Goater v Moree Plains Shire Council
[2015] FCCA 2594
•9 December 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| GOATER v MOREE PLAINS SHIRE COUNCIL | [2015] FCCA 2594 |
| Catchwords: BANKRUPTCY – Application to set aside bankruptcy notice – applicant claiming to have a counter-claim, set-off or cross demand of greater value than the creditor’s judgment debt – claim against the Council for release of incorrect information to the debtor’s bank resulting in foreclosure and loss of business – whether the claim by the debtor against the Council is a joint one by reference to existing proceedings between the Council and the debtor’s husband considered – consideration of the merits of the claim and the issue of mutuality. |
| Legislation: Australian Consumer Law, s.18 Bankruptcy Act 1966 (Cth), ss.40, 41 Real Property Act 1900 (NSW), s.57 |
| Concrete Constructions (NSW) Pty Ltd v Nelson [1990] HCA 17 Re Anderson; ex parte Alexander (1927) NSW StR 35 Swarbrick v Burge & Ors [2009] FMCA 985 |
| Applicant: | SHIRLEY GOATER |
| Respondent: | MOREE PLAINS SHIRE COUNCIL ABN 46 566 790 582 |
| File Number: | SYG 2310 of 2015 |
| Judgment of: | Judge Driver |
| Hearing date: | 21 September 2015 |
| Date of last submissions: | 9 October 2015 |
| Delivered at: | Sydney |
| Delivered on: | 9 December 2015 |
REPRESENTATION
| Solicitors for the Applicant: | Mr N Hill of Australegal |
| Counsel for the Respondent: | Mr S Bell |
| Solicitors for the Respondent: | SR Law |
ORDERS
Bankruptcy Notice BN183075 issued on 22 July 2015, which was served on the applicant on 30 July 2015, is set aside, pursuant to ss.40(1)(g) and 41(7) of the Bankruptcy Act 1966 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 2310 of 2015
| SHIRLEY GOATER |
Applicant
And
| MOREE PLAINS SHIRE COUNCIL ABN 46 566 790 582 |
Respondent
REASONS FOR JUDGMENT
Introduction and background
On 21 August 2015 the applicant, Mrs Goater, applied to set aside bankruptcy notice BN183075 issued on 22 July 2015 and served on 30 July 2015. Mrs Goater claims that she has a counter-claim, set-off or cross demand equal to or exceeding the sum specified in the bankruptcy notice as owing to the respondent (Council) pursuant to s.40(1)(g) of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act). At the trial of this matter on 21 September 2015, I noted that the time for compliance with the bankruptcy notice was extended automatically pursuant to s.41(7) of the Bankruptcy Act until the conclusion of these proceedings.
The matter was transferred to my docket by order of Registrar Segal on 1 September 2015.
The application is opposed by the Council.
Mrs Goater relies upon her affidavit made on 20 August 2015 and her solicitor’s affidavit (Mr Nigel Hill) made on 21 September 2015. I received those affidavits, as well as the documents annexed to them. The deponents were not required for cross-examination.
At the time of the trial of this matter, the Council did not introduce any evidence. However, I gave the parties the opportunity after the trial to provide further documents relating to the intended claim by Mrs Goater against the Council. I also provided the parties with the opportunity to make post hearing submissions. Mrs Goater filed further affidavits made by Estelle Nam on 12 October 2015 and Mr Hill on 13 October 2015 and 9 November 2015 and filed further submissions on 1 October 2015. The Council filed two affidavits made by David Joshua Edgeworth Simons made on 2 October 2015 and 6 November 2015. Its post hearing submissions were filed on 9 October 2015. I have taken into account the post hearing submissions and the additional affidavits, to the extent that the affidavits fell within the scope of the leave I granted.
