Ahmed v Craig Moore Wholesale Cars Pty Ltd

[2018] ACAT 131

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

AHMED v CRAIG MOORE WHOLESALE CARS PTY LTD (Civil Dispute) [2018] ACAT 131

XD 1211/2018

Catchwords:                CIVIL DISPUTE – vehicle advertised on an internet sales site – ACAT jurisdiction – cross-border transactions

Legislation cited:        Australian Consumer Law ss 54, 259

Electronic Transactions Act 2001 s 13
Electronic Transactions Act 2000 (NSW) s 13
Magistrates Court Act 1930 s 262
Motor Dealers and Repairers Act 2013 (NSW) ss 62, 63, 64, 72

Cases cited:Avopiling (WA) Pty Ltd v Central Systems Pty Ltd [2015] WASC 82

Brinkibon v Stahag Stahl und Stahlwarenhandelsgessellschaft mbH [1983] 2 AC 34
Entores Ltd v Miles Far East Corp [1955] 2 QB 327
Maxwell v Bedding (Australia) Pty Ltd [2016] ACAT 64
Olivaylle Pty Ltd v Flottweg GMBH & Co KGAA (No 4) [2009] FCA 522

List of

Texts/Papers cited:     Jeannie Marie Paterson, ‘The New Consumer Guarantee Law and the Reasons for Replacing the Regime of Statutory Implied Terms in Consumer Transactions’ (2011) 35(1) Melbourne University Law Review 252

Tribunal:                   Senior Member H Robinson

Date of Orders:  20 December 2018

Date of Reasons for Decision:         20 December 2018

AUSTRALIAN CAPITAL TERRITORY  )

CIVIL & ADMINISTRATIVE TRIBUNAL       )          XD 1211 / 2018

BETWEEN:

NIAZ AHMED

Applicant

AND:

CRAIG MOORE WHOLESALE CARS PTY LTD

Respondent

TRIBUNAL:Senior Member H Robinson

DATE:20 December 2018

ORDERS

The Tribunal orders that:

1.The Tribunal has jurisdiction to determine the matter.

2.The matter is set down for telephone directions on Wednesday 16 January 2019 at 4:00pm.

………………………………..

Senior Member H Robinson

REASONS FOR DECISION

1.The substantive matter concerns an application for relief under the Australian Consumer Law (ACL). This decision deals with the preliminary question of whether the Tribunal has jurisdiction to hear the matter. The answer depends on whether a ‘material part of the cause of action in the proceeding’ arose in the Australian Capital Territory, as required by section 262 of the Magistrates Court Act 1930 (ACT) (Magistrates Court Act).

Background

2.The basic chronology of events, at least as they relate to the jurisdictional issue, does not appear to be in contest.

3.The applicant is a resident of the Australian Capital Territory (ACT). The respondent is a car dealership. It has a registered office in New South Wales (NSW), and does business from a premises in NSW. It also advertises vehicles online.

4.On 25 June 2017 the applicant purchased a 2004 Kia Carnival car from the respondent for $4,500.

5.The applicant first saw the vehicle advertised on an internet sales site. He contacted a representative of the respondent by SMS and asked about the vehicle. The applicant, apparently satisfied with the answers, then sent the respondent’s representative a text message saying he could:

only offer you $4500 (subject to test drive) … if you are happy with this offer then please text me your BSB and account number so I can transfer a deposit. I can come down on Sunday 25 June 2017 around midday to inspect and test drive the car. Thanks in advance.[1]

[1] Applicant’s submission on jurisdiction, Attachment B 26 October 2018

6.The respondent’s representative responded to this with the respondent’s banking details, street address and the comment “okay let’s do $4500 see you Sunday.”[2]

[2] Applicant’s submission on jurisdiction, Attachment B 26 October 2018

7.The applicant was in the ACT at the time he sent and received the text messages. The respondent’s representative was in NSW.

8.The applicant paid a deposit of $300 by electronic funds transfer. Again, he was in the ACT at the time of making the transaction.

9.As per the text message arrangement, on 25 June 2017 the applicant travelled to Sydney to do a test drive. He liked the car and paid the balance owing.

10.Upon collection of the vehicle, the applicant signed a document entitled “Form 5: Motor Dealer’s Notice for Motor Vehicles” (Form 5). The respondent submits that the Form 5 was the contract for sale, but the applicant denies this and says that the contract consisted of the text messages and oral negotiations.

11.The applicant then drove the vehicle back to the ACT. He drove it primarily in the ACT from the date of purchase until early April 2018.

