Kelbush Pty Ltd v Western Pacific Automotive Pty Ltd
[2012] FMCA 257
•18 May 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| KELBUSH PTY LTD v WESTERN PACIFIC AUTOMOTIVE PTY LTD | [2012] FMCA 257 |
| PRACTICE AND PROCEDURE – Discovery – whether in the interests of the administration of justice. |
| Federal Magistrates Act 1999 (Cth), s.45 Federal Magistrates Court Rules 2001 (Cth), r.14.02 Trade Practices Act 1974 (Cth), ss.52, 71, 82, 87(2) |
| Abrahams v Qantas Airways Limited (2007) 210 FLR 314; [2007] FMCA 639 Doukidis v Williamson (2008) 6 ABC(NS) 717; [2008] FMCA 1352 Harley v Commonwealth of Australia (No.2) [2011] FMCA 294 Hobson v BWL Pty Ltd (2010) 199 IR 91; [2010] FMCA 722 Mulley v Manifold (1959) 103 CLR 341 |
| Applicant: | KELBUSH PTY LTD |
| Respondent: | WESTERN PACIFIC AUTOMOTIVE PTY LTD |
| File Number: | PEG 237 of 2011 |
| Judgment of: | Lucev FM |
| Hearing date: | 28 March 2012 |
| Date of Last Submission: | 28 March 2012 |
| Delivered at: | Perth |
| Delivered on: | 18 May 2012 |
REPRESENTATION
| Counsel for the Applicant: | Mr M Mirzai |
| Solicitors for the Applicant: | Summers Legal |
| Counsel for the Respondent: | Mr M Holler |
| Solicitors for the Respondent: | Tolson & Co |
DECLARATION
The Court declares that:
Under s.45(1) of the Federal Magistrates Act 1999 (Cth), it is appropriate that there be discovery by the respondent of all contracts signed by a purchaser or prospective purchaser in relation to the sale and purchase of a Mercedes Benz CLK 63 AMG Black Series motor vehicle, bearing registration number 1DCS 663 and chassis/VIN number WDB 2093772F253264, including contracts signed by:
(a)any person prior to the applicant signing any contract; and
(b)the applicant;
and within the possession, custody or control of the respondent.
ORDERS
The Court orders that:
The respondent give discovery to the applicant of the documents set out in the above declaration by 1 June 2012.
The proceedings be adjourned to a further directions hearing at 10.00am on 18 June 2012.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG 237 of 2011
| KELBUSH PTY LTD |
Applicant
And
| WESTERN PACIFIC AUTOMOTIVE PTY LTD |
Respondent
REASONS FOR JUDGMENT
Introduction – buying a new Mercedes Benz
Buying a new Mercedes Benz CLK 63 AMG Black Series motor vehicle,[1] with defective paintwork,[2] is at the heart of this litigation, in which the applicant, Kelbush Pty Ltd,[3] alleges misleading and deceptive conduct under s.52 of the Trade Practices Act 1974 (Cth)[4] and breach of contract, for which it seeks amends from the respondent, Western Pacific Automotive Pty Ltd.[5]
[1] “the Mercedes”.
[2] “the Defect”.
[3] “Kelbush”.
[4] “TP Act”.
[5] “Western Pacific Automotive”.
An application in a case
By application in a case filed 14 March 2012 Kelbush seeks an order for discovery in the following terms:
1.The respondent provide discovery of the following documents to the applicant:
-all contracts entered into by the respondent in relation to the vehicle the subject of these proceedings, including prior contracts signed by the applicant and any other prospective purchasers;
-all pre-delivery and inspection reports produced by the respondent or any other person in relation to the vehicle the subject of these proceedings; and
-all quality control reports produced by the manufacturer in relation to the vehicle the subject of these proceedings.
Kelbush also seeks ancillary orders with respect to costs and liberty to apply.
The making of the orders is opposed by Western Pacific Automotive.
Matters arising on the pleadings
Kelbush alleges misleading and deceptive conduct under s.52 of the TP Act, and alleges breach of contract, by Western Pacific Automotive.
There is no dispute that:
a)in or around June 2009 Kelbush had the opportunity to purchase the Mercedes from Western Pacific Automotive; and
b)Western Pacific Automotive represented to Kelbush that the original purchaser who had ordered the Mercedes,[6] having paid a deposit of $50,000, was not completing the Prior Purchaser’s contract.
