Supreme Court New South Wales Medium Neutral Citation: Metro Chatswood Pty Ltd v CRI Chatswood Pty Ltd (in liq) & anor [2011] NSWSC 434 Hearing dates: 30 March 2011 Decision date: 30 March 2011 Jurisdiction: Equity Division - Duty List Before: Brereton J Decision: Order that proceedings be transferred to Land and Environment Court. Catchwords: PRACTICE AND PROCEDURE - transfer of proceedings from Supreme Court to Land and Environment Court - where related proceedings on foot in Land and Environment Court - where issue in Supreme Court is whether claim for relief in Land and Environment Court will be "encumbrance" within meaning of transactional documents so as to disentitle bank from calling in guarantee -- Supreme Court natural forum for contractual interpretation - doubt as to jurisdiction of Land and Environment Court to restrain bank calling on guarantee - matters will traverse same evidence - no reason why Land and Environment Court not capable of dealing with question of construction - convenient that matter be heard in Land and Environment Court. CORPORATIONS - second defendant in liquidation - relief claimed not susceptible of procedure by proof of debt - only able to be obtained by court proceedings - leave granted to commence proceedings against second defendant in liquidation. Legislation Cited: (NSW) Civil Procedure Act 2005, s 149B. (CTH) Corporations Act 2001, s 500(2). Category: Principal judgment Parties: Metro Chatswood Pty Ltd (plaintiff) CRI Chatswood Pty Ltd (in liq) (first defendant) Commonwealth Bank of Australia (second defendant) Babcock & Brown International P/L (third defendant) Representation: Counsel: Mr I M Jackman SC w T J Breakspear (plaintiff) Mr M R Elliott (first defendant) Ms S Mirzabegian (second defendant) Solicitors: Kemp Strang (plaintiff) Blake Dawson (first defendant) Freehills (second defendant) Mallesons Stephen Jaques (third defendant) File Number(s): 2011/102760 Judgment ( ex tempore ) 1HIS HONOUR: By notice of motion filed pursuant to leave granted this morning, the plaintiff Metro Chatswood Pty Limited ('Metro') seeks an order under (NSW) Civil Procedure Act 2005, s 149B, transferring the present proceedings, which were instituted by a statement of claim also filed in court pursuant to leave granted this morning, to the Land and Environment Court. 2Metro is the purchaser of Lot 105 in a development at Chatswood. The first defendant CRI Chatswood Pty Ltd (in liq) ('CRIC') is, under the transaction documentation, obliged to deliver to the plaintiff, inter alia, the relevant certificate of title "free and clear of any mortgage, charge, or any lease, caveat or other encumbrance (but otherwise subject to notations 1-59 inclusive appearing in edition 1 of the certificate of title issued on 15 January 2010)." As a result of an extension negotiated yesterday the settlement of the transaction is now due to take place at 2 pm on Thursday. Metro has procured Suncorp Metway Bank to issue a bank guarantee in favour of the second defendant, Commonwealth Bank of Australia ('CBA'), in effect as payment of the deposit. CBA is entitled to call on that guarantee after the settlement date, unless precluded from doing so by operation of clause 3.10(j) or 4.3(a) of the settlement deed. 3CTI Joint Venture Company Pty Ltd is the developer of adjoining lots in the vicinity, and has the benefit of development approvals in respect of them. It has commenced proceedings in the Land and Environment Court, numbered 11/40255, to enforce certain conditions of its development consent, which it says require that part of the land currently comprised in the title of Lot 105 be excluded from that lot and transferred to its lot and that certain easements be created over Lot 105 for the benefit of its lots. By way of interlocutory relief in those proceedings, it seeks various injunctions, including an injunction restraining completion of the sale and transfer of Lot 105 to Metro. 4Metro contends that the pendency of the CTI Joint Venture Company's claim in the Land and Environment Court, or any interlocutory relief that CTI may be granted in that court, or any final relief that it may be granted, constitutes an "encumbrance" within the meaning of clause 3.10(b) of the settlement deed; and that any failure on its part to pay the development fee would arise because of non-compliance by CRIC (the first defendant) with its obligations under clause 3.10(b) of the settlement deed: so that CBA would not be entitled to demand payment under the bank guarantee. 