Kheir's Financial Services Pty Ltd v Aussie Home Loans Ltd
[2009] FMCA 340
•28 May 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| KHEIR'S FINANCIAL SERVICES PTY LTD & ANOR v AUSSIE HOME LOANS LTD | [2009] FMCA 340 |
| INDUSTRIAL LAW – Independent Contractors Act 2006 (Cth) – whether the Act applies to a contract terminated before the date of commencement of the Act considered. |
| Acts Interpretation Act 1901 (Cth), s.8 Workplace Relations Act 1996 (Cth) Workplace Relations Legislation Amendment (Independent Contractors) Act 2006 (Cth) |
| Carlton & United Breweries Ltd v Castlemaine Tooheys Ltd (1986) 161 CLR 543 Karabetsos v Connor Anderson International Pty Ltd [2006] FMCA 1437 Keldote Pty Ltd & Ors v Riteway Transport [2009] FMCA 319 Kheir’s Financial Services Pty Ltd v Aussie Home Loans Ltd [2008] FCA 1602 Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564 Maxwell v Murphy (1957) 96 CLR 261 |
| First Applicant: | KHEIR'S FINANCIAL SERVICES PTY LTD |
| Second Applicant: | GAMEL KHEIR |
| Respondent: | AUSSIE HOME LOANS LTD |
| File Number: | SYG 2771 of 2008 |
| Judgment of: | Driver FM |
| Hearing date: | 20 April 2009 |
| Date of Last Submission: | 30 April 2009 |
| Delivered at: | Sydney |
| Delivered on: | 28 May 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr J Fernon, SC with Mr T Boyd |
| Solicitors for the Applicant: | Kheir & Associates Solicitors |
| Counsel for the Respondent: | Mr BA Coles, QC with Mr SB Docker |
| Solicitors for the Respondent: | Kemp Strang |
ORDERS
The application and cross claim are dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 2771 of 2008
| KHEIR'S FINANCIAL SERVICES PTY LTD |
First Applicant
GAMEL KHEIR
Second Applicant
And
| AUSSIE HOME LOANS LTD |
Respondent
REASONS FOR JUDGMENT
Introduction and background
This is an application under ss.12 and 16 of the Independent Contractors Act 2006 (Cth) (“the Independent Contractors Act”) and s.14 of the Federal Magistrates Act 1999 (Cth) seeking the variation of a contract for the provision of services and the recovery of money said to be due to the applicants under the contract. There is a cross-claim by the respondent against the applicants to recover moneys paid pursuant to the contract which are said to be recoverable under the terms of the contract.
The proceedings were brought in the Federal Court and transferred to this Court: Kheir’s Financial Services Pty Ltd v Aussie Home Loans Ltd [2008] FCA 1602. The applicants are a financial services company and its principal, who at the relevant time, traded as an independent mortgage broker for Aussie Home Loans. The applicants rely upon a third further amended application filed on 22 April 2009 and a second amended statement of claim filed on 11 December 2008.
Essentially, the applicants assert that Mr Kheir relied upon oral representations in order to enter into a series of contracts with Aussie Home Loans and that he did not pay any attention to the written terms of the contracts concerning payment and recovery of commission for loans arranged by Kheir’s Financial Services. The terms of the contracts denying Kheir’s Financial Services’ ongoing commission for loans arranged after the termination of the relevant contracts with Aussie Home Loans are said to be unfair and the applicants seek the deletion of those terms and the insertion of alternative terms ensuring ongoing payment of commission after the termination of the contracts. The applicants also seek the deletion of provisions requiring the repayment of upfront commission in circumstances where the loans arranged were repaid within 12 months.
The respondent relies upon a defence to the second further amended statement of claim filed on 16 December 2008. Aussie Home Loans denies that the contracts were unfair for the purposes of the Independent Contractors Act and assert that an entitlement to “claw back” up front commission paid under the contracts where the loans were repaid within 12 months.