Consideration
Mrs Goater operates a funeral business in Moree (where she lives) with her husband, Terrance Goater. It appears that they got into difficulties in the course of their business, which resulted in arrears of fees and charges and rates due to the Council, as well as mortgage payments due to the Commonwealth Bank (Bank). The Council obtained a judgment against Mrs Goater in 2012 for approximately $10,000. Payments of approximately $4,000 were made but those payments stopped when the Bank took possession of the premises from which the funeral business was conducted, apparently due to default on the mortgage. Mr and Mrs Goater were ultimately successful against the Bank in the NSW Court of Appeal[1]. They regained possession of their premises but assert that their business was effectively destroyed. Mrs Goater remains indebted to the Council in respect of the unpaid portion of the judgment debt, hence the bankruptcy notice. Mr and Mrs Goater allege that the Bank’s action was precipitated by the provision of incorrect or inaccurate information to the Bank by the Council in respect of payments to the Council from them. In short, they claim that the Council incorrectly told the Bank that no payments had been made when there had been payments.
[1] Goater v Commonwealth Bank Australia [2014] NSWCA 382
Mrs Goater asserts that she has a claim against the Council arising out of its disclosure which she claims was unauthorised, misleading and deceptive or negligent. She claims losses well in excess of the amount due to the Council on the bankruptcy notice. There is no dispute that the claim now asserted could not have been raised in the proceedings leading to the judgment debt in 2012 because the relevant facts or circumstances had not occurred then.
The second affidavit by Mr Hill details the claim proposed to be pursued by Mrs Goater against the Council in the District Court. Annexed to that affidavit is a draft statement of claim by Mrs Goater which claims damages against the Council for negligent misstatement, misleading or deceptive conduct and breach of confidence.
The Council asserts that there is no issue of a breach of confidence by it as Mrs Goater had expressly requested the Council to provide to the bank information about their indebtedness to the Council. The Council asserts that its records show no payments for water rates. The Council concedes that payments were made but says that it allocated those to arrears of general rates as it was entitled to do. The Council denies any misrepresentation.
The Council also disputes that the claim by Mrs Goater against the Council meets the test of mutuality with the debt due to the Council. It asserts that Mr and Mrs Goater appear to be claiming the same damages against the bank in the NSW Supreme Court and that there are other proceedings by Mr Goater against the Council in the Local Court which are essentially the same as the foreshadowed proceedings by Mrs Goater in the District Court.
The Council notes that (at the time of its supplementary submissions) there was no evidence that proceedings had been commenced in the District Court but says that, even if they have been, they would constitute an abuse of process and should be struck out.
Does Mrs Goater have a counter-claim, set-off or cross demand?
Relevantly, for the purposes of the claim Mrs Goater submits that:
a)she must show that she has a prima facie case[2];
b)the standard may be expressed by saying that the debtor must show that she has a prima facie case, even if then and there she does not adduce the admissible evidence which would make out a prima facie case before a court trying the issues that are involved in her counter-claim, set-off or cross demand[3];
c)the Court must weigh up the merit of the counter-claim with the justice of allowing bankruptcy proceedings to go ahead or be stayed[4]; and
d)the Court looks at whether it is just that the claim should be determined before the bankruptcy proceedings are allowed to continue, ie whether it is a claim which it is proper and reasonable to litigate[5].
[2] Ebert v Union Trustee [1960] HCA 50
[3] Ibid
[4] Guss v Johnstone [2000] HCA 26
[5] Ibid
The facts and circumstances alleged by Mrs Goater in her statement of claim are:
a)In or about June 2007, the Goaters entered into agreements with the Bank under which the Bank provided credit facilities and the Bank secured these facilities by obtaining a first registered mortgage over each of their Properties.
Particulars
Written agreement dated 6 December 2006 for the business overdraft facility account number 2574 1012 8342 with $50,000 credit amount to the plaintiff
Written agreement dated 13 June 2007 for the BetterBusiness Loan account number 2574 1017 3987 with $290,000 credit amount to the Goaters
Registered mortgages AD444039 and AD444040
b)On or about 8 October 2012, the Bank issued a notice pursuant to s.57(2)(b) of the Real Property Act 1900 (NSW) to Mr Goater for default under the business loan.
