(I4 CATCHWORDS Federal Court of Australia - Jurisdiction - Consumer protection - Conduct contravening Part IV or Part V of Trade Practices Act 1974 - Implied conditions in contract of supply of goods - Supply of motor vehicle to consumer - vehicle not of merchantable quality - Damages sought from supplier and manufacturer - Trade Practices Act 1974 (Cth.} ss. 4, 71, 74A 74D, 82, 86. Praccice ~ Summary dismissal - Rules of Court 0.10 r.4; 0.20 r.2,. Frank Arturi v. Zupps Motors Pty Ltd. and Auswide Pty Limited QLD No. G11 of 1980 Coram : Brennan J. 19 December 1980 Canberra. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QLD No. Gll of 1980 GENERAL DIVISION IN THE MATTER of the Trade Practices Act 1974 BETWEEN : FRANK _ARTURI Applicant AND 3 ZUPPS MOTORS PTY LTD lirst Respondent AND : AUSWIDE PTY LIMITED Second Respondent ORDER JUDGE MAKING ORDER : Brennan J. DATE OF ORDER : 19 December 1980. WHERE MADE : Canberra, THE COURT ORDERS THAT : 1. The applicant's proceedings be dismissed gencrally. 2. The applicant pay the respective respondents their costs of the proceedings. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QLD No. G1l of 1980 GENERAL DIVISION ee er IN THE MATTER of the Trade Practices Act 1974 BETWEEN : FRANK ARTURI Applicant AND: ZUPPS MOTORS PTY LTD First Respondent AND : AUSWIDE PTY LIMITED Second Respondent Coram : Brennan J. 19 December 1980 REASONS FOR JUDGMENT The application initiating these proceedings claims: "], Damages pursuant to s.82 of the Trade Practices Act 1974 for breach of implied conditions in a contract for the sale of a certain motor vchicle referred to in the Statement of Claim, 2. Costs. " The application was accompanied by a Statement of Claim, and in the ultimate paragraph of that pleading there 1s a claim for "damages for breach of contract", At a directions hearing, an intimation wus given that it would be desirable to determine as a preliminary question the jurisdiction of this Court to give the relief claimed, and the directions hearing was adjourned. When the adjourned directions 2. hearing came on, counsel for the respective respondents submitted that this Court did not have jurisdiction to give the relicf claimed, and counsel for the first respondent moved to stay or dismiss the proceedings as frivolous or vexatious or an abuse of the process of the Court. The requisite notice had not been given under 0,10 r.4, but upon the first respondent undertaking to file an appropriate notice of motion nunc pro tunc, I dispensed with service of the notice. A timetable was set for the receipt of written submissions in support of the oral submissions as to jurisdiction which had been made on behalf of cach of the parties, Written submissions have now been received from the solicitors for those parties who wished to add to what was said on their behalf, The relevant jurisdiction of this Court is conferred by s.86 of the Trade Practices Act 1974 (the Act). It provides: Jurisdiction 1s conferred on the Court to hear and determine actions, prosecutions and other proceedings under this Part and that jurisdiction is exclusive of the jurisdiction of any other court, other than the jurisdiction of the High Court under section 75 of the Constitution, " "Proceedings under this Part" include a proceeding under s.82(1): " A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV or V may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention." The question thus arises whether the applicant in these proceedings is seehing to recover an amount of loss or damage caused by "conduct that was done 1n contravention of a provision of...Part V". The Statement of Cluim alleges that the applicant entered into an agreement with Australian Guarantee Corporation Limited for the lease of a Fiat motor vehicle which had been imported into w ' Australia by the second respondent, a "corporation" as defined by s,4 of the Act; that the applicant negotiated with the first respondent (also a "corporation") for the acquisition of a new Fiat motor vehicle, and that the applicant and first respondent agreed that the applicant "should acquire the said vehicle by way of lease" from Australian Guarantee Corporation Limited; and that the first respondent delivered the motor vehicle to the applicant. Although the Statement of Claim does not in terms allege a contract between the applicant and the first respondent (which I shall call "the dealer", though the Statement of Claim does not so describe it), I assume that the pleader's intention was to allege that the applicant and the dealer were parties to a contract for the supply of the Fiat motor vehicle. That assumption is based upon allegations that there was an "agreement" between them which was "subject to an implied condition that the said motor vehicle was reasonably fit for the purpose'', i.,e., for use as a private motor vehicle, "by reason of the provisions of s.71 of the Trade Practices Act 1974", and which was "subject to a further implied condition that the said motor vehicle was of merchantable quality by virtue of the provisions" of the same section, In its relevant parts, s.71 provides; " (1) Where a corporation supplies...goods to a consumer in the course of a business, there is an implied condition that the goods supplied under the contract for the supply of the goods are of merchantable quality,..." " (2) Where a corporation supplies...goods to a consumer in the course of a business and the consuner, expressly or by implication, makes known to the corporation or to the person by whom any antecedent negotiations are conducted any particular purpose for which the goods are being acquired, there 31s an implied condition that the goods supplied under the contract for the supply of the goods are reasonably fit for that purpose,..." Section 71 appears to have been drawn from the Supply of Goods (Implied Terms) Act 1973 (U.K.), $.3,. As conditions are implicd by 4. s.71 only when goods are supplied under a contract by the obligor corporation, I assume that the pleader intended to allege a contract between the applicant and the dealer and to claim damages for breach of conditions statutorily implied in it. The Statement of Claim alleges breaches of the implied conditions in that the motor vehicle was not fit for use as a private motor vchicle and was not of merchantable quality. Jurisdiction arises under s,82 when the damage claimed in the proceedings is alleged to have