Fox v Robinson & Anor
[2003] FMCA 107
•31 March 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| FOX v ROBINSON & ANOR | [2003] FMCA 107 |
| PRACTICE AND PROCEDURE – Trade practices – jurisdiction – sale of unit – whether s.6(3) of Trade Practices Act applies – relevance of communication and representation after contract executed – reliance upon representations in deciding whether to terminate contract during cooling off period – no power to transfer from Federal Magistrates Court to State Tribunal – accrued/associated jurisdiction – postal and telephonic communication. |
Building Act 1993 (Vic)
Domestic Building Contracts Act 1995,(Vic) ss.8, 54, 57
Trade Practices Act 1974, ss.6(3), 52
Fair Trading Act 1999 (Vic), s.11
Federal Magistrates Act 1999 (Cth), ss.10(1A), 18
Snyman v Cooper [1989] 91 ALR 209
Swan v Downes [1978] 34 FLR 36
Smolonogov v O’Brien (1982) 44 ALR 347
O’Brien vSmolonogov (1983) 53 ALR 107
Fencott v Muller (1983) 152 CLR 570
re Wakim; ex parte McNally (1999) 198 CLR 511
Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457
| Applicant: | VICTORIA JANE FOX |
| Respondents: | KRISTINE ANNE ROBINSON and GODDARD ELLIOTT |
| File No: | MZ 645 of 2001 |
| Delivered on: | 31 March 2003 |
| Delivered at: | Melbourne |
| Hearing Date: | 11 December 2001 |
| Judgment of: | McInnis FM |
REPRESENTATION
| Counsel for the Applicant: | Mr K Oliver |
| Solicitors for the Applicant: | Wainwright Ryan |
| Counsel for the First Respondent: | Mr A Hanak |
| Solicitors for the First Respondent: | Lucas Neale |
| Counsel for the Second Respondent: | Mr R De Brouwer |
| Solicitors for the Second Respondent: | Minter Ellison |
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MZ 645 of 2001
| VICTORIA JANE FOX |
Applicant
And
| KRISTINE ANNE ROBINSON and GODDARD ELLIOTT |
Respondents
REASONS FOR JUDGMENT
In this application Victoria Jane Fox (the Applicant) by application filed 21 August 2001 has made a claim against Kristine Anne Robinson (the First Respondent) and Goddard Elliott (the Second Respondent). The claim against the First Respondent arises from an agreement alleged to be entered into between the Applicant and that Respondent on or about 20 January 2001 in relation to the purchase of land and construction of a home on that land for the price of $173,000. Reliance is placed upon terms of the agreement alleged to include warranties that work would be carried out in a proper and workmanlike manner, that materials used in the works would be good and suitable for the purpose for which they were used and would be new, works would be carried out in accordance with all relevant laws including the Building Act1993 (Vic) (the Building Act) and Regulations made thereunder, that the works would be carried out with reasonable skill and care, that the home would be suitable for occupation at the time the work was completed and that the First Respondent was covered by insurance as required under the Building Act. Reliance is also placed on an implied term pursuant to s.8 of the Domestic Building Contracts Act1995 (Vic) (the DBC Act).
Further reliance is placed upon alleged representations by the First Respondent to the Applicant of a kind similar to the warranties to which I have referred. In the particulars subjoined to paragraph 4 of the Statement of Claim annexed to the Application, the Applicant refers to the representations of the First Respondent being transmitted by the First Respondent’s agent to the Applicant’s solicitors who are now the Second Respondent.
The claim against the Second Respondent is based upon an alleged breach of a retainer which in brief terms alleges that the Second Respondent did not exercise skill, care and diligence of a reasonably competent solicitors, did not exercise the proper professional skill, diligence and care in the performance of the retainer in acting for the Applicant as her solicitors and did not make all necessary and appropriate searches and enquiries concerning the property including whether the First Respondent was covered by the required insurance and did not inform the Applicant of the results of any searches and enquiries or advise her in relation to those searches and enquiries.
It is further claimed against the Second Respondent that representations were made to the Applicant by the Second Respondent that the contract note in relation to the property complied with the laws of the State of Victoria and provisions of the Building Act and that the Applicant would be covered by insurance as required by the Building Act. It is claimed that in breach of the representations by the Second Respondent the contract note did not comply with the laws of the State of Victoria or the Building Act and that the Applicant was not covered by insurance as required by that Act. It is further claimed that by acting upon the representations of the Second Respondent, the Applicant did not terminate the agreement by a certain date which would have been possible pursuant to s.31 of the Sale of Land Act and moreover that she paid the purchase price to the First Respondent on the settlement date.
