Nova 96.9 Pty Ltd v Natvia Pty Ltd

1. [1]

   There are on foot, in the District Court, proceedings brought by the three Plaintiffs in these proceedings (District Court of NSW proceedings 2016/302220). Each of the three Plaintiffs is a subsidiary of Nova 96.9 Pty Ltd, a Sydney radio station, and I shall for present purposes refer to them collectively as “Nova”. Mr P. Doyle-Gray, of Counsel, appears for Nova.

2. [2]

   Nova has sued the Defendant, Natvia Pty Ltd (“Natvia”), a producer of artificial sweetener (see paragraph one of the Amended First Cross-Claim Statement of Cross-Claim filed in the District Court proceedings), in respect of fees said to be due pursuant to contracts entered into by Natvia and Nova for commercials aired on Nova radio. Mr N. Olson, of Counsel, appears for Natvia.

3. [3]

   Natvia accepts that it has not paid all of the money due pursuant to the advertising contracts, but it contends that the contracts were entered into as a result of misrepresentations made by Nova concerning the effectiveness of the radio advertising in respect of expected additional revenue. It also claims that the conversations and emails constitute a collateral contract to the effect of the representations. Nova disputes that any representations were made by it in connection with the advertising contracts.

4. [4]

   The District Court proceedings have been listed for a three-day hearing commencing on 19 September 2018.

5. [5]

   Natvia, through its lawyers, has claimed that the District Court has no jurisdiction to hear the matter: see the affidavit of Mr Benjamin Fry of 3 August 2018, pages 51-52.

6. [6]

   Nova does not accept that the District Court does not have jurisdiction, but it, by Summons filed on 3 August 2018, seeks the following relief:

7. [7]

   In support of its claim that the District Court does not have jurisdiction, Natvia relies on the decision of Parker J in The NTF Group Pty Ltd v PA Putney Finance Australia Pty Ltd [2017] NSWSC 1194, and a decision of Taylor SC DCJ in Sapphire Suite Pty Ltd v Bellini Lounge Pty Ltd [2018] NSWDC 160, in which his Honour followed NTF Group, finding it persuasive. In a further decision, Parramatta Operations TC Pty Ltd trading as APX Parramatta v Consulting Professional Engineers Pty Ltd trading as Consulting Professional Engineers Pty Ltd [2018] NSWDC 202, noting the agreement of the parties in that case that the District Court had no jurisdiction to hear the claim (a conclusion with which his Honour did not disagree), Taylor DCJ transferred the matter to the Local Court. His Honour described that case (at [1]) as:

8. [8]

   In an email sent on 6 August 2018, Natvia’s solicitor advised Nova’s solicitor that it consents to prayer one of the relief sought in the Summons and that it does not consent to subsequent prayers two and three: see page 9 of Mr Ashley del Corral’s Affidavit of 6 August 2018.

9. [9]

   Due to the imminent hearing in the District Court, the matter was commenced in the Equity Duty Judge List last Friday (3 August 2018) and listed before me as Duty Judge on Tuesday, 7 August 2018.

10. [10]

    I was informed by Mr Doyle-Gray that the issue of the jurisdiction of the District Court in commercial cases has started to assume considerable significance since NTF Group (supra) was decided. Parker J was cognisant of the very unfortunate consequences which would follow from his decision: see NTF Group at [46]. I have myself long ago drawn attention to the need for legislative attention to the question of District Court jurisdiction in civil matters: see Bushby v Dixon Holmes du Pont Pty Ltd [2010] NSWSC 234 at [34], a matter dealing with a narrower point and, particularly, ss 134-135 of the District Court Act 1973 (NSW) (“the DCA”).

11. [11]

    I should note that Counsel were in agreement that the proceedings are not proceedings within subdivision 2 of Division 8 of Part 3 of the DCA and, hence, that s 144 of the CPA, to which different considerations apply, is not relevant here: see Mahommed v Unicomb [2017] NSWCA 65 at [52] per Ward JA (with whom Macfarlan JA and McDougall J agreed).

12. [12]

    The position of Nova is a very unusual one because it has filed a Summons seeking to have the proceedings transferred to this Court pursuant to s 140 of the Civil Procedure Act 2005 (NSW) (“the CPA”), but seeks to persuade me that I should not grant the transfer sought by that Summons. Mr Olson made the point that there was a fundamental inconsistency in Nova’s position because it seeks to have the matter transferred to this Court pursuant to s 140 of the CPA ostensibly because of the jurisdictional problem but then have it transferred back to the District Court pursuant to s 146 of the CPA. Mr Olson contended that Nova could maintain in the District Court the argument advanced here since every Court has the power to determine whether or not it has jurisdiction: see Khatri v Price (1999) 95 FCR 287 at [15] per Katz J. I raised with Mr Doyle-Gray the possibility of Nova running the argument which he wished to advance in this Court in the District Court, but he contended that the course of action adopted by Nova was a cheaper, and more efficient, one. I also raised with him a concern as to the utility of the course he has adopted, since any decision of mine would not be binding on a District Court judge: see Keramaniakis v Wagstaff [2005] NSWDC 14 at [48]-[59]. Mr Doyle-Gray’s response was that, although not binding, my decision would be persuasive in the District Court.

