The declaratory orders should not be made
121 The reason why I have addressed the question of the relief sought on this issue first is that, even if I were to conclude that the ACCC had made out some, or all, of these eight individual cases of unconscionable conduct, I would not, in the circumstances, have been willing to exercise my discretion to grant the declaratory relief that is sought. That is so for the following reasons.
122 It is well-established that this Court is empowered under s 21 of the Federal Court of Australia Act 1976 (Cth) to make declarations directed (among other things) to public interest considerations such as those identified by the ACCC. Many of the authorities on this point are cited in Australian Competition and Consumer Commission v Grove & Edgar Pty Ltd (2008) ATPR 42-269; [2008] FCR 1956 at [20]. However, as noted earlier in these reasons (at [18]-[20]), a declaration is a discretionary remedy and the Court must be satisfied that it is appropriate in all the circumstances that such an order be made. In Forster v Jododex Aust Pty. Limited (1972) 127 CLR 421, Gibbs J (at 438) quoted the following observations of Lord Radcliffe in Ibeneweka v Egbuna [1964] 1 WLR 225 to demonstrate the breadth of the discretion involved:
After all, it is doubtful if there is more of principle involved than the undoubted truth that the power to grant a declaration should be exercised with a proper sense of responsibility and a full realisation that judicial pronouncements ought not to be issued unless there are circumstances that call for their making. Beyond that there is no legal restriction on the award of a declaration.
123 Similar observations have been made by various judges of this Court. For example, Gray J expressed his dissatisfaction at the "fashion of seeking declarations" in proceedings under the TPA and the tendency that had consequently developed of "the Court granting [declarations] as a matter of course, and usually without discussion as to the adequacy of the terms of the declaration sought, or as to the necessity for one to be made": Australian Competition and Consumer Commission v Francis (2004) 142 FCR 1; [2004] FCA 487 ("Francis") at [98]. On the same vein, his Honour went on to deprecate the "mechanical" process that seemed to have developed surrounding such declaratory orders: see Francis at [110]. More recently, McKerracher J observed in United Group Resources Pty Ltd v Calabro (No 5) (2011) 198 FCR 514; [2011] FCA 1408 at [139]:
A declaration should not be made lightly. Although, in itself, it may not give rise to an immediate financial or other consequence, like all judicial power, it should be exercised only when there is a proper purpose in doing so.
124 His Honour went on to refer to the observations of King CJ in J N Taylor Holdings Limited (In liquidation) v Alan Bond (1993) 59 SASR 432 (at 436-7):
The proposition that there is no limit to the jurisdiction of the court to grant declaratory relief would be an incomplete and misleading statement of the true position unless there be added the further proposition that there are circumstances which are so contra-indicative to the exercise of the discretion in favour of the grant of declaratory relief that the existence of those circumstances would lead almost inevitably to the exercise of the discretion against the making of a declaration. Examples of such decisively contra-indicative circumstances can be found in the cases. A declaration will not be made except in matters "which have a real legal context, and to the determination of which the Court's procedure is apt". There must be some person who has a true interest in opposing the declaration. The question raised must not be purely theoretical. There must not only be a party with a true interest in opposing the declaration, but the plaintiff must have a real interest in having the question determined. That interest may exist although the apprehended impact on the plaintiff may be no more than a future possibility. If, however, the determination of the question could not affect the plaintiff's legal rights or commercial or personal interests now or in the future, that is to say would "produce no foreseeable consequences for the parties", the declaration would almost certainly be refused.
