Supreme Court New South Wales Medium Neutral Citation: In the matter of Tasmanian Botanics Pty Limited [2019] NSWSC 885 Hearing dates: 2 July 2019 Decision date: 02 July 2019 Jurisdiction: Equity - Corporations List Before: Black J Decision: Order that the NSW proceedings be transferred to the Supreme Court of Tasmania. Catchwords: CORPORATIONS – transfer of proceedings – where civil proceedings regarding corporations matters in two courts involve significant commonality of issues and parties – where majority of parties are resident in location of other court – where there may be risk of these proceedings being delayed if heard together with the proceedings in other court – where there is a risk of inconsistent findings – whether in interests of justice that proceedings be transferred to another court. Legislation Cited: - Corporations Act 2001 (Cth) ss 1337H, 1337L - Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW) s 5 Cases Cited: - Hancock Prospecting Pty Ltd v 150 Investments Pty Ltd [2017] FCA 520; (2017) 120 ACSR 495 - Roff v Aqua Distributors Pty Ltd (1996) 22 ACSR 248 - Yara Pilbara Fertilisers Pty Ltd (formerly known as Burrup Fertilisers Pty Ltd) v Oswal (No 8) [2015] FCA 49 - Zhu v Tech Universal (HK-Macau) Development Pty Ltd [2005] FCA 256; (2005) 53 ACSR 704 Category: Procedural and other rulings Parties: ACN 161 995 204 Pty Limited (Plaintiff) Tasmanian Botanics Pty Limited (First Defendant) Pijen (No 22) Pty Limited (Second Defendant) Representation: Counsel: E A J Hyde (Plaintiff) C Colquhoun/M Jaireth (Defendants) Solicitors: Gadens (Plaintiff) Thomson Geer (Defendants) File Number(s): 2018/253717 Judgment – ex tempore (revised 5 july 2019) 1. The First Defendant, Tasmanian Botanics Pty Limited ("TB") applies for an order under s 1337H of the Corporations Act 2001 (Cth) that these proceedings ("NSW proceedings") be transferred to the Supreme Court of Tasmania. The NSW proceedings are brought by the Plaintiff, ACN 161 995 204 Pty Limited ("ACN 161") and seek, broadly, relief in respect of oppression against TB and a substantial shareholder in TB, Pijen (No 22) Pty Ltd. The evidence led in the application 1. I will first refer to the evidence led in the application, before turning to the relevant principles, and reaching a determination by reference to them. TB relies on the affidavit dated 24 April 2019, of its solicitor, Ms Sutherland, which refers to the status of the NSW proceedings. These proceedings have reached the point that evidence in chief has been filed by both parties, although a disclosure application which, in New South Wales, would ordinarily be dealt with after evidence, has not yet been determined. It appears that nine witnesses, Messrs Langman, de Vries and Sheen for ACN 161 and Messrs Leinert, Alan Fehlberg, Rodney Fehlberg and Tony Fehlberg and Roberts and Egan for TB will give evidence in the NSW proceedings, including persons who are involved in other proceedings in the Supreme Court of Tasmania ("Tasmanian proceedings") to which I will refer below. I pause to note that it appears that all of those persons are Tasmanian residents. 2. The Tasmanian proceedings involve persons associated with the parties to the NSW proceedings, which are also addressed in Ms Sutherland's affidavit. TB, the First Defendant in the NSW proceedings, is the Plaintiff in the Tasmanian proceedings, and Messrs de Vries and Langman are the First and Second Defendants in the Tasmanian proceedings. As I noted above, Mr de Vries and Mr Langman are also witnesses in the NSW proceedings, and Mr Langman appears to be the principal of ACN 161. Ms Sutherland in turn refers to the steps taken in the Tasmanian proceedings. Mr Hyde, who appears for ACN 161 in this application, fairly points out that it appears the Tasmanian proceedings are substantially wider in scale, and involve a number of additional parties, then the NSW proceedings. It appears that there may have been delays in the provision of particulars as to damages in the Tasmanian proceedings. I have been informed the pleadings have closed and discovery has been given, and evidence has not yet been led in the Tasmanian proceedings. 3. Ms Sutherland in turn refers to matters which she contends would lead to savings of costs and greater efficiency in use of Court resources if the NSW proceedings were transferred to the Supreme Court of Tasmania, including avoiding the need to retain counsel and solicitors to act in both the NSW and the Tasmanian proceedings; avoiding the potential need for Tasmanian resident witnesses to travel to New South Wales for the NSW proceedings; and avoiding issues arising from overlap of matters in dispute in the proceedings. 4. ACN 161 in turn relies on the affidavit dated 3 May 2019 of its solicitor, Mr Chandler. Mr Chandler refers to the steps then taken in the progress of the NSW proceedings and points to various differences in procedure between the Supreme Court of Tasmania and the Supreme Court of New South Wales. It is not necessary to review those matters in any detail, because Mr Hyde did not put any proposition that those differences in procedure should be taken into account in determining this application. That position was rightly taken, because a Court in determining an application of this kind should not engage in an assessment of the relative advantages and disadvantages with the way in which different Australian courts approach procedural issues, as to which different approaches may properly be taken. Mr Hyde did, however, put a submission that the oppression case would likely reach hearing in New South Wales more quickly than they would reach a hearing in Tasmania. That may be the case, but that will depend on matters to which I will refer below. Mr Hyde also put, and I will return to, a submission that the oppression issue raised in the NSW proceedings would likely be delayed in reaching a hearing date, if the NSW proceedings was joined with, or heard together with, the Tasmanian proceedings. That proposition is almost certainly true, but I will again return to its significance below. 