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Nathan v Capital Finance Australia [2008] FCA 459 (8 April 2008)

Last Updated: 11 April 2008

FEDERAL COURT OF AUSTRALIA

Nathan v Capital Finance Australia [2008] FCA 459

TRADE PRACTICES – appeal from decision of a Federal Magistrate - misleading and deceptive conduct – harassment and coercion – whether appellant denied natural justice – whether Federal Magistrate failed to give proper effect to ss 52 and 60 of the Trade Practices Act 1974 (Cth)
Held: appeal dismissed – no error of law

Trade Practices Act 1974 (Cth) ss 52 and 60
Bankruptcy Act 1966 (Cth)

Nathan v Capital Finance Australian Ltd [2007] FMCA 1503, affirmed
Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12; (2004) 202 CLR 45, explained
Fox v Percy [2003] HCA 22; (2003) 214 CLR 118, applied
O’Sullivan v Parkin [2007] FCAFC 98, considered

KAILAI NATHAN v CAPITAL FINANCE AUSTRALIA LTD (ACN 069 663 136)

VID 871 OF 2007

MARSHALL J
8 APRIL 2008
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 871 OF 2007

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

BETWEEN:	KAILAI NATHAN Appellant
AND:	CAPITAL FINANCE AUSTRALIA LTD (ACN 069 663 136) Respondent

JUDGE:	MARSHALL J
DATE OF ORDER:	8 APRIL 2008
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1. The appeal is dismissed.
2. The appellant pay the respondent’s costs of the appeal.

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

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 871 OF 2007

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

BETWEEN:	KAILAI NATHANAppellant
AND:	CAPITAL FINANCE AUSTRALIA LTD (ACN 069 663 136)Respondent

JUDGE:	MARSHALL J
DATE:	8 APRIL 2008
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1 The appellant, Mr Kailai Nathan, appeals from a judgment of Burchardt FM, in which his Honour dismissed Mr Nathan’s claims concerning alleged contraventions of ss 52 and 60 of the Trade Practices Act 1974 (Cth) ("the Act"); see Nathan v Capital Finance Australia Ltd [2007] FMCA 1503. Mr Nathan’s amended statement of claim in the proceeding below traversed many issues, however his Honour struck out all aspects of it other than those concerning ss 52 and 60 of the Act. In his reasons for judgment, Burchardt FM said at [10]: "I did ... make it clear that the trial would be restricted to the issues involving alleged contraventions of s 52 and s 60 of the Act." The aspects of the amended statement of claim dealing with other issues were the subject of interlocutory decisions of the primary judge in respect of which Mr Nathan did not seek leave to appeal.

Section 52

2 The events the subject of the claim under s 52 of the Act occurred in May 2001. Mr Nathan’s case was essentially as follows:
• on 24 May 2001 he visited the premises of James Lane Motors in Coburg;
• at that time he was employed as a casual psychiatric nurse by a nursing agency;
• he spoke to a Mr Gavin Fernandez at James Lane Motors about purchasing a motor vehicle;
• on 28 May 2001, he returned to James Lane Motors and spoke to a Mr Cameron McCredie; and
• Mr McCredie told him that the loan arrangement for the purchase of the vehicle included "loan protection cover" for the monthly payments.
3 The respondent’s case on the s 52 issue was essentially as follows:
• Mr Nathan might be confused about loan protection insurance on the car because he had taken out a personal loan with the respondent in September 2001 which included a sickness, accidental injury or involuntary unemployment insurance policy, as part of that personal loan;
• no such loan protection cover was included in the car loan or any representation made to that effect;
• it is not possible to obtain such insurance cover in favour of a debtor; and
• if such a representation was made by Mr McCredie, he was not authorised to do so by the respondent.
4 His Honour noted at [53] of his reasons for judgment that Mr Nathan did not ask Mr McCredie whether he made the relevant representation. This appears to be technically incorrect as Mr Nathan asked Mr McCredie about whether he said to Mr Nathan that the monthly repayment provided comprehensive and loan insurance. Mr McCredie said he did not recall. However, Mr Nathan did not put squarely to Mr McCredie that he said, in May 2001, that there was such loan insurance included in the policy. I think that is the context in which his Honour was critical of Mr Nathan in his questioning of Mr McCredie. Further, the primary judge said at [57]:

It should also be noted that there is no reference to loan protection insurance in the documentation that relates to the loan that enabled Mr Nathan to buy the car.

His Honour referred to a personal loan contract made between Mr Nathan and the respondent, in September 2001, which was distinct from the car loan and did include a loan insurance element.

