FEDERAL COURT OF AUSTRALIA Sagacious Legal Pty Ltd v Lumley General Insurance Limited t/as Lumley Special Vehicles [2009] FCA 763 PRACTICE AND PROCEDURE — transfer of proceedings — opposition of parties — Court acting on its own motion Federal Court of Australia Act 1976 (Cth), s 32AB Insurance Contracts Act 1984 (Cth), ss 13, 21, 22, 57 Judiciary Act 1903 (Cth) s 39B(1A)(c) Federal Court Rules 1979 (Cth),O 82 r 7 Assad v Minister for Immigration and Citizenship [2008] FCA 1039, applied Beetham v Cortra Pty Ltd [2003] FCA 150, cited Commercial Union Assurance Co of Australia Ltd v Beard [1999] NSWCA 422, 47 NSWLR 735, cited Garage Wholesalers Pty Ltd v Engineering Software Solutions Pty Ltd [2009] FCA 361, cited Hong Bo Su v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 1355, cited Kurniadi v Loh [2002] FCA 1021, 193 ALR 253, cited Melville v Macquarie University [2006] FCA 1761, cited Nadu v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCA 571, cited Ozluk v Australian Turkish & Kurdish Community Services Co-Operative Ltd [2008] FCA 352, cited Rahman v Dayeh [2006] FCA 1362, applied Rixon v Business Parcel Express Pty Ltd [2006] FCA 969, cited Sheikholeslami v University of New South Wales [2006] FCA 712, cited SAGACIOUS LEGAL PTY LTD (ACN 097 910 417) v LUMLEY GENERAL INSURANCE LIMITED (ACN 000 036 279) T/AS LUMLEY SPECIAL VEHICLES NSD 509 of 2009 FLICK J 17 July 2009 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NSW DISTRICT REGISTRY GENERAL DIVISION NSD 509 of 2009 BETWEEN: SAGACIOUS LEGAL PTY LTD (ACN 097 910 417) Applicant AND: LUMLEY GENERAL INSURANCE LIMITED (ACN 000 036 279) T/AS LUMLEY SPECIAL VEHICLES Respondent JUDGE: FLICK J DATE OF ORDER: 17 July 2009 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The proceeding be transferred to the Federal Magistrates Court of Australia pursuant to s 32AB of the Federal Court of Australia Act 1976 (Cth). 2. Any costs incurred to date in the proceeding in this Court be costs in the cause on their transfer to the Federal Magistrates Court of Australia. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of orders can be located using eSearch on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA NSW DISTRICT REGISTRY GENERAL DIVISION NSD 509 of 2009 BETWEEN: SAGACIOUS LEGAL PTY LTD (ACN 097 910 417) Applicant AND: LUMLEY GENERAL INSURANCE LIMITED (ACN 000 036 279) T/AS LUMLEY SPECIAL VEHICLES Respondent JUDGE: FLICK J DATE: 17 July 2009 PLACE: SYDNEY REASONS FOR JUDGMENT (Revised from Transcript) 1 On 1 June 2009 the Applicant commenced a proceeding in this Court by way of an Application accompanied by a Statement of Claim. 2 The Applicant seeks damages, interest pursuant to s 57 of the Insurance Contracts Act 1984 (Cth) (the 1984 Act) and costs. The Applicant is apparently the owner of a motor vehicle which is said to have been insured by the Respondent. The vehicle was damaged to the extent that it was "written off", a claim was made on the insurance policy and that claim was refused. Neither the Application nor the Statement of Claim specify the amount claimed pursuant to the insurance policy nor the quantum of such loss or damage as is now claimed. 3 It is considered that the proceeding should be transferred pursuant to s 32AB of the Federal Court of Australia Act 1976 (Cth) (the 1976 Act) to the Federal Magistrates Court. That section provides as follows: Discretionary transfer of proceedings to the Federal Magistrates Court (1) If a proceeding is pending in the Court, the Court may, by order, transfer the proceeding from the Court to the Federal Magistrates Court. (2) The Court may transfer a proceeding under subsection (1): (a) on the application of a party to the proceeding; or (b) on its own initiative. (3) The Rules of Court may make provision in relation to transfers of proceedings to the Federal Magistrates Court under subsection (1). (4) In particular, the Rules of Court may set out factors that are to be taken into account by the Court in deciding whether to transfer a proceeding to the Federal Magistrates Court under subsection (1). (5) Before Rules of Court are made for the purposes of subsection (3) or (4), the Court must consult the Federal Magistrates Court. (6) In deciding whether to transfer a proceeding to the Federal Magistrates Court under subsection (1), the Court must have regard to: (a) any Rules of Court made for the purposes of subsection (4); and (b) whether proceedings in respect of an associated matter are pending in the Federal Magistrates Court; and (c) whether the resources of the Federal Magistrates Court are sufficient to hear and determine the proceeding; and (d) the interests of the administration of justice. (7) If an order is made under subsection (1), the Court may make such orders as it considers necessary pending the disposal of the