Particulars
Default notice from Commonwealth Bank to Terence Claude Goater dated 8 October 2012.
c)On or about 24 October 2012, the Goaters lodged a Financial Ombudsman Service dispute claim against the Bank and the parties entered into a resolution agreement with title “Resolution and Release Agreement” on 18 October 2013 and closed the dispute (the FOS Agreement).
Particulars
Financial Ombudsman Service dispute reference number 302598
Resolution and Release Agreement signed on 18 October 2013
d)At all material times, the Goaters owed monies to the Council for council rates, burial costs for the funeral services conducted by the Goaters, and water rate arrears.
e)On or about 8 August 2012, the Council commenced proceedings in the Local Court against Mrs Goater for burial costs and a default judgment was entered on or about 12 September 2012.
Particulars
Local Court proceeding number 2012/247342: Moree Plains Shire Council v Shirley Goater
f)On or about 15 November 2012, the Council commenced proceedings in the Local Court small claims division against Mr Goater for council rate and water rate arrears and a default judgment was entered against Mr Goater on or about 19 December 2012.
Particulars
Local Court proceeding number 2012/356409: Moree Plains Shire Council v Terence Claude Goater T/AS Terry Goater Funerals
g)From about 12 September 2012 until about 19 March 2015, the Council issued a total of 22 Garnishee orders against the Goaters - 17 Garnishee Orders against Mrs Goater and five Garnishee Orders against Mr Goater in the two Local Court proceedings referred to at (e) and (f) above in an attempt to recover monies owed by the Goaters.
Particulars
Local Court proceeding 2012/247342:
17 Garnishee Orders issued against the plaintiff:
On 12 October 2012: St George Bank, Commonwealth Bank, Westpac Banking Corporation, National Australia Bank and Australia and New Zealand Banking Group in the amount $10,749.60
On 24 January 2013: Australia and New Zealand Banking Group in the amount $6,312.44
On 24 May 2013: St George Bank, Commonwealth Bank, Westpac Banking Corporation, National Australia Bank and Australia and New Zealand Banking Group in the amount $6,695.44
On 11 February 2015: St George Bank, Commonwealth Bank, Westpac Banking Corporation, National Australia Bank and Australia and New Zealand Banking Group in the amount $7,130.44
On 19 March 2015: Community Mutual Limited in the amount $7,895.33
Local Court proceeding 2012/365409
5 Garnishee Orders issued against Mr Goater:
On 15 May 2013: St George Bank, Commonwealth Bank, Westpac Banking Corporation, National Australia Bank and Australia and New Zealand Banking Group in the amount $5,293.25
h)From about 2 September 2013 to about 10 October 2013, there was correspondence between the parties regarding entering into payment arrangements in respect of water rate and council rate arrears referred to above and the parties entered into a payment arrangement for the water rate and council rate arrears, which resulted in an agreement (the Rates Payment Arrangement).
Particulars
The Rates Payment Arrangement was entered into by communication between the plaintiff and Suzie Treloar and by communication between the plaintiff and the defendant’s solicitors, SR Law.
Particulars of the payment arrangement in respect of water rate arrears are set out in the email correspondence between Ms Treloar and Mrs Goater from 2 September to 3 September 2013 negotiating to enter into a payment arrangement whereby the Goaters were required to make monthly repayments of $500 for water rates commencing 3 September 2013 until the debts are paid off.
Particulars of the payment arrangement in respect of council rate arrears whereby the Goaters were to make monthly payments of $500 are set out in:
An email from Ms Treloar to Mrs Goater of 2 September 2013
An email from Ms Treloar to Rohan Dalal of the Bank of 6 November 2013
i)On or about 5 September 2013, Mrs Goater, with Mr Goater, attended an examination hearing pursuant to an examination order issued and the Goaters provided personal information regarding their financial and taxation affairs.