The evidence
I received all of the evidence provisionally, subject to objections which were identified in tables tendered by the parties. The applicants rely upon the affidavit of Gamel Kheir made on 5 September 2008, to which is exhibited a bundle of documents. Mr Kheir made a second affidavit on 17 October 2008 and a third affidavit on 26 February 2009 which are also relied upon. The applicants also rely upon the affidavits of Mr Kheir’s brothers (the affidavit of Majed Kheir made on 18 August 2008 and the affidavit of Khaled Kheir made on 18 July 2008). All of the applicants’ witnesses were required for cross-examination.
The respondent relies upon two affidavits by Jill Garland made on 28 March 2008 and 18 November 2008, the affidavit of John Lloyd Flavell made on 19 November 2008, the affidavit of Graeme McDiarmid made on 20 November 2008, two affidavits by James Symond made on 19 November 2008 and 16 April 2009, the affidavit of Jonathon Chester Connolly made on 20 November 2008 and the affidavit of Doreen Theseira made on 19 December 2008, to which was exhibited a bundle of documents. Mr Symond and Ms Garland were required for cross-examination.
I also received as an exhibit tendered during the course of the trial a letter dated 30 December 2004 and an annexed contract signed by Mr Kheir on his own behalf and as a director of the applicant company and dated 3 January 2005.
Preliminary issue – jurisdiction and application of the Independent Contractors Act
The trial of this matter took place over two days on 20 and 22 April 2009. The parties’ pleadings did not raise any issue of jurisdiction. Neither was any issue raised before the receipt and testing of evidence. The issue was raised by counsel for the respondent during the presentation of oral submissions. The submissions were confirmed in writing. The respondent draws attention to the fact that each of the three contracts in issue in this case were terminated before Part 3 of the Independent Contractors Act commenced on 1 March 2007. The respondent submits that none of them are subject to review under that Act because otherwise the Independent Contractors Act would have retrospective application inconsistent with the presumption that statutes operate only prospectively.
In the alternative, the respondent submits that the rights of the parties to the contracts became property rights upon the termination of the contracts such that by the time the relevant provisions of the Independent Contractors Act commenced there was no contract upon which it could operate. The respondent submits that to construe the Independent Contractors Act to allow such contracts to be reviewed, avoided or varied would be inconsistent with s.51(xxxi) of the Constitution because it would provide for the acquisition of property otherwise than on just terms.
No notices were issued in relation to the constitutional issue. In the absence of the issue of notices, under s.78B of the Judiciary Act 1903 (Cth), the Court cannot deal with that issue.
The parties joined issue in later submissions filed on 24 and 30 April 2009 on the question of whether the Independent Contractors Act has retrospective operation by reference to the question of whether that Act was a continuation of the previous legislative provisions (the Workplace Relations Act 1996 (Cth) (“the Workplace Relations Act)) or whether it changed the law.
In the absence of some clear statement to the contrary, an Act will be assumed not to have retrospective operation[1]. The leading authority in Australia is Maxwell v Murphy[2], relevantly at page 267:
The general rule of the common law is that a statute changing the law ought not, unless the intention appears with reasonable certainty, to be understood as applying to facts or events that have already occurred in such a way as to confer or impose or otherwise affect rights or liabilities which the law had defined by reference to the past events.
[1] Statutory Interpretation in Australia, 6th edition, DC Pearce and RS Geddes, p307
[2] (1957) 96 CLR 261
The Independent Contractors Act established an exclusive federal regime for the review of unfair services contracts. It effected substantial changes to the previously applicable law. There can be no dispute that the variation of a terminated contract, as sought by the applicants, would affect rights or liabilities arising under the contract. As the contracts in issue all were terminated before the commencement of the relevant parts of the Independent Contractors act, the application before me calls for the retrospective application of that Act. A clear statutory intention supporting such retrospective application is necessary if the Court is to exercise jurisdiction in those circumstances.
Schedule 2 to the Workplace Relations Legislation Amendment (Independent Contractors) Act 2006 (Cth) contains consequential amendments and transitional provisions in relation to the legislation. The former operative provisions of the Workplace Relations Act are saved in part in relation to investigation or proceedings which had been commenced or not completed by the commencing day and Part 22 of the Workplace Relations Act by item 3 of the Schedule continues to apply to such investigations or proceedings notwithstanding the repeal of that Part. That provision suggests that the Independent Contractors Act was not intended to operate in relation to causes of action acted upon but incomplete by 1 March 2007. At the same time, proceedings not commenced before that date under the Workplace Relations Act 1996 are unaffected by the transitional provisions. That may be because they were intended to be brought under the Workplace Relations Act which did not need any saving or transitional provisions in relation to proceedings not commenced by 1 March 2007.
