Notesco Pty Ltd v Australian Financial Complaints Authority Ltd [2022] NSWSC 285

Supreme Court New South Wales

Medium Neutral Citation: Notesco Pty Ltd v Australian Financial Complaints Authority Ltd [2022] NSWSC 285 Hearing dates: 28 February 2022 – 1 March 2022 Date of orders: 17 March 2022 Decision date: 17 March 2022 Jurisdiction: Equity - Commercial List Before: Rees J Decision: Declare that Determination made by the Australian Financial Complaints Authority (AFCA) is invalid. Remit the complaint to AFCA to be determined by an AFCA Decision Maker who was not involved in the preliminary assessment or the Determination. Catchwords: FINANCIAL SERVICES – elderly French resident opens trading account with holder of Australian Financial Services Licence – accesses highly leveraged investments not then available in the EU – trades in CFDs – loses the lot – makes complaint to AFCA – AFCA staff consult AFCA Decision Maker when making preliminary assessment – AFCA Decision Maker consults AFCA staff when making Determination. AUSTRALIAN FINANCIAL COMPLAINTS AUTHORITY SCHEME – external dispute resolution scheme – Part 7.10A Corporations Act 2001 (Cth) – AFCA Rules – complaint resolution process – procedural fairness requirement – the Court's role – general review at [4]-[21]. JURISDICTION – construction of AFCA rules on jurisdiction at [127]-[140] – rule B.2.1 – definition of Financial Service (rule E.1.1) – broad jurisdiction – 'one stop shop' to resolve disputes about products and services provided by Financial Firms. IMPARTIALITY – construction of AFCA rules on complaint resolution process at [144]-[157] – separation of preliminary assessment and Determination – separation of AFCA Decision Maker from preliminary assessment – Isbester applied – Determination not made in accordance with AFCA Rules – Determination invalid. WAIVER – no requirement in AFCA Rules to raise jurisdictional challenge during complaint resolution process – no waiver – see [119]-[123]. ESTOPPEL – must be pleaded properly – pleading deficient – see [124]-[126]. WORDS AND PHRASES – "arise from" at [130] – "relate to" at [131] – "in connection with" at [139]. Legislation Cited: Corporations Act 2001 (Cth) ESMA Decision 2018/706 of 22 May 2018 to Temporarily Restrict Contracts for Differences in the Union Treasury Laws Amendment (Putting Consumers First – Establishment of the Australian Financial Complaints Authority) Act 2018 (Cth) Cases Cited: Agricultural & Rural Finance Pty Ltd v Gardiner (2008) 328 CLR 570; [2008] HCA 57 Australian Capital Financial Management Pty Ltd v Australian Financial Complaints Authority Ltd [2021] NSWSC 1577 Australian Football League v Carlton Football Club Ltd [1998] 2 VR 546 Banque Commerciale SA (in liq) v Akhil Holdings Ltd (1990) 169 CLR 279 Commissioner for Railways v Bielewicz [1963] NSWR 482 Commonwealth v Verwayen (1990) 170 CLR 394; [1990] HCA 39 Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305 Cromwell Property Securities Ltd v Financial Ombudsman Service Ltd [2014] VCSA 179; (2014) 313 ALR 469 D H Flinders Pty Ltd v Australian Financial Complaints Authority [2020] NSWSC 1690 Fraser v The Irish Restaurant & Bar Co Pty Ltd [2008] QCA 270 Frost v Kourouche (2014) 86 NSWLR 214; [2014] NSWCA 39 Greater Taree City Council v Murowski Investments Pty Ltd [2010] NSWLEC 258 Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 Hatfield v Health Insurance Commission (1987) 15 FCR 487 Henry, Re; JL v Secretary, Department of Family and Community Services [2015] NSWCA 89 Investors Exchange Ltd v Australian Financial Complaints Authority Ltd [2020] QSC 74 Isbester v Knox City Council (2015) 255 CLR 135; [2015] HCA 20 Kioa v West (1985) 159 CLR 550 Larratt v Bankers and Traders Insurance Co Ltd (1941) 41 SR (NSW) 215 Legione v Hateley (1983) 152 CLR 406; [1983] HCA 11 Magrath v Parkside Hotels Ltd [2011] EWHC 143 (Ch) Margetson v Glynn [1892] 1 QB 337 MetLife Insurance Ltd v Australian Financial Complaints Authority [2022] FCA 23; (2022) 397 ALR 316 Mickovski v Financial Ombudsman Service Ltd (2012) 36 VR 456; [2012] VSCA 185 Minister for Immigration and Citizenship v SZGUR (2011) 241 CLR 594; [2011] HCA 1 North v Homolka [2014] VSC 478 Plenary Research Pty Ltd v Biosciences Research Centre Pty Ltd [2013] VSCA 217 Quintano v BW Rose Pty Ltd [2008] NSWSC 793 R v Orcher (1999) 48 NSWLR 273; [1999] NSWCCA 358 Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6 Robson v QBE Insurance (Australia) Ltd [2020] NSWSC 1558; 94 MVR 341 Transtar Linehaul Pty Ltd v Deputy Commissioner of Taxation (2011) 169 FCR 271; [2011] FCA 856 Travelex Ltd v Federal Commissioner of Taxation (2010) 241 CLR 510; [2010] HCA 33 Vines v Australian Securities and Investments Commission (2007) 73 NSWLR 451; [2007] NSWCA 75 Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 Workers' Compensation Board of Queensland v Technical Products Pty Ltd (1988) 165 CLR 642 Texts Cited: ASIC, Media Release 19-088MR: "Some AFS licensees may be breaking overseas laws" ASIC, Regulatory Guide 227: "Over the Counter Contracts for Difference (CFD): Improving Disclosure for Retail Investors" Revised Explanatory Memorandum to the Treasury Laws Amendment (Putting Consumers First – Establishment of the Australian Financial Complaints Authority) Bill 2017 Sean Wilken and Karim Ghaly, The Law of Waiver, Variation, and Estoppel (3rd ed, 2012, Oxford University Press) Category: Principal judgment Parties: Notesco Pty Ltd (Plaintiff) Australian Financial Complaints Authority Ltd (Defendant) Representation: Counsel: Mr DR Sulan SC/Mr R Pietriche (Plaintiff) Mr EAJ Hyde (Defendant)