renew his application on additional material if it turns out that no order is made that the application to set aside the composition and the application to set aside his brother's deed of arrangement be heard together. 12 Accordingly, I will order that the application be dismissed with costs. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein. Associate: Dated: 1 September 1999 Counsel for the Applicant: Mr C Kourakis QC Mr M Keith Solicitor for the Applicant: Cowell Clarke Counsel for the Respondent: Mr M Galvin Solicitor for the Respondent: Rossi, Ryan & Raniga Date of Hearing: 1 September 1999 Date of Judgment: 1 September 1999