Representations referred to by both the First and Second Respondent are said to constitute misleading and deceptive conduct in breach of s.52 of the Trade Practices Act 1974. When the matter was first listed before the Court it became evident that a jurisdictional issue arose concerning the further hearing of the application. Orders were made for that jurisdictional issue to be heard after the filing of an Outline of Submissions by the parties. After the hearing supplementary submissions were filed by leave of the Court on behalf of the First Respondent.
No formal application was made in relation to the jurisdictional issue as the Court by leave permitted the First Respondent to bring the matter before the Court by way of oral application.
First respondent’s submissions
Reference was made to the nature of the Applicant’s case and it was submitted that the allegation of breach of contract relies upon terms that required the First Respondent to construct a dwelling for the Applicant. It was submitted that this case would ordinarily be dealt with by the Victorian Civil and Administrative Tribunal (VCAT) which has jurisdiction to hear and determine the proceeding (see s.57 DBC Act) in order for the Applicant to succeed she must prove that the contract is a “domestic building contract” as defined by s.8 of the DBC Act. If so it is submitted that VCAT has jurisdiction and prime responsibility to resolve the dispute (see ss.54 and 57 DBC Act).
It is noted that the claim against the First Respondent which arises under the Trade Practices Act (the TPA) is based upon an alleged breach of s.52 of that Act.
It was submitted the First Respondent is an individual and not a corporation and therefore the claim is not properly brought under s.52 of the TPA unless it comes within the provisions that extend the operation of that Act to individuals. It is claimed that the only conduct that is referred to in the pleadings though not specifically pleaded is in the particulars subjoined to paragraph 4 of the Statement of Claim which provides:-
“The Robinson representations were in writing and were contained in the Contract Note and Vendor’s Statement to the Purchasers of Real Estate Pursuant to Section 32 of the Sale of Land Act 1962, which were transmitted by Robinson’s agent Ray White Boronia, to the Applicant’s solicitors, Goddard Elliott by post under cover of a letter from Ray White Boronia to Goddard Elliott dated 23 January 2001.”
Reference was made to s.6(3) of the TPA which provides:-
“In addition to the effect that this Act, other than Parts IIIA and X, has provided by subsection (2), the provisions of Part IVA, of Divisions 1, 1A and 1AA of Part V of Divisions 2 and 3 of Part VC have, by force of this subsection, the effect they would have if:
(a)those provisions (other than sections 55 and 75AZH) were, by express provision, confined in their operation to engaging in conduct to the extent to which the conduct involves the use of postal, telegraphic or telephonic services or takes place in a radio or television broadcast; and
(b)a reference in those provisions to a corporation included a reference to a person not being a corporation.”
It is submitted that the pleading which refers to transmission by the First Respondent’s agent of the contract note and vendor’s statement is an attempt to invoke s.6 of the TPA. There is no other claim against the First Respondent which would give the Court jurisdiction to determine the Applicant’s claims. The pleading it was submitted is not sufficient to attract the jurisdiction under s.52 of the TPA.
It is submitted that s.6(3) is aimed at two types of conduct. First, in relation to postal and telephonic services the conduct relied upon must “involve the use of” personal services. Secondly, in relation to radio or television services the conduct must take place during the radio or television broadcast (see Snyman v Cooper [1989] 91 ALR 209, 216 per von Doussa J). The application of s.6(3) is said to be wider in the case of postal services than in the case of radio or television services.
The First Respondent submitted that the conduct relied upon must occur by using the postal services (see Swan v Downes [1978] 34 FLR 36, 46, Franki J). A representation during a telephone call is sufficient it was conceded to come within s.6(3) (see Smolonogov v O’Brien [1982] 44 ALR 347, 361). Reference was made to those cases where a sufficient connection with telephone services may arise by representations made in the Yellow Pages Directory, representations in a magazine requiring parties to reply by post or representations in a magazine sent by post. The conduct in the present case relied upon by the Applicant has said to be entirely in writing and set out in the sale contract and vendor’s statement. It was submitted that the representations alleged by the Applicant in paragraphs 4(a) and (e) are not contained in the contract or the vendor’s statement. That is the allegations that representations were made regarding the materials and workmanship of the works carried out to lock up stage were of good quality and that the works would be carried out with reasonable care and skill.