5 The Federal Magistrate conceded the possibility that an over-zealous salesman may have made such a representation to secure a car sale. However, his Honour said at [60]: "... I do not believe for one moment that Mr McCredie made any such representation." Further, Burchardt FM said at [62] that it defied "commonsense" and "obvious reality" to suggest that the representation would be made. His Honour said at [67]:

The prospect of insurance of the sort described is radically unsound, giving, as it would, to Mr Nathan the option of ceasing payments after, say, one month, or possibly even without making any payments at all, and then having an insurer immediately reimburse and discharge all of his hire purchase obligations in full.

6 The extraordinary nature of the alleged representation creates further difficulty for Mr Nathan. It is well understood that in cases where a class of person is claimed to have been misled or deceived that an assessment of the reactions of the ‘ordinary’ or ‘reasonable’ members of a class is required and that "the court may well decline to regard as controlling the application of s 52 those assumptions by persons whose reactions are extreme or fanciful"; see Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12; (2004) 202 CLR 45 at 86 per Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ. Where a particular individual, rather than a class of persons, is said to have been misled or deceived it is also appropriate to consider the assumptions of that individual as to the meaning of a representation and whether that meaning or interpretation can be said to be reasonable in the circumstances. It is fanciful for Mr Nathan to believe that the alleged statement by Mr McCredie regarding loan protection would absolve him from liability for payment of the loan in default. Even if a representation had been made to Mr Nathan, which is not borne out by the evidence, there is doubt in my mind whether Mr Nathan’s assumptions about its meaning fall within the protection of s 52.
7 In considering whether any such representation had been made, his Honour also took into account that he accepted Mr McCredie as a witness of the truth but considered Mr Nathan "a very unimpressive witness" who told lies to the respondent about being in the movie business in order to secure the loan that enabled him to purchase the vehicle.
8 His Honour said at [66]:

...I am comfortably satisfied that Mr Nathan has not discharged the burden of proof upon him to establish that the representation for which he contends was made. Indeed I am positively certain that no such representation was made.

9 The primary judge said at [67]:

It therefore follows that the s 52 claim must fail. Mr Nathan was not induced to take out the loan with the Respondent that he took out on the basis of a representation made by Mr McCredie because no such representation was ever made, by him or by anyone else, for or on behalf of the Respondent.

10 His Honour did not find it necessary to deal with the issue whether Mr McCredie was authorised, in any event, to make such a representation on behalf of the respondent.
11 Those findings of fact, referred to above, on the s 52 issue were strong and decisive ones, aided by the primary judge’s observations of the evidence given by Mr Nathan and by Mr McCredie. Grounds one, three and seven of the notice of appeal dealing with the s 52 issue challenge certain findings of fact made by the primary judge. Those findings include his Honour’s categorisation of Mr Nathan as an unimpressive witness with a propensity not to tell the truth. Those are not matters on which this Court is any better placed than the court below to assess, nor is a review of the factual findings the Federal Magistrate made a proper exercise of the appellate jurisdiction of this Court; see Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 at 125-126 per Gleeson CJ, Gummow and Kirby JJ.
12 The only substantive legal challenge to the s 52 aspect of the case as dealt with below is the allegation in ground two of the notice of appeal that Mr Nathan was denied natural justice by his Honour’s alleged failure to give proper effect to s 52. That ground is related to ground eight which alleges that the primary judge failed to consider whether the alleged representation induced Mr Nathan into error. Those grounds are untenable. Section 52 precludes a corporation, in trade or commerce, from engaging in conduct that is misleading or deceptive or is likely to mislead or deceive. His Honour found that no such conduct occurred. That finding was open to him on the evidence before him. No appealable error has been identified on this aspect of the appeal.

Section 60

13 Ground five of the notice of appeal contains the allegation that the primary judge erred in his approach to the allegations of harassment and coercion made under s 60 of the Act.
14 Section 60 of the Act provides:

A corporation shall not use physical force or undue harassment or coercion in connection with the supply or possible supply of goods or services to a consumer or the payment for goods or services by a consumer.

15 On the topic of the alleged breach of s 60 by the respondent, the primary judge said at [69]:

It only remains now to deal with the issue of harassment asserted by Mr Nathan. The endeavours made by the Respondent to repossess the car and to otherwise pursue legal avenues against Mr Nathan were all, in my view, entirely reasonable and do not begin to approach what might be said to be harassment within the meaning of s 60 of the Act.