Particulars
The information was communicated by the Goaters to Ms Treloar and her colleague Tammie Single of the defendant. The information given by the Goaters were in the form of answers to Ms Treloar’s questions. The Goaters indicated that they had not lodged tax return and that “it has been funeral drought”. The parties confirmed the Monthly Payment Arrangement in relation to water and rate arrears and the Goaters were told “if you have any problems with paying, just call us”. Ms Treloar took notes as they spoke. The discussion was oral and the Goaters were not given a copy of the notes taken by Ms Treloar.
j)From about 3 September 2013 until 6 November 2013, the Goaters made payments required under the Rates Payment Arrangement and further payments amounting to $4,073.75 to the Council by electronic funds transfer.
Particulars
Particulars of the payments are set out in the Goaters’ transaction records from Community Mutual Limited for period from 1 September 2013 to 4 November 2013.
k)On or about 8 October 2013, Mrs Goater requested a payment arrangement with respect to burial costs owing as referred to above and subsequently in the same month the Council agreed to enter into an arrangement (the Monthly Payment Arrangement).
Particulars
Email from Mrs Goater to Ms Treloar of 8 October 2013
Email from Ms Treloar to Ms Goater 9 October 2013
The parties agreed to reduce the council rate payments to $250 per month and burial costs at $250 per month and continue with $500 per month for the water rate arrears.
The Goaters were to increase the monthly payments for council rates and burial costs to $500 for each account from January 2014. The particulars are set out in the emails between Ms Treloar to Jovana Vasiljevic of 20 January 2014 and of 12 February 2014.
This was agreed on or about 15 October 2013.
Particulars of the initial payment arrangement in respect of burial costs owing are set out in an email correspondence between Ms Treloar and Mrs Goater from about 2 October 2013 to about 11 October 2013 whereby the parties negotiated and agreed on $250 monthly payments.
l)On 29 October 2013, the Bank sent an email to the Council seeking:
i)documentation which confirmed the Monthly Payment Arrangements had been entered into;
ii)documentation providing details of the Monthly Payment Arrangements requirements and amounts due; and
iii)confirmation whether the payments under the arrangement were being adhered to.
Particulars
Email from Mr Dalal, Manager Businesss, Group Credit Structuring Risk Management at the Bank to Ms Treloar of 29 October 2013
m)On or about 5 November 2013, the Bank requested Mrs Goater to authorise the Council to provide information regarding the Monthly Payment Arrangement to the Bank, in accordance with the terms of the FOS Agreement.
Particulars
Telephone call from Mr Dalal at Commonwealth Bank on 5 November 2013 to Mrs Goater.
n)Shortly after the request referred to in the preceding paragraph, Mrs Goater gave authority to the Council to provide information to the Bank regarding the Monthly Payment Arrangement.
Particulars
The authority was given by Mrs Goater to Ms Treloar on the understanding that the information required by the Bank was in connection with the payment arrangements the Goaters had in place with the Council.
Email from Mrs Goater to Ms Treloar dated 6 November 2013
o)At no time during or prior to granting the authority referred to in the preceding paragraph did the Council inform Mrs Goater nor Mr Goater that the Council regarded the Goaters as being in breach of the Monthly Payment Arrangement or that the Council intended to pursue further court action against them in connection with the amounts owing to the Council.
p)On or about 6 November 2013, the Council sent an email (the Treloar Email) to the Bank stating:
i)“[The Goaters] were required to attend an exam order at the Moree Court House on 29th August 2013. They failed to attend. WE sent another request notifying them an arrest warrant to issue if they did not attend. They attended at second request, however part of the [examination] order requests full financial disclosure and information from the rate payer and they are requires to bring tax returns, copies of bank statements as well as details of any debts (credit cards, loans etc)… They claimed to have not completed a tax return for more than three years, that their only income was Centrelink benefits (for both of them), and they received no income from their business. They have bought a reasonably new vehicle recently which they said was purchased through the business. They did not bring any bank statements to the court house and have so far refused out requests to provide them. We have continually asked for this information, and have so far been stone walled. This means that they have not legally complied with the Exam Notice.”
ii)“They made [an] agreement with us to pay off their water arrears at $500 per month (since September). They have so far not complied with this”; and
iii)“Due to non-compliance of the payment of the water debt, the non-compliance of the Exam Order and the current action for unpaid burial costs, our legal action continues”.
