Adelaide Petroleum NL v Poseiden Ltd

[1988] FCA 562

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L . JUDGMENT No. zkA..Y.&

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I C A T C H W O R D S

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TRADE PRACTICES - pleading - motion to strike out - promissory

i statements - whether excluded from ambit of s.52 - question open

to debate - s.51A - effect of section - damages - whether

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discretion to transfer.

adequately pleaded - s.86A - factors governing exercise of

COURTS - s.86A Trade Practices Act 1974 - motion for transfer of

action to Supreme Court of South Australia - coqnate proceedinqs

pending in that Court - relevant factors - no special qbestion of

State law - important questions of construction under Trade

Practices Act - motion dismissed.

Trade Practices Act 1974 s.51A, s.52, s.86A	I
Federal Court of Australia Act 1976	: m

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Bill Acceptance Corporation Ltd v GWA Ltd (1983) 50 ALR 242

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Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR

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Hamer v Westpac Banking Corporation [l9871 ATPR 40-811

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Johnson v Eastern Micro Electronics

R.G. Steedman v Golden Fleece Petroleum Ltd [l9861 ATPR 40-660

Pty Ltd (1986) 70 ALR 339

Gartenmann Ceiling Systems Australia Pty Ltd v Pollutlon Control

I Engineering Pty Ltd (unrep. Fed.Ct., 23/12/87, Gummow J.)

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Taco Company of Australia Inc.	v	Taco Bell Pty Ltd (1982) 42	ALR
177	- . .
Chase Manhattan Overseas Corporation	v	Chase Corporation	Ltd

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71985) 9 FCR 129

TJM Products Pty Ltd v A & P Tyres Pty Ltd (1987) 14 FCR 3 3

Gollel Holdings Pty Ltd v Kenneth Maurer Funerals Pty Ltd [l9871

Rhone-Poulenc Agrochimie	SA v UIM Chemical Services Pty Ltd (1986)
12 FCR 417

Henjo Investments Pty Ltd	v Collins Marrickville Pty Ltd (1988)	79
ALR 8 3

. . .	-
Smolono ov v O'Brien	(1982) 44 ALR 347

d F e m p s t o n Holdings Pty Ltd (1986) 65 ALR 302

Mudglnberrl Statlon Pty Ltd v AMIEU [l9861 ATPR 40-708

Povey Corporation Ltd v Gull Petroleum (WA) Pty Ltd (unrep. Fed.

; & I

Ct. 24/12/87; French J.)

ADELAIDE PETROLEUM NL & OTHERS v POSEIDON LIMITED	& OTHERS
NO. WAG 115 Of 1988
FRENCH J. PERTH
7 OCTOBER 1988

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IN THE FEDERAL COURT

OF AUSTRALIA

I	AUSTRALIA	WESTERN
!	DISTRICT REGISTRY
GENERAL DIVISION No. WAG 115 of 1988
!	B E T W E E N :  ADELAIDE PETROLEUM NL

First Applicant

TOPEND RESOURCES NL

Second Applicant

LYTTON NOMINEES PTY LTD

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!

Third Applicant

MOUBLON PTY LTD

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Fourth Applicant

PAUL GEOFFREY NAUGHTON

Fifth Applicant

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DAVID BRIAN CLARKE 1: 1;

Applicant	Sixth	I
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MICHAEL WILLIAM ATKINS I. I .

Seventh Applicant

3.:

SWIRL PTY LTD

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Eighth Applicant

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GUINEVERE NOMINEES PTY LTD

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Applicant Ninth i

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LIMITED	MACQUARIE	BANK	I .
Applicant	Tenth	1	i

SOUTH AUSTRALIAN INDUSTRIAL MINERALS

PTY LTD

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Eleventh Applicant

WINDAMURAH PTY LTD

Twelth Applicant

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and

POSEIDON LIMITED

First Respondent

POSEIDON OIL PTY LTD

Second Respondent

JOHN OSCAR ZEHNDER

Third Respondent	1 .i
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ROBERT JAMES CHAMPION DE CRESPIGNY

Fourth Respondent

BRUCE PHILLIP WEBB

Fifth Respondent

MARK SELLARS

Sixth Respondent

MINUTE OF ORDER

JUDGE MAKING ORDER: FRENCH J.

