Sent v Jet Corporation of Australia Pty Ltd

[1986] HCA 35

HIGH COURT OF AUSTRALIA

Gibbs C.J., Mason, Brennan, Deane and Dawson JJ.

SENT v. JET CORP. OF AUSTRALIA PTY. LTD.

(1986) 160 CLR 540

26 June 1986

Trade Practices

Trade Practices—Consumer protection—Power to award compensation to person suffering loss as result of contravention by another person of consumer protection provision—Whether power dependent on existence of another proceeding for contravention of consumer protection provisions—Trade Practices Act 1974 (Cth), ss. 82, 87.

Decision

GIBBS C.J., MASON, BRENNAN, DEANE AND DAWSON JJ.: In 1983, Jet Corporation of Australia Pty. Limited (hereafter referred to as "Jet Corporation") as trustee of Jet Corporation of Australia Trust commenced proceedings in the Federal Court against a number of respondents including Messrs Sent and Forshaw, the present appellants. The claims which Jet Corporation made against the appellants and which were formulated in successive pleadings were struck out or abandoned on or prior to 25 February 1985. On that day Northrop J. gave Jet Corporation leave further to amend the originating application and the amended statement of claim. Jet Corporation then amended the originating application to claim against the appellants and certain other respondents -

" Orders pursuant to Section 87(1A) or (2) of the Trade Practices Act 1974 directing (the appellants) to pay to the Applicant such damages as to the Court seems fit consequent upon the loss or damage suffered by the Applicant as a consequence of the conduct of the said respondents as set out in paragraphs 62-78 of the Statement of Claim amended on the 25th day of February 1985."

Reference to pars 62-78 of the amended statement of claim reveals that the conduct of the parties against whom orders under s.87(1A) or (2) are sought occurred in 1981. It is alleged that the conduct was engaged in in contravention of s.52 of the Trade Practices Act 1974 (Cth) ("the Act"). Section 52 is contained in Part V of the Act.

2. If the conduct and events alleged in pars 62-78 of the amended statement of claim and the consequential loss alleged in par.79 thereof were established, Jet Corporation would or might have been entitled to damages under s.82(1) of the Act had the time limited by s.82(2) for bringing the action not expired. Section 82 reads:

" (1) A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV or V may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.

(2) An action under sub-section (1) may be commenced at any time within 3 years after the
date on which the cause of action accrued."

Presumably in order to avoid the time limitation prescribed by s.82(2), Jet Corporation sought and obtained leave to make a claim under s.87(1A) and (2). The relevant provisions of s.87 read as follows:

" (1) Without limiting the generality of section 80, where, in a proceeding instituted under, or for an offence against, this Part, the Court finds that a person who is a party to the proceeding has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in (whether before or after the commencement of this sub-section) in contravention of a provision of Part IV or V, the Court may, whether or not it grants an injunction under section 80 or makes an order under section 80A or 82, make such order or orders as it thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention (including all or any of the orders mentioned in sub-section (2) of this section) if the Court considers that the order or orders concerned will compensate the first-mentioned person in whole or in part for the loss or damage or will prevent or reduce the loss or damage.

(1A) Without limiting the generality of section 80, the Court may, on the application of
a person who has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in (whether before or after the commencement of this sub-section) in contravention of a provision of Part V, make such order or orders as it thinks appropriate against the person who engaged in the conduct or a person who was involved in the contravention (including all or any of the orders mentioned in sub-section (2)) if the Court considers that the order or orders concerned will compensate the first- mentioned person in whole or in part for the loss or damage or will prevent or reduce the loss or damage.

(2) The orders referred to in sub-sections (1) and (1A) are -

(a) ...

(b) ...

(c) ...

(d) an order directing the person who engaged in the conduct or a person who was involved in the contravention constituted by the conduct to pay to the person who suffered the loss or damage the amount of the loss or damage;

(e) ...

(f) ..."