[6] “Prior Purchaser”.
Kelbush claims that Western Pacific Automotive represented, prior to Kelbush’s purchase of the Mercedes, that the Mercedes was:
a)an original, brand new and genuine Mercedes motor vehicle;
b)a factory standard motor vehicle of its kind; and
c)a motor vehicle suitable for the purposes of a long-term investment.
Western Pacific Automotive denies representing that the Mercedes was suitable for the purposes of a long-term investment.
Kelbush alleges that it relied upon, and was induced by, Western Pacific Automotive’s representations in entering into two contracts to purchase the Mercedes.[7]
[7] “the Kelbush Contracts”, and respectively “First Kelbush Contract” and “Second Kelbush Contract”.
Subsequent to the Purchase, the Defect, which is said to be a significant, was discovered. Kelbush alleges that in order to rectify the Defect the Mercedes needs to be completely repainted, and in order to effect a repainting the Mercedes has to be effectively completely dismantled. Consequently Kelbush alleges that:
a)the value of the Mercedes is diminished; and
b)the Mercedes is no longer suitable as an investment vehicle,
because it will be apparent to an experienced buyer that it is no longer in original condition.
The Defect is admitted by Western Pacific Automotive. However, Western Pacific Automotive contends that features of the Mercedes other than the paintwork are what makes it unique, and denies that the Defect makes the Mercedes unsuitable as a long-term investment.
Kelbush asserts that it would not have purchased the Mercedes but for the representations as to the Mercedes being of a factory standard and suitable for a long-term investment, and that those representations are misleading or deceptive or likely to mislead or deceive in breach of s.52 of the TP Act. Western Pacific Automotive does not admit that Kelbush relied on the representations in purchasing the Mercedes.
As a consequence of the misleading and deceptive conduct Kelbush alleges loss and damage comprising $280,390 being the purchase price of the Mercedes, and the cost of financing the purchase. Western Pacific Automotive admits that Kelbush has suffered loss and damage, but not to the extent claimed. Western Pacific Automotive says that the loss and damage arising from the Defect is the difference in value between the Mercedes and an equivalent Mercedes without the Defect, or the cost of repainting the Mercedes.
Kelbush also alleges breach of contract in relation to the Purchase of the Mercedes. It alleges that there were material written express terms of an agreement to purchase,[8] as follows:
a)that Kelbush would trade-in an existing motor vehicle for an agreed price of $130,000;
b)that Kelbush would pay a cash deposit of $50,000; and
c)that the Mercedes had factory-standard metallic paint as a standard feature.
[8] “Purchase Agreement”.
Kelbush also alleges implied terms in the Purchase Agreement, namely that the Mercedes was:
a)reasonably fit for purpose as a vehicle for investment purposes;[9] and
b)painted to Mercedes Benz factory standard commensurate with that model of motor vehicle.
[9] TP Act, s.71.
Kelbush alleges that the implied terms of the Purchase Agreement were breached because of the Defect, and because the Defect meant that the Mercedes was not suitable for the purposes of a long-term investment.
Western Pacific Automotive says that the Purchase Agreement was a complete contract.
Kelbush claims loss and damage by way of diminution of the value of the Mercedes, with particulars to be provided prior to trial.
Kelbush claims:
a)declarations that:
i)Western Pacific Automotive has engaged in misleading and deceptive conduct in contravention of s.52 of the TP Act; and
ii)the Purchase Agreement is void ab initio under s.87(2)(a) of the TP Act;
b)an order:
i)under s.87(2) of the TP Act directing Western Pacific Automotive to refund all monies paid by Kelbush to Western Pacific Automotive under the Purchase Agreement; and
ii)under s.87(2)(d) of the TP Act directing Western Pacific Automotive to pay to Kelbush the damages sustained by Kelbush under s.82 of the TP Act;
c)damages pursuant to s.82 of the TP Act;
d)in the alternative, damages for breach of contract; and
e)interest on any amount payable by Western Pacific Automotive.
Discovery sought
Kelbush seeks discovery of a number of categories of document, briefly described as:
a)Kelbush’s Contracts;
b)the Prior Purchaser’s Contract;
c)pre-delivery and inspection reports; and
d)quality control reports.