DATE OF ORDER: 7 OCTOBER 1988

WHERE MADE:	PERTH
THE COURT ORDERS	THAT:

A. On the respondents' motion of 29 August 1988 to strike

out portions of the statement of claim:

1. Paragraphs 1 3 and 17 of the amended statement of claim

be struck out.

2.         The applicants have leave to file and deliver a further

amended statement of claim. r .

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3 . Costs reserved. be

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On the respondents' motion of 29 August 1988 to	transfer	I
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the proceedings: The motion is dismissed. Costs are reserved.
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Note: Settlement and entry	of orders is dealt with	in	1.
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Order 36 of the Federal Court	Rules.	!
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IN THE FEDERAL COURT	)
OF AUSTRALIA	1

WESTERN	AUSTRALIA	1
DISTRICT	REGISTRY	1

GENERAL DIVISION ) No. WAG 115 of 1988

B E T W E E N :  ADELAIDE PETROLEUM NL

First Applicant	, .
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TOPEND RESOURCES NL

Second Applicant

LYTTON NOMINEES PTY LTD

Third Applicant

MOUBLON PTY LTD

Fourth Applicant

PAUL GEOFFREY NAUGHTON

Fifth Applicant

DAVID BRIAN CLARKE

Sixth Applicant

MICHAEL WILLIAM ATKINS

Seventh Applicant

SWIRL PTY LTD I. .. .

Eighth Applicant

GUINEVERE NOMINEES PTY LTD

Ninth Appiicant

MACQUARIE BANK LIMITED

Tenth Applicant

SOUTH AUSTRALIAN INDUSTRIAL MINERALS

PTY LTD

Eleventh Applicant	i-,
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WINDAMURAH PTY LTD	I '
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Twelth Applicant

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and

POSEIDON LIMITED

First Respondent

POSEIDON OIL PTY LTD

Second Respondent

JOHN OSCAR ZEHNDER

Third Respondent

ROBERT JAMES CHAMPION DE CRESPIGNY

Fourth Respondent

BRUCE PHILLIP WEBB

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Fifth Respondent I .'

MARK SELLARS

Sixth Respondent I

CORAM :	FRENCH J.
7 October 1988

REASONS FOR JUDGMENT ON MOTIONS TO STRIKE OUT PLEADINGS	I .
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AND TRANSFER PROCEEDINGS TO SUPREME COURT F SOUTH AUSTRALIA

Introductiou

This action arises out of an agreement whereby Poseidon

Limited was to acquire	control of Adelaide	Petroleum NL.
Litigation has commenced	in this Court and in	the Supreme Court of

South Australia. The respondents move to strike out certain

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elements of the amended statement of claim and for an order

an sferring the se proceedings to the Supreme Court of South

Australia or the South Australian Registry of this Court.

Proceedings in the Federal Court

The Federal Court proceedings which were commenced on 5

August 1988 are brought by Adelaide Petroleum NL ("Adelaide"),

three of its directors; Messrs. Naughton, Clarke and Atkins, six

share and option holders and two other companies, Topend Resources

NL.and Lytton Nominees Pty Ltd. The respondents are Poseidon

Limited ("Poseidon"), its wholly owned subsidiary, Poseidon Oil

l Pty Ltd ("Poseldon Oil"), three directors of Poseidon and an

executive who is its Manager, Corporate Development and Finance.

