Supreme Court New South Wales Medium Neutral Citation: Murray Morgan Investments v Capma Pty Limited [2016] NSWSC 264 Hearing dates: 17 November 2015 Date of orders: 17 March 2016 Decision date: 17 March 2016 Jurisdiction: Common Law Before: Hidden J Decision: Proceedings in this Court transferred to the Family Court of Australia Catchwords: CROSS-VESTING: application to transfer proceedings for possession to the Family Court – plaintiff a company – whether the company controlled by the husband in Family Court proceedings – wife claims the company as matrimonial property Legislation Cited: Jurisdiction of Courts (Cross-Vesting) Act 1987 Cases Cited: Valceski v Valceski [2007] NSWSC 440, 70 NSWLR 36 Category: Principal judgment Parties: Phoebe Kyriakou (1st applicant) Murray Morgan Investments Limited (plaintiff/1st respondent) Capma Pty Limited (Deed Administrator Appointed) (defendant/2nd respondent) Representation: Counsel: Simon Gregory (applicant) Ian Coleman SC (plaintiff/1st respondent) JS Wheelhouse (defendant/2nd respondent) Solicitors: Lander & Rogers Lawyers (applicant) Peters Linnette Lawyers (plaintiff/1st respondent) Argyle Lawyers (defendant/2nd respondent) File Number(s): 2015/166227 Judgment 1. HIS HONOUR: These are proceedings for possession of a home at Woollahra, which is registered in the name of the defendant, Capma Pty Limited ("Capma"). The plaintiff, Murray Morgan Investments Limited ("MMI") lent money to Capma in about June 2011 to enable it to complete the purchase of the property, and that loan was secured by a mortgage over it. Capma is alleged to be in breach of the mortgage, so as to entitle MMI to possession. 2. All the issued share capital in Capma is held by a company called Helmstar Pty Ltd ("Helmstar"). Until late 2010, all the issued capital in Helmstar was held by Mr Chrisilios Kyriakou, who was also its sole director. Since August 2011, the Woollahra home has been occupied by his wife, Phoebe Kyriakou, and their children. Mr and Mrs Kyriakou separated in August 2010, when they were living in Monaco. Mrs Kyriakou brought proceedings in the Family Court in May 2013, and they were divorced on 2 September 2014. 3. There are currently property settlement proceedings between them in the Family Court. Mrs Kyriakou seeks to have the loan from MMI to Capma and the mortgage securing it set aside. She invokes s 106B of the Family Law Act 1975, which empowers the court to set aside a transaction made to defeat an existing or anticipated order in proceedings in that court, or which is likely to defeat any such order. Capma is a respondent to those proceedings, but MMI is not. 4. By a notice of motion of 7 August 2015, Mrs Kyriakou seeks to transfer the proceedings in this Court to the Family Court, pursuant to s 5(1) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (the Cross-Vesting Act). MMI opposes that order. Subsection 5(1) provides: "(1) Where: (a) a proceeding (in this subsection referred to as the relevant proceeding ) is pending in the Supreme Court of a State or Territory (in this subsection referred to as the first court ); and (b) it appears to the first court that: (i) the relevant proceeding arises out of, or is related to, another proceeding pending in the Federal Court or the Family Court and it is more appropriate that the relevant proceeding be determined by the Federal Court or the Family Court; (ii) having regard to: (A) whether, in the opinion of the first court, apart from this Act and any law of a State relating to cross-vesting of jurisdiction and apart from any accrued jurisdiction of the Federal Court or the Family Court, the relevant proceeding or a substantial part of the relevant proceeding would have been incapable of being instituted in the first court and capable of being instituted in the Federal Court or the Family Court; (B) the extent to which, in the opinion of the first court, the matters for determination in the relevant proceeding are matters arising under or involving questions as to the application, interpretation or validity of a law of the Commonwealth and not within the jurisdiction of the first court apart from this Act and any law of a State relating to cross-vesting of jurisdiction; and (C) the interests of justice; It is more appropriate that the relevant proceeding be determined by the Federal Court or the Family Court, as the case may be; or (iii) it is otherwise in the interests of justice that the relevant proceeding be determined by the Federal Court or the Family Court; the first court shall transfer the relevant proceeding to the Federal Court or the Family Court, as the case may be." 1. Helmstar, the company which owns Capma, is owned by the Kyriakou family trust, and Mrs Kyriakou contends in the Family Court proceedings that it is matrimonial property. She also contends that MMI is matrimonial property, and has applied to have that company joined as a respondent in the Family Court proceedings. It is her case that Mr Kyriakou is the alter ego of MMI and Capma, and that this is an issue which needs to be determined in those proceedings. 2. There is no doubt that the Family Court has accrued jurisdiction to hear and determine the controversy in this Court: Valceski v Valceski [2007] NSWSC 440, 70 NSWLR 36, at [37] (48) ff (Brereton J). This application turns on where the interests of justice lie. 3. In Valceski, Brereton J, after considering the first two factors set out in s 5(1)(b)(ii) of the Cross-Vesting Act, continued at [69] (59 – 60): "That leaves to the third factor, the interests of justice. The question is simply whether, assuming that the jurisdiction of the transferor court has been regularly invoked, it is in the interests of justice that the proceedings be heard and determined in the transferee court, there being a statutory obligation to transfer the proceedings to that court whenever it appears to be in the interests of justice to do so – for which purpose it is both necessary and sufficient that the transferee court be the 'more appropriate' forum [BHP Billiton Ltd v Schultz [2004] HCA 61; (2004) 221 CLR 400, 421 [14], 434-5 [63]]. In identifying the 'more appropriate forum', relevant considerations include the cost and efficiency of proceedings in the respective jurisdictions, and the 'connecting factors' described by Lord Goff in Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460, 478 – including matters of convenience and expense such as availability of witnesses, the places where the parties respectively reside or carry on business, and the law governing the relevant transaction [BHP v Schultz, 422 [18]]. Consideration of relevant connecting factors may identify a 'natural forum' [BHP v Schultz, 423 [19]; cf British American Tobacco Australia Ltd v Gordon [2007] NSWSC 230, [44]]. As Schultz makes clear, the interests of justice concern those of both parties, and rather than the selection of the most advantageous, or least disadvantageous, forum for one of them, the 'interests of justice' are to be judged by more objective factors, such as facilitate identification of the 'natural forum', in which objectively judged it might be expected that the dispute would fall to be resolved, with its concomitant juridical advantages and disadvantages for each party, whatever they may be [cf British American Tobacco v Gordon, [47]]." 