Unconscionable conduct in relation to weekly fee increases?
105 In my opinion, a necessary step in determining whether the ACCC has made out a case of unconscionable conduct in relation to the fee increases in 2001 or 2004 is answering a question as to what right, if any, Seal-A-Fridge had at the respective times under its agreement with each franchisee in question to effect an increase in the weekly fee or to charge such a fee at all? Answering that question as a matter of contract law is not as straightforward as the ready payment to Seal-A-Fridge of a weekly amount of $50 by Mr and Mrs Malishev and Camabe might suggest.
106 In their original form, the franchise agreement between Seal-A-Fridge and Mr and Mrs Malishev and the agreement between that company and Camabe each provided in respect of the 13 number that "the Franchisee shall be responsible for paying its own costs associated with the use of the national telephone number" (cl 3C(a)). Each of these franchise agreements also contained an "entire agreement" clause (cl 7G).
107 As a matter of language, the expression "responsible for paying its own costs associated with the use of the national telephone number" connotes firstly a liability to pay a fee that will vary according to the use made of that service rather than any fixed weekly fee. Secondly, that the fee is to be usage based and to comprise "its own costs", i.e. those of the franchisee, does not readily suggest that the franchisee is to be under any liability to make any contribution at all towards the cost of establishing or any cost, fixed or variable, of maintaining the 13 number. Rather, that there is a "national telephone number" is a given which underpins cl 3C. That clause is predicated on the assumption that the number already exists with the necessary inference being that the franchisor, Seal-A-Fridge, has established it and is maintaining it. On that basis the establishment and maintenance costs for the 13 number are the "own costs" of Seal-A-Fridge, not a franchisee.
108 Clause 3C is not, of course, to be read in isolation from the franchise agreement as a whole. So doing only serves to reinforce the impression that there is no provision in the franchise agreement whereby a franchisee is under a liability to pay a fixed weekly fee to Seal-A-Fridge either in relation to the 13 number or at all. I have already referred to the "entire agreement" clause. This apart, "franchise service fee" though defined to be that specified in Sch 1, is not the subject of any operative clause in the franchise agreement and in any event its amount is stated to be "nil" in Schedule 1.
109 Yet it is pellucidly clear from their evidence that, at the time when each franchise agreement was signed, Mr and Mrs Malishev and Mr Radford respectively were expecting to pay a $50 per week fee to Seal-A-Fridge in respect of the 13 number in addition to usage costs and Seal-A-Fridge, by Mr Rooney, was also then expecting them to pay such a fee. Further, it seems then to have been common ground, in so far as any attention was then given to the subject, that the $50 per week figure was an estimate which may need to be adjusted over time so as to meet the cost fluctuations associated with the maintenance of the 13 number.
110 Thus, the written franchise agreement, though it contains an entire agreement clause and a clause which does not provide for a weekly fixed fee, omits provision in respect of one basis upon which both Seal-A-Fridge and each of the franchisees mentioned considered themselves to be contracting.
111 In these circumstances, the franchisees could not, in my opinion, even if they were so disposed, rely upon the written franchise agreement to ground a contention that, prior to the signing of the deed of variation, they had been under no contractual liability to pay any weekly service fee to Seal-A-Fridge.
112 The applicable legal principle is found in the following passage from an English Law Commission, Law of Contract, The Parol Evidence Rule, Report (English Law Commission, London, 1986), p 9700 at [2.12]:
The mere production of a contractual document, however complete it may look, cannot as a matter of law exclude evidence of oral terms if the other party asserts that such terms were agreed. If that assertion is proved, evidence of the oral terms cannot be excluded because the court will, by definition, have found that the contractual terms are partly to be found in what was agreed orally as well as the document in question. No parol evidence rule could apply. On the other hand, if that assertion is not proved, there can be no place for a parol evidence rule because the court will have found that all the terms of the contract were set out in the document in question and, by implication, will thereby have excluded evidence of terms being found elsewhere.