The applicants allege that on or about 10 June they

agreed with the respondents that the three Poseidon directors

would procure the sale of 2,000,000 fully paid shares, 2,400,000

contributory shares and	2,500,000 options in Adelaide to Poseidon.
Poseidon agreed to subscribe for	5,000,000 ordinary shares in
Adelaide Petroleum at a subscription price of	40 cents and to take
over the management	of Adelaide. The agreement, it is alleged,
was entered

into by the applicants on the strength of

representations by Poseidon that it would upon its completion:

(a) take over the management of Adelaide Petroleum;

(b) nominate and support he lection of its three

I directors, Zehnder, de Crespigny and Webb as directors
of Adelaide in place of Naughton, Clarke and Atkins.

Th applica ,nts say that by making these rep resentations Poseidon

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engaged in misleading or deceptive conduct in contravention of

s.52 of the Trade Practices Act	1974, because at the time of
making them it “did not have reasonable grounds	for making them”.
The applicants say that they relied upon the representations	in

entering into the pleaded agreement and further that in reliance

upon them they declined to enter into an agreement with another

party, Pagini Resources NL, under which that company “would obtain
control of Adelaide“. Poseidon and Poseidon Oil are said to have

subsequently informed the applicants that Poseidon was not willing

to take over the management of Adelaide and in doing	so, to have
repudiated the agreement.

The applicants claim damages for the contravention of

s . 5 2 . These- are asserted with no great specificity as appears

from para.13 of the amended statement of claim which reads:

“AS a result of acting upon the representations referred

to in paragraph 9 the Applicants have suffered loss and

damage in that but for the representations the Applicants would have entered the Pagini Agreement but they have now lost the benefit of that Agreement.”

They also claim damages for the repudiation of the agreement.

Proceedings in the Supreme Court of South Australia

On 25 August 1988 Poseidon and Poseidon Oil commenced an

action (No. 1953 of 1988) in the Supreme Court of South Australia

against Adelaide, Topend Resources NL, Lytton Nominees Pty Ltd,

Moublon Pty Ltd and Messrs. Naughton, Clarke and Atkins. In that

action the plaintiffs plead the formation of the agreement of 10

June 1988 and set out various terms thereof, including a provision

that 'Naughton, Clarke and Atkins would resign	as directors of
Adelaide,	and would support the appointment to the Board of

Adelaide of persons nominated by Poseldon". It is said to have

been an express term of the agreement that:

"9(2) Adelaide would, within a reasonable time, convene

an Extraordinary General Meeting of Adelaide to enable

its members to consider, and if thought fit, pass the

resolutions ecessary to approve various th

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transactions described therein; and

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(ii) Settlement of the various transactions would take -

place within certain specified periods from the date of

the said Extraordinary General Meeting."

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In breach of that agreement, Adelaide is said to have wrongfully

failed to convene the extraordinary general meeting with the '. ,

result that the substantive transactions provided for in the . ,

agreement have not been completed. It is alleged that by a letter

dated 0 July 1988 from their solicitors to Poseidon's solicitors,

Adelaide and proceedings wrongfully repudiated the agreement by their wrongful the other defendants in the South Australian

allegation in that letter that Poseidon and Poseidon Oil had

refused to approve a draft information memorandum and had

themselves thereby repudiated the agreement. The Adelalde group,

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it is said, contend that the agreement has come	to an end, whereas
Poseidon and its subsidiary are ready, willing and able	to perform
it "on its proper construction". Poseidon and Poseidon Oil seek	i
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an order for specific performance, damages for breach of contract

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and an injunction restraining the defendants until further order

from dealing with any of the shares, investments or mineral

interests referred to in various speclfied paragraphs of the

agreement. On 26 August 1988 an application for interlocutory

injunctive relief came on for hearing but was not argued as certain undertakings were given to the court in terms acceptable

to the plaintiffs.	On 1 September 1988 the Adelaide group sought
an order that	the proceeding in the South Australian Supreme Court

be.stayed pending the determination by this Court of the motion to

have these proceedings transferred to South Australia. On 5 t:

September, Cox J. made orders that the South Australian action be

placed in the commercial list and that the defendants file

defences on or before 14 September. His Honour declined to fix a

time for the hearing of the stay and transfer motion, but directed
that the solicitors for the parties advise this Court that he had

formed no view as to the merits of the respective applications for

transfer. In the event however, that proceedings are transferred

to the Supreme Court, his Honour will be disposed to refer the

matter to a Master with a view to fixing an abridged timetable for

the filing of pleadings and other interlocutory steps, and

directing that there

sworn by the solicitor for the respondents an action can usually be an early trial. According to an affidavit

be brought on for trial in South Australia within	6 to 8 weeks of
entry onto the commercial list.

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The Strike Out Motion

By motion filed 29 August 1988, the respondents seek

orders for the striking out of the application and of paras. 9,

10, 12, 13 and 17 of the statement of claim. That pleading and

the application were amended by order made on 13 September 1988,

but the amendments did not answer the respondents’ points and they

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proceeded with their motion.

The first attack is on para. 9 which pleads the

precontractual representation by Poseidon that it would, on

completion of the proposed agreement, take over the management of l
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Adelaide and nominate and support the election of Zehnder,	de	..
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Crespigny and Webb as directors of that company in lieu of

Naughton, Clarke and Atkins. According to para.	12 of the amended
pleading:

“Poseidon in making the representations referred to in

paragraph 9, and each of them, engaged in conduct which was misleading or deceptive or was likely to mislead or

deceive within the meaning of section 52(1) of the	Act	!.
in that	at	the tine of making those representations

Poseidon did not have reasonable grounds for making

them. I’

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NOW, it is contended	by the respondents that the representations
pleaded are of a purely promissory character. No statements	of

past or existing fact are alleged.

There is considerable authority for the proposition that

promissory or predictive statements are not mrsleading or

deceptive in the sense contemplated by 5.52 merely because they

are not fulfilled - Bill Acceptance Corporation Ltd v GWA Ltd

(1983) 50 ALR 242, 250 (Lockhart J.); Global Sportsman Pty Ltd v

Mirror Newspapers Pty Ltd (1984) 2 FCR 82, 88; Hamer v Westpac

Banking Corporation [l9871 ATPR 40-811 at 48,824 (Pincus J.); t .

Johnson v Eastern Micro Electronics Pty Ltd (1986) 70 ALR 339 I

(Ryan J.); R.G. Steedman v Golder. Fleece Petroleum Ltd [l9861 ATPR

40:660,	47,325 (Woodward J.); Gartenmann Ceiling Systems Australia
Pty Ltd v Pollution Control Engineering Pty Ltd (unrep.	Fed. Ct.,
23/12/87,	Gummow 3 . ) .
Global Sportsman (supra) came before the Full Court as a

case stated on the question whether an expression of opinion in a

newspaper could amount	to misleading or deceptive conduct. The
question was answered in the affirmative but	on the basis that an
expression of opinion might convey a misrepresentation as	to

whether the opinion were held or that rt had some foundation. At

p.88 the Court said:

"The non-fulfilment of a promise when the time for

performance arrives does not of itself establish that

the promisor did not intend to perform lt when it was

made or that the promisor's intention lacked any, or any

adequate, foundation. Similarly, that aprediction

proves inaccurate does not of itself establish that the

maker of the prediction did not believe that it would

eventuate or that the belief lacked any, or any

adequate, foundation. Likewise, the incorrectness of an opinion (assuming that can be established) does not of rtself establish that the opinion was not held by the

person who expressed it	or that it	lacked any, or any
adequate foundation."

