Volkswagen Financial Services Australia Ltd v City Prestige Service Centre... [2007] NSWSC 203 | Case summary

JUDGMENT 1 HIS HONOUR: Volkswagen Financial Services Australia Limited (Volkswagen), commenced proceedings against City Prestige Service Centre Pty Ltd (City Prestige) in the District Court of New South Wales for a loss suffered by Volkswagen on the resale of a Ferrari motor vehicle purchased from City Prestige and on-delivered by Volkswagen pursuant to a hire purchase agreement. Volkswagen, in substance, alleges that City Prestige represented that the Ferrari was manufactured and first registered in 2003 but that the vehicle was in fact manufactured before October 2001 and first registered in late 2001 or 2002. 2 It is self-evident that the extent to which the vehicle was new is perhaps one of the most material considerations affecting value apart, of course, from the physical integrity and mechanical state of the vehicle. Volkswagen has sued for breach of contract, for contravention of ss52 and 53 of the Trade Practices Act for misrepresentation and alleges also a breach of duty of care by City Prestige in failing to ensure that the terms of the sale agreement - which included the manufacturing and registration details - were accurate. 3 Volkswagen paid in excess of $440,000 to City Prestige and delivered the vehicle to its customer, La Ruffa and Associates Pty Limited (LRA) in late November 2004. LRA were unable to continue the payments and in mid-April 2005 delivered the Ferrari to Volkswagen which delivered it to the Lamborghini Melbourne dealership for sale. Lamborghini Melbourne could not sell the Ferrari and it was sent on to the Pickles Group for sale. The Pickles Group privately sold the Ferrari for $215,000. 4 Volkswagen alleges that, as at the date of its purchase from City Prestige, the true value of the Ferrari was about $370,000 and that, when it was delivered to the Pickles Group, $235,000. On the other hand, if the vehicle had in fact been manufactured and first registered in 2003 it would have been worth, as at November 2005, almost $381,000. 5 City Prestige defends the action, essentially upon the basis that it merely acted as a conduit between Eastwood Pty Limited, trading as Brighton Classic Cars (whose principal is a Mr Duchini on the one hand and LRA on the other. It is said that LRA purchased the vehicle from Brighton by trading-in three motor vehicles that were the subject of finance from and encumbrances in favour of Volkswagen. City Prestige was informed by Mr Duchini or LRA or both that the vehicle was first registered in 2003 and merely passed that information on to Volkswagen. City Prestige issued the invoice to Volkswagen in the amount of $440,288 at the request of Mr Duchini or Mr La Ruffa or both. City Prestige also claims that, whilst the Ferrari was at the Lamborghini Melbourne dealership, an offer to purchase the Ferrari for an amount significantly greater than the price it was sold for by the Pickles Group was rejected by Volkswagen. City Prestige also claims that the ultimate sale price of the Ferrari did not reflect its true value at the time of its sale. 6 The matter comes to this Court pursuant to applications made by City Prestige for an order under s140(1) of the Civil Procedure Act 2005 for the proceedings pending in the District Court of New South Wales to be removed into this Court to permit an order to be made under s5(2)(b)(iii) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 for the transfer of the proceedings to the Supreme Court of Victoria. The crucial question is whether it is "in the interests of justice that the…proceeding be determined by the Supreme Court of [Victoria]". 7 This provision has recently been considered by the High Court of Australia in BHP Billiton Limited v Schultz (2004) 221 CLR 400. The joint judgment of Gleeson CJ, McHugh and Heydon JJ, who dissented on the outcome of the appeal, contains the following statement of principle which is, I think, uncontroversial (at 421) - "[14] In the context of the [Cross-vesting Act], one is not concerned with the problem of a court, with a prima facie duty to exercise a jurisdiction that has been regularly invoked, asking whether it is justified in refusing to perform that duty. Rather, the court is required by statute to ensure that cases are heard in the forum dictated by the interests of justice. An application for transfer under s5 of the Cross-vesting Act is brought upon the hypothesis that the jurisdiction of the court to which the application is made has been regularly invoked. If it appears to that court that it is in the interests of justice that the proceedings be determined by another designated court, then the first court 'shall transfer' the proceedings to that other court. There is a statutory requirement to exercise the power of transfer whenever it appears that it is in the interests of justice that it be exercised. It is not necessary that it should appear that the first court is 'clearly inappropriate' forum. It is both necessary and sufficient that, in the interests of justice, the second court is more appropriate. [15] The reason why a plaintiff has commenced proceedings in a particular court might, or might not, concern a matter related to the interests of justice. It might simply be that the plaintiff's lawyers have their offices in a particular locality. It is almost invariably the case that a decision as to the court in which an action is commenced is made by the plaintiff's lawyers, and their reasons for making that choice may be various … The interests of justice are not the same as the interests of one party, and there may be interests wider than those of either party to be considered. Even so, the interests of the respective parties, which might in some respects be common (as, for example, costs and efficiency), and in other respects conflicting, will arise for consideration. The justice referred to in s5 is not disembodied, or divorced from practical reality … … [18] … Reference is sometimes made to one forum or another being the 'natural forum'. Such a description is usually based upon a consideration of 'connecting factors', described by Lord Goff in Spiliarda [ Maritime Corporation v Cansulex Limited [1987] AC 460 at 478] as including matters of convenience and expense, such as availability of witnesses, the places where the parties respectively