3. The Act contains no time limitation expressly applicable to claims made under s.87. If the amended claim now made by Jet Corporation against the appellants is supported by s.87(1A) and (2), it will be necessary to consider whether the time limited by s.82(2) is applicable to that claim though it does not purport to be brought under s.82(1). But the first question is whether s.87(1A) and (2) support the making of the amended claim. The answer to that question depends on whether the relief now claimed is relief which may be granted under sub-s.(1A). The relief now claimed follows the text of par.(d) of sub-s.(2), but sub-s.(2) merely prescribes the kinds of orders which the Court might make in exercise of its power to make a compensatory order under sub-s.(1A). If the relief sought by the amended claim could not be granted under sub-s.(1A), the order made by Northrop J. granting leave to amend should have been set aside by the Full Court of the Federal Court. To ascertain the scope of sub-s.(1A), it is necessary first to consider the scope of sub-s.(1).

4. Sub-section (1) of s.87 confers on the Court authority to make a compensatory order in favour of a person if two conditions are satisfied. The first is that the person is "a party to the proceeding", that is, a proceeding instituted under or for an offence against Part VI. The second is that the person "has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in ... in contravention of a provision of Part IV or V". The first condition would be devoid of content if the right to seek relief under s.87(1) were acquired simply by making an application for relief under that sub-section. The "proceeding" to which the sub-section refers is a proceeding other than a proceeding for relief under that sub-section. The relief which might be granted to a party under sub-s.(1) is therefore ancillary or additional to the relief which the Court might grant in the proceeding under other provisions of Part VI, although the power to grant relief under sub-s.(1) is not dependent on the granting of relief under other provisions of that Part. The amended claim now made against the appellants is not for relief ancillary or additional to any other relief claimed against them under Part VI by Jet Corporation. The amended claim was not, and could not have been, brought under sub-s.(1).

5. Sub-section (1A) confers on the Court authority to make a compensatory order in favour of any person "who has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in ... in contravention of a provision of Part V". Conduct engaged in in contravention of Part IV does not found a right to claim relief under sub-s.(1A). When the conduct complained of is engaged in in contravention of Part V of the Act, the condition on the right to seek relief under sub-s.(1A) is the same as the second condition on the right to seek relief under sub-s.(1).

6. Sub-section (1A) of s.87 contains no express condition that there should be proceedings instituted under or for an offence against Part VI in respect of the conduct complained of. Considering sub-s.(1A) in isolation, it might be regarded as conferring on any person a right to claim compensatory relief for loss or damage caused by conduct engaged in in contravention of Part V irrespective of the making of any claim for relief under any other provision of Part VI. That was the view adopted by the Full Court of the Federal Court in Fenech v. Sterling (1984) 57 ALR 98, at p 103, where their Honours held that -

" an application under (sub-s.(1A)) can stand on its own feet; it does not have to be founded upon any other proceeding, although such an application will often spring from some earlier action."

One result of that view of the Federal Court would be an element of apparent tension with the legislative policy underlying the provisions of s.82(2). In the absence of any express reference in sub-s.(1A) to proceedings for the grant of relief under other provisions of Part VI, however, there is much to be said for it as a matter of ordinary construction of the words of the sub-section.

7. But there are three countervailing indicia which together suggest that an application under sub-s.(1A) must be ancillary to proceedings brought under other provisions of Part VI. The first is that the relief which sub-s.(1A) empowers the Court to grant is in the Court's discretion: the Court may make a compensatory order, and the order may provide for compensation in whole or in part. Where conduct in contravention of Part V causes loss it would be curious to confer on a person or a number of persons both a right to compensation under s.82 and, quite independently, a right to the discretionary grant of compensation under s.87(1A). It would be more curious to prescribe a time limitation for commencing an action under s.82(1) while the Court retained a discretion to grant commensurate relief in independent proceedings after the prescribed time had expired. On the other hand, it is quite understandable that s.87(1A) should confer on the Court a discretionary power, ancillary to its jurisdiction under other provisions of Part VI, to grant compensatory relief in whole or in part to one who has been shown to suffer loss in consequence of contravening conduct for which a defendant is convicted under s.79 or which has been found against a respondent in civil proceedings instituted under a provision of Part VI other than s.87. A right to seek the exercise of the Court's discretion is more likely to be a right which a person not a party might seek incidentally to a proceeding instituted by and against other persons under other provisions of Part VI.