been caused by conduct done in contravention of Part IV or V of the Act, that is to say, conduct which does not conform to norms of conduct prescribed by those provisions. Section 71 prescribes no norm of conduct: it affects the legal relationship between parties to a contract by importing one or more conditions into the contract. It does not proscribe conduct by the supplier of goods; it relates to the quality of the goods supplied. There are two reasons why a breach of a condition which is implied by s.71 does not involve conduct in contravention of a provision of Part V. First, the breach does not consist in the conduct of supplying goods, but in the want of correspondence between the state of the goods supplied and the quality refcrred to in s.71. Secondly, s.71 takes effect by imposing an obligation upon one of the contracting partics as though the parties had embodied the obligation in their contract. No doubt it 1s right to say that the obligation is statutorily created, for the condition can derive no force from an actual or implied consent of the partics whose freedom to exclude its imposition 1s removed by s.68,. But by describing the obligation as an implied condition, s.71 defines the nature of the obligation, 1t 1s an obligation which takes effect by a legal fiction, namely, that the parties had made a contract which included the obligation. For the purposes of s,.82, therefore, a breach of the obligation is not to be treated as a breach of an obligation imposed upon the obligor by the Act dehors the contract, but as an obligation imposed by the contract itself. 5. It follows that a procéeding for damages for breach of a s.71 condition is not a proceeding falling within s.82, It would be startling i1f a breach of a s.71 condition were a contravention of the section, for on that hypothesis 1t would, by virtue of s.79, be punishable on conviction. So absurd a consequence could not have been intended. A claim is also made against the second respondent (the importer), which is alleged to be a "manufacturer" of the vehicle within the meaning of that term in s,74A, The applicant 1S alleged to have been a "consumer" within the meaning of that term in the Act, and paragraph 14 of the Statement of Claim 1s pleaded in these terms: " In the premises the supply of goods by the second respondent was subject to an implicd condition that the said motor vehicle was of merchantable quality by reason of the provisions of Section 74D of the Trade Practices Act 1974, " The allegation and the relief which 1s claimed thereon are misconceived. Section 74D does not imply a condition, and it has no operation unless the manufacturer supplies the goods to anothcr person who acquires the goods for re-supply (s.74D(1)(4)). It does not relate to a contract between a manufacturer and a consumer, and the applicant can found no claim for damages for breach of contract upon s.74D. The claim so framed discloses no Jacobs (1887) L.R.34 Ch.D.278 at p.284, with respect to such a pleading "it is demurrable at once, and it 1s something more, it 15 perfectly frivolous,"" It cannot be allowed to stand, It may be that the pleader intended to claim compensation under s.74D against the second respondent on the footing that the applicant suffered damage by reason that the l1iat motor vehicle, having been supplied by the importer to the dealer and having been supplied by the dealer to the applicant $0 as to 6. fulfil the requirements of s.74D(1) (a) and (b), was not of merchantable quality. If the claim had been so framed, the damages would not have been recoverable "pursuant to s.82", <A proceeding for compensation by reason of goods not being of merchantable quality is not a claim for damage by conduct contravening a provision of Part V. A defect in the quality of goods is not "conduct" and it 1s therefore not contravening conduct falling within s.82, The applicant has not invoked the jurisdiction of this Court in any matter in respect of which jurisdiction is conferred upon it by Part VI, nor do his pleadings rely on any other provision of the Act to confer jurisdiction, The application must therefore be dismissed, An argument based upon s.32 of the Federal Court of Australia Act 1976 (Cth.) that the Court might exercise jurisdiction in an associated matter does not arise for determination. That section has effect only when the jurisdiction of the Court 1s invoked in a matter in which jurisdiction has been vested in it. As I construe the application and the statement of claim, the applicant has not invoked jurisdiction 1n such a matter. It is not necessary in order to dispose of these proceedings to refer to the jurisdiction to enforce claims which are properly made under s.74D. Section 74(1) refers to that jurisdiction, The sub-section creates a liability in the manufacturer corporation to compensate the consumer and provides that the consumer "may recover the amount of the compensation by action against the corporation in a court of competent jurisdiction,' As that provision itself does not create anv stundard of curial competency, the standard must be found clsewhere in federal Jaw, and it may be found in s,39(2) of the Judiciary Act 1903 (Cth.) (sce Commonwealth v. Dalton (1924) 33 C.L.R.452 at p.455), or an other provisions apt to confer jurisdiction upon the courts of the States or Territorics. I do not perceive a jurisdiction in this Court to grant relicf in a claim arising solely under s.74D. It was submitted that 1 should depart from the usual order as to costs because it had been-held by Boulter D.C.J. in Fletcher v. Seddon Atkinson (Australia) Pty.Ltd. (1979) 1 N.S.W.L.R. 169 that jurisdiction to award damages for breach of a condition implied by s.71 was to be vested exclusively in the Federal Court, and that his Honour's view was the only judicial pronouncement until Rogers J. in Zalai v. Col Crawford (Retail) Pty.Ltd. (1980) ATPR 42,448 decided that s.86 confers no jurisdiction on this Court to entertain proceedings of that kind, a decision with which I respectfully agree for the reasons above stated. The fact that Boulter D.C.J. had expressed a contrary view is no ground for refusing a successful party an indemnity for its costs. I would dismiss the procecdings with costs. ' . } t cert.cy that this and the $/X peleccird paces are a true cory of the Brasens, Tor vudy, aeuit herein of his Honour wa. Justice BRENNAN Associet Datedc: 4 DEC 1480 '