5. Mr Chandler pointed, in that affidavit, to a concern that there may be a disadvantage to ACN 161 if the proceedings were transferred to the Supreme Court of Tasmania at a point at which the Defendants have not filed evidence in New South Wales, where it is common practice in Tasmania for evidence to be led orally rather than by affidavit. That issue no longer arises, where the Defendants have now served their evidence in the NSW proceedings, and affidavits of both parties will be available to both parties and to the Supreme Court of Tasmania if it wishes to make orders for evidence to be led in affidavit form. 6. Mr Chandler's further affidavit dated 26 June 2019 dealt with further issues as to the structure of proceedings in Tasmania; the status of the Tasmanian proceedings; and legal representation in the Tasmanian proceedings. Ms Sutherland in turn led evidence in reply, by an affidavit dated 13 June 2019, in respect of Mr Chandler's first affidavit. The nature of the two proceedings 1. I have been taken to the Points of Claim and Points of Defence filed in the NSW proceedings and to the pleadings in the Tasmanian proceedings. It seems to me that there are significant overlaps in the matters in issue in the two proceedings. I recognise that Mr Hyde pointed out that, in the NSW proceedings, those overlaps are qualified to some extent, because matters alleged by ACN 161 in the NSW proceedings are not admitted by TB, where TB advances affirmative cases as to those matters in the Tasmanian proceedings. That matter does not seem to me to be of particular significance, where ultimately the matters will have to be determined, not only upon the Points of Claim and Points of Defence, but upon evidence in both the NSW proceedings and the Tasmanian proceedings. Where a matter is raised by ACN 161 in the NSW proceedings, and not admitted by TB, then the Court will need to reach factual findings about it. It will reach those factual findings on the evidence, and it may either accept or not accept ACN 161's case. If it accepts that case, then there is a risk of inconsistent findings if the Supreme Court of Tasmania accepts TB's contrary case in the Tasmania proceedings. That risk of inconsistency exists either because the Courts may take different views as to the evidence led from common witnesses in the proceedings, or, possibly, because different evidence is led in the two proceedings. The risk of inconsistent findings is no less because it arises in those different ways, or where there is a non-admission rather than a denial in the NSW proceedings. 2. Mr Colquhoun who appears with Mr Jaireth for TB, draws attention to three areas of overlap in the two proceedings, which seem to me to be significant. The first is that, while it appears to be common ground that Mr Langman resigned as a director of TB in late August 2017, there appears to be an underlying factual dispute as to whether that resignation was prompted by the threat of his removal as a director of TB. The allegation that he resigned is admitted in the NSW proceedings, but that is not sufficient to displace the underlying dispute, likely to arise in the evidence, as to the circumstances in which that occurred, which is in turn likely to be relevant to assessing the significance of that event. Second, there is a dispute, reflected in a non-admission in the NSW proceedings and in an affirmative case brought by TB in the Tasmanian proceedings, as to the terms of an agreement as to the funding of TB reached in October 2016. Both parties accept that there was a period for which ACN 161 would not be required to make any capital contributions to TB, but ACN 161 and Mr Langman contend that arrangement continued indefinitely, and TB advances the contrary position that it ceased at a point at which TB began to generate a return. Third, there are issues in both proceedings in respect of the circumstances of an offer made by a third party to purchase a portion of the shares in TB, and the value assumed by that offer, again reflected in a non-admission by TB in the NSW proceedings and in an affirmative case put by TB in the Tasmanian proceedings. 3. The Court may more readily recognise that overlap of issues where the former solicitor for ACN 161, in an affidavit sworn in these proceedings in November 2018, identified a number of common issues in the two proceedings, including the existence and terms of the relevant funding agreement for TB; the position in respect of the proposed sale of shares in TB to that third party and any valuation undertaken by that third party in respect of that transaction; a potential disparity between that valuation and a valuation later adopted by TB for a subsequent capital raising; and identified the basis of the oppression claim put by ACN 161 as including, inter alia, the suggested proposal to remove Mr Langman as a director; and circumstances relating to a later share issue, which in turn involve issues as to valuation. The applicable principles 1. Section 1337H of the Corporations Act provides that, where a proceeding is brought with respect to a civil matter arising under the corporations legislation (as defined) in a State Supreme Court, that Court may transfer the relevant proceedings to another Court, if it appears to the first Court that, having regard to the interests of justice, it is more appropriate for the relevant proceeding to be determined by that other Court. There is no doubt that the Supreme Court of Tasmania has jurisdiction to determine the NSW proceedings, for the purposes of the application of that section. 