Cash Resources Australia Pty Ltd v Bentley [2002] VSC 271

Supreme Court of Victoria|2002-07-12|Before: GILLARD J.

FAIR TRADING ACT 1999 - Application to VCAT - Proceeding no longer justiciable in Supreme Court - Fair trading dispute - Section 111 - Stay of Supreme Court proceeding.

The return of a summons, filed in the proceeding by the second defendant, seeking an order that the proceeding be dismissed for want of jurisdiction or, alternatively, an order that it be stayed pending the hearing of a matter in the Victorian Civil and Administrative Tribunal ("the Tribunal").

The plaintiff, Cash Resources Pty Ltd ("the plaintiff"), is an investor which lends money. The first defendant, Malcolm Graham John Bentley ("Mr Bentley"), is married to the second defendant, and carried on business through a company called Collins Street Lamp Company Pty Ltd ("the Company").

The second defendant, Lynette Anne Bentley ("Mrs Bentley"), is and was, at all material times, a joint owner with her husband of premises situated at 4 Stewart Avenue, Wandin North ("the property").

Mr Bentley, at all relevant times, was a director and shareholder of the Company. In early 2001, the Company was in financial difficulties. Mrs Bentley was not a shareholder, nor was she a director. In order to alleviate the Company's financial problems, Mr Bentley and the Company commenced negotiations with the plaintiff to obtain financial accommodation. The negotiations were finalised in about May 2001.

The plaintiff agreed to lend to the Company, on a short term basis, the sum of $308,000, secured by guarantees from Mr and Mrs Bentley, the Company and Mr Bentley's brother and his wife. A number of documents had to be executed, and Mr and Mrs Bentley were required to provide a mortgage over their matrimonial home to secure repayment of the loan.

On 14 May 2001, the plaintiff forwarded to the Company a number of documents to be executed, including a mortgage over the defendants' home, guarantee, indemnity and charge, and a facilities agreement. Also included was a solicitor's certificate to be completed by a solicitor.

A solicitor, Mr Theodore Zervas, signed the certificate, in which he certified that he explained the documents to the defendants, and the defendants certified that they had read a copy of the certificate and that the information stated therein was true.

On 19 June 2001, some of the funds were made available to, inter alia, the defendants. A further provision of funds was made on 27 June 2001.

The defendants executed an instrument of mortgage which was registered under the Transfer of Land Act in dealing no. X555247Y.

The Company got into further difficulties and on 27 February 2002, the plaintiff through its solicitors, Messrs. Cornwall Stodart, demanded payment by the defendants of the balance due under the mortgage. The defendants did not comply with the notice. Mrs Bentley remains in possession of the property.

On 20 March 2002, the plaintiff issued a writ in this Court against Mr and Mrs Bentley, seeking an order that they deliver up possession of the property.

On 18 April 2002, the plaintiff obtained a default judgment against the first defendant. On 24 April 2002, Mrs Bentley filed a conditional appearance. On 23 May 2002, Mrs Bentley filed and delivered a defence in which she asserted that Mr Bentley had exerted physical and verbal pressure on her to sign the documents, that she signed without having any knowledge or understanding of the financial documents, that she was told by her husband prior to signing the documents that the extent of her liability under the guarantee and mortgage was limited to half of $69,000, and that she would be released from the deal within ninety days after the signing of the financial documents.

She asserts in the defence that her husband and also the solicitor, Mr Zervas, acted for and on behalf of the plaintiff company.

She claims that the pressure that was applied to her amounted to duress, undue influence and unconscionable conduct, and that some of the representations that were made were misleading and deceitful.

On 23 May 2002, the plaintiff filed a summons seeking summary judgment against Mrs Bentley. She swore an affidavit in opposition to the proceeding, and the application has been adjourned.

On 21 June 2002, Mrs Bentley filed a summons in the proceeding, seeking an order that the proceeding be dismissed for want of jurisdiction, or alternatively, that the proceeding be stayed. The basis for the relief sought by her, is an application she made to the Tribunal which, it is contended, raises issues under the Fair Trading Act 1999 ("the Act"). By reason of s. 111, the proceeding in this Court is no longer justiciable and, accordingly, should be dismissed or stayed.

Mrs Bentley instituted her proceeding in the Tribunal on 7 March 2002, which was some thirteen days prior to the issue of the writ in this Court.