It was submitted that the contract of sale was signed by the Applicant on 20 January 2001 and that any representation made in that document was made on or before that date. Documents were not sent by post until 23 January 2001 some three days after the alleged misrepresentations were made. The documents were not sent to the Applicant but to the Applicant’s solicitors. No allegation, it is submitted, is made that the representations were read by the Applicant at that time. It was submitted therefore that there is insufficient connection between the use of the post and the conduct relied upon.
It was further submitted that the representation relied upon in the present case was made using postal services. In Green v Ford it was noted that 5,000 copies of the magazine that contained the representation were sent by post and the representation was clearly made using postal services. In the present case it was submitted the representation was allegedly made in the contract and vendor’s statement and that representation was not made using the postal service. Accordingly there is no connection between the representation and the postal service. The document upon which the representation was alleged to have been made was sent, according to the submissions of the First Respondent, after the representation had been already made to the Applicant. That alone would not constitute the making of a representation in a manner which involved the use of postal services required by s.6(3) of the TPA.
It was further submitted that in any event the representation must be operative to induce the Applicant to enter into the contract. The conduct relied upon to invoke s.6(3) occurred after the Applicant entered into the contract. Accordingly it was not conduct that could be said to be relied upon by the Applicant when entering into the contract.
A further submission was made in relation to the issue of whether the transaction took place in trade or commerce. It was submitted that the failure to allege the transaction took place in trade or commerce is a fatal defect in the Applicant’s case. In the present case the transaction was the purchase of a domestic dwelling albeit incorrectly referred to as an agreement to construct a home as claimed in paragraph 1(b) of the Statement of Claim. Representations which relate to the sale of a residential dwelling are not made in trade or commerce. Reliance was placed upon the Full Court decision in the matter of O’Brien vSmolonogov (1983) 53 ALR 107 where it was held that the sale of land not used for business purposes was not in trade and commerce. At page 113 the Full Court states,
“In the present case, it cannot be suggested that the lands acquired by the appellants became trading stock (see FC of T v St Huberts Island Pty Ltd (in liq) (1978) 19 ALR 1; 138 CLR 211). Nor is it a case where the taxpayer’s activities amounted to more than the mere realization of a capital asset and constituted the carrying on of land development (see FC of T v Whitfords Beach Pty Ltd (1982) 39 ALR 521. The land itself was not used for any business activity: it was not used for farming or grazing.”
It was submitted that there is nothing in the present transaction which would enable the Court to characterise the agreement as being of a kind that would attract the attention of s.52 of the TPA.
In any event it was submitted that there can be no prejudice to the Applicant as the proceeding can be determined by VCAT. A claim of misleading conduct may be available under s.11 of the Fair Trading Act 1999 (Vic) subject to any arguments regarding trade or commerce and the same procedures in any event are available to the Applicant in VCAT as would be available in the Federal Magistrates Court. In dealing with the proposed amended Statement of Claim it was submitted by the First Respondent that the attempt to address the issues raised by the First Respondent relating to the Court’s jurisdiction amounts to a concession that the amended Statement of Claim was both necessary and desirable.
During the course of oral submissions Counsel for the First Respondent noted that VCAT does have exclusive jurisdiction as against the Supreme, County and Magistrates Courts in Victoria arising out of s.57 of the DBC Act. Clearly the exclusive jurisdiction of VCAT does not apply in relation to a Federal Court.
The First Respondent has indicated a willingness to permit the matter to be litigated and it was suggested at one point that perhaps this Court may consider transferring the matter to a State Court. It is clear however that there is no power for this Court to in fact transfer the matter to VCAT or indeed the State Court and that matter was not pursued.
Second respondent’s submissions
The Second Respondent supported the submission that there is no jurisdiction in relation to the First Respondent though it conceded that the matter is less clear in relation to the action against the Second Respondent. Whilst not opposing what has been referred to as a proposed transfer of proceedings from this Court to the Supreme Court or County Court of Victoria, the Second Respondent was opposed to any attempt to permit the matter to be listed before the Domestic Building List at VCAT. Reliance was placed upon the definition of a “domestic building dispute” in s.54 of the DBC Act as including a dispute or claim arising between certain persons described including a “building practitioner” as defined in the Building Act. That definition it was submitted does not include a solicitor. The claim therefore against the Second Respondent being a firm of solicitors is not therefore a claim between relevant parties that would bring it within the definition of a domestic building dispute and hence VCAT does not have jurisdiction to hear the dispute between the Applicant and the Second Respondent.