1. On 14 June 2013, on Mrs Kyriakou's application, the Family Court made an interim order restraining Mr Kyriakou and Capma from doing anything that may interfere with her use and application of the Woollahra property, and restraining Capma from mortgaging any property of which it is the registered proprietor (which included the Woollahra property). 2. MMI instituted the proceedings in this Court by statement of claim filed on 4 June 2015. It is alleged that Capma was in breach of the loan agreement by failing to pay land tax of roughly $134,000 due on 18 March 2015. MMI took swift action, serving a s 57(2)(b) notice on 31 March 2015, and on 1 May 2015, upon expiry of the period specified in that notice, demanding repayment of the whole principal and interest, sounding in millions of dollars. During the period of the s 57(2)(b) notice Capma entered into an instalment arrangement with the Office of State Revenue, and paid instalments amounting to $100,000. However, after notification by Mrs Kyriakou that she sought the transfer of those proceedings to the Family Court, Capma failed to pay the remaining $34,000. 3. The basis upon which Mrs Kyriakou claims that MMI is the alter ego of Capma and, more importantly, MMI is set out in affidavits read on the application. However, it is not necessary to examine that material, as it is not for me to assess it. What is relevant for present purposes is that the claim is made and, on the basis of it, MMI is sought to be joined as a party to the Family Court proceedings. 4. Counsel for Mrs Kyriakou, Mr Gregory, submitted that the transfer should be ordered because justice would be best served by one court resolving "the whole justiciable controversy, thereby avoiding duplication and inconsistency." He argued that there is a significant overlap in the factual substratum in the two proceedings, in particular, the determination whether Mr Kyriakou is the alter ego of MMI and Capma for the purpose of assessing the matrimonial asset pool. 5. Mr Gregory accepted that Mrs Kyriakou could apply to this Court to be joined as a defendant and effectively pursue her application under s 106B here. Certainly, if MMI obtained judgment, she could seek a stay of execution of the writ of possession pending the resolution of the issues relating to the property in the Family Court. Nevertheless, Mr Gregory maintained his submission that it is desirable that all issues be resolved in the one court which, in the circumstances, must be the Family Court. The case could be managed, and discovery would be effected, in that court. The resolution of the larger issue of the matrimonial asset pool might mean that there is no need to determine the claim in this Court or the s 106B claim. 6. In this way, Mr Gregory argued, the costs of conducting two separate proceedings could be avoided. As to the progress of the proceedings in the Family Court, he relied upon affidavit evidence that Mrs Kyriakou's solicitor in that court, Daniel Kaufman, believed that the matter could be fixed for final hearing in the early part of this year, depending upon the commitments of the judge allocated for the matter, and that the hearing would be estimated to take 10 days. 7. Counsel for MMI, Mr Coleman SC, argued that both the projected hearing date and the duration of the proceedings in the Family Court were optimistic, noting that, in addition to MMI, six other corporate entities were sought to be joined as parties, and that the case may involve expert evidence on a variety of matters. He also noted that from the affidavit evidence it is clear that there is a "genuine and substantial controversy" as to whether Mr Kyriakou is effectively MMI. 8. Mr Coleman noted that the Family Court is a specialist court, and that the issues raised in the proceedings in this Court fall comfortably within the ambit of proceedings which it regularly hears and determines, and are outside the "specialist" jurisdiction of the Family Court. He argued that, even having regard to Mrs Kyriakou's case, the issues raised are likely to be determined more expediently by this Court. The proceedings involve a discrete issue, capable of being determined in this Court, and there is no significant overlap with the issues to be decided in the Family Court. He submitted that it would be undesirable and inappropriate to expose MMI to the risk of incurring costs of representation throughout the Family Court proceedings. 9. Capma was represented by counsel at the hearing of the motion, but neither opposed nor consented to the order sought. 10. I understand the force of Mr Coleman's arguments, and I have not found this question easy to resolve. On balance, however, I am persuaded by the submissions of Mr Gregory that the proceedings in this Court should be transferred to the Family Court. Given that the possession proceedings are founded upon the failure of Capma to pay a modest amount of land tax, I agree with Mr Gregory's submission that there is no demonstrated need for an expeditious determination of the matter. Ultimately, the question of Mrs Kyriakou's interests in the Woollahra home falls to be determined under the umbrella of the issue of matrimonial property in the Family Court. I accept that it is in the interests of justice, including efficiency and expense, that all issues touching on that question be decided in that court. This does not necessarily commit MMI to representation throughout a lengthy proceeding in which its interest in the Woollahra property is only one of a number of issues. The matter could be heard and determined efficiently as a separate issue. 11. Accordingly, Mrs Kyriakou should be joined to these proceedings, the proceedings should be transferred to the Family Court, and MMI should pay Mrs Kyriakou's costs of the motion. I make orders 1 & 2 in the notice of motion. If necessary, I shall hear the parties on costs. ********** 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: 17 March 2016