Victorian Civil and Administrative Tribunal|2005-09-13

Froesch v Mohi (Civil Claims) [2005] VCAT 1933 (13 September 2005)

Jurisdiction - sale of horse - telephone conversation between parties in different States - whether conduct occurred in Victoria - whether contract made in Victoria - extra-territorial operation of Victorian statute - whether proceeding should be stayed - Fair Trading Act 1999 ss6, 9, 107, 108, 159 - Service and Execution of Process Act 1992 (Commonwealth) s20.

1. The respondent's application for an order striking out the proceeding for want of jurisdiction is dismissed.

2. Insofar as the respondent's application is for a stay of the proceeding pursuant to section 20 of the Service and Execution of Process Act 1992 (Commonwealth), it is dismissed.

3. The principal registrar is directed to fix this proceeding for hearing, before any member, to allow three hours for the hearing, and to notify the parties of the date and time fixed.

4. A party who wishes to call an expert witness shall, no later than 7 days before the day fixed for the hearing, file and serve on the opposite party a report by that expert witness prepared in accordance with Practice Note VCAT 2.

5. The principal registrar is directed to send to the solicitors for each party a copy of Practice Note VCAT 2.

The applicant Ms Froesch has made a claim for $9,999.00 against the respondent Ms Mohi. Attached to her application was a typed "outline of the history of the dispute" of 11 paragraphs. In that outline she alleged that she purchased and took delivery of a horse from Ms Mohi for $11,000.00 but the horse has turned out to be unfit for the purpose of show jumping. She alleged that she agreed in the course of a telephone conversation with Ms Mohi on 31 March 2005 to purchase the horse and that she had the horse collected by a horse transport company on 6 April 2005. She alleged that after a bad experience of trying to get the horse to jump safely she informed Ms Mohi on 9 April 2005 that the horse was unfit for the purpose and asked for her money back. Her claim is in effect for the return of the purchase price but she has limited her claim to $9,999.00.

The respondent's address specified in the application was the address of the office of a firm of solicitors in Sydney. In section 8 of the application form Ms Froesch ticked boxes that indicated that she was making claims including "payment of damages", the "cancellation (rescission) of a contract", "loss, injury or damage because of contravention of the Fair Trading Act 1999" and "misleading or deceptive conduct".

The principal registrar of the Tribunal served the application upon Ms Mohi by posting it to the address in Sydney specified in the application and by including in the envelope a notice given in conformity with the requirements of the Service and Execution of Process Act 1992 (Commonwealth).

In paragraph 1 of the outline of history attached to the application Ms Froesch alleged that she read an advertisement in the magazine "Horse Deals" offering the horse for sale and that the advertisement had described the horse as suitable for competitive show jumping. In paragraph 2 of the outline she alleged that during the telephone conversation on 31 March 2005 Ms Mohi had stated that the horse was suitable to be trained and competed as a show jumper.

By a letter to the principal registrar dated 21 June 2005 Ms Mohi's solicitor applied for an order striking out the proceeding for want of jurisdiction.

In compliance with directions given by the Deputy President in charge of the Tribunal's Civil Claims List, each party filed and served an affidavit and a written submission of law.

In her affidavit dated 22 July 2005 Ms Mohi deposed that the telephone conversation of 31 March 2005 occurred while she was at her home in Yarramalong, New South Wales. She deposed that during that conversation Ms Froesch offered to purchase the horse for $11,000.00 subject to a veterinary surgeon's examination and that she (Ms Mohi) had accepted the offer. She deposed that she had placed the advertisement in "Horse Deals" and that at the time that the horse was delivered to Ms Froesch the horse "was as represented in the advertisement". So it appears that her defence to the claim is going to be that whatever representations were made by her to Ms Froesch about the horse were true at the time that they were made, and that when she sold the horse it was fit for the purpose of competitive show jumping.

In her affidavit dated 5 August 2005 Ms Froesch deposed that the matters alleged in the outline referred to above were correct and that she had relied upon the representations made in the magazine advertisement and in the telephone conversation on 31 March 2005. She also deposed that she agreed with Ms Mohi's evidence that she (Ms Froesch) had made an offer during that telephone conversation to purchase the horse for $11,000.00 subject to a satisfactory veterinary examination and that Ms Mohi had accepted the offer during that conversation.

In the written submission filed on Ms Mohi's behalf her solicitors argued that the contract between the parties was made in New South Wales and that the proper law of the contract was the law of New South Wales. They also argued that New South Wales was the more convenient forum. Because of that second argument I have taken Ms Mohi's application to be not only that the proceeding should be struck out for want of jurisdiction but also, in the alternative, for an order under section 20 of the Service and Execution of Process Act staying the proceeding on the grounds that a court or tribunal in New South Wales would be the appropriate forum.