Particulars
Email from Ms Treloar to Mr Dalal of Commonwealth Bank dated 6 November 2013.
q)On or about 27 November 2013, the Bank issued a default notice to the Goaters alleging breach of the FOS Agreement and the basis for the alleged breach was the Treloar Email, a copy of which was attached to the default notice.
r)The Bank stated expressly in the default notice that it relied on the Council’s statement that:
i)the Goaters had not complied with the Monthly Payment Arrangement in relation to the water rate arrears; and
ii)the Council was taking legal action against the Goaters as the judgment creditors in the Local Court proceedings numbers: 2012/356409 and 2012/247342.
Particulars
Letter from Commonwealth Bank dated 27 November 2013 enclosing a copy of the Treloar Email.
s)On or about 30 January 2014, the Goaters were served with a statement of claim by the Bank.
t)On or about 25 February 2014, the Goaters sought assistance from Mr John Humphries, a voluntary financial counsellor based in Melbourne, whom they were acquainted with since 2012 and from about 26 February 2014 until about 13 May 2014, Mr Humphries assisted the Goaters.
u)On or about 26 February 2014, two days before the Bank applied for the default judgment against the Goaters, Mr Humphries sent two emails to Giselle Simons of the Council’s solicitor, SR Law, and indicated that:
i)Mr Humphries was trying to assist the Goaters to “ascertain the exact position” with respect to the payments made under the Monthly Payment Arrangement;
ii)This was going to have “catastrophic consequences” for the Goaters as the Bank was insisting that if no arrangement was in place with the Council, it would continue with its legal action;
iii)The Goaters would “lose their home” and the legal action by the Bank would “destroy their business and leave them homeless when they are at retirement age”;
iv)There has been misallocation of payments by the Council.
Particulars
Email from Mr Humphries to Ms Simons of 26 February 2014
Email from Mr Humphries to Ms Simons of 27 February 2014
v)On or about 26 February 2014, Mr Humphries phoned Ms Treloar of the Council and a conversation took place to the effect of:
Mr Humphries: “The Goaters are actually up to date with the monthly payments. Would you tell the Bank so they stop their legal action”
Ms Treloar: “Did the Goaters say that”
Mr Humphries: “Terry Goater says they have been complying with the arrangement”
Ms Terloar: “They missed three water payments, made nothing to the funerals and missed a payment for the rates. If Mr Goater believes he’s up to date with the payments then he should verify this with his bank statements as their EFT would show”
Mr Humphries: “I will go and check and get back to you”
Particulars
Particulars of the conversation is set out in the email from Ms Treloar to Ms Simons of 26 February 2014.
w)On or about 28 February 2014, the Bank filed a notice of motion for default judgment against the Goaters and on or about 7 March 2014, the default judgment was entered against the Goaters.
x)On or about 13 May 2014, the Bank took possession of the Properties pursuant to a writ of possession issued to enforce the default judgment.
y)On 13 May 2014, with leave of Supreme Court, the Goaters filed a notice of motion to set aside the default judgment.
The application to set aside the default judgment in the Notice of Motion was heard before Justice Davies on 22 May 2015 who dismissed the application with costs. On or about 7 November 2014, the Goaters successfully appealed to the NSW Court of Appeal. The Court of Appeal set aside set aside the default judgment entered on 7 March 2014 and ordered that the Bank pay the Goaters’ costs of the appeal and in the Court below. On or about 9 November 2014, the Goaters regained possession of the Properties.
The Goaters claim compensation for loss and damage said to have been caused by the Council in tort (negligent misstatement) in breach of the Australian Consumer Law 2010 (misleading and deceptive conduct) and for breach of confidence.
