St. Elizabeth Home v Camnet Finance Pty Ltd

Supreme Court of NSW|2024-04-29|Before: Schmidt AJ

JUDGMENT

In October 2023, Camnet Finance Pty Ltd brought proceedings in the Local Court against St. Elizabeth Home seeking to recover payments it claimed it was owed under a contract for the rental and maintenance of printing equipment, then of some $74,000.
That claim is defended. St. Elizabeth Home also pursues a cross-claim against Camnet and two other defendants. It seeks both declaratory relief under the Australian Consumer Law, ACL, a schedule to the Competition and Consumer Act 2010 (Cth), and the Fair Trading Act 1987 (NSW) in relation to its agreement with Camnet, which it claims is void and unenforceable, as well as compensation. It also seeks declaratory relief in relation to claimed agreements with Kubic Pty Ltd and Comtech Business Equipment Pty Ltd, which it claims never came into existence, as well as other orders under the ACL.
St. Elizabeth Home's claims include that Camnet's unfair agreement is a standard form small business contract; that Kubic has possession of Camnet's equipment, which should be returned to Camnet; that it should be refunded payments it made to Camnet under the void contract, as well as those it mistakenly made to Kubic and Comtech; and that it should also receive damages and/or compensation from them for their unconscionable conduct.
Those claims are also defended by Camnet and Comtech. Kubic is not active in the proceedings.
In February 2024, St. Elizabeth Home commenced these proceedings, seeking orders transferring the Local Court proceedings to this Court. Comtech consented to those orders but Camnet opposed them. It contends that what is in issue between it and St. Elizabeth Home should remain in the Local Court, even if it does not have jurisdiction in relation to the claims against Kubic and Comtech, but there is no basis upon which the proceedings could justly be transferred to this Court. That was also disputed.

Issues

The Local and District Courts have the jurisdiction conferred upon them by statute. There is no question that what is in issue falls within the monetary limit of the Local Court and that it does not have jurisdiction to grant purely declaratory relief.
There is also no issue that the Court has power to order the transfer of the proceedings to this or the District Court: s 140 of the Civil Procedure Act 2005 (NSW). Such an order requires that the Court be satisfied that "there is sufficient reason for hearing the proceedings in the higher court": s 140(4).
In issue is: 1. whether any declaratory relief is necessary, given what is in issue between the parties; 2. whether what is in dispute in relation to Camnet's contract could justly be severed from what is claimed in relation to the other two defendants and remain to be dealt with in the Local Court; and 3. whether all that is claimed could be dealt with in the District Court or needs to be referred to this Court.

Can the proceedings justly be split?