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AS appears from the judgment, that statement is founded on the I .'I

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proposition that conduct is not misleading or deceptive unless It

conveys some representation, that	is to	say, a mis-statement of	ic
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past or existing fact. And that is a proposition for which

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support may be found in a number of decisions including - Taco 1

Company of Australia Inc. v Taco Bell Pty Ltd (1982) 42 ALR 177,

202 (Deane and Fitzgerald JJ); Chase Manhattan Overseas

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Corporation v Chase Corporation Ltd (1985) 9 FCR 129, 139 (Wilcox , c

J.); (1986) 12 FCR 375, 378 (Lockhart J.), 393 (Beaumont J.); TJM

Products Pty Ltd v	A & P Tyres Pty Ltd (1987) 14 FCR 33	(Fisher
J.); Gollel Holdings Pty Ltd	v Kenneth Maurer	Funerals Pty Ltd

119871 ATPR 40-790, at 48,616 (Einfield J.).

Recently however, two decisions of the Full Court have ! '

called seriously into question the generality of that requirement.

- Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty	Ltd
(1986) 12 FCR 477, 489 (Bowen CJ), 504 (Lockhart J.) and	Henjo

Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR

83, 93 (Lockhart J., Burchett and Foster	JJ agreeing in this
respect).	To the extent that the exclusion of "mere" unfulfilled

promises or predictions from the scope of s.52 rests upon the

absence of a statement of past or existing fact	it may be suspect.
And insofar as that limiting requirement derives from the common

law, it may yet be shown to be an	un~ustifiable	gloss on the words
of the statute.	On the other hand, it can	be argued that the

consequence of bringing unfulfilled promises and predictions

within the scope of s.52, whether or not they embody

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mis-statements of fact, is so farreaching in its impact on such

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'. conduct that the legislature could be expected to have made that

clear, if that is what it had intended.

There 1s another basis upon which an unkept promise not

embodying any mis-statement may fall outside the scope of

misleading or deceptive conduct.	In Bill Acceptance Corporation
-	Ltd v GWA Ltd (1983) 50 ALR 242, Lockhart J. said:

. "Whether statements or representations of this type are misleading or deceptive must be determined at the time

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they were made, although this may be determined	by
reference to later events. For example, what a person
does tomorrow may have a real bearing	on whether he held
a particular belief today.
The mere fact that representations	as to future conduct

or events	do	not come to pass does not make them
misleading or deceptive, notwithstanding	that	he

applicant has relied on them and has altered his

position on the faith of them." (at p.250)

The law on the question is to some extent open to debate. It is

certainly not possible to say with confidence that para.9 is

manifestly untenable because it does not allege some implied

representation as to past or existing fact in the conduct

complained of. In the circumstances, I am of the view that para.9

may stand in its present form. In any event it must be read with

the plea in para.12 that at the time of making the representations

Poseidon did not have reasonable grounds for making them, a plea

! which attracts the operation of s.51A(l) and will, on that basis, support a contention that the conduct in question is misleading or deceptive.

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11.

Paragraph 10 pleads that in reliance upon the

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representations referred to in para.9, the applicants entered into

the agreement with Poseidon and "declined to enter into an

agreement with Pagini Resources NL... by which Pagini Resources NL

would take control of Adelaide". There 15 , it is said, no plea I '

that the applicants were induced by the representation alleged, the notion of reliance not necessarily importing inducement.

These submissions disclose no basis for striking out the

paragraph. The cause of action under	ss. 52 and 82 of the Trade	-
Practices Act requires proof that any	loss claimed was	suffered

"by reason of" or "as a result of" the misleading or deceptive

conduct complained of	- Smolonogov v	O'Brien (1982) 44 ALR 347,
362 (Ellicott J.): Neilson	v Hempston Holdings Pty Ltd	(1986) 65

ALR 302, 308 (Pincus J.); Mudginberri Station Pty Ltd	v AHIEU
119861 ATPR 40-708, 47,717 (Morling J.).	"Reliance" is capable of
forging a link in the chain of causation between conduct and	loss
necessary to establish the cause of action.