Requirements for discovery in this Court
Section 45 of the Federal Magistrates Act 1999 (Cth)[10] provides as follows:
[10] “FM Act”.
Interrogatories and discovery
(1) Interrogatories and discovery are not allowed in relation to proceedings in the Federal Magistrates Court unless the Federal Magistrates Court or a Federal Magistrate declares that it is appropriate, in the interests of the administration of justice, to allow the interrogatories or discovery.
(2) In deciding whether to make a declaration under subsection (1), the Federal Magistrates Court or a Federal Magistrate must have regard to:
(a) whether allowing the interrogatories or discovery would be likely to contribute to the fair and expeditious conduct of the proceedings; and
(b) such other matters (if any) as the Federal Magistrates Court or the Federal Magistrate considers relevant.
Rule 14.02 of the Federal Magistrates Court Rules 2001 (Cth)[11] provides as follows:
[11] “FMC Rules”.
Declaration to allow discovery
(1) A declaration may be made under subsection 45 (1) of the Act to allow discovery on the application of a party or on the Court's own motion.
(2) If a declaration is made, the Court or a Registrar may make an order for disclosure:
(a) generally; or
(b) in relation to particular classes of documents; or
(c) in relation to particular issues; or
(d) by a specified date.
The requirements for discovery in this Court have been set out in a series of cases including Abrahams v Qantas Airways Limited,[12] Doukidis v Williamson[13] and Hobson v BWL Pty Ltd.[14] In order to obtain an order for discovery in this Court the Court must determine on the available evidence that it is in the interests of the administration of justice to do so, and in making that determination must have regard to whether allowing discovery would be likely to contribute to the fair and expeditious conduct of the proceedings, and such other matters as the Court considers relevant. Those other matters might include:
[12] (2007) 210 FLR 314; [2007] FMCA 639 (“Abrahams”).
[13] (2008) 6 ABC(NS) 717; [2008] FMCA 1352.
[14] (2010) 199 IR 91; [2010] FMCA 722.
a)the relevance of any documents sought to be discovered;
b)the volume of documents sought to be discovered;
c)whether there is a court book containing relevant documents, and the extent to which relevant documents are included in the court book;
d)whether discovery would narrow the issues;
e)whether both parties seek discovery;
f)whether there is consent to discovery;
g)whether discovery is “of benefit” in the litigation; and
h)the effect of discovery on litigants, especially, vulnerable litigants.[15]
The categories of relevant factors are not closed.[16]
[15] Abrahams FLR at 321 per Lucev FM; FMCA at para.25 per Lucev FM.
[16] Abrahams FLR at 321 per Lucev FM; FMCA at para.25 per Lucev FM.
As the Court observed in Abrahams the interests of the administration of justice are directed to the interests of the management of justice, that is, the management by the Court of the proceedings pending before the Court.[17]
Consideration
[17] Abrahams FLR at 316-317 per Lucev FM; FMCA at paras.9-11 per Lucev FM, followed in Harley v Commonwealth of Australia (No. 2) [2011] FMCA 294 at para.12 per Lindsay FM.
Kelbush Contracts
Kelbush asserts that Western Pacific Automotive is in possession of the signed Kelbush Contracts, comprising:
a)the Second Kelbush Contract under which the Mercedes was purchased; and
b)the First Kelbush Contract for a higher purchase price than that in the Second Kelbush Contract.
Kelbush claims that Western Pacific Automotive informed Kelbush that it required a second contract to be signed by Kelbush to effectively reduce the apparent purchase price of the Mercedes, with the reduction achieved by reducing the purchase price and trade-in value of Kelbush’s trade-in vehicle by $50,000. Kelbush asserts that Western Pacific Automotive informed Kelbush that the purpose of this exercise was to enable Western Pacific Automotive to claim the deposit paid by the Prior Purchaser as it gave the appearance that Western Pacific Automotive had suffered a $50,000 loss in re-selling the Mercedes.
Kelbush asserts that the Kelbush Contracts are relevant to the proceedings as they support its claim that the true purchase price of the Mercedes was higher than the purchase price paid by Kelbush.
The actual purchase price under the Second Kelbush Contract will be relevant to the actual loss on the Mercedes.