At the time of the hearing before me no court proceedings by Mrs Goater had been instituted against the Council. The Goaters had commenced proceedings against the Bank in the NSW Supreme Court. Mr Goater had raised by way of cross claim in the Local Court a claim against the Council in proceedings brought by the Council against him. Mrs Goater instituted her proceeding based on the statement of claim in the District Court of NSW filed on 13 October 2015. On the same day a summons was filed to transfer the Local Court proceedings to the District Court. The summons was heard by Judge Elkhaim in the District Court on 22 October 2015. His Honour ordered, apparently without objection, that Mr Goater’s Local Court proceeding be transferred to the District Court and consolidated with Mrs Goater’s proceeding. It follows that there is now a consolidated proceeding by the Goaters against the Council in the District Court, although their solicitor maintains that the claims remain distinct.
The amount claimed in the District Court proceedings is many times greater than the amount due on the bankruptcy notice. As I have already noted the claim could not have been set up in the proceedings supporting the bankruptcy notice. The real questions in this case are whether the claim in the District Court is a genuine claim which the Goaters are fairly entitled to litigate and whether the claim meets the test of mutuality.
In my opinion, the claim in the District Court is a genuine one with a reasonable prospect of success. It appears plain that the Goaters’ foreclosure litigation with the Bank was a consequence of the Council providing information to the Bank. If the information was wrong and provided negligently, or if the information was misleading or deceptive, the Goaters are entitled to claim compensation for loss or damage attributable to the action of the Council. While it may be a good answer to the claim of breach of confidence that the information was provided at the request of Mrs Goater, that would not be an answer to the claims in tort or under the Consumer Protection Law as pleaded.
Further, in my opinion, the Goaters are entitled to litigate their claim against the Council notwithstanding that they are also claiming damages against the Bank in the Supreme Court. There may be overlap in terms of the loss or damage alleged but the wrong alleged against the Bank is different from the wrong alleged against the Council. There is a connection in that the action of the Council appears to have stimulated the action by the Bank, but thereafter the Bank is responsible for its own actions. There may be scope for further consolidating the District Court and Supreme Court proceedings but I cannot say, at this stage, that there is anything improper about the proceeding in the District Court. A procedural objection raised by the Council before Judge Elkhaim in the District Court appears to have been overcome by his Honour’s order for consolidation.
As to the amount of the claim, given that the amount due on the bankruptcy notice is only $6,822.97, if liability were established against the Council for even a portion of the economic loss suffered by Mrs Goater in her dealing with the Bank, it is likely that that amount would exceed the amount due on the bankruptcy notice.
Misleading conduct under s.18 of the Australian Consumer Law – third party reliance
A question arose before me whether the consumer protection claim could be maintained against the Council. I agree with Mrs Goater’s submissions on that issue. The statement of claim alleges a contravention of s.18 of the Australian Consumer Law, by reason of the Council’s misleading or deceptive conduct. An unusual feature of the cross-claim is that the relevant misleading conduct was not relied upon by Mrs Goater. Rather the conduct was relied upon by a third party, being the Bank. Nonetheless, it is maintained that the relevant misleading conduct caused loss to Mrs Goater.
While most statutory misleading conduct cases involve misleading conduct by a defendant which is relied upon by a plaintiff thereby causing loss to the plaintiff, it is clear that s.18 embraces misleading conduct directed to a third party which is relied upon by that party, causing loss to a plaintiff. The Full Court of the Federal Court decision in Ford Motor Company of Australia Limited v Arrowcrest Group Pty Ltd[6] contains a useful summary of these cases at [114]-[122]. Paragraphs 114 to 115 bear setting out in full:
In Janssen-Cilag Pty Ltd v Pfizer Pty Ltd [1992] FCA 437; (1992) 37 FCR 526 the applicant and respondent were competitors in the pharmaceutical industry. The applicant claimed that it suffered loss or damage by reason of consumers relying upon the misleading and deceptive conduct of the respondent. In that case Lockhart J held that the applicant could establish causation for the purposes of s 82 of the TPA if it could prove that consumers relied upon the respondent’s misleading and deceptive conduct to the detriment of the applicant’s market share.