The respondent's application was heard by me on 2 September 2005. Ms Mohi did not appear. By letters her solicitors had indicated that she did not propose to appear and that she relied upon her affidavit and her written submission. Ms Froesch was present and was represented by Mr Andrew of Counsel. Ms Froesch supplemented her affidavit with some brief oral evidence. That evidence was that when she telephoned Ms Mohi to inform her that she had paid $11,000.00 into Ms Mohi's bank account at Seymour (Victoria) at Ms Mohi's request, Ms Mohi had stated that she would only deliver the horse once she had confirmation from her bank that the money had been paid, because on a previous occasion when she had sold a horse and delivered it the cheque given in payment for it had been stopped and so she had decided that she would never let a horse go again until the purchase funds had been cleared. The significance of that short piece of evidence will appear below.

For the purpose of determining the respondent's application I have to assume, and do assume, that the allegations made by Ms Froesch in her application form and outline and in her evidence so far are true. Whether they eventually will be found to be true remains to be seen. I also assume, of course, that Ms Mohi's account of the telephone conversation of 31 March 2005, including the fact that she was in New South Wales at the time, are true.

The respondent's submission about jurisdiction concentrated on the claim for damages for breach of contract, or for rescission of the contract, but did not come to grips with the other cause of action indicated in the application form: the claim based on "misleading or deceptive conduct" in contravention of the Fair Trading Act 1999 (Victoria)

Section 9(1) of the Fair Trading Act provides:

"A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive".

Section 159(1) provides that a person who suffers injury, loss or damage because of a contravention of the provision of the Act may recover the amount of the loss or damage by proceeding against any person involved in the contravention, Section 159(2) provides that a proceeding under the section may be brought before the Tribunal. Section 158(2) and (3) make available other remedies, including an order that a contract is void and an order for refund of money paid under a contract, once loss or damage caused because of a contravention of a provision of the Act has been established.

Ms Froesch's allegations are capable of supporting a claim that she has suffered loss and damage because of a contravention by Ms Mohi of section 9. The allegedly misleading or deceptive conduct is the alleged misrepresentations about the horse made in the magazine advertisement and by telephone. Because of the evidence of an admission by Ms Mohi that she had sold horses on more than one occasion, there is a basis for a contention that the conduct occurred "in trade or commerce". Leaving aside for the moment the issue of extra-territorial operation of the Fair Trading Act (which I shall discuss below), an applicant must nevertheless allege and prove that the misleading or deceptive conduct took place in Victoria and that the loss occurred in Victoria.

In her affidavit Ms Froesch deposed that she read the magazine advertisement in Broadford, Victoria, where she resides. Although she did not expressly say so, I infer that during the telephone conversation on 31 March 2005 she was at her home in Broadford (for she was responding to the advertisement in the magazine she bought at or near Broadford). Ms Mohi was at Yarramalong, New South Wales, during that conversation. Ms Froesch paid the purchase money at a Victorian bank and so incurred her alleged loss in Victoria.

In Ramsey v Vogler [2000] NSWCA 260 (unreported, 13 October 2000) the plaintiffs claimed that the defendant by her agent had made various false representations which induced them to buy a business system from the defendant, and that the representations were made by telephone by the agent in Queensland to them in New South Wales or in letters sent by the agent from Queensland which they read in New South Wales. They alleged fraudulent misrepresentation and also a contravention of the Fair Trading Act 1987 (NSW) which contains a provision similar to section 9 of the Victorian Act. The trial judge found that the offending conduct occurred in Queensland and that the Fair Trading Act 1987 (NSW) did not apply.

The Court of Appeal allowed an appeal. It held that the trial judge had wrongly decided that the defendant was not vicariously liable for the agent's fraudulent misrepresentations. It decided the appeal on that basis. It went on, however, to state that the trial judge was also wrong to conclude that the offending conduct occurred in Queensland. The issue was where, in substance, the wrongful act took place. The representations were received in New South Wales, as the agent intended, and were acted upon in New South Wales, as the agent intended. So the offending conduct, in substance, took place in New South Wales, the place to which the representations were directed. The damage was suffered in New South Wales. So the Fair Trading Act (NSW) was applicable.

In support of their conclusions the members of the Court of Appeal (Stein JA gave a judgement with which the other two members agreed) cited a passage from Voth v Manildra Flour Mills Pty Ltd [1990] HCA 55; (1990) 171 CLR 538 at 567-8 in which the High Court approved of a statement in an English Court of Appeal decision, that a representation made by telephone is made where the telephone message is received. They cited three Federal Court decisions to the same general effect. Although the statements in Ramsay v Vogler about where the offending conduct took place are obiter, they are supported by impressive authority. I propose to follow that decision and hold that the representations made to Ms Froesch by magazine advertisement and by telephone were made to her in Victoria where the representations were read or heard by her and were acted upon. The alleged loss or damage occurred in Victoria. The Tribunal has jurisdiction to hear and determine the claim based upon the alleged contravention of section 9 of the Fair Trading Act.

Section 6 of the Fair Trading Act is headed "Extra-territorial application of this Act" and provides:

(2) This Act applies outside Victoria to the full extent of the extra-territorial legislative power of the Parliament".