An issue which arose during the course of submissions made for and on behalf of the Second Respondent related to the question of whether the Court in applying its associated jurisdiction could hear and determine the claim by the Applicant against both Respondents on the basis that it had jurisdiction to hear the claim against the Second Respondent and should therefore entertain the claim against the First Respondent. It was conceded that one possible avenue of resolving the dispute would be to permit the Applicant to amend the Statement of Claim against the First Respondent.
A further issue on the facts seemed to relate to the issue of retainer of the Second Respondent and the extent to which in any event conduct by the Second Respondent may fall within the scope of s.6(3) of the TPA. It was submitted that the Second Respondent’s liability “is in many respects based on a finding of some liability against the First Respondent because if there are no problems, as it were, with the dwelling which has been sold then there is no loss and damage in respect of any conduct against the firm of solicitors”. Reference was made to the Statement of Claim which alleges the retainer arose “in or about January 2001” though reliance is placed upon correspondence dated 25 January 2001. If 25 January 2001 is the relevant date then it was submitted a significant problem arises in the trade practices case because it is alleged that by reason of the representation the Applicant did not terminate the contract on 24 January 2001 being the last day within the cooling off period under the contract. The difference in one day may be significant and may involve amending the Statement of Claim.
Applicant’s submissions
Representations which are alleged to be relied upon by the Applicant do not depend upon the success of the fact that the contract was not entered into with the Second Respondent until 25 January 2001. On that issue reliance was placed upon representations made by the Second Respondent on or about 24 January 2001 in a telephone conversation.
In relation to the general claim against the Respondents the Applicant relied upon alleged breaches of s.52 of the TPA and asserted the Court has jurisdiction by using the postal, telegraphic or telephonic references referred to in s.6(3) of the TPA. Claims in contract are associated with the jurisdiction of the Court and therefore s.18 of the Federal Magistrates Court Act applies (see Fencott v Muller (1983) 152 CLR 570; re Wakim; ex parte McNally (1999) 198 CLR 511). It was submitted in writing and in oral submissions that in any event the claim against the Respondents falls within the scope of what might be described as a ‘single justiciable controversy’ of a kind referred to in re Wakim.
As I understood the submission by the Applicant the communication by the representations by way of contract and vendors statement to the Applicant’s solicitors during the cooling off period for the contract involved communicating representations which were then relied upon by the Applicant who failed to avail herself of the ability to terminate the contract during the cooling off period. It is not necessary for the Court to determine whether the claim would succeed but rather whether the Court is satisfied that the claim presented is a claim under the Trade Practices Act and the Court has authority to determine the dispute. It is irrelevant that a representation was made after the contract was entered into because what is relied upon is that the Applicant upon receiving the representation did not then act upon rights which she had to terminate the contract during the cooling off period.
Sub-division of a property and agreement to construct a house upon that property with entering into a contract during the construction of the property may constitute conduct of a kind which could be said to be in trade or commerce. It is not comparable to the sale of a family home but rather subject to evidence to be received by the Court and may well be regarded as conduct in trade and commerce and if the Statement of Claim requires amendment then that amendment can be easily undertaken. Ultimately it is a matter for the Court to decide the issue rather than dismiss the application on the basis of lack of jurisdiction.
Reasoning
It is appropriate to set out the relevant legislation as a starting point in considering the Court’s jurisdiction to deal with this application.
The Federal Magistrates Act 1999 (Cth) (the FM Act) provides:
“Jurisdiction
10(1)The Federal Magistrates Court has such original jurisdiction as is vested in it by laws made by the Parliament:
(a)by express provision; or
(b)by the application of section 15C of the Acts Interpretation Act 1901 to a provision that, whether expressly or by implication, authorises a civil proceeding to be instituted in the Federal Magistrates Court in relation to a matter.
…..
18.To the extent that the Constitution permits, jurisdiction is conferred on the Federal Magistrates Court in respect of matters not otherwise within its jurisdiction that are associated with matters in which the jurisdiction of the Federal Magistrates Court is invoked.”
The TPA Act (as amended by the Federal Magistrates (Consequential Amendments) Act 1999) provides in s.86 the following:-
“86(1A)Jurisdiction is conferred on the Federal Magistrates Court in any matter arising under Division 1 or 1A of Part V in respect of which a civil proceeding is initiated by a person other than the Minister or the Commission”.