(Case references omitted)
125 In this matter the ACCC is seeking these declaratory orders in its role as the regulator under the TPA, now the Australian Consumer Law. The eight individual customers of EDirect that are the subject of these proposed declaratory orders are not applicants in these proceedings, so their personal rights or interests are not directly involved and nor will they be directly affected. On the opposite side of the proceedings, the respondent, EDirect, has taken no active role in the proceedings since early April 2011 and, since August 2011, it has been in liquidation. However, before it ceased taking an active role, it did two things that are of some importance in deciding whether declaratory relief is justified in this matter. First, it offered the interlocutory undertaking to the Court, which is set out at [10] above. This undertaking is in substantially the same form as the interlocutory orders sought by the ACCC. Further, it can be seen from para 1.3 of that undertaking that it partly addresses some of the concerns which are reflected in the proposed declaratory orders above (at [118]). Further still, given that it was shortly thereafter placed in liquidation, that undertaking has effectively become a permanent undertaking because it is highly unlikely that EDirect will ever be able to act to give the seven days notice mentioned in the introductory words to that undertaking. Secondly, EDirect filed a defence in these proceedings which admitted many parts of the ACCC's statement of claim. Further, on many of those parts of the statement of claim which EDirect denied, it has had a measure of success, as set out above. Both of these matters show a degree of co-operation with the ACCC as the regulator in these proceedings. Conversely, EDirect's attitude in these proceedings is markedly different to that of the respondent in Tobacco Institute of Australia Limited v Australian Federation of Consumer Organisations Inc (No 2) (1993) 41 FCR 89. In that case, Sheppard J (at 101) pointed to the respondent's vigorous defence of the proceedings in a trial that lasted some weeks, as a significant factor in his Honour's decision to grant declaratory relief.
126 Finally, in relation to EDirect's involvement in these proceedings, it is appropriate to note the following matters. First, because of its liquidation, any monetary orders the ACCC obtains against EDirect are unlikely ever to be paid. Thus, the undertaking the ACCC gave to the Court as a part of its application for leave to continue these proceedings against EDirect in liquidation: see at [14] above. Secondly, unlike with EDirect (No 1), the continuation of these proceedings cannot be justified on the basis that a deterrent pecuniary penalty could be made against EDirect. Thirdly, presumably because of EDirect's liquidation, the ACCC has abandoned the other claims for relief it had initially sought against EDirect: see at [3] above. It follows that the declaratory orders the ACCC has sought in these proceedings now constitute the sole purpose of the proceedings.
127 In Francis, Gray J pointed out that s 21 of the Federal Court of Australia Act 1976 (Cth) gives the Court the power to make "binding declarations of right": see Francis at [95]. Of this provision, his Honour said (Francis at [96]):
… What is declared must have some effect on the rights and obligations of the parties to the proceeding in which the declaration is pronounced. As Mason CJ, Dawson, Toohey and Gaudron JJ pointed out in Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 582, quoting Mason J in Gardner v Dairy Industry Authority (NSW) (1977) 138 CLR 646 … 52 ALJR 180 at 188, a declaration will not be granted if it 'will produce no foreseeable consequences for the parties'. The mere expression of a conclusion, particularly a conclusion as to the facts, in the form of a declaration will generally fall short of this requirement.
128 Later in his reasons, his Honour referred (at [111]) to the comments of the High Court in Rural Press Limited v Australian Competition and Consumer Commission (2003) 216 CLR 53; [2003] HCA 75 that: "Close attention to the form of proposed declarations, particularly those 'by consent', should be paid by primary judges."
129 Adopting this advice, I have given close attention to the form of the declarations proposed by the ACCC in this matter (at [118]-[119] above). Having done so, I have a number of significant concerns about them, as follows. To begin with, in each of the declarations for each of the eight individuals, the first paragraph states that: "EDirect employed the sales method referred to in para 3 above". This is, of course, the system of conduct aspect of this fourth issue which I have already rejected for the reasons given at [117] above. It follows that the references to para 3 cannot be included in any of the proposed declarations for these eight individual customers. The only other paragraph of each of the proposed declarations sets out matters of which EDirect was said to be aware, or of which it ought to have been aware. These matters largely reflect the matters set out in the affidavits of these customers that are summarised at [114] above. However, somewhat misleadingly, in my view, they fail to include any reference to the other matters also in those affidavits that are summarised at [115] above. That includes, for example, the facts that two of those seven customers had returned their mobile telephone to EDirect within the 14 day cooling-off period and two other customers actually had a use for a mobile telephone and did, in fact, use the one that was provided by EDirect.
130 Finally, there is no paragraph of the proposed declarations that identifies what the actual position was with each of the eight customers. While the second paragraph of each of the proposed orders (see at [118] above) states that EDirect was aware, or ought to have been aware, about particular matters relating to each customer, for example, that he or she may not have had the legal capacity to enter into a contract, the proposed orders do not go on to state whether that was, in fact, the case. Without this information, the proposed declarations do not convey the elements of the unfairness that is critical to EDirect's unconscionable conduct allegedly involving each of those eight individual customers.
