FEDERAL COURT OF AUSTRALIA

Corrimal Holdings Pty Ltd v Lissadel Holdings Pty Ltd [2003] FCA 213

PRACTICE AND PROCEDURE - transfer of proceedings to the District Court of New South Wales on Court's own motion – where amount claimed is within jurisdiction of District Court.         

Trade Practices Act 1974 (Cth), s 86A

Nelson v Fernwood Fitness Centre Pty Ltd [1999] FCA 802 applied

CORRIMAL HOLDINGS PTY LTD & PHILLIP PATRICK HART & KAREN LESLIE HART v LISSADEL HOLDINGS PTY LTD & DEREK EBBS

N 1401 of 2002

MOORE J

SYDNEY

19 MARCH 2003

THE COURT ORDERS THAT:

1.                  The matter be transferred to the District Court of New South Wales.

2.                  Costs in the Federal Court be costs in the cause. 

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

REASONS FOR TRANSFER

1                     This application is a claim for relief under s 82 (and initially also s 87) of the Trade Practices Act 1974 (Cth) (“the Act”).  The following emerges from the applicants’ case as pleaded.  The second and third applicants were, at all material times, directors of the first applicant.  The first respondent is a company, and the second respondent a director of it.  The respondents owned and operated three Snap Printing businesses: Snap Printing Milsons Point (“the Milsons Point business”), Snap Printing Burwood (“the Burwood business”), and Snap Printing Bathurst Street Sydney (“the Bathurst Street business”).

2                     The first applicant entered into negotiations to purchase the Milsons Point business.  These negotiations were conducted by the second applicant and the second respondent.  During these negotiations, the respondents were negotiating to sell the Burwood business and the Bathurst Street business to an employee of the first respondent, Mr Chan. 

3                     It is alleged that during the negotiations regarding the Milsons Point business, the respondents made a number of misrepresentations regarding that business, including representations regarding gross sales over a number of different time periods, the nature of the management of the business (specifically, its independence in relation to the Bathurst Street and Burwood businesses and the role of the employees), and the role of the customer service representative.  In addition, it is alleged that the first respondent knew or ought to have known that the primary customer of the Milsons Point business had a relationship Mr Chan and were likely to move their business to one of his businesses.

4                     The first applicant purchased the Milsons Point business, with the second and third applicants taking out a mortgage over a property, entering into a guarantee agreement with Westpac, and advancing money to the first applicant to facilitate the operation of the business.  The second applicant resigned his job at an insurance company to focus on the venture. 

5                     The application seeks damages under s 82 of the Act.  The first applicant is claiming loss of profit, costs concerning the sale contract, payments made to the franchisor, and rental payments under the acquired lease.  The second and third applicants are claiming damages for contingent liability to Westpac, loss of monthly salary for the second applicant and monies advanced to the first applicant.  At a directions hearing on 11 March 2003, counsel for the applicants estimated total damages claimed as being in the range of $550,000 to $650,000.  Any claim for relief under s87 was effectively abandoned at that directions hearing. 

6                     Section 86A of the Trade Practices Act 1974 (Cth), confers power on the Federal Court to transfer proceedings to the District Court of New South Wales by its own motion.  In Nelson v Fernwood Fitness Centre Pty Ltd [1999] FCA 802, Madgwick J said:

There is power in this Court under s 86A of the Trade Practices Act (Cth) 1974 ("TPA") to transfer all matters for determination in these proceedings to the District Court, if it is in the interests of justice to do so.

Having regard to the speed with which matters are ready for hearing in the District Court, to the likely size of any award of damages, and to the nature of the issues, it seems to me that it is in the interests of justice to transfer all of the matters in these proceedings.  Further, the case appears to raise no issue of principle as to the meaning or application of the TPA.  The causes of action appear to be variously based on Parts IVA and V of that Act, which are relatively well settled areas of law, as well as on breach of contract, negligence and alleged factual misrepresentations.  These factors incline me to order the transfer.

The only question remaining pertains to the application of the statutory prohibition in s 86A(2) of the TPA against transferring such matters unless the (State) Court "has power to grant the remedies sought before the Federal Court in the matter". The only remedy suggested, before I raised the question whether this case should be transferred to the District Court, was an award of damages.  It is now belatedly said that it is "possible" that the applicants, "if successful", will seek other forms of relief under s 87 of the TPA.  Experience of such cases suggests that even if liability be established, it is uncommon for all claimed losses to be reflected in an award of damages. 

7                     Counsel for both the applicants and the respondents indicated a preference for the matter to remain in the Federal Court, however they made no submissions of substance as to why the matter should not be transferred. 

8                     This matter will fall within the jurisdictional limits of the District Court.  There appears to be no novel issues of law to be determined.  In my opinion, it is in the interest of justice that the matter be transferred essentially for the same reasons given by Madgwick J in the passage just quoted.  I therefore transfer the matter to the District Court of New South Wales.

Associate:

Dated:              19 March 2003