Champion Truck Bodies Pty Limited v Capital Finance Australia Limited

Federal Court of Australia|2010-04-08|Before: Cowdroy J

REASONS FOR JUDGMENT 1 By application filed on 26 March 2010 the applicants apply to this Court for an order under s 86A(4) of the Trade Practices Act 1974 (Cth) ('the TP Act') to transfer to this Court two proceedings currently before the Local Court of New South Wales ('the Local Court'), namely proceeding No. 10433 of 2009 and proceeding No. 3341 of 2009. The application is not opposed. 2 The application was supported by an affidavit sworn 22 March 2010 of Lauren Kate Magasdi, the solicitor for each of the applicants on this application who are the defendants and cross-claimants in the Local Court proceedings. Both proceedings have a common plaintiff, namely Capital Finance Australia Limited ('Capital Finance').

Proceeding No. 3341 of 2009 3 In proceeding No. 3341 of 2009 in the Local Court the first defendant is Champion Truck Bodies Pty Limited ('Champion') and the second defendant is Robert Else ('Mr Else'). Such proceedings were instituted by Statement of Claim filed 14 April 2009 and are set down for hearing in the Local Court on 14 April 2010. Apparently defences and cross-claims were filed by Champion and Mr Else but the Court has no details of such documents. On 9 October 2009 amended defences and amended cross-claims were filed. On 6 November 2009 Capital Finance filed a defence to the amended cross-claim entitled 'Defence to Cross Claim'. 4 On 8 March 2010 Champion and Mr Else served a Draft Amended Defence and a Draft Further Amended Statement of Cross-Claim ('the cross-claim') upon Capital Finance. Before the Local Court on 16 March 2010 Capital Finance objected to leave being granted to file and serve the cross-claim upon the basis that, as it raised an issue under s 73 (contained in Division 2 of Part V of the TP Act), the Local Court had no jurisdiction to deal with it. The Court notes that the cross-claim also raises issues under ss 51A, 52 and 53 of the TP Act (which are contained in Division 1 of Part V of the TP Act) and ss 75B and 82 of the TP Act (which are contained in Part VI of the TP Act). 5 According to the affidavit of Ms Magasdi, the Local Court on 16 March 2010 ordered that the defendants have leave to file and serve by 19 March 2010 a motion seeking leave to amend its cross-claim. Such motion was fixed to be heard on 6 April 2010.

Proceeding No. 10433 of 2009 6 Andrew Broderick Traders Pty Limited ('Broderick Traders') and Andrew Richard Broderick ('Mr Broderick') are the first and second defendants and cross-claimants in the Local Court proceeding No. 10433 of 2009 instituted by Capital Finance by Statement of Claim filed 14 October 2009. On 23 November 2009 a defence was filed to such Statement of Claim. A cross-claim was also filed against Capital Finance. Such proceedings are set down for hearing on 6 July 2010. The Court has been informed by Counsel for the Applicants that Broderick Traders and Mr Broderick will seek to rely on the same relief as is sought in proceeding No. 3341 of 2009 and as such will encounter the same opposition by the respondents to the granting of leave as exists in relation to those proceedings. 7 The applicants claim that, in addition to the issues sought to be raised above, they also wish to plead that Capital Finance breached s 47 of the TP Act. Section 47 is contained in Part IV of such Act.

Section 86 of the TP Act 8 Section 86 of the TP Act makes certain provision for courts, other than Federal Courts, to be invested with jurisdiction under that Act. Section 86 provides inter alia that: (2) The several courts of the States are invested with federal jurisdiction within the limits of their several jurisdictions, whether those limits are as to locality, subject‑matter or otherwise, and, subject to the Constitution, jurisdiction is conferred on the several courts of the Territories, with respect to any matter arising under Part IVA or IVB or Division 1, 1A or 1AA of Part V in respect of which a civil proceeding is instituted by a person other than the Minister or the Commission.

(3) Nothing in subsection (2) shall be taken to enable an inferior court of a State or Territory to grant a remedy other than a remedy of a kind that the court is able to grant under the law of that State or Territory.

