The NTF Group Pty Ltd v PA Putney Finance Australia Pty Ltd

[2017] NSWSC 1194

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

The NTF Group Pty Ltd v PA Putney Finance Australia Pty Ltd [2017] NSWSC 1194

Hearing dates:

16 August 2017

Date of orders:

07 September 2017

Decision date:

07 September 2017

Jurisdiction:

Equity

Before:

Parker J

Decision:

Proceedings to be transferred from Local Court to this Court

Catchwords:

Jurisdiction – Local Court – debt claim – cross-claim invoking Australian Consumer Law, s 237 – conferral of Commonwealth jurisdiction on State courts – Competition and Consumer Act 2010 (Cth), s 138B – “limits” of Local Court jurisdiction – Local Court Act 2007 (NSW), ss 30, 32 – Fair Trading Act 1987 (NSW), s 30 – doubt as to Local Court’s power to grant s 237 relief – transfer of proceedings from Local Court to Supreme Court
Jurisdiction – District Court – debt claim – District Court Act 1973 (NSW), s 44(1)(a)(i) – commercial parties – no District Court jurisdiction – cross-claim invoking Australian Consumer Law, s 237 – conferral of Commonwealth jurisdiction on State courts – Competition and Consumer Act 2010 (Cth), s 138B – “limits” of District Court jurisdiction – Fair Trading Act 1987 (NSW), s 30 – District Court Act 1973, s 135 – Civil Procedure Act 2005 (NSW), s 146 – no transfer of proceedings from Supreme Court to District Court

Legislation Cited:

Civil Procedure Act 2005 (NSW), ss 22, 140(1), 146
Competition and Consumer Act 2010 (Cth), ss 131, 138B, Sch 2 ss 21, 236, 237(1), 243
Contracts Review Act 1980 (NSW), s 7
Courts Legislation (Amendment) Act 1993 (NSW), s 3, Sch 1 (2)
District Court Act 1973 (NSW), ss 44, 135
Fair Trading Act 1987 (NSW), ss 30, 32, 68, 72
Judiciary Act 1903 (Cth), ss 39, 79
Local Court Act 2007 (NSW), ss 29, 30, 32, 33
Local Courts (Civil Claims) Act 1970 (NSW), s 12A
National Consumer Credit Protection Act 2009 (Cth)
Statute Law (Miscellaneous Provisions) Act 1992 (NSW), Sch 1
Supreme Court Act 1970 (NSW), ss 52, 53
Supreme Court Rules 1970 (NSW), Pt 12 r 7, Pt 14 r 2
Trade Practices Act 1974 (Cth), ss 86, 87

Cases Cited:

Adams v Chas S Watson Pty Ltd (1938) 60 CLR 545; [1938] HCA 37
Bitannia Pty Ltd v Parkline Constructions Pty Ltd (2006) 67 NSWLR 9; [2006] NSWCA 238
Credit Loans Australia Pty Ltd v Viera [2016] NSWSC 484
Federated Sawmill, Timberyard and General Woodworkers’ Employés’ Association (Adelaide Branch) v Alexander (1912) 15 CLR 308; [1912] HCA 42
Forsyth v Deputy Commissioner of Taxation (2007) 231 CLR 531; [2007] HCA 8
K & M Prodanovski Pty Ltd v Northshore Car Rentals Pty Ltd [2017] NSWSC 625
Le Mesurier v Connor (1929) 42 CLR 481; [1929] HCA 41
New South Wales Land and Housing Corporation v Quinn [2016] NSWCA 338
Provectus Care Pty Ltd v Epicor Software (Aust) Pty Ltd [2009] NSWSC 1281
Ryner Pty Ltd v Roller [2007] NSWSC 372

Category:

Principal judgment

Parties:

The NTF Group Pty Ltd (First Plaintiff)
Joan Nelson (Second Plaintiff)
Gregory Neville Taylor (Third Plaintiff)
PA Putney Finance Australia Pty Ltd (Defendant)

Representation:

Counsel:
NE Furlan (Plaintiffs)

 

Solicitors:
ResourcesLaw International (Plaintiffs)

  In person: P Aalders (Defendant - director)

File Number(s):

2017/169707

Publication restriction:

Nil

Judgment

1. This is an application to transfer Local Court proceedings to this Court. The proceedings in question have been brought against the present plaintiffs (to whom I will refer as the applicants) by the present defendant (to which I will refer as the respondent).

2. The respondent is a company which is in the equipment rental business. The first applicant is a company which was one of its customers. The second and third applicants are directors of the first applicant.

3. In the Local Court, the respondent claims the sum of $99,859.90 allegedly due from the first applicant under agreements for the rental of various items of equipment, together with interest. The respondent also seeks judgment against the second and third applicants as guarantors.

4. The applicants have filed a defence and cross-claim. The applicants seek to have the Local Court proceedings transferred to this Court because they say the Local Court lacks jurisdiction to deal with the cross-claim.

5. In the cross-claim, the applicants allege that the respondent, in seeking to enforce the agreements, contravened s 21 of the Australian Consumer Law (“ACL”). Section 21 appears in Ch 2 and relevantly provides:

21   Unconscionable conduct in connection with goods or services

(1)   A person must not, in trade or commerce, in connection with:

(a)   the supply or possible supply of goods or services to a person (other than a listed public company); or

(b)   the acquisition or possible acquisition of goods or services from a person (other than a listed public company);

engage in conduct that is, in all the circumstances, unconscionable.