That case is not authority for the proposition that causation can be established without proof of reliance. It is authority for the proposition that the applicant need not establish that it relied upon the respondent’s conduct, but can establish liability by proof that others did, as a result of which the applicant suffered loss.
[6] [2003] FCAFC 313
Consequently, I accept Mrs Goater’s submission that the claim based on statutory misleading conduct does not suffer any defect by reason that Mrs Goater did not herself rely on the relevant misrepresentation.
Misleading conduct–“in trade and commerce”
A question also arose before me whether the misrepresentations by the Council could be said to have been made “in trade and commerce”. I accept Mrs Goater’s submissions on that issue.
In Concrete Constructions (NSW) Pty Ltd v Nelson[7], the High Court considered the meaning of the term “in trade and commerce” in the context of a case brought by an employee plaintiff against his employer company in connection with alleged misrepresentations by the employer’s foreman which resulted in physical injury to the plaintiff.
[7] [1990] HCA 17
The Court was asked to consider the question whether the then prohibition under s.52 of the Trade Practices Act 1974 (Cth) of misleading or deceptive conduct by a corporation in trade or commerce extends to the internal affairs of the corporation or to purely internal communications between employees of a corporation in the course of their employment. The plurality indicated at [7] that the phrase “in trade and commerce” qualifies the prohibition against engaging in conduct. However, the plurality considered it could be construed as encompassing conduct in the course of the myriad of activities which are not, of their nature, of a trading or commercial character but which are undertaken in the course of, or as incidental to, the carrying on of an overall trading or commercial business. Alternatively, it could be construed as referring to conduct which is itself an aspect or element of activities or transactions which, of their nature, bear a trading or commercial character.
The High Court held that the term has the latter construction, so that for s.18 of the Australian Consumer Law to be enlivened, the relevant misleading conduct must be an aspect or element of activities or transactions which, of their nature, bear a trading or commercial character.
I accept that the Council is a person capable of being sued for misleading and deceptive action under the Australian Consumer Law[8].
[8] See for example, Fabcot Pty Ltd v Port Macquarie-Hastings Council [2010] NSWSC 726
However, in line with the High Court’s decision in Concrete Constructions, the Council will only be liable insofar as the relevant misleading conduct is an aspect or element of activities or transactions which, of their nature, bear a trading or commercial character.
In Mrs Goater’s submission, the misrepresentations by the Council were made in a commercial context. While it may be difficult to characterise the levying of rates by the Council as being an aspect of activities or transactions bearing a trading or commercial character, in Mrs Goater’s submission, the Council’s activities in collecting unpaid debts and negotiating with debtors are activities bearing a commercial character. Moreover, in the present case, the relevant debts were not rates, but burial fees charged by Council for managing cemeteries under its control. In addition, the alleged misrepresentations by Council, in the present case, were made specifically in response to a request from the Bank and it was plain that the nature of the request was to ascertain the Bank’s credit risk associated with Mrs Goater.
I accept that making a representation to the Bank in these circumstances clearly had a commercial character. It is at least arguable also that, to the extent that it might be suggested that no benefit accrued to the Council via its conduct so it therefore lacked a commercial character, it is not a prerequisite of something being done “in trade and commerce” that a benefit accrue to the actor. If it were a prerequisite, it would restrict the meaning of the term “in trade and commerce” beyond anything contemplated by the High Court in Concrete Constructions. It would be limiting the application of the misleading conduct proscription to misrepresentations made in a commercial transaction, where the representor would or may accrue a benefit. This is probably not what the High Court anticipated in Concrete Constructions. In any event, it is arguable that the misrepresentation in the present case may have advantaged the Council by facilitating its collection of the unpaid charges on the sale by the Bank of Mrs Goater’s Properties.