proceeding by the Federal Magistrates Court. (8) An appeal does not lie from a decision of the Court in relation to the transfer of a proceeding under subsection (1). (8A) The Federal Magistrates Court has jurisdiction in a matter that: (a) is the subject of a proceeding transferred to the court under this section; and (b) is a matter in which the court does not have jurisdiction apart from this subsection. To avoid doubt, the court's jurisdiction under this subsection is not subject to limits set by another provision. (9) The reference in subsection (1) to a proceeding pending in the Court includes a reference to a proceeding that was instituted in contravention of section 32AA. (10) This section does not apply to proceedings of a kind specified in the regulations. 4 The power to make an order tansferring a proceeding to the Federal Magistrates Court is a discretionary power (s 32AB(1)) which may be exercised upon the Court's own initiative (s 32AB(2)(b)). It is thus a power which may be exercised even though an applicant may oppose such an order being made: e.g. Rahman v Dayeh [2006] FCA 1362. But where the parties consent to the making of such an order, Jacobson J has observed that such consent is "decisive": Rixon v Business Parcel Express Pty Ltd [2006] FCA 969 at [3]. 5 In addition to those matters set forth in s 32AB(6) to which the Court "must have regard", O 82 r 7 of the Federal Court Rules 1979 (Cth) provides a further non-exhaustive list of those factors to be taken into account when exercising the discretion. Rule 7 provides as follows: Factors to be considered In deciding whether to transfer a proceeding or an appeal to the Federal Magistrates Court, factors that the Court or a Judge may take into account, in addition to the factors to which the Court or the Judge is required to have regard under subsection 32AB (6) of the Act or subsection 44AA (7) of the Tribunal Act, include: (a) whether the proceeding or appeal is likely to involve questions of general importance, such that it would be desirable for there to be a decision of the Federal Court on one or more of the points in issue; (b) whether, if the proceeding or appeal is transferred, it is, in the opinion of the Court or the Judge, likely to be heard and determined at less cost and more convenience to the parties than if the proceeding or appeal is not transferred; (c) whether the proceeding or appeal is, in the opinion of the Court or the Judge, likely to be heard and determined earlier in the Federal Magistrates Court; (d) the wishes of the parties. 6 The power conferred by s 32AB has been exercised on a number of occasions and in diverse situations. In Garage Wholesalers Pty Ltd v Engineering Software Solutions Pty Ltd [2009] FCA 361, McKerracher J transferred a proceeding alleging a contravention of s 52 of the Trade Practices Act 1974 (Cth). His Honour considered that the proceeding involved a claim for a moderate amount and that it was likely that it could be dealt with more expeditiously and less formally in the Federal Magistrates Court. See also Kurniadi v Loh [2002] FCA 1021, 193 ALR 253. A further instance is provided by Ozluk v Australian Turkish & Kurdish Community Services Co-Operative Ltd [2008] FCA 352 where Graham J transferred an application brought pursuant to s 46PO of the Human Rights and Equal Opportunity Commission Act 1986 (Cth). See also Beetham v Cortra Pty Ltd [2003] FCA 150. In Melville v Macquarie University [2006] FCA 1761 Madgwick J transferred an application brought under the Workplace Relations Act 1996 (Cth) for unlawful termination of employment. See also Sheikholeslami v University of New South Wales [2006] FCA 712; Rixon v Business Parcell Express Pty Ltd [2006] FCA 969. Applications arising under the Migration Act 1958 (Cth) have also been the subject of orders made pursuant to s 32AB: Nadu v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCA 571; Hong Bo Su v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 1355. 7 These are but instances of the circumstances in which the discretionary power may be exercised. That discretion, however, is relevantly confined by s 32AB(6) and O 82 r 7. Although r 7 identifies "factors that the Court or a Judge may take into account", s 32AB(4) provides that "the Rules of Court may set out factors that are to be taken into account…". But the discretion is otherwise unconfined, although it remains a discretionary power to be exercised judicially and by reference to the facts and circumstances of each individual case which comes before the Court. 