In their written submissions in relation to para.12, as

it stood prior to the amendment to the statement of claim, the

respondents complained that it did not plead the falsity of	the
representations set out in para.9.	No substance, it is said, is

given to the bare allegation that the conduct	as alleged in para.9
was misleading or deceptive.	As has already been noted however,
para, 12 now embodies the plea formerly included	as a particular

that "...at the time of making those representations Poseidon dld

not have reasonable grounds for making them" and thus attracts the

application of s.51A of the Trade Practices Act.

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Prima facie the effect of that section is that every

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representation with respect to any future matter is misleading or

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deceptive unless there are reasonable grounds for making it at the

time that it is made. The burden of establishing the existence ..

of reasonable grounds is on the.party making the representation.
It was submitted by the respondents that the applicants should be

obliged to plead as material facts the reasonable grounds said to

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be lacking. In my opinion that is not a requirement of a viable

plea in reliance upon s.51A. It may be however, that to avoid the
abuse of the section by persons making the bald assertion that
promises or predictions lack reasonable grounds, particulars may
be ordered. But that consideration does not go to the viability

of para.12.

Paragraphs 13 and 17 plead loss and damage as follows: i

"1'3. As a result of acting upon the representations

referred to in parasraph - - 9 the Applicants have

suffered loss ana damage in that--but for the

representations the Applicants would h	ave	entered
the Pagini Agreement but they	have now lost	the
benefit of that Agreement.

17. By reason of Poseidon's repudiation of the

Agreement, Adelaide, Moublon, TopEnd and Atkins

have suffered loss and damage.

PARTICULARS

(1)	Adelaide has lost the opportunity of raising capital by a placement of 12,000,000 shares;
(2) Moublon and Atkins have	lost the benefit of

selling their shares and options in Adelaide
to Poseidon for the prices set out In the

Agreement.	.-
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13.

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(3) Adelaide has lost the opportunity to sell its

i . properties in accordance with the Agreement;

( 4 ) Adelaide has lost the opportunity of

I terminating its management contracts with

Moublon and Lytton.

( 5 ) TopEnd has lost the opportunity of acquire
gold properties for consideration in shares.

(6) TopEnd has lost the benefits of the provisions

of clause 3 of the Agreement."

These paragraphs, it was submitted, do not set out

sufficient material facts to disclose a causal relationship

between the conduct alleged and the loss said to have been

suffered. Paragraph 13 gives no clue to the nature of the

"benefit" of the Paginl Agreement said to have been lost as a

result of the conduct of the respondents. It is a mysterious plea

and nothing said in argument dispelled the mystery. In my opinlon

it fails	to	properly identify the loss suffered whlch is an
essential element of the cause of action under	5 . 8 2 of the	Trade
Practices Act.	The paragraph in its present form is,	I think,

insufficient to support a cause of action and will be struck	out.
Paragraph 17 purports to recite losses following from	Poseidon's
repudiation of the agreement. I am inclined to the view that	the
paragraph does not provide any pleading	of material facts adequate
to disclose the nature of the losses. Nor do the particulars

significantly improve the situation. The respondents are entitled

to ask why the right to sell shares and options to Poseidon

constitutes a benefit. The loss of that opportunity may be a

financial loss if the market value of the securities has

diminished since the agreement was made.	At the very least the
applicants should	be pleading the facts whereby non-performance of

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the agreement has generated a loss in relation to that sale. The
same is true of the other various "lost opportunity" pleas. In my

opinion para. 17 is inadequate even as particularised to properly

inform the respondents of the case against them.	It	will be
struck out with leave to amend.

In summary therefore I accede to the respondents' strike

out motion to the extent of ordering that paras. 13 and 17 of the

amqnded statement of claim be struck out.

The motion also sought to strike out the application

against Poseidon Oil on the basis that there was no cause of

action pleaded against it. The amendments to the statement of

claim seem to me, however, to have covered the point insofar as	it
is now alleged that Poseidon's repudiation	f the agreement was on
behalf of itself and Poseidon Oil.

