CNH Capital Australia Pty Ltd v Pratley (No.1)
[2009] FMCA 454
•15 May 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CNH CAPITAL AUSTRALIA PTY LTD v PRATLEY (No.1) | [2009] FMCA 454 |
| BANKRUPTCY – Creditor’s Petition – respondent debtor opposition to Creditor’s Petition–challenge to the validity of s.52 of the Federal Magistrates Act 1999 (Cth) whether application involves a matter arising under the Constitution – application dismissed. CONSTITUTIONAL LAW –. Notice under s.78B of the Judiciary Act 1903 (Cth). |
| Commonwealth of Australia Constitution Act 1900 (Imp), s.117 Federal Magistrates Act 1999 (Cth), s.52 Judiciary Act 1903 (Cth), s.78B Federal Magistrates Court Rules 2001 (Cth), r.8.01 |
| Australian Litigation Fund Pty Ltd v Mearns (No.3) [2005] FMCA 1870 CNH Capital Australia Pty Ltd v Pratley (No.3) [2009] FMCA 456 In Finlayson; ex parte Finlayson (1997) 72 ALJR 73 |
| Applicant: | CNH CAPITAL AUSTRALIA PTY LTD |
| Respondent: | ANTONY JOHN PRATLEY |
| File Number: | SYG 2593 of 2008 |
| Judgment of: | Lloyd-Jones FM |
| Hearing dates: | 24 March & 27 April 2009 |
| Delivered at: | Sydney |
| Delivered on: | 15 May 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr A.P. Spencer |
| Solicitors for the Applicant: | Bayside Solicitors |
| Solicitors for the Respondent: | The respondent appeared in person by telephone |
ORDERS
That the respondent’s application for an adjournment of the hearing of the Creditor’s Petition is refused.
That there be no order to costs.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 2593 of 2008
| CNH CAPITAL AUSTRALIA PTY LTD |
Applicant
And
| ANTONY JOHN PRATLEY |
Respondent
REASONS FOR JUDGMENT
The proceedings
At the time of writing this judgment, the Court has not received any notifications from the various Attorney Generals served with the s.78B Notices.
This judgment addresses the preliminary question in respect of the Constitutional question raised by the respondent debtor, Antony John Pratley. The substantive matter in these proceedings is by way of a Creditor’s Petition. The applicant creditor, CNH Capital Australia Pty Ltd (ACN 069 132 396) (“CNH”), seeks a sequestration order against the estate of Mr Pratley. Mr Pratley opposes the making of a sequestration order in a Notice Stating Grounds of Opposition to the Petition filed on 10 November 2008. I have addressed this issue in a separate judgment: CNH Capital Australia Pty Ltd v Pratley (No.3) [2009] FMCA 456.
By consent on 24 February 2009, the hearing of the Creditor’s Petition was adjourned to 24 March 2009. On 23 March 2009, a Notice of Constitutional Question arising within the proceedings under s.78B of the Judiciary Act 1903 (Cth) was filed in the proceedings. On
24 March 2009, the matter was transferred by the Duty Registrar to this Court as the purported Notice under s.78B of the Judiciary Act may prevent the Court from considering the Petition until the issues raised in that Notice are resolved.
Section 78B of the Judiciary Act states:
Notice to Attorneys-General
(1) Where a cause pending in a federal court including the High Court or in a court of a State or Territory involves a matter arising under the Constitution or involving its interpretation, it is the duty of the court not to proceed in the cause unless and until the court is satisfied that notice of the cause, specifying the nature of the matter has been given to the Attorneys‑General of the Commonwealth and of the States, and a reasonable time has elapsed since the giving of the notice for consideration by the Attorneys‑General, of the question of intervention in the proceedings or removal of the cause to the High Court.
(2) For the purposes of subsection (1), a court in which a cause referred to in that subsection is pending:
(a) may adjourn the proceedings in the cause for such time as it thinks necessary and may make such order as to costs in relation to such an adjournment as it thinks fit;
(b) may direct a party to give notice in accordance with that subsection; and
(c) may continue to hear evidence and argument concerning matters severable from any matter arising under the Constitution or involving its interpretation.
