Century 21 Australia Pty Ltd v The State of Victoria

[2015] HCATrans 74

[2015] HCATrans 074

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S27 of 2015

B e t w e e n -

CENTURY 21 AUSTRALIA PTY LTD ACN 003 145 346

Plaintiff

and

THE STATE OF VICTORIA

First Defendant

SECRETARY TO THE DEPARTMENT OF JUSTICE AND REGULATION FOR VICTORIA

Second Defendant

Directions hearing

GAGELER J

TRANSCRIPT OF PROCEEDINGS

FROM CANBERRA BY VIDEO LINK TO SYDNEY AND MELBOURNE

ON TUESDAY, 7 APRIL 2015, AT 2.12 PM

Copyright in the High Court of Australia

MR C.J. BEVAN:   If your Honour please, I appear with my learned friend, MR L.P. MENZIES, for the plaintiff.  (instructed by Jemmeson & Fisher Solicitors).

MS K.E. FOLEY:   Your Honour, may it please the Court, I appear on behalf of the defendants.  (instructed by Victorian Government Solicitor)

HIS HONOUR:   Now, Mr Bevan, I hope you have been provided with a piece of paper which I wrote on in the last hour or so.

MR BEVAN:   I have, your Honour, and what is proposed is acceptable to my client.

HIS HONOUR:   Thank you, Mr Bevan.  There are some aspects of the case that I want to ask you about, Mr Bevan, in a moment, but Ms Foley may I ask you, have you also received that piece of paper?

MS FOLEY:   I have, your Honour, and the defendants are also content with the directions that are set out in that document.  At the appropriate time, I wish to address your Honour very briefly on two matters arising from the plaintiff’s outline of submissions but it may be better for me to do that once you have heard from my learned friend.

HIS HONOUR:   Thank you very much.  Mr Bevan, not all of your section 109 arguments appear to me, as presently advised, to have the same cogency.

MR BEVAN:   Yes.

HIS HONOUR: How, for example, do you put and make relevant to the liability that is asserted in the Victorian proceedings, the inconsistency that you say exists between section 43(3) of the Estate Agents Act and the misleading and deceptive conduct provisions of the competition and consumer law?

MR BEVAN:   In a nutshell, the argument there is that the Competition and Consumer Act has enunciated a regime for the liability for misleading and deceptive conduct or unconscionable conduct, nominates the party responsible for the conduct or those who aid and abet and specifies the remedies available to those who suffer loss insofar as the conduct of the franchisee in this case, the Victorian Realty Group, either constitutes misleading and deceptive conduct or unconscionable conduct. 

The argument is that ‑ to adopt the language of decisions such as Telstra and Wenn v Attorney‑General ‑ we say there is a direct collision where the State law, if allowed to operate, would impose an obligation greater than that for which the federal law has provided.  That is enunciated in Telstra, and then the relevant statement of principle in Wenn is:

There are significant areas of liberty designedly left and which should not be closed up.

That is adopting what was said in Wenn v Attorney‑General. So that the argument is section 43(3) extends the scope for liability to a franchisor who has no role in the operation of the franchise business which operates as a real estate agent in Victoria and extends the liability of the real estate agent under the Estate Agents Act from the party responsible for the conduct or those who aided or abetted it to a third party, in this case, the franchisor under a franchise agreement as defined in section 43(5) of the Victorian Act.

HIS HONOUR: So, assume you are right that there is a direct inconsistency between the misleading and deceptive conduct provision of the Commonwealth Act and section 43(3) of this State Act, the consequence of invalidity under section 109 of the Constitution would be that the State provision is inoperative to the extent of that inconsistency.

So, I can understand the argument to be that section 43(3) could not constitutionally apply to a liability created by the Trade Practices Act, but is the argument wider than that, and if it is not wider than that, how is it that you say that a read down section 43(3) is an answer to the claims that are made in the Victorian County Court proceedings?

MR BEVAN:   Firstly, yes, the argument is wider than the way your Honour has formulated it.  In particular, we say the liability is limited to those who either are responsible for the conduct in this case, misappropriations or those who aid or abet it.  We say it goes further than that by attributing a liability to a third party who has no role in the management of the business which was responsible for that misappropriating conduct.

Secondly, our case is that section 43(3) is valid to the extent that it makes the franchisee liable. Indeed, the whole of 43 is valid insofar as it creates obligations for a franchisee to register a franchise agreement to be liable for defalcations to be liable for damages for negligence which are unfunded by an insurer, and we say it is invalid only to the extent that it purports to make the franchisor jointly and severally liable; that is to say, it is only invalid to the extent that it operates to extend the subrogation provisions later in the Act.

HIS HONOUR:   Mr Bevan, does any part of that aspect of your case involve characterising the defalcations that are pleaded in the County Court

proceedings as breaches of fiduciary duties and breaches of particular State statutes as unconscionable conduct or misleading and deceptive conduct within the meaning of the relevant Commonwealth legislation?