13. [13]

    I set out the presently relevant terms of s 44 of the DCA, s 140, s 146 and s 149 of the CPA, s 53 of the Supreme Court Act 1970 (NSW) as at 2 February 1998 (“the SCA”) and Part 14 of the Supreme Court Rules 1970 (NSW) as at 2 February 1998 (“the SCR”), which are the provisions relevant to the question now before this Court:

14. [14]

    Notwithstanding the unusual aspect of the application and my concerns as to utility, I think I do need to address the issue raised by Nova. This is, as least in part, because I am of the view that this Court should not transfer matters to itself pursuant to s 140 of the CPA unless good reasons are advanced. That is to say, transfer is not merely a matter of consent between the parties; secondly, since Nova also seeks an order remitting the matter back to the District Court, this necessarily entails the same question of jurisdiction of the District Court.

15. [15]

    There is agreement between Counsel for the parties that, on the state of the authorities in this area, the District Court does not have jurisdiction to deal with Nova’s claim. This is because of the following matters:

    1. (1)

       The District Court only has the jurisdiction which is conferred on it expressly, or by necessary implication, by the DCA, or by other state or Commonwealth legislation: Pelechowski v Registrar, Court of Appeal (1999) 198 CLR 435 and Jago v District Court (NSW) (1989) 168 CLR 23.

    2. (2)

       Section 44 of the DCA confers jurisdiction to hear a particular type of civil proceedings, namely, and relevantly, proceedings which, had they been commenced in the Supreme Court of New South Wales, would have been assigned to the Common Law Division. There is also a monetary limit in most cases imposed in s 44(1)(ii) of the DCA (a figure of $750,000 at present).

    3. (3)

       The relevant date for determining whether or not a matter would have been assigned to the Common Law Division is 2 February 1998 – the provision having been held by the High Court not to be “ambulatory”: see Forsyth v Deputy Commissioner of Taxation (2007) 231 CLR 531.

    4. (4)

       The effect of s 53 of the SCA was to assign all matters to the Common Law Division unless by some Act or other specific rule a matter was assigned to another of the Divisions which at that time were in place.

    5. (5)

       If s 53(3E), coupled with SCR Rule 14.2(1), applies, then the matter is not one which would have been assigned to the Common Law Division.

    6. (6)

       The approach taken by Parker J in NTF Group was to ask whether the proceedings (a claim for equipment owned by the Plaintiff, an equipment hire company, and leased to the Defendant for the purposes of the Defendant’s business) were “proceedings arising out of a commercial transaction”. His Honour held that they clearly were. His Honour said:

    7. (7)

       In a later case, Sapphire Suite (supra), his Honour Taylor DCJ applied what Parker J had said in NTF Group (omitting footnotes):

16. [16]

    Mr Doyle-Gray contends, however, that the approach taken by Parker J and followed by Taylor DCJ does not pay due regard to the words of SCR Rule 14.2(1) and the orthodox approach to statutory interpretation. He accepts that in neither case was the Court taken to the argument he now advances, which he described as one of statutory interpretation.

17. [17]

    Mr Doyle-Gray’s argument, as I understand it, is structured as follows:

    1. (1)

       SCR Rule 14.2(1) has two parts, and:

    2. (2)

       The consequence, Mr Doyle-Gray submits, is that “commercial transactions” must be taken to mean something other than that which would fall within trade or commerce. Mr Doyle-Gray gave, as examples, an employment contract or an issue involving a negotiable instrument. I shall detail below why he gave those two examples.

    3. (3)

       A claim by a radio station for advertising fees, therefore, is, Mr Doyle-Gray submits, not a matter arising out of a commercial transaction, is a matter involving trade or commerce, but it is not a matter in which there is an issue of “importance in trade or commerce”.

