Australian Competition & Consumer Commission v Davis & Others [2003] FCA 1227 | Case summary

3.1. unconscionable; 3.2. physical force; 3.3. undue harassment; 3.4. coercion; 3.5. communicating with the debtor and other parties, such as the debtor's representative; 3.6. communicating with debtors and other parties in public; 3.7. frequency of communications; 3.8. personal visits and surveillance; 3.9. allowing arrangements and other process to work; 3.10. responding to debtor complaints; 3.11. reviewing reasonableness of fees incurred in collecting debts; 3.12. engage in conduct; 3.13. in connection with; 3.14. goods and services (personal domestic and household use); 3.15. financial services; 3.16. supply or possible supply; 3.17. payment for goods or services; and 3.18. consumer.

LEE J: 1 In this matter the applicant ("the ACCC") commenced proceedings pursuant to authority vested in it by the Trade Practices Act 1974 (Cth)("the Act") in which, inter alia, it sought declarations and injunctive relief against the sixth, seventh and eighth respondents ("the respondents") in respect of their alleged involvement in conduct engaged in by the first respondent ("Esanda") said to contravene ss 51AB and 60 of the Act. By consent orders by way of declarations and injunctions have been made against Esanda and other respondents in respect of that conduct. 2 The conduct in question related to the seizure of a motor vehicle owned by a customer of Esanda ("the consumer") over which a chattel mortgage had been granted to Esanda. The ACCC alleged inter alia, that in respect of the seizure of the motor vehicle Esanda engaged in conduct in connection with the supply of goods and services by Esanda to the consumer that was unconscionable and contravened s 51AB of the Act, and used undue harassment, or physical force in connection with the payment for services by the consumer, in contravention of s 60 of the Act. 3 The parties have filed a Statement of Agreed Facts in addition to the affidavits and statements tendered by the ACCC and the respondents in their respective cases. 4 The relevant facts may be shortly stated as follows. 5 In about July 1998 Esanda advanced a sum of $15,092.02 to the consumer, applied to the purchase of motor vehicle from Esanda. The sum advanced, and interest, was to be repaid to Esanda by forty-eight monthly payments of $373.20, the first payment to be made on 24 July 1998. The total amount repayable to Esanda, inclusive of interest, was $17,913.60. As noted above the sum due by the consumer was secured by a chattel mortgage over the vehicle. 6 From time to time the consumer defaulted in payment of the monthly instalments, due, in part, to adverse circumstances suffered by the consumer in his employment. The consumer sought to replace the loan from Esanda with a loan from another financier and also sought to obtain from Esanda a variation in the terms of repayment. None of these steps was successful. 7 By April 2000 the arrears exceeded $1,800 and in that month, by service of a notice, Esanda demanded that the consumer cure his default under the mortgage. 8 On the 20 June 2000 the vehicle was "repossessed". The amount outstanding at that time was approximately $2,180. The allegations made against Esanda and other respondents by the ACCC in this proceeding arise out of the manner in which the "repossession" was effected. 9 The sixth respondent, and his father the eighth respondent, conduct separate businesses as tow-truck operators. The sixth respondent has considerable experience in "repossessing" vehicles for finance companies and stated that over the past five years he had undertaken approximately twelve to fifteen "repossessions" per week as a tow-truck operator. The sixth respondent also holds an investigator's licence and is a licensed security guard and crowd controller. 10 In June 2000 the sixth respondent was instructed by an agent of Esanda, the second respondent ("Capalaba"), to assist it in seizing the consumer's vehicle. The sixth respondent was told that the customer may resist seizure of his vehicle and that the sixth respondent should obtain additional personnel to assist him. The sixth respondent asked the seventh and eighth respondents to attend at the consumer's premises. I am satisfied that the material before the Court raises the inference that the seventh and eighth respondents were aware from the sixth respondent that the sixth respondent had been instructed that there could be a physical confrontation if, as expected, the consumer resisted seizure of his vehicle and that it would be necessary for the sixth respondent to have assistance on hand to be able to recover the vehicle. 