MR BEVAN:   Yes, our case involves the proposition that misappropriating money held on trust would constitute either misleading and deceptive conduct or unconscionable conduct as against the owners of those funds who are consumers within the meaning of the Competition and Consumer Act.

HIS HONOUR:   Well, that is a factual nuance that may need to be teased out in the course of considering the steps proposed in these directions.  It appears untutored by argument to be a long bow to say that any misappropriation must also amount to misleading and deceptive conduct.  I can understand that a particular misappropriation may have that aspect to it but I will leave that with you for the moment, Mr Bevan.

MR BEVAN:   If your Honour please.

HIS HONOUR:   But the details of some of these arguments and their relationship to the facts might need to be looked at with some care in the course of preparing the matter in accordance with the directions with which you are both content.

MR BEVAN:   If your Honour please.

HIS HONOUR:   Is there anything else you wanted to say at this stage, Mr Bevan?

MR BEVAN:   No, thank you, your Honour.

HIS HONOUR:   Thank you.  Ms Foley.

MS FOLEY:   Thank you, your Honour.  There are three things, if I might briefly address your Honour.

HIS HONOUR:   Yes.

MS FOLEY:   The first goes to the point that has just been raised with my learned friend in relation this, I think as your Honour put it, factual nuance.  That fact, if it is set out in the pleadings as my learned friend has described it, may end up being an issue that will not be agreed between the parties, and I just want to say that because the submissions that the defendants filed based on the material that we had at the time indicated that there was no factual dispute between the parties and that certainly was the case, but the dialogue that your Honour has just had with my learned friend, as your Honour has anticipated, may end up teasing out some facts that cause some difficulty.  I just want to make that point, given what was said in our outline of submissions.  Two other ‑ ‑ ‑

HIS HONOUR:   Ms Foley, I should make clear, that dialogue was meant to be simply a sample.  I was not attempting to tease out what might be all of the factual nuances within the case.

MS FOLEY:   Indeed, your Honour, and, yes ‑ ‑ ‑

HIS HONOUR:   Go ahead.

MS FOLEY:   I expect that the special case process will make clear those issues and hopefully there will not be too many of them, but given what was said in our outline, I wanted to make that clear.  Your Honour, there are two issues arising out of the plaintiff’s outline of submissions which I want to briefly express the defendants’ disagreement with.  The first is stated in paragraph 1(a) of the plaintiff’s outline of submissions, if your Honour has it.

HIS HONOUR:   Yes, you are going to tell me that there is no reason why these proceedings cannot be remitted to the County Court.

MS FOLEY:   Yes.  Obviously, the defendants’ position is not that they should be, but we did just want to make clear that the statement that the proceedings cannot be remitted to the County Court on the basis it is without jurisdiction is not correct ‑ ‑ ‑

HIS HONOUR:   Yes.

MS FOLEY: ‑ ‑ ‑ by virtue of section 39(2) of the Judiciary Act.  The second point I want to briefly make, your Honour, relates to paragraph 4(a) of the plaintiff’s outline ‑ ‑ ‑

HIS HONOUR:   Yes.

MS FOLEY: ‑ ‑ ‑ in which it is contended that the Court’s original jurisdiction is engaged because the proceeding involves an action between a State and a resident of another State. The resident that the plaintiff speaks of is the plaintiff itself which is a corporation and the case law establishes that only a natural person can be a resident for the purposes of section 75(iv).

HIS HONOUR:   Yes.

MS FOLEY:   The defendant just makes those two points, your Honour, for completeness, but otherwise the defendants are content with the directions that your Honour has proposed.

HIS HONOUR:   Yes, thank you.  If there is no satisfactory resolution of the potential factual issues in the case, we may have to revisit the question of remitter when the matter comes before me next time, but for the moment ‑ ‑ ‑

MS FOLEY:   Indeed.

HIS HONOUR: ‑ ‑ ‑ we will leave that, and perhaps the reliance on section 75(iv) of the Constitution could be tidied up in the amended statement of claim, Mr Bevan.

MR BEVAN:   If your Honour please.

HIS HONOUR:   Have the parties had an opportunity to consider what dates might go into these proposed directions?

MS FOLEY:   Your Honour, if it is of assistance, I have not liaised with my learned friend about this, but 1(a), the date there should be 9 April and I believe the other dates will follow from that.

HIS HONOUR:   Well, very well.  We will put 9 April there.  Mr Bevan, it is unrealistic you being in Sydney and Ms Foley being in Melbourne to expect you to confer easily.  We may as well do it by video link.

MR BEVAN:   Yes.

HIS HONOUR:   Do you want a moment to consider what dates flow on from there?