    4. (4)

       Mr Doyle-Gray referred to what he called the orthodox approach to statutory interpretation found in what was said by O'Connor J in Attorney-General (NSW) v Brewery Employees Union (NSW) (1908) 6 CLR 469 at 531:

18. [18]

    Mr Doyle-Gray pointed out that “in trade or commerce” first came under scrutiny in the constitutional context in Huddart Parker Ltd v Commonwealth (1931) 44 CLR 492 and, as a relatively recent example of consideration of the words “in trade or commerce”, referred to the decision in Williams v Pisano [2015] NSWCA 177, per Emmett JA (with whom Bathurst CJ and McColl JA agreed on this point). In the latter decision, his Honour said at [36]-[37] (omitting footnotes):

19. [19]

    Although Mr Doyle-Gray described the phrase of “commercial transactions” as one not having a well-known or considered meaning, the phrase is one in common use in legislation and in the authorities. In Visy Industries USA Pty Ltd v Federal Commissioner of Taxation (2011) 284 ALR 455, Gordon J considered whether a Forward Exchange Contract was a commercial transaction or an adventure in the nature of trade entered into for the purpose of “making a profit”. Her Honour said:

20. [20]

    In NRMA Insurance Ltd v Flanagan [1982] 1 NSWLR 585, Hunt J (as his Honour then was), in discussing whether the proceedings before him should be entered into the Commercial List noted that the critical question was whether the issues that arose “arose out of an ordinary commercial transaction” and said (at p 591F-592A):

21. [21]

    I read SCR Rule 14.2(1)(b) as a recognition by the draftsman that there may be proceedings which are not commercial transactions but which nevertheless raise an issue of importance in trade or commerce. In Williams v Pisano (supra), the Court of Appeal held that a vendor of a residential home is not in normal circumstances acting in the course of a trade or business or in a business context (see [38]). It is possible that, even though proceedings may arise out of a sale of residential property, an issue might be raised which is of importance in trade or commerce. An example might be a claim by the purchaser that a corporate defendant on a sale of a residential property is empowered to execute the contract of sale without a resolution of the board. Whether an issue is one that has importance in trade or commerce for the purpose of SCR Rule 14.2(1)(b) involves a matter of judgment, but it is clear that the legislature recognised that there could be cases of that type. Thus, subparagraphs (a) and (b) are dealing with quite discrete and separate matters and I do not think that the interpretation of (a) is ‘governed’ or controlled by (b) as Mr Doyle-Gray contended.

22. [22]

    Mr Doyle-Gray referred to Firebird Global Master Fund II Ltd v Republic of Nauru (2015) 258 CLR 31, in which the High Court gave consideration to s 11 of the Foreign States Immunities Act 1985 (Cth) which provided that:

23. [23]

    As was noted in Firebird Global by French CJ and Kiefel J at [58] (with whom Gageler J agreed at [131]), there was no dispute that the foreign judgment obtained in Japan was based upon a commercial transaction, namely, the guarantee of bonds (issued by a Nauru statutory corporation) by the Republic of Nauru. The definition of “commercial transaction” in s 11(3) of the Foreign States Immunities Act 1985 (Cth) excludes contracts of employment and negotiable instruments. The consequence that Mr Doyle-Gray asserts on his proposed construction, namely, that SCR Rule 14.2(1)(a) deals with employment contracts and negotiable instruments itself highlights the artificiality of the approach for which he contends. Not only are these very narrowly confined, but an employment contract is something less likely, not more likely, to be viewed in ordinary parlance as a commercial transaction. I do not think the statutory exclusion in s 11(3) of the Foreign States Immunities Act 1985 (Cth) can assist Nova as to the meaning of commercial transactions in SCR Rule 14.2(1)(a).

24. [24]

    That proceedings on a negotiable instrument (at least where issued by one corporation to another) would normally be regarded as a commercial transaction, gains supports from Inland Revenue Commissioners v Rowntree & Co Ltd [1948] 1 All ER 482 at 486, Tucker LJ (with whom Somervell LJ agreed) said of the words, “borrow” and “lend”:

25. [25]

    Three further examples of the use of the phrase “commercial transactions” in addition to Firebird Global, Flanagan and Rowntree (supra) are Morley v Richardson (1942) 65 CLR 512 at 519 per Starke J, where wheat purchase contracts were described as “ordinary commercial transactions”; Commonwealth v Huon Channel & Peninsula Steamship Co Ltd (1918) 24 CLR 385 at 394 per Barton J:

26. [26]

    As Mr Doyle-Gray pointed out, in Firebird Global (supra), Nettle J and Gordon J made reference to the approach to be taken to statutory interpretation. Their Honours said (at [186]):

27. [27]

    In Project Blue Sky at [69], the majority, per McHugh, Gummow, Kirby and Hayne JJ, said (omitting footnotes):

28. [28]

    The starting point of statutory construction is “the text itself”: see Alcan (supra) and Firebird Global at [186]. The words of the SCR Rule 14.2(1) are, in my view, clear and not productive of any ambiguity.