"(1) Once an application has been made to the Tribunal in accordance with the Victorian Civil and Administrative Tribunal Act 1998 in respect of a fair trading dispute, or in respect of any other matter in respect of which the Tribunal has jurisdiction under this Act, the issues in dispute are not justiciable at any time by Court unless -

(a) the proceeding in that Court was commenced before the application to the Tribunal was made and that proceeding is still pending; or

(b) the application to the Tribunal is withdrawn or struck out for want of prosecution.

(2) Sub-section (1) applies to all issues in dispute, whether as shown in the application or emerging in the course of the proceeding in the Tribunal." (Emphases added).

It is observed that there may be two bases whereby the issues in a court are no longer justiciable. First, if there is in fact a fair trading dispute or, secondly, there is a proceeding in the Tribunal in respect of a matter over which the Tribunal has jurisdiction under the Act.

It was submitted by Mr P. Best of Counsel, who appeared with Mr J. Gray of Counsel for Mrs Bentley, that there was a fair trading dispute between the plaintiff and Mrs Bentley and, secondly, that her proceeding in the Tribunal raised a matter in respect of which the Tribunal had jurisdiction under the Act.

Mr J. Dixon of Counsel, who appeared for the plaintiff, submitted that s. 111 did not apply and, in particular, the dispute raised by Mrs Bentley in the Tribunal was not a dispute involving the plaintiff. This submission was based upon the contention that the plaintiff was not a party to any alleged wrongdoing leading to the execution of the documents, nor were any of the persons who were alleged to have committed some wrongdoing acting as its agent at the relevant time.

What is meant by the phrase "fair trading dispute" is answered by s. 107(1) of the Act. It provides -

"(1) In this Part a "fair trading dispute" is a dispute or claim arising between a purchaser or possible purchaser of goods or services and a supplier or possible supplier of goods or services in relation to a supply or possible supply of goods or services."

At first glance, it is difficult to accept that there is a fair trading dispute between the plaintiff and Mrs Bentley. The plaintiff's claim is simple and straightforward. It has a mortgage, properly executed by Mr and Mrs Bentley, over their residential property, securing the repayment of moneys advanced to the husband's Company. There was a default under the terms of the mortgage, and the plaintiff contends that it is entitled to judgment for possession of the property to enable it to be sold. That is the proceeding instituted in this Court.

On the face of that proceeding, it could not be said that there is any dispute of claim arising out of the purchase of services or the supply of services.

However, Mrs Bentley, in her defence, contends that she has grounds in law for having the mortgage set aside against her or not enforced. She has filed affidavits in answer to the summary judgment summons, which provide a factual basis for some of the matters raised in her defence.

The words "services" and "supplier" are defined by s. 3 of the Act.

"Services" is defined as including "any rights (including rights in relation to, and interests in, real or personal property), benefits, privileges or facilities that are, or are to be, provided, granted or conferred in trade or commerce, including the rights, benefits, privileges or facilities that are, or are to be provided, granted or conferred under a contract for or in relation to -

(a) the performance of work (including work of a professional nature) whether with or without the supply of goods; or

(b) the provision of, or the use or enjoyment of facilities for amusement, entertainment, recreation or instruction; or

(c) the conferring of rights or benefits or privileges for which remuneration is payable in the form of a royalty, tribute, levy or similar payment -

but does not include rights or benefits being the supply of goods or the performance of work under a contract of service."

"Services" are defined in wide and general terms. Despite the width and generality of the definition, the term should not be given an expansive construction.

There is a similar definition in the Trade Practices Act 1974. See s. 4. In Queensland Aggregates Pty Ltd v T.P.C. [1981] FCA 138; (1981) 57 FLR 314 at 318, the Full Court of the Federal Court said -

"On the other hand, the repeated use, in the operative sections of the Act, of the words 'goods or services', the content of operative sections of the Act and the ordinary meaning of the word 'services', combine to raise real doubt as to whether it was a legislative intent, to be derived from the statute, that the word should be given the full extended meaning which the definition contained in s. 4 of the Act would prima facie ascribe to it." Later, on the same page, the Court said - "In the view we take, the sweepingly general provisions of the definition of 'services' contained in s. 4 of the Act should not be given an expansive construction. Thus, for example, we would, in the context of the repeated use in the Act of the words 'goods or services', exclude from references to the supply of 'services' in the defined sense, the supply of goods even though the supply of goods would ordinarily involve the granting of 'rights in relation to, and interests in ..... personal property'.

Again, as at present advised, we would exclude from the scope of the words 'supply of services', a simple payment of money even though, in one sense, money might be regarded as coming within the word 'benefits'."

"Supplier" means "in relation to a supply ... of services, ... the person who has supplied ... the services."

