FEDERAL COURT OF AUSTRALIA Koonara Management Pty Ltd v Giddy [2017] FCA 118 File number: NSD 2021 of 2016 Judge: GLEESON J Date of judgment: 17 February 2017 Catchwords: PRACTICE AND PROCEDURE – transfer of proceedings from District Court of New South Wales to the Federal Court of Australia – transfer order made pursuant to s 12GK(4) of the Australian Securities and Investments Commission Act 2001 (Cth) Legislation: Australian Securities and Investments Commission Act 2001 (Cth) Date of hearing: Heard on the papers Date of last submissions: 15 February 2017 (Plaintiff) 15 February 2017 (Defendant) Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 18 Counsel for the Plaintiffs: Mr G Stapleton Solicitor for the Plaintiffs: Minter Ellison Solicitor for the Defendant: Mr BJ Miller of Garland Hawthorn Brahe Table of Corrections 17 May 2017 On the cover page and the Orders page the file number "NSD 1357 of 2016" has been replaced with "NSD 2021 of 2016". ORDERS NSD 2021 of 2016 BETWEEN: KOONARA MANAGEMENT PTY LTD (ACN 082 883 323) First Plaintiff ROCKY CASTLE FINANCE PTY LTD (ACN 082 858 160 Second Plaintiff AND: STUART GIDDY Defendant JUDGE: GLEESON J DATE OF ORDER: 17 FEBRUARY 2017 BY CONSENT, THE COURT ORDERS THAT: 1. Pursuant to s 12GK(4) of the Australian Securities and Investments Commission Act 2001 (Cth), the Sydney Registry of the District Court of New South Wales transfer District Court proceeding 2015/00193570, Koonara Management Pty Ltd atf Koonara Management Trust v Stuart Giddy, to the Sydney Registry of this Court forthwith. 2. Pursuant to s 12GK(4) of the Australian Securities and Investments Commission Act 2001 (Cth), the Sydney Registry of the District Court of New South Wales transfer District Court proceeding 2015/00193532, Rocky Castle Finance Pty Ltd atf Rocky Castle Finance Trust v Stuart Giddy, to the Sydney Registry of this Court forthwith. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT GLEESON J: 1 By originating process dated 22 November 2016, the plaintiffs seek, primarily, an order pursuant to s 12GK(4) of the Australian Securities and Investments Commission Act 2001 (Cth) ("ASIC Act") directing the Sydney Registry of the District Court of New South Wales ("District Court") to transfer two District Court proceedings to the Sydney Registry of this Court. 2 In addition, the plaintiffs seek declarations to the effect that statements of cross-claim in each of the District Court proceedings give rise to matters for determination under Pt 2, Div 2 of the ASIC Act. 3 The relevant District Court proceedings are 2015/193570 ("Koonara District Court proceeding") and 2015/193532 ("Rocky Castle District Court proceeding"). 4 The defendant consents to the orders proposed by the plaintiffs. 5 On 13 October 2016, I made an order pursuant to s 12GK(4) of the ASIC Act in similar proceedings: Koonara Management Pty Ltd v Rockliff [2016] FCA 1206. 6 Section 12GK(4) provides: (4) If: (a) a proceeding is pending in a court (other than the Supreme Court) of a State or Territory; and (b) a matter for determination in the proceeding arose under: (i) this Division; or (ii) Part 3 in its application in relation to an investigation of a contravention of this Division; the court must, if directed to do so by the Federal Court, transfer to the Federal Court the matter and such other matters for determination in the proceeding, as the Federal Court decides, the determination of which would, apart from any law of a State or of the Northern Territory relating to cross‑vesting of jurisdiction, be within the jurisdiction of the Federal Court. 7 Section 12GK(4) is in Div 2 of Pt 2 of the ASIC Act, which is entitled "Unconscionable conduct and consumer protection in relation to financial services". 8 Relevantly, by s 12GF(1), a person who suffers loss or damage by conduct of another person that contravenes a provision of Subdiv C (ss 12CA to 12CC) or Subdiv D (ss 12DA to 12DN) may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention. Section 12GM confers on the Court power to make other orders in a proceeding instituted under, or for an offence under Div 2 of Pt 2 of the ASIC Act in certain circumstances. 