COURTS —- trade practices - CATCHWORDS jurisdiction - cross-vesting ~ related proceedings in Supreme Court of state and in Federal Court - motion to transfer Federal Court proceedings to State Supreme Court ~ State Court power to award remedies under Part VI of Trade Practices Act - anterests of justice - legitimacy of accrued jurisdiction - onus on proponent of transfer - relevant considerations - action involving claims against legal practitioners - within jurisdiction of both courts - possible reflection on professional conduct - professional conduct historically regulated by Supreme Court - more appropriate forum - transfer ordered. Trade Practices Act 1974 s.52, s.86A, s.87 Jurisdiction of Courts (Miscellaneous Amendments Act 1987 Ewins v Buderim Imports Pty Ltd (unrep. Wilcox J. 2 September 1987) POVEY CORPORATION LIMITED and ST ANDREW PROPERTY HOLDINGS PTY LTD v GULL PETROLEUM (W.A.) PTY LTD, FREDERICK WILLIAM RAE, RAESIDE PTY LTD, BORAN PTY LTD, K. & W. SALES AND DISTRIBUTION PTy LTD and ROBINSON COX (A FIRM) NO. WAG 105 OF 1987 FRENCH J. PERTH 24 December 1987 'Wdlontdd vilvuisny LES #0 14uN09 Iwusas4 8861 ONV 8} GSA. L fa JUDGMENT No. 792/87... fae ee oe op rome pee weeps wen IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION BETWEEN: NO. WAG 105 OF 1987 POVEY CORPORATION LIMITED and ST ANDREW PROPERTY HOLDINGS PTY LTD Applicants and GULL PETROLEUM (W.A.) PTY LTD Pirst Respondent and FREDERICK WILLIAM RAE Second Respondent and RAESIDE PTY LTD Third Respondent and BORAN PTY LTD Fourth Respondent and K. & W. SALES AND DISTRIBUTION PTY LTD Fifth Respondent and ROBINSON COX (A FIRM) Sixth Respondent eevee ee ee te ee ee ree ee MINUTE OF ORDER JUDGE MAKING ORDER: FRENCH J. DATE OF ORDER: WHERE MADE: PERTH THE COURT ORDERS THAT: On the respondents' motion dated 2 October 1987:- As to the applicant's motion filed 25 September 1987 to restrain the second to fifth respondents from continuing in the Supreme Court:- The matter be transferred to the Supreme Court of Western Australia. 24 DECEMBER 1987 Costs of the motion be in the cause. The motion be dismissed. No order as to costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. Seolitinente saeeieii nee ee IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION BETWEEN: CORAM: FRENCH J. 24 December 1987 NO. WAG 105 OF 1987 POVEY CORPORATION LIMITED and ST ANDREW PROPERTY HOLDINGS PTY LTD Applicants and GULL PETROLEUM (W.A.) PTY LTD First Respondent and FREDERICK WILLIAM RAE Second Respondent and RAESIDE PTY LTD Third Respondent and BORAN PTY LTD Fourth Respondent and K. & W. SALES AND DISTRIBUTION PTY LTD Fifth Respondent and ROBINSON COX (A FIRM) Sixth Respondent mon ee re ee ee x SR te ep ee eee T i es, 2. REASONS FOR JUDGMENT On 17 June 1987 Heads of Agreement were signed for the sale of the petroleum retailing business known as "Gull Petroleum" for a sum of $15,500,000.00. The vendors were Gull Petroleum (WA) Pty Ltd and associated parties. The purchasers were Povey Corporation Limited and St. Andrew Property Holdings Pty Ltd, Formal contracts said to embody the terms of the Heads of Agreement were executed on 24 August. Settlement was to be effected on 31 August, but did not proceed. Notices of Default were sent by the vendors to the purchasers' solicitors. Correspondence followed between the solicitors for the parties and on 15 September the vendors' solicitors sent Notices of Termination of the contracts. On the following day the vendors commenced actions number 2356 and 2357 of 1987 in the Supreme Court of Western Australia claiming declarations that the agreements have been validly terminated and the deposits forfeited. On 18 September 1987 the vendors instituted proceedings in this Court under the Trade Practices Act 1974 in relation to a letter sent on behalf of Povey Corporation Limited to the Perth Stock Exchange. In the letter Povey's solicitors said their clients had been induced to enter the agreements by false representations. spr ae eer oo . t we nn ne rr re or - 3. On 18 September interlocutory relief was granted in respect of the further publication of the letter and any further accusation of misrepresentation on the part of the vendors. On 21 September, Povey Corporation Limited and St Andrew Property Holdings Pty Ltd commenced these proceedings. By the amended statement of claim they allege that they were induced to enter unto the agreements by misstatements on the part of the vendors. The misstatements are said to have constituted misleading and deceptive conduct in contravention of s.52 of the Trade Practices Act 1974 and to have caused loss thereby giving rise