(3) For the purposes of subsection (1), a notice in respect of a cause:
(a) shall be taken to have been given to an Attorney‑General if steps have been taken that, in the opinion of the court, could reasonably be expected to cause the matters to be notified to be brought to the attention of that Attorney‑General; and
(b) is not required to be given to the Attorney‑General of the Commonwealth if he or she or the Commonwealth is a party to the cause and is not required to be given to the Attorney‑General of a State if he or she or the State is a party to the cause.
(4) The Attorney‑General may authorize the payment by the Commonwealth to a party of an amount in respect of costs arising out of the adjournment of a cause by reason of this section.
(5) Nothing in subsection (1) prevents a court from proceeding without delay to hear and determine proceedings, so far as they relate to the grant of urgent relief of an interlocutory nature, where the court thinks it necessary in the interests of justice to do so.
The Notice of Constitutional Question arising within a proceedings – s.78B of the Judiciary Act filed on 23 March 2009 states:
Key words: “Forum shopping”
Presently s.52 of the Federal Magistrates Court Act permits an applicant to strategically exclude the defendant from exercising his right to defend by choosing a registry prohibitively remote from the defendant and the evidence in the case. State Courts would not permit this to occur by reason of their legislation and the common law. The Federal Magistrates may or may not consider itself bound by the doctrine “forum non conveniens” and the above possible abuse arises.
1. The power given by the Commonwealth Parliament to a Federal Magistrate or the Court to decide to hear a case at any place in Australia contains no express limitations and allows for a resident of Perth to have to fly to Melbourne to defend a proceeding filed in Melbourne notwithstanding there being no factual connection to Melbourne.
2. Australian Corporations with offices in several States and Territories could engage in “forum shopping” to put it beyond the financial reach of a defendant to defend a relatively small claim.
3. Imagine Qantas issuing in Darwin against a contractor from Melbourne who supplied a special service in Melbourne, say 20 cushions for business class. He seeks payment; Qantas counters “the cushions were defective” and demand their deposit back. Qantas issues a claim in Darwin. It might be abuse of process but the sole proprietor cushion supplier can’t afford the airfares to ship him and his witnesses to Darwin to argue that.
4. The apparently unlimited power of Section 52 affects every resident of every state of Australia and is open to abuse by wealthier litigants restricting access to justice to those who can afford flights across Australia for themselves and their witnesses.
The Questions upon which the Attorney Generals of each State, or the Attorney General of a single State or the Commonwealth Attorney General may wish to intervene and make submissions.
5. Did the Federal Parliament intend the power given to a Magistrate or a Federal Magistrates Court in Section 52 of the Federal Court Act to be unlimited?
6. If yes to 5, Section 52 of the Federal Court Act ultra vires
(i) it conflicts with the prohibition contained in s.117 of the Constitution;
(ii) there is no obligation case upon the Federal Magistrate to exercise his power in judicially and no right of review despite the potentially prejudicial nature of the power.
What relevance is section 52 to ordinary Australians?
The Federal Magistrates Court was created at a low cost means of providing all Australians with access to justice. Access to justice includes the cost of obtaining justice. Whilst forum shopping is being permitted by s.52 wealthier litigants use this to obtain the advantage of choosing a venue geographically remote and prohibitively expensive to access and, as a result, the defendant cannot afford to defend and his access to justice is surreptitiously denied.
Section 52 of the Federal Magistrates Act 1999 (Cth) states:
Venue
(1) The Federal Magistrates Court may sit at any place in Australia.
(2) The Federal Magistrates Court or a Federal Magistrate may, at any stage of a proceeding in the Federal Magistrates Court, order that:
(a) the proceeding; or
(b) a part of the proceeding;
be conducted or continued at a place specified in the order, subject to such conditions (if any) as the Federal Magistrates Court or Federal Magistrate imposes.