11 The sixth and eighth respondents each drove a tow-truck to the consumer's premises. Upon arrival the sixth respondent spoke to the third, fourth and fifth respondents, persons engaged by Capalaba to seize the vehicle on behalf of Esanda. The sixth respondent was told that the third respondent would jump the gate and enter the garage and open the garage door from the inside. The sixth respondent raised a doubt about his entitlement to enter the consumer's property but accepted an assertion from one of the third to fifth respondents that he was able to do so. After the garage door had been opened the sixth respondent drove his tow-truck onto the consumer's premises by reversing it up to the rear of the consumer's vehicle in the garage. The seventh and eighth respondents also entered the garage. The sixth respondent was in the process of connecting the consumer's vehicle to his tow-truck when the consumer ran into the garage, at that time clad only in underwear and in an agitated state. In the scuffle that ensued the sixth and eighth respondents pinned the consumer to the ground and kept him there whilst the seventh respondent completed attaching the sixth respondent's tow-truck to the vehicle. After the seventh respondent had driven the tow-truck and the consumer's vehicle away from the consumer's premises the sixth and eighth respondents 'got up off' the consumer and ran out of the garage and off the consumer's premises. 12 The ACCC submits that pursuant to s 75B of the Act the respondents were persons involved in a contravention of s 51AB of the Act by Esanda by the third respondent entering the consumer's residence by jumping over a gate for the purpose of opening the garage door from the inside and by failing to desist from the attempt to seize the consumer's vehicle when they had reasonable cause to apprehend that a physical confrontation may occur if they continued. The ACCC also submits that the respondents were persons involved in a contravention of s 60 of the Act by Capalaba by the sixth and eighth respondents physically restraining the consumer while the consumer's vehicle was removed from the consumer's property and that, by the same acts, the sixth and eighth respondents contravened s 23 of the Fair Trading Act 1987 (WA)("the FTA"). 13 With regard to the allegations that the sixth, seventh and eighth respondents were involved in the contravention of s 51AB of the Act by Esanda it was not in issue that the respondents were aware that their actions on behalf of Esanda were in connection with the supply of goods and services by Esanda to the consumer. The alleged contravening conduct of Esanda by its agents, was particularized as a series of separate acts but the alleged contravention was not limited to the acts in combination. It may by accepted that either by entering the consumer's property without consent, jumping or climbing over a gate for the purpose of entering the consumer's garage and releasing the securing mechanism on the inside for the garage door, or, at least, by failing to desist from an attempt to seize the consumer's vehicle when it became clear that a physical confrontation would occur if that attempt were continued, the allegation that Esanda engaged in unconscionable conduct within the meaning of that provision as used in s 51AB of the Act would be satisfied. That is to say that in all the circumstances the conduct described may be said to have been "clearly unfair or unreasonable". (See: Hurley v McDonald's Australia Ltd (2000) 22 ATPR 41-741 at [22]). 14 The sixth respondent was aware of the intention of the third respondent to enter the consumer's residence by jumping over a gate and, indeed, may have been involved in assisting the third respondent to do so. The sixth respondent was also aware of the purpose of the third respondent in so acting, namely, to enter the garage and release the securing mechanism on the inside of the garage door. There is no evidence that the seventh and eighth respondents were aware of the third respondent's proposed acts. However each of the sixth, seventh and eighth respondents failed to desist from the attempt to seize the consumer's vehicle after it became obvious that a physical confrontation with the consumer may occur if they continued with that attempt and, therefore, it must be concluded that the sixth, seventh and eighth respondents had knowledge of the relevant facts that constituted the contravention of s 51AB of the Act by Esanda and, therefore, were persons involved in that contravention. (See: Hamilton v Whitehead (1988) 166CLR 121). 15 I reject the submissions made on behalf of the respondents that the respondents had no reasonable cause to apprehend that a physical confrontation may occur if they participated in the seizure of the consumer's vehicle. 