Unfair contracts are dealt with in Pt 2-3 of Ch 2 General Protections of the ACL, as is misleading and deceptive and unconscionable conduct: Pts 2-1 and 2-3. Section 23 provides that unfair terms of "consumer" and "small business" contracts are void, although the contract continues to bind the parties if it is capable of operating without the unfair term.
The meaning of "unfair" is provided by s 24. It specifies when the term of a contract will be unfair, as well as the matters a court must take into account in determining whether it is unfair. Small business contracts are dealt with in s 27.
"Consumer" and "small business" are defined in ss 23(4) and (5). The latter requiring, in short, that at least one party to the contract made the contract in the course of carrying on a business at a time when it employs fewer than 100 persons, or that its turnover for the last income year was less than $10,000,000. St. Elizabeth Home does not claim that it falls within that definition.
The cross-claim pleads that the Camnet agreement is a standard form contact within the meaning of s 27 of the ACL as applied by s 28 of the Fair Trading Act, as well as a small business contract within s 23(4).
St. Elizabeth Home claims that identified parts of the agreement are unfair terms within the meaning of s 24 and, in some cases, also s 25, which gives examples of unfair terms, with the result that they are void under s 23.
If a contract is a standard consumer or small business contract, s 250 empowers a court, on an application of a party to such a contract, to declare that a term is an unfair term. In the case of a standard small business contract, such a party must be "covered by paragraph 23(4)(b) at the time the contract was entered into". It appears that St. Elizabeth Home was not covered by that paragraph. But that section does not "limit any other power of the court to make declarations": s 250(5).
"Court" is defined in s 2 to mean "any court having jurisdiction in the matter." It is the Fair Trading Act which generally regulates the jurisdiction of NSW courts in respect of the ACL.
Section 30 of the Fair Trading Act deals with the jurisdiction of this, the District and Local Court for the purposes of the ACL, by the way it defines "court". In the case of some provisions, "court" is defined to mean this Court: s 30(3). They include s 250 and Divs 2 and 4 of Pt 5-2 of the ACL. In Div 4 the kinds of orders which may be made are dealt with in s 243. They include declarations that the whole or part of any contract is void.
Section 71 of the Fair Trading Act deals with declaratory relief sought in respect of standard form consumer contracts, requiring that leave of this Court be obtained when a declaration under s 250 of the ACL is sought in respect of such a consumer contract. That requirement does not apply to the cross-claim, the Act not so regulating declaratory relief in respect of standard form small business contracts.
Section 21 of the ACL requires that persons must not engage in unconscionable conduct in trade or commerce in connection with the supply of goods or services. Actions for damages in respect of such conduct may be pursued and compensation orders also made: ss 236 and 237. Orders can also be made to address loss or damage suffered by third parties: s 239. Injunctions requiring the refund of money or transfer of property can also be made: s 232.
Both injunctive relief, dealt with in Div 2 of Pt 5-2, and orders dealt with in Div 4, are not within the Local Court's jurisdiction: s 30(3). They include those available under ss 232, 237 and 243.
Claims for damages, however, regulated as they are by Div 3 of Pt 5-2, do not fall within s 30(3). Actions for damages may thus be brought in any court of competent jurisdiction: s 236.
Despite this, given all that St. Elizabeth Home pursues against Camnet and the other parties, including in relation to the return of Camnet's equipment, I am not persuaded that splitting the cases as Camnet suggested at the hearing, so that what it pursues and is pursued against it can be left to be dealt with by the Local Court, can be justly ordered.
In short, St. Elizabeth Home pleads not only that its contract with Camnet was unfair, with the result that it is void and unenforceable, but also conduct which contravened Pt 2-3 of Ch 2 of the ACL, which entitles it to an injunction requiring payments it has made to be refunded; as well as misleading and deceptive conduct on the part of Kubic and Comtech, which has prevented it returning the rented equipment to Camnet; and that it has made payments under the Camnet agreements and the claimed agreements with Kubic and Comtech, which should be refunded.
What is advanced includes that St. Elizabeth Home has no agreement with either Kubic or Comtech; it was in June 2020 that Kubic approached, offering an alternative arrangement for printing equipment; it then represented that it had power to vary the Camnet agreement to become responsible for payments under that agreement, which it would make; Kubic took possession of the Camnet equipment, which it has failed to return, making it impossible for St. Elizabeth Home to return it to Camnet; St. Elizabeth Home had signed an agreement with BOQ Finance (Aust) Limited in June 2020 for rental of other printing equipment, under which it made payments which it does not challenge; but it had also mistakenly made payments to Kubic, with whom it had no agreement and later to Comtech, after it sought payments in 2023 under an agreement which it claimed it had entered with St. Elizabeth Home, but which it had never entered.
The loss and damage which St. Elizabeth Home pursues thus includes any payments it is ordered to make under the Camnet agreement, as well as the return of Camnet's equipment, in addition to the refund of what it mistakenly paid Kubic and Comtech.
Given the common facts which will thus arise to be considered and all the orders sought against Camnet, Kubic and Comtech, it does not seem to me that the just, quick and cheap resolution of all of the real issues in these proceedings support them being split in the way in which Camnet proposed: s 56 of the Civil Procedure Act.

Is the declaratory relief sought necessary?

Declaratory relief, even if claimed, may not be necessary. For example, in a claim for breach of contract or a similar cause of action, where the existence of the contract is in issue, it is not always necessary: STM123 No. 28 Pty Ltd v Eastern Suburbs Commercial Pty Ltd [2023] NSWSC 1266 at [27]. Unnecessarily claiming declaratory relief obviously does not accord with the obligations imposed on parties by s 56 in relation to the overriding purpose of the legislative scheme there specified.
Here St. Elizabeth Home seeks declaratory relief in relation to its contract with Camnet, which it claims contains terms which are void and unenforceable, as well as compensation and other orders available under Divs 2 and 4 of Pt 5-2 of the ACL. That will depend on its terms, as well as the evidence which the parties lead. That, it must be accepted, is a necessary claim, given the scheme of the ACL, which specifies the kinds of orders which can be made in s 243. The exercise of the declaratory power there specified is not granted by s 30(3) of the Fair Trading Act to the Local Court.
St. Elizabeth Home also seeks declaratory relief in relation to the claimed contracts under which Kubic and Comtech have sought payment of money from it, which it has refused to make. It denying that they ever came into existence, despite the payments it has made. It also seeks orders for repayment of those payments, which it claims it mistakenly made to both of them, it in fact having had no contractual obligation to do so, as well as the return of Camnet's equipment.
Inevitably determination of the repayment claims will require consideration of whether or not any contract ever came into existence with either Kubic or Comtech and will thus not necessarily also require declaratory relief. But St. Elizabeth Home also pursues other relief in relation to Kubic and Comtech under the ACL, the grant of which is confined to this Court, which must also be considered.
It follows that even if the declaratory orders sought in respect of them are not necessary, the orders Camnet pursued cannot be made.