The Transfer Motion

By a further motion filed on 29 August 1988 the

respondents move for:

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"1. An order pursuant o sec. 86A of the Trade

Practices Act 1974 that all matters in the within
proceedings be transferred to the Supreme Court of

South Australia.

2. In the alternative, an order that the within

proceeding be transferred to the South Australian

District Registry of the Court.

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I 3 . order An that further no step be taken this i

1 z f r her action un l o der."

! In two affidavits of Carey Hugh Goodall, a solicitor acting for

l the respondents, it was said that the agreement in dispute in both

actions came into existence in South Australia and	if still on
foot is to be performed in that State and governed	by its law. Of

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11 potential witnesses for the respondents in these proceedings,

some 8 reside in South Australia, 2 in Queensland and 1 in New

South Wales. The major proportion of Adelaide's petroleum

exploration permits are located in South Australia. In an - .- _.--.. X .

affidavit sworn by Nichael William Atkins, a director of Adelaide - i:

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and one of	the applicants in these proceedings, it is said that
although the company	was incorporated in South Australia, its

principal management is in Perth. It has no administrative or

management offices in South Australia. TopEnd Resources NL,

Lytton Nominees Pty Ltd and Moublon Pty Ltd are managed and

controlled from Perth and the three directors of Adelaide,

Naughton, Clarke and Atkins, reside here also. It is contemplated

that some 6 persons, all of whom reside in Perth will be called as

witnesses for the applicants. As to oil licences which are the

subject of the agreement, the area of those located in Western

Australia is said to be only marginally less extensive than	those
in South Australia.

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The debate in this case crosses State boundaries with

respect to the parties involved and the witnesses to be called.

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The respondents' motion invokes the power	of	the Court under
s.86A of-ths	Trade Practices Act to transfer a matter	to another

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court of a State or Territory. The section provides in the

relevant parts:

"(l) 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 determinati0.n in the proceeding arose ~

under Division 1 or 1A of Part V,

the Federal Court may, subject to sub-section (21, 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	hat	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."

so- far as concerned, it is clear that the present application is a civil the conditions for the exercise of that power are

proceeding pending in this	Court, which gives rise	to a matter for
determination under Division 1 of Part	V of the Act.	I am

satisfied also that the present application is, in the language	of
s.86A(2)	( a ) , related to a proceeding pending in the Supreme Court

of South Australia. It is therefore unnecessary to consider

whether, if that were not the case, it would nevertheless be in

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the interests of justice for the matter to be determined by the

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, I other court (s.86A(2)(b).

where the necessary conditions for the exercise of the discretlon are satisfied, it is unconfined other than by the scope

and purposes of the section. As to that the Attorney General in

his Second Reading Speech introducing the provision said:

"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 thls. Many complaints lnvolve

relatively small amounts of money or are disputes of

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 in
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 that speech that the intention of	the
legislature was to allow for transfer	to State courts of matters

arising under Part V which "involve relatively small amounts	of
money or are disputes of local character".	In my opinion however,

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that reference exemplifies but does not exhaust the class of cases

I	which	may be	transferred	under	the	section.	The	statutory
!

language will not permit the introduction of a principle limiting

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its application by reference-to the amount of money involved or

the geography of the Proceedings under consideration. That is not

to say, of course, that these matters will not be relevant

considerations. -- -

Accepting that the discretion is a broad one, it is

necessary to consider factors relevant to its exercise in this

case.	It	is clearly desirable if possible that the controversy
underlying these proceedings	be heard and disposed of in	m e

court. In deciding whether the Supreme Court of South Australia

should hear.the action instituted in this Court, it is appropriate

to inquire whether it throws up any peculiar question of State law

or in respect of which the State court has a special jurisdiction.