2. Section 1137L of the Act in turn identifies further matters for the Court to consider in determining whether to transfer the proceeding, and requires the Court to have regard to the principal place of business of any body corporate concerned in the proceeding or application; the place or places where the events that are the subject of the proceeding took place; and the other Courts that have jurisdiction to deal with the proceeding or application. Matters relevant to the exercise of the discretion whether to transfer proceedings to another Court also include the existence of a substantial overlap between the issues arising in proceedings in a different court; whether it would be more efficient or less time consuming or less costly for the proceedings or issues to be resolved in another court; and whether the risk of inconsistent findings will be removed if proceedings are heard in that other court: Roff v Aqua Distributors Pty Ltd (1996) 22 ACSR 248; Zhu v Tech Universal (HK-Macau) Development Pty Ltd [2005] FCA 256; (2005) 53 ACSR 704. 3. Both Counsel in this application referred to the observations of Yates J in Hancock Prospecting Pty Ltd v 150 Investments Pty Ltd [2017] FCA 520; (2017) 120 ACSR 495, where his Honour identified, by reference to authority, the guiding principles to be applied in such an application. His Honour there referred to the observation of McKerracher J in Yara Pilbara Fertilisers Pty Ltd (formerly known as Burrup Fertilisers Pty Ltd) v Oswal (No 8) [2015] FCA 49 at [24]ff that it is necessary to conduct a balancing exercise between the relevant factors that inform as to whether or not it is in the interests of justice to transfer a proceeding; and that the question involves an essential practical management decision as to which Court, in the pursuit of the interests of justice, is more appropriate to hear and determine the relevant question. Those decisions also referred to relevant factors including the stage of the proceedings in the respective Courts; the commonality or diversity of the parties; the nature of the proceedings; the commonality or diversity of issues; the risk of conflicting findings of fact or conflicting orders; a costs benefit analysis; the potentially unnecessary drain on judicial and other public and private resources; and whether there is any particular judicial expertise residing in one Court or the other. Determination 1. Both Counsel have addressed these matters in their respective submissions, and they provide a helpful framework for analysis. I accept that, as Mr Hyde points out, the NSW proceedings are relatively well advanced and, subject to the question of discovery or disclosure, would likely reach a hearing relatively promptly. It is difficult to say whether the proceedings would reach a hearing as promptly in the Supreme Court of Tasmania, if dealt with separately, which depends upon matters such as the workload of that Court at a particular time. There is, at least in some of the evidence led by ACN 161, a suggestion that the extent of work in that Court will place pressure on its ability to allocate an early hearing date, but all Courts of course have pressures on their ability to allocate early hearing dates. 2. Mr Hyde submits that, if the matter was transferred to the Supreme Court of Tasmania, it was unlikely that it would go to hearing quickly, because TB would, as it has foreshadowed, apply for the matter then to be heard together with the Tasmanian proceedings. I have referred to the extent of overlap between the issues in those proceedings above. It seems to me that Mr Hyde's submission in that respect had a fundamental difficulty. Plainly, the NSW proceedings are not presently exposed to the threat of being joined with the Tasmanian proceedings, because the Tasmanian proceedings are not to be heard in New South Wales. However, if the NSW proceedings are transferred to Tasmania, they will only be heard with the Tasmanian proceedings if there is good reason for them to be heard together. In that situation, there is no reason for complaint if the oppression issues in the NSW proceedings are heard more slowly, because the interests of justice have warranted their being heard together with the Tasmanian proceedings. It seems to me that ACN 161's submission of delay, in that respect, emphasised that the present position created a forced separation of the two proceedings, because they were heard in separate jurisdictions, and ACN 161 relies on that forced separation to assert that the NSW proceedings would be heard more promptly. The fallacy in that reasoning is that that is not a desirable outcome, if it comes at the expense of separating the proceedings when the interests of justice would be served by hearing them together. 3. The next issue arising is the commonality or diversity of the parties. There is certainly a degree of commonality in the parties, at least so far as TB is party to both proceedings, and Mr Langman is party to the Tasmanian proceedings and the company with which he is associated, ACN 161, is party to the NSW proceedings. I recognise that there are a number of other parties in the Tasmanian proceedings. The nature of the proceedings both involve issues that are, in part, issues of corporate conduct, involving questions of the application of the corporations law, whether in respect of allegations of breach of directors' duty and an alleged appropriation of corporate opportunity in the Tasmanian proceedings or oppression in the NSW proceedings. There seems to me to be a significant commonality of issues, and I referred to the common issues that can be identified from a comparison of the Points of Claim and Points of Defence in the NSW proceedings and the pleadings in the Tasmanian proceedings above. 