DIRECTOR-GENERAL OF THE DEPARTMENT OF FAIR TRADING v Joanna MONAGHAN & 1 Ors

DIRECTOR-GENERAL OF THE DEPARTMENT OF FAIR TRADING v Joanna MONAGHAN & 1 Ors - [2003] NSWSC 1099 - NSWSC 2003 case summary — Zoe

[12]

9 Section 43 of the FTA provides as follows: "43 Unconscionable conduct (1) A supplier shall not, in trade or commerce, in connection with the supply or possible supply of goods or services to a consumer, engage in conduct that is, in all the circumstances, unconscionable. (2) Without limiting the matters to which the Supreme Court may have regard for the purpose of determining whether a supplier has contravened subsection (1) in connection with the supply or possible supply of goods or services, the Court may have regard to: (a) The relative strengths of the bargaining positions of the supplier and consumer, (b) whether, as a result of conduct engaged in by the supplier, the consumer was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the supplier, (c) whether the consumer was able to understand any documents relating to the supply or possible supply of the goods or services, (d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the consumer (or a person acting on behalf of the consumer) by the supplier or a person acting on behalf of the supplier in relation to the supply or possible supply of the goods or services, and (e) the amount for which, and the circumstances under which, the consumer could have acquired identical or equivalents goods or services from a person other than the supplier (3) A supplier shall not be taken for the purposes of this section to engage in unconscionable conduct in connection with the supply or possible supply of goods or services to a consumer only because the supplier institutes legal proceedings in relation to that supply or possible supply or refers a dispute or claim in relation to that supply or possible supply to arbitration. (4) For the purpose of determining whether a supplier has contravened subsection (1) in connection with the supply or possible supply of goods or services to a consumer; (a) The Supreme Court shall not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention, and (b) The Court may have regard to conduct engaged in, or circumstances existing, before the commencement of this Act. (5) (Repealed) (6) A reference in this section to the supply or possible supply of goods includes a reference to the supply or possible supply of goods for the purpose of re-supply or for the purpose of using them up or transforming them in trade or commerce." 10 The matters to which the Court may have regard under s 43(2)(a) - (e) are a non-exhaustive statement of the considerations that may lead the Court to conclude that the supplier has engaged in conduct that is in all the circumstances unconscionable. Unconscionability 11 It was common ground that the principles stated by the High Court in Commercial Bank of Australia Ltd v Amadio (1982-1983) 151 CLR 447 concerning unconscionability for the purposes of the common law have application when considering unconscionability for the purposes of s 43(1) of the FTA. In Amadio Mason J observed at 461: "But relief on the ground of 'unconscionable conduct' is usually taken to refer to the class of case in which a party makes unconscientious use of his superior position or bargaining power to the detriment of a party who suffers from some special disability or is placed in some special situation of disadvantage, e.g., a catching bargain with an expectant heir or an unfair contract made by taking advantage of a person who is seriously affected by intoxicating drink. Although unconscionable conduct in this narrow sense bears some resemblance to the doctrine of undue influence, there is a difference between the two. In the latter the will of the innocent party is not independent and voluntary because it is overborne. In the former the will of the innocent party, even if independent and voluntary, is the result of the disadvantageous position in which he is placed and of the other party unconscientiously taking advantage of that position."

[13]