to a cause of action under s.82. The applicants seek damages and an order' under para.87(2)(a) of the Act declaring the agreements void ab initio. Breaches of various conditions of the contracts are also pleaded and are said to have given rise to loss and a right to rescind. Declarations that the contracts have been properly rescinded and damages are also claimed. The sixth respondent 1s a firm of solicitors which acted for both the applicants and the first to fifth respondents in connection with the acquisition of the Gull business. It is said that it was negligent and in breach of its fiduciary duties to the cnet "FT wot 4. applicants in connection with the transaction. It 1s also pleaded that the firm acted notwithstanding a clear conflict of interest between the parties. Neirther these proceedings nor those instituted by the vendors in the Supreme Court have progressed beyond the filing of statements of claim. The first to fifth respondents move for an order transferring the proceedings to the Supreme Court. The applicant in the meantime seeks an order restraining the first to fifth respondents from further prosecuting the two Supreme Court actions pending the outcome of the present proceedings. It is necessary first to consider the statutory source of the power which the Court is called upon to invoke. Statutory Framework The power of this Court to transfer a matter to another Court of a State or Territory is to be found in s.86A of the Trade Practices Act:- ""86A(1) Where - (a) a civil proceeding instituted (whether before or after the commencement of this section) by a person other than the Minister or the Commission is pending in the Federal Court; and (b) a matter for determination in the proceeding arose under Division 1 or 1A of Part V, is conditioned upon the receiving court having power to grant the 5. the Federal Court may, subject to sub-section (2), upon the application of a party or of the Federal Court's own motion, transfer to a court of a State or Territory the matter referred to in paragraph (b) and may also transfer to that court any other matter for determination in the proceeding. (2) The Federal Court shall not transfer a matter to another court under sub-section (1) unless the other court has power to grant the remedies sought before the Federal Court in the matter and it appears to the Federal Court that - (a) the matter arises out of or is related to a proceeding that is pending in the other court; or (b) it is otherwise in the interests of justice that the matter be determined by the other court. (3) Where the Federal Court transfers a matter to another court under sub-section (1) - (a) further proceedings in the matter shall be as directed by the other court; and (b) the judgment of the other court in the matter is enforceable throughout Australia and the external Territories as if 1t were a judgment of the Federal Court." As may be seen from sub-s.86A(2) the power to transfer remedies sought before the Federal Court in the matter. several courts of the States with respect to matters arising under Divisions 1 or 1A of Part VY of the Trade Practices Act and is so Jurisdiction is invested in the Federal Court and in the invested by s.86 which provides:- "86(1) Jurisdiction 1s conferred on the Federal Court in any matter arising under this Act in respect of which a civil proceeding has, whether before or after the commencement of this section, been instituted under this Part. a ee eee a 6. (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 Division 1 or 1A 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 sub-section (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. (4) The jurisdiction conferred by sub-section (1) on the Federal Court 1s exclusive of the jurisdiction of any other court other than the jurisdiction of the several courts of the States and Territories under sub-section (2) and the jurisdiction of the High Court under section 75 of the Constitution." Section 86 in its present form and s.86A have come into Operation on 1 September 1987 as a result of the Jurisdiction of Courts (Miscellaneous) Amendments Act 1987. That Act forms part of the recently implemented scheme for the cross-vesting of jurisdiction between Federal and State Courts. Its purpose was explained by the Attorney-General in his Second Reading Speech:- "Divisions 1 and 1A of Part V of the Trade Practices Act deal with areas of consumer protection, such as misleading or deceptive conduct, bait advertising, pyramid selling and product safety standards. Examples of the diverse types of cases that arise under these divisions are disputes