This passage commended itself as a correct statement of principle to McHugh JA (as his Honour then was) in State Rail Authority (NSW) v Heath Outdoor Pty Ltd (1986) 7 NSWLR 170 at 192 and, in turn, in this Court, to Sundberg J in Bruce v AWB Ltd (2000) 100 IR 129 at [8] (Bruce). In Bruce (ibid) Sundberg J added the following further observation, citing in support Youell v Bland Welch & Co Ltd [1990] 2 Lloyd's Rep 423, "[a]lthough the Law Commission and McHugh JA spoke of extrinsic oral terms, the parol evidence rule applies to all forms of evidence outside the written document, and not merely to oral evidence" (emphasis in original): see also Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424 at [280] - [281] (Full Court). The rule thus also embraces the reference to a $50 weekly fee in a disclosure document.
113 Thus the existence of the entire agreement clause does not prevent a finding that not all of the terms of the agreement between Seal-A-Fridge and Mr and Mrs Malishev or, as the case may be, Camabe are to be found in the respective written franchise agreements. That said, an oral term cannot contradict a term in a written contract: Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 472. However, if, as seems to me to be possible and preferable, one construes cl 3C(a) of the franchise agreement as providing for a usage charge but having nothing to say, one way or the other, about any further fee in respect of the 13 number, it does not contradict that clause to regard the agreement between the parties as carrying with it an oral term providing for the payment of a $50 weekly fee to Seal-A-fridge in respect of the 13 number.
114 Just to regard the franchise agreement as including an oral term that the franchisee will pay a weekly fee of $50 to Seal-A-Fridge in respect of the 13 number would not though, in my opinion, carry fully into effect the intentions of the parties to that agreement. Each franchise agreement provided for an initial 15 year term with options to extend the agreement for two successive 15 year terms. The extensions were to be subject to the entry by the franchisee into Seal-A-Fridge's then current franchise agreement which was, as to "non-financial terms", to be substantially the same as the existing franchise agreement. Thus, it was contemplated that extensions might be on different financial terms. Even allowing for that, it seems inherently unlikely, given the considerable length of the initial term of the agreement, that the parties to the franchise agreement contemplated that the $50 per week fee would remain unchanged for the whole of the original 15 year term. Thus, the oral term providing for a weekly fee of $50 should be regarded as being supplemented by an implied term providing for its increase in a way that would give business efficacy to the franchise agreement: BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 292.
115 The franchisees had no direct relationship with the provider of the 13 number. Part of the assumption underlying the franchise agreement in terms of the pre-existence of the 13 number was that Seal-A-Fridge had subscribed and would continue to be the subscriber for that number or any replacement. A corollary of this was that the franchisees would not come to be billed directly by Telstra (or any substitute national number provider). In these circumstances and though one way of adjusting the $50 per week fee over the 15 year term might be to imply a term that it would increase proportionately by the amount of any increase in line with provision charges to Seal-A-Fridge, that would import an obligation on the part of Seal-A-Fridge to provide the franchisee with complete copies of the provider account to it so that the amount of any increase in the line provision charge from time to time could be evidenced. Yet the $50 per week fee was only ever regarded as an estimate. Also the fee necessarily carried with it in the estimate something of an allowance for the administrative work entailed in analysing the account received by Seal-A-Fridge to identify usage charges appropriate to a particular franchisee.
116 An alternative and more likely way of making allowance for the impact on the continuing appropriateness of the $50 per week fee so as to give business efficacy to the franchise agreement would be to imply a term allowing for the annual adjustment of that fee, at the election of Seal-A-Fridge, in accordance with any movement in the CPI index, an objective, readily ascertainable benchmark. Once again, it seems unlikely that Seal-A-Fridge or any party would have contemplated multiple adjustment reference dates, varying in accordance with when each franchise agreement was made, as opposed to a common adjustment date across the entire network of franchisees. As to what such a common reference date might be, there is nothing much to chose as between the start of a calendar year and the start of a financial year.
117 It also seems inherently unlikely that either party to a franchise agreement contemplated that the weekly fee would ever be less than $50 per week.