29. [29]

    Treating SCR Rule 14.2 as a form of delegated legislation, and considering that Part 14 sits within a group of rules (Parts 12-14) that seek to establish the criteria for assignment of matters to particular Divisions of the Court, against a background that, in the absence of specific assignment, a matter, by force of s 53(4) of the SCA, will be assigned to the Common Law Division, its purpose appears to be to limit the proceedings which are assigned to the Commercial Division to those of a commercial nature, or having within them an issue of importance in trade or commerce, even if the proceedings themselves do not arise out of a commercial transaction.

30. [30]

    I will confess to a lack of familiarity with the phrases, “restrictive appositive” and “unrestrictive appositive”, used by Mr Doyle-Gray, and I have not located those phrases on a brief examination of the chapter, “Intrinsic or Grammatical Aids to Interpretation”, in Statutory Interpretation in Australia (Pearce and Geddes, LexisNexis Butterworths, 8th ed, 2014). Mr Doyle-Gray described an appositive as (at T16.2-6):

31. [31]

    The Macquarie Dictionary (the Macquarie Library Pty Ltd, 2nd revised ed, 1990) defines an ‘appositive’ as:

32. [32]

    The question of whether there is in SCR Rule 14.2(1) a restrictive appositive may excite morphologists, but I find the terminology of no assistance and it, I think, obscures the obvious fact that the ‘or’ between subparagraphs (a) and (b) is disjunctive, with the consequence that there are two types of proceedings which were assigned to the Commercial Division as at February 1998, namely, proceedings arising out of commercial transactions and proceedings in which there is an issue that has importance in trade or commerce. I do not accept that the use of ‘or’ places any restriction whatsoever on what is encompassed by “commercial transaction”, or that the meaning of “in trade or commerce” is able to confine or limit what is meant by the phrase “commercial transactions”.

33. [33]

    I accept that it is a firm general principle of statutory interpretation that no words used in a statute are otiose or superfluous: see Statutory Interpretation in Australia (supra) at 2.26 and Project Blue Sky (supra) at [71] per McHugh, Gummow, Kirby and Hayne JJ, and I also accept that the apparent scope of a section “may be limited by other sections in the Act” (see Statutory Interpretation in Australia (supra) at 4.3 and the cases there cited), but even accepting for the purposes of Nova’s argument that the phrase “in trade or commerce” has acquired a “legal meaning”, and accepting also that that legal meaning should be given to those words in SCR Rule 14.2(1)(b), that does not lead to the conclusion that the phrase “commercial transactions” in SCR Rule 14.2(1)(a) is to be read down or constrained by the meaning of “in trade or commerce”. Nothing in Brewery Employees (supra) or in Gamer's Motor Centre (supra), relied on by Mr Doyle-Gray as encompassing the orthodox principles which he says should be applied (and which he contends Parker J failed to apply: see T27.6-20), support such an approach. As I have said, SCR Rule 14.2(1)(b) is not concerned with commercial transactions but with matters of importance in trade or commerce which may arise in proceedings which do not stem from a commercial transaction.

34. [34]

    It follows that, in my view:

35. [35]

    Like Parker J and Taylor DCJ, I regard the conclusions in NTF Group, Sapphire Suite and this case as to the limits of the District Court’s jurisdiction as a most inconvenient and unfortunate outcome for litigants in this State. If, as I understand may be the case, consideration is presently being given to legislative reform in this area, hopefully steps can be taken in the very near future to remove the lacuna identified.

36. [36]

    It follows that, in my view, there is a compelling reason to order, pursuant to s 140 of the CPA, the transfer of the District Court proceedings from the District Court to this Court.

37. [37]

    In relation to the second prayer for relief, namely, that the matter be transferred back to the District Court pursuant to s 146 of the CPA, it is necessary to consider the same issues to which I have already referred because an order can only be made pursuant to that provision if this Court is satisfied that the proceedings could properly have been commenced in the District Court. Obviously, in view of my conclusions expressed above, I am not satisfied that the proceedings could be properly have been commenced in the District Court. Therefore, it is not appropriate to make an order pursuant to s 146 of the CPA.

Costs

1. [38]

   Mr Doyle-Gray contended that the appropriate costs order was that the costs of this application should be costs in the cause. Mr Olson contends that Nova should pay Natvia’s costs.

2. [39]

   Natvia, through its solicitor, advised Nova that it had consented to the first prayer of relief sought in the Summons. Nova apparently wanted to retain the hearing date in the District Court and that is no doubt why it was not willing to simply seek a transfer of the proceedings to this Court pursuant to s 140 of the CPA. Natvia was entitled to resist Nova’s contention that the District Court does have jurisdiction and also the transfer back to the District Court. Given that Nova has failed to persuade me that the District Court does have jurisdiction to hear this matter, and has failed to persuade me that the matter can be remitted to the District Court pursuant to s 146 of the CPA, I am of the view that Natvia is entitled to its costs of this hearing since, had Nova sought only the relief in the first prayer of the Summons, Natvia would have had no need to attend and be heard.