16 On the material submitted the inference is plain that the sixth respondent was made aware that there was a real risk that the consumer would not permit his vehicle to be seized whatever the terms of the contract with Esanda may be, and that if seizure of the vehicle was to be effected parties acting on behalf of Esanda would have to be prepared to deal with a hostile consumer to gain control of the vehicle and remove it from the consumer's premises. Equally the inference is plain, and should be drawn, that in requesting the seventh and eighth respondents to assist him in carrying out what he had been contracted to do at the consumer's premises the sixth respondent conveyed to the seventh and eighth respondents the nature of the risk involved, in particular, that the consumer may attempt to prevent the sixth respondent from carrying out the work he had been instructed to do. 17 With regard to the alleged contravention of s 23 of the FTA, or "involvement" by the respondents in the alleged contravention of s 60 of the Act by Capalaba, the following may be said. 18 The statement in s 60 of the Act that a corporation shall not use physical force in connection with the payment for goods or services by a consumer is a provision of wide import, intended to govern relations between trading corporations and consumers by providing that a corporation is not to resort to harassment, or the use of physical force, in support of a demand for the payment by a consumer for goods or services supplied to the consumer. The Act is setting a norm of corporate conduct in which the use of physical force, or undue harassment, by a corporation in such circumstances is deemed to be unacceptable. 19 Section 23 of the FTA is a like provision of concurrent effect, not restricted to a corporation. 20 In the instant case the respondents submit that the consumer had agreed with Esanda that Esanda could take possession of the vehicle pursuant to powers granted to Esanda in the chattel mortgage and, therefore, as agents of Esanda, the respondents could rely on the contractual right of Esanda to enter the consumer's premises and take possession of the vehicle. 21 That submission does not address the question whether, notwithstanding contractual rights held by Esanda, there was a contravention of the terms of s 60 of the Act or s 23 of the FTA. If a consumer contested the powers of seizure available under the mortgage or resisted seizure of the vehicle irrespective of the terms of the mortgage, neither Esanda nor its agents could determine to use such force as was necessary to overcome that resistance in order that rights asserted to be held under the terms of the mortgage could be exercised. The purpose of s 60 is to prevent such conduct by a corporation in respect of a consumer in relation to the payment by the consumer for goods or services. 22 The evidence presented is sufficient to establish that by pinning the consumer to the ground until the consumer's vehicle had been removed from the consumer's premises the sixth and eighth respondents used physical force in connection with the supply of goods and services by Esanda to the consumer and the payment for services by the consumer, in contravention of s 23 of the FTA. It is not an answer to that contravention for the sixth and eighth respondents to assert that they were engaged in acts of self-defence. Their acts, which provoked the consumer's conduct, went beyond self defence. They attended at the consumer's premises anticipating that the consumer may resist seizure of his vehicle. It was understood by them that the sixth respondent may require assistance to allow the sixth respondent to seize the vehicle without hindrance from the consumer. The anticipated event occurred and the sixth and eighth respondents used sufficient physical force not only to protect themselves from threatened assault by the consumer but to subdue the consumer for such period of time as was necessary to allow the seventh respondent to attach the consumer's vehicle to the sixth respondent's tow truck and to remove it from the consumer's premises. 23 The ACCC seeks a declaration that by the foregoing conduct, for which direct liability attached to the sixth-eighth respondents under s 23 of the FTA, the sixth and eighth respondents were also liable as accessories to a like contravention of s 60 of the Act by Capalaba. 24 I invited the parties to make submissions on whether insofar as s 23 of the FTA purported to impose direct liability on a person who was a person "involved" in a contravention of the Act by a corporation, such a provision would be inconsistent with the terms of the Act and be rendered inoperative to the extent of that inconsistency by operation of s 109 of the Constitution. (See: Grace Bros Pty Ltd v Magistrates, Local Courts of New South Wales (1988) 84 ALR 492 per Gummow J at 502-505; Mallan v Lee (1949) 80 CLR 198 per Dixon J at 215-216). That is to say, if by operation of s 75B of the Act a person is liable as an accessory to a contravention of the Act committed by a corporation would it follow that the Act would not permit the FTA to invert the principles of accessorial liability by purporting to make such a person directly liable as a principal in respect of the same circumstances and subject matter. (See: Mallan v Lee at 216). In other words by reason of an inconsistency in law such a provision in the FTA would not be concurrent with the terms of the Act. The question so raised does not concern the legislative power of the Commonwealth or of a State. It is a question of inconsistency in provisions that purport to have concurrent effect. 