8. The second indicium is that s.87 appears immediately after s.86 in Part VI which confers jurisdiction on the Federal Court to hear and determine "actions, prosecutions and other proceedings under this Part". The earlier sections of Part VI provide for actions, prosecutions and other proceedings for the granting of specific kinds of relief. If s.87 were intended to provide for the granting of relief in proceedings independent of actions, prosecutions and other proceedings for which Part VI provides, it would have been more appropriate to insert s.87 prior to s.86. In fact, s.83 distinguishes between proceedings under ss.77, 80, 80A, 81 and 82 and "an application under sub-section 87(1A)". The difference in description is hardly consistent with the supposed independent nature of an application under s.87(1A). Moreover, s.83 provides evidentiary assistance to applicants under s.87(1A) which is not provided for parties to proceedings who claim relief under s.87(1). A person who is not a party to a proceeding brought under a provision of Part VI other than s.87 but who wishes to seek a compensatory order under s.87(1A) needs to be able to prove, for the purposes of his application, that the conduct which caused his loss or damage contravened Part V. Section 83 makes a finding of contravention in proceedings for relief under other provisions of Part VI prima facie evidence of contravention in proceedings under s.82 and applications under s.87(1A).

9. Thirdly, the language of s.87(1A) appears to be complementary to s.87(1): both sub-sections confer a right to seek a discretionary order for compensation on persons suffering loss by conduct engaged in in contravention of Part V, sub-s.(1) conferring the right on parties, sub-s.(1A) conferring the right on persons generally whether parties or not.

10. For these reasons, the better view is that compensatory relief under sub-s.(1A) can be applied for and granted only if a proceeding is instituted or has been instituted under or for an offence against a provision of Part VI other than s.87 in respect of conduct engaged in in contravention of Part V. Thus sub-s.(1) provides for the discretionary granting of compensatory relief in favour of parties to such proceedings and sub-s.(1A) provides for the discretionary granting of compensatory relief in favour of persons who may not be parties to such proceedings but who make applications in such proceedings. In either case the power to grant relief under s.87 is dependent on the institution of proceedings under a provision of Part VI other than s.87.

11. It follows that -

(a) when a person has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in in contravention of a provision of Part IV of the Act, the Court may make a compensatory order under s.87(1) if that person is a party to a proceeding instituted under a provision of Part VI other than s.87 or for an offence against Part VI in respect of that conduct;

(b) if a proceeding is instituted under a provision of Part VI other than s.87 or for an offence against Part VI in respect of conduct engaged in in contravention of Part V, the Court may make a compensatory order under s.87(1A) in favour of any person who has suffered, or who is likely to suffer, loss or damage by that conduct on the application of that person.

Although s.87 contains no time limitation, the proceeding on which the power to grant relief under s.87 depends will be barred if it is instituted outside the time, if any, limited for instituting that proceeding.

12. In the present case, there is no claim under the provisions of Part VI other than s.87 which has been made against the appellants. There is no proceeding upon which the amended application for relief made by Jet Corporation pursuant to the order of 25 February 1985 might depend. There is no prosecution in respect of the conduct which is alleged to contravene s.52, nor could there be (s.79). It follows that s.87(1A) does not support the amended claim now made by Jet Corporation against the appellants. The question whether, if the amended claim were supported by s.87(1A), the time limited by s.82(2) would apply does not arise.

13. Leave to amend the originating application and the statement of claim should not have been granted. The appeal should be allowed, the judgment of the Full Court set aside and in lieu thereof the appeal to that Court from the order of Northrop J. should be allowed. Paragraphs 3, 4, 6 and 7 of the order of Northrop J. should be set aside as against the appellants and in lieu thereof it should be ordered that the application to amend the claims set out in the originating application and in the amended statement of claim be dismissed as against the appellants.

Orders

Appeal allowed with costs.

Order that the order of the Full Court of the Federal Court of Australia be set aside and in lieu thereof order that the appeal to that Court be allowed with costs.

Set aside paragraphs 3, 4, 6 and 7 of the order of Northrop J. dated 25 February 1985 as against the appellants and order that the application to amend the claims set out in the application and in the amended statement of claim be dismissed as against the appellants.