Deane J, in the same case, observed at 474: "The jurisdiction of courts of equity to relieve against unconscionable dealing developed from the jurisdiction which the Court of Chancery assumed, at a very early period, to set aside transactions in which expectant heirs had dealt with their expectations without being adequately protected against the pressure put upon them by their poverty. The jurisdiction is long established as extending generally to circumstances in which (i) a party to a transaction was under a special disability in dealing with the other party with the consequence that there was an absence of any reasonable degree of equality between them and (ii) that disability was sufficiently evident to the stronger party to make it prima facie unfair or 'unconscientious' that he procure, or accept, the weaker party's assent to the impugned transaction in the circumstances in which he procured or accepted it. Where such circumstances are shown to have existed, an onus is cast upon the stronger party to show that the transaction was fair, just and reasonable: 'the burthen of shewing the fairness of the transaction is thrown on the person who seeks to obtain the benefit of the contract' (see per Lord Hatherley, O'Rorke v. Bolingbroke (1877) 2 App. Cas., at p. 823; Fry v. Lane (1888) 40 Ch.D. 312, at p. 322; Blomley v. Ryan (1956) 99 CLR 362, at pp. 428-429). The equitable principles relating to relief against unconscionable dealing and the principles relating to undue influence are closely related. The two doctrines are, however, distinct. Undue influence, like common law duress, looks to the quality of the consent or assent of the weaker party (citations omitted). Unconscionable dealing looks to the conduct of the stronger party in attempting to enforce, or retain the benefit of, a dealing with a person under a special disability in circumstances where it is not consistent with equity or good conscience that he should do so. The adverse circumstances which may constitute a special disability for the purposes of the principles relating to relief against unconscionable dealing may take a wide variety of forms and are not susceptible to being comprehensively catalogued. In Blomley v. Ryan, Fullagar J. listed some examples of such disability: 'poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary' As Fullagar J. remarked, the common characteristic of such adverse circumstances 'seems to be that they have the effect of placing one party at a serious disadvantage vis-a-vis the other'". 12 In Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57; 77 ALJR 1853 the High Court discussed the concept of unconscionable conduct in a case involving a claim for equitable relief against forfeiture. In that context Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ in their joint judgment observed at [23] that the phrase "unconscionable conduct" tends to mislead in the several respects that are discussed in the succeeding paragraphs. By these proceedings the Plaintiff claims orders under the FTA in respect of unconscionable conduct engaged in by the First Defendant in the supply of services to various of her clients. Section 43 of the FTA is not confined to a consideration of the circumstances as they existed at the time of the formation of the contract but includes consideration of conduct that occurs during the course of the contract. In Holloway v Witham (1990) 21 NSWLR 70 Lee CJ at CL said at 74: "But important though it be that the Act enables the Commissioner to make applications on behalf of consumers for compensation, the real virtue in the Act, in so far as it is aimed at unfair trading, is that it enable remedies available to consumers and/or the Commissioner which are dependent, not upon breach of contract by the trader, but upon proof of specific conduct on the part of the trader as defined in the Act. The fact that the trader may by reason of the conduct engaged in be in breach of the contract, is largely irrelevant to the pursuit of remedies provided by the Act and, equally, breach of contract by the consumer will not necessarily displace the right of the consumer to the remedies provided in respect of the conduct of the supplier. In Holt v Biroka Pty Ltd (1988) 13 NSWLR 629, Kearney J held that s 4(4) of the Act, in defining "conduct", produced the result that the conduct to be considered was the whole of the conduct related to the contractual bargain and its performance and I respectfully adopt that view - it plainly carries out the purpose of the Act."

[43]

37 On Saturday 11 May 2002 Mr Daniels went back to Liberty Network to cancel the contract. While waiting outside their office he suffered a panic attack. He went to the Burwood Police Station to seek help and he was taken to the Burwood Hospital. After about two hours he was released. He returned to Liberty Network and spoke with Gina. He was in a distressed state and he said that he wanted his money back. Gina told him that he was suffering from buyer remorse and that he had nothing to worry about. She said to him words to the effect, "If you pull out of this deal I will lose my job and that will be your fault". She left the room and Cindy came in. Cindy reassured Mr Daniels that he had nothing to worry about and that they would arrange for him to be married in six months instead of the normal twelve months. Mr Daniels reiterated that he wanted to have his money back. Cindy told him, "I don't want to hear any more about giving your money back or I will lose my job and you don't want that. The office has been in operation for the last twenty-six years and you have nothing to worry about." 38 During this interview Cindy suggested that Liberty Network would arrange to obtain a mobile phone for Mr Daniels so that he could have private conversations with prospective partners. He was taken to the Vodafone shop in Burwood and a mobile telephone was purchased for him. It was suggested that Mr Daniels needed to go out on a practice date, since he had not been dating for some time. He was given an introduction advice form with the name of a lady to contact. 39 On 16 May Mr Daniels returned to Liberty Network and spoke with Cindy. He was shown a photograph of a Russian woman named Elena. During this interview he said to Cindy, "I want my money back, I don't want any bride". Cindy reassured him that his money was safe and told him that Elena was the woman for him. He was instructed to write a letter to Elena and to bring it to Liberty Network where it would be typed and sent to their agency in Russia. The Russian agency would translate the letter and give it to Elena.