…

(4)   It is the intention of the Parliament that:

(a)   this section is not limited by the unwritten law relating to unconscionable conduct; and

(b)   this section is capable of applying to a system of conduct or pattern of behaviour, whether or not a particular individual is identified as having been disadvantaged by the conduct or behaviour; and

(c)   in considering whether conduct to which a contract relates is unconscionable, a court’s consideration of the contract may include consideration of:

(i)   the terms of the contract; and

(ii)   the manner in which and the extent to which the contract is carried out;

and is not limited to consideration of the circumstances relating to formation of the contract.

6. ACL s 236 creates a right to damages for contravention of any provision of Ch 2, which includes s 21. However, the cross-claim does not seek damages. Rather, the applicants seek orders that the agreements and guarantees be declared “to be void on and after 31 March 2011”.

7. These orders are expressed to be sought under ACL s 243. However, strictly speaking, the source of power to make the orders is s 237(1), which provides:

237   Compensation orders etc. on application by an injured person or the regulator

(1)   A court may:

(a)   on application of a person (the injured person ) who has suffered, or is likely to suffer, loss or damage because of the conduct of another person that:

(i)   was engaged in a contravention of a provision of Chapter 2, 3 or 4; or

(ii)   constitutes applying or relying on, or purporting to apply or rely on, a term of a contract that has been declared under section 250 to be an unfair term; or

(b)   on the application of the regulator made on behalf of one or more such injured persons;

make such order or orders as the court thinks appropriate against the person who engaged in the conduct, or a person involved in that conduct.

8. ACL s 243 then specifies the kinds of orders which may be made under s 237(1). It provides:

243   Kinds of orders that may be made

Without limiting section 237(1), 238(1) or 239(1), the orders that a court may make under any of those sections against a person (the respondent) include all or any of the following:

(a)   an order declaring the whole or any part of a contract made between the respondent and a person (the injured person) who suffered, or is likely to suffer, the loss or damage referred to in that section, or of a collateral arrangement relating to such a contract:

(i)   to be void; and

(ii)   if the court thinks fit—to have been void ab initio or void at all times on and after such date as is specified in the order (which may be a date that is before the date on which the order is made);

(b)   an order:

(i)   varying such a contract or arrangement in such manner as is specified in the order; and

(ii)   if the court thinks fit—declaring the contract or arrangement to have had effect as so varied on and after such date as is specified in the order (which may be a date that is before the date on which the order is made);

(c)   an order refusing to enforce any or all of the provisions of such a contract or arrangement;

(d)   an order directing the respondent to refund money or return property to the injured person;

(e) except if the order is to be made under section 239(1)—an order directing the respondent to pay the injured person the amount of the loss or damage;

(f)   an order directing the respondent, at his or her own expense, to repair, or provide parts for, goods that had been supplied by the respondent to the injured person;

(g)   an order directing the respondent, at his or her own expense, to supply specified services to the injured person;

(h)   an order, in relation to an instrument creating or transferring an interest in land, directing the respondent to execute an instrument that:

(i)   varies, or has the effect of varying, the first mentioned instrument; or

(ii)   terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the first mentioned instrument.

9. The ACL is not an enactment in its own right. It is a schedule to the Competition and Consumer Act 2010 (Cth) (“CCA”). The CCA gives it the force of Commonwealth law in certain circumstances, and also facilitates its adoption as State law. The ACL applies as Commonwealth law to the unconscionable conduct of a corporation: CCA s 131(1). It also applies as Commonwealth law to unconscionable conduct against a corporation: CCA s 131(2)(a). Because both the respondent and the first applicant are companies, the applicants’ cross-claim falls within the ACL as Commonwealth law.

10. The Fair Trading Act 1987 (NSW) (“FTA”) also applies the ACL as State law if one or other of various factors connect the claim to New South Wales: FTA s 32. The relevant requirements are satisfied, and thus the applicants’ cross-claim falls within the ACL also as State law.

Transfer from Local Court

11. The civil jurisdiction of the Local Court (relevantly, in its General Division) is set out in Pt 3 of the Local Court Act 2007 (NSW) (“LCA”). Section 30 relevantly provides:

30   Conferral of jurisdiction

(1)   Subject to this Part, the Court sitting in its General Division has jurisdiction to hear and determine:

(a)   proceedings on any money claim, so long as the amount claimed, whether on a balance of account or after an admitted set-off or otherwise, does not exceed the jurisdictional limit of the Court when sitting in that Division, and

(b)   proceedings to recover detained goods, or to recover the assessed value of detained goods, so long as the value of the goods, together with the amount of any consequential damages claimed for their detention, does not exceed the jurisdictional limit of the Court when sitting in that Division, and

(b1)   proceedings involving company title home unit disputes under section 34A, and

(c)   proceedings that, pursuant to any other Act, are required to be dealt with by the Court sitting in that Division.

…

(4) In determining an amount for the purposes of subsection (1) or (2), any interest up to judgment under section 100 of the Civil Procedure Act 2005 is to be disregarded.

(5)   If:

(a)    the jurisdictional limit of a Division is increased, and

(b)   proceedings in which an amount of money is claimed are pending in the Court when that increase takes effect,

the Court may, on the application of a plaintiff, make an order altering the amount specified in the claim to an amount not exceeding the new jurisdictional limit.

(6)   In this section, admitted set-off, in relation to proceedings, means set-off admitted by the plaintiff in the originating process in the proceedings.

12. Section 29 relevantly provides:

29   Jurisdictional limit of Court

(1)   For the purposes of this Part, the jurisdictional limit of the Court is:

(a)   $100,000, when sitting in its General Division,

…

(2)   However, the jurisdictional limit of the Court, when sitting in its General Division, in relation to a claim for damages arising from personal injury or death is $60,000.