118 The written franchise agreement in respect of Mr and Mrs Malishev and Camabe should be regarded as carrying with it an oral term that the franchisee would, in addition to usage charges, pay to Seal-A-Fridge a weekly fee of $50 in respect of the 13 number. It should also be regarded as carrying with it an implied term, necessary so as to give business efficacy to that franchise agreement, that the weekly fee of $50 per week might, at the election of Seal-A-Fridge, be increased once each year in accordance with the movement in the CPI since 1 January the previous year but no so as to be less than the then existing weekly fee.
119 Each party to the franchise agreement also seems to have taken it as a given that Seal-A-Fridge was entitled to add an additional amount in respect of GST to the weekly fee on and from the commencement of that tax. That this was regarded as contractually permissible is not the result of any oral or implied term as at the commencement of each franchise agreement but rather the result of a variation to the agreement as at the commencement of the GST regime to be inferred from the subsequent conduct of the parties. The relevant conduct is the inclusion of GST in Seal-A-Fridge accounts and the payment by each franchisee of those accounts.
120 The approach of the ACCC was that the phrase "the Franchisee shall be responsible for paying its own costs associated with the use of the national telephone number" in cl 3C(a) was capable of being construed as embracing the $50 weekly fee in respect of the 13 number. In support of this construction of that clause the ACCC pointed to the conduct of Seal-A-Fridge and each franchisee both prior to and after the signing of the franchise agreement. This approach would treat such conduct as extrinsic evidence admissible to give meaning to cl 3C(a).
121 So far as the pre-contractual conduct of the parties is concerned, it was once the case that, to use such evidence for an interpretative purpose, the contractual term or phrase concerned had to be ambiguous and, further, that conduct had to be part of the objective background to the agreement rather than just evidence of a party's subjective intentions: Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 352. More recently, the approach to the construction of a contract is that its meaning is to be determined by what a reasonable person would have understood it to mean having regard not only to the text but also to the surrounding circumstances known to the parties and the purpose or object of the transaction: Toll (FGCT) Pty Ltd v Alphafarm Pty Ltd (2004) 219 CLR 165 at [41]. Ambiguity is no longer a pre-condition to the admission of extrinsic evidence as to the background to a contract: Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd (2006) 156 FCR 1. Even if it were, the phrase is attended with ambiguity. That there was express reference on behalf of Seal-A-Fridge to the liability which a franchisee would have to pay a weekly fee of $50 in respect of the 13 number is common ground, a mutually known fact, not just the subjective intention of Mr Rooney on behalf of Seal-A-Fridge.
122 Whether the post-contractual conduct of the parties may permissibly be used for the purpose of construing cl 3C(a) may be an open question at ultimate appellate level (qv Seddon N and Ellinghaus MP, Chesire and Fifoot's Law of Contract, 9th Australian Edn, LexisNexis Butterworths [10.16]) but, having regard to the expression of opinion on that subject by the Full Court in BowescoPty Ltd (rec & mgr apptd) v Zohar (2007) 156 FCR 129 at [78] - [79],I consider that I am bound to hold that evidence of subsequent conduct is not admissible for the purpose of construing cl 3C(a).
123 The starting point for construing cl 3C(a) remains the objective meaning of the language employed in that clause. I have already expressed my view as to how, read, in context, that clause is to be construed as a matter of language. While I accept that, looking to the pre-contractual surrounding circumstances, and particularly the mutual understanding of the parties, it is possible reasonably to argue that the phrase "the Franchisee shall be responsible for paying its own costs associated with the use of the national telephone number" in cl 3C(a) does carry with it in the notion of "its own costs" liability to pay a $50 weekly fee I do not find that argument persuasive given that the mutual understanding extended not just to a weekly fee but also to a usage charge liability. Regard to the surrounding circumstances, in my opinion, better supports a conclusion that the agreement between the parties incorporates an oral term as to the weekly payment liability.
124 Alternatively, the omission of an express reference to a weekly payment liability of $50 in respect of the 13 number was a mutual mistake capable of rectification even in the presence of the "entire agreement" clause: Macdonald v Shinko Australia Pty Ltd [1999] 2 Qd R 152 at 155-156.
