Turelin Nominees Pty Ltd v Dainford Ltd

[1983] FCA 60

Re: TURELIN NOMINEES PTY. LTD.
And: DAINFORD LIMITED (1983) 67 FLR 440
VG No. 202 of 1982
Courts - Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Smithers J.(1)

CATCHWORDS

Courts - Federal jurisdiction - Trade Practices Jurisdiction - proceedings in Federal Court in respect of alleged misleading and deceptive conduct in course of sale of home unit - action by respondent in Supreme Court for specific performance of contract of sale - power of Federal Court to restrain respondent from continuing proceedings in Supreme Court - relevance of possibility that relief in Federal Court would include order varying terms of contract or declaration avoiding the contract - whether proceedings in Supreme Court would render Trade Practices Act inoperative - whether likely to endanger or prejudice ultimate achievement of justice according to the totality of laws applicable.

Trade Practices Act 1974 ss.52, 53, 53A, 82 and 87.

Commonwealth Constitution ss.75 and 76.

Federal Court of Australia Act 1976 ss.22 and 32.

Trade Practices - Consumer Protection - Misleading or deceptive conduct - Applicant seeking relief in Federal Court of Australia - Respondent seeking specific performance in Supreme Court of Queensland - Whether Federal Court had power or jurisdiction to order relief sought by applicant - Whether Federal Court had power to restrain respondent from continuing proceedings in Supreme Court - Likelihood of prejudice to ultimate achievement of justice - Whether application should be decided by reference to questions arising under the Commonwealth Constitution - Trade Practices Act 1974 (Cth), ss 52(1), 53, 53A, 82, 86, 87 - The Constitution (63 & 64 Vict. c. 12), ss 75, 76, 77 - Federal Court of Australia Act 1976, ss 22, 23, 32.

HEADNOTE

The applicant company entered into an agreement on 28 August 1981 (the August agreement) to purchase certain land in Queensland from the respondent company. The applicant alleged that representations or warranties made by or on behalf of the respondent concerning the nature and quality of attributes which a residential unit would have when constructed were untrue or were not intended to be fulfilled.

By way of an originating application the applicant sought relief against the respondent pursuant to the provisions of ss 82 and 87 of the Trade Practices Act 1974 (the Act). The applicant alleged that the respondent's conduct during the negotiations which resulted in the August agreement was "misleading or deceptive conduct" within the meaning of s. 52(1) of the Act and also constituted a contravention of ss 53 and 53A of the Act.

On 8 February 1983, the respondent issued a writ out of the Supreme Court of Queensland in which the respondent sought a decree of specific performance of the August agreement by the applicant. On 11 March 1983, the applicant issued a notice of motion in the Federal Court of Australia seeking an order restraining the respondent from proceeding further in the Supreme Court of Queensland proceedings.

The applicant contended that the Supreme Court of Queensland did not have jurisdiction to grant relief under ss 82 and 87 of the Act even if the commission of misleading and deceptive conduct within the meaning of that expression of s. 52 of the Act were proved. It was submitted on behalf of the respondent that the Federal Court of Australia did not have the power or jurisdiction to order the relief sought by the applicant.

Held: That the present application should be decided upon considerations of propriety and convenience in relation to the achievement of justice according to the totality of Australian law applicable to the contract in question and to the parties in relation to that contract, not by reference to questions arising under the Constitution.

PER SMITHERS J.: To proceed to judgment in the Supreme Court of Queensland action would be likely to endanger or prejudice the ultimate achievement of justice according to the totality of law applicable to the transaction in question. This was a situation which resulted from the Federal nature of the Australian system of government.

Accordingly, the respondent would be restrained from continuing further with the Supreme Court of Queensland proceedings until the proceedings in the Federal Court of Australia were finalised or until further order.

The powers conferred upon the court by s. 23 of the Federal Court of Australia Act 1976 include the power to restrain parties from invoking the jurisdiction of another court where such jurisdiction would, if exercised, prejudice the achievement of justice according to the whole of the relevant law or be otherwise vexacious, oppressive or useless.

