Trainor v BMW Melbourne Pty Ltd and Others
[2003] FMCA 7
•9 January 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| TRAINOR v BMW MELBOURNE PTY LTD & ORS | [2003] FMCA 7 |
| TRADE PRACTICES – Misleading deceptive conduct – summary dismissal application – silence – associated jurisdiction – section 51AB Trade Practices Act – unconscionable conduct – court has associated jurisdiction. |
| Trade Practices Act 1974, ss.51AB, 52 Federal Magistrates Act 1999, ss.10, 18 Federal Magistrates Court Rules 2001 |
| Dey v Victorian Railways Commissioners (1949) 78 CLR 62 Kennedy v Australasian Coal and Shale Employees Federation (1983) 50 ALR 735 |
| Applicant: | JULIE-ANNE TRAINOR |
| First Respondent: | BMW MELBOURNE PTY LTD |
| Second Respondent: | BMW AUSTRALIA FINANCE LTD |
| Third Respondent: | GRAEME JOHN FINN |
| File No: | MZ833 of 2001 |
| Delivered on: | 9 January 2003 |
| Delivered at: | Melbourne |
| Hearing Date: | 15 February 2002 |
| Judgment of: | Phipps FM |
REPRESENTATION
| Counsel for the Applicant: | Mr R. Cameron |
| Solicitors for the Applicant: | Clements Hutchins & Co |
| Counsel for the First Respondent: | Mr G. D. Block |
| Solicitors for the First Respondent: | Romer & Co |
| Counsel for the Second Respondent: | Mr Christie |
| Solicitors for the Second Respondent: | Mills Oakley |
| Counsel for the Third Respondent: | Mr Donald |
| Solicitors for the Third Respondent: | Harwood Andrews |
ORDERS
The Application by each respondent is dismissed
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
NZ 833 of 2001
| JULIE-ANNE TRAINOR |
Applicant
And
| BMW MELBOURNE PTY LTD |
First Respondent
| BMW AUSTRALIA FINANCE LTD |
Second Respondent
| GRAEME JOHN FINN |
Third Respondent
REASONS FOR JUDGMENT
Introduction
Each respondent has applied for summary judgment seeking to have the applicant's claim struck out or dismissed. A substantial body of affidavits has been filed. The argument largely proceeded on the basis of a statement of claim as it was proposed to be amended handed up by counsel for the applicant on the day of the hearing.
Issues
At times relevant to the claim the applicant was in a relationship with the third named respondent. The first respondent is a dealer in BMW motor vehicles and the second respondent provides finance for the purchase or acquisition of motor vehicles.
In the statement of claim the applicant alleges that until approximately 10 April 2001 she was the owner of a Honda motor vehicle. On or about 10 April 2001, she and the third respondent acquired a BMW motor vehicle from the first respondent using a hire purchase contract with the second respondent.
She alleges that she paid a $1000 deposit and that a trade-in allowance of $10,000 was allowed for her Honda motor vehicle. She claims that what occurred was that BMW Finance, that is the second respondent, paid the third respondent $17,000. The hire purchase agreement shows a cash price of $76,000 including GST, term charges of $17,08.62 and the total amount payable of $96,073.62. The hire purchase agreement shows both applicant and third respondent as hirers.
The applicant alleges that she was not aware that she was a hirer, that the third respondent had told her that she would not be responsible, and that when she signed documents they were not explained to her. In sum, she alleges that she was not aware that the whole of the proceeds of a $17,000 trade-in amount would be paid to the third respondent nor that she was personally and directly liable for payments for the BMW.
The relationship between applicant and third respondent broke-up. The applicant then alleges that she reached agreement with the first and second respondents to return the BMW and for her to be released from any liability. That has not happened. She claims the payment to her of the $17,000 and release from the hire purchase agreement pursuant to various provisions of the Trade Practices Act 1974 or by remedy under common law or equitable remedies.
The statement of claim
The applicant alleges that she was induced to execute the hire purchase agreement by misrepresentations of the first respondent through an employee. The misrepresentations alleged are a combination of positive representations and allegations of a failure to inform the applicant of various matters. It is alleged that this constituted misleading and deceptive conduct pursuant to s.52 of the Trade Practices Act. It is alleged that the second respondent is also responsible for this conduct. It is then alleged that both the first and second respondents knew that the applicant was under a special disability, that there was undue influence by the third respondent and that the conduct of both the first and second respondents was unconscionable conduct in breach of s.51AB of the Trade Practices Act 1974.
