Director of Consumer Affairs Victoria v Backloads.com Pty Ltd

Director of Consumer Affairs Victoria v Backloads.com Pty Ltd - [2009] VCAT 754 - VCAT 2009 case summary — Zoe

[58]

The Backloads removalist services contract is a consumer document which, to the extent it is printed on paper, typed onto paper or typed by keyboard strokes onto an internet webpage, is not in a minimum 10 point font, contrary to section 163(3)(b) of the Act.
The Backloads removalist services contract is a consumer document that creates confusion, uncertainty, or doubt and is, therefore, not clearly expressed, contrary to the requirements of section 163(3)(c) of the Act, because:
- (a) it refers to an unidentified non-party - the "Contractor" - and confers rights and obligations under the contract in respect of the unidentified non-party;
- (b) it purports to assign to "the Contractor" who is not a party to the contract, the rights of persons on whose behalf the respondent is acting, who are also not party to the contract, to collect all charges and payments from the consumer. This is apparently regardless of whether the "charges and payments" arise under the contract or by other contracts or reasons. The term does not specify the respondent's authority to assign such rights, in circumstances where the authority to assign is not self evident;
- (c) having assigned the respondent's right to collect all charges and payments from a consumer to an unidentified non-party - "the Contractor" - it inconsistently includes terms that purport to empower the respondent to seize, retain, or defer or refuse delivery of any goods or to sell all or any of the goods to recover payment of outstanding charges;
- (d) it contains terms that are inconsistent:
  - (i) Term 11(c) which provides that: "the method, route and time by which the carriage of Goods or provision of services under this contract are performed shall be at the absolute discretion of the [respondent]." (Emphasis added);
  - (ii) Term 14(a) which provides that: "all quoted prices are for the performance of the work specified in accordance with the Warranties implied by the Trade Practices Act 1974." One of the warranties implied by the Trade Practices Act 1974 is, relevantly, to the effect that, where a consumer expressly or by implication makes known to the corporation the result that the consumer desires the services to achieve, there is an implied warranty that the services supplied under the contract for the supply of the services will be reasonably fit for that purpose or are of such a nature and quality that they might reasonably be expected to achieve that result, except where circumstances show that the consumer does not rely, or that it is unreasonable for the consumer to rely, on the corporation's skill or judgment. (Emphasis added); and
  - (iii) Term 11(c), which empowers the respondent to perform the contract at its "absolute discretion" is inconsistent with section 32JA(1) of the Fair Trading Act 1999 (Vic) which implies into a contract of supply of services an implied condition to the effect that where a consumer expressly or by implication makes known to the supplier or in the course of any antecedent negotiations, makes known to a dealer or to a person acting on behalf of a supplier the particular purpose for which the services are required or the result that the consumer desires the services to achieve, that the services are reasonably fit for that purpose or are such as might reasonably be expected to achieve that result;
- (e) it empowers the respondent to abandon the Goods. Term 11(b) relevantly provides that: "if there is no-one in attendance at the place for delivery of the Goods the [respondent] shall be entitled at its discretion to leave the Goods at that place ...";
- (f) its terms refer to other terms which appear to be incorrect references:
  - (i) Term 14(b) relevantly provides that: "... The effect of this sub-clause may be varied where the Client chooses a Transit Protection option. (See Clause 15) or ...". Clause 15 deals with valuation of goods, not Transit Protection; and
  - (ii) Term 14(f) relevantly provides that the consumer has to indemnify the respondent on "... the occurrence of any of the events listed in this clause or clauses 10, 12 or 14 ...". Term 12 does not list events;
- (g) it uses terms that are likely to mislead consumers as to where they have to initiate proceedings for any alleged breach of contract. Term 2(e) provides relevant that: "This agreement shall be governed by and interpreted and enforced in accordance with the laws applicable in the Australian Capital Territory."; and
- (h) it uses terms that are contrary to fact. Term 2(e) provides relevantly that: "This agreement shall be deemed to have been entered into in the Australian Capital Territory."