St Justins Properties Pty Ltd v. Rule Holdings Pty Ltd (1980) 3 ATPR 40-146 applied.

Settlement Corporation v. Hochschild (1966), 1 Ch 10, referred to.

Bushby v. Munday (1821) 5 Madd 297, referred to.

L.E. Stack v. Coast Securities (No. 9) Pty Ltd, Supreme Court of Queensland, Fitzgerald J., unreported, distinguished.

Bargal Pty Ltd v. Jeanette Ann Force, Supreme Court of Queensland McPherson J., unreported, 13 March 1983, referred to.

Hughes Motor Service Pty Ltd v. Wang Computer Pty Ltd (1978) 35 FLR 346, referred to.

HEARING

1983, March 25; April 12. #DATE 12:4:1983

ORIGINATING APPLICATION.

F.W. Galbally, for the applicant.

N.J. Young, for the respondent.

Cur. adv. vult.

Solicitors for the applicant: Galbally & O'Bryan.

Solicitors for the respondent: Godfrey Stewart, Frank Curtain & Co.

J.D.W.

ORDER

(1) That the respondent be restrained until proceedings herein are finalised or further order, from proceeding further in the Supreme Court of Queensland in proceedings No. 552 of 1983 issued on the 8th day of February, 1983.

(2) That the respondent pay the applicant's costs of and incidental to this motion. Orders accordingly.

JUDGE1

In the originating application in this matter the applicant seeks relief against the respondent in respect of an agreement made between the applicant and the respondent on 28 August 1981 in which the applicant agreed to purchase and the respondent agreed to sell certain land in Queensland.

The relief is sought pursuant to ss.82 and 87 of the Trade Practices Act 1974 (the Act) on the ground that the conduct of the respondent in the negotiations as a result of which the contract was entered into, was misleading or deceptive conduct within the meaning of s.52(1) of the Act and also constituted a contravention of s.53 and of s.53A of the Act. The remedies sought include an order rescinding or declaring the contract void ab initio or an order determining the contract as from such date as the Court deems appropriate, an order that the respondent repay to the applicant the sum of $24,900.00 paid by the applicant to the respondent pursuant to the contract, and such further and other relief as to the Court may seem fit.

The alleged conduct in respect of which the relief is claimed was the making by or on behalf of the respondent of representations or warranties said to be untrue or not intended to be fulfilled concerning the nature and quality of attributes which a residential unit then in the course of construction by the respondent on the land would have when completed.

The claim and relief sought are such as are, pursuant to s.82 of the Act, within the jurisdiction of this Court to entertain and grant.

The applicant's statement of claim was delivered on 22 December 1982. The respondent's defence was delivered on 11 March 1983 and puts in issue the commission of the alleged misleading and deceptive conduct and alleges that that conduct if committed did not mislead or deceive the applicant. The jurisdiction of the Court to entertain the application and give relief to which the Court may consider it to be entitled under ss.52, 82 and 87 of the Act is not challenged.

However, on 8 February 1983 at the instance of the respondent there was issued out of the Supreme Court of Queensland a writ, No. 552 of 1983 in which the respondent as plaintiff seeks as against the applicant and one Paton, a director of the applicant, a decree for the specific performance by the applicant of the contract of sale dated 28 August 1981.

On 11 March 1983 the applicant gave notice of motion in this Court for an order restraining the respondent from proceeding further in respect of the proceedings No. 552 of 1983 in the Supreme Court of Queensland. The applicant's submission is that the Supreme Court of Queensland does not have jurisdiction to grant relief such as that provided for in ss.82 and 87 of the Trade Practices Act on the ground of the commission by the respondent of the alleged conduct considered as misleading and deceptive conduct within the meaning of that expression in s.52 of the Act, even if, the commission of that conduct be proved. It is said that, if the Supreme Court were to make a decree for specific performance of the contract according to its terms such an order would or might deprive the applicant of the relief to which it would be entitled in this Court, under the Act, on proof of the commission of the conduct alleged. It is said that both the applicant and respondent are subject to the laws of Australia and their legal rights and duties in respect of the contract the subject of the litigation between them are those which are determined by the application to the contract both of the laws of Australia, in particular, the provisions of the Act, and the laws of Queensland. It is urged that it would be inappropriate, to say the least, that one party to the contract should seek relief from any Court the grant of which might exclude the operation of the Act in respect thereof. Section 86 of the Act confers jurisdiction upon the Federal Court to hear and determine actions, prosecutions and other proceedings under Part V and provides ". . . that jurisdiction is exclusive of the jurisdiction of any other Court, other than the jurisdiction of the High Court under section 75 of the Constitution.".