131 Turning then from the form of the relief to the justification for it being granted, the ACCC has identified three matters: disapproval of EDirect's conduct; clarification of the law; and providing information for consumers. All are ultimately founded on the public interest that is claimed to exist in these matters. This concept of the public interest covers a very wide and almost boundless field. In Right to Life Association (NSW) Inc v Secretary, Department of Human Services and Health (1995) 56 FCR 50, Lockhart J observed of the concept that it was (at 59):
… of wide meaning and not readily delimited by precise boundaries. Opinions have differed, do differ and doubtless always will differ as to what is or is not in the public interest. It is not difficult to find examples in history where laws on the statute book have become outmoded and crimes that were theoretically grave crimes punishable by heavy penalties were in fact rarely, if ever, the subject of prosecution because the thinking of society had undergone a change which had not yet found its way into legislative reform.
132 To similar effect in McKinnon v Secretary, Department of Treasury (2005) 145 FCR 70; [2005] FCAFC 142 Tamberlin J (at [8]-[9]) observed:
8. The reference to "the public interest" appears in an extensive range of legislative provisions upon which tribunals and courts are required to make determinations as to what decision will be in the public interest. This expression is, on the authorities, one that does not have any fixed meaning. It is of the widest import and is generally not defined or described in the legislative framework, nor, generally speaking, can it be defined. It is not desirable that the courts or tribunals, in an attempt to prescribe some generally applicable rule, should give a description of the public interest that confines this expression.
9. The expression "in the public interest" directs attention to that conclusion or determination which best serves the advancement of the interest or welfare of the public, society or the nation and its content will depend on each particular set of circumstances. There will, as in the present case, often be competing facets of the public interest that call for consideration when making a final determination as to where the public interest lies and these are sometimes loosely referred to, in my view, as opposing public interests. In the present case, broadly speaking, the competing aspects of the public interest include the benefits conferred on the public by the transparency of government processes and the need for confidentiality in certain circumstances.
133 In the next paragraph of his reasons, his Honour drew a distinction between public and private interests as follows (at [10]):
The expression "the public interest" is often used in the sense of a consideration to be balanced against private interests or in contradistinction to the notion of individual interest. It is sometimes used as a sole criterion that is required to be taken into account as the basis for making a determination. In other instances, it appears in the form of a list of considerations to be taken into account as factors for evaluation when making a determination. By way of example, town planning legislation frequently lists a number of factors that a local council or planning body is required to take into account when making a determination, with a concluding consideration being a generalised reference to the public interest and the circumstances of the case.
134 It is apparent from these observations that the content of the public interest in any given set of circumstances is both unconfined and quite pliant. That being so, where the Court is being asked to make declarations in the public interest, I consider it should be particularly careful to ensure that there is a real and genuine public interest involved and that must be all the more so where, as in this case, the only relief sought is declaratory orders and that relief is solely based on the public interest. If this care is not taken by the Court, and declarations in the public interest are consequently made as a matter of course, in time, the value of both is likely to be significantly eroded.
135 There are two aspects to the conduct that lies at the heart of this fourth issue. There is the effect EDirect's conduct allegedly had on the eight individual customers. Even assuming that conduct contravened the provisions of the TPA, by itself, this aspect essentially involves the private or personal interests of the eight individual customers involved. As noted above, none of those individuals is a party to these proceedings. On this aspect, the position may have been quite different if the ACCC had been able to prove that EDirect operated a sales system that unfairly (in the unconscionable sense) affected a large group of its customers and thereby contravened the provisions of the TPA. However, the ACCC has failed on that aspect of its case. The other aspect of EDirect's conduct is its alleged contravention of a piece of legislation that has been put in place to protect consumers, viz the TPA. This is where a public interest component may arise. If a declaration about EDirect's alleged contravention of the TPA (or the Australian Consumer Law) would serve to clarify that law, or inform consumers about its operation, clearly the public interest may be engaged. Indeed, this aspect of the public interest has been the basis for declarations made by the courts on innumerable occasions in the past. However, in this case, the nature of the alleged contravening conduct will not, in my view, serve either of these purposes. That is so because a determination that particular conduct is "unconscionable" is steeped in value judgment.