Section 8 of the Acts Interpretation Act 1901 (Cth) provides:
Where an Act repeals in the whole or in part a former Act, then unless the contrary intention appears the repeal shall not:
(a) revive anything not in force or existing at the time at which the repeal takes effect; or
(b) affect the previous operation of any Act so repealed, or anything duly done or suffered under any Act so repealed; or
(c) affect any right privilege obligation or liability acquired accrued or incurred under any Act so repealed; or
(d) affect any penalty forfeiture or punishment incurred in respect of any offence committed against any Act so repealed; or
(e) affect any investigation legal proceeding or remedy in respect of any such right privilege obligation liability penalty forfeiture or punishment as aforesaid;
and any such investigation legal proceeding or remedy may be instituted continued or enforced, and any such penalty forfeiture or punishment may be imposed, as if the repealing Act had not been passed.
Section 42 of the Independent Contractors Act provides that regulations made under the Act may make provision for matters of a transitional, saving or application nature arising out of, or relating to, the provisions of that Act or of the Workplace Relations Legislation Amendment (Workplace Relations) Act 2006. Subsection (3) provides:
(3)Subject to subsection (4), despite subsection 12(2) of the Legislative Instruments Act 2003, regulations made for the purpose of subsection (1) of this section may be expressed to take effect from a date before the regulations are registered under that Act.
It does not appear, however, that any relevant regulations have been made under that section. Further, subsection 42(3), while it authorises the making of regulations taking effect before the date of registration, does not authorise the making of regulations taking effect before the date of commencement of the Independent Contractors Act.
The Independent Contractors Act is not expressed to apply retrospectively. In particular, it is not expressed to apply to contracts terminated before its commencement. It follows, in my view, that such contracts continue to be governed by the Workplace Relations Act or by state law. I find that the Workplace Relations Act and state law continue to apply in relation to rights and liabilities arising under contracts terminated prior to the commencement of the Independent Contractors Act on 1 March 2007.
This is, of course, quite a different question from the question of whether the Independent Contractors Act operates, after its commencement, in relation to contracts terminated before proceedings are instituted under the Act. As to that, see Keldote Pty Ltd & Ors v Riteway Transport [2009] FMCA 319.
The other problem concerns this Court’s jurisdiction. The Court is conferred with jurisdiction under the Independent Contractors Act by s.12. However, just as Part 3 of that Act does not apply to contracts terminated before the commencement of the Part, neither is the Court granted any jurisdiction in relation to such contracts. Hypothetically, it might be possible for the applicants to amend their application to claim relief, if available, under the Workplace Relations Act. The problem then is, however, that this Court had no jurisdiction under the Workplace Relations Act prior to 27 March 2006: Karabetsos v Connor Anderson International Pty Ltd [2006] FMCA 1437.
It follows, in my view, that I have no alternative but to dismiss the application for lack of jurisdiction. That is unfortunate, especially as the issue going to jurisdiction was only belatedly raised.
The cross claim must fail for similar reasons. That claim is for damages for breach of contract. It is brought in the Court’s accrued or associated jurisdiction. A claim in the Court’s associated or accrued jurisdiction can only be entertained if the Court’s primary (statutory) jurisdiction is invoked. If no federal jurisdiction is properly invoked there can be no accrued jurisdiction: Carlton & United Breweries Ltd v Castlemaine Tooheys Ltd (1986) 161 CLR 543 at 553 and Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564 per French J at 598.
Even if I were wrong in that analysis, I would decline to hear the cross claim on its own in the exercise of discretion. It would, in my view, be unjust to permit the respondent to seek damages for breach of the contracts in circumstances where the applicants are prevented from seeking, in effect, the rectification of the relevant contractual terms.
I will hear the parties as to costs.
I certify that the preceding twenty-four (24) paragraphs are a true copy of the reasons for judgment of Driver FM
Associate:
Date: 28 May 2009
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