[68]

This proceeding against the respondent was commenced in late 2007. The points of claim and defence were filed in 2007 and the matter was the subject of directions hearings in late 2007.
The Director failed to comply with orders made at the directions hearing on 13 December 2007 to file witness statements and did not appear at the directions hearing on 13 December 2007.
The Director's failure to comply with these orders led to the Tribunal making an order on 7 February 2008 pursuant to s78 of the VCAT Act that the proceeding be determined in favour of the respondent and the proceeding struck out. The Director then made application for the setting aside of those orders and the reinstatement of the proceedings. That application was ultimately successful and the proceeding was reinstated on 20 May 2008.
Since that time the proceeding has been prepared by the Director in accordance with the Tribunal's directions, and in particular the respondent has been served with ten affidavits in support of the application. Since the proceeding was reinstated the file shows that it has been the respondent, not the applicant, who has failed to comply with orders of the Tribunal. These failures have led to the proceeding being adjourned from its scheduled hearing date and finally listed for hearing before me on 25 November 2008.
On that date the respondent sought a further adjournment, Mr Matysik saying that he wished to produce a great many witnesses to give evidence in the application and needed time to prepare his case.
After hearing argument, I ordered that the applicant present its case on 25 and 26 November 2008. I further ordered that at the conclusion of the applicant's case the proceeding be adjourned to 1 April 2009 to give the respondent plenty of time to undertake the preparation that he had outlined and to arrange to call his witnesses. I made other procedural orders for the filing of documents.
The matter commenced again before me on 1 April 2009 and continued on 3 April 2009. As the closing argument in his submissions Mr Matysik made application to me under s60 of the VCAT Act that certain parties should be joined to this proceeding. He identified the parties to be joined as follows:
1. The Australian Furniture Removalists Association. He said that that body should be joined to the proceeding because an adverse decision would impact on most of the transport industry in Australia and that the Australian Furniture Removalists Association was the official body of removalist experts in Australia. He said that AFRA was the force behind an Australian standard for furniture removalist contracts and that AFRA's contract has been endorsed by the Consumer Affairs Victoria website.
2. Kent Industries Pty Ltd. He said that the managing director of this company was the president of AFRA. He said Kent Industries was a large organisation with the financial resources to fight an application such as this and he wished to have those resources employed on his behalf.
3. AutoTrans Express Australia Pty Ltd. He told me this company specialised in car removals. He said the terms and conditions of the contract used by them were far more abhorrent than those of this respondent and that this company deals with the public.
In support of his application for a joinder Mr Matysik told me that he had known of the provisions of s60 of the VCAT Act well before the date of making his application and in fact had sought to use s60 in other unrelated proceedings before this Tribunal. However, he had delayed making the joinder application before me because he had thought up to the conclusion of the case that he could win it without drawing anyone else into the proceeding. He had now formed the view that he was unlikely to win the case. He had heard legal argument put on behalf of the Director that he was unable to understand. He had recently noticed the conditions of contract of these companies and had come to the conclusion that an adverse decision against him would have a significant impact upon the furniture removalist industry generally. It was for these reasons that he was making the application.
Section 60 of the VCAT Act provides that I may order that a person be joined as a party to the proceeding if I consider -

[72]

