JUDGMENT No. CRRA ZS... . CATCHWORDS Trage Practices Act - proceeding commenced in Federal Court - whether proceeding should be transferred to the County Court Pursuant to s.36A ctices Act - jurisdiction and powers of County Court - mature of Federal Court's discretion to transfer matters to the County Court. County Court Act 13958 (Vic) 5.3, +, 35, 37, 43 Federal Court Rules 0.52 r.36A Jurisdiction of Courts (Miscellaneous Amendments) Act 1337 Practises Act 1374 s.82, "53, 8&5, 82, 85, 86A, 87 JOHN JAMES KINA IDs and NATIO AUSTRALIA B. LIMI V. No. G.449 of 1937 NORTHROP J. 8 JUNE 1988 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA ) ) VICTORIA DISTRICT REGISTRY ) V. No. G.449 of 1987 ) GENERAL DIVISION ) BETWEEN : G 3 NNA AND R Applicants and NATIONAL AUS » BANK CIMIT Respondent COURT: NORTHROP J DATE: 3 JUNE 1398 PLACE: MELBOURNE NUTE_OF OR THE COURT ORDERS THAT: 1. The proceeding herein being V. No. G.443 of 1337 be transferrad to the County Csurt sf Victoria at Warrnambool. The costs of the motion be costs in the cause. ta Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. V. No. G.443 of 1987 wees ve INTHE FEDERAL COURT OF AUSTRALIA f GENERAL DIVISION { BETWEEN OHN J. 3K AND_ANOR Applicants and N. B MI Respondent- COURT: NORTHROP J. DATE: 3 JUNE 13388 PLACE: MELBOURNE = = rie 17a REASONS FOR JUDGMENT Strangely, the applicant is moving the Court under 5.86A of the Trade Practices Act 1974 for an order that this civil proceeding be transferred to the County Court at Warrnambool, in the State of Victoria. The respondent 15 opposing the motion. The proceeding was commenced in the Federal Court on 18 November 1387. A matter for determination in the proceeding arises under Division 1 of Part V of the Trade Practices Act. At that time the legal advisors did not know that the i Misc nts ta Act 1987 had come into operation on 1 September 1987. That Act had introduced amendments to the Trade Practices Act. The effect of the amendments was to invest federal jurisdiction on State courts with respect to any matter arising under Division 1 or 1A of Part Vof the Trade ices Act in respect of which a civil proceeding is instituted by a person other than the Minister or the Trade Practices Commission and to empower the Federal Court ta transfer to a State court proceedings of that kind which had been commenced in the Federal Court for hearing and determination by the State court. AS a complementary provision, rule 356A was inserted in 0.62 of the Federal Court Rules with effect from 21 September 13987. That rule made a party liable to a reduction in the amount of costs that could be recovered where the sum recovered in the proceeding was less than $50,000.. at the hearing of the motion, counsel for the applicants informed the Court that if the legal advisors had knowm of the amendments to the Trade Fracticas Act made by the Act of 1987 the proceeding would have been commenced in the County Court, not the Federal Court. The applicants live at Warrnambool and are customers af the respondent at its Warrnambool branch. The proceeding arises out of guarantees given by the applicants to the respondent with respect to moneys advanced by the respondent to a third person. The total amount involved in the proceedings is of the order of $30,000. The applicants allege they entered into the guarantees as a result of conduct by the respondent in contravention of 5.52 of the ls Trade Practices Act. That sectiscn is within Division l of Part Vof that Act. In addition the applicants are making claims hased upon State law. In doing this, they are relying upon the accrued jurisdiction of the Federal Court. The respondent has cross-claimed basing its cross-claim on the guarantees. In addition to a claim for damages under 3.82 of the Trade Practices Act, the applicants are seeking an order under 3.87 for a declaration that the ralavant guarantee has been void ab initio as against the applicants. In addition the applicants ara seeking orders based upon State laws. The County Court 15 constituted by the County Court Act 1958 (Vic). One of its Jurisdictions 15 che jurisdiction, within 1ts jurisdictional limit of 3100,000, to hear and determine civil proceedings at law and in equit;; see 5.4. It has jurisdiction throughout the whole of Victoria and is a court of vecord; see 5.35. One of its general jurisdictions is to hear and determine actions "regardless of the type of relief sought or the subject-matter as are not by this or any other Act excluded from its jurisdiction"; see paragraph 37(1)(a). 