with motor traders, unsolicited advertising and unsafe consumer products. At present the Federal Court has exclusive jurisdiction in the area. However, the community's best interests are not necessarily served by this. Many complaints involve relatively small amounts of money or are disputes of Te ee ee ee 7. local character. The general interest, and that of the parties, may be better served by these matters being heard in a State court rather than the Federal Court. The Bill therefore confers concurrent jurisdiction on State and Territory courts within the limits of their respective jurisdictions. The Bill enables the Federal Court to transfer a matter to an appropriate State or Territory court and for an inferior court in one State or Territory to transfer a matter to an inferior court in another." It might be thought from the preceding comment that the intention of the legislation is to allow for the transfer to State Courts of those matters arising under Part V of the Act which "involve relatively small amounts of money or are disputes of a local character". However the range of considerations that may be brought to bear on the question whether a matter can be transferred, 15 as wide as "the interests of justice" referred to in para.86A(2)(b). Even after a determination that transfer is in the interests of justice the Court has a discretion under sub-s.86A(1). Reference should also be made to sub-s.75B(2) which, in relation to Part VI of the Act provides:- "75B(2) In this Part, unless the contrary intention appears — (a) a reference to the Court in relation to a matter 1s a reference to any court having jurisdiction in the matter; Salas epree — 8. Section 87 refers to various orders which may be made by "the Court", a term to be understood in the light of sub-s.75B(2). The Exercise of the Discretion The Court's power to effect a transfer 1s conditioned by sub-s.86A(2) on the fulfilment of the following requirements:- (i) That the other court has power to grant' the remedies sought before the Federal Court in the INatter; (ii) That the matter arises out of or in relation to a proceeding that is pending in the Court; and (11) That it is otherwise in the interests of justice that the matter be determined in the Supreme Court. As to the first condition, it was contended that the Supreme Court lacked the power to award relief under s.87. Any Court which has jurisdiction in a matter in which relief may be given under s.87, may exercise the powers conferred by that section. So much can be seen from a reading of s.87 in the light of para.75B(2)(a). The Supreme Court has the relevant jurisdiction by virtue of sub-section 86(2). It may therefore award the remedies for which s.87 provides. I am fortified in this view by the similar conclusion arrived at by Wilcox J. in Ewins v Buderim Imports Pty Ltd (unrep. Wilcox J. 2 September 1987). Sa ee re eee ee yor + woe Bt ers pee ener wee sence oy ot 9. So far as the award of damages under s.82 1s concerned, I am satisfied that at least in the case of a superior court, the grant of jurisdiction carries with 1t the power to award damages under that section. So far as the other relief claimed is concerned, I am satisfied that the Supreme Court in the exercise of 1ts primary jurisdiction has power to grant the remedies sought. The second condition of the transfer power under sub-s.86A(2) 1s that the matter in the Federal Court arises out of or is related to a proceeding pending in the other court. That condition is satisfied in this case. Whatever the outcome of the present motion, it 1S plain that the proceedings are really two faces of the one coin and should be heard and disposed of together. The third condition is that it is otherwise in the interests of justice that the matter be determined by the Supreme Court. The class of issues that may arise under this head 1s not closed. Such questions as the respective stages reached by the proceedings in each court will be relevant. If a matter be ready for trial in the Federal Court and the proceedings in the State Court only just commenced, that would ordinarily be a factor welghing against transfer. te eae pomee tpg ee = — Steet salted 10. The respective state of court lists and workload must also, I think, be relevant, although nothing has been said in this case to indicate any significant difference in that regard. In the present case the proceedings in each court are at the same stage, that 1s to say, statements of claim have been filed. Apart From the case where the federal claim is a trivial or insubstantial component of the applicant's case, I do not think 