V Rent Pty Limited v Video Ezy International Pty Limited [2000] FCA 879 (30 June 2000)

Last Updated: 30 June 2000

FEDERAL COURT OF AUSTRALIA

V Rent Pty Limited v Video Ezy International Pty Limited [2000] FCA 879

PRACTICE & PROCEDURE - transfer of proceedings to the District Court of New South Wales pursuant to s 86A of the Trade Practices Act 1974 (Cth) - delay by applicants in prosecuting the proceedings - whether "in the interests of justice" to order transfer

Trade Practices Act 1974 (Cth) s 86A

Wall v SBA Foods Pty Limited [1999] FCA 1831 followed

V RENT PTY LIMITED (ACN 082 609 201), IAN MURRAY BOSWELL AND BRUCE STEVENSON BISSETT v VIDEO EZY INTERNATIONAL PTY LIMITED (ACN 003 532 269), PETER JOHN CONRIDGE, KERIN ELIZABETH HARRINGTON, GAYLE HARRINGTON, BRONWYN HOOPER-DOAK, JEFFREY RONALD HARRINGTON & KEITH WILLIAM WHITTAKER, JOHN OGILVIE AND FOBOPO PTY LIMITED (ACN 003 551 335)

N 808 OF 1999

MOORE J

30 JUNE 2000

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 808 OF 1999
BETWEEN:	V RENT PTY LIMITED (ACN 082 609 201) FIRST APPLICANT IAN MURRAY BOSWELL SECOND APPLICANT BRUCE STEVENSON BISSETT THIRD APPLICANT
AND:	VIDEO EZY INTERNATIONAL PTY LIMITED (ACN 003 532 269) FIRST RESPONDENT PETER JOHN CONRIDGE SECOND RESPONDENT KERIN ELIZABETH HARRINGTON, GAYLE HARRINGTON, BRONWYN HOOPER-DOAK, JEFFREY RONALD HARRINGTON & KEITH WILLIAM WHITTAKER THIRD RESPONDENT JOHN OGILVIE FOURTH RESPONDENT FOBOPO PTY LIMITED (ACN 003 551 335) FIFTH RESPONDENT
JUDGE:	MOORE J
DATE OF ORDER:	30 JUNE 2000
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The proceedings being N 808 of 1999 in the Federal Court of Australia are transferred to the District Court of New South Wales.

2. Subject to order 3, costs in this Court be costs in the cause.

3. The applicants pay the respondents' costs of the directions hearings of 6 March 2000 and 2 May 2000.

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

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 808 OF 1999

BETWEEN:	V RENT PTY LIMITED (ACN 082 609 201) FIRST APPLICANT IAN MURRAY BOSWELL SECOND APPLICANT BRUCE STEVENSON BISSETT THIRD APPLICANT
AND:	VIDEO EZY INTERNATIONAL PTY LIMITED (ACN 003 532 269) FIRST RESPONDENT PETER JOHN CONRIDGE SECOND RESPONDENT KERIN ELIZABETH HARRINGTON, GAYLE HARRINGTON, BRONWYN HOOPER-DOAK, JEFFREY RONALD HARRINGTON & KEITH WILLIAM WHITTAKER THIRD RESPONDENT JOHN OGILVIE FOURTH RESPONDENT FOBOPO PTY LIMITED (ACN 003 551 335) FIFTH RESPONDENT