'Action' is defined in s.3 in very wide terms and includes a claim under Division 1 of Part V of the Trade Practices Act. I have not been referred to any provision of the County Court Act or of any other Act of the Victorian Parliament excluding from the jurisdiction of the County Court an action under Division 1 of Part V of the Trade Practices Act. Section #93 of the County Court Act is of importance. [It is set out in full:- finan "49. The court or a judge shall as regards any action or matter within its or his jurisdiction for the time heing have power to grant, and shall grant, in any action or matter, such relief, redress or remedy, or combination of cemedies, either absolute or conditional, and shall have power to make any order that could be made in regard to any action or Matter, and shall in avery such action or matter give such and the like effact to every ground of defence or counter-clain, aquitable or legal, in as full and ampla a manner as might and ought to be done in the like case, by the Supreme Court." For present purposes, I am prepared to accept that jurisdiction is the authority to hear and determine matters while power is the method by which that jurisdiction. is exercised. It becomes mecessary to refer to the relevant provisions of the Trade Practices Act in operation since 1 September 1987. Part VI of the Trade Practices Act is headed "Enforcement and Remedias". Part VI comprises sections 758 to 87A inclusive. As is to be axpected From its heading, Part VI contains many provisions relating to powers. Sub-section 75B(2) was ainserted into Part VI by the Act of 1987. That sub-section is 3set out:- "(Z2) In this Part, unless the contrary intention appears- (a) a reference to the Court in relation to a matter is a reference to any court having jurisdiction in the matter; (b) a reference to the Federal Court is a reference to the Federal Court of Australia; ' ul ' and (c) a reference to a judgment is a reference to a judgment, decree or order, whether final or interlocutory.". The Act of 1987 inserted a new 5.96 to replace the former 5.86. The section confers jurisdiction on courts. The parts of 5.936 relevant to this motion are set out:- "86(1) Jurisdiction 18 conferred on the Federal Court in any matter arising under this Act in respect of which a civil proceeding has, whether hefore sr after the commencement of this section, been instituted under this Part. \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, woe with respect to any matter arising under Division Lor lAof Part V in respect of which a civil praceeding 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... to grant a remedy other than a remedy of a kind that the court is able to grant under the law of that State ... (4) The jurisdiction conferred by sub~section (1) om the Federal Court is exclusive of the jurisdiction of any other court other than the jurisdiction of the 3everal courts of the States and Territories under sub-section (2) amt the jurisdiction of the High Court under section 75 of the Constitution." The Act of 1387 inserted a new 5.86A into the Trade Practices Act. Section 86A empowers the Federal Court to transfer a matter from the Federal Court toa State or Territory court and froma State or Territory court to the Federal Court and empowers some State or Territory courts to transfer a matter to another State or Tarritory court. The parts of the section relating to the power of the fFaderal Court relevant to this motion are set out:- "86(A) (1) Where- (a) a civil proceeding institutad ... by a person ... is pending in the Federal Court; and (b) a matter for determination in the proceeding arose under Division 1 or 1A of Part Vv, the Federal Court may, subject to sub-section 2), upon the application of a party or of the Faderal Court's own motion, transfer to a court of a State ... the matter referred to in paragraph (b) and may also transfer to that court any other matter for -. determination in the proceeding. (2) The Faderal Court shall mot transfer a Matter to another court under sub-section (1) unless the scther court has power to grant the cemedias sought before the Federal Court in the matter and it appears to the Federal Court that- (a) the matter arises out of sr is ralated 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) a eeee" A number of sections in Part VI of the Trade Practices Act confer powers enabling a court to exercise the jurisdiction conferred by 5.86. Thus 3.80 enables a court, whether the Federal Court or a State court, to grant injunctions in conformity with the provisions of that section. Section 82 enables a court, whether the Federal Court or a State court, to award damages in conformity with the provisions of that section. Section 87 enables a court, "dy whether the Federal Court or a Stata court to "make such order or orders as it thinks appropriate ... (including all or any of the orders mentioned in sub-section (2) ...)" in conformity with the provisions of that section; gee sub-section 87(1). Sub-section 87(2) enumerates a number of orders that may be made. Some of the orders that ara enumerated can be summarized as follows:- (a) an order declaring the whole or any part of a contract void; {b) an order varying the terms of any contract in such manner and from such date as the court thinks f1t; and . ic) an order refusing anforcement of the terms of any contract. By the proceeding in this Court the applicants are seeking relief with respect to a matter arising under Division 1 of Part V of the Trade Practices Act. That matter is within the limits of the jurisdiction of the County Court both as to locality and subject matter. Therefore by sub-section 836(2) the County Court is investad with federat jurisdiction to hear and determine that matter. In addition, the County Court has jurisdiction to hear