It is then alleged that in June of 2001 an agreement was made between the applicant and the second respondent for the return of the vehicle and the release of the applicant from any obligation. The applicant, she says, returned the vehicle but was not released from the obligations under the hire purchase agreement.
Paragraphs 10 – 13 of the statement of claim are as follows:
10.The applicant was induced by BMW Melbourne to execute the hire purchase agreement by the misrepresentations of BMW Melbourne. ("the representations")
Particulars
(i)An employee of BMW Melbourne, Juan Bodna, proffered a contract to the applicant for the sale of the BMW to Extreme Nominees Pty Ltd as purchaser.
(ii)The applicant was informed by Bodna on behalf of BMW Finance that a company known as Extreme Nominees was the hirer of the BMW.
(iii)The applicant was informed by Bodna that she was signing all documents in her capacity as a director of Extreme Nominees Pty Ltd.
(iv)Bodna did not inform the applicant that she was personally responsible to BMW Finance under the hire purchase agreement.
(v)BMW Melbourne completed the sale agreement in the name of Extreme Nominees Pty Ltd. BMW Melbourne wrongfully paid to Finn the trade-in allowance derived from the Honda together with the deposit paid for by the applicant (totalling $17,000).
(vi)Bodna procured the transfer of the Honda from the applicant to BMW Melbourne.
11.Further or alternatively, at no time did Bodna inform the applicant that:
(i) She was personally responsible to BMW Finance under the hire purchase agreement.
(i)That the trade-in allowance derived from the sale of the Honda together with the deposit paid for by the applicant totalling $17,000 was to be given to Finn.
(ii)The nature and purpose of each of the documents that he proffered to her for signature.
(iii)That she should seek independent assistance or explanation with respect to the documents.
(iv)That the transaction entered into by her was a disadvantageous one.
12.At all relevant times Bodna;
(a) Knew the matters set out in par 11.
(b) Knew that the applicant was unaware of the matters set out in par 11.
(c) Knew that the matters set out in par 11 would be likely materially to affect the decision of the applicant whether or not to sign the documents and enter into the hire purchase agreement.
13.Accordingly, Bodna was under a duty to the applicant to disclose the matters set out in par 11.
This then found further pleadings alleging a duty of care and breach of s.52 of the Trade Practices Act.
Discussion
Attack was made on the particulars in paragraphs 10 and 11 on the basis that each on their own they could not constitute misleading and deceptive conduct. I consider that the correct approach is to look at the pleading as a whole and not to adopt a too technical approach.
I consider that I am entitled to take into account what is contained in the various affidavits filed by each party. I consider that it is relevant that the Federal Magistrates Court is not a court of pleading. The respondents are seeking summary dismissal of the application under rule 13.07 or rule 13.10 of the Federal Magistrates Court Rules 2001. The settled principle is that a summary order which prevents a party pursuing a claim according to the ordinary course of procedure should only be made in a very clear case: Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91; General Steel Industries Ltd v Commissioner for Railways (1964) 112 CLR 125; Salemi v Minister for Immigration and Ethnic Affairs (1976) 177 CLR 388.
The argument then proceeded based on the limited jurisdiction conferred directly on the Federal Magistrates Court under the Trade Practices Act. Subsection 86(1A) provides:
Jurisdiction is conferred on the Federal Magistrates Court in any matter arising under Division 1 or 1A of Part V in respect of which a civil proceeding is instituted by a person other than the Minister or Commission.
The only provision of Division 1 or 1A of Part V under which the applicant seeks to raise her claim is s.52. That provides:
A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or likely to mislead or deceive.
The submission on behalf of the first and second respondents was that in order to establish a claim of misleading and deceptive conduct the applicant needed to establish a duty in the first and second respondents, or one of them, in such a way that it could be attributed to the other. The submission was that the only way such a duty could arise was under s.51AB of the Trade Practices Act, the provision governing unconscionable conduct, or at common law. Section 51AB is not in Division 1 or Division 1A of Part V and so not something over which the Court has direct jurisdiction, and of course, the Court does not have direct common law jurisdiction. It was argued that the accrued jurisdiction could not assist. In effect, it was argued that the applicant was seeking to pull the claim up by its own bootstraps. Since there needed first to be a duty established using matters over which the Court does not have jurisdiction to found a s.52 claim, s.52 could not form the basis of accrued jurisdiction bringing in s.51AB or common law.