1t helpful to attempt to address such questions as whether proceedings the subject of a transfer motion, may be seen as "substantially contractual" or "substantially tortious" in character. When jurisdiction is conferred upon this Court in respect of a "matter" 1t 1s given by federal law authority to adjudicate upon the entire controversy, including the common law or other claims that fall within the boundary of the matter. This 1s called an "accrued jurisdiction" and sometimes a "pendent jurisdiction". To the extent that those terms suggest that the common law or other claims forming part of the matter are somehow less than legitimate appendages of the Court's jurisdiction, they mislead. The fullness of the amplitude of the court's jurisdiction in respect of the matters entrusted to 1t, is derived from statutes which must be read in the light of the constitutional power the exercise of which they express. ae eee ll. Being satisfied that the federal claims are not trivial or insubstantial, I am not concerned with any attempt to assess the relative importance of the federal and common law elements of these proceedings. Nor am I swayed by the fact that some of the parties in the Supreme Court proceedings differ From those in the proceedings un the Federal Court. In my opinion, with appropriate directions, the matter pending in the Supreme Court and that in this Court, could be dealt with in such a way as to minimise duplication. Whether the procedure used would involve a consolidation or concurrent or consecutive hearings, is a question for the court concerned. It is, nevertheless, relevant and a factor in favour of retention of the proceedings commenced in this Court that they address a wider range of issues and parties than those pending in the Supreme Court. The language of para.86A(2)(b) suggests that the reference to the "interests of justice" is not merely the expression of an evenly balanced discretion. For unless it is "otherwise in the interests of justice" that the matter be determined by the Supreme Court, the Federal Court has no power to order a transfer. Sone eae aaa sera ce tr ee : ' . 12. In my opinion, this requires the proponent of transfer to demonstrate some good reason why it should be ordered. The mere fact that related proceedings are pending in the other Court, cannot be such a reason, for the transfer must be ."otherwise in the interests of justice". (emphasis added) To that extent the section discloses a predisposition in favour of this Court dealing with those proceedings commenced in it which raise claims under Division 1] or 1A of Part V of the Act. Such an approach is supported to a degree by the rather narrow view of the operation of the transfer provisions expressed in the Second Reading Speech. All other things being equal, I would have been inclined to refuse the motion for transfer. There is however another factor in this case. The applicants have joined as sixth respondent a firm of solicitors who previously acted for them and for the other respondents. They raise against them serious allegations of breach of fiduciary duty and negligence. They allege that the firm continued to act in the face of a clear conflict of interest between its clients. These allegations may reflect upon the propriety of the conduct of members of the firm in their capacity as legal practitioners. To onpt enews pom moe me cneee n oe $ 13. It 1S the Supreme Court which in this State has historically and traditionally exercised judicial control over the professional conduct and standards of practitioners admitted here. It 18 the Pull Court of the Supreme Court which regulates admission to practice and exercises the ultimate Gisciplinary power of striking a practitioner off the roll. It is to the Full Court that a practitioner subject to any lesser disciplinary penalty umposed by the Barristers' Board may appeal. I am satisfied that this Court could, in the exercise of 1ts accrued jurisdiction, deal with the claim against' the solicitors. In my opinion, however, the Supreme Court of Western Australia 1s the tribunal most fitted to do so, particularly having regard to the possible professional or disciplinary consequences of a finding adverse to them. For that reason, 1n my Opinion, interests of justice are best served by the transfer of the proceedings to the Supreme Court and in the exercise of my discretion I order that they be so transferred I certify that this and the preceding thirteen (13) pages are a true copy of the Reasons for Judgement of His Honour Justice French. Associate: (pede vtirke Date: QA Bveanbes 987. oe ee er ee womens re po