and determine the other matters with respect to which the applicants are seeking remedies aither because those matters arise under State law or because they come within federal jurisdiction being within the accrued jurisdiction. It is not necessary to determine which. The County Court has jurisdiction to hear and determine the cross-claim made by the respondent with respect to enforcing the guarantee. In this context, counsel for the respondent has relied upon sub-section 986(3) and has contended that the County Court does not have power to grant the remedy sought by the applicants in the matter under the Trade Practices Act. It will be recalled that in this matter, the applicants are seeking an order under s.87 of the Trade Practices Act for a declaration that the relevant guarantee has been void ab initio. Counsel contended that the County Court is an inferior court of a State. That is accepted. He contended further that the declaration sought 1s not a ramedy of a kind that the County Court is able to grant under the law of the State of Victoria and thus sub-section 36(2) does not enable the County Court to grant that declaration. This contention is not accepted. Sub-section 86(2) confers jurisdiction on the County Court to hear and determine the matter arising under 3.52 of the Trade Practices Act. It was not disputed that the County Court has power to award damages under s.82 of the Trade Practices Act in favour of the applicants if they make out their case against the respondent. A number of sections contained in Part VI confer specific power on courts to grant specified remedies; see for example 5.80 with respect to injunctions and 3.97 and in particular sub-sectionms 87(1) and (2) with respect to declarations. One of the remedies specified is that referred to in paragraph 87(2)(a), a power to declare the whole or any part of a contract to be void and, if the court thinks fit "to have been void ab initio or at all times on and after such date before the date on which the order is made as is specified in the order". Counsel for the respondent did not dispute that the County Court has power to grant unjunctions and to make declarations. Section 49 of the County Court Act makes that very clear. Counsel contended, however, that the power to make equitable declarations was limited to prospective conduct and that an equitable declaration could not be made to operate retrospectively. For present purposes, I will assume that contention to be correct. The issue is whether the jurisdiction conferred on the County Court by sub-section 86(2) to make the declaration sought is taken away by sub-section 36(3). That sub-section is a limitation imposed on the amplitude of the powers conferred om State courts by sub-section 386(2). The limitation does not apply to superior courts of a State. Thus the Supreme Court of Victoria has jurisdiction to exercise all the powers conferred by the Trade Practices Act. Under 5.49 of the County Court Act, the County Court has power to make any order that could be made by the Supreme Court. In those circumstances it would be strange 1f the County Court did not have power to make the declaration sought by the applicants. Further, the limitation contained in sub-section 86(3) applies to a remedy "other than a remedy of a kind that the court is able to grant under the law of that State", (emphasis added). The County Court has power to make declarations. It is true that a declaration that can be made under paragraph 87(2)(a) is one which cannot be made under State law, but it is of a kind that the County Court is able to grant under State law in as full and ample a manner as might and ought to be granted by the Supreme Court. The County Court has power under State law to grant injunctions and declarations. aA declaration under paragraph 37(2)(a) is a particular kind of declaration within the generic concept of declarations. Counsel for the respondent contended further that in the exercise of the discretion conferred by sub-sections 86A(1) and (2) of the Trade Practices Act, the Federal Court should not make the order sought by the applicants. There 15 a civil proceeding pending in this Court. A matter ("the federal matter") for determination in the proceeding arises under Division 1 of Part V of the Trade Practices Act. In addition, other matters ("the State matters") arise for determination in the same proceeding. Sub-section 86A(1) empowers this Court to transfer all those matters to the County Court. The power to transfer is not unfettered. For present purposes, this Court should not transfer a matter, in these proceedings the faderal matter, as well as a Stata matter, to the County Court unless "1t appéars ts the Faderai Court that ... it is in the interests of justice that the matter be determined" by the County Court; see paragraph B6A(2)(b). ~ ll - One of the State matters concerns a claim by the applicants that the respondent was in breach of a fiduciary duty owed to the applicants arising from the fact that the respondent, with knowledge of the adverse financial position of the third person for whom the guarantees wera ta he given, failed to disclose that adverse financial position