Lural Insurance Services Pty Ltd v Kairi Pty Ltd

[1985] FCA 68

Re: LURAL INSURANCE SERVICES PTY. LTD.; BRUCE CAMERON CHITTOCK and SANDRA
ELIZABETH CHITTOCK
And: KAIRI PTY. LTD.and BAILLIEU MILNER REAL ESTATE PTY. LTD.
No. WA G15 of 1985
Trade Practices
(1985) ATPR para 40 - 553

COURT

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
Toohey J.

CATCHWORDS

Trade Practices - misleading and deceptive conduct - representations by lessee's agent concerning leased premises - federal and state court claims between same parties - interlocutory application to restrain respondents from proceeding in state court pending resolution of Federal Court proceedings - observations on the considerations to be taken into account by the Court in exercising its discretion - whether the prospect of success of applicants' claim a relevant consideration

Trade Practices Act 1974 ss. 52, 82, 87

HEARING

PERTH
#DATE 8:3:1985

ORDER

1. The first respondent be restrained, until judgment in these proceedings or until further order, from continuing with plaints No. 32465 of 1982, No. 1541 of 1983 and No. 1542 of 1983 in the Local Court of Western Australia held at Perth and from instituting or continuing any action other than in these proceedings to recover from the applicants or any of them any amount under the agreement for lease or lease of the premises known as Unit 2A Corner of King Edward and Scarborough Beach Roads, Osborne Park or by reason of the occupancy of the shop by the applicants.

2. The order contained in paragraph 1 hereof is conditional upon the applicants paying the costs of the first respondent in the Local Court proceedings the subject of the injunction and upon the applicants prosecuting the application No. WA G15 of 1985 in the Federal Court with all reasonable speed.

3. There be liberty to the parties to apply to vary or discharge the terms of this order and liberty to apply generally.

4. The costs of the application to restrain proceedings in the Local Court be reserved.

JUDGE1

This application concerns a lease of shop premises in Osborne Park. The first applicant Lural Insurance Services Pty. Ltd. is the lessee. The other applicants are directors of that company and have guaranteed its obligations under the lease. The first respondent Kairi Pty. Ltd. is the lessor of the premises and Baillieu Milner Real Estate Pty. Ltd., the second respondent, acted as Kairi's agent in the letting of the premises.

1. The applicants claim that during negotiations for the lease, Radford Moyle, then employed by Baillieu Milner as a leasing negotiator, represented to the applicants that an access road was to be constructed allowing easy access to the shopping centre of which the leased premises were part, that the access road would be constructed by February or March 1982 (some 4 or 5 months after negotiations), that trade in the shopping centre would be strong and that there would be enough trade to support the type of business proposed to be conducted by Lural. That business was a travel agency and outlet for the sale of products from New Zealand.

2. On or about 11 November 1981 Lural entered into the lease.

3. The applicants claim that the respondents engaged in conduct that was misleading or deceptive or likely to mislead or deceive within the terms of s.52 of the Trade Practices Act 1974. They also allege that the representations were false, fraudulent and were made negligently.

4. In the matter now before the Court, the applicants seek an injunction restraining Kairi from continuing with four plaints in the Local Court of Western Australia in which Kairi claims rent due by Lural in respect of the premises and money due by Mr. and Mrs. Chittock under the guarantee. The applicants seek to restrain not only those proceedings but also any other proceedings that may be brought in the Local Court to recover rent due under the lease, until determination of the application in the Federal Court. The respondents oppose the interlocutory relief sought.

5. The applicants claim damages pursuant to s.82 of the Trade Practices Act and an order, pursuant to s.87, declaring the lease to have been void ab initio. Section 52 lies within Part V of the Act - "Consumer Protection". The entitlement of a person to recover damages for conduct done in contravention of Part V arises from s.82 of the Act. That section and s.87 are to be found in Part VI - "Enforcement and Remedies". Section 86 confers jurisdiction on the Federal Court to hear and determine actions, prosecutions and other proceedings under Part VI:
   
   

"... and that jurisdiction is exclusive of the jurisdiction of any other court other than

the jurisdiction of the High Court under

section 75 of the Constitution".

1. It is clear that only the Federal Court has jurisdiction to entertain the claim for relief under the Trade Practices Act. Pursuant to its accrued jurisdiction, this Court may entertain a cross-claim by Kairi for rent and for money due under the guarantee, though its jurisdiction in that respect is not exclusive. Stack v. Coast Securities (No. 9) Pty. Ltd. (1983) 57 ALJR 731.

2. There is no doubt that this Court has power to restrain Kairi from proceeding with claims for rent in the Local Court; the real question is the propriety of making the order sought. St. Justins Properties Pty. Ltd. v. Rural Holdings Pty. Ltd. (1980) ATPR 40-146. It is for this Court, in the exercise of its discretion, to determine whether it will deal with the non-federal issues as well as the federal. In exercising that jurisdiction the Court will have regard to the fact that it is the only court which is fully invested with jurisdiction to decide all the questions that arise between the parties to the lease. But it is a relevant consideration that there is no substance in the questions raised under the Trade Practices Act, or that the questions raised under that Act are an insubstantial or severable part of the entire proceedings, or that for some other reason it would be more convenient that the proceedings in the Local Court should continue. See Stack v. Coast Securities (No. 9) Pty. Ltd. per Gibbs C.J. at 738.