[64]

65 I am satisfied that the First Defendant by her servants and agents in trade and commerce in connection with the supply or possible supply of services to Mr Daniels engaged in conduct that was in all the circumstances unconscionable contrary to s 43 of the FTA. I consider that Mr Daniels received no service for the fees that he paid and that it is appropriate to make a compensation order in respect of the total sum. Mr Burns 66 Mr Burns is aged fifty-three years. He has never been married. Over the past thirty years he has had few relationships. In his affidavit that was sworn on 10 October 2002 (his principal affidavit) Mr Burns states that he has suffered from depressive illnesses, emphysema and spinal decay for a number of years. As at that date he was taking prescribed medication including Effexir, Valium and Diazepam. 67 Mr Burns attended the offices of Liberty Network on 6 March 2002. He had earlier seen an advertisement for Liberty Network in the Sunday Telegraph. 68 At his first consultation Mr Burns was interviewed by Gina. He completed the Liberty Network Personal Particulars Form. During the course of the interview he was handed the Scale of Fees. Gina outlined the services available for each of the six levels of membership. Mr Burns said he would take up the $220 membership. A discussion at this initial consultation to the following effect took place: "Gina: This is the basic joining fee you get six months dating service. The further up the service you go the better the service, I have a client on the books for you. What sort of money are you prepared to spend to ensure your happiness. Burns: I have been to a dating service in 1971 and I was ripped off and I don't want that to happen again. Gina: How much would you like to spend on finding a lady. Burns: I could go to $3,000.00 if it was necessary and it I more than I had been prepared to spend (sic) Gina: Where do you have your money? Burns: In various investments. Gina: How much money have you got tied up in investments? Burns: Respectfully that's none of your business. Gina: I can upgrade you to higher plan and because of your past bad experience I will give you a discount. You will meet more ladies as you go up the scale. I have ladies now. You could be going out this Friday or Saturday night if you wished. Burns: I want an easygoing, down to earth lady with similar interests, surfing, astronomy and reading. I want some approximately my age or a few years younger, Australian or Anglo Saxon, obviously if I meet and attractive lady that good (sic) so long as we were compatible and can communicate, a slender and attractive lady, some who is slender in build similar to myself. Gina: Yes we can find a match for you. Because if you joined the higher level of service I have a match for you now and you could be going out this weekend.

[78]