Going back to the meaning of "fair trading dispute", it was submitted on behalf of Mrs Bentley that she in fact was the supplier of the services to the plaintiff in the form of the execution of various security documents.

By reference to the definition of "services", it was submitted on behalf of Mrs Bentley that she had in fact "provided, granted or conferred in commerce rights in relation to an interest in real property". It was submitted therefore that she was a supplier of services within the meaning of s. 107.

I did not understand Mr Dixon to disagree with that proposition.

In my view, the execution of the mortgage and guarantee resulted in Mrs Bentley granting rights to the plaintiff, and the mortgage on registration resulted in the Bentleys granting an interest in the land - see s. 74(2) of the Transfer of Land Act 1958.

No reason has been advanced to restrict the meaning of "services", and the execution of the mortgage constituted the supply of services within the meaning of s. 107(1) of the Act.

It is now necessary to consider Mrs Bentley's claim in the Tribunal. On 7 March 2002, she signed an Application to the Civil Claims List. She joined, as respondents to that application, the plaintiff, her husband, Mr Zervas the solicitor and her husband's company.

Attached to the application and forming part of it was a single page headed "Outlined History of the Dispute". She asserts in that outline that she did not receive any advice from Mr Zervas prior to execution of the documents, nor was she advised to seek independent legal advice, that she did not understand the nature and effect of the documentation and that she was in fear of physical and emotional repercussions from her husband if she did not sign the documentation.

She asserted that the plaintiff "was aware of or should have reasonably been aware of any conflicts of interest" and failed to explain the documentation to her. She asserted that the guarantee and indemnity and mortgage were signed under duress as a result of misleading conduct, false representations and unconscionable conduct, and again, it is asserted that those alleged wrongful acts were performed by the plaintiff and the other three respondents. She sought an order that the contract be set aside and sought damages "if appropriate".

On 7 May 2002, she filed her points of claim in the Tribunal, which repeated much of what was said in her defence in this proceeding, and sought an injunction restraining the plaintiff from seeking possession of her home and an injunction to restrain it from selling the family home. She sought other orders.

Mr Dixon for the plaintiff contended that the assertions that the plaintiff was involved in any wrongdoing, or that any person or body was acting for and on behalf of the plaintiff in respect of the transaction, were false, and that there was no evidence that the plaintiff was in any way involved in any of the alleged wrongdoing.

Mr Best submitted on behalf of Mrs Bentley that it was unnecessary for her to prove these matters as they had been bona fide raised both in this Court and at the Tribunal.

The opening words of s. 111(1) support the conclusion that the filing of the application in the Tribunal in respect of a fair trading dispute, or in respect of any other matter of which the Tribunal has jurisdiction, results in the dispute not being justiciable in this Court if commenced before the proceeding in Court and the application is still on foot.

But if a party contests the jurisdiction of the Tribunal in this Court, then in my view, the party applying to the Tribunal would have to establish by evidence that the application validly enlivened the Tribunal's jurisdiction.

In my opinion, once any factual matters are put in dispute with respect to the jurisdiction of the Tribunal, then the party seeking to oust the jurisdiction of this Court should place some admissible evidence before the Court to support the contention that the proceeding is no longer justiciable in this Court.

If after the jurisdiction was questioned, the question was to be decided merely on the face of the documents filed at the Tribunal, then there would be scope for abuse of process.

If the evidence which is placed before this Court is contested, in the normal case, this Court would not resolve the dispute but leave it to the Tribunal to determine whether it has jurisdiction to deal with the dispute. But there would have to be some evidence showing that the jurisdiction of the Tribunal has been validly enlivened.

The Tribunal may only make an order to resolve a fair trading dispute on the application of a party to the dispute. See s. 110. It is submitted on behalf of the plaintiff that any alleged wrongdoing in relation to the events leading up to and the execution of the mortgage did not involve it. It was submitted that in those circumstances, it could not be a party to the fair trading dispute or, indeed, a party to any of the other matters relied upon by Mrs Bentley to enliven the jurisdiction of the Tribunal. In regard to the latter, she relies upon alleged contraventions of ss. 7, 9 and 12 of the Act, namely, unconscionable conduct, alleged misleading or deceptive conduct and false representations in relation to the provision of services, and she claims damages pursuant to s. 159. It is contended by the plaintiff that it was not a party to any of the alleged conduct which could contravene the Act.