It is clear from the legislation that the Federal Magistrates Court has jurisdiction to hear and determine claims made under s.52 of the TPA.
Section 18 of the FM Act is almost identical to s.32(1) of the Federal Court of Australia Act 1976. That section was considered by the High Court in Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457. In that case Mason J stated in relation to that section which applied to the Federal Court the following:
“Plainly it was intended to vest a jurisdiction in the Federal Court to hear and determine matters not otherwise within its jurisdiction, matters that are ‘associated’ with matters in which the jurisdiction of the Court is invoked. The expression ‘To the extent that the Constitution permits’ suggests that s 32 is directed, not merely to jurisdiction to hear and determine matters arising under federal laws not otherwise vested in the Federal Court, but also to jurisdiction arising under State or other non-federal laws. Problems of constitutional validity arise in relation to the latter, but not in relation to the former. The opening words of s.32(1) would serve no purpose at all if the sub-section was exclusively directed to matters arising under federal laws.”
In the Philip Morris case Mason J further states at p 512,
“Likewise, it may appear that the attached claim and the federal claim so depend on common transactions and facts that they arise out of a common substratum of facts. In instances of this kind a court which exercises federal jurisdiction will have jurisdiction to determine the attached claim as an element in the exercise of its federal jurisdiction”.
In my view applying the authorities to which I have referred and considering the submissions made by the parties, whilst I have reservations about the current manner in which the Statement of Claim is pleaded, I am satisfied that essentially the claim against both Respondents arises out of a contract for the sale of a unit upon which a dwelling was constructed. The subdivision in my view is a subdivision and sale of a unit which in all the circumstances may be distinguished from the sale of a normal residential home and to that extent I am satisfied would be sufficient to constitute conduct in trade and commerce.
The reliance upon s.6(3) of the TPA against both Respondents in my view is legitimate. In both cases whilst again there may be a need to further clarify the pleadings there is at least sufficient to indicate reliance upon postal and telephonic services. To that extent it may ultimately be a matter for the Court to determine whether or not there has indeed been reliance upon the representations but for the purpose of considering jurisdiction at least it can be said that an element of the jurisdiction has been satisfied namely that representations were communicated either by post or by telephone. The fact that representations may have been either set out in a document and repeated by telephone or post does not deprive the Court of jurisdiction. To repeat a representation in a form which attracts the jurisdiction of the Court in administering s.52 of the TPA is sufficient in my view to permit the Court to hear and determine the matter. In any event I am satisfied on the material before me that it would be appropriate for the Court to at least consider and determine the facts surrounding the contract and in particular whether communication of the representations after the date of the contract may have been relied upon at least to the extent that the Applicant did not exercise rights she may or may not have had to terminate the contract during the cooling off period.
I am further satisfied that in circumstances of this kind where there would appear to be a claim against the Second Respondent that in any event it would be appropriate for this Court to hear and determine the associated action against the First Respondent. It is not necessary for me to formally make that determination in the present case as I am satisfied that the claim currently pleaded against the First Respondent has sufficient though perhaps not clearly drafted pleadings against the First Respondent to attract the jurisdiction of the Trade Practices Act subject of course to further argument during the trial and after the Court has had the opportunity of considering the evidence.
At this stage it is my view that the Court does have jurisdiction to hear and determine the claims against both Respondents and it is appropriate in those circumstances for the Court to give directions to the parties for the further conduct of the hearing and as a result of the delay in delivering this decision on the preliminary point the Application will be given such priority as the Court is able to give to ensure that the matter proceeds to an early hearing.
I should add for the sake of completeness that any purported exclusive jurisdiction given to VCAT does not deprive this Court of its powers to entertain the application pursuant to the jurisdiction vested in this Court under the TPA and/or the jurisdiction which this Court undoubtedly has as a consequence of its associated or accrued jurisdiction.
I am satisfied that the claims against both the First and Second Respondents arise out of a common substratum of facts and it would be appropriate for this Court to hear and determine the claims for the reasons stated (see re Wakim and Philip Morris Inc).
It should be noted that whilst submissions were made that the matter should be transferred from this Court to VCAT, I am satisfied that there is no power in this Court to make an order of that kind and if I had been persuaded that the Court did not have jurisdiction then the only order which would be appropriate would be to dismiss the application with or without an order for costs.
I certify that the preceding forty-one (41) paragraphs are a true copy of the reasons for judgment of McInnis FM
Associate:
Date: 31 March 2003
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