25 Furthermore, it may be argued that if s 23 of the FTA purported to impose direct liability on a person whom s 75B of the TPA made liable as an accessory to the conduct of a corporation, such a liability imposed by the FTA would not be dependent upon satisfaction of a principal element required to be proved to attract liability under s 75B namely, that it be proved that the person had knowledge of the essential facts that constituted contravention of the Act by a corporation. (See: Yorke v Lucas (1985) 158 CLR 661 at 670). Accordingly s 23 may be considered to be directly inconsistent with the terms of the Act to that extent. That is to say, insofar as s 75(1) of the Act provides that it operates concurrently with a State law, there can be no concurrent operation of a State law where, in respect of the same facts and the same subject matter, the Act and the FTA were not capable of "simultaneous obedience". (See: Ex parte McLean (1930) 43 CLR 472 per Dixon J at 483). It could be said that there was "textual collision" between the Act and the FTA at that point. (See: Miller v Miller (1978) 141 CLR 269 per Barwick CJ at 275; Grace Brothers per Gummow J at 504; PSL Industries Ltd v Simplot Australia Pty Ltd (2003) 174 FLR 111 at [11] - [17]). 26 Counsel for the ACCC submitted that s 75(1) of the Act applied because no conflict arose between s 23 of the FTA and the provisions of ss 60 and 75B of the TPA. Counsel for the respondents submitted that there was a "textual collision" between the provisions but the argument was not developed. In any event neither party sought that a notice be issued to the Attorneys‑General pursuant to s 78B of the Judiciary Act 1903 (Cth) to test the proposition. Accordingly the cause before the Court is not to be treated as involving a matter arising under the Constitution and it is to be assumed that the s 23 of the FTA has force and effect according to its terms. (See: Glennan v Federal Commissioner of Taxation (2003) 198 ALR 250 at [14]; Re: Finlayson; Ex parte Finlayson (1997) 72 ALJR 73 at 74). 27 However, having been found to be principals to a contravention of s 23 of the FTA, it is not apparent that it is either necessary or appropriate to exercise a discretion to make a further declaration that the sixth and eighth respondents aided and abetted a contravention of s 60 of the Act by Capalaba by reason of the acts which ground the declaration that those respondents contravened s 23 of the FTA. (See: Mallan v Lee at 215‑216). 28 Insofar as the ACCC seeks a declaration that the seventh respondent was involved in contravention of s 60 by the second respondent, by the use of physical force by the physical restraint of the consumer by the sixth and eighth respondents there is insufficient evidence to justify a conclusion that the seventh respondent aided and abetted, was directly knowingly concerned in or a party to that contravention by the second respondent. Evidence that the seventh respondent failed to desist from attempting to seize the consumer's vehicle when he had cause to anticipate that a physical confrontation with the consumer may occur did not show that the seventh respondent aided and abetted, or was a party to, the application of force by the sixth and eighth respondents. 29 Declarations will be made in accordance with the foregoing reasons. Further orders will be made in terms sought by the ACCC restraining the sixth respondent in respect of future conduct as a person carrying on business in the field of vehicle "repossession". The proposed period and purpose of restraint appear to be reasonable. 30 I am not satisfied that the limited information in respect of the business of the eighth respondent, or the minor involvement of the seventh respondent in this matter warrants the making of a similar injunction against those respondents. However, it is appropriate that they be given instruction as to operation for the Act by directing the respondents to attend a compliance seminar. 31 In respect of the question of costs the ACCC succeeded, in part, by obtaining declarations and orders against all respondents but it failed to obtain other declarations and orders sought, in particular against the seventh and eighth respondents. The appropriate order for costs would appear to be that the sixth respondent pay so much of the ACCC's costs as relate to that respondent but that otherwise the parties pay their own costs. Unless the parties file submissions within seven days on the issue of costs an order will be made in those terms. I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lee.

Australian Competition & Consumer Commission v Davis & Others

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