16 Mr Nathan submitted that there was an implied warranty in the sale agreement to enjoy quiet possession of the vehicle for the duration of the agreement. He claimed that legal action commenced against him by the respondent designed to repossess the vehicle and to bankrupt him amounted to harassment. As did the Federal Magistrate, I disagree with that submission. In attempting to repossess the vehicle and take action under the Bankruptcy Act 1966 (Cth), the respondent was doing no more than asserting its legal rights. There was no implied warranty to enjoy quiet possession of a vehicle in respect of which payments were not made as required under the agreement.

Disposition

17 When the primary judge published his reasons for judgment on 10 September 2007 he did not make any orders. The current appeal was, to that extent, premature; see O’Sullivan v Parkin [2007] FCAFC 98. No orders were made until 18 September 2007 when his Honour dismissed the application and ordered costs against Mr Nathan on an indemnity basis.
18 Mr Nathan has not sought to appeal from the judgment which contained the operative orders in respect of which he seeks relief. However, despite this, I have dealt with his appeal as if the judgment of 10 September 2007 contained an order dismissing his application. This is the most practical commonsense way of dealing with the controversy between the parties, especially as Mr Nathan does not have the benefit of legal representation.
19 It is also necessary to deal with the remaining grounds of appeal enumerated in Mr Nathan’s notice of appeal. Ground four contains a new allegation of bias against the primary judge and has not been substantiated by Mr Nathan. The allegation concerned a disclosure made by his Honour of a shareholding in the parent company of the respondent. Mr Nathan conceded that he did not raise any issue of bias at the time his Honour made the disclosure and therefore acquiesced in his Honour hearing the application. However, Mr Nathan referred in his oral submissions today to comments made in transcript by the Federal Magistrate at an interlocutory hearing. Those comments showed that the Federal Magistrate was keen to bring the proceeding to finality. That does not mean that he was biased in any way against Mr Nathan or that there exists any basis for a reasonable apprehension of bias against his Honour.
20 Ground six is: "Did the learned Federal Magistrate err in law in assuming the terms of the Loan Protection insurance in the absence of the policy itself...". This ground is based on an incorrect premise that the primary judge assumed the terms of an agreement when it was proved that no such agreement existed. That ground also fails.
21 The Court will order as follows:
1. The appeal is dismissed.
2. The appellant pay the respondent’s costs of the appeal.

I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall.

Associate:

Dated: 8 April 2008

The Appellant appeared in person.


Counsel for the Respondent:	Ms G Gray

Solicitor for the Respondent:	Bartier Perry

Date of Hearing:	8 April 2008

Date of Judgment:	8 April 2008

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1.	The appeal is dismissed.
2.	The appellant pay the respondent’s costs of the appeal.

2	The events the subject of the claim under s 52 of the Act occurred in May 2001. Mr Nathan’s case was essentially as follows:
•	on 24 May 2001 he visited the premises of James Lane Motors in Coburg;
•	at that time he was employed as a casual psychiatric nurse by a nursing agency;
•	he spoke to a Mr Gavin Fernandez at James Lane Motors about purchasing a motor vehicle;
•	on 28 May 2001, he returned to James Lane Motors and spoke to a Mr Cameron McCredie; and
•	Mr McCredie told him that the loan arrangement for the purchase of the vehicle included "loan protection cover" for the monthly payments.
3	The respondent’s case on the s 52 issue was essentially as follows:
•	Mr Nathan might be confused about loan protection insurance on the car because he had taken out a personal loan with the respondent in September 2001 which included a sickness, accidental injury or involuntary unemployment insurance policy, as part of that personal loan;
•	no such loan protection cover was included in the car loan or any representation made to that effect;
•	it is not possible to obtain such insurance cover in favour of a debtor; and
•	if such a representation was made by Mr McCredie, he was not authorised to do so by the respondent.
4	His Honour noted at [53] of his reasons for judgment that Mr Nathan did not ask Mr McCredie whether he made the relevant representation. This appears to be technically incorrect as Mr Nathan asked Mr McCredie about whether he said to Mr Nathan that the monthly repayment provided comprehensive and loan insurance. Mr McCredie said he did not recall. However, Mr Nathan did not put squarely to Mr McCredie that he said, in May 2001, that there was such loan insurance included in the policy. I think that is the context in which his Honour was critical of Mr Nathan in his questioning of Mr McCredie. Further, the primary judge said at [57]:

6	The extraordinary nature of the alleged representation creates further difficulty for Mr Nathan. It is well understood that in cases where a class of person is claimed to have been misled or deceived that an assessment of the reactions of the ‘ordinary’ or ‘reasonable’ members of a class is required and that "the court may well decline to regard as controlling the application of s 52 those assumptions by persons whose reactions are extreme or fanciful"; see Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12; (2004) 202 CLR 45 at 86 per Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ. Where a particular individual, rather than a class of persons, is said to have been misled or deceived it is also appropriate to consider the assumptions of that individual as to the meaning of a representation and whether that meaning or interpretation can be said to be reasonable in the circumstances. It is fanciful for Mr Nathan to believe that the alleged statement by Mr McCredie regarding loan protection would absolve him from liability for payment of the loan in default. Even if a representation had been made to Mr Nathan, which is not borne out by the evidence, there is doubt in my mind whether Mr Nathan’s assumptions about its meaning fall within the protection of s 52.
7	In considering whether any such representation had been made, his Honour also took into account that he accepted Mr McCredie as a witness of the truth but considered Mr Nathan "a very unimpressive witness" who told lies to the respondent about being in the movie business in order to secure the loan that enabled him to purchase the vehicle.
8	His Honour said at [66]:

10	His Honour did not find it necessary to deal with the issue whether Mr McCredie was authorised, in any event, to make such a representation on behalf of the respondent.
11	Those findings of fact, referred to above, on the s 52 issue were strong and decisive ones, aided by the primary judge’s observations of the evidence given by Mr Nathan and by Mr McCredie. Grounds one, three and seven of the notice of appeal dealing with the s 52 issue challenge certain findings of fact made by the primary judge. Those findings include his Honour’s categorisation of Mr Nathan as an unimpressive witness with a propensity not to tell the truth. Those are not matters on which this Court is any better placed than the court below to assess, nor is a review of the factual findings the Federal Magistrate made a proper exercise of the appellate jurisdiction of this Court; see Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 at 125-126 per Gleeson CJ, Gummow and Kirby JJ.
12	The only substantive legal challenge to the s 52 aspect of the case as dealt with below is the allegation in ground two of the notice of appeal that Mr Nathan was denied natural justice by his Honour’s alleged failure to give proper effect to s 52. That ground is related to ground eight which alleges that the primary judge failed to consider whether the alleged representation induced Mr Nathan into error. Those grounds are untenable. Section 52 precludes a corporation, in trade or commerce, from engaging in conduct that is misleading or deceptive or is likely to mislead or deceive. His Honour found that no such conduct occurred. That finding was open to him on the evidence before him. No appealable error has been identified on this aspect of the appeal.

13	Ground five of the notice of appeal contains the allegation that the primary judge erred in his approach to the allegations of harassment and coercion made under s 60 of the Act.
14	Section 60 of the Act provides:

17	When the primary judge published his reasons for judgment on 10 September 2007 he did not make any orders. The current appeal was, to that extent, premature; see O’Sullivan v Parkin [2007] FCAFC 98. No orders were made until 18 September 2007 when his Honour dismissed the application and ordered costs against Mr Nathan on an indemnity basis.
18	Mr Nathan has not sought to appeal from the judgment which contained the operative orders in respect of which he seeks relief. However, despite this, I have dealt with his appeal as if the judgment of 10 September 2007 contained an order dismissing his application. This is the most practical commonsense way of dealing with the controversy between the parties, especially as Mr Nathan does not have the benefit of legal representation.
19	It is also necessary to deal with the remaining grounds of appeal enumerated in Mr Nathan’s notice of appeal. Ground four contains a new allegation of bias against the primary judge and has not been substantiated by Mr Nathan. The allegation concerned a disclosure made by his Honour of a shareholding in the parent company of the respondent. Mr Nathan conceded that he did not raise any issue of bias at the time his Honour made the disclosure and therefore acquiesced in his Honour hearing the application. However, Mr Nathan referred in his oral submissions today to comments made in transcript by the Federal Magistrate at an interlocutory hearing. Those comments showed that the Federal Magistrate was keen to bring the proceeding to finality. That does not mean that he was biased in any way against Mr Nathan or that there exists any basis for a reasonable apprehension of bias against his Honour.
20	Ground six is: "Did the learned Federal Magistrate err in law in assuming the terms of the Loan Protection insurance in the absence of the policy itself...". This ground is based on an incorrect premise that the primary judge assumed the terms of an agreement when it was proved that no such agreement existed. That ground also fails.
21	The Court will order as follows:
1.	The appeal is dismissed.
2.	The appellant pay the respondent’s costs of the appeal.