A case involving the construction or application of State

planning, licensing or mining laws might come to mind as an

example. Consistency in the application of such laws by a court

with particular responsibility for and experience in their

construction and application, is a factor weighing in favour of

transfer in a particular case. In Povey Corporation Ltd v Gull

petroleum (WA) Pty Ltd (unrep. 24/12/87) where related proceedings

were pending in the Supreme Court of Western Australia,	I ordered
transfer of the matter from this court where a firm of solicitors

had been named as a respondent and serlous allegations of

negligence and breach of fudiciary duty raised against them. The

allegations if established,	might	have	resulted	in	serious
professional	dlsciplinary	consequences	for	the	practitioners

involved. The Supreme Court being the court which has

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historically exercised judicial control over the professional

i ,. conduct and standards of practitioners, it was the most

appropriate to deal with these claims. There is, however, nothing

in the materials so far to indicate that	any such question arises
either in the proceedings in this Court or	in the Supreme Court of
South Australia.

Matters arising at common law or equity or "common Porm"

statutes should'not, in my opinion, be put in the same class as

matters arising under laws peculiar to a particular state.

Unless the issue attracting federal jurisdiction is trivial or

insubstantial, it is an unprofitable exercise to attempt to

I determine whether proceedings, the subject of a motion for

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transfer, are "substantially" contractual or tortious in . L

character.	The jurisdiction conferred on this Court under federal
law in respect of a matter	is -jurisdiction to adjudicate upon the
entire controversy including the claims	at law or equity that fall

within its boundaries. Although in its latter aspect, the ..

jurisdiction is described as "accrued" it is no less within the

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authority of the Court than the federal question which triggers

its exercise.

A question may arise in an area in which this court has

particular responsibility for the construction and application of

the law. And in the same way as the presence of a special

question of state law may weigh in favour of transfer, the need to ;-,

resolve a special question of federal law can	be a factor against
such transfer.

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The two sets of proceedings ar:*,.t substantially the

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.	sane stage in their progress. Althougll the actlon in the Supreme
Court of South Australia has been placed in the commercial list in
that court, there is no reason to believe that transfer would
result in their earlier hearing and determination than if their
trial is expedited in this Court. So far as considerations of

convenience go, there are witnesses resident in both States.

Should it become necessary this Court can hear the trial of the

* , .

- action in both States.

The proceedings in this Court throw up two questions

arising under the Trade Practices Act 1974. The first concerns

the application of s .52 to statements which may not embody any -

mis-statement of past or existing fact. The second involves the

operation of s.51A. The involvement of these issues ralses

significant constructional and policy questions in an	area which
has fallen within the authority of this Court for over a	decade.

In making that observation I acknowledge that four states,

including South Australia, have recently enacted Fair Trading Acts

which largely replicate the consumer protection provisions of the

! Trade Practices Act. In my opinion, however, the involvement of

important constructional questions arising under the federal

statute in a non trivial claim made in reliance upon it, is

the notwithstanding the desirability of proceeding in one forum. refusal of the order sought

sufficient to warrant

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. On the question of transfer of these proceedings under

5 . 4 8 of the Federal Court of Australia Act 1976 to the South

Australian Registry, the evidence relating to he location of the

parties and proposed performance of the agreement in dispute, their witnesses and the place of formation and

do not recommend

one venue over the other. The question of the future of the

proceedings in the Supreme Court	of South Australia may have some
bearing on	the issue of the most appropriate venue and on the

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question whether any stay of these proceedings should be ordered,

but that is yet to be resolved. I am not satisfied that

circumstances have yet arisen which would require a change of

venue within the Federal Court. Should they arise, a further

application can be made. I propose therefore to dismiss the

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respondents' motion.

I certify that this and the preceding

twenty ( 2 0 ) pages are a true copy
of the Reasons for Judgment of his

Honour Justice French.

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Associate: FT

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Counsel for the Applicants:  Mr N. McKerracher and M e P. Tottle

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Solicitors for the Applicants: Robinson Cox

Counsel for the Respondents: Mr J. Gilmour

Solicitors for the Respondents:	Gilmours
Date of Hearing:	14 September 1988

Date of Judgment: 7 October 1988

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