13. Section 32 provides:

32   Jurisdiction in proceedings for review of contracts

(1) The Court has the same jurisdiction as the Supreme Court, and may exercise all the powers and authority of the Supreme Court, to refuse to enforce any or all of the provisions of a contract under section 7(1)(a) of the Contracts Review Act 1980.

(2)   This section applies only if application for the exercise of the jurisdiction is made in proceedings concerning the contract that have previously been commenced in the Court but have not been determined.

14. Section 33 provides:

33   Certain jurisdiction excluded

(1)   The Court does not have jurisdiction under this Part to hear or determine any of the following kinds of proceedings:

(a)   proceedings in which the validity or effect of any devise, bequest or limitation under any will or settlement, or under any document in the nature of a settlement, is disputed,

(b)   proceedings for passing-off, wrongful arrest, false imprisonment, malicious prosecution or defamation,

(c)   proceedings for infringement of letters patent or copyright,

(d)   (Repealed)

(e)   proceedings in which the title to land is in question (other than proceedings on a claim in respect of which the question of the title to land is merely incidental).

(2)   The judgment of the Court in proceedings on a claim in respect of which the question of the title to land is merely incidental, as referred to in subsection (1) (e), is not admissible as evidence of the title to the land in any other legal proceedings.

15. The argument before me focused on the possibility of the Local Court having jurisdiction under the ACL as a matter of Commonwealth law. CCA s 138B relevantly provides:

138B   Conferring jurisdiction on State and Territory Courts

(1) Jurisdiction is conferred on the several courts of the States and Territories in relation to any matter arising under … the Australian Consumer Law in respect of which a civil proceeding is instituted by a person other than the Commonwealth Minister or the Commission.

…

(3)   The jurisdiction conferred by subsection (1) on the several courts of the States is conferred within the limits of their several jurisdictions, whether those limits are as to locality, subject matter or otherwise.

(4) The jurisdiction conferred by subsection (1) on the several courts of the Territories is conferred to the extent that the Constitution permits.

(5)   This section is not to be taken to enable an inferior court of a State or a Territory to grant a remedy other than a remedy of a kind that the court is able to grant under the law of that State or Territory.

16. Sub-section (4) refers to limits imposed by the Constitution. The Constitution does not permit the Commonwealth, as part of conferring Commonwealth jurisdiction on a State court, to alter the structure or essential characteristics of that State court: Le Mesurier v Connor (1929) 42 CLR 481; Adams v Chas S Watson Pty Ltd (1938) 60 CLR 545 at 554-555 (Latham CJ). But otherwise, the Commonwealth is free to invest a State court with jurisdiction to determine claims under Commonwealth law irrespective of any limits which apply to the exercise by that court of its State jurisdiction. There is thus no constitutional objection to the Commonwealth conferring power on the Local Court to review contracts under the ACL, with or without limitations as to the nature of the contract being reviewed.

17. The starting point is the conferral of jurisdiction in sub-s (1). Because there is no civil proceeding instituted by the Commonwealth Minister, the requirements of that provision are satisfied. Prima facie, this confers jurisdiction on the Local Court. But the applicants contend that the jurisdiction invoked by the cross-claim falls outside the “limits” of the Local Court’s jurisdiction for the purposes of s 138B(3).

18. The language of s 138B(3) is based on the Judiciary Act 1903 (Cth) (“JA”), s 39(2), which provides for the investment with Commonwealth jurisdiction of the courts of the States in certain cases “within the limits of their several jurisdictions, whether such limits are as to locality, subject-matter, or otherwise”. Where such a provision speaks of jurisdictional limits, it is of course speaking of the existing jurisdictional limits applying to proceedings in the relevant State court. The provision thus involves the idea of Commonwealth jurisdiction being conferred on State courts but subject to jurisdictional limits that apply to claims brought under State law in those courts.

19. Federated Sawmill, Timberyard and General Woodworkers’ Employés’ Association(Adelaide Branch) v Alexander (1912) 15 CLR 308 concerned a debt claim under a Commonwealth statute instituted in a magistrate’s court in South Australia where Commonwealth jurisdiction had been conferred on State courts under s 39(2). Griffith CJ said (at 312):

I think that this provision [s 39(2)] must be construed as relating to matters arising under federal Statutes, and being of a nature analogous to those over which such Courts respectively have jurisdiction under State laws, and as also including any other matters in respect of which jurisdiction is conferred by a federal Statute, but so that in all respects other than subject matter the provisions of the State law as to Courts of summary jurisdiction shall prevail.

20. It is easy enough to apply this concept of analogy to an express limitation on money claims by reference to the amount claimed, such as that which appears in LCA s 30. The concept also readily applies to restrictions on the subject matter of claims which could otherwise be entertained, such as those set out in s 33. It is not so straightforward to apply in the present circumstances.

21. The Local Court does not have any equitable jurisdiction to review or avoid contracts, whether the subject of claims in that Court or otherwise. The applicants submitted that the failure to confer jurisdiction on the Local Court except by reference to money claims and to claims concerning goods of a certain value (as set out in LCA s 30) should be seen as a “limit” on the Local Court’s jurisdiction in the relevant sense.

22. It is, of course, correct that the Local Court is a court of statutory jurisdiction and, accordingly, it has jurisdiction over claims only to the extent that jurisdiction is expressly conferred on it. However, I am not sure that, if one focusses on the provisions of the LCA for the moment, the applicants’ submission is correct.