9 The discretion conferred on this Court by s 12GK(4) to give a direction to the District Court arises in the context of s 12GJ of the ASIC Act, which provides: (1) Jurisdiction is conferred on the Federal Court in any matter: (a) arising under this Division; or (b) arising under Part 3 in its application in relation to an investigation of a contravention of this Division; in respect of which a civil proceeding may be instituted under this Subdivision or under Part 3 as so applying. (2) With respect to any matter: (a) arising under this Division; or (b) arising under Part 3 in its application in relation to an investigation of a contravention of this Division; in respect of which a civil proceeding is instituted under this Subdivision or under Part 3 as so applying: (c) the several courts of the States are invested with federal jurisdiction within the limits of their several jurisdictions, whether those limits are as to locality, subject‑matter or otherwise; and (d) subject to the Constitution, jurisdiction is conferred on the several courts of the Territories. (3) Nothing in subsection (2) is taken to enable an inferior court of a State or Territory to grant a remedy other than a remedy of a kind that the court is able to grant under the law of that State or Territory. (4) The jurisdiction conferred by subsection (1) on the Federal Court is exclusive of the jurisdiction of any other court other than the jurisdiction of the several courts of the States and Territories under subsection (2) and the jurisdiction of the High Court under section 75 of the Constitution. District Court proceedings 10 In support of the application, the plaintiffs relied on an affidavit of Christopher Keane, solicitor, sworn 22 November 2016. The affidavit deposes to the following facts: (1) the first plaintiff is the plaintiff in the Koonara District Court proceeding; (2) on 26 July 2016, Mr Giddy filed an amended defence to the amended statement of claim in the Koonara District Court proceeding and a statement of cross-claim; (3) the second plaintiff is the plaintiff in the Rocky Castle District Court proceeding; and (4) on 26 July 2016, Mr Giddy filed an amended defence to the amended statement of claim in the Rocky Castle District Court proceeding and a statement of cross-claim. 11 In his affidavit, Mr Keane expresses the view that this Court is the proper forum for pursuing the relief sought in the cross-claim. 12 Mr Keane's affidavit annexes the pleadings filed in the District Court proceedings. The claims made in the amended statement of claim in the Koonara District Court proceeding are for amounts described as debts and "contingent debts" allegedly incurred in connection with a managed investment scheme called the "Coonawarra Wine Grape Project". In the Rocky Castle District Court proceeding, the amended statement of claim claims damages for non-payment of monies allegedly payable under pursuant to a loan deed. 13 The defences plead that Mr Giddy relies upon the matters raised in the relevant cross-claim by way of set-off. 14 In the Koonara District Court proceeding, there is a "First cross-claim amended statement of cross-claim", filed 13 February 2017, which seeks orders pursuant to s 12GM of the ASIC Act, s 1325 of the Corporations Act 2001 (Cth) ("Corporations Act") and s 7 of the Contracts Review Act 1980 (NSW); or alternatively s 12GF of the ASIC Act or s 729 of the Corporations Act. The cross-claim alleges, among other things, that representations made in a prospectus in respect of investment in the "Coonawarra Wine Grape Project" were misleading and deceptive in contravention of s 12DA of the ASIC Act. 15 In the Rocky Castle District Court proceeding, there is also a "First cross-claim amended statement of cross-claim", filed 13 February 2017, seeking similar orders to those sought in the Koonara District Court proceeding as well as additional orders. Consideration 16 In order to exercise the power conferred by s 12GK(4), it is necessary for the Court to be satisfied that a matter for determination in the relevant District Court proceeding arose under Div 2 of Pt 2 of the ASIC Act. 17 Having regard to the cross-claims identified above, I am satisfied that matters for determination in the District Court proceedings include whether the plaintiffs are liable to pay damages to the defendant pursuant to s 12GF(1) of the ASIC Act by reason of contraventions of s 12DA of the ASIC Act. On that basis, I am satisfied that a matter for determination in the District Court proceedings, namely, the claim for damages arose, at least in part, under Div 2 of Pt 2 of the ASIC Act. 18 I am satisfied that the Court has power to make a direction under s 12GK(4) and that the Court is an appropriate forum for determination of the matters arising in the District Court proceedings. I consider those matters to be sufficient to provide a proper basis for allowing the application. Accordingly, I will make the directions sought by consent. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson. Associate: Dated: 17 February 2017