However, Mr. Young for the respondent submitted that there is no jurisdiction in this Court to make the order sought. The thrust of his submissions was formulated in the following terms:-
(a) The subject matter of the action in the Supreme Court of Queensland does not form any part of the matter before the Federal Court and over which it has jurisdiction; it is a separate and distinct matter.

(b) Because the subject matter of the action in the Supreme Court of Queensland is a separate and distinct matter (for the purposes of Section 76(ii) of the Constitution) from that raised by the Applicant's Application, the grant of an injunction in respect of the Queensland proceeding cannot be a proper exercise of a power which is confined to "the matter before the Court" and "the matters in which the Court has jurisdiction".

(c) Whatever implied or inherent powers the Court possesses as a superior court of record, such powers cannot extend the range of matters in respect of which jurisdiction may be given to the Court beyond those set out in Sections 75 and 76 of the Constitution and does not in particular authorise or empower this Court to grant an injunction to restrain parties from proceeding in another superior court.

He acknowledged that in St. Justin Properties Pty. Ltd. & Ors. v. Rule Holdings Pty. Ltd (1980) 3 ATPR, case 40-146 at pp.42-118 Toohey J. had expressed the opinion that in a case where "this Court has jurisdiction to deal with the matters placed before it by the applicant's substantive application, it may as a matter of power, restrain the respondent from proceeding further in the Supreme Court, at least until the litigation in this Court has been finalised.". (see p.42-120). His Honour said also that he did not think that this view was inconsistent with anything said in the High Court in Thomson Publications (Australia) Pty. Ltd. v. Trade Practices Commission & Ors. (1981) 55 ALJR 614. But Mr. Young pointed out that the St. Justin Case was heard before the decision in Philip Morris Inc. v. Adam P. Brown Male Fashions Pty. Ltd. (1981) 55 ALJR 120. Reference was also made by Mr. Young to the decision of Fox J. in Brown & Anor v. Jam Factory Pty. Ltd. (1981) 3 ATPR 40-213 at p.42-922. In that case his Honour, having awarded damages under s.82 of the Trade Practices Act in respect of misleading conduct inducing a party to enter into a lease, ordered that the lessors be restrained from continuing with an action in the Supreme Court of Victoria already instituted in respect of the lessee's claim for rent already due, and from initiating or continuing any action to recover any amount under an agreement for a lease of the relevant premises for the occupancy thereof by the lessors. It appears also that on 22 June 1982 in Bradford House Pty. Ltd. & Ors. v. Leroy Fashion Group Ltd. No. VG 78 of 1982 in this Court, Northrop J. made an order temporarily restraining the respondent from proceeding further in an action No. 925 of 1982 issued out of the Supreme Court of Victoria in which the respondent was the plaintiff and Bradford house Pty. Ltd. was the defendant. The action in the Supreme Court was for rent and other moneys due by the defendant company to the plaintiff under a lease. The order in this Court was made on the ground that the defendant company had filed an application, VG 202 of 1982 in this Court for relief in respect of the provisions of the lease, alleging that it had been induced to enter into the lease by misleading and deceptive conduct committed by the respondent, contrary to s.52 and other provisions of the Trade Practices Act. The proceedings were taken to completion in this Court, the respondent claiming, by cross-claim the relief it had claimed in the Supreme Court. It is to be observed also that in Allpike Honda Pty. Ltd. & Ors. v. Marbellof Nominees Pty. Ltd. & Ors. No. W.A. G28 of 1982 (unreported) Toohey J. adhered to the views expressed by him in the St. Justin's Case (supra) and made an interlocutory order restraining a respondent to a proceeding in this Court for relief against it under s.82 of the Act, from proceeding in a local Court in respect of a claim related to the matter of the claim in this Court.