23. In my view, the Local Court’s lack of power to set aside contracts is not, of itself, necessarily a “limit” on its jurisdiction for the purposes of the conferral of Commonwealth jurisdiction. There is a logical difficulty in treating a failure to invest jurisdiction over one type of claim as being a limit on jurisdiction in another type of claim. It may be that “limits” in s 138B(3) should be understood as express limits or exceptions to jurisdiction otherwise conferred.

24. In any event, LCA s 32 does confer on the Local Court jurisdiction to grant relief under the Contracts Review Act 1980 (NSW) (“CRA”), s 7(1)(a). CRA s 7 relevantly provides:

7   Principal relief

(1)   Where the Court finds a contract or a provision of a contract to have been unjust in the circumstances relating to the contract at the time it was made, the Court may, if it considers it just to do so, and for the purpose of avoiding as far as practicable an unjust consequence or result, do any one or more of the following:

(a)   it may decide to refuse to enforce any or all of the provisions of the contract,

(b)   it may make an order declaring the contract void, in whole or in part,

(c)   it may make an order varying, in whole or in part, any provision of the contract,

(d)   it may, in relation to a land instrument, make an order for or with respect to requiring the execution of an instrument that:

(i)   varies, or has the effect of varying, the provisions of the land instrument, or

(ii)   terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the land instrument.

(2)   Where the Court makes an order under subsection (1) (b) or (c), the declaration or variation shall have effect as from the time when the contract was made or (as to the whole or any part or parts of the contract) from some other time or times as specified in the order.

25. LCA s 32 can be traced back to 1993: Local Courts (Civil Claims) Act 1970 (NSW), s 12A, inserted by Courts Legislation (Amendment) Act 1993 (NSW), s 3, Sch 1 (2). The Explanatory Note in Sch 3 stated:

The Contracts Review Act 1980 provides relief against contractual provisions that are legal but unjust. Jurisdiction under that Act is at present confined to the Supreme Court and the District Court as most of the remedies under that Act are equitable in nature. However, one of those remedies is a power enabling the Court to refuse to enforce any or all of the provisions of a contract. The proposed amendment would enable a Local Court to exercise a similar power in relation to a contract that is at present within its jurisdiction under the Local Courts (Civil Claims) Act 1970.

26. The fact that the State has, by s 32, conferred power on the Local Court to refuse enforcement of contracts in some circumstances makes it even more difficult to see a “limit” as arising by implication for the purposes of JA s 39(2). Jurisdiction under LCA s 32 is limited to cases where the contract is already the subject of proceedings in the Local Court. But this limitation would be satisfied in the present case, as the claim being made by the applicants is made by way of cross-claim, arising out of the claim made against them by the respondent which is undoubtedly within the jurisdiction of the Local Court.

27. Furthermore, not every statutory provision which prevents a Court from granting relief is necessarily one which goes to jurisdiction for the purposes of s 39(2). In proceedings in a State court exercising Commonwealth jurisdiction, applicable State laws are “picked up” and made applicable by JA s 79. In the Federated Sawmill case, a provision of a State law required proceedings in the relevant State court to be instituted within a particular period of time. All of the members of the High Court held that proceedings under the Commonwealth statute could not succeed if instituted outside that time limit. Griffith CJ appears to have concluded that the failure to institute the proceedings in time went to jurisdiction (at 312); but he also treated the State limitation provision as binding under s 79 (at 312-313). Barton J considered that the proceedings failed because the State limitation was picked up by s 79 (at 316-317); he said that the matter was clear without referring to s 39(2), but expressed agreement with what Griffith CJ had said about that provision (at 317). Isaacs J decided the point under s 79 (at 321-322). Subsequently, in Adams v Chas S Watson Pty Ltd (1938) 60 CLR 545, Latham CJ (at 553) and Starke J (at 559) treated a locality restriction as not depriving the State court of jurisdiction, but simply as giving rise to a defence in the proceedings.

28. Section 237(1) gives the court a wide power to make orders it “thinks appropriate”; the orders listed in s 243 are only examples of orders which can be made. It could hardly be doubted that there would be power to make a monetary compensation order under s 237(1). If no other limitation existed, there would be no reason why the Local Court could not make a monetary compensation order under s 237 within its monetary jurisdictional limit. Even if the Court lacked power to make non-monetary orders of the type set out in ACL s 243, that would be because of s 138B(5), not a lack of jurisdiction under s 138B(3).

29. So far I have confined my discussion to the provisions of the LCA defining its civil jurisdiction. The LCA does not expressly deal with claims under the ACL. However, FTA s 30 relevantly provides:

30 Meaning of generic terms in Australian Consumer Law for purposes of this jurisdiction

…

(2)   For the purposes of the application of the Australian Consumer Law (NSW), court means, unless otherwise expressly provided by this Act:

(a)   the Local Court, or

(b)   the District Court, or

(c)   the Supreme Court.

(3)   In the following provisions of the Australian Consumer Law (NSW), court means the Supreme Court:

(a) section 218,

(b) Division 2 of Part 5-2,

(c)   Division 4 of Part 5-2,

(d)   sections 246, 247, 248 and 250.

…

(5)   Subsections (2)–(4) are subject to any jurisdictional limits on the court concerned … imposed by any other Act.

30. ACL ss 237(1) and 243 appear in Div 4 of Pt 5-2 and, accordingly, the effect of s 30(3) is that the Local Court has no power under the FTA to make an order as currently framed in the applicants’ cross-claim in this case. ACL s 236, which confers a power to award damages, does not appear in Div 4 and is thus unaffected by s 30(3), although it is limited to claims within the Court’s jurisdictional limit by s 30(5).

