Case arose from a property development project involving residential subdivisions in Brisbane
The Queensland Supreme Court has deemed it appropriate to transfer the proceeding to the Federal Court due to a possible overlap of issues and a risk of different conclusions.
This case was rooted in a dispute between two men – a CFO and one responsible for business development – who worked together on a property development called Carver’s Reach at Park Ridge in Brisbane.
The project, which involved residential subdivisions, took place along Park Ridge Road until December 2021. The plaintiff in the present proceeding was Golden Gate Property Group Pty Ltd (GGPG), which served as the corporate developer of the subdivisions.
The CFO arranged for a loan worth $7m through his company – Ultimate Investment Portfolio Pty Ltd – to help finance the project. The business developer alleged that his relationship with the CFO fell apart in December 2021 when Ultimate suddenly issued notices of loan default to GGPG.
However, the CFO claimed that the relationship became strained in November 2019 when he instructed lawyers to document and record the loan. The CFO added that he identified a specific property along Park Ridge Road for acquisition and attempted to negotiate to purchase it in 2018.
When that failed, the CFO left this acquisition to the business developer and a GGPG employee. According to the CFO, he later learned that the two other men acquired an interest in the property for themselves through a put-and-call option in favour of Golden Eagle Property Group Pty Ltd.
GGPG’s receiver also alleged that the employee, the business developer, and Golden Eagle – who were the defendants in the present proceeding – acquired that specific property for their own benefit in breach of their fiduciary duties.
In March 2022, the defendants went before the Federal Court to bring an oppression case under s. 232 of the Corporations Act 2001 against the CFO, the entities associated with him, and the GGPG entities. They also alleged that the CFO and associated entities breached their duties under ss. 180–182 of the Corporations Act.
Three days later, GGPG initiated the present proceeding before the Queensland Supreme Court against the business developer and Golden Eagle. The defendants applied to transfer this proceeding to the Federal Court under s. 1337H of the Corporations Act and/or s. 5(1) of Queensland’s Jurisdiction of Courts (Cross-Vesting) Act 1987. GGPG cross-applied for a default judgment.
In GGPG Pty Ltd v Golden Eagle Property Group Pty Ltd, [2022] QSC 205, the Queensland Supreme Court agreed to transfer this proceeding to the Federal Court due to a combination of factors, specifically the likelihood of an overlap of some issues, a real risk of different conclusions, and the desirability for one proceeding.
The Supreme Court found a possible overlap in some issues and thus a real risk that it and the Federal Court would later arrive at different conclusions based on the evidence. Therefore, a single court deciding the full dispute could best do justice and could avoid the risk of duplication or inconsistency, the Supreme Court decided.
The Supreme Court also deemed it likely to benefit the parties overall if there would be a single litigation instead of two related proceedings. Managing and hearing the proceedings separately could possibly waste public, private, and judicial resources, the Supreme Court said.
The Supreme Court did note that proceeding before either of the courts would not result in any particular advantage, given that both it and the Federal Court were experienced with dealing with corporate litigation.