Mutuality of debts
The Council asserts that Mrs Goater’s claim against it cannot meet the test of mutuality with its judgment debt against her. It is clear that for an applicant to succeed on an application to set aside a bankruptcy notice on the grounds that the applicant has a counter-claim, set-off or cross demand, the counter-claim, set-off or cross demand must be mutual and due in her own right[9].
[9] Re Anderson; ex parte Alexander (1927) NSW StR 35
Consequently, a claim by a judgment creditor personally cannot be answered by a claim against the creditor as a member of a partnership or as an executor or trustee. Likewise, joint debts cannot be set off against several debts[10].
[10] See Swarbrick v Burge & Ors [2009] FMCA 985 at [65]
In the present case, Mrs Goater is making a claim against the Council for the loss that she says she has suffered. That claim has been consolidated with Mr Goater’s cross-claim against the Council for the loss that he says he has suffered. Mr Goater is currently a defendant in a proceeding commenced by the Council in the Local Court (case number 2015/4417).
Mrs Goater submits that simply because an order has been made to consolidate her claim with the claim of her husband, it does not mean that Mrs Goater’s claim against the Council should, by reason of this, be characterised as a joint debt or entitlement. It is merely a consequence of the need to efficiently manage cases; it is not a matter that changes the underlying character of the entitlement claimed. I agree.
Mrs Goater has provided useful submissions on the general issue of mutuality. The question of when persons are “jointly entitled” and must be joined was considered in Conridge v Lorenzo Flammia Trading as Manna & Flammia Solicitors[11]. In that case, a defendant sought to have proceedings summarily dismissed on the basis that the plaintiff had not joined another party whom the defendant regarded as “jointly entitled”. The plaintiff’s action was a professional negligence claim against one solicitor and a negligent representation claim against another solicitor. Both solicitors maintained that the plaintiff’s wife was jointly entitled to relief and she ought to have been joined.
[11] [2013] NSWSC 498
McCallum J expressed doubt as to whether it could be said that the husband and wife could be said to be jointly entitled to the same relief where their damages claims would necessarily be different. McCallum J also indicated at [16]-[17] that it was not clear to her whether a duty of care owed to two persons gives rise to a situation where each is jointly entitled to the same relief, or whether, rather, the position is that they are concurrently entitled to the same relief. Her Honour did not need to decide the question in the case.
In Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service[12], the NSW Court of Appeal held that if the relevant promises under an agreement were made to two parties jointly, then a claim for damages needed to be made by both the parties; and if this did not occur, then the better view was that the proceedings should be dismissed. However, it was held in that case that the relevant promises were made to the parties severally and as such joinder was not necessary.
[12] [2010] NSWCA 268
Mrs Goater submits that McCallum J’s doubts in Conridge as to whether it is possible to have a “joint entitlement” to relief in a claim in negligence and negligent misstatement were well-placed. She submits that if the Court of Appeal decided that a claim for breach of contract by a person severally entitled to the claim with others did not require joinder of the others as they were not “jointly entitled”, a fortiori the situation where persons have stand-alone claims in tort, misleading conduct and breach of confidence.
Mrs Goater submits that her and her husband’s claim against the Council are not joint entitlements for the same relief, but that they are “concurrently entitled to the same relief”. Furthermore, she submits that procedural steps to consolidate her claim with that of her husband do not change the character of the claim to a “joint entitlement” or a joint debt. She contends that there is no mutuality problem with her claim against the Council. I agree.
Conclusion
I accept that Mrs Goater has a counter claim, set off or cross demand against the Council equal to or exceeding the sum specified in the bankruptcy notice, for the purposes of ss.40(1)(g) and 41(7) of the Bankruptcy Act. I will therefore order that the bankruptcy notice be set aside.
I will hear the parties as to costs.
I certify that the preceding forty-two (42) paragraphs are a true copy of the reasons for judgment of Judge Driver
Associate:
Date: 9 December 2015
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