8 The prospect of transferring the proceeding to the Federal Magistrates Court was canvassed with the parties when the matter first came before the Court on 30 June 2009. The matter was stood over to this morning to permit the parties an opportunity to advance such further submissions as were considered appropriate. Yesterday, on 16 July 2009, the Applicant provided a detailed outline of written submissions addressing those issues canvassed on 30 June and, in particular, reasons opposing any transfer. The adjournment has also permitted the filing of a Defence to the Statement of Claim. 9 The basis upon which this Court's jurisdiction was initially invoked was not self-evident, other than perhaps the reference in the Application as filed to the claim for interest pursuant to s 57 of the 1984 Act. Reference was also made in the Statement of Claim to an agreement to indemnify the Applicant, and to the Particulars that state that the insurance policy was "express and implied" and "to the extent that it was implied, its terms were implied by the Insurance Contracts Act 1984 (Cth)". Why the claim was not commenced in some competent State Court was not the subject of submissions. 10 The written outline of submissions filed subsequent to the filing of the Application and the Statement of Claim seeks to support the contention that the jurisdiction of the Court was properly invoked and reliance is now expressly placed upon s 39B(1A)(c) of the Judiciary Act 1903 (Cth) which provides as follows: The original jurisdiction of the Federal Court of Australia also includes jurisdiction in any matter: (a) …; or (b) …; or (c) arising under any laws made by the Parliament, other than a matter in respect of which a criminal prosecution is instituted or any other criminal matter. Although not expressly identified in the outline of submissions, the "laws made by the Parliament" to which reference is made were identified in oral submissions this morning as being the Insurance Contracts Act 1984 (Cth) and, in particular, ss 13, 21, 28 and 57 of that Act. 11 But doubt as to whether this Court's jurisdiction has been properly invoked need not presently be resolved because the power to transfer a proceeding exists even where a question arises as to jurisdiction: cf Assad v Minister for Immigration and Citizenship [2008] FCA 1039. Tamberlin J there concluded: [21] I note that during argument as to whether the Court ought to transfer the matter to the Federal Magistrates Court, a question arose as to whether this Court has power to remit a "proceeding" to the Federal Magistrates Court where this Court does not have jurisdiction due to the absence of a federal "matter". In my view, the expression "proceeding" in s 32AB of the Federal Court of Australia Act 1976 (Cth) is distinct from the expression "matter" (as used in s 39B(1) of the Judiciary Act 1903 (Cth)) and is sufficiently wide to encompass the present dispute between the parties. I therefore consider that the Court has power to, and should, transfer the proceeding notwithstanding any doubt which may exist as to its jurisdiction to hear and determine the application. 12 Having considered the factors set forth in s 32AB(6), O 82 r 7, and the submissions made both in writing and orally, it is considered that the present proceeding should be transferred to the Federal Magistrates Court. What further orders or directions as that Court may hereafter make is a matter for that Court to determine. No submission was advanced that a referral of a proceeding pursuant to s 32AB to the Federal Magistrates Court can in any way constrain the manner in which that Court thereafter itself deals with the proceeding. 13 Notwithstanding the fact that the Applicant does not wish for the proceeding to be transferred, it is considered that the case essentially involves a motor vehicle accident claim upon an insurance policy. That claim can be expeditiously resolved in the Federal Magistrates Court. As was stated by Gyles J in Rahman v Dayeh at [3]: ... It has been put that the Federal Magistrates Court is an inferior court and that, even if it has jurisdiction, it is best exercised by the Federal Court as a superior court. Federal Magistrates are Federal judicial officers governed by Ch III of the Constitution although, in a sense, judges of an inferior court. Both the qualifications for appointment and the characteristics of those individuals who have been appointed, fit them to undertake jurisdiction which might not previously have been thought appropriate. Even though I must pay regard to the opposition of the applicant, in one sense the applicant may be gaining another level of appeal to this Court. Although it is not certain whether the proceeding will be heard at an earlier point of time in the Federal Magistrates Court than in this Court, there is no reason why it could not be heard as expeditiously as that Court considers appropriate. Such legal costs as will be incurred, it is to be expected, will be less — or at least no more — than those that would be incurred in this Court. The Respondent insurer this morning adopted a "neutral stance" as to whether the proceeding should be transferred. 