Rule 8.01 of the Federal Magistrates Court Rules 2001 (Cth) states:
Change of venue
(1) A party who files an application or response in a proceeding may apply to have the proceeding heard in another registry of the Court.
(2) In considering an application, the Court must have regard to:
(a) the convenience of the parties; and
(b) the limiting of expense and the cost of the proceeding; and
(c) whether the matter has been listed for final hearing; and
(d) any other relevant matter.
Section 117 of the Commonwealth of Australia Constitution Act 1900 (Imp) states:
Rights of residents in States
A subject of the Queen, resident in any State, shall not be subject in any other State to any disability or discrimination which would not be equally applicable to him if he were a subject of the Queen resident in such other State.
Applicant creditor’s submissions
Mr Spencer, appearing for the applicant creditor, submits that s.52 of the Federal Magistrates Act 1999 (Cth) (“the Act”) cannot be read so as to confine a party appearing in the Federal Magistrates Court to attend proceedings wherever they have been instituted without any recourse to complain about how unfair that location may be to that party. In effect, the s.78B Notice appears to suggest that s.52 gives the Federal Magistrates Court the power to sit anywhere in Australia and to compel any citizen to appear there without the opportunity to complain that this requirement operates unfairly against that particular citizen.
Mr Spencer submits that s.52(1) gives the Court the power to conduct its business at any place within Australia without the consideration to State boundaries or other location. Effectively this gives any member of this Court the power to sit anywhere in Australia as a Federal Magistrate without geographically limiting that Federal Magistrate’s jurisdictional power. Mr Spencer submits that s.52(2) makes it clear that the Court may move proceedings or conduct a part of proceedings in another place if it chooses to do so. That choice is constrained by considerations of fairness and the interests of justice. However, if the relevant Federal Magistrate is satisfied that it is appropriate to conduct part of the proceedings in another location, the Judicial Officer has the jurisdictional power to do so.
Mr Spencer also submits that that r.8.01 of the Federal Magistrates Court Rules 2001 (Cth) makes it clear that a party to proceedings may apply to have those proceedings heard in another registry of the Court and sets out four discretionary powers to be taken into account by the Court when entertaining such an application. Mr Spencer argues that s.52 empowers the Court to sit at a convenient venue determined by the registry where the application was filed, or subsequently at an alternative location subject to an application under r.8.01. Mr Spencer submits that it is incumbent upon the party serving a s.78B Notice to satisfy the Court that in fact they have a cause of action involving a Constitutional question: Australian Litigation Fund Pty Ltd v Mearns (No.3) [2005] FMCA 1870 per Barnes FM.
The Court was also referred to In Finlayson; ex parte Finlayson (1997) 72 ALJR 73 at [74] per Toohey J (sitting as a single Judge in the High Court) where His Honour stated:
In terms of s.78B, a cause does not “involve” a matter arising under the Constitution or involving its interpretation merely because someone asserts that it does. That is not to say that the strength or weakness of the proposition is critical. But it must be established that the challenge does involve a matter arising under the Constitution. The applicant’s argument is based on a misunderstanding of the structure of the Family Court. It involves no more than a consideration of the division of functions that is a feature of any court.
Mr Spencer submits that the issues addressed in Finlayson are the same as those presently before this Court in that there is a misunderstanding about the effect of s.52 and the Rules. Therefore there is no constitutional issue that should prevent this matter from proceeding.
Respondent debtor’s submissions
Mr Pratley forwarded written submissions that Mr Spencer’s submissions were incorrect and misconstrued the two provisions. Mr Pratley suggests that s.52 of the Federal Magistrates Act and r.8.01 of the Federal Magistrates Court Rules are alternatives. It is submitted that the Court may on its own volition under s.52 transfer the proceedings to another registry or alternatively a party may apply to another Court for an order under r.8.01 for the proceedings to be transferred to another registry. It is acknowledged that under r.8.01 power is limited in that it requires the Federal Magistrates Court to have regard to four factors which is in contrast to the s.52 power which contains no limitation.