MR BEVAN:   Would 28 April be acceptable for 1(b), your Honour?

HIS HONOUR:   Yes.  Ms Foley, do you have a difficulty with 28 April?

MS FOLEY:   No, your Honour.

HIS HONOUR:   Thank you.  That brings us to 3(a).  Now, I had suggested that it be the same date, 28 April.

MR BEVAN:   Acceptable, your Honour.

MS FOLEY:   I believe we need a date for paragraph 2, your Honour.

HIS HONOUR:   We do, of course.  Yes, I am so sorry.  What do you suggest?

MS FOLEY:   The same day, I think 28 April would be acceptable if the parties want to keep this moving, your Honour.

MR BEVAN:   Acceptable.

HIS HONOUR:   28 April?

MR BEVAN:   Acceptable, your Honour.

HIS HONOUR:   Very well.  I just want the dates to be realistic.  So 3(b), Ms Foley, I think that is you?

MS FOLEY:   Yes, your Honour.  Two weeks after that, your Honour.  We expect the defence will be rather simple.

HIS HONOUR:   So what is two weeks after 28 April?

MR BEVAN:   12 May.

HIS HONOUR:   12 May.

MR BEVAN:   Yes.

MS FOLEY:   Thank you.

HIS HONOUR:   Actually, 28 April is too soon for the two.  I want the pleadings finished in the County Court before there is any application for removal, so ‑ ‑ ‑

MR BEVAN:   Perhaps if they could be 12 May then, your Honour.

HIS HONOUR:   I think maybe a little later, Mr Bevan, if ‑ ‑ ‑

MR BEVAN:   If your Honour please.

HIS HONOUR:   Maybe 19 May?  Yes, let us make that 19 May.

MR BEVAN:   If your Honour please.

HIS HONOUR:   We will make 3(c), 19 May.

MR BEVAN:   If your Honour please.

HIS HONOUR:   Now, some time fairly soon after 19 May the matter should come back before me.  Would Monday, 25 May be acceptable to the parties?

MR BEVAN:   That is suitable, your Honour.

MS FOLEY:   Yes, your Honour.

HIS HONOUR:   Is any particular time more suitable than another, Mr Bevan?

MR BEVAN:   2.00 pm is acceptable again, your Honour.

HIS HONOUR:   2.00 pm?

MR BEVAN:   Yes.

HIS HONOUR:   Very well, and is there is anything further either party wishes to say about the form of those orders?

MR BEVAN:   No, thank you, your Honour.

MS FOLEY:   No, your Honour.

HIS HONOUR:   Very well.  It is probably best that I read them onto the transcript.  The directions I make are as follows:

1.Note the intentions of the Secretary to the Department of Justice and Regulation for Victoria (“the Secretary”) and of Century 21 Australia Pty Ltd (“Century 21”) respectively, subject to any necessary leave of the County Court of Victoria and to any necessary consent of other parties to Proceeding No CI‑15‑00640 now pending in the County Court of Victoria (“the County Court proceedings”) to file and serve in those proceedings:

(a)      on or before 9 April 2015, a further amended statement of claim, substantially in the form of Exhibit BRU 2 to the affidavit of Blair Russell Ussher sworn in these proceedings 31 March 2015;

(b) on or before 28 April 2015, a defence to the further amended statement of claim, specifically admitting all material allegations of fact and specifically pleading and particularising the constitutional invalidity of section 43(3) of the Estate Agents Act 1980 (Vic).

2.Direct that any application for removal of the County Court proceedings into this Court pursuant to section 40(1) of the Judiciary Act 1903 be made on or before 19 May 2015. If such application is made by the Attorney‑General of Victoria, or otherwise with the consent of all parties, dispense with the requirements of Part 26 of the High Court Rules 2004 (Cth) other than sub‑rules 21.01(a), (b) and (c)

3.Direct that in these proceedings:

(a)on or before 28 April 2015, Century 21 file and serve any amended statement of claim;

(b)on or before 12 May 2015, the State of Victoria and the Secretary file and serve a defence; and

(c)on or before 19 May 2015, Century 21 file a draft of any special case as might be agreed between the parties.

4.List these proceedings and any application for removal of the County Court proceedings as might be made in accordance with direction 2 before me at 2.00 pm on 25 May 2015 for further directions or for the making of orders.

5.The cost of this directions hearing are to be the costs in the cause in these proceedings.

Those are the ‑ ‑ ‑

MS FOLEY:   Your Honour, if I could just raise one thing.  In reading out paragraph 2, I believe your Honour referred to sub‑rules 21.01 and I think your Honour meant 26.01.

HIS HONOUR:   I definitely meant 26.01.  Thank you for that.  Subject to that correction, those are the orders I now make.  Thank you very much, Mr Bevan and Ms Foley.

AT 2.35 PM THE MATTER WAS ADJOURNED