125 The ACCC's further submission in relation to cl 3C(a) was that it did not allow Seal-A-Fridge to charge a fee to generate a profit. On the construction of cl 3C(a) which I prefer, it was not the source of contractual authority to charge a weekly fee at all, only the separate usage charges. It was the oral term which supplied the contractual authority to charge the weekly fee. That term did not prohibit the making of a profit.
126 There was, unsurprisingly, no dispute by Mr Rooney with the proposition that Mr and Mrs Malishev and, as the case may be Camabe were contractually liable, on and from the commencement of the franchise agreement, to pay a weekly fee of $50 in respect of the 13 number.
127 In the course of the correspondence sent by the solicitors engaged by Mr Radford one of the positions advanced was that Seal-A-Fridge had no contractual right even to the payment of the weekly fee of $50. It follows from the foregoing analysis that I do not regard that position as sound in law
128 It emerged in evidence not only that Mr Radford had approved in advance the sending of this correspondence to Seal-A-Fridge by the solicitors but that so, too, had Mr and Mrs Malishev. Mr Rooney put forward in his submissions in this case that the advancing of the position that there was no liability to pay the weekly fee amounted to a repudiation of each franchise agreement by each franchisee but not one that Seal-A-Fridge had accepted. It is not necessary for the purposes of this case to determine the correctness of that submission if for no other reason than, even if correct, it would leave each agreement in place with the terms as to liability to pay the weekly fee being as I have described them.
129 The ACCC's case as to why the conduct of Seal-A-Fridge in pressing for and securing increases in the weekly fee was unconscionable had a number of themes. Insofar as that case was predicated upon Seal-A-Fridge seeking to make a profit from the weekly fee in circumstances where it had no contractual right to make any profit at all from that fee it depended upon the acceptance of the construction of the franchise agreement advanced by the ACCC. For reasons already given, I do not accept that the agreement should be so construed.
130 It does not follow from this that profit making considerations are irrelevant to the determination of whether the conduct of Seal-A-Fridge was unconscionable. The section directs attention to all of the circumstances.
131 I have already canvassed above, under the heading, "The 13 National Number" the gross income of Seal-A-Fridge from weekly fees at particular times and the costs being charged to it by Telstra at those times for the maintenance of that number. Some recapitulation is desirable so as to put in context conduct to which the ACCC referred in its submissions as to unconscionability.
132 Seal-A-Fridge had, from February 1999, a net annual margin, after payment of Telstra fixed costs, of $18,780 from the gross annual weekly fee income it was then receiving. By August 2001 and assuming a continuance of a $50 per week fee in respect of the 13 number its net annual margin after payment of Telstra fixed charges was approximately $41,534. The effect of an increase in the weekly fee to $75 per week in 2001 was to add an additional $32,500 to that net margin. By 2004 when Seal-A-Fridge promoted and secured the weekly fee increase to $100 the charges to it by Telstra had actually decreased slightly. The effect of an increase of the weekly fee to $100 over the then network of franchisees was to yield to Seal-A-Fridge (assuming payment) a gross fee income of $120,000. Its actual Telstra fixed charges at the time amounted to $28,184.
133 The ACCC's description of the conduct of Seal-A-Fridge in respect of the securing of the weekly fee instance in 2001 and 2004 was that, in each instance, it was a "unilateral profit gouge". So it was. For the purpose of augmenting its profit, Seal-A-Fridge gouged further fee income from its franchisees thus reducing the profit margin of each franchisee. Seal-A-Fridge was not, as I have found, contractually prohibited from making a profit from the weekly fee of $50. What it had no contractual authority to do was unilaterally and arbitrarily to increase that weekly fee in 2001 by 50%, ie a further $25 per week or, in 2004, by a further 33%, i.e. a yet further $25 per week. At the most, in light of what I regard as an implied term in the franchise agreement, Seal-A-Fridge had a right once each year, if it chose, to increase the weekly fee by reference to CPI movement.