The Local Court's jurisdiction

It was common ground that the Local Court has no power to grant purely declaratory relief, while this Court does have such power. Likewise, St. Elizabeth Home contends that it cannot grant injunctive relief.
In The NTF Group Pty Ltd v PA Putney Finance Australia Pty Ltd [2017] NSWSC 1194, both the jurisdiction of the Local and District Courts under the ACL arose to be determined. There Parker J concluded that given the provisions made in s 30(3) of the Fair Trading Act, while the Local Court had power to award damages under the ACL, it had no power to make the orders there sought, they being orders that the agreements and guarantees there in question be declared void: at [6] and [30]. Those proceedings were therefore removed from the Local Court: at [37].
It follows that like in The NTF Group, these proceedings also cannot remain in the Local Court, it still having no power to make the declaration sought in respect of the Camnet agreement. Nor can it make the refund and return of property orders sought under ss 232 and 243, they falling within Divs 2 and 4 of Pt 5-2 of the ACL, which are not within the Local Court's power to grant.

The jurisdiction of the District Court

The District Court may grant declaratory relief under s 134(1)(h) of the District Court Act 1973 (NSW): Kolapo v Pitsikas (t/as Comino and Pitsikas) & Anor [2003] NSWCA 59. There the declaratory relief pursued involved a claim against legal practitioners in an action for negligent advice given in respect of claims against a travel agent. It was concluded that the District Court had the necessary jurisdiction to make a declaration about a claimed indemnity for costs owed to the travel agent: at [12].
The District Court now also has power to deal with actions arising out of commercial transactions within its jurisdictional limit: s 44(1)(c1) of the District Court Act, enacted after The NTF Group was decided. The absence of that jurisdiction was the basis on which Parker J concluded that it did not then have the necessary jurisdiction to deal with the claims there made under the ACL: at [44]-[52].
Section 135 of the District Court Act also deals with that Court's jurisdiction under the Fair Trading Act, permitting it to exercise all the powers and authority of this Court, "in any proceedings in which relief is sought under the Fair Trading Act and where the amount of the claim concerned does not exceed the amount for the time being specified in section 44(1)(a)".
What is specified in s 44(1)(a)(ii) is "the amount (if any) claimed does not exceed the Court's jurisdictional limit, whether on a balance of account or after an admitted set-off or otherwise". There is no issue that what St. Elizabeth Home claims does not exceed that limit. The other matter dealt with in s 44 (1)(a)(i), the assignment of the matter to the Common Law Division if brought in the Supreme Court, is not relevant to the District Court's jurisdictional limit, with which s 135 deals.
In the District Court these legislative provisions have led to the view that once a monetary claim is made under s 236 of the ACL, within the limits of its jurisdiction, for damages under the Fair Trading Act, then it has jurisdiction to grant non-monetary relief under ss 237 and 243, in connection with that claim: Storm Industries Pty Ltd trading as trustee of the T&L Trust v Unicar Australia Pty Ltd [2020] NSWDC 51 at [282]. That approach followed what was decided in Provectus Care Pty Ltd v Epicor Software (Aust) Pty Ltd [2009] NSWSC 1281 at [6], and K & M Prodranovski Pty Ltd v Northshore Car Rentals Pty Ltd [2017] NSWSC 625 at [28] and [31].
I agree with that view.
It follows that while s 30(3) of the Fair Trading Act precludes the Local Court from exercising the power to grant the relief St. Elizabeth Home pursues under the ACL, what it seeks does now fall within the jurisdiction of the District Court. The requirement of s 140 of the Civil Procedure Act, that there be sufficient reason for hearing the proceedings in that Court, is thus satisfied by the matters I have discussed.

Orders transferring the proceedings to this Court must be refused

That being so, I can see no basis for concluding that there is sufficient reason for this Court hearing what is raised by the Local Court proceedings, what is in issue falling within the jurisdiction of the District Court, as it does.
In the result I am satisfied that while orders transferring the proceedings to this Court must be refused, orders transferring them to the District Court must be made, what is in issue not all falling within the jurisdiction of the Local Court, but being within that of the District Court.

Costs

The parties agreed that the costs of the proceedings should be costs in the cause.

Orders

For these reasons I order that: 1. The Local Court proceedings be transferred to the District Court; and 2. Costs of the proceedings be costs in the cause.

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: 03 May 2024

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