9 Applying s 15AA of the Acts Interpretation Act 1901 (Cth), the Court is satisfied that s 86(2) confers federal jurisdiction on the Local Court within the limits of its jurisdiction as to locality and subject matter with respect to any matter arising under Part IVA or IVB or Division 1, 1A or 1AA of Part V of the TP Act, other than matters instituted by the Australian Competition and Consumer Commission or the Minister.

Interpretation of Section 86A of the TP Act 10 Section 86A empowers the transfer of proceedings between State courts and the Federal Court of Australia ('the Federal Court'). Section 86A(4) provides: (4) Where:

(a) a proceeding is pending in a court (other than the Supreme Court) of a State or Territory; and

(b) a matter for determination in the proceeding arose under Part IVA or Division 1, 1A or 1AA of Part V;

the court shall, if directed to do so by the Federal Court, transfer to the Federal Court the matter referred to in paragraph (b) and such other matters for determination in the proceeding the determination of which would, apart from any law of a State or of the Northern Territory relating to cross‑vesting of jurisdiction, be within the jurisdiction of the Federal Court as the Federal Court determines.

11 The applicants have referred the Court to two decisions in which a State court considered issues raised under s 73 of the TP Act (which is contained in Division 2 Part V of the TP Act). The applicants submit that these decisions demonstrate that a State court has jurisdiction in respect of matters arising under Division 2 Part V of the TP Act despite the fact that this Division is not referred to in s 86(2) of the TP Act. Those decisions were Landy DFK Finance v Rasaratnam (2001) Aust Contract R 90-117 in which Balmford J in the Supreme Court of Victoria heard an appeal under the Magistrates Court Act 1989 (Vic) and Business and Professional Leasing Pty Ltd v Dannawi; BPL (NSW) Pty Ltd v Blue Robe Petroleum Pty Ltd; BPL (NSW) Pty Ltd v Macarounas [2008] NSWSC 902. 12 The applicants have also referred the Court to Pamela Ashcroft t/as Fit & Ready for Work v Macquarie Equipment Rentals Pty Ltd [2009] FCA 862 where the Court accepted a submission that a Local Court proceeding which raised an issue involving s 73 of the TP Act should be removed to this Court. However, the decision provides no reasons which reveal the basis of the Court's decision, and the interpretation of s 86(2) was not considered. 13 In analysing the above authorities, it is important to characterise correctly the legislative effect of s 73 of the TP Act. Section 73 renders a supplier and a linked credit provider jointly and severally liable for a consumer's loss when that loss was the result of a misrepresentation, breach of contract, or failure of consideration in relation to the contract or where there is a breach of a term implied by ss 70, 71 or 72 or of a warranty that is implied in a contract by virtue of s 74 of the TP Act or s 12ED of the Australian Securities and Investments Commission Act 2001 (Cth). Section 73 neither invests jurisdiction nor does it create a contravention of the TP Act. 14 The only issue for this Court to determine is whether the Local Court proceedings should be transferred to this Court pursuant to s 86A(4) of the TP Act. To answer this question it is not necessary for the Court to determine whether the Local Court would have jurisdiction to deal with all issues foreshadowed in the cross-claim. 15 Since the proceedings now before the Local Court will involve issues arising under Division 1 of Part V of the TP Act this Court is empowered to make an order under s 86A(4) transferring that portion of the Local Court proceedings and any other matters over which this Court has jurisdiction to the Federal Court for determination. In the absence of any opposition to the orders sought, the Court is satisfied that both Local Court proceedings should be removed from that Court to the Federal Court so as to avoid any uncertainty concerning the jurisdiction of the Local Court to hear the matters. Since a fragmented hearing would not be cost effective or time efficient, the proceedings should be removed to the Federal Court in their entirety. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Cowdroy.

Trade Practices Act 1974(Cth)ss 47, 51A, 52, 53, 73, 75B, 82, 86A(4)

Magistrates Court Act 1989(Vic)

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