JUDGE:	MOORE J
DATE:	30 JUNE 2000
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1 These proceedings concern an application under ss 80, 82 and 87 of the Trade Practices Act 1974 (Cth) ("the Act") filed on 18 August 1999. An amended application and amended statement of claim were filed with leave of Court on 3 May 2000. In that amended application the applicants seek damages, declaratory relief and other orders relating to a video store franchise agreement between them and certain of the respondents. The parties to the application are described in the statement of claim as follows. The second applicant, Ian Murray Boswell ("Boswell") is a director and shareholder of the first applicant, V Rent Pty Limited ("V Rent"), which is the franchisee of the relevant video store, Video Ezy Auburn ("the video store"). The third applicant, Bruce Stevenson Bissett ("Bissett") is a shareholder of V Rent and the business partner of Boswell. The first respondent, Video Ezy International Pty Limited ("Video Ezy International"), is the franchisor of all Video Ezy video rental stores including Video Ezy Auburn. The fourth respondent, John Ogilvie ("Ogilvie"), is a director and shareholder of the fifth respondent, Fobopo Pty Limited ("Fobopo") and the national franchise manager of Video Ezy International, responsible for the sale of Video Ezy International's stores. The third respondents, named in the statement of claim as "the Harrington group", are described as a group that owned Video Ezy franchises in Western Australia and New South Wales and who upgraded and sold Video Ezy franchises on behalf of Video Ezy International. The Harrington group, jointly with the second respondent Peter John Conridge ("Conridge"), was the vendor for the sale of Video Ezy Auburn to the applicants. The applicants contend that certain representations made by the respondents (and certain matters not disclosed by them), relevant to the applicant's decision to acquire the franchise, constituted misleading and deceptive conduct within the meaning of the Act. The application is alternately pleaded as a claim for damages under the Fair Trading Act 1987 (NSW) and for damages at common law for breach of contract.

2 The immediate issue before the Court is the question of whether this matter ought to be transferred from the Federal Court ("the Court"), on the Court's motion, to the District Court of New South Wales ("the District Court"). Section 86A of the Act enables the Court, of its own motion, to transfer to the District Court a "matter for determination in the proceedings" arising, inter alia, under Part V of the Act. The power conferred by s 86A also enables, subject to the other requirements of that section, the whole of any proceedings to be transferred to the other court: see Ryan J in Wall v SBA Foods Pty Ltd [1999] FCA 1831. An order transferring proceedings should not be made unless the other court has power to grant the remedies sought before the Federal Court and it appears to the Court, relevantly, that it is in the interests of justice that the matter be determined by the other court.

3 There have been a series of directions hearings in this matter culminating in a hearing on 22 May 2000 where I invited submissions on why I should not make an order transferring the matter to the District Court. My reasons for doing this included an impression I held from the outset that the proceeding might be of a character appropriate to be heard in the District Court.

4 I first raised the issue of transfer at the first directions hearing on 23 September 1999. It was addressed briefly by the then parties at the second directions hearing on 29 October 1999. It was then agreed that if in due course I was entertaining making an order for transfer, the parties would be invited to make submissions on the question. It was also agreed that, pro tem, the proceedings would be case-managed in the Court. The then parties' position on the question of transfer was, in substance, the opposite of the position taken by them at the hearing on 22 May 2000. On 29 October 1999, counsel then appearing for the applicants submitted that the matter should remain in the Court. He described the proceeding as a "true trade practices claim" and noted that it had much in common with franchise representation cases previously heard in the Court. Counsel for the first respondent took the opposite view. He submitted that there was no particular reason why the matter should remain in the Court and characterised the matter as a standard misrepresentation case in relation to the acquisition of a business. Counsel then appearing for the second and third respondents agreed with that latter position. A varied timetable was then agreed providing for request for particulars, the filing and serving of defences and defences to cross-claims, and notification by each party of proposed categories of documents for discovery. It was necessary to provide for a varied timetable because directions given at the first directions hearing had not been complied with fully. The directions given on 29 October 1999 were also not complied with fully.

5 The matter next came before the Court for directions on 1 December 1999. On that occasion the question of transfer was again adverted to during the hearing. Orders were made by consent requiring the applicants to provide answers to the first respondent's particulars, service by each party of a schedule of documents to be discovered, and the filing and serving of a verified list of documents in accordance with the schedule of documents by 18 February 2000. By this stage of the proceedings Ogilvie and Fobopo had been joined as third and fourth cross-respondents and Video Ezy International, V Rent and Boswell became the cross-claimant, first cross-respondent and second cross-respondent respectively.