31. Before the enactment of s 30 in its current form, the power to award damages for contraventions of the FTA in FTA s 68 (the FTA predecessor of ACL s 236) was not limited to any particular State court, but the power to grant other forms of relief in s 72 (the FTA predecessor of ACL s 237(1)) was limited to this Court. The position was thus the same as it now is under s 30. The predecessor provisions go back to the enactment of the FTA in 1987. That enactment coincided with the enactment by the Commonwealth Parliament of amendments to Trade Practices Act 1974 (Cth) (“TPA”), s 86, which is the predecessor to CCA s 138B, and which conferred jurisdiction in certain TPA matters on State courts for the first time; prior to then the Commonwealth courts had had exclusive jurisdiction. Accordingly, the Local Court’s ability to award damages and inability to grant s 72 / s 237(1) relief goes back for as long as the FTA has existed and for as long as State courts have had jurisdiction under the TPA.

32. Sub-sections 30(2) and (3) do not use the language of jurisdiction, and they have been enacted independently of the LCA provisions which define the Local Court’s jurisdiction. In substance, however, they confer on the Local Court a general power to grant relief under the ACL as State law, but make an exception for, among others, claims under s 237(1). At least arguably, this is a “limit” on the Local Court’s jurisdiction for the purposes of conferral of Commonwealth jurisdiction under the CCA. It would be hard to think of a closer analogy than that between the ACL as State law and the ACL as Commonwealth law.

33. In Credit Loans Australia Pty Ltd v Viera [2016] NSWSC 484, the plaintiff brought proceedings in this Court against the defendant to enforce a loan secured by a mortgage. The defendant cross-claimed under the National Consumer Credit Protection Act 2009 (Cth) (“NCCPA”). The plaintiff sought to have the proceedings transferred to the Local Court. Adamson J refused the transfer, on the ground that the Local Court lacked jurisdiction to grant the relief claimed under the NCCPA. However, the decision is not directly on point because the relief sought included civil penalties, declarations, and orders in the nature of injunctions.

34. It is not necessary for the purposes of these proceedings to determine the issue concerning the Local Court’s jurisdiction finally. It is enough to say that there is real doubt as to whether the Local Court has jurisdiction to entertain the applicants’ cross-claim.

35. Mr Aalders, a director of the respondent who has been authorised to conduct the proceedings on its behalf, pointed to the inconvenience which would result from the proceedings being transferred to this Court. He said that the cross-claim had only been articulated years after the agreements in question had been entered into, and pointed out how easy it would be for unmeritorious cross-claims of this type to be used to complicate and delay otherwise straightforward contractual claims in the Local Court. There is nothing before me to suggest that the cross-claim in the present case is not genuine, and Mr Aalders did not make any application to the Local Court to have it struck out; but, as a generality, Mr Aalders’ points are well taken. However, if the Local Court does lack, or may lack, jurisdiction, then there is no practical alternative but to transfer the proceedings to a court which has jurisdiction to deal with all relevant issues that are raised. However much delay and additional cost may be incurred, it would be less than the delay and additional cost which would be incurred if the proceedings were left in the Local Court only to find at a later stage that the Local Court lacked jurisdiction to deal fully with them.

36. As I have noted, the Local Court would have power to deal with a cross-claim for damages for contravention of ACL s 21 under ACL s 236. It might be that such a right to damages could have been put forward by way of defence of circuity of action to the respondent’s claim. Alternatively, the applicants’ claim to have enforcement of the agreements relied upon by the respondent refused might have been capable of being formulated under the CRA, in which case the Local Court would have had jurisdiction to deal with it. It may be that this Court could refuse to transfer the proceedings from the Local Court if it would have been open to the applicants, without any prejudice to their position, to advance the matters complained of by way of defence or by way of cross-claim for relief which is within the jurisdiction of the Local Court. However, this possibility was not argued before me in the present case.

37. It follows, in my view, that the proceedings must be removed from the Local Court. I reach this conclusion without any enthusiasm. There seems to me to be little to be said for a situation where the Local Court can award damages for contravention of ACL s 21 but cannot grant other relief, even if it is defensive or compensatory in nature. Especially is this so when the Local Court for more than 20 years has had jurisdiction to grant relief under the CRA. However, in the absence of legislative clarification (or a decision at a higher level that the Local Court has jurisdiction), I do not think I should put the parties in the present case at risk that some sort of jurisdictional problem may later be found to exist.

Transfer to District Court

38. The next question is, therefore, whether, accepting that the proceedings must be removed from the Local Court, they should be heard in this Court or transferred to the District Court. The applicants indicated that they wished the proceedings, if possible, to be determined in the District Court, but raised questions as to the District Court’s jurisdiction to do so.

39. The Civil Procedure Act 2005 (NSW) (“CPA”), s 146, relevantly provides:

146   Transfer of proceedings to lower court

(1)   If the Supreme Court is satisfied, in relation to proceedings before it:

(a)   that the proceedings could properly have been commenced in the District Court or the Local Court, and

(b)   that any cross-claim in the proceedings could properly have been brought as a cross-claim in the District Court or the Local Court,

the Supreme Court may order that the proceedings, including any such cross-claim, be transferred to the District Court or to the Local Court, as the case requires.

…

(3)   In determining:

(a)   whether any proceedings could properly have been commenced in the lower court, or

(b)   whether any cross-claim could properly have been brought in the lower court,

the higher court must have regard to the current limits of the lower court’s jurisdiction as if they had been the limits of that jurisdiction when the proceedings were commenced, or the cross-claim brought, in the higher court.