I announced to the respondent at the conclusion of the hearing that his application for joinder under s60 was refused. The reasons that I have refused this application follow below.
It is not my view that any other person named by the respondent as a potential party ought to be bound by or have the benefit of any order which I may make in this proceeding. The orders sought by the Director are not orders which will apply generally across the industry. They are orders which, if made, will apply solely to this respondent.
The proceeding before me is an application by the Director to declare certain terms which are said to be contained in the contracts used by this respondent to be unfair. In deciding whether or not the impugned terms are unfair I am required by the legislation to have regard to those terms as they are used in the particular contract of which they form part, and in the context of that contract. Subject to considerations of a general nature which I will refer to in the body of this judgement, my purpose is not to examine every contract in the furniture removalist industry, or every term of every contract in the furniture removalist industry. My task is to examine the particular terms which are the subject of this application and determine whether or not they are unfair terms within the meaning of s32W of the Fair Trading Act.
Further and for the same reasons it is not my view that any of the persons named by the respondent are affected by this proceeding. Whether or not any term in any contract used by them is an unfair term is a question that will depend upon the application of all the principles set out in s32W and 32X to their individual contracts. It may well be that other furniture removalists may be very interested in the outcome of this proceeding. They will not, however, be affected by the proceeding unless the Director seeks to take action against them in respect of their own terms.
Finally in my view it is not desirable that any other person be joined as a party at this late stage of the proceeding. This application was made at the very conclusion of this proceeding. It is a proceeding which has been on foot since late 2007. It is a proceeding in which all the evidence has now been heard and all witnesses cross-examined. The respondent has known for a long time both about the essential nature of the proceeding and also about the possible applicability of s60 of the VCAT Act to this proceeding.
Mr Matysik submitted to me that the interests of justice would be served by parties being joined who had the financial capacity to instruct solicitors to defend the proceeding. Quite apart from the issue of whether or not parties should be joined in order that the respondent may have access to their financial resources, it appeared to me that although Mr Matysik was unrepresented, he has put the case on behalf of the respondent in a very effective manner. Mr Matysik has prepared copious amounts of material in support of his case and has argued the respondent's position before me in detail. He has told me that he has a law degree although he does not practise law. His legal training was evident in the way in which he argued the respondent's submissions.
To join any other party at this late stage would be impractical and not in the interests of justice. For these reasons the application was refused.

[73]

In previous cases before me, I have discussed the nature of this proceeding and its relationship to the scheme of consumer protection in Australia. I required the applicant to make submissions fully on this issue before me, but I do not intend to reproduce this material as I have dealt with it in previous applications and I regard it as being relatively uncontroversial.
Proceedings under Part 2B are in the nature of public interest proceedings. They are not brought in order to determine individual consumer disputes. They are brought for the protection of the public interest in order to challenge, for the public good, the use of unfair terms in consumer contracts.
Thus, although evidence has been presented to me of particular consumer transactions with Backloads, it is not necessary for me to make a finding as to the ultimate legal responsibilities of each party arising out of those individual consumer transactions. It was apparent to me in the hearing that Mr Matysik had difficulty comprehending this distinction, and this is understandable, for it is unusual for sworn evidence to be given before a Tribunal without the Tribunal being obliged to finally determine all of the legal issues which are raised in that sworn evidence.
Section 32Y of the Act provides that a term which I declare to be unfair is void, but that the contract in which such an unfair term exists will continue to bind the parties if it is capable of existing without the unfair term.
This underscores the fact that I am not making a decision principally to affect the contractual obligations of any individual consumer. Whether or not an individual consumer contract is affected by my decision will be a matter for the individual concerned. I need to make it clear that I am not asked by the Director to make any order which directly affects the legal remedies of any of the deponents of the affidavits. Each of those persons may have their own remedy against the company if they choose to avail themselves of it.

[82]