Mr Pratley argues that Mr Spencer submits that the express and unlimited power in s.52 was “construed by considerations of fairness and interests of justice”. He further submits that this was done without pointing to anything in s.52 that evidences it as so constrained. Mr Pratley argues that Mr Spencer’s submission that s.52 is a power capable of being exercised whether or not a party has made an application under r.8.01 to transfer the proceedings, is a misunderstanding of the provisions. Nothing constrains the Federal Magistrates Court from itself determining to transfer proceedings to another registry in Australia. The Court’s decision would be reviewable as there is a requirement for it to consider four factors. However a decision made under s.52 (in the absence of an application under r.8.01) is not reviewable because there is no requirement in the wording of the section for the Court to act judicially or for it to consider any factors.
Mr Pratley further argues that the Court can require a party to attend a venue a long distance from his/her home or the party risks judgment against him/her if they cannot afford to attend. He submits that it is “mischievous” to assert that the Court would never exercise power in this way and that this fails to consider the non-reviewability of the s.52 decision and ignores the Constitutional issue, which is:
Did the parliament of the Commonwealth of Australia exceed its own constitutional powers when it purported to give unlimited and non-reviewable powers to the Federal Magistrates Court under s.52 of the Federal Magistrates Court Act.
Mr Pratley submits that s.52 of the Federal Magistrates Act exceeds the Constitutional power to make laws because it may impose greater financial, evidentiary and time burdens on a party residing in one Australian state rather than another. That results in a conflict with s.117 of the Constitution which limits the legislative powers of the Commonwealth to ensure no discrimination is suffered by a resident of a state solely by reason of his residency of that state.
At the hearing of 24 March 2009, Mr Pratley raised the issue of a New South Wales District Court decision on Victorian law. Mr Pratley submits that the NSW District Court should not have made a judgment on Victorian law. The contract is a Victorian contract and pertains to Victorian law and Victorian Fair Trading Law. He submits that the matter should have been brought to a Victorian Court.
Consideration
I brought to Mr Pratley’s attention that the s.78B Notice contains no reference to the issue of a NSW Court making a decision in respect of Victorian law. The s.78B Notice challenges the validity of s.52 of the Federal Magistrates Act but does not ventilate this jurisdictional issue.
The Court acknowledges that Mr Pratley appears a self-represented litigant and attended by telephone at his own election. During the hearing of 24 March 2009 he was located in what he described as “the middle of a paddock” which prevented him from taking notes of the proceedings. When the shortcomings of his s.78B Notice were pointed out to Mr Pratley, he requested an adjournment to amend the Notice. He also sought leave to file an application to transfer these proceedings from Sydney to Melbourne. In order to permit Mr Pratley to complete this task, I adjourned the hearing and made the following orders:
1.The respondent to file any amendment to the Notice of Opposition by 14 April 2009.
2.The applicant to file any reply by 21 April 2009.
3.The proceedings be adjourned until 27 April 2009 at 10.15am.
At the hearing of 27 April 2009 Mr Pratley indicated that he had forwarded to the Court by facsimile transmission the following documents:
a)An Interim application;
b)A reply to the judgment creditor’s response about the Notice on Constitutional questions; and
c)An affidavit in support of the interim application.
These documents were provided to the Court but not formally filed in the Court Registry. Leave was granted for Mr Pratley to file the documents in Court. I make the observation that the Court is not in receipt of any amendment to the s.78B Notice and consequently the issue remains as to whether the Creditor’s Petition should be further delayed by hearing the matters raised in the s.78B Notice. The Court was faced with the general contention that it is a duty of the Court not to proceed in this matter unless it could be established that there was some reason as to why the Court should not comply with s.78B of the Judiciary Act.
The authorities establish that it is insufficient for a person issuing a s.78B Notice to simply assert that they have a Constitutional cause. It is incumbent upon that party to satisfy the Court that they in fact have a cause which involves a constitutional question: Australian Litigation Fund v Mearns (No 3) (supra).