6 At directions on 6 March 2000 it was apparent the earlier directions had again not been complied with fully. On that occasion the applicants sought orders that they be allowed to serve an amended statement of claim on each of the respondents and cross-respondents by 27 March 2000, joining Bissett as third applicant and Ogilvie and Fobopo respectively as fourth and fifth respondents. The orders also provided that each respondent indicate whether they consented to the filing of the amended statement of claim by 10 April 2000. Other orders made on that occasion required the applicants and first respondent, and the applicants and second and third respondents to agree on categories of documents for discovery, the filing and serving of verified lists of documents and inspection by the applicants of the documents discovered. The timetable provided for all of these steps to be completed by 24 April 2000 and the matter was listed for further directions on 2 May 2000.

7 At directions on 2 May 2000 it was again apparent that the applicants had not complied with the directions given at the previous directions hearing. In particular, directions concerning the filing of amended pleadings had not been complied with. Leave was granted to the applicants to file and serve an amended application and amended statement of claim by 9 May 2000. It was on this occasion that the hearing on the question of transfer was set down for 22 May 2000.

8 At the hearing on 22 May 2000, counsel for the applicants informed the Court that the applicants neither consented to nor opposed an order for transfer. The principal submission put on behalf of the applicants was that if the Court were minded to transfer the proceedings, the applicants would seek order that the costs of the parties in this Court should be costs in the cause. Reference was also made to aspects of the power to transfer as contained in s 86A of the Act. On the issue of whether it is in the interests of justice to transfer the proceedings, counsel for the applicants noted that the claims for loss and damage are within the limit of the non-consensual jurisdiction of the District Court (less than $750,000) and, from the applicants' perspective, no significant evidentiary or forensic advantage would be gained or lost if the matter were transferred to that court. Additionally, counsel observed, the District Court has power to order damages under s 82 and to grant the requisite statutory remedies under s 87 of the Act where, as is the case in this proceeding, the principal relief sought is an amount of money: see Madgwick J in Nelson v Fernwood Fitness Centre Pty Ltd [1999] FCA 802, referring to Pelechowski v Registrar, Court of Appeal [1999] HCA 19; (1999) 162 ALR 336.

9 Counsel for the applicants submitted that factors relevant to the exercise of the Court's discretion on the question of transfer included the delay and costs thrown away in the present proceedings as a result of their transfer to the District Court. The applicants further submitted, however, that the proceedings in this Court are not so far advanced to preclude any prejudice being cured by a direction that costs incurred in this Court be costs in the cause. This was the approach taken by Ryan J in Wall v SBA Foods Pty Ltd (supra).

10 Counsel for the first respondent opposed the transfer of the matter. He submitted in support of this position that the proceeding was a "classical section 52 case", primary jurisdiction for which has always resided in the Court. Additionally, counsel submitted, the proceeding against the first respondent involves a significant amount of money (approximately $300,000 plus interest). Although clearly within the jurisdictional limit of the District Court, it is a claim for a significant amount of money which ought to be determined in this Court. Counsel also submitted that procedural and practical injustice would be borne by the first respondent if the matter were transferred, as the litigation had been on foot in the Court for many months and had been conducted in a reasonably dilatory fashion by the applicants. It was the first respondent's submission that this injustice could only be partially cured by an order for costs. If the matter were transferred to the District Court the dilatory manner in which the applicants had conducted the proceeding in this Court would merely be a matter of history. The applicants would, counsel submitted, have a "clean slate" in the District Court, and the respondents' ability to take issue with the history of delay in this Court would be lost. Furthermore, delay would be incurred in the District Court while the matter was, effectively, recommenced. By contrast, it was submitted, this Court was in the best position to force the applicants to prosecute the application with expedition or make some appropriate order against them if they continued to conduct the proceeding in the dilatory manner they had to this point. Both counsel for the second and third respondents and counsel for the fourth and fifth respondent joined with counsel for the first respondent in these submissions.

11 Counsel for the first respondent submitted that if, in the result, I decided to order the transfer of the proceeding, I should not order (as invited to by the applicants) that the costs in this Court be costs in the cause. Counsel submitted that the costs of the proceedings should be costs in the cause except the costs of the directions hearings on 2 May 2000 and 6 March 2000, in relation to which it should be ordered that the applicants pay the respondents' costs.