That "extra-territorial legislative power" is "full power to make laws for the peace, order and good government of the State that have extra-territorial operation": Australia Act 1986 (Commonwealth) section 2(1). As the applicant's written submission stated, the cases establish that there is a limitation on that power, a limitation that there must be some connection with the State, i.e. some connection with Victoria. In that submission it was put that the law was that "even a remote and general connection between the subject matter of the legislation and the State" would suffice. In Halsbury's Laws of Australia, volume 5, paragraph [90-1215], the learned contributors put the view that a State may legislate in respect of matters occurring elsewhere in Australia "if there is still a substantial connection" with the State. This case is not the occasion, I think, to determine which of the two views is correct. I propose to assume the correctness of the view more favourable to the respondent Ms Mohi, namely, that extra-territorial operation of the Fair Trading Act is possible where the subject matter of the provisions in question have a substantial connection with Victoria.

In my opinion, a provision like section 9 has a substantial connection with Victoria if its operation extends to conduct which involves a person in Victoria hearing or reading words spoken or generated by another person outside Victoria in circumstances in which it would be envisaged that the words would be acted upon in Victoria. So, although insofar as the claim is based upon misleading or deceptive conduct or a contravention of the Fair Trading Act it is not necessary for me to decide whether s9 has an extra-territorial operation to the above extent, I consider that it has.

The question of extra-territorial operation may be more important in relation to the claim based upon an alleged breach of contract: breach of (as I apprehend that Ms Froesch would put that claim) an implied condition that the horse would be reasonably fit for the purpose (show jumping) of which she had made Ms Mohi aware.

The Tribunal's jurisdiction to deal with a claim for breach of a contract for the sale of a horse is conferred by Part 9 of the Fair Trading Act. Section 108(1) provides that the Tribunal may hear and determine a consumer and trader dispute. Section 107(1) defines a "consumer and trader dispute" in a way that includes a dispute or claim arising between a purchaser of goods and a supplier of goods in relation to a supply of goods.

The respondent's written submission included a submission that the contract was made in New South Wales. I do not accept that submission. Ms Froesch and Ms Mohi agree that during the telephone conversation of 31 March 2005 Ms Froesch made an offer and Ms Mohi accepted it. The contract is made, however, at "the place where the offeror receives the notification of acceptance by the offeree": Entores Ltd v Miles Far East Corporation [1955] EWCA Civ 3; [1955] 2 QB 327 at 335, Greig & Davis, The Law of Contract (1987), pp 315-6 (the passage is quoted in the applicant's written submission.) The notification of Ms Mohi's acceptance was made to Ms Froesch in Victoria.

For the purposes of sections 107(1) and 108(1) of the Fair Trading Act the issue is not so much where a contract for the supply of goods was made as where the dispute in relation to the supply of goods occurred. But in respect of both aspects of that issue there is a substantial connection with Victoria. The contract was made in Victoria. Even if it was not, payment under it was made in Victoria. The dispute arose when Ms Froesch, in Victoria, telephoned Ms Mohi and asked her to take back the horse and refund her money. If those sections of the Fair Trading Act need to have an extra-territorial operation to that extent, in my opinion they do have that operation.

So I refuse the application for an order dismissing the proceeding for want of jurisdiction.

As to the matter of whether there should be a stay of the proceeding, most of the matters set out in section 20(4) of the Service and Execution of Process Act as being matters that a court is to take into account are not matters that weigh in favour of one party or the other. They reside in different places. Ms Froesch wishes to call two expert witnesses who reside in Victoria. Ms Mohi probably wants to call the veterinary surgeon who made the pre-delivery inspection; he resides in New South Wales; she also wants to call other (unidentified) witnesses who reside in New South Wales. In view of my conclusion that the contract was made in Victoria, the law that would be most appropriate to apply, in determining whether there was a breach of an implied condition in the contract, is the law of Victoria, but if my conclusion is wrong I do not see any difficulty in the Tribunal ascertaining and applying the law of New South Wales in that regard. The subject matter of the proceeding is the horse, and the horse is situated in Victoria; I doubt that that is a weighty matter to consider, but if it is it weighs in favour of Victoria as the appropriate forum.

For those reasons I consider that the respondent has not established that a court or tribunal in New South Wales would be the appropriate forum. Insofar as the application is one for a stay of the proceeding, it is dismissed.

I shall include in my order a direction to the principal registrar to fix this proceeding for hearing and to allow 3 hours for the hearing. The parties will be notified of the date and time fixed for the hearing. As expert witnesses will be involved I shall order that a party who wishes to call an expert witness shall, no later than 7 days before the hearing date fixed, file and serve a report by that expert witness prepared in accordance with Practice Note VCAT 2. I shall direct the principal registrar to provide the respective solicitors for the parties with a copy of Practice Note VCAT 2.

Fair Trading Act 1999

Froesch v Mohi

At a glance

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Decision date

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Judgment (11 paragraphs)

Froesch v Mohi (Civil Claims) [2005] VCAT 1933 (13 September 2005)

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Legislation Cited (2)

Cases Cited (1)