12.The applicant says that in early April 2018 he discovered that the vehicle’s engine oil was cloudy and likely mixed with coolant. His evidence is that he was advised by a mechanic that the vehicle was not driveable. On 23 May 2018 the applicant obtained a quote from a mechanic for repairs to the value of $10,037. This exceeds the value of the vehicle.

13.The applicant alleges that this is a major failure of the vehicle and seeks remedies under the ACL. His position is that the Tribunal has jurisdiction because a “major part” of the claim under the ACL – being the major failure – happened in the ACT.

14.The respondent says that the Tribunal does not have jurisdiction, as the contract was entered into in NSW and no material part of the claim arises in the Territory. Additionally, the sale of the vehicle was governed by the law of NSW.

15.The respondent has not had an opportunity to inspect the car and cannot properly respond to the substantive claims. It does not need to do so for the purposes of this preliminary issue and accordingly I draw no conclusions about the substantive merits of the applicant’s case.

The jurisdictional issue

16.The only issue at present is whether this matter should be heard in the ACAT or in an alternative forum in NSW.

17.The tribunal’s jurisdiction in civil matters is determined by reference section 262 of the Magistrates Court Act. This section provides that:

262   Cause of action arising, or defendant resident, outside ACT

The Magistrates Court has jurisdiction to hear and decide a proceeding if—

(a)     the defendant was resident in the ACT when the claim was served on the defendant, even though all of the cause of action in the proceeding arose outside the ACT; or

(b)     both of the following apply, even though the defendant is not in the ACT:

(i)a material part of the cause of action in the proceeding arose in the ACT, even though part of the cause of action arose outside the ACT;

(ii)the claim is served on the defendant in Australia or an external territory

18.As the respondent was not a resident of the Territory at the time the claim was served, section 262(a) does not apply. The claim was served on the respondent in NSW, and therefore the requirements of section 262(b)(ii) are met. The question is whether a ‘material part’ of the cause of action arises in the ACT as per the requirement in section 262(b)(i).

19.In Maxwell v Bedding I reviewed the legislation and authorities and concluded that:

it seems that to be a ‘material’ part of a cause of action, the relevant part need not be a major part, but it must relate to the claim, or have some consequence for it. Something of consequence for the claim must have happened in the ACT.[3]

[3] Maxwell v Bedding (Australia) Pty Ltd [2016] ACAT 64 [62]

20.Adopting this approach, the first question, therefore, is whether ‘something of consequence’ for the claim happened in the ACT. This requires an examination of the nature of the claim.

21.The applicant’s main contention is that the vehicle did not meet the guarantee as to acceptable quality under section 54(1) of the ACL. This section provides:

54     Guarantee as to acceptable quality

(1)     If:

(a) a person supplies, in trade or commerce, goods to a consumer; and

(b) the supply does not occur by way of sale by auction;

there is a guarantee that the goods are of acceptable quality.

22.The applicant further says that:

(a)the vehicle was not of acceptable quality because it had a substantial defect in the form of engine failure; and

(b)the engine failure was a ‘major failure’ under section 259(3) of the ACL; and

(c)because of the major failure, the applicant was entitled to reject the goods and he did reject those goods on 8 May 2018; or

(d)alternatively, if the failure was not a major failure, the applicant was entitled to request that the failure be remedied in a reasonable time, and as the respondent failed to comply with this requirement, the applicant was entitled to reject vehicle under section 259(2)(b)(ii) of the ACL; and

(e)further, and in the alternative, the applicant seeks compensation for the defective goods.

23.The applicant contends that the major thing that happened was the ‘major failure’ or the ‘minor failure’, either of which occurred in the ACT. The applicant submitted that:

A cause of action arises where there is a breach of those statutory rights. Here the Applicant has alleged a breach of s 54 guarantee as to acceptable quality under the ACL because the vehicle broke a little over 9 months after purchase. A breach occurs when there is a major failure or a non-major failure of this guarantee…[4]

[4] Applicant’s submission on jurisdiction 26 October 2018 [2]

24.Interestingly, the applicant does not contend that the vehicle was defective at the point of sale, or even that there is a latent defect. He submitted that:

The applicant has not alleged that the vehicle purchased was defective because the days when one had to establish a hidden or latent defect are gone.  The focus of the ACL is on whether there was a major or non-major failure of a guarantee at the time the fault or defect occurred.[5]

[5] Applicant’s final submissions [4]

25.In other words, on the applicant’s argument, the status of the vehicle at the time of supply is irrelevant — it is enough that the vehicle simply failed to live up to the standards expected by the ACL. If this argument is correct, then it follows that the failure itself is a material part of the cause of action, sufficient to found geographic jurisdiction for the purpose of section 262 of the Magistrates Court Act.

