FEDERAL COURT OF AUSTRALIA Wilson v Rambaldi [2001] FCA 1038 CORPORATIONS – application for ex parte orders that receivers and managers be restrained from exercising powers under a debenture – application for order restraining receivers and managers from winding up corporation – application for order that books and records of corporation be made available to applicant – where limited material before the Court – application for injunctive relief dismissed – change of venue – where no evidence of substantive connection of the matter with New South Wales – where applicant submits that he is unable to obtain legal representation in Victoria – proceedings transferred to Victorian District Registry Federal Court of Australia Act 1976 (Cth)s 48 Federal Court Rules O 10 r 1(1) and 1(2)(f) Kasofsky v Kreegers Pty Ltd [1937] 4 All ER 374 distinguished National Mutual Holdings Pty Ltd v The Sentry Corporation (1988) 19 FCR 155 applied Wyllie Group Pty Ltd v ANZ Securities Ltd [2000] FCA 1382 cited Wang v Australia China Marketing Company Pty Ltd [2001] FCA 13 cited KENNOLL WILSON v GESS MICHALE RAMBALDI (aka GUISEPPE MICHELE RAMBALDI and TIM ARTHUR JONAS as Receivers and Managers of WORLD IT LIMITED (Receivers and Managers Appointed) v TRAVELSHOP LIMITED N 3000 OF 2001 TAMBERLIN J SYDNEY 2 AUGUST 2001 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 3000 OF 2001 BETWEEN: KENNOLL WILSON APPLICANT AND: GESS MICHAEL RAMBALDI aka GUISEPPE MICHELE RAMBALDI and TIM ARTHUR JONAS as Receivers and Managers of WORLD IT LIMITED (Receivers and Managers Appointed) FIRST RESPONDENTS TRAVELSHOP LIMITED SECOND RESPONDENT JUDGE: TAMBERLIN J DATE OF ORDER: 2 AUGUST 2001 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The application for interlocutory relief is dismissed. 2. The proceeding be transferred to the Victorian District Registry of the Federal Court of Australia. 3. The applicant to pay the respondents' costs of the application to date and the first respondents' costs on the notice of motion. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 3000 OF 2001 BETWEEN: KENNOLL WILSON APPLICANT AND: GESS MICHAEL RAMBALDI aka GUISEPPE MICHELE RAMBALDI and TIM ARTHUR JONAS as Receivers and Managers of WORLD IT LIMITED (Receivers And Managers Appointed) FIRST RESPONDENTS TRAVELSHOP LIMITED SECOND RESPONDENT JUDGE: TAMBERLIN J DATE: 2 AUGUST 2001 PLACE: SYDNEY REASONS FOR JUDGMENT 1 On 31 July 2001, the applicant, Mr Wilson, filed an application for ex parte orders that the first respondent be restrained from exercising powers and duties conferred under a debenture dated 17 April 2001, together with an order restraining the respondents from taking any steps to wind up their corporation, World IT Limited ("World"). A further order is sought that the books and records of World be made available to the applicant for "the purpose of the proceedings" until final order. I gave leave to abridge the time for service of the application and any further evidence. The matter came before me again on 1 August 2001. On that occasion, a notice of motion was filed by the first respondents seeking that the application be set aside or, alternatively, that the proceedings be conducted and continued in the Victorian District Registry pursuant to s 48 of the Federal Court of Australia Act 1976 (Cth)and the Federal Court Rules, O 10 r 1(1) and 1(2)(f). 2 The applicant is a director and a majority shareholder of World which was trading as a satellite telecommunications company with a capability of offering satellite communications around the world. It is said by the applicant that World has substantial paid up capital and a turnover of $5 million with a substantial amount in cash reserves. 3 On 17 April 2001, World, as chargor, issued a debenture to the second respondent to secure a convertible note for $500,000 repayable within twelve months. The applicant says that on about 24 July 2001 he was given a notice of event of default dated 20 July 2001. That notice asserts that a combination of events have occurred which, in the opinion of the financier, have had material adverse effects on the property charged and that the chargor is unable to pay its debts when they fall due. There is in evidence a notice of appointment of receiver addressed to World which states that the first respondents have been appointed by the second respondent as joint and several receivers to enter and take possession of the property and assets charged by the debenture and to exercise powers conferred on the receiver by the debenture. Under cl 11 of the Deed of Charge, wide powers are given to the receiver including, by reference to cl 10.3, the power to carry on or concur in the carrying on of the business of World. 