134 Though there was no evidence of actual relative movements in the CPI as between 1999 and 2001, common life experience over those years is sufficient to highlight that there was never any possibility that such an implied term would authorise percentage increases of the order demanded by Seal-A-Fridge. Even if, contrary to my preferred content of the implied term authorising an annual increase one were to regard the reference base for such an implied term as movements in Telstra's charges to Seal-A-Fridge, on the evidence the position remains that such movements would have provided no authority for either of the increases Seal-A-Fridge demanded of and secured from Mr and Mrs Malishev and Camabe.
135 Some caution needs to be exercised not in describing the conduct of Seal-A-Fridge as "profit gouging" but in accepting at face value that the amount of additional profit thereby secured in 2001 and 2004 was as high as that put forward by the ACCC.
136 The evidence disclosed that Seal-A-Fridge assumed, and was intended by all concerned to assume, an administrative burden in the dissection of the accounts for payment which it received from Telstra so as to yield individual accounts to each franchisee incorporating usage charges specific to particular franchisees. There were doubtless labour and perhaps also premises costs which at least rateably related to the undertaking of this administrative burden by Seal-A-Fridge. There may also have been postage, stationery, equipment and incidental expenses which, again at least rateably, related to the sending out of the individual accounts to franchisees. All of such expenses could fairly be said to be in relation to the administration of the contractual liabilities of the franchisees in relation to the 13 number.
137 Such expenses aside, Seal-A-Fridge assumed a degree of entrepreneurial risk in its business model as reflected in the terms, written and otherwise, of its franchise agreements with, materially, Mr and Mrs Malishev and Camabe. That risk arose from the circumstance that Seal-A-Fridge was liable to Telstra, in accordance with Telstra's terms of trade, for the whole of Telstra's charges, usage related and otherwise, in respect of the 13 number. Further, that one or more franchisees might be in arrears did not relieve Seal-A-Fridge from a responsibility to maintain the 13 number at least for the benefit of those who were not in arrears. The evidence led showed that franchisees were sometimes in arrears in making payment to Seal-A-Fridge in respect of the weekly fee and usage expense charged to them. Mr Rooney rightly highlighted this risk in his submissions. What he did not do was to seek to quantify it by evidence. That might, for example, have been done by evidence as to the opportunity cost of funds deployed in the interval between when Seal-A-Fridge paid Telstra in accordance with Telstra's terms of trade in respect of the 13 number and when Seal-A-Fridge received payment from franchisees or by evidence as to overdraft costs.
138 Though neither side led any evidence as to the actual or estimated cost to Seal-A-Fridge of its administrative burden in relation to the 13 number, it seems inherently unlikely from the nature of the tasks involved, having regard to the examples of the accounts from Seal-A-Fridge to franchisees which were in evidence, that related expenses approached the net amount that was left to Seal-A-Fridge from the weekly fee of $50 after it had paid the Telstra charges. Further, though again this was not the subject of any attempted quantification in either side's case, it seems inherently unlikely, even making allowance for the entrepreneurial risk which I have mentioned, that this would consume all that remained to Seal-A-Fridge after the deduction of administration related expenses.
139 Mr Rooney put forward in submissions in relation to whether the conduct should be regarded as unconscionable that Seal-A-Fridge had been charging $50 per week plus call costs since 1997 and that the 2001 increase it demanded was the first in over 3 years. A like justification attended the 2004 increase demanded. Yet Seal-A-Fridge had no contractual authority at all to make either its 2001 or 2004 fee increase demands. At most, on the construction of the franchise agreement which I prefer, it had a right to demand annual CPI related increases.
140 The ACCC's case in respect of unconscionable conduct did not just depend on the characterisation of the conduct of Seal-A-Fridge as "profit gouging". Further, and correctly in my opinion, profit gouging was not treated as synonymous with unconscionable conduct. Rather, it was put forward as part of the overall factual matrix which the ACCC submitted revealed unconscionable conduct on the part of Seal-A-Fridge.