12 As already noted, the District Court has the power to hear and determine the subject matter of this proceeding and to grant the relief sought. Despite the submissions of counsel for the first respondent, I am not convinced that there is any particular feature of the proceeding that it renders it either necessary or desirable that it be heard in this Court. The amount of damages sought is, relatively speaking, not a significant sum. The character of the proceeding appears to be an unexceptional s 52 claim coupled with contractual claims turning on the facts only (or principally) and raising no questions of principle. Any legal issues that might arise presently appear to concern the construction of the agreement, which is a matter raised in the Court's accrued jurisdiction. Similar factors to these formed the basis of orders for transfer made by Madgwick J in Nelson v Fernwood Fitness Centre (supra) and Ryan J in Wall v SBA Foods (supra). In my view, the only remaining issue is whether it is in the "interests of justice" to transfer the matter to the District Court.

13 The term "the interests of justice" in s 86A of the Act comprehends not only the interests of the immediate parties but the interests of litigants in the Court and the justice system generally. There is a class of matters that must, by statute, be dealt with by this Court. There is also a class of matters which, because of their special features, might be seen as more appropriately dealt with by this Court. It cannot be assumed that it is in the interests of justice for cases that do not fall into either class to be heard by this Court if applicants who, having chosen this Court as their forum, do not prosecute their application diligently. The power conferred to the Court by s 86A recognises that the Court might not hear and determine matters that can be effectively dealt with in another forum. No compelling reason has been put forward that convinces me this proceeding does not fall into this latter category. Moreover the fact that the proceeding was commenced in this Court is of limited relevance. As Ryan J observed in Wall v SBA Foods (supra) at par 18 (referring to his earlier reasons in Overall v Permanent Trustee Co Ltd [1999] FCA 1385):

"I doubt, with respect, that there is any prima facie force in the applicant's choice of forum which a respondent has the onus of overcoming by demonstrating some overriding objective factor. The existence of such a prima facie force was suggested by Wilcox J in Bourke v State Bank of New South Wales (1988) 22 FCR 378. However, Rogers J in Seymour Smith v Electricity Trust of South Australia (1989) 97 FLR 160, after referring to the observations of Wilcox J in Bourke, said, at 174:

`With respect, I do not accept there is any weight to be ascribed to the fact that the court may be overriding the plaintiffs' choice of venue. The court is, in my view, required to carry out a balancing exercise to determine the appropriate court.'"

In my view, no question of onus arises in cases of this kind.

14 As previously observed, any practical injustice to the parties arising from transfer can be adequately cured by an order that costs be costs in the cause (with the qualifications discussed below). The history of this matter in this Court will not be lost and, I trust, is sufficiently revealed by these reasons. I am satisfied that it is in the interests of justice that the matter be determined by the District Court. I propose to order that the proceeding be transferred to the District Court of New South Wales and that costs be costs in the cause, with the exception that the applicants' pay the respondents' costs of the directions hearings on 6 March 2000 and 2 May 2000. I so order.

15 My reasons for making the costs order in these terms are as follows. As noted earlier, it was clear at the directions hearing on 2 May 2000 that the timetable then in place had not been complied with because the applicants had not finalised their amended pleadings. On that occasion I reserved on the question of costs. The directions earlier given on 6 March 2000 resulted in a timetable that effectively duplicated steps in the timetable arising from the directions hearing on 1 December 1999. This was a result of the applicants' failure to complete the steps required in that timetable. I therefore accept the submission of counsel for the first respondent that it is appropriate the applicants pay the respondents' costs of the directions hearings on both 6 March 2000 and 2 May 2000.

I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore.

Associate:

Dated: 30 June 2000

Counsel for the applicants:	Mr A J McInerney
Solicitor for the applicants:	O'Connor Filewood
Counsel for the first respondent:	Mr F Kunc
Solicitor for the first respondent:	William Vernon Howes, Solicitor
Counsel for the second & third respondents:	Mr J B Simpkins
Solicitor for the second & third respondents:	G J Byles & Associates
Solicitor for the fourth & fifth respondents:	M Freidman, Freidman Reeves Solicitors
Date of Hearing	22 May 2000
Date of Judgment:	30 June 2000