Schaefer, Eric Joseph v Guthrie, Mr Lloyd, Chairman, State Housing Commission t/as Homewest

[1998] FCA 554

FEDERAL COURT OF AUSTRALIA

PRACTICE AND PROCEDURE - whether reasonable cause of action disclosed - assessment of fixed costs.

Federal Court Rules Order 20 rule 2.
Trade Practices Act 1974.
The Metropolitan Water Supply, Sewerage and Drainage Act 1909 (WA) s 103

ERIC JOSEPH SCHAEFER -v- MR LLOYD GUTHRIE, CHAIRMAN, STATE HOUSING COMMISSION Trading as HOMESWEST
WAG 155 of 1997

COURT:        R.D. FARRELL JR
PLACE:         PERTH
DATE:           22 MAY 1998

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WG155 of 1997

BETWEEN:	ERIC JOSEPH SCHAEFER APPLICANT
AND:	MR LLOYD GUTHRIE, CHAIRMAN, STATE HOUSING COMMISSION TRADING AS HOMESWEST RESPONDENT
COURT:		R.D. FARRELL JR
DATE OF ORDER:		15 MAY 1998
WHERE MADE:		PERTH

THE COURT ORDERS THAT:

1.  The application is dismissed pursuant to Order 20 rule 2 of the Federal Court Rules on      the grounds that the application disclosed no reasonable cause of action.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WG155 of 1997

BETWEEN:	ERIC JOSEPH SCHAEFER APPLICANT
AND:	MR LLOYD GUTHRIE, CHAIRMAN, STATE HOUSING COMMISSION TRADING AS HOMESWEST RESPONDENT
COURT:		R.D. FARRELL JR
DATE OF ORDER:		22 MAY 1998
WHERE MADE:		PERTH

THE COURT ORDERS THAT:

The applicant pay to the respondent the costs of these proceedings fixed at $1,300.00.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WG155 of 1997

BETWEEN:	ERIC JOSEPH SCHAEFER APPLICANT
AND:	MR LLOYD GUTHRIE, CHAIRMAN, STATE HOUSING COMMISSION TRADING AS HOMESWEST RESPONDENT

COURT:	R.D. FARRELL JR
DATE:	15 MAY 1998
PLACE:	PERTH

REASONS FOR DECISION

(Edited from Transcript)

On 15 December 1997, the applicant, Mr Eric Schaefer, filed an application against the respondent, Mr Lloyd Guthrey, Chairman, State Housing Commission trading as Homeswest. The application is expressed to be brought under the Trade Practices Act 1974.

The matter was referred to mediation conference. After the conference the respondent, by Notice of Motion, sought orders that the application be dismissed (pursuant to Order 20 rule 2 of the Federal Court Rules) on the grounds that it disclosed no reasonable cause of action.

Order 20 rule 2 relevantly provides that:

“Where in any proceeding it appears to the Court that in relation to the proceeding generally or in relation to any claim for relief in the proceeding no reasonable cause of action is disclosed... the Court may order that the proceeding be stayed or dismissed generally or in relation to any claim for relief in the proceeding”

The respondent’s Notice of Motion was referred to me for hearing. For convenience, I will refer to the respondent as “Homeswest”, though I should more strictly refer to “Mr Guthrie”. The respondent indicated that it would be prepared, for the purpose of its Notice of Motion, to treat the application as having been brought against Homeswest, which is a statutory corporation, rather than against Mr Guthrey. It has not therefore been necessary to address the objection that the Trade Practices Act 1974 has no application to Mr Guthrie, because he is not a corporation.

The motion was heard on the morning of 15 May 1998. At the conclusion of that hearing, I made orders that the application be dismissed. I reserved my decision on costs.

Mr Schaefer represents himself in these proceedings. I had been inclined to reserve the giving of the reasons for my decision so that I could take the time to express them in a form which would more readily be understood by a person without legal training. However, given that it was desirable to avoid the necessity that the parties incur additional costs by attending on another occasion to deal with a costs application. I decided to state my reasons immediately in oral form, or “ex tempore”. I advised the parties that I reserved the right to take more than usual latitude in the editing of the transcript of those reasons in order to enhance their clarity for Mr Schaefer’s benefit.

The major part of these reasons are, therefore, an edited version of the reasons I delivered orally on 15 May 1998. The final part of these reasons relates to the issue of costs, upon which I had reserved my decision.

Mr Schaefer’s Grievance

The relief claimed by Mr Schaefer in his application is in the following terms:

“(1)Homeswest to immediately stop printing up and issuing their own "demands for payment" for water consumption.

(2)Homeswest to return all moneys collected through the use of their printed up and issued water bills or as directed by law.”

Mr Schaefer also sought interlocutory relief in similar terms.

Mr Schaefer put various documentation before the court and set out in some detail the nature of his grievance against Homeswest. He did this in an affidavit dated 15 December 1997 in support of his original application and in a further affidavit dated 20 April 1998 in response to Homeswest's Notice of Motion. Homeswest gave its account of the dispute with Mr Schaefer in an affidavit of its Manager Rental Operations dated 2 April 1998.