141 What was revealed overall, so the ACCC submitted, was "misstatement, non-disclosure of information, threats and intimidation and abuse of Seal-A-Fridge's position of strength in relation to being able to cut off the phone number". I agree.
142 In its circular letter to franchisees of 15 January 2001 in respect of the increase of the weekly fee from $50 to $75 Seal-A-Fridge put forward that Telstra's charges to it had recently increased. This was false. There was no such recent increase. The promotion to the franchisees that there existed this basis for the increased demanded evidenced an absence of good faith on the part of Seal-A-Fridge.
143 Further, as is evident from the dissection of the initial franchise fee into component parts, part of that fee was attributed by the parties to the franchise agreement to "goodwill". "Goodwill" has been said to be "a quality or attribute derived from other assets of the business": Commissioner of Taxation v Murry (1998) 193 CLR 605 (Murry) at [12]. Insofar as what the franchisees in this case at least purportedly acquired in return for the initial franchise fee was goodwill (and it suffices for the purposes of this case to assume the aptness of the attribution of an amount in respect of goodwill), one of the sources of that goodwill was surely the 13 national number and the right to access calls from the same. Logically and, it seems in actuality, one way in which the capital cost to Seal-A-Fridge of establishing, though not maintaining, that source of goodwill might have been recovered was via the payment of the initial franchise fee. An alternative way of recovering that capital cost would have been to amortise it and then recover it as a component of the weekly fee paid by each franchisee. On the evidence, Seal-A-Fridge did not opt for the latter alternative. The point of adverting to this is that there was nothing even in the business model used by Seal-A-Fridge for the sale of its franchises which could provide a credible explanation for the statements made to franchisee in the letter of 15 January 2001.
144 In relation to the 13 number, Seal-A-Fridge was in a position akin to a utility. There is nothing inherently "unconscionable", in terms of s 51AC, in a utility to which money is lawfully due having an ability to deny access to the service which the utility provides in the event of non-payment by a consumer of the service, drawing that ability to the attention of that consumer and then withdrawing that consumer's access to that service in the event that payment of the money lawfully due is not made. Seal-A-Fridge had such a right, by necessary implication, under each franchise agreement, in my opinion. Some, particularly a consumer in arrears, might describe the highlighting of the prospect of service withdrawal as threatening or intimidating. It is, in truth, no more than evidencing the reasonable proposition that, in a fee for service relationship, the person who has not been paid what is owed for the past supply of that service cannot be expected indefinitely to continue to supply that service without payment.
145 In the context of the present case, and having regard to the central role played by the 13 number in the promotion by various advertising means of the generic "Seal-A-Fridge" business name, there can be no doubt that continued access to calls directed to a franchisee following a call to that 13 number was essential to the continued conduct of that franchisee's business. Essentiality of access to the 13 number by franchisees gave Seal-A-Fridge a position of strength in relation to them in the event of non-payment. Yet that essentiality does not per se make the highlighting of the withdrawal of access to that service in the event of non-payment unconscionable. So much was, as I understood it, accepted by the ACCC. Rather, so the ACCC submitted, it was the abuse of that position of strength that was relevant to the characterisation of the conduct of Seal-A-Fridge as unconscionable, in all of the circumstances. I agree.
146 What emerges is that the 2001 weekly fee increase was demanded and obtained by Seal-A-Fridge, without contractual authority but supported by falsehood and abuse of a position of strength for the purpose of gaining additional profit. These means also led eventually to the securing of the agreement of the franchisees concerned to the variation of their respective franchise agreements. Viewed as a whole and having regard to the general statements in the authorities mentioned above as to the meaning of s 51AC, the adoption of these means by Seal-A-Fridge in respect of the 2001 increase constituted unconscionable conduct on the part of Seal-Fridge.
147 A like conclusion should be made in respect of the conduct of Seal-A-Fridge which predated the 2004 price increase in my opinion. That conduct did not feature the cutting off of access by Mr and Mrs Malishev or Camabe to the 13 number. It did not have to. The ability which Seal-A-Fridge had to do that in the event its demands for an increase in the weekly fee, however unauthorised and extortionate, were not accepted had already been demonstrated.