3. Another relevant consideration is the stage the proceedings sought to be restrained have reached, in particular the proximity of the matter to a hearing, the amount of costs already incurred and the willingness of the party seeking to restrain those proceedings to meet those costs.

4. The proceedings sought to be restrained in the Local Court are, in two cases, actions commenced in 1982 and, in the other two cases, actions commenced in 1983. It also appears from the affidavit of Nicholas David Pope filed on behalf of the respondents that there is another plaint in the Local Court which has not yet been served on the applicants. This claims the balance of rent, outgoings and interest up to the date of the surrender of the lease which took place by agreement between the applicants and Kairi on 30 May 1983. There has been a period of some 12 months during which no action was taken by Kairi in respect of the Local Court proceedings. This is explained by Mr. Pope as brought about by the absence of a witness overseas. His affidavit continues: "However so far as the Plaintiff is now concerned those matters are now ready to be listed for hearing in the Local Court". But, it would seem, no step has yet been taken by Kairi to enter the Local Court actions for trial. Some interlocutory steps have been taken in the Local Court.

5. As to plaint No. 31484 of 1982, which is a claim by Kairi against Lural, a confession of debt was signed in that matter on 7 October 1982. Execution was levied on a judgment resulting from that confession but the company had no assets with which to meet the judgment.

6. On the considerations so far mentioned, it would be appropriate to restrain Kairi from proceeding further in the Local Court in respect of actions already instituted other than plaint No. 31484. As to that matter, there is a judgment of the Local Court and the matter is res judicata between the parties unless and until that judgment is set aside. See Indrisie v. General Credits Limited (unreported decision of Northrop J. delivered 26 October 1984). This is not a case in which the actions pending in the other court have been given a date for hearing nor is it a case in which a great deal of time and expenditure has been incurred on interlocutory matters. Such costs as Kairi has incurred to date may be catered for in an order that, as a condition of obtaining an injunction, the applicants pay those costs.

7. But the matter is complicated because the respondents contend that the applicants' claim in the Federal Court has no reasonable prospect of success and that this, of itself, is sufficient reason for refusing the injunction. This submission was based in part upon an affidavit sworn by Mr. Moyle and filed in the proceedings in which he denied having made the representations alleged in the statement of claim. On the other hand, Bruce Cameron Chittock, the second applicant, has sworn an affidavit verifying the contents of the statement of claim. It is not possible to draw any conclusion one way or the other from the affidavits and it must be assumed that the applicants have a reasonable prospect of establishing the representations alleged by them.

8. The applicants' claim is open to attack on the ground that what are pleaded as representations, even if established, are no more than predictions about what might happen in the future. But I would be reluctant to conclude that, on this ground, the applicants have no reasonable prospect of establishing their claim. The matter was not fully argued and it may be possible to spell out of the representations alleged assertions of existing fact relating to an access road and to trade.

9. Although the applicants seek injunctive relief, this is not a case of an applicant who seeks to restrain, until the hearing of the application, the conduct complained of in the statement of claim and which is sought to be restrained by final order. What the present applicants seek to do is to prevent any further proceedings in the Local Court so that all issues between the parties may be aired and resolved in the one court capable of disposing of all those issues viz. the Federal Court. The relevant considerations are not necessarily the same.

10. For this reason I do not think it is profitable to attempt to determine the likely success of the respondents' argument that the applicants' claim is in any event statute barred. Sub-section 82(2) of the Trade Practices Act requires that an action under sub-s.(1) be commenced within 3 years after the date on which the cause of action accrued. The representations upon which the applicants rely were said to have been made in or about October and November 1981. No proceedings were commenced in the Federal Court until 7 February 1985. The applicants argue that the cause of action accrued, not when the representations were made but when damage resulted from a breach of the undertakings given. I explored this question in Arcadi v. Colonial Mutual Life Assurance Society Ltd. (1984) ATPR 40-473 and it is unnecessary to repeat what is said there. Before the question of limitations can be determined, there are questions of fact and law to be answered. Certainly it is not possible to resolve the factual questions at this stage.

11. In my view the compelling consideration in the present case is that it is only in the Federal Court that all issues between the parties can be determined. Some costs have been incurred by the respondents in the Local Court and the applicants must be prepared to meet those costs as a condition of restraining the further prosecution of those proceedings. They have not acted promptly in making application to the Federal Court and have allowed the Local Court actions to continue unduly. Furthermore the applicants must be prepared to prosecute the action in the Federal Court with all reasonable speed otherwise Kairi should be left to prosecute its actions in the Local Court. As judgment has already been entered in plaint No. 31484 of 1982, it is not appropriate to restrain proceedings in that matter. In any event it is apparent that execution on the judgment in that action is unlikely to achieve any result.

12. I propose that there be an injunction restraining the first respondent, until judgment in the Federal Court proceedings or until further order, from continuing with plaints No. 32465 of 1982, No. 1541 of 1983 and No. 1542 of 1983 in the Local Court of Western Australia held at Perth and from instituting or continuing any action other than in these proceedings to recover from the applicants or any of them any amount under the agreement for lease or lease of the premises known as Unit 2A Corner of King Edward and Scarborough Beach Roads, Osborne Park or by reason of the occupancy of the shop by the applicants. But that injunction is conditional upon the applicants paying the costs of the first respondent in the Local Court proceedings the subject of the injunction and upon them prosecuting the application in the Federal Court with all reasonable speed. There will be liberty to the parties to apply to vary or discharge the terms of this order and the costs of the application to restrain proceedings in the Local Court will be reserved.