4 The applicant says that the notice is vague and contains no particulars and that the claim is disputed. On 24 July 2001, the first respondents arrived at World's premises and took over the running of the company. They changed the locks two days later. There is a further affidavit by the applicant, dated 1 August 2001, which alleges that the appointment of the receivers was a "ruse" on the part of the second respondent. 5 The first respondents have filed an affidavit by Mr Rambaldi who is one of the receivers and managers. This deals with a number of matters, including an assertion that a balance sheet analysis of the company as at 24 July 2001 disclosed a deficiency of assets of about $901,000 on a book value basis and $3.793 million on an estimated realisable value basis. 6 The first respondents have entered a conditional appearance on the basis that they do not concede that the Court had jurisdiction to deal with this question. However, that submission has been withdrawn. There is a live issue between the parties as to whether the applicant is a "creditor" within s 418A of the Corporations Law. 7 It is clearly inappropriate that a declaration at this point should be made as to the validity of the appointment of the first respondents. That is in the nature of final relief. On the material presently available, no ground has been made out for an Order that the books and records of World should be made freely available for the purpose of the proceedings and I do not accede to that application. 8 I am not persuaded that any restraining orders should be made on the limited material before me. No undertaking as to damages was proffered by the applicant. There is no threat shown to wind up World. There is in evidence a letter of 27 July 2001 from Mr Rambaldi which indicates that if certain conditions are not met, World will cease trading. No basis has been laid in the evidence to challenge that commercial decision. It has not been shown that damages may not be an adequate remedy. In addition, the case as presented at this time as to the alleged invalidity of the appointment of the first respondents cannot be described as strong. 9 The applicant referred the Court to the decision Kasofsky v Kreegers Pty Ltd [1937] 4 All ER 374, where the Court dismissed a claim by a receiver on the ground that it had not been proven that he was properly appointed. That case is clearly distinguishable from the present because the claimant had only produced the debenture and a document which purported to appoint himself. In the present case the uncontradicted evidence of Mr Ramboldi was that, as at 24 July, there was a substantial deficit of assets. 10 For these reasons, on the material presented by the applicant, I dismiss the application for the injunctive relief sought and for access to documents, as no proper basis has been made out. 11 As to the continuance of the matter, it appears that all parties are residents of Victoria, including World. Relevant documents and records appear to be located in Victoria and for the matter to be heard in Sydney would require transportation of the documents and witnesses to Sydney. There is no evidence as to any relevant connection of the matter with New South Wales with the exception of the assertion from the bar table to the effect that it was not possible to obtain legal representation in Victoria in the circumstances. The relevant principles as to change of venue are referred to in National Mutual Holdings Pty Ltd v The Sentry Corporation (1988) 19 FCR 155 at 162 where the Court said: "The balance of convenience is important, but its weight must vary from case to case. Ultimately the test is: 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." 12 This case has been consistently applied in later cases: see Wyllie Group Pty Ltd v ANZ Securities Ltd [2000] FCA 1382; Wang v Australia China Marketing Company Pty Limited [2001] FCA 13. In the absence of any indication of a substantive connection with New South Wales, it is my opinion that it is in the interests of all parties, the interests of justice and the interests of the most efficient administration of the Court, if this matter is removed to the Victorian Registry pursuant to s 48 of the Federal Court of Australia Act 1976 and the Federal Court Rules, O 10 r 1(1) and 1(2)(f). 13 It is inappropriate in this proceeding to order that the proceedings be struck out. 14 For the above reasons the Orders I make are: 1. This proceeding be transferred to the Victorian District Registry of the Federal Court of Australia. 2. The applicant is to pay the respondents' costs of the application and the first respondents' cost of the notice of motion. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin. Associate: Dated: 2 August 2001 Solicitor for the Applicant: Mr M Newman Newman & Associates Counsel for the First Respondent: Mr F Gleeson and Mr T Duggan Counsel for the Second Respondent: Mr A L Hill Solicitor for the Second Respondent: Mr P James Date of Hearing: 31 July 2001 and 1 August 2001 Date of Judgment: 2 August 2001