40. If a plaintiff commences proceedings for relief at common law or under State legislation, but a cross-claim is filed invoking Commonwealth legislation, then the whole of the matter thereupon attracts Commonwealth jurisdiction: Bitannia Pty Ltd v Parkline Constructions Pty Ltd (2006) 67 NSWLR 9 at [32]. Once the proceedings are transferred from the Local Court to this Court, therefore, they are within Commonwealth jurisdiction. However, JA s 79 picks up CPA s 146, which requires the Court to be satisfied both that the proceedings as originally constituted were within the jurisdiction of the District Court and that the cross-claim could have been brought in the District Court as a cross-claim. Unless both conditions are satisfied, the proceedings cannot be transferred from this Court to the District Court.

41. The civil jurisdiction of the District Court appears in Pt 3 Div 2 of the District Court Act 1973 (NSW) (“DCA”). Section 44 provides:

44   Actions

(1)   Subject to this Act, the Court has jurisdiction to hear and dispose of the following actions:

(a)   any action of a kind:

(i)   which, if brought in the Supreme Court, would be assigned to the Common Law Division of that Court, and

(ii)   in which the amount (if any) claimed does not exceed the Court’s jurisdictional limit, whether on a balance of account or after an admitted set-off or otherwise,

other than an action referred to in paragraph (d) or (e),

(b)   (Repealed)

(c)   any action brought to recover an amount not exceeding $20,000, which is the whole or part of the unliquidated balance of a partnership account, or the amount or part of the amount of the distributive share under an intestacy or of a legacy under a will,

(d)   any motor accident claim, irrespective of the amount claimed,

(d1)   any work injury damages claim, irrespective of the amount claimed,

(e) any proceedings transferred to the Court under section 146 (1) of the Civil Procedure Act 2005, irrespective of the amount (if any) claimed in those proceedings.

(2) Where the amount claimed in an action includes interest (being interest which the Court could, under section 100 (1) of the Civil Procedure Act 2005, order to be included in the amount for which it could give judgment), that interest shall be disregarded for the purposes of:

(a)   determining whether the maximum amount for which the action is authorised by this Act to be brought has been exceeded or not, and

(b)   determining whether or not the Court has jurisdiction to hear and dispose of the action.

(3)   Where:

(a) an amendment to subsection (1) which is enacted after, or was enacted before the commencement of Schedule 3 to the District Court (Procedure) Amendment Act 1984 has or had the effect of increasing the amount specified in paragraph (a) or (b) of that subsection, and

(b)   an action in which an amount of money is claimed is pending at the time when the amendment has effect or, as the case may be, an action in which an amount of money is claimed was pending at the time when the amendment had effect and has not been finally determined,

the Court may, on the application of the claimant, make an order altering the amount specified in the claim to an amount not exceeding that specified in paragraph (a) or (b) of that subsection, as in force immediately after the amendment has or had effect.

42. Section 44(1)(a)(i) was introduced in its current form into the DCA with effect from 2 February 1998. In Forsyth v Deputy Commissioner of Taxation (2007) 231 CLR 531, the High Court rejected the view that the provision operated in an ambulatory way so that the question whether a particular action would have been allocated to the Common Law Division is to be answered by reference to the provisions governing assignment in force at the time the claim is made. Instead, the High Court held that the District Court’s jurisdiction depends upon whether the action would have been assigned to the Common Law Division according to the assignment rules which existed as at 2 February 1998.

43. The Supreme Court Act 1970 (NSW) (“SCA”) as at 2 February 1998 provided for the assignment of the business of the Court into a number of Divisions, including Common Law, Equity, and Commercial Divisions. The Act relevantly provided:

52   Arrangements for despatch of business

The business of the Court, other than the Court of Appeal, shall, for convenient despatch, be assigned in accordance with this Division.

53   Assignment of business

(1)   Subject to the rules, there shall be assigned to each Division, other than the Family Law Division, the Administrative Law Division, the Criminal Division and the Commercial Division, all proceedings:

(a)   which are required by or under any Act from time to time in force to be commenced, heard or determined in that Division or in the corresponding former jurisdiction, or

(b)   which would have been commenced in the corresponding former jurisdiction if this Act had not been passed.

…

(3E)   Subject to the rules, there shall be assigned to the Commercial Division all proceedings of a commercial nature which are required by or under any Act, or by or in accordance with the rules, from time to time in force to be commenced, heard or determined in that Division.

…

(4)   Subject to the rules, there shall be assigned to the Common Law Division all proceedings not assigned to another Division by the foregoing provisions of this section.

44. In relation to the Commercial Division, the Supreme Court Rules 1970 (NSW) (“SCR”) at the relevant time provided in Pt 14:

Assignment of business

2. (1)   Subject to subrule (2), there shall be assigned to the Commercial Division proceedings in the Court:

(a)   arising out of commercial transactions; or

(b)   in which there is an issue that has importance in trade or commerce.

(2)   Subrule (1) does not apply to any proceedings:

(a)   assigned by the Act or by or in accordance with the rules or by or under any other Act to the Court of Appeal, the Equity Division, the Admiralty Division, the Family Law Division, the Protective Division, the Probate Division, the Administrative Law Division or the Criminal Division;

(b)   which may be entered in the Construction List; or

(c)   for defamation.

(3)In subrule (1), “issue” includes any question or issue in any proceedings, whether of fact or law or both, and whether raised by pleadings, agreement of parties or otherwise.