The Director presented evidence from several consumers who had entered into transactions with the respondent.
Joanne Hogan made contact with the respondent in about late June of 2006. Initially she carried out an internet search to find a removalist and obtained a telephone number of the respondent.
She telephoned the respondent around the end of June 2006 and spoke to a member of the respondent's staff. She advised that she needed to move her furniture and provided the staff member with her contact details and a list of all the items which needed to be moved. She was given a telephone quote in the sum of approximately $350.
After making some enquiries and realising that the respondent had offered the cheapest quote, she telephoned again on the same day to accept the quote and booked the job in for 15 July 2006.
She telephoned the respondent again in early July 2006 to add a scooter to the list of items to be moved and obtained a revised quotation of $482 to include the cost of moving the scooter. It appears that her father also had a telephone conversation with the respondent to add the cost of insurance to the quotation.
Ms Hogan never received any written document from the respondent prior to the collection of her goods and did not see any terms or conditions of contract. On 15 July 2006 the respondent collected her goods from the property and was paid the sum of $572, which amount included $88 insurance arranged by her father. She received a handwritten receipt for the goods when she asked for a receipt for payment.
Ms Hogan deposed that many of the items which were the subject of the contract were missing. These items were contained in three large striped zip bags. The balance of her affidavit details her attempts to find the whereabouts of her items and to make a claim on the insurance which she had effected through the respondent company. It took her five months to locate the missing goods. The only occasion on which she sighted the company's terms and conditions was on the back of a letter addressed to her father dated 1 August 2006 - a fortnight after the proposed delivery date and on the letterhead of Interstate Australia-wide Furniture Removal & Taxi Truck Services, but referring to the respondent's website and ABN and ACN numbers.
Marwa Khalaf also made contact with the respondent after conducting an internet search and obtaining the respondent's telephone number.
On 12 July 2006 she obtained a quotation from a representative of the respondent for the removal of goods from Ballarat to Melbourne. In obtaining the quote she provided a list of items to be moved, and the pick-up and relocation addresses, and was given a quote for $366. During the conversation Ms Khalaf told the respondent's representative that she wished to move on Sunday 16 July 2006 and asked how long it would take for the move from her property in Ballarat to her new address in Melbourne.
Her evidence was that the respondent's representative told her that it would take two days but that it would never usually take that long and at most it may take a few hours.
She subsequently received an emailed quotation confirming the details she had discussed over the telephone and providing a facility for the quotation to be edited or booked.
She used this facility on the internet through the respondent's website to amend the quote. On receiving an email confirmation of those amendments she also received from the respondent notification that the transit time between the pick-up and drop-off address would be between four hours and two days, and a list of the inventory of furniture and other personal items to be moved.
On 13 July 2006 she telephoned the respondent again to add additional items to be moved and received a higher quotation. She confirmed over the telephone her booking on 16 July 2006.
She had another discussion with a representative of the respondent on 15 July 2006, again confirming the pick-up.
The balance of her affidavit details the difficulties which arose for her when the respondent did not attend on 16 July 2006 to pick up the items and her difficulties in obtaining information from the respondent as to when the pick up would take place.
The Director also relied upon affidavits from other persons who were involved in each of these moves, such as Noha Khalaf, the sister of Marwa, and Gerard Hogan, the father of Joanne Hogan.
The Director presented evidence from Bardia Ghostine, who was also a customer of the respondent. Her evidence was that she made contact with the respondent through an internet search and obtained the quotation from the respondent via the internet through an on-line questionnaire. She accepted the quote by telephone to the respondent. The quote was in the sum of $558 and related to collection of goods on Thursday 20 April 2006.
She received a written letter dated 10 April 2006 which confirmed the quote and provided the details of the quote and the respondent's conditions of contract.
Around 17 April 2006 she decided to amend the quote to add the transfer of two couches. She telephoned the respondent and arranged for this to be done at a cost of an extra $200 and arranged for the scheduled pick-up to be 20 April 2006. She was annoyed that the pick-up took place after office hours at 5.45 pm. She was even more annoyed when the load was not delivered for a further four days and some of the items in the load were damaged. Further, she received some belongings which did not belong to her and those belongings were not collected from her until 6 October 2006.
She also made a claim on the respondent for damage to the property, which was dealt with in a very tardy and uncooperative manner.
The Director also relied upon an affidavit of Lisa Anne Tickell, an inspector employed by the Director. Her affidavit set out the attempts which have been made by the Director to increase consumer and public awareness about unfair contract terms, particularly in certain targeted industries, including the industry of furniture removals. She identified the respondent company as being a company which had come to the notice of the Director because of complaints from consumers.
Lisa Tickell also set out the history of the Director's communications with the respondent company since the year 2004. She deposes to requests by the Director to the respondent to redraft its consumer contract and to ensure that it was published in a font size that did not offend against the requirements of s163 of the Act. She exhibits correspondence between the Director and the respondent in which the respondent's antagonism to the Director is evident.
Of particular concern is a document placed on the respondent's website which describes the witness Marwa Khalaf. It identifies Marwa Khalaf by name. It suggests that Ms Khalaf has made a fraudulent claim for lost wages