5In the Land and Environment Court proceedings, the CTI Joint Venture Company's interlocutory application has been set down for hearing this afternoon. In addition, invoking the ancillary jurisdiction of the Land and Environment Court, Metro has filed a cross-claim seeking substantially the same relief as it seeks by its statement of claim in these proceedings, and a motion seeking an order restraining CBA from calling on the bank guarantee. However, there is some doubt as to the jurisdiction of the Land and Environment Court to deal with such matters: in this court, counsel for Metro, Mr Jackman SC, does not assert that it is clear that there is no jurisdiction; nor does Ms Mirzabegian counsel for CBA. It nonetheless appears at this stage that CBA is inclined to object to the Land and Environment Court dealing with Metro's cross-claim on the ground of lack of jurisdictional competence. 6It may be that if interlocutory relief is granted in the Land and Environment Court, CBA will then accept that it is not entitled to call on the guarantee. However, although its present position was expressed to be so in argument before me, it was also made clear that CBA was not prepared to give this court an undertaking to that effect. Thus, it seems to me that Metro is entitled to treat that as a matter that is still unresolved. 7For CBA it was, I think correctly, submitted that in Metro's substantive claim the essential question will be the narrow one of whether the pendency of the CTI Joint Venture Company's claim, or any interlocutory or final relief it may be granted, amounts to an "encumbrance" within the meaning of clause 10.1(b). There is no doubt that this court is the natural forum for determining such a dispute, in the sense that it is essentially a contractual question, specifically one of construction of a contract. That consideration tells in favour of this court being the appropriate court, at least in the absence of the pending proceedings in the Land and Environment Court. In that respect, it needs to be borne in mind, first, that not only the CTI Joint Venture Company's claim, but also Metro's cross-claim and Metro's motion for interlocutory relief, are also pending in that court. That will involve before that court, a jurisdictional argument, as well as an argument on the merits of the motion. This court, if it heard the claim, would not be confronted with a jurisdictional argument, but would otherwise have to hear the same argument on the merits. Some of the same underlying evidentiary material as would be used in the Land and Environment Court would, I suspect, also have to be referred to on the hearing. 8The Land and Environment Court has set aside time for the hearing this afternoon. If this court were not to transfer the matter to the Land and Environment Court, then it might well be that much of the same material would have to be traversed again, in this court, tomorrow morning. It seems to me entirely desirable that these issues be heard in one court, shorn of jurisdictional dispute, and that that can best be achieved by the transfer of the proceedings in this court to the Land and Environment Court. The judges of that court are no less capable of dealing with the question of construction than the judges of this court. 9CRIC is in liquidation, pursuant to a creditor's voluntary winding up. (CTH) Corporations Act , s 500(2), provides that after the passing of a resolution for voluntary winding up, no action or other civil proceeding is to be pursued with or commenced against the company, except by leave of the court and subject to such terms as the court imposes. 10The statement of claim, which I have granted leave to file this morning, seeks by way of final relief declarations binding CRIC, a company in liquidation, although the interlocutory relief sought is only against CBA. 11The relief claimed against CRIC is not susceptible of procedure by way of proof of debt, and can only be obtained by proceedings in a court. In those circumstances, it seems to me appropriate to grant leave, on the usual terms, to commence and continue the subject proceedings against CRIC. My orders are: (1) Pursuant to Corporations Act, s 500(2), I grant leave to Metro Chatswood Pty Limited to commence the present proceedings against the first defendant CRI Chatswood Pty Limited (in liquidation), notwithstanding that it is in liquidation and to prosecute those proceedings to judgment, provided that no judgment be executed against the assets of the first defendant without the further leave of this court first having been obtained. (2) Pursuant to Civil Procedure Act s 149B, I order that these proceedings be transferred to the Land and Environment Court. (3) I order that costs of the present application be costs in the transferred proceedings. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 25 May 2011