when asked by the applicants whether the resporident knew anything adverse about the third person's financial position. As a result of this non-disclosure, the applicants claim they gave the guarantees the subject of the proceedings. Counsel for the respondent contended that the nature of the duty giving rise to the claim to have the guarantee set aside based upon the unfair or unconscionable conduct of the person to whom the guarantee was given gave rise to complex and difficult questions of fact and of law. He referred to the dec2zsions ef the High Court in The Commercial Bank of Australia Ltd. v Amadio (1983) 151 C.L.R. 447 and Behan v Obelon Pty. Ctd. (1985) 157 C.L.R. 326. He submitted that for these reasons it was more appropriate that this matter should be determined by a superior court rather than the County Court and thus it would not be in the interests of justice that this matter be determined in the County Court; see paragraph 36A(2)(b) of the Trade Practices Act. He argued therefore that the Court could not grant the motion sought by the applicants. It must be remembered that this matter is a State matter normally to be determined by a State Court. If the Matter came before the County Court, any appeal would be to the Supreme Court and thereafter, by special leave, ta the - 12 - High Court. The matter could be determined by the Federal Court pursuant to its accrued jurisdiction only. Any appeal would be to a Full Court of the Federal Court and thereafter, by special leave, to the High Court. In these circumstances, thera 1s much to be said for the view that the matter should, im the interests af justice, be datermined in State courts and, in garticular, on the Facts of this matter, in the County Court. This approach avoids the undesirable consideration of the ecelative merits oF ogroaceduras an different courts. Further, the existence of 0.62 r.36A of the Faderal Court Rules supports the view that since the amount involved in this proceeding 15 less than 350,000, 1t 215 in (the interests of justice, that this matter, as well as the other matters arising in this proceeding, he determined by the County Court. Counsel For the respondent indicated that the raspondent would not seek to rely upon 0.62 r.i6A 1f the applicants succeeded in their claims. That indication, however, of itself is not sufficient to compel the Court cto otherwise order under that rule. The policy of the Trade Fractizses Act illustrated by the amendments made by the Act of 1997, together with the policy behind the making of 0.62 ¢.56A makes 1t clear that, prima facie, the matters raised by this proceeding should, in the interests of justice, be determined by the County Court. It would need a strong case to show that the interests of justice cequire litigants to be made liable to costs at a -13- higher rate for the determination of matters which are within the jurisdiction of a court of record of the standing of the County Court and where the liability for costs are at a lower cate than in the Federal Court. The proceeding could be heard by the County Court at Warrnambool later this year. The witnesses likely to be called to give evidence in the proceeding live at Warrnambool. All factors indicate that in the interests of justice, the proceeding should he heard by a court at Warrnambool. The County Court is the appropriate court to determine all matters raised in the proceeding. In all the circumstances, it appears to me that it is in the interests of justice that the federal matter as well as the State matters should be determined by the County Court at Warrnambool. Accordingly the motion will be granted. The costs of the motion should be costs in the cause. Since writing these reasons, I have been referred to Ewins v Buderim Imports Pty. Ltd. (1987) 76 A.L.R. 157. In that case, Wilcox J. expressed the opinion that the amendments made to the Trad ractices Act by the Act of 1987 conferred upon the Supreme Court of New South Wales all the powers theretofore conferred by s.87 only on the Federal Court and in particular the powers to make the declarations specified in 3.87. With respect, I agree with the opinion expressed by Wilcox J., and that opinion supports the view - 14 - expressed above that having regard to the provisions of sub-section 758(2), s.87 "enables a court whether the Federal Court or a State court to" make such order or orders as 1¢ thinks appropriate ... (axcluding all or any of the orders mentioned in sub-section (2) ...)" in conformity with the provisions of that section; see sub-section 37(1)." w. 2") het da and the thirteen (13) iusdisg pages ure a true cony of the r@a: na for judgment herein of the 'sowrabis oir. Juctica RM Noch eee rarer P UIULOr Associate lated? S dune 1%22 A SP Title of Action File Number Dates of Hearing Judgment Delivered Counsel For Applicant Solicitors for Applicant Counsel for Respondent Solicitors for Respondent Signed . Sar. Ff. Anion Date 8 June 1988 ATTACHMENT A : nn James Ki (=f ig Applicants and National Australia Bank Limited Respondent : V. No. G.449 of 1987 : 28 April 1988 : 8 June 1388 Mr A. D. Vass12 : OD. Madden & Co. - : Mr G. aA. aA. Nettle : Mallasons Stephen Jaques