However, Mr. Young urged that the subject matter of the respondent's action in the Supreme Court was such that with respect thereto the Commonwealth Parliament had not made any law. It was put that the question whether a contract ought to be specifically performed according to the laws of the relevant State is necessarily a matter arising otherwise than under any law made by the Parliament and is a matter with respect to which the Australian Parliament has no power to confer jurisdiction on the Federal Court. He relied on ss.75, 76 and 77(1) of the Constitution. And it was said further that such a power which could not be conferred by express enactment could not be thought to reside in the Federal Court as part of its inherent jurisdiction. Accordingly the power or the jurisdiction to grant the injunction sought is not to be found in ss.22 and 23 of the Federal Court of Australia Act or in the inherent jurisdiction of the Court.

The foregoing contentions proceed on the basis that should this Court restrain the respondent as sought, that restraint would be a step in the exercise of a jurisdiction to entertain and decide the matter of the applicant's entitlement to a decree for specific performance. It presumes that that matter is not involved in the claim for relief in the proceeding in this Court and is not an associated matter within the meaning of s.32 of the Federal Court of Australia Act. But in my view such a restraint, if imposed, would not be imposed as a step in the purported exercise of jurisdiction to entertain and deal with an application for relief in the matter of the respondent's entitlement to a decree for specific performance of the contract. The power to impose such a restraint exists, if at all, as an incident of the jurisdiction of this Court to entertain and deal with the relief claimed by the applicant under the provisions of the Act. It is to be found in the circumstance that to enable that jurisdiction to be exercised effectively a respondent should be restrained temporarily from seeking a decree for specific performance of the contract from another Court, being one which has jurisdiction to make such a decree. The order for restraint if made is an order in personam against the respondent, and does not affect the jurisdiction of that Court if and when its jurisdiction in respect of a claim for a decree of specific performance is invoked. The jurisdiction to restrain a party to a proceeding in a superior court from instituting and continuing another proceeding in a foreign court has been described as arising where the institution and continuation of that other proceeding would be oppressive, vexatious or useless. See Settlement Corporation v. Hochschild (1965) 1 Ch. 10 and Bushby v. Munday (1821) 5 Madd. 297. That the question exists in such circumstances appears at this stage to be established. To describe the proceedings of a Court in exercising its jurisdiction as oppressive vexatious or useless is to use ungracious terms. But the substance of the matter must be that, in certain situations, the exercise of jurisdiction by a second Court may result in the determination of issues between the parties in a manner out of harmony with the justice of the case. In such a situation it is not to the point that the second court is not foreign in the ordinarily accepted meaning of that term. It is the factor that the proper exercise of the jurisdiction of the second Court may complicate, and perhaps frustrate, the ultimate determination of the issues between the parties according to law that is critical. Such a situation may well exist where the law applicable in the Court of a State does not include all the law by which, in the end, the rights and liabilities of the parties as citizens of Australia are governed. That is the situation, currently existing in relation to the contract between the applicant and respondent of 20 August 1981.

There is a Federal law pursuant to which, if the facts are as alleged, the contract may be declared void ab initio or varied and it is only this Court which can apply that law to the contract. It is clear that in attempting to litigate a claim for a decree for specific performance in the Supreme Court of Queensland the respondent is seeking an adjudication concerning the rights and liabilities of the parties in respect of the contract in which the provisions of the Trade Practices Act are not applied or at least fully applied. Whatever may be said of the applicability of the provisions of the Act by way of defence, the provisions of s.87 which go to the root of the claim for specific performance, could not be effectively applied. If the respondent were to succeed the effect might be to render the provisions of the Act inoperative so far as the contract is concerned. That a law which according to its provisions binds each of the parties in relation to the contract should be rendered inoperative by the adoption of such a procedure is clearly a situation unacceptable in the administration of justice between Australian citizens.