The role of silence and a “duty to disclose” was considered by a Full Court of the Federal Court in Denagogue Pty Ltd v Ramensky & Anor (1992) 39 FCR 31. Black CJ said this at p.31:
“No reason has been shown for departing from the findings of the primary Judge that the appellant engaged in conduct that was misleading or deceptive in contravention of s.52 of the Trade Practices Act 1974. The failure of the appellant (the vendor) to disclose to the respondents (the purchasers) unusual features relating to access to the land they were buying was but one of the circumstances that lead the primary Judge to conclude that there had been misleading and deceptive conduct. The primary question was whether there had been conduct that was misleading or deceptive or likely to mislead or deceive. In this case, as in every case in which s.52 is relied upon, this was a question of fact that could only be determined – as the Judge did determine it – having regard to all the relevant circumstances.
Silence is to be assessed as a circumstance like any other. To say this is certainly not to impose any generally duty of disclosure; the question is simply whether, having regard to all the relevant circumstances, there has been conduct that is misleading or deceptive or that is likely to mislead or deceive. To speak of ‘mere silence’ or of a duty of disclosure can divert attention from the primary question. Although ‘mere silence’ is a convenient way of describing some fact situations, there is in truth no such thing as ‘mere silence’ because the significance of silence always falls to be considered in the context in which it occurs. The context may or may not include facts giving rise to a reasonable expectation, in the circumstances of the case, that if particular matters exist they will be disclosed.”
Gummow J said this at p.40:
“In my view, to inquire in such a case whether an independent ‘duty to disclose’ has arisen is to digress from the application of the terms of s.52. Thus, in Rhone-Poulenc (supra) the basic proposition for which the appellants unsuccessfully contended was that a manufacturer who sells a product it knows is bought by consumers for the purpose for which it was made, contravenes s.52 if the sale and use of the product is unlawful and the product is liable to forfeiture and the manufacturer has not made this known to consumers; see Rhone-Poulenc at 505-506, per Lockhart J. Again, in Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83, the positive statement on behalf of the restaurant vendor that the restaurant seated 128 people was, in the circumstances of the case, misleading when unqualified by words which distinguish the actual capacity from the licensed capacity, that being a matter of vital important given the nature of the business being sold. In my view, it is unhelpful to describe that result, involving as it does a contravention of s.52, as the product of the breach of any ‘duty’ imposed upon the vendor by that section.”
Applying this approach, the issue in this summary disposal application is whether the facts alleged by the applicant, assisted by reference to the affidavits, could not constitute misleading and deceptive conduct. That cannot be said.
The applicant alleges that, prior to the transactions involving the two motor vehicles, she owned a Honda motor vehicle. At the end of the transactions she did not have a motor vehicle, she had a potential liability under the lease of the BMW motor vehicle and the third respondent had received from either the first respondent or the second respondent $17,000 for the Honda. She alleges that she was misled about the nature of the transactions she entered into. Much of her allegation does appear to be based on a failure to inform and explain. It is alleged for the respondents that the applicant had worked for solicitors in a position which should have given her an understanding of the significance of signing documents and the need to ensure they were understood before signing. These two matters, reliance on a failure to explain and her background and experience in legal matters, may go to the strength of her case, but they do not justify summary dismissal. There is sufficient in what is alleged to found a case of misleading and deceptive conduct.
As a separate cause of action, the applicant seeks to rely on s.51AB of the Trade Practices Act 1974. The first and second respondents’ submission was that the Court has no jurisdiction under that section.
It is correct that the Court is not given direct jurisdiction under s.51AB because it is not contained within Division 1 or Division 1A of Part V. Resolution of this issue requires an examination of the statutory provisions by which jurisdiction is conferred on the Federal Magistrates Court.
Section 10 of the Federal Magistrates Act 1999 provides;
(1)The Federal Magistrates Court has such original jurisdiction as is vested in it by laws made by the Parliament:
(a)by express provision; or
(b)by the application of section 15C of the Acts Interpretation Act 1901 to a provision that, whether expressly or by implication, authorises a civil proceeding to be instituted in the Federal Magistrates Court in relation to a matter.
(2)The original jurisdiction of the Federal Magistrates Court includes any jurisdiction vested in it to hear and determine appeals from decisions of persons, authorities or tribunals other than courts.
(3)The process of the Federal Magistrates Court runs, and the judgments of the Federal Magistrates Court have effect and may be executed, throughout Australia.
