Westchester Financial Services Pty Limited v Acclaim Exploration NL [1999] NSWSC 621

New South Wales Supreme Court CITATION : Westchester Financial Services Pty Limited v Acclaim Exploration NL [1999] NSWSC 621 CURRENT JURISDICTION : Equity FILE NUMBER(S) : 2813/99 HEARING DATE(S) : 21/06/99, 22/06/99 JUDGMENT DATE : 22 June 1999

PARTIES : Westchester Financial Services Pty Limited ACN 074 841 900 (P) Acclaim Exploration NL ACN 009 076 233 (D) JUDGMENT OF : Santow J

COUNSEL : Stephen Blanks (Sol) (P) P M Wood (D) SOLICITORS : Stephen Blanks & Associates (P) Freehill Hollingdale & Page (Agents) (D) CATCHWORDS : CORPORATIONS: Cross-vesting where relevant events occurred in Western Australia in relation to a company incorporated and having its principal place of business, assets and projects there. ACTS CITED : Bankinvest AG v Seabrook & Others (1988) 14 NSWLR 711 CASES CITED : Corporations (New South Wales) Act 1990 ss40, 42 and 44 facilitated by ss44C, 44D and 48 Corporations Law s995 DECISION : Cross-vesting to Western Australia ordered

Westchester.22June99 — 23 June, 1999: Westchester Financial Services P/L v Acclaim Exploration NL 4 IN THE SUPREME COURT OF NEW SOUTH WALES IN EQUITY

SANTOW J

No. 2813/99 WESTCHESTER FINANCIAL SERVICES PTY LIMITED ACN 074 841 900 Plaintiff ACCLAIM EXPLORATION NL ACN 009 076 233 Defendant

JUDGMENT — ex tempore 22 June 1999

1 The Defendant in the principal proceedings applies by the relevant cross-vesting provision contained in the Corporations (New South Wales) Act 1990 for their transfer to the Supreme Court of Western Australia. This is to be found principally in ss40, 42 and 44 facilitated by ss44C, 44D and 48. Relevantly, s44(2) provides as follows: " 44. (2) Where it appears to the court that, having regard to the interests of justice, it is more appropriate for the proceeding, or an application in the proceeding, to be determined by another court having jurisdiction in the matters for determination in the proceeding or application, the first-mentioned court may transfer the proceeding or application to that other court." 2 The principal proceedings are applications for an injunction brought by the Plaintiff as a minority shareholder in the Defendant. The injunction seeks to restrain the proposal of two resolutions at an extraordinary general meeting of the Defendant, a listed exploration company incorporated in Western Australia and having its principal place of business there, where also are its assets and projects. The relevant resolutions are thus to be passed at a meeting in Western Australia. They relate first to the approval of a reduction of capital to be satisfied by an in specie transfer of shares in another company ("the second resolution"). Second, they relate to the approval of a transaction involving the acquisition from a non-Australian company of shares in an Australian company, the consideration for which consisting of the allotment of shares in the Defendant company to the non-Australian company, all this being pursuant to a call option in favour of the Defendant. I refer to this transaction and the resolution compendiously as "the third resolution". 3 The attack by the Plaintiff on the second resolution is a purely legal point where it is not anticipated that any witnesses would be required. 4 The attack by the Plaintiff on the third resolution is however based upon the contention that the relevant material provided to shareholders is either misleading or deceptive or otherwise contravenes s995 of the Corporations Law. While the nature of the Plaintiff's case has yet to be clarified, it would appear from the annexed correspondence to Mr Ryan's affidavit of 19 June 1999 that it will include the contention that the Defendant has not sufficiently identified the relationship between the Defendant and the non-Australian company. That matter and other related questions have led the Defendant to conclude that it seems likely that the state of knowledge of the Defendant and its directors will be in issue and accordingly the Defendant proposes to have two of its Western Australian resident directors give evidence regarding those matters. 5 The Plaintiff for its part contends that in relation to the third resolution it would simply rely on NSW experts and complains that the Defendant is not doing likewise. The Defendant's forensic choice is probably to rely on the evidence of two of its resident directors. I should observe that I have no reason to doubt the bona fides of the Defendant's likely forensic choice. Nor, looking at the Plaintiff's position, is it by any means self-evident that the Plaintiff would be prejudiced if it decided to rely on Western Australian legal advisers or arranged for its local lawyers to conduct the proceedings in Western Australia and obtained any experts from there. That however is again a matter for the Plaintiff's forensic choice and it suffices to say that there is nothing inevitable, contrary to the Plaintiff's submission, that these proceedings necessarily require only experts to give evidence rather than from those directly involved, who reside in Western Australia. 6 Section 44B requires that a court must have regard to where the principal place of business of the body corporate concerned in the proceeding is located and the place or places where the relevant events that are the subject of the proceeding or application took place. It will be apparent that the Defendant has its principal place of business in Western Australia while the Plaintiff has its principal place of business in New South Wales. However, the places where the relevant events have occurred or are to occur are clearly enough Western Australia. 7 The criteria to be applied in determining whether orders for cross-vesting should be made are set out in Bankinvest AG v Seabrook & Others (1988) 14 NSWLR 711 particularly at 727, 728 and 730 in the judgment of Rogers AJA. The "interests of justice" look not so much to convenience but to the suitability or appropriateness of the relevant jurisdiction. This is to identify the natural forum whose appropriateness depends on finding whether it has the most real and substantial connection with the action in question. Here, almost self-evidently, as indeed I indicated when the matter first came before me, that place is Western Australia. Nothing I have heard from the Respondent to this application indicates otherwise. That the recipient of the consideration to be issued under the third resolution is a non-Australian company which is to sell shares in another company certainly does not represent a real and substantial connection with New South Wales. While there may be questions of convenience form the point of view of the Plaintiff as a New South Wales company with a New South Wales legal adviser, that, as I have said, could not prevail over those matters of real and substantial connection.