It will not be until a determination in this Court in proceeding No. VG 202 of 1982 has been made that it will be possible for the respondent to assert that, according to the laws of Australia, the contract is one which a Court ought to enforce in toto, in part, or subject to conditions or at all. This follows from the provisions of s.87 of the Act pursuant to which, in a proper case, this Court may determine whether the contract should be determined ab initio or be varied. Relief of this nature may be granted on the application of a person who has suffered loss or damage by conduct of another person that was engaged in in contravention of a provision of Part V of the Act. According to the provisions of s.87 of the Act, if the Court considers that the making of an order for variation or avoidance of a contract will compensate the person who suffered the loss and damage, the Court may make such order or orders at it thinks appropriate against the person who engaged in the conduct, including an order that the whole or any part of a contract between the person who suffered the damage and the person who engaged in the conduct be void, or void ab initio, or an order varying the contract in such manner as is specified therein and an order declaring the contract to have had effect, as so varied from a specified date. Obviously any such order would be relevant to the obligations to be performed by the parties to the contract.

The jurisdiction to entertain and give the statutory relief provided for in the Act is not challenged. By the Federal Court of Australia Act 1976 the Commonwealth Parliament has set up a Court to entertain applications for that relief and has declared that Court a Superior Court of Record. That Court has been given the very wide powers provided in s.23, namely to make, in respect of matters in relation to which it has jurisdiction, orders of such kind, including interlocutory orders and to issue or direct the issue of writs of such kinds, as the Court thinks appropriate. This provision, in terms, confers discretionary power of the widest nature. It is not to be thought that it is an unlimited power. But it is at least clear that it would extend to the making of interlocutory orders designed to ensure that a party to a proceeding in the Court should be restrained from taking action designed to embarrass and perhaps frustrate the other party in seeking relief to which, according to the law applicable to the contract sued upon, he may be entitled.

As pointed out by Toohey J. in the St. Justin's Case (supra) it was taken for granted in Settlement Corporation v. Hochschild (supra) that where a party to a proceeding in the Court of Chancery had instituted a proceeding in a foreign court which was, in the circumstances vexatious, oppressive or useless, there was jurisdiction to restrain the party from continuing that proceeding. It was pointed out therein that no question arose, of conflict between the tribunals involved, because the jurisdiction invoked was in personam. In his reasons for judgment in that case Ungoed-Thomas J. referred to Bushby v. Munday (supra) where in relation to the issues between the parties, both the Court in England and the Court in Scotland had jurisdiction. It was thought proper to restrain a party from proceeding in Scotland. This step was taken because the provisions for discovery in the English Court provided a mechanism more likely to lead to a proper investigation of the issues than those available in Scotland. The critical consideration was that continuation of the proceedings in Scotland would reduce the likelihood of the achievement of justice according to law.

In the instant case, to proceed to judgment in the Supreme Court of Queensland in action No. 552 of 1983 would be likely to endanger or prejudice the ultimate achievement of justice according to the totality of law applicable to the transaction in question. It is a situation which results from the Federal nature of the Australian system of government. To restrain a party from proceeding with litigation in another Court which will or may well have consequences of this kind would seem to fall within the powers conferred on this Court by s.23 of the Federal Court Act. Whatever limitations may exist in relation to the wide words of s.23 they would not exclude power to make orders appropriate in the exercise of the inherent jurisdiction of superior court to restrain parties before it from invoking the jurisdiction of another court which, because of the nature of its jurisdiction would, if exercised, prejudice the achievement of justice according to the totality of the relevant law or be otherwise vexatious, oppressive or useless.

It would seem therefore that the application at present before me is to be decided not by reference to questions arising under the Constitution but by considerations of propriety and convenience in relation to the achievement of justice according to the totality of the law applicable to the contract in question and to the parties in relation to that contract. It is my view that such considerations lead to the conclusion that the respondent should be restrained from continuing further with the proceedings No. 552 of 1983 in the Supreme Court of Queensland until the proceedings in this Court in VG No. 202 of 1982 are finalised or further order.