26.I do not necessarily accept the entirety of the applicant’s submission – indeed, some authorities appear to suggest that it is necessary to show the existence of a latent or other defect at the time of the supply of the goods.[6] This was not sufficiently argued before me that I can reach a conclusion. If a latent defect, however described, is necessary, then it appears unlikely that jurisdiction will arise in the ACT only because the defect is identified here. However, further complicating matter, in many cases (not necessarily this one), the cause, origin and even timing of the defect may be a question of fact that requires a full hearing to determine. It may also be that the fact of the failure and the right to reject or repair that follow that are a material part of a claim for a breach of section 54 of the ACL. It is unfortunate that such uncertainty exists under legislation that is intended to protect consumers, particularly given the respondents will often be small business. In such circumstances, neither party is well placed to make submissions on jurisdiction.

[6] See discussion in Jeannie Marie Paterson, ‘The New Consumer Guarantee Law and the Reasons for Replacing the Regime of Statutory Implied Terms in Consumer Transactions’ (2011) 35(1) Melbourne University Law Review 252

27.Ultimately, however, I do not need to determine this issue, because I am satisfied that the Tribunal has jurisdiction for another reason: that is, the contract was formed in the ACT.  I now turn to why I am so satisfied.

28.The applicant says that a contract was formed by way of the offer and acceptance of 25 June 2017. The respondent says that the contract was not formed until after the signing of the relevant paperwork (that so-described ‘contract’) at the respondent’s business premises in NSW. This raises a couple of questions: first, whether a contract can be formed by informal text message, and secondly where the contract was formed as a consequence of the exchange of text messages.

29.In relation to the first question, in Avopiling (WA) Pty Ltd v Central Systems Pty Ltd [2015] WASC 82 (Avopiling) the Western Australian Supreme Court considered whether relatively informal text messages were capable of constituting a binding agreement to settle a dispute. Allanson J opined that:

The question of whether the parties had an intention to create a legally binding contract is determined objectively by drawing inferences from what they said and did in the course of their dealings. What would each party, by its words and conduct, have led a reasonable person in the position of the other party to believe: Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; 218 CLR 451 [22]; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 [40] - [41] To resolve this dispute the court does not search for uncommunicated motives or intentions: Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95 [25]. The parties being at odds on whether there was a legally binding contract formed, Avopiling, as the party asserting the contract, bears the onus of proof: see Ermogenous [26]. I am satisfied it has proved an agreement.

The fact that the parties intended to later embody their agreement in a formal contract does not deny the existence of an agreement, with the intention to be immediately bound. It is not necessary to repeat the classes identified by Dixon CJ, McTiernan & Kitto JJ in Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353, 360 - 362. It is sufficient to refer to the statement of principle in GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631, 634 (McHugh JA):

[T]he decisive issue is always the intention of the parties which must be objectively ascertained from the terms of the document when read in the light of the surrounding circumstances: Godecke v Kirwan (1973) 129 CLR 629 at 638; Air Great Lakes Pty Ltd & Ors v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 at 332 - 334, 337. If the terms of a document indicate that the parties intended to be bound immediately, effect must be given to that intention irrespective of the subject matter, magnitude or complexity of the transaction. :[7]

[7] [2015] WASC 82 [30]–[31]

30.In that case, his Honour was satisfied that a contract was formed, notwithstanding the informal language, because:

[The parties] were communicating through a medium which normally lends itself to social rather than commercial purposes. What is said by the parties in correspondence needs to be considered in the context of the correspondence and the whole of the parties' conduct: see Geebung Investments Pty Ltd v Varga Group Investments No 8 Pty Ltd (1995) 7 BPR 14,551, 14,552 (Gleeson CJ); 14,570 (Kirby P). I take into account the medium they used, and the informal nature of some of their comments. But while they also exchanged less formal remarks, the words used regarding the agreement included reference to both accepting an offer and reaching settlement.

31.The terms of the agreement between the parties in the present were not as complex as those in Avopiling. In this case, the negotiations for the sale of a vehicle, the terms of which were primarily the sale price and the condition of a successful test drive. Those terms were apparently agreed, along with the agreement that the applicant would journey to NSW to collect the vehicle.  I have considered whether the text messages, as informal as they were, were sufficient to, objectively, constitute a binding agreement. I am satisfied that they were, and that the intention of both parties to be bound by that agreement evidenced by the payment of the deposit. I am satisfied that the parties agreed enter into to a legally binding arrangement.