Put briefly, Mr Schaefer’s grievance arose as follows. Mr Schaefer was a tenant of Homeswest under a tenancy agreement commencing 20 November 1989. Relevantly, clause 2.5 of that agreement made provision for charging for the consumption of water in the following terms:

“Excess water - 2.5 - The tenant agrees to pay all excess water charges assessed on the premises (my emphasis)”.

At the time the tenancy agreement was entered into, water usage under a certain value was not charged by the Water Corporation to Homeswest and the amount charged in excess of that value was referred to as “excess water”. However, the Water Corporation's practice later changed, so that the charge is now levied by the Water Corporation upon Homeswest in respect of all water consumed and not only for excess water.

Sub-sections 103 (1) and (3) of the Metropolitan Water Supply, Sewerage and Drainage Act 1909 (WA) (the “Water legislation”) relevantly provide:

“(1)The amount of any water charges made in respect of land is payable to the [Water] Corporation by the owner of the land...

(2)Unless the Crown is the owner, ... the amount of any charges according to the quantity of water supplied and paid by an owner shall, in the absence of special agreement to the contrary, be deemed to be rent due and owing by the occupier to the owner in respect of the land in addition to any rent so due and owing and shall be recoverable as such.”

Homeswest has taken the view that, because Homeswest:

• is the owner of the land occupied by its tenants; and

• pays the charges to the Water Corporation which are made according to the quantity of water supplied in respect of that land

the terms of the Water legislation entitle Homeswest to recover the amount of those charges from the occupiers of the land, ie its tenants. In other words, those amounts are, in Homeswest’s view, due and owing by its tenants to Homeswest in addition to the usual rent.

I make no finding as to the correctness of Homeswest’s view concerning its rights and entitlements under the Water legislation. I note that there was no evidence or argument on the question of whether Homeswest’s land was owned by “the Crown”, in which case sub-section 103 (3) of Water Legislation would appear not to apply. Nor was there any argument on the question of whether clause 2.5 of the tenancy agreement was a “special agreement to the contrary” for the purposes of the sub-section.

Homeswest goes about recovering the charges from its tenants by issuing them with documents entitled "Water Consumption Account". While the accounts are not entitled “Additional Rent Relating to Water Consumption”, Homeswest contends that that is effectively what the accounts are recovering, for the purposes of the Water legislation.

Mr Schaefer objects to paying those accounts. He has attempted to pursue his grievance in the W.A. Local Courts but, apparently for various procedural reasons, has had no success.

The terms of Mr Schaefer’s application briefly refer to the proposition that Homeswest was not a "licensed, legally authorised, water supply/billing authority. Leaving their 'demands for payment' with no legal supply, no legal trade."

Mr Schaefer explained in his submissions that he sees charging for the consumption of water as being the equivalent of supplying water. He disputes that Homeswest is entitled to charge for the consumption of water on the grounds that it is not a licensed supplier of water.

As I have explained earlier, Homeswest regards itself as merely seeking to recover from Mr Schaefer an amount which it has paid out itself to the Water Corporation for water which the Water Corporation has supplied, rather than seeking to charge Mr Schaefer for a service which it has supplied itself.

Whether The Application Discloses a Cause of Action

Homeswest points out that while, Mr Schaefer may have a grievance against Homeswest, he is required to set out in his application a “cause of action” which would give this court a legal basis upon which to address that grievance and, if it found in Mr Schaefer’s favour, to provide a remedy to him.

Mr Schaefer’s application referred to the Trade Practices Act 1974, and specifically to:

• Section 2: Object of this Act, and

• Section 4(c): Acquisition, Supply and Resupply.

Section 2 briefly sets out the object of the Trade Practices Act 1974 in the following terms:

“The object of this Act is to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection.”

Section 4(c) merely provides numerous definitions in relation to the acquisition, supply and resupply of goods and services.

Neither of these sections is proscriptive in nature. By that I mean that they do not forbid any particular activity. Nor do either of the provisions set out an entitlement to any remedy. The references to those sections do not, therefore, identify a cause of action.

Having also had reference to the terms of Mr Schaefer’s affidavits and to his submissions, I am satisfied that the application, as it currently stands, does not sufficiently articulate any such cause of action.

Mr Schaefer has not been able to point to any Section in the Trade Practices Act 1974 which might arguably have been breached by Homeswest. He appears to have proceeded on the basis that:

1. Homeswest is seeking to charge for water which it has not supplied and which it is not entitled to supply;

2. Homeswest’s action in doing so are, in Mr Schaefer’s view, clearly not right;

3. The Trade Practices Act 1974 provides for the regulation of trade; and

4. Mr Schaefer is therefore confident that Homeswest’s actions would in some way breach the Act.

Conclusion

It seems to me that the first element in Mr Schaefer’s reasoning is incorrect. The more appropriate analysis for Homeswest's actions is not supplying the service or goods itself, but that it is recovering money which it has paid out on behalf of the tenant to the supplier, ie the Water Corporation.