In L. E. Stack v. Coast Securities No. 9 Pty. Ltd. (Qld. G.8 of 1983) in an application to stay proceedings for specific performance in the Supreme Court of Queensland in a situation somewhat similar to that in this case, Fitzgerald J. in the exercise of his discretion, refused to restrain the respondent from continuing to prosecute its action in the Supreme Court. It appears that there was reason, at that stage, to contemplate that it was probable that steps in that Court designed to achieve a stay of those proceedings would succeed. In those circumstances his Honour said that "in my opinion justice will be best served by refusing to make the interlocutory injunctions sought whilst recording that the applicant might re-apply if it becomes necessary or appropriate to do so.". Since that decision was given, judgment delivered on 13 March 1983 has been given in the Supreme Court of Queensland in Bargal Pty. Ltd. v. Jeanette Ann Force No. 6333 of 1982. The plaintiff in that case sought specific performance of a contract for the sale of land and the defendant was an applicant in a proceeding in this Court G.19 of 1983 for relief under the Trade Practices Act 1974 in respect of the contract. McPherson J. took the view that as the existence, in the circumstances, of the jurisdiction of the Supreme Court had been the subject of contention before him, adjourn the matter until a reasonable time had elapsed to permit the taking of steps that might be appropriate in relation to the constitutional questions involved. It appears however, that subject to it being established, on constitutional grounds, that the Supreme Court lacked jurisdiction in the matter of the specific performance of the contract, the matter would proceed to judgment in that court. The situation before me is therefore different from that before Fitzgerald J. Should the respondent's action in Queensland proceed it would seem that the applicant in this Court may well be involved in proceedings in the Supreme Court in which difficult constitutional questions going to jurisdiction remain to be resolved, and which, on their face, concern a contract the terms of which, according to the total law applicable thereto, may ultimately be found to be those, not of the contract as originally entered into and sued upon, and which may even be declared void ab initio. Accordingly, although it may well appear that the Supreme Court has jurisdiction in the matter of the specific performance of the contract, it is essential to ensure that questions arising in this Court be decided before that jurisdiction is exercised.

In conclusion I would refer to the observations of Bowen C.J. in Hughes Motor Service Pty. Ltd. v. Wang Computer Pty. Ltd. (1978) 35 F.L.R. 346 at p.353, namely,
"In my opinion there are many matters to be considered in exercising this Court's discretion besides weighing the advantage to the plaintiff against the disadvantage to the defendant. Some might be comprised in the principle of forum non conveniens if that were adopted. This would involve consideration of circumstances relating to the witnesses. In cases where, as in the present case, many of the issues of fact and the relief claimed were the same, it would involve consideration of the fact that the work done on pleadings, particulars, discovery, interrogatories and preparation generally might be found, when the hearing of the second case came on, to have been wholly or partly thrown away. This would be due to the creation of an issue estoppel in respect of the making of the representations and their falsity (Blair v. Curran (1939) 62 C.L.R. 464 at pp.531-532 and Brewer v. Brewer (1953) 88 C.L.R. 1, at p.14 et seq. cf. 'The Collateral Estoppel Effect of Prior State Court Findings in Cases within Exclusive Federal Jurisdiction' (1978) 91 Harvard Law Review p.1281) and to the fact that the Hire Car Group, if they were successful against Wang, could not recover the same damages twice (cf. Hills v. Co-operative Wholesale Society Ltd. (1940) 2 K.B. 435, at pp.438-440). In addition, the court might have to consider other matters. Thus in some sense the public interest may be involved in deciding whether two cases claiming the same damages and involving substantial issues of fact, which are the same in each case, should be allowed to proceed simultaneously in the State and federal systems of justice. This would certainly open the way to tactical manoeuvres in which the appearance might well be presented to the public of two court systems competing to see who determined the common facts first. It would be unfortunate if we adopted practices and procedures which facilitated this. In MacShannon v. Rockware Glass Ltd. (1978) 2 W.L.R. 362 Lord Diplock thought it relevant to consider the substantial waste of time and effort if it became a common practice to bring in England actions arising out of industrial injuries in Scotland when the matters were referred by trade unions to English solicitors for them."
I would add that in cases, such as the present, where the exercise of the jurisdiction of this Court may go to the basic question as to what contract, if any, is to be performed the desirability of disposing of that matter promptly is manifest.