Mr Burns read the form and signed it. 86 After Mr Burns signed the Guarantee of Service he was invited to write a letter to Elena. Arrangements were made for a photographer to take photographs of him. Thereafter there was discussion about how Mr Burns would pay the additional fees. He explained that he would have to break an investment. He agreed to pay $4,000 on 23 May with the balance of $8,700.00 when the funds became available. He paid the balance on 30 May 2002. 87 On 23 May 2002 Mr Burns commenced correspondence with Elena. He continued to request that Liberty Network arrange introductions for him so that he could go out on dates. He pointed out to Cindy that he had not initially approached Liberty Network seeking a long distance penfriend. It was his wish to be introduced to women who would be interested in going out with him socially. 88 On 1 July 2002 Mr Burns wrote a further letter of complaint to Liberty Network asserting that he had been a member for four months and that he had received relatively little in the way of return for his money. He had gone out on three dates; with Margaret, Nicole and Maria. He complained about the cost of the Melbourne trip given that it had not led to any on going contact. He pointed out that an overseas penfriend did not constitute a relationship and he complained that, despite the expenditure of a considerable sum of money, he was still sitting at home alone every weekend. Mr Burns stated that if he did not receive satisfaction he would make contact with the Department of Fair Trading and seek its assistance in resolving the matter. 89 In early July Cindy contacted Mr Burns and gave him a contact number for a woman named Suzi. Mr Burns contacted Suzi by telephone. She advised that she was then too busy with business affairs, but that she would ring him back. She did not. Cindy also supplied Mr Burns with the contact details of a woman named Rosalie. Rosalie did not return Mr Burns' telephone call. 90 The Second Defendant telephoned Mr Burns and gave him the contact details of a Russian woman living in Sydney. Mr Burns did not make contact with this woman. He had been advised by the Department of Fair Trading not to continue his dealings with Liberty Network pending the investigation of his complaint. 91 The Second Defendant telephoned Mr Burns and inquired about whether contact had been made with the Russian woman. During this conversation the Second Defendant became abusive and said to him: "We all know that you are manic depressive … but you didn't have to do this" (referring to the complaint lodged by Mr Burns with the Department of Fair Trading). 92 There was no issue concerning the sums of money paid by Mr Burns to Liberty Network. Nor was there an issue concerning the nature of the services that had been provided. In his affidavit Mr Burns neglected to mention that he had been given contact details for two other women, Vinnie and Lorraine. He had spoken to each by telephone. He agreed in cross-examination that his contact with Maria extended to a meeting at the Harbord Diggers Club one Sunday afternoon when they had had a cup of tea. In all, Mr Burns agreed that he had been furnished with the contact details of nine women who were living in Sydney. 93 Mr Burns was challenged upon the basis that he had lodged a complaint with the Department of Fair Trading, but had nonetheless, continued his correspondence with Elena. It was suggested to him that he had made his complaint to the Department of Fair Trading with a view to obtaining a refund of the monies paid under his contract with the First Defendant while at the same time seeking to obtain the benefit of the introduction to Elena.

[80]

96 I did not consider that Mr Burns intended to deceive by the omission to refer to the continuing correspondence with Elena in the latter part of 2002. Mr Burns was aggrieved with Liberty Network over what he regarded as the lack of service provided for the fees that he had paid. I accept that the complaint that he made to the Department of Fair Trading was a genuine one. As at 10 October 2002 when he swore his principal affidavit Mr Burns entertained the hope that Elena existed and that she might travel to Australia. He continued to correspond with her because of this hope. I do not find that state of affairs to be inconsistent with the assertion in this affidavit that I have set out at paragraph [94] above. The assertions in Mr Burns' principal affidavit reflected the concerns he had expressed to Cindy. He had paid approximately $20,000 to Liberty Network. He had a penfriend. He had wanted to be able to go out on weekends with a woman companion. His fading hope that something might come of the correspondence with Elena did not mean that he had received value for the fees that he had paid to Liberty Network. 97 Allied to the submission that Mr Burns' principal affidavit was intentionally misleading, was a submission touching on the circumstances in which he came to swear a second affidavit. In paragraph 35 of his principal affidavit Mr Burns stated: "Since 23 May 2002 I have been corresponding with the Russian lady Elena, we have probably exchanged about 10 letters each". In cross examination it was suggested to Mr Burns that his further affidavit, sworn on 22 November 2002, to which is annexed his correspondence with Elena, including letters written by him as late as October 2002, was prepared because the correspondence between him and Elena had come to light. The First Defendant referred to it in her affidavit that was sworn on 18 October 2002. Mr Burns said that he was not aware of the contents of the First Defendant's affidavit at the date he swore his second affidavit. I accept that to be the case. I do not find the assertion in paragraph 35 of Mr Burns' principal affidavit to be misleading.