136 Logan J highlighted this phenomenon in Australian Competition and Consumer Commission v Seal-A-Fridge Pty Ltd (2010) 268 ALR 321; [2010] FCA 525, when dealing with an unconscionable conduct claim under s 51AC of the TPA. Having referred (at [13]) to some extra judicial observations made by French CJ about the value judgments involved in assessing legal standards expressed in broad terms such as "good faith", "reasonable" and "unconscionable", his Honour proceeded to make these apt (with respect) observations (at [14]-[15]):
14. … Particular care needs to be taken with respect to precedent in relation to the making of such value judgements. This is because, "The language used by judges to explain the reasons why they think the statutory words do or do not apply to the particular circumstances of the case under consideration is chosen with those particular circumstances in mind and is not intended as a paraphrase of the statutory words that is necessarily appropriate to all other circumstances": Caltex Oil (Australia) Pty Ltd v Feenan [1981] 1 NSWLR 169 at 173 34 ALR 231 at 235 (Caltex Oil).
15. … [These comments] might equally well have been made in respect of the broad legislative standards upon the application of which to such contracts entitlement to relief depended - "unfair", "harsh or unconscionable", or "against the public interest". It has long been recognised in relation to the exercise of that jurisdiction that what is required in the application of those standards to particular cases is a common sense approach characteristic of the ordinary juror which can not be communicated and might even be clouded by an analysis of decided cases, even those factually analogous: Davies v General Transport Development Pty Ltd [1967] AR (NSW) 371 per Sheldon J and Agius v Arrow Freightways Pty Ltd [1965] AR (NSW) 77 per Beattie J. In my opinion, similar sentiments attend the making of value judgements as to whether or not particular conduct constitutes "unconscionable conduct" for the purposes of s 51AC of the Trade Practices Act.
137 It follows that when a court comes to a conclusion as to whether, in a particular set of factual circumstances, something is "unfair" or "against the public interest" or "harsh or unconscionable", it does not usually lay down any principles of general application in relation to those statutory words. That must be particularly so, in my view, with judgments about whether particular conduct is "unconscionable", and therefore in contravention of s 51AB of the TPA. It follows, further, in my view, that a declaration in this case that EDirect's conduct was unconscionable in contravention of s 51AB of the TPA would provide little, if any, precedential value in relation to those provisions of the TPA, or its successor the Australian Consumer Law. Nor would it, for the same reason, assist to inform the consumer public about the general operation of those provisions. In the absence of these two matters, the only other matter, disapproval of EDirect's conduct (see at [131] above), would not, by itself, provide sufficient justification to make the proposed declaratory orders.
138 Finally, I consider there is another discretionary consideration that militates against granting the declaratory orders sought by the ACCC. Much earlier in these reasons, I identified some specific discretionary factors that may arise when a court comes to make a declaratory order: see at [18]-[20] above. I pointed out that, while I was satisfied that EDirect provided a proper contradictor in the circumstances of this case, there may still be discretionary factors attaching to this proper contradictor factor. One of those was identified by Young J in Transphere (see at [19] above). That is, whether "the Court has the assistance in presentation of both legal submissions and evidence of matters of fact". Because of EDirect's withdrawal from any active involvement in these proceedings prior to the trial, I have not had the benefit of any legal submissions from an active contradictor. The absence of such legal submissions from an active contradictor is, in my view, particularly significant in this case. That is so because Mr Burnside has raised some quite novel issues in argument going to the operation of the unconscionable conduct provisions of the TPA. For example, whether the act of an Indian national speaking quickly with heavily accented English could be said to constitute unconscionable conduct, or whether a person's natural tendency to continue a telephone call out of courtesy to the caller could be characterised as a vulnerability or susceptibility.
139 So, because of the presence of all these discretionary reasons in this case, even if the unconscionable conduct alleged against EDirect were established in relation to some, or all, of the eight individual customers, I am not persuaded that, in all the circumstances, it would be appropriate for me to exercise my discretion to make the declaratory orders the ACCC has sought (set out at [118] above). Having come to this conclusion, in the unusual circumstances of this matter outlined above, I do not consider it is necessary for me to decide whether EDirect's conduct was indeed unconscionable and therefore in contravention of s 51AB of the TPA.