14 Notwithstanding the careful written submissions advanced by Counsel for the Applicant, it is not considered that the proceeding involves any point of general importance, let alone a point which should be resolved by a single judge of this Court — at least initially. 15 If attention is confined to the Application and the Statement of Claim, the only two "federal aspects" of the claim there advanced are: · the claim for interest pursuant to s 57 of the 1984 Act; and · the Particulars provided as to a possible implied term of the policy. Neither of those matters, nor any other aspect of the Statement of Claim, is considered to raise any point of general importance. Indeed, it is not understood that Counsel for the Applicant sought to contend otherwise. Whether or not any term is to be implied may possibly depend upon a resolution of disputed facts which, it is considered, are best resolved before a Federal Magistrate. 16 Those points of general importance upon which Counsel for the Applicant sought to rely were to be found, so it was contended, not in the Statement of Claim but rather in the Defence — a document not before the Court when the question of possible transfer to the Federal Magistrates Court was first raised. That Defence, so it was contended, raised a number of "complicated points", including: · the application of s 21(2)(c) of the 1984 Act and "the circumstances in which information contained in an insurer's files is … a matter which is known to the insurer"; · the circumstances in which a proposal form can be looked at in isolation; · whether s 28(3) of the 1984 Act allows the Respondent to reduce its liability to "nothing", as is alleged; · the proper construction and scope of s 37 of the Road Transport (Safety and Traffic Management) Act 1999 (NSW); and · the admissibility or discretionary exclusion of material. A further matter relied upon, being a matter which is intended to be raised in a Reply yet to be filed, is: · the applicability of s 13 of the 1984 Act, being that provision expressly stating that a "contract of insurance is a contract based on the utmost good faith …". 17 For present purposes it may be accepted that each of these issues may well be raised during the course of the proceeding. None of the "complicated points", however, are such that they cannot be resolved by a Federal Magistrate. As was properly recognised by Counsel for the Applicant, assistance has been provided by other courts as to the manner in which at least some of the statutory provisions in question are to be applied: e.g. Commercial Union Assurance Co of Australia Ltd v Beard [1999] NSWCA 422, 47 NSWLR 735. But there remain difficult issues of statutory construction which are yet to be resolved — or so it was contended by the Applicant. There was said to be "contrary views" expressed by different superior courts. But the Federal Magistrates Court, it should be recognised, routinely confronts and has to interpret a myriad of complex statutory provisions and routinely has to resolve difficult questions of evidence and law. That quite frequently is the nature of the jurisdiction entrusted to that Court. 18 Not surprisingly, Counsel for the Applicant did not refer in his outline of written submissions to the Defence pleading such further facts as: · the non-disclosure of convictions for offences other than for "not wearing a seatbelt"; · the non-disclosure of convictions for driving with more than the prescribed concentration of alcohol; and · the driving of the vehicle the subject of the claim by a driver "under the influence of intoxicating liquor". It is envisaged by the insurer at least that it will be necessary to issue subpoenas and to obtain discovery. The insurer further contends that a significant aspect of its case will be the question as to whether liability can be denied simply upon the basis that the driver of the vehicle was intoxicated at the time of the accident. The insurer envisages that relevant to that part of its case there will be the need to call evidence from police officers, ambulance officers and possibly evidence from those in the emergency department of the hospital to which the driver was taken after the accident. If this be the manner in which the claim is ultimately resolved, the only "complicated point" that may have to be resolved may be confined to s 37 of the New South Wales Act. 19 Even though it may be accepted that points of general importance may emerge from the most mundane or apparently simple of cases, it is considered that the present proceeding remains a claim made upon an insurance policy in respect to a motor vehicle accident. Even if the jurisdiction of this Court has been properly invoked, such claims only invite