[92]

111 Mr Marks was a single man aged thirty-five years at the date of his contact with Liberty Network. He was a shift worker accustomed to working six days per week on afternoon, night or early morning shifts. His work pattern had prevented him meeting women and forming a relationship. He described himself as a shy and introverted person. 112 In February 2002 Mr Marks saw an advertisement for Liberty Network in the Daily Telegraph. 113 On 20 March 2002 Mr Marks telephoned Liberty Network and spoke to Cindy. During that discussion he was told that the joining fee was $220. He sought and obtained confirmation that this was the only fee that was payable. Cindy suggested that he come in for an interview. He explained that his work commitments made it difficult for him to attend during office hours. Cindy said that he could join immediately and that he would be placed on the Liberty Network files and that he could call into the office on a later occasion. He was invited to transfer $220 to the Liberty Network account and supplied with the account details. He was given a membership number and told that a Liberty Network application form would be sent to him in the mail. Later that day Mr Marks transferred the sum of $220 to the Liberty Network bank account. 114 During the course of the following week Mr Marks received the Liberty Network "Personal Particular and Requirements Form" together with a receipt for his payment of $220. He completed the application form. During that same week Cindy telephoned him and arranged for an interview. 115 On 3 April 2002 Mr Marks attended at Liberty Network for an interview. Cindy interviewed him and told him that the agency had been established for a long time and that they had a number of nice ladies on their books. She quoted the success rate in finding the right lady for a client as being around fifty percent. 116 Mr Marks had forgotten to bring the application form with him to the interview. He was given another which he completed in the interview room. Cindy had a photograph album on the desk. She showed Mr Marks the Scale of Fees. She pointed to the $220 rate, saying: "That's just the bottom, the standard thing, but we want you to go up higher. The next one up you get a better selection of ladies and more opportunity."

[99]

130 A note on Mr Marks' Liberty Network file dated 27 June 2002 recorded by Veronica recorded: "Received phone call from Mrs Marks saying that she was Mr Marks' mum. Questioned as to why her son had paid $1,000 Visa on the 11.5.02. I told her I would call her back on (telephone number given). Called back and told her he signed for the $1,000. She said yes but what for, I told her she can ask him & she said he forgot and I said well I can't give you the info. She said what if he called and asked I said that is not a problem." 131 The Liberty Network file did not indicate that Mr Marks had followed the matter up by telephoning and enquiring about the purpose of the $1000 payment. 132 It is the defendants' case that Mr Marks paid two amounts to Liberty Network: $220 and $1,000. Service was not denied to him. He asked Liberty Network not to provide further services in his interview with the First Defendant on 18 May 2002. 133 In a supplementary affidavit that was sworn on 14 April 2003 Mr Marks corrected some of the assertions contained in his first affidavit which he said had been prepared from memory. He accepted that the events and conversations that he had said occurred at an interview on 10 or 11 April 2002 may have taken place on 11 May 2002. He did not take issue with the assertion that he attended Liberty Network offices on 11 May 2002 and that he spoke with Cindy. He recalled paying the sum of $1,000 on that occasion and being given a receipt for the same. He agreed that during his conversation with Marina an arrangement had been made for them to meet at the Rooty Hill RSL on a Sunday. This had not eventuated. He had telephoned Marina back and been told that she was too busy. 134 Mr Marks accepted that, contrary to the assertions set out in his first affidavit, he had authorised the $1,000 credit transaction on his Visa Card. His explanation as to how he had forgotten this event was that he had been tired at the time as the result of working shift work. He believed that the incident must have slipped his mind. 135 In cross-examination Mr Marks agreed that he had a recall of speaking to a woman named Michelle whose details had been provided to him by Liberty Network. He had little recall of his contact with Michelle. He did not remember ever meeting her. He recalled the telephone conversation as a short, sharp conversation. He was not able to say on how many occasions he had spoken with Michelle. 136 Mr Marks agreed that after the initial introduction supplied by Liberty Network had not worked out he had requested another introduction.