I note the submissions made by Mr Spencer and I agree that s.52 of the Federal Magistrates Act cannot be read as to confine a person appearing in the Court to attend proceedings wherever they are instituted, without any recourse to complain about the fairness of that location.
Section 52(1) of the Federal Magistrates Act gives the Court the power to conduct its business at any place within Australia without consideration to state boundaries or other locations. In effect, the Act gives me the power to sit anywhere in Australia as a Federal Magistrate without geographical limitations on my jurisdictional power. Section 52(2) gives the Court the power to move proceeding, or conduct a part of proceedings, in another place if it choses to do so and that mechanism is constrained by considerations of fairness and in the interests of justice. Consequently in circumstances where I am satisfied that it is appropriate to conduct part of these proceedings other than in the Registry in which it was filed, that would be permitted and within the Court’s jurisdictional power.
Similarly I agree with the submission made by Mr Spencer that r.8.01 provides that a party to proceedings may apply to have the proceedings heard in another registry of the Court and sets out four discretionary factors taken into account by the Court in entertaining such an application. So rather than s.52 of the Federal Magistrates Act constraining a defendant to a particular venue, that section empowers the Court to sit at a convenient venue to be determined by either the initiating Registry, or to relocate the proceedings in response to an application filed under r.8.01.
The file before me discloses that on at least two occasions the Duty Bankruptcy Registrar advised Mr Pratley that it is open to him to bring such an application seeking that transfer. This statement by the Registrar was in response to informal applications by Mr Pratley to transfer the matter. Mr Pratley took no prior steps before 27 April 2009 in filing the interim application. In the circumstances, it is not open to him to assert that his Constitutional rights have been infringed when he failed to take advantage of a procedure open to him set out in the Act and Rules as ventilated above.
The authorities establish that it is incumbent upon a party serving a s.78B Notice to satisfy the Court that they have a cause which involves a Constitutional question: Australian Litigation Fund Pty Ltd v Meahers (No.3) (supra).
The assertion that s.52 of the Federal Magistrates Act permits some kind of forum shopping so that an applicant can strategically exclude a respondent from exercising his/her right to defend the case by choice of location is not sustainable. As has happened in these proceedings, Mr Pratley has been able to attend all directions and hearings before the Court by telephone. While it is acknowledged that this form of appearance may not be ideal, he has not been denied attending on any occasion and the opportunity to ventilate the issues he seeks to put before the Court.
It further appears that Mr Pratley is either competent in the area of law discussed or, alternatively, is assisted by a person possessing legal skills. In the latter circumstance, there is no reason why that person could not also seek to attend by telephone. This Court is also able to provide video-link between various locations within Australia, should Mr Pratley believe it necessary for him to observe the proceedings visually. In the absence of any requirement for witnesses to give evidence under oath and to be cross-examined, the need for these facilities is diminished.
Mr Pratley’s complaint about the exercise of jurisdiction of the District Court of New South Wales is not formally contained in the s.78B Notice, nor has he amended that Notice when the defect was brought to his attention on 24 March 2009. It was pointed out to him that bankruptcy falls under Federal jurisdiction and that the relevant laws which apply in this Court in Sydney are uniform across Australia and that there is nothing unique about his matter being heard in Sydney. If there is a dispute about the relevant jurisdictions of the State Courts then that matter should have been returned and ventilated in the New South Wales Courts system.
The s.78B Notice that has been filed does not give the Court any cause to stay the hearing of the Creditor’s Petition. Mr Pratley’s argument about the capacity or power of the District Court of New South Wales being able determine matters involving Victorian law is not an issue which would cause this Court to adjourn the hearing of the Creditor’s Petition. A period of approximately one month was provided to
Mr Pratley to file various documents and, in particular, to amend the s.78B Notice to incorporate the claims in relation to the State’s jurisdiction. At the time of this hearing no amendment had been sought. In the circumstances I see no reason that the hearing of the Creditor’s Petition should not proceed.
I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of Lloyd-Jones FM.
Associate:
15 May 2009
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