This is not the first case, nor will it be the last, where a marriage has broken down, and the estranged wife seeks to avoid liability under a mortgage signed during the course of a marriage. As a general proposition, unless it is shown that the lender has been guilty of some wrongful conduct or it has engaged others, for whom it is responsible, who have in fact been guilty of some wrongdoing, then it is difficult for a wife in those circumstances to avoid the obligations under a validly executed mortgage. See, by way of example, H. G. & R. Nominees Pty Ltd v Fava [1997] 2 VR 368.

The evidence before the Court reveals that the plaintiff negotiated the loan facility with Mr Bentley and engaged its solicitors to prepare a number of documents which were forwarded to him for execution by the various parties. Also enclosed with the documents was a solicitor's certificate, and it is a proper inference that the solicitor's certificate was prepared by the plaintiff's solicitors, expecting that a solicitor would be engaged to advise the Bentleys with respect to the execution of the documents. The evidence leads to the conclusion that that was in fact done. There is direct evidence from Allan Kaye, a director of the plaintiff, to the effect that the solicitor who completed and signed the certificate is independent of the plaintiff and its solicitors. It was contended that it was an arm's length transaction and the plaintiff was not guilty of any wrongdoing, and that there was no evidence that it or its solicitors, at any stage, engaged anybody to act on the plaintiff's behalf in relation to the documents. Further, it was contended that the plaintiff was not responsible for any wrongdoing.

Mr Best drew attention to the letter dated 2 May 2001, written by the plaintiff, addressed to the debtor Company, Attention Mr Bentley. The letter set out that the plaintiff had approved the facilities identified in the letter on behalf of the Company, and it went on to state that the approval was subject to completion and fulfilment of certain conditions. The conditions included guarantees and the execution, amongst other things, of a mortgage.

The term of the loan was described as - "three months maximum".

Mr Bentley signed a copy of that letter, dated 3 May 2001.

Mrs Bentley has sworn that she was shown a copy of the letter, she understood the term of the loan was for three months maximum and that she was only liable for a lesser sum. The latter was represented to her by her husband.

In fact, the mortgage that she executed secured a number of agreements and the liability was not limited to ninety days.

The plaintiff contests these matters but I am satisfied, on the evidence before the Court, that there is a bona fide application before the Tribunal and that the plaintiff may be involved as a party to the dispute and as a party against whom some relief may be obtained. It is not for me to resolve those questions. All I have to be satisfied with is, that there is some evidence to support the jurisdiction of the Tribunal against the plaintiff. Whether or not, after a full investigation, that is so, is a matter for the Tribunal.

In my opinion, Mrs Bentley has, by filing her defence and affidavits in opposition to the application for summary judgment, raised the very issues which are in dispute in the Tribunal application, and it follows that the proceeding in this Court now involves a fair trading dispute and also involves alleged contraventions of the Fair Trading Act, which enlivens the jurisdiction to award damages. It follows that s. 111 of the Act applies and this Court is no longer empowered to hear the plaintiff's proceeding. See s. 164 of the Act.

Having reached the conclusion that s. 111 applies, the next question to consider is what this Court should do in respect of the present proceeding.

Under s. 112, the Court is obliged to stay proceedings in certain circumstances, the end result of which could be that this Court must dismiss this proceeding. I am not satisfied under s. 112(2)(b) that the proceeding in this Court can be appropriately dealt with by the Tribunal. I say that because there may be some doubt about the powers of the Tribunal to make an order in favour of the present plaintiff which would give it all that it seeks in the present proceeding, in the event that Mrs Bentley fails in her claim before the Tribunal against the plaintiff.

Accordingly, I am not prepared to stay the proceeding pursuant to s. 112. If I was, this Court would be obliged under s. 112(5) to dismiss the proceeding in this Court on the happening of a certain event. This may result in added expense to the plaintiff in the event of Mrs Bentley failing.

What I propose to do is to order a stay pursuant to the general jurisdiction of the Court, so that if Mrs Bentley fails in her application to the Tribunal, and the plaintiff is unable to obtain all it wishes to obtain at the Tribunal, it can revive this proceeding and obtain the necessary relief.

Subject to submissions by counsel, I propose to make the following orders -

(i) that pursuant to the general jurisdiction of this Court, the proceeding be stayed pending the determination by the Victorian Civil and Administrative Tribunal of an application made by the second defendant in which the plaintiff is a party, or further order of the Court;

(ii) that any application by any party in this proceeding may be made upon seven days' written notice to the other parties.

I will hear counsel on the question of costs.

Civil and Administrative Tribunal Act 1998

At a glance

Court

Decision date

Before

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Judgment (71 paragraphs)

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Legislation Cited (1)

Cases Cited (1)