[104]

141 In the circumstances in which Mr Marks sought to cancel his membership which relevantly included that he had been subjected to pressure to pay $16,000 to meet a prospective Russian bride, I consider that the refusal to refund the $1,220 that he had paid to secure "Priority service" to have be unconscionable and contrary to s 43 of the FTA. Mr Bentley 142 Mr Bentley was a single man aged twenty-five years at the time he made contact with the Liberty Network. He had moved to Sydney and he did not have any friends living there. In June 2002 he saw an advertisement for the Liberty Network in the Daily Telegraph newspaper. On 1 July 2002 he telephoned Liberty Network and spoke to Cindy. He asked how much the service cost and was told that the first consultation was free and that Liberty Network was in a position to introduce him to girls that afternoon. 143 Mr Bentley went to the Liberty Network offices on 3 July 2002. He was interviewed by Cindy and an older woman who appeared very confident. This woman gave Mr Bentley a Personal Particulars Form to complete. She inquired about his employment and whether he was saving to purchase a house. He told her that he had saved about $8,000. He explained that he wanted to meet someone with whom he socialise and see whether they were suited. He said that he was sick of going out attempting to meet girls at nightclubs. The older woman explained that there were two women on the Liberty Network books whom she considered may be suited to him; one was a fashion designer from Queensland who was away for the next two weeks and the other was a gym instructor. She described both as being around twenty-five years of age, beautiful and single. She said that she could introduce him to these women if he was interested. He asked what the cost would be. He was then shown the Scale of Fees. The consultant pointed to the fee of $5,500 recommending it as the appropriate level of membership for him. He rejected this proposal. He also rejected the $1,580 membership. When it came to the $880 membership the consultant said, "I can offer you this, for six months. At this level, I can introduce you to the two girls straight away". Mr Bentley agreed and paid $880 to Liberty Network.

[106]

145 Within two days of paying the sum of $880 to Liberty Network Mr Bentley rang the Department of Fair Trading to seek advice. In evidence he said that he had understood that the payment of the fee would provide him with introductions to suitable women. There had been talk of two introductions prior to his payment of the fee, but there was no mention made of these after receipt of the funds. 146 On 13 July 2002 Mr Bentley went to Liberty Network to see Cindy. He was told that she was busy and he was asked to wait in an interview room. After a lengthy interval he spoke to Cindy. He asked for a refund of his fees. Cindy said he would have to speak to one of the managers, David or Joanne. She asked if he had received information that had been sent to him concerning a woman named Nikki. Mr Bentley said that he had not. He complained about being made to wait so long to see Cindy and he insisted that he wanted a refund. Cindy gave him a Liberty Network business card with the names, "Joanne" and "David" written on the back and again said that he would have to speak to them since she was not in a position to refund his money. 147 On Monday 15 July 2002 Mr Bentley contacted the First Defendant by telephone and requested a refund of the fee of $880. He complained that he had not been given any introductions or offered any services. She said, "We can't do that. We can put your file on hold". Mr Bentley went on to discuss the possibility of a partial refund if it were considered that he had received some service for his money to-date. The First Defendant said to him that Liberty Network had sent out material to him and that she feared that he was going out with the girl and wanting his money his money back at the same time. The discussion became acrimonious. 148 The First Defendant in her affidavit suggested that Mr Bentley had confused Veronica and Cindy. Cindy is older than Veronica. It appeared likely that Veronica had been the first point of contact and that she had introduced Mr Bentley to Cindy at the initial interview. Nothing of significance turns on this. The First Defendant said that on 4 July 2002, two days after Mr Bentley joined Liberty Network, an introduction was processed relating to a woman named Nikki, reference number 18K, and sent to Mr Bentley by mail. 149 The First Defendant's account of the telephone call with Mr Bentley was at odds in some respects with his account. She recalled that Mr Bentley had commenced by asking for a refund of his money. She said that she inquired, "What is the reason?" and that Mr Bentley said, "I've got a girlfriend now and I don't need your services. Anyway you haven't done anything for me". She said that she responded by saying, "If you have a girlfriend I am quite happy to put your file on hold but you can't expect me to refund you because you want the money for something else. If you didn't get the introduction to Nikki I can do it again". 150 To the extent that there were differences between the account of the telephone call given by Mr Bentley and First Defendant I prefer his version. In this respect I have regard not only to the impression that I formed of each in the course of giving evidence but also to what seems to me to be the inherent probability of the respective accounts.