reside or carry on business, and the law governing the relevant transactions. Lord Templeman described such factors as 'legion' and said that it was difficult to find clear guidance as to how they are to be weighed in a particular case ( Spiliarda [1987] AC 460 at 465). Thus, New South Wales might well be the 'natural forum' for an action for damages brought by a passenger in a motor vehicle against the driver if they were both residents of New South Wales, even though the injury resulted from a collision that occurred on the other side of the Queensland or Victoria border. [19] In many cases, there will be such a preponderance of connecting factors with one forum that it can readily be identified as the appropriate, or natural, forum. In other cases there might be significant connecting factors with each two different forums. Some of the factors might cancel each other out. If the action is between two individuals, and the plaintiff resides in one law area and the defendant in another, there may be no reason to treat the residence of either party as determinative although, as already noted, it will ordinarily be the residence of the defendant that is important to establish jurisdiction. Weighing considerations of costs, expense, and convenience, even when they conflict, is a familiar aspect of the kind of case management involved in many cross-vesting applications." 8 This leads me to consider whether there is indeed a "preponderance of connecting factors" leading to the conclusion that it would be in the interests of justice that this action be transferred to the Victorian Supreme Court. City Prestige points to the following features - (a) the proceedings involve the purchase of a motor vehicle registered in Victoria by a resident of Victoria (Mr La Ruffa) from a Victorian dealer in motor vehicles, on Volkswagen's case, City Prestige and on City Prestige's case, Brighton; (b) the place for performance of some of the obligations under the hire purchase agreement is in Victoria; (c) an issue will arise as to whether the true nature of the transaction was a sale by the dealer to Volkswagen or a sale by the dealer to LRA followed by a sub-sale to Volkswagen for the purposes of effecting the hire purchase agreement, in which latter event, the sale occurred entirely in Victoria; (d) which of these alternatives was the fact depends on evidence being called from those involved in the acquisition, namely Mr Duchini and Mr La Ruffa, both of whom reside in Victoria; (e) it will be necessary to call a Mr Rodney Rawles, a director of City Prestige at the time of the transaction, as to the circumstances in which the invoice in the sum of $440,288 was raised; and experts from the automotive industry as to valuation reflecting what are said to be conditions in the Melbourne luxury car market; (f) witnesses from the Lamborghini Melbourne dealership, the Pickles Group and from the firm Robert Lane Motors as to the Ferrari being in its yard and discussions with Mr La Ruffa are also necessary; and (g) the only connection that the proceedings have with New South Wales is that the plaintiff is incorporated in New South Wales and was the recipient of the invoice issued in respect of the sale of the vehicle. 9 Volkswagen, it appears, intends to call two witnesses at the trial and its files concerning the dispute are held in Sydney. Volkswagen's solicitor says that he expects that Volkswagen would call expert evidence relating to the value of the Ferrari and that this expert was likely to be based in New South Wales. 10 Volkswagen's submits that the proceedings, having been appropriately commenced in the District Court (which has no jurisdiction to cross-vest), the proceedings ought not to be moved into this Court simply to permit the exercise of the cross-vesting jurisdiction of this Court. In particular, it is argued that it is significant that the legislature has not granted to the District Court any powers to cross-vest. I was initially attracted by this last argument but on consideration it seems to me to be of little weight. After all, the jurisdiction to transfer a matter into this Court is unrestricted except by appropriate discretionary considerations. Having regard to the fact that the crucial test for the exercise of the cross-vesting jurisdiction is the interests of justice, there is much to be said for the contention that, where cross-vesting is appropriate, this will be the major, though not the only factor, in favour of transferring the matter from the District Court into this Court. The amount at stake would, I think, be a significant factor; if the amount involved here was a much smaller sum, I think that would mitigate strongly in favour of leaving the matter in the District Court. Overall, it does not seem to me that these questions should be the subject of nice distinctions: the question is fundamentally a question of appropriate case management in the interests of justice. I note that, in the event that I grant the plaintiff's application, the plaintiff can apply for the proceedings to be transferred to the County Court under s26 of the Courts (Case Transfer) Act 1991. 11 I have concluded that the nature of the litigation, the issues raised and the likely course of the evidence justify the transfer of the proceedings to the Supreme Court of Victoria in the interests of justice. However, that order will be subject to the defendant undertaking to facilitate any application made by the plaintiff for an order that the proceedings be transferred to the County Court and, for that purpose, give its written consent to the transfer in accordance with s26 of the Courts (Case Transfer) Act 1991 if the plaintiff requests it to do so. Accordingly, I make the following orders - 1 Pursuant to s140(1) of the Civil Procedure Act 2005, the proceedings pending in the District Court of New South Wales being case number 2088/06 are transferred to this Court; 2 Pursuant to the jurisdiction of Courts (Cross-Vesting) Act 1986 the proceedings are thereupon transferred to the Supreme Court of Victoria; 3 Costs of the proceedings in both the District Court and the Supreme Court of New South Wales to abide the outcome of the proceedings in the Supreme Court of Victoria. **********

Volkswagen Financial Services Australia Ltd v City Prestige Service Centre Pty Ltd

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