inquiry as to whether they should be transferred to the Federal Magistrates Court. The potential importance to the present parties of such provisions as ss 13, 21 and 28 of the Insurance Contracts Act 1984 (Cth) may also be accepted. The application of such provisions, however, will in all likelihood largely depend upon the facts and circumstances to which they are to be applied. As was recognised by both the Applicant and the Respondent, and depending upon how the facts are ultimately to be resolved, one or other of the "complicated points" may not finally emerge for resolution. And such importance as may emerge from the application of those statutory provisions as may extend beyond the interests of the present parties (if any), it is considered, is no reason why it is not appropriate to transfer the proceeding to the Federal Magistrates Court. 20 It was further submitted on behalf of the Applicant that "it would be a curious result that at the same time the Court is seeking to expand and encourage its general jurisdiction as a Commercial court that an interesting case involving some complexities within its original jurisdiction is transferred". That is a submission without substance. This Court exercises such jurisdiction as is entrusted to it and may exercise in an appropriate case such powers as have been conferred, including the power conferred by s 32AB of the 1976 Act. This is an appropriate case in which to exercise that power. This Court should not "encourage" cases to be commenced in this Court simply because they may have some "commercial" aspect. It remains a matter for an applicant to commence such proceedings as may be advised and in such forums as are considered appropriate. The fate of any proceeding thereafter remains a matter for the parties — and the Court — to address. It was not understood that Counsel for the Applicant sought to contend that this Court should "encourage" cases to be brought before it which should be properly and appropriately resolved in some other forum — be it the Federal Magistrates Court or some State court. The responsibility of this Court is to exercise such jurisdiction as is entrusted to it in accordance with law. What jurisdiction is entrusted to it, and the powers with which it is clothed, are matters for the legislature. But the manner in which it exercises that jurisdiction and those powers is a matter for the Court. 21 It is further considered that the proceeding should be transferred now rather than later. A course urged on behalf of the Applicant was for this Court to retain the proceeding until the Reply is filed and until after its evidence has been filed and discovery provided. The question as to whether to make an order pursuant to s 32AB could then be addressed, so it was contended, upon a more complete understanding of the issues. That submission should not prevail. The content of the Reply was outlined, at least in part, during the course of oral submissions, and provides no basis for delaying the transfer. And, if the proceeding is to be transferred, it is better for questions as to evidence and discovery and the future conduct of the proceeding to be addressed by a Federal Magistrate from the outset. 22 It will remain a matter for the Federal Magistrate to give such directions as are considered appropriate for the proper resolution of the claim being advanced. The informality of the procedures otherwise adopted by that Court in other proceedings is no reason to question the ability of that Court to formulate directions which properly recognise the commercial nature of the claim being pursued by the Applicant and the bases upon which it is sought to be resisted by the insurer. 23 Although the questions as to the appropriate order to be made in respect to those costs as were incurred on 30 June 2009, and as to who should pay those costs, were raised on both 30 June 2009 and this morning, Counsel for the Applicant contended that such costs should be reserved. No submission was advanced by the insurer opposing that course. ORDERS 24 The Orders of the Court are: 1. The proceeding be transferred to the Federal Magistrates Court of Australia pursuant to s 32AB of the Federal Court of Australia Act 1976 (Cth). 2. Any costs incurred to date in the proceeding in this Court be costs in the cause on their transfer to the Federal Magistrates Court of Australia. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. Associate: Dated: 21 July 2009 Counsel for the Applicant: Mr M B J Lee (17 July 2009) with Mr M J Leighton-Daly (30 June, 17 July 2009) Solicitor for the Applicant: Slater & Gordon Lawyers Counsel for the Respondent: Mr P Braham (17 July 2009) with Mr H El-Hage (30 June 2009) Solicitor for the Respondent: Hicksons Lawyers Date of Hearing: 30 June, 17 July 2009 Date of Judgment: 17 July 2009