[115]

On 10 February 2002 Mr Milton again telephoned Liberty Network and made an appointment to attend at their office at 4.00pm that day. He kept the appointment and was interviewed by the First Defendant and a consultant named Veronica. He was asked how much money he wished to spend and said that he wanted to spend as little as possible. He explained he had a previous bad experience with an introduction agency and he wished to avoid such a situation again. 159 The First Defendant explained to Mr Milton that the higher the fee he paid the more opportunity he would have of being matched to the right partner. She took him through the Scale of Fees explaining the differing level of services available. Mr Milton said that he had been quoted $220. He observed that he was now being asked to pay more. He said he would go home and think about it. The First Defendant said that his Personal Details form would be thrown in the bin and that if he decided to sign up with Liberty Network in the future he would have to come back and complete another form at a cost of $100. He asked if his form could be held for a couple of days while he thought about the matter. The First Defendant repeated that if he were to leave the form would be thrown in the bin. She emphasised that by paying for higher services Mr Milton would be improving his chances. The interview concluded with Mr Milton saying that he would pay the $220 and, if need be, he would upgrade his membership. He paid the fee with his Visa credit card. He was handed a Liberty Network reference card and told to quote the reference number when telephoning the office. 160 On 11 February 2002 Mr Milton was telephoned by a person who identified herself as Cindy from Liberty Network. She said that she had located a girl named Kylie, a schoolteacher, who would be suitable to be introduced to him. She said it would be necessary for him to come into the office and have his photograph taken. She quoted the sum of $380.00 as the cost of obtaining the photographs. 161 Mr Milton said that he did not have time to attend at the office and have his photograph taken. He considered it would be cheaper to have a photographer friend take photos of him. He said he would arrange to do this and contact Liberty Network thereafter. 162 On 18 February 2002 he received a letter from Liberty Network advising him that his details had been given to a person named Sally. He understood that Sally had been supplied with his telephone number and that she would ring him. He received no calls from Sally. 163 On 1 March 2002 Mr Milton telephoned Liberty Network and spoke with Cindy, informing her that he had not been contacted by Sally. Cindy said she would chase the matter up. During this call Mr Milton complained that he had signed up with Liberty Network on 10 February and that he had not received any introductions. Cindy said she would follow up the introduction to Sally and that she had another introduction that may suit Mr Milton. She explained that this woman was going away to New Zealand for a holiday and would not be available for an introduction for a fortnight. She offered to endeavour to arrange another introduction for Mr Milton in the meantime.

[128]

The Second Defendant also asserts that during this discussion with Mr Anderson he said: "I am not going to admit to you that the business does not have the money to repay James instantly but I am going to tell you that I am not going to risk losing the business and letting down all our clients because we have no liquidity. We are not going to be closed by you. … Joanne and I have put into place safeguards to ensure that any further disbursement money received will be held in a special account. We will make the money by attracting more clients to our local service." 185 I am satisfied that the Second Defendant was aware of the dealings between Liberty Network and Mr Burns. Passages in his affidavit seemed to me consistent with such a view. After Mr Burns complained to the Department of Fair Trading I am satisfied that it was the Second Defendant who spoke to him by telephone on more than one occasion seeking to effect an introduction with a Russian lady in Sydney. 186 In his affidavit the Second Defendant makes assertions consistent with a view that he acted, in conjunction with the First Defendant, as a de-facto proprietor of the business. Thus at p 77 he states: "In Liberty I also insisted that in the event that if anything about a prospective client appeared different from the norm I was to be told, so I could interview that person personally." 187 The evidence established that the Second Defendant was present at the offices of Liberty Network six days per week. I am satisfied that he was knowingly concerned in the conduct of the First Defendant that I have found to be unconscionable contrary to s 43 of the FTA with respect to Mr Daniels, Mr Burns and Mr Marks. The Relief 188 The Plaintiff seeks declarations that during the periods specified with respect to each of the five named clients the First Defendant engaged in conduct that was in all the circumstances unconscionable and that the second defendant was knowingly concerned in that conduct. I propose to make declarations in the terms that are sought with respect to the dealings between the First Defendant (with which the Second Defendant was knowingly concerned) and Mr Daniels, Mr Burns and Mr Marks.

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