There is nothing necessarily improper in what Homeswest has done merely because it is not a licenced supplier. As I stated earlier, I do not finally make any finding or decision as to Mr Schaefer’s rights and entitlements under the tenancy agreement as opposed to any rights and entitlements Homeswest may have as an owner under the Water legislation. That is not a matter upon which the Court needs to, nor indeed can, rule given the nature of this application.

The fact remains that Mr Schaefer has not drawn my attention to any Section of the Trade Practices Act 1974 which has been breached by Homeswest.

If it were the case that, while no Section of the Trade Practices Act 1974 were expressly referred to, the nature of the grievance was such that I could recognise that the application could be amended so as to set out a cause of action based upon that Act (or indeed some other Act conferring jurisdiction upon the Court), then I would have ordered that Mr Schaefer have leave to amend the application. He would then have had the opportunity to rectify any shortcomings in the way in which he had framed the application.

However, having considered the nature of the grievance raised by Mr Schaefer, the terms of the application, the affidavits and the submissions in the course of the hearing, it does not appear to me that the terms of the Trade Practices Act 1974 can assist him in pursuing that grievance. I have therefore ordered that the application be dismissed.

Costs

I turn then to the question of costs. The usual principle is that a wholly successful party should be awarded costs.

Mr Schaefer appears to be resisting payment of the water charges as a matter of principle. He sees himself as acting in the interests of thousands of other Homeswest tenants, many of whom would, he believes, be less well equipped to defend their interests in a dispute against Homeswest. He contends that if Homeswest is permitted to act beyond their authority in this matter, so could everyone else, and that the resulting threat to society is obvious.

I note that the application was dismissed at this summary stage for reasons relating to the limits on the Federal Court of Australia’s jurisdiction, rather than the inherent merits of Mr Schaefer’s grievance. Mr Schaefer appears to have proceeded on the mistaken assumption that because, in his view, his claim has merit, he would succeed in this Court. To put it in plain terms, the application has been dismissed because Mr Schaefer has come to the wrong court.

It seems to me that there were arguable issues relating to the contractual entitlements of Mr Schaefer and Homeswest under clause 2.5 of the Tenancy Agreement, and also questions of fact and statutory interpretation arising from the terms of Sub-section 103 (3) of the Metropolitan Water Supply, Sewerage and Drainage Act 1909 (WA). These were matters which it seems to me could appropriately be dealt with by the Western Australian courts. They were not issues which this Federal Court could deal with, however, unless Mr Schaefer’s claim came within the reach of legislation, such as the Trade Practices Act 1974, which gives the Federal Court the task of resolving those issues. There was nothing before me to suggest that Homeswest’s activities were in breach of any such legislation.

This difficulty would have been readily apparent to a person with legal training, and I doubt that Mr Schaefer would have pursued this action in this Court had he received independent legal advice. Notwithstanding his unhappy experience in the Western Australian courts, it seems to me they are the only courts with the jurisdiction or power to deal with the matters in dispute.

I appreciate that, as a pensioner, Mr Schaefer may not easily have been able to obtain such legal advice. However, when a person commences legal proceedings to resolve a dispute, they force the party against whom the action is brought to incur the cost of defending that action. In this Court, as in most Courts, a litigant runs the risk of paying the other party’s costs if they are not successful. Mr Schaefer was forthright in conceding that he had been aware of that risk. Given the potential magnitude of that risk, the cost to Mr Schaefer of preliminary independent legal advice may have been a worthwhile investment.

There are, in my view, no grounds in these proceedings to depart from the usual principle that the successful party should be awarded costs. I will therefore order that Mr Schaefer pay Homeswest’s costs in these proceedings.

I offered to fix costs, given the early stage which the proceedings had reached and the desirability of avoiding the potential for further costs and disputation arising out of the possibility that the parties might otherwise need to refer the matter to a Registrar of the Court for taxation to settle the amount of costs to be paid by Mr Schaefer.

Homeswest is claiming costs fixed at $1,800.00, representing $600.00 costs of the Crown Solicitor and barrister’s fees of $1,200.00. It has expressly excluded any costs incurred in referring the matter to mediation, which was done at its request.

Work done included:

• preparation, filing and service of a Notice of Appearance;

• attendance by Counsel at a short directions hearing;

• attendance by a solicitor at a case management conference;

• general research;

• preparation, filing and service of a Notice of Appearance and supporting affidavit;

• preparation and filing of an outline of submissions; and

• attendance by Counsel on the hearing of the notice of motion of about an hour’s duration.

While Homeswest were entitled to approach the defence of the matter seriously, I have discounted their claim for costs somewhat, chiefly on the basis that I am not satisfied that it was necessary to incur barrister’s costs of that magnitude in the circumstances of the case.

I have therefore ordered that Mr Schaefer pay Homeswest’s costs fixed at $1,300.00.

I certify that this and the preceding eight (8) pages are a true copy of the Reasons for Judgment herein of Judicial Registrar R.D. Farrell

Associate:

Dated:             22 May 1998

Applicant appeared in person:
Counsel for the Respondent:	Mr R.L. Hooker
Solicitor for the Respondent:	Crown Solicitor for the State of Western Australia
Date of Hearing:	15 May 1998
Date of Judgment:	22 May 1998