4. Mr Hyde submits that the matters in issue in the NSW proceedings occur later in time than the bulk of the matters in issue in the Tasmanian proceedings, because they concern a share issue which took place after Mr Langman's resignation as a director of TB. That proposition is true, as far as it goes. However, it requires the significant qualification that the matters which are raised in the Tasmanian proceedings involve conduct that was anterior to the share issue which is challenged in the NSW proceedings, and are likely to provide background to it. I pointed above to the extent of overlap of the issues, as identified by the respective pleadings. There does seem to me to exist a risk of conflicting findings of fact, although not necessarily of conflicting orders, notwithstanding Mr Hyde's submission that matters are not admitted by TB rather than an affirmative case to the contrary being put in the NSW proceedings. 5. So far as a cost benefit analysis is concerned, Mr Hyde frankly, but correctly, recognised that there was little linking this matter to New South Wales, beyond the fact that solicitors previously retained by ACN 161 practiced here. Even that is no longer the case, where ACN 161 now retains solicitors practising in Melbourne to act for it, and the solicitors acting for TB in both the NSW and Tasmanian proceedings are Tasmanian solicitors. All of the witnesses are, as I noted above, resident in Tasmania, and they would need to travel to New South Wales, at least potentially, to give evidence in the oppression proceedings. Mr Hyde points to the possibility that evidence could be given by audio-visual link, but history teaches that oppression proceedings generally involve contested issues of fact, and extended periods of cross-examination by audio-visual link are not necessarily particularly satisfactory. I have also had regard to the impact on use of judicial resources of a transfer decision, but that matter seems to me to be neutral. There is not likely to be any substantial saving of time of the two matters being heard together, where they involve somewhat different issues, and I do not think that there is any great likelihood that the total demand on the Court's resources would be greater, if separate proceedings were heard in New South Wales or Tasmania. To put that another way, any saving to the Supreme Court of New South Wales by transferring the proceedings to Tasmania will be matched by additional work for the Supreme Court of Tasmania. 6. The final issue to which reference was made in Hancock Prospecting Pty Ltd, above, was whether there is any particular judicial expertise residing in one Court or the other. I have noted above my hesitation in reaching any decision as to that question, where a question of transfer of proceedings arises between superior Courts of Australian States. It may be that, in some fields, there are areas of particular speciality in particular Courts. I accept that it is likely that the Corporations List of this Court would hear, by number, a greater number of corporations matters than the Supreme Court of Tasmania. That is hardly surprising, given the population of the two States. Having said that, there is no reason to think, and I would not think, that the Supreme Court of Tasmania is not amply capable of dealing with corporations matters, and Mr Hyde did not suggest to the contrary. In these circumstances, it does not seem to me that there is any relevant factor of judicial expertise which would weigh on the outcome of this application. 7. It seems to me that the balance of the factors to which I have referred, combined with the fact that the place of business of the relevant bodies corporate are in Tasmania; and that the events that are the subject of the proceedings took place in Tasmania, which are factors to which I must have regard under s 1338L; and that there is no doubt that the Supreme Court of Tasmania has jurisdiction to deal with the matter, are such that the proceedings should be transferred to the Supreme Court of Tasmania. It will be a question for that Court to determine whether the NSW proceedings should there be heard separately from, or together with, the existing proceedings in the Supreme Court of Tasmania. While TB has contended that the proceedings should be heard together, and ACN 161 has at least proceeded on an impliedly different view, I express no view as to that matter. If the proceedings are not to be joined together, then it may be that the Supreme Court of Tasmania will be able to hear the oppression proceedings more promptly than would be the case if they are joined. 8. It was common ground between the parties that, if I were to reach this result, an order should be made that the costs of this application be costs in the cause. 9. Accordingly, I make the following orders: 1. Order that, pursuant to s 1337H of the Corporations Act 2001 (Cth), Supreme Court of New South Wales proceedings No 253717 of 2018 be transferred to the Supreme Court of Tasmania. 2. The costs of this application be costs in the cause. 3 The Court book and exhibits be returned. ********** 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: 14 July 2019