148 Some further observations ought to be made about these conclusions.
149 Referring in Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (2003) 214 CLR 51 to s 51AA of that Act, which prohibits conduct that is unconscionable within the unwritten law from time to time of the States or Territories, Gleeson CJ observed, at [14]:
Unconscientious exploitation of another's inability, or diminished ability, to conserve his or her own interests is not to be confused with taking advantage of a superior bargaining position. There may be cases where both elements are involved, but, in such cases, it is the first, not the second, element that is of legal consequence. It is neither the purpose nor the effect of s 51AA to treat people generally, when they deal with others in a stronger position, as though they were all expectant heirs in the nineteenth century, dealing with a usurer. [Footnote reference omitted]
150 The content of what is "unconscionable" for the purposes of s 51AC of the Trade Practices Act is not dictated by or limited to that which is unconscionable within the unwritten law from time to time of the States or Territories. That acknowledged, just exploiting a position of strength in trade or commerce for profit is not likewise "unconscionable" in terms of s 51AC of that Act. A provider of a utility service which is in demand and who has the ability to cut off access to that service in the event of non-payment doubtless enjoys bargaining power in negotiations as to price with a consumer and in the encouraging of payment within specified terms of trade. This bargaining power is though but a reflection of that demand and of an ability that is reasonably incidental to the supply of the service. In this particular sense, it would be an error to regard s 51AC as prohibiting the taking advantage of a superior bargaining position even though s 51AA of the Trade Practices Act does not. Where, as here, attributes of that superior bargaining position are abused by their deployment, in conjunction with falsehoods to the end of securing an increase in price to which there is no contractual entitlement the context and thus the scope for reaching a conclusion as to a contravention of s 51AC is different. It may or may not be the case that that same context might also reveal a contravention of s 51AA of the Trade Practices Act but the existence of such a contravention is neither a necessary element of nor a pre-condition to a conclusion that s 51AC has been contravened.
151 The ACCC sought to make something of the nature of the language that Mr Rooney had used in his dealings with franchisees. Unconscionability is not found in matters of nicety or uncouthness of language but in the ends to which that language is deployed. Here, Mr Rooney's oral exchanges with franchisees form part of an overall factual matrix in which is revealed a concerted and successful endeavour by Seal-A-Fridge to force contractually unauthorised price increases and later contractual variations on the basis of falsehood. The conclusion that the conduct directed to these ends should be characterised as unconscionable is multi-factorial, not a matter of manners.
152 Unlike the ACCC, Mr Rooney did in his submissions invite me to engage in an exercise of moral relativism by comparing the circumstances of this case with those of others. He conceded that there were features of the conduct of Seal-A-Fridge which were not praiseworthy, e.g. misrepresenting an increase in Telstra costs but put forward that the conduct was not as bad as that evident in other, earlier cases in which unconscionable conduct had been found. Such a finding was, he submitted, a conclusion reserved for extreme cases.
153 I decline to engage in such a comparative exercise. Moral turpitude is an inherent element in the finding of a contravention of s 51AC of the Trade Practices Act. Thus, though this is a civil case in which proof on the balance of probabilities is all that is required in respect of controversial factual issues, I readily accept that "inexact proofs, indefinite testimony, or indirect inferences" do not suffice: Briginshaw v Briginshaw (1938) 60 CLR 336 at 362. None of these qualities was present in the ACCC's evidentiary case. Further, the ultimate conclusion as to unconscionable conduct is not one lightly to be made. At this general level of abstraction there is, with respect, some substance in Mr Rooney's submission. To descend into a detailed factual analysis of earlier decided cases is though, as I have already observed when discussing the meaning of s 51AC, to risk clouding the issues in the present case. If, in all the circumstances of the present case and acknowledging that it is not a conclusion lightly to be reached, the conduct of Seal-A-Fridge can be said to be "unconscionable" in terms of the meaning of that word as used in s 51AC then it is nothing to the point that that conduct may be comparatively better or worse than conduct which is the subject of other cases.