Section 18 of the Federal Magistrates Act 1999 provides:
To the extent that the Constitution permits, jurisdiction is conferred on the Federal Magistrates Court in respect of matters not otherwise within its jurisdiction that are associated with matters in which the jurisdiction of the Federal Magistrates Court is invoked.
The circumstances in which associated jurisdiction are attracted have been described in many cases. In Re Wakim; Ex parte McNally (1999) 198 CLR 511, Gummow and Hayne JJ said this of associated jurisdiction at 585:
“What is a single controversy ‘depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct in relationships’. There is but a single matter if different claims arise out of ‘common transactions and facts’ or a ‘common substratum of facts’, notwithstanding that the facts upon which the claims depend ‘do not wholly coincide’. So, too, there is but one matter where different claims are so related that the determination of one is essential to the determination of the other, as, for example, in the case of third party proceedings or where there are alternative claims for the same damage and the determination of one will either render the other otiose or necessitate its determination. Conversely, claims which are ‘completely disparate’, ‘completely separate and distinct’ or ‘distinct and unrelated’ are not part of the same matter.
Often, the conclusion that, if proceedings were tried in different Courts, there could be conflicting findings made on one or more issues common to the two proceedings will indicate that there is a single matter. By contrast, if the several proceedings could not have been joined in one proceeding, it is difficult to see that they could be said to constitute a single matter.”
Here, there can be no issue that the claim under s.51AB is part of a single controversy which includes a claim under s.52.
The argument for the respondents was that while there can be no doubt about the existence of s.18 of the Federal Magistrates Act, the intention of Parliament must have been not to confer jurisdiction under s.51AB. Claims under s.52 and under s.51AB are often closely related so that in deliberately excluding s.51AB Parliament must have intended to deliberately exclude its jurisdiction.
I do not think that is correct. The wording of s.18 of the Federal Magistrates Act is clear. No restriction is put upon it. It makes express provision conferring jurisdiction in respect of matters not otherwise within the court’s jurisdiction if they meet the requirement of being associated with matters in respect of which the jurisdiction is invoked. The amendments to the Trade Practices Act which confer jurisdiction on the Federal Magistrates Court were contained in the Federal Magistrates (Miscellaneous Amendments) Act 1999, which is a companion Act to the Federal Magistrates Act 1999. The Bills which became the Act were both presented to Parliament and debated together. The argument put for the respondents could apply to any other Commonwealth statutory provision. For instance, a misleading and deceptive conduct claim is often associated with a breach of copyright claim and common law passing off proceeding. The same argument could be put in respect of the copyright claim. It is a claim under a law of the Commonwealth under which the Federal magistrates court does not have direct jurisdiction. At some point the argument must become inapplicable, otherwise s.18 would have no operation. Presumably the argument is inapplicable in circumstances where the connection between the s.52 claim and the associated claim is unusual enough to not have occurred to the mind of parliament. If the argument is correct, then it must be that parliament’s intention was that jurisdiction under s.18 is in some way subject to a limitation or exception of how often claims under s.52 of the Trade Practice Act are closely related to the other matters under Commonwealth law.
A jurisdictional provision such as s.18 cannot be subject to such a vague implied restriction. The argument put has no validity. There is no reason why s.18 should not be given full effect in respect of claims under s.51AB of the Trade Practices Act.
I consider that in the facts alleged in this case, jurisdiction under both s.52 of the Trade Practices Act and s.51AB is conferred on the Court.
It was argued, fairly faintly, for the third respondent that there was no jurisdiction because no federal claim was raised against him. The claims against the third respondent are all common law claims. They come within the test as summarised by Gummow and Hayne JJ in
Re Wakim. It is settled that so long as the single controversy test is satisfied, jurisdiction over a third party is obtained even although no claim under Federal law is brought against that third party – Burgundy Royale Investments Pty Ltd & Ors v Westpac Banking Corporation (1987) 76 ALR 173, Kennedy v Australasian Coal and Shale Employees Federation (1983) 50 ALR 735. In Re Wakim, it was decided that proceedings may fall within the accrued jurisdiction even when separate proceedings are brought against different parties. Consequently, there is jurisdiction over the claim brought against the third party.
A number of other matters were argued about the pleading, but none of them are such as to justify a summary dismissal of the claim.
Conclusion
Consequently, each respondent's summary dismissal application is dismissed.
I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of Phipps FM
Associate:
Date: 9 January 2003
4