If a Mercedes of this model does actually appreciate in price as a long-term investment then whether the price actually paid was $280,000 or $330,000 as it is alleged to be under the First Kelbush Contract, may be relevant to what the loss on the Mercedes as an investment might be if it cannot now be considered to be a long-term investment.
The Court, therefore, considers that it is in the interests of the administration of justice, and the fair and expeditious conduct of the proceedings (including any further mediation), that the Kelbush Contracts to be discovered.
Prior Purchaser’s Contract
Kelbush seeks discovery of the Prior Purchaser’s Contract. It asserts that the Prior Purchaser’s Contract will support its claim that the true purchase price of the Mercedes was higher than the purchase price paid by Kelbush, and that it was sold to Kelbush at a discounted price because of the Defect.
The Prior Purchaser’s Contract is relevant for the same reasons as the First Kelbush Contract.
The Court, therefore, considers that it is in the interests of the administration of justice, and the fair and expeditious conduct of the proceedings (including any further mediation), that the Kelbush Contracts to be discovered.
Pre-delivery and inspection reports
Kelbush seeks the discovery of all pre-delivery and inspection reports produced by, for, or on behalf of, Western Pacific Automotive or any other person in relation to the Mercedes. Kelbush says that it understands that these reports are produced as part of Western Pacific Automotive’s pre-delivery inspection and quality control processes. Kelbush seeks these reports to investigate when or whether Western Pacific Automotive became aware of the relevant defect prior to the Purchase.
Western Pacific Automotive asserts that, the Defect having been admitted, the primary issue for determination in these proceedings is the quantum of any loss or damage suffered by Kelbush. Therefore, it is said that the pre-delivery and inspection reports are not relevant to that issue. Further, because knowledge is not an element of the misleading and deceptive conduct under s.52 of the TP Act, or of the breach of contract pleaded, the pre-deliver and inspection reports are not otherwise relevant.
The Court does not consider that the discovery of the pre-delivery and inspection reports are necessary or relevant to any issue it will be required to determine. And, although relevance alone is not a warrant for discovery, in this Court[18] a lack of relevance is the death knell of a discovery application.[19]
[18] Abrahams FLR at 320 per Lucev FM; FMCA at para.22 per Lucev FM.
[19] Mulley v Manifold (1959) 103 CLR 341.
The Court will not therefore make a declaration with respect to discovery of the pre-delivery and inspection reports.
Quality control report
Kelbush seeks discovery of all quality control reports produced by the manufacturer of the Mercedes in relation to the Mercedes. Kelbush asserts that these reports are provided by the manufacturer of the Mercedes to Western Pacific Automotive, or are alternatively able to be obtained by Western Pacific Automotive from the manufacturer.
Kelbush seeks to review these reports to investigate whether Western Pacific Automotive became aware of the defect when provided with the quality control reports.
Western Pacific Automotive submits that these documents are not relevant for the same reasons as the pre-delivery and inspection reports.
The Court’s view is that the quality control reports are not relevant for the same reasons as the pre-delivery and inspection reports, and therefore there will be no declaration with respect to the discovery of these documents.
Other matters relevant to discovery
Relevance
Those documents which are relevant ought in the circumstances of this case be discovered for the reasons set out above.
Volume
The volume of documents in this case is very small and ought not preclude a discovery declaration and order.
Whether of benefit to the litigation
Discovery would be of benefit in:
a)clarifying the true value of the Mercedes at the time of purchase; and
b)possibly facilitating further mediation. Mediation having been adjourned on 19 March 2012 to a date to be fixed, discovery might aid in a settlement of the matter, or at least result in some agreement on the facts.
Conclusion, declaration and orders
The Court has concluded that:
a)there ought to be a declaration under s.45(1) of the FM Act that it is appropriate, in the interests of the administration of justice, that there be discovery of the following documents:
i)the Kelbush Contracts;
ii)the Prior Purchaser’s Contract; and
b)an order that the documents referred to in the declaration be discovered by 1 June 2012; and
c)the matter be adjourned to a further directions hearing at 10.00am on 18 June 2012.
There will be a declaration and orders accordingly.
The Court will hear from the parties as to costs.
I certify that the preceding forty-six (46) paragraphs are a true copy of the reasons for judgment of Lucev FM
Date: 18 May 2012
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