32.The sale was ‘subject to test drive’. This was clearly a ‘condition precedent’ to the applicant’s performance of his obligations under the agreement, but it did prevent the agreement coming into existence of the agreement itself.

33.I note for completeness that the document relied upon by the respondent as constituting ‘the contract of sale’, the Form 5, does not appear to be a contract at all, but rather a regulatory notice required under the Motor Dealers and Repairers Act 2013 (NSW). It sets out various rights and obligations as per the legislation.[8] The respondent has not suggested that this Act, or any other NSW legislation, operates in such a way as to prevent the contract being formed in the ACT or confer exclusive jurisdiction in NSW.

[8] Citing sections 62, 63, 64 and 72 of the Motor Dealers and Repairers Act 2013

34.In terms of where the agreement was formed, the general rule is that an agreement is concluded when and where communication of acceptance is received. There is a rule known as the ‘postal acceptance rule’, which provides that where postal acceptance is contemplated by the parties (whether expressly or by implication) acceptance occurs when and where the letter is posted. Numerous cases have established that in situations where a contract is accepted by instantaneous communication such over the telephone, the postal acceptance rule does not apply and the contract is made where the acceptance is received.[9] This is, with some complexities, confirmed by legislation in both NSW[10] and the ACT.[11]

[9] Entores Ltd v Miles Far East Corp [1955] 2 QB 327; Brinkibon v Stahag Stahl und Stahlwarenhandelsgessellschaft mbH [1983] 2 AC 34; Olivaylle Pty Ltd v Flottweg GMBH & Co KGAA (No 4) [2009] FCA 522

[10] Electronic Transactions Act 2000 (NSW) section 13(1)(a)

[11] Electronic Transactions Act 2001 (ACT) section 13(1)(a)

35.In this case:

(a)the applicant offered to purchase the vehicle for $4,500, while in the ACT;

(b)the respondent accepted that offer in NSW, but communicated the acceptance by instantaneous communication; and

(c)the instantaneous communication was received in the ACT.

36.On this basis, I am satisfied that the contract of sale was formed in the ACT as acceptance of the offer was communicated by text message, received in the ACT. Accordingly, I am satisfied that the contract was made in the Territory. The formation of the contract is a material part of the cause of action and is sufficient to ground the jurisdiction of the Tribunal.

37.I have noted the respondent’s concerns about the implications for its business practices if the Tribunal makes “a finding that the mere use of a web site involves the carrying on of business world-wide”.[12] That is not the consequence of this decision. Jurisdiction is based not on the representation on the website, but by the nature of the contractual negotiations between the parties. This decision leaves the respondent in the unfortunate position of having to defend a case brought in another jurisdiction, but this is the consequence of the casual negotiation processes adopted.

[12] Respondent’s submission [10]

38.Jurisdiction is not necessarily a ‘either or’ matter. This Tribunal may share jurisdiction in relation to matter with another court or tribunal in another jurisdiction — although once a matter has been commenced in one jurisdiction issue estoppel will prevent it being litigated in another. Where one jurisdiction may be a more convenient form than another there may be grounds to have the matter transferred between jurisdictions, but that is not the question before the Tribunal.

39.It is worth noting that these proceedings could alternatively be commenced in NSW, in which case there is unlikely to be any question as to geographical jurisdiction, because the respondent’s registered office is in NSW. Given the ACT’s proximity to Queanbeyan, commencement in NSW may be the more practical solution where geographic proximity in in doubt. Nonetheless I am satisfied that the tribunal has jurisdiction to hear this matter. I am not asked to consider whether it is in fact the most convenient.

Order

40.The Tribunal has jurisdiction to determine the matter.

41.The matter is set down for telephone directions on Wednesday 16 January at 4:00pm.

………………………………..

Senior Member H Robinson

HEARING DETAILS

FILE NUMBER:	XD 1211/2018
PARTIES, APPLICANT:	Niaz Ahmed
PARTIES, RESPONDENT:	Craig Moore Wholesale Cars Pty Ltd
COUNSEL APPEARING, APPLICANT	N/A
COUNSEL APPEARING, RESPONDENT	N/A
SOLICITORS FOR APPLICANT	Consumer Law Centre of the ACT
SOLICITORS FOR RESPONDENT	Mr M Flaherty, Solicitor
TRIBUNAL MEMBERS:	Senior Member H Robinson
DATES OF HEARING:	9 November 2018