45. Although the claim was a simple contractual claim in debt, it appears to me that the proceedings would not have been assigned to the Common Law Division. The principal claim in the proceedings is between two corporate entities and, on the face of it, the goods in question were leased for business purposes. Accordingly, the proceedings fall within the description of proceedings “arising out of commercial transactions” in SCR Pt 14 r 2(1)(a) and would have been assigned to the Commercial Division.

46. Accordingly, the District Court would not have had jurisdiction. This is (as it seems to me) a surprising and unwelcome result. But I see no alternative to it given the decision in Forsyth and the wording of the rules at the relevant time.

47. Although s 44(1)(e) would confer jurisdiction on the District Court once proceedings were transferred to it, the provision is of no assistance in the present case unless it is first established that the proceedings could properly be transferred.

48. This is enough to conclude that the requirements of CPA s 146 are not satisfied. For completeness, however, I will consider whether, if the respondent’s claim could have been commenced in the District Court, the applicants’ cross-claim could have been brought as a cross-claim in that Court.

49. Under CPA s 22, the District Court would have had jurisdiction to entertain the cross-claim if the cross-claim could have been brought by way of separate originating action. The SCR at the relevant time assigned to the Common Law and Equity Divisions proceedings under specified Acts. The TPA was not specified. The SCR did, however, provide in Pt 12:

Business assigned to one of several Divisions

7.   Proceedings in the Court in which a claim is made for relief under:

(a) the Fair Trading Act 1987 (except business assigned by section 53 (3D) of the Act to the Criminal Division);

(b) Division 1 or 1A of Part V of the Trade Practices Act 1974,

shall be assigned to the Common Law Division, the Equity Division or the Commercial Division as is appropriate to the nature of the proceedings.

50. In New South Wales Land and Housing Corporation v Quinn [2016] NSWCA 338 at [81]-[82], the Court of Appeal said that “any action of a kind” in s 44(1)(a) was no more specific than a reference to a genus or class of action. Therefore, it did not matter that the action in that case was brought under a statutory provision which was enacted after 2 February 1998. Accordingly, I proceed on the basis that, to the extent that DCA s 44(1)(a)(i) is relevant, a claim under a provision of the ACL would be of the same “kind” as a claim made under an equivalent provision of the FTA or TPA referred to in SCR Part 12 r 7.

50. However, in my view, the appropriate assignment, based on the assignment rules as at 2 February 1998, would have been the Commercial Division, for the same reasons that I have concluded that the respondent’s originating action would have been assigned to the Commercial Division. Alternatively, the appropriate Division would seem to have been the Equity Division, given that proceedings for the rectification, setting aside or cancellation of deeds or other written instruments were assigned to that Division by SCA s 53(3). Considered on its own, in my opinion, the applicants’ cross-claim would not have been assigned to the Common Law Division.

51. It is also necessary to consider whether the District Court would have had jurisdiction to entertain the applicants’ cross-claim for relief under the ACL, given the invocation of s 237(1). Having regard to FTA ss 30(2) and (3) (quoted at [29] above), in my opinion, the District Court is relevantly in the same position as the Local Court. The District Court has power to entertain a claim for damages under ACL s 236, but lacks power to entertain a claim under ACL s 237(1), which is reserved to this Court. The Commonwealth jurisdiction conferred by s 138B is, or at least is arguably, limited by analogy in the same way.

52. It remains to be considered whether these conclusions are affected by DCA s 135, which provides:

135   Jurisdiction in proceedings under the Fair Trading Act 1987

The Court has the same jurisdiction as the Supreme Court, and may exercise all the powers and authority of the Supreme Court, in any proceedings in which relief is sought under the Fair Trading Act 1987 and where the amount of the claim concerned does not exceed the amount for the time being specified in section 44 (1) (a).

54. DCA s 135 was enacted in 1992: Statute Law (Miscellaneous Provisions) Act 1992 (NSW), Sch 1. The explanatory note states:

The proposed amendment confers on the District Court (which currently has jurisdiction to hear matters under the Trade Practices Act 1974 of the Commonwealth) the same jurisdiction as the Supreme Court has in relation to proceedings under the Fair Trading Act 1987 (provided that the amount of the claim does not exceed the jurisdictional limit of the District Court).

55. The note leaves it unclear as to what the enactment of s 135 was designed to achieve. The District Court already had jurisdiction to award damages for contraventions of the FTA under FTA s 68 up to its jurisdictional monetary limit. In this context, the reference to the District Court’s jurisdiction in matters under the TPA is puzzling: for reasons given above, that jurisdiction would appear to have been similarly limited.

56. Yet the new power conferred is limited to cases where “the amount of the claim concerned” does not exceed that monetary limit.

57. One possibility is that the limitation of jurisdiction only applies in the event that a claim is made for a monetary amount; on this view, the District Court is invested with full jurisdiction to determine any FTA claim, subject only to a limit in monetary damages which may be awarded. This seems an unlikely view of the provision.

58. It seems to me that s 135 presupposes that a claim has been made for a monetary sum and simply gives the Court jurisdiction to grant any available non-monetary relief in connection with that claim under the FTA. On this view, the effect of the provision is somewhat limited; but it would mean that if a claim for damages were made under ACL s 236 which fell within the Court’s jurisdictional limit, the Court could instead exercise jurisdiction to make alternative orders under s 237(1). It appears that this was how White J saw the provision operating in Provectus Software (referred to below). On this view, s 135 would not make any difference in the present case, no monetary claim being made in the cross-claim.

59. If it had been necessary to consider whether the applicants’ cross-claim could have been brought as a cross-claim in the District Court, I would not have been satisfied that it could.

60. Turning to earlier decisions, in Ryner Pty Ltd v Roller [2007] NSWSC 372, Price J had to consider an application to transfer proceedings from the District Court to be heard together with related proceedings in this Court. His Honour recounted that at an earlier stage of the District Court litigation, Johnstone DCJ struck out a cross-claim in those proceedings which claimed damages under TPA s 82 and relief under TPA s 87 on the ground that the District Court had no jurisdiction. That decision, however, does not appear to have been reported, and Price J did not find it necessary to make any decision as to the scope of the District Court’s jurisdiction.

61. In Provectus Care Pty Ltd v Epicor Software (Aust) Pty Ltd [2009] NSWSC 1281, White J (as his Honour then was) held, in a case where the equitable jurisdiction to “rescind” a contract had been invoked, that it was sufficiently questionable that the District Court had jurisdiction to deal with the claim to justify a transfer of the proceedings to this Court. His Honour said:

[6]   Prima facie it would appear to me that the claim for rescission in reliance on s 87(1A) of the Trade Practices Act is a claim which would be within the jurisdiction of the District Court pursuant to s 86(2) of that Act, and by reason of s 135 of the District Court Act 1973 is not excluded by s 86(3) of the Trade Practices Act. The District Court may exercise jurisdiction in which relief is sought under the Fair Trading Act 1987 (NSW) and is within the monetary jurisdiction of the District Court of $750,000. Such relief would include relief under s 72 of the Fair Trading Act, which is a cognate provision to s 87 of the Trade Practices Act.

…

[8] The claim for rescission in the proposed cross-claim appears to me to be a claim for rescission in equity. Although a view may have been formed by at least one judge in the District Court that that Court would have jurisdiction in respect of such a claim, that question might also be controversial. Prima facie it would appear to turn on the question of whether such a claim as is sought in the proposed cross-claim would, as at 2 February 1998, have been assigned to the Common Law Division or to the Equity Division if commenced in this court. (See s 44(1)(a)(1) of the District Court Act 1973 (NSW).)

62. In K & M Prodanovski Pty Ltd v Northshore Car Rentals Pty Ltd [2017] NSWSC 625, an application was made to transfer to this Court District Court proceedings in which a cross-claim had been made for relief under ACL s 243. The applicant argued that a claim for an order under ACL s 243 was itself an exercise of the equitable jurisdiction and, accordingly, the proceedings should be transferred to this Court. The argument was rejected by N Adams J. Her Honour analysed the decision of White J and concluded:

[28]   Although the pleadings in Provectus are not extracted in that judgment, when [6] and [8] are read together I am satisfied that what White J held in that decision is that, although any claim for rescission relying upon the TPA was within the jurisdiction of the District Court, there is some doubt as to whether a claim for equitable rescission would be.

…

[31] I am not satisfied that the applicant has established that it is appropriate to transfer these proceedings from the District Court to this Court at this stage. I am satisfied that the District Court has jurisdiction to grant the relief sought under s 243 of the ACL. I am also satisfied that the District Court has jurisdiction to hear any claim of common law rescission. The position in relation to equitable rescission remains unclear, and, as White J pointed out in Provectus, turns on whether a proposed cross-claim based upon such a claim would be assigned to the Common Law Division or the Equity Division (see s 44(1)(a)(1) of the District Court Act). Whatever the true position is in that regard, the fact remains that the applicant’s claim for statutory rescission under the ACL is broad and any claim for equitable rescission insufficiently clear at this stage to warrant transfer of the proceedings to this Court.

63. In the present case, the cross-claim is purely for an order of the type set out in ACL s 243. On the view expressed by N Adams J in Prodanovski, the District Court would have power to entertain such a claim.

64. Both Provectus and Prodanovski concerned applications to transfer proceedings from the District Court to this Court, rather than from this Court to the District Court. Whether the District Court had jurisdiction to entertain the proceedings initially brought against the applicants in those cases did not need to be specifically considered and the issue which I have addressed, namely whether the respondent’s initial action would have been allocated to the Commercial Division, was not considered. It is not clear from the facts of Prodanovski whether that case in fact concerned an action which would have been assigned to the Commercial Division. Although the defendant was a company, it appears from its name that it may have been a “one man” company, and the subject matter of the lease in that case was a Lamborghini motor car, which may not have been used for business purposes.

65. Furthermore, neither in Provectus nor in Prodanovski was the basis for the District Court’s jurisdiction analysed in any detail. The points which I have raised concerning the District Court’s ability to entertain a cross-claim under ACL s 237(1) were not addressed. The decisions in Provectus and Prodanovski do not dispel the doubt that I have as to the District Court’s jurisdiction.

Conclusion and orders

66. For these reasons, I have concluded that:

(1)   it is sufficiently doubtful that the Local Court has jurisdiction over the cross-claim propounded by the applicants to require the proceedings to be transferred from the Local Court to this Court;

(2)   I am not satisfied that either the respondent’s action could have been commenced in the District Court, or that the applicants’ cross-claim could have been brought as a cross-claim in such an action in the District Court, and accordingly, the proceedings cannot be transferred from this Court to the District Court.

67. The orders of the Court are:

1. Order that the Local Court proceedings, including the cross-claim filed in those proceedings, be transferred from the Local Court to the Supreme Court, pursuant to s 140(1) of the Civil Procedure Act 2005 (NSW).

2.    Order that the costs of the plaintiffs’ application to transfer the proceedings be costs in the proceedings so transferred.

3.   Grant the parties leave to approach the Equity Registrar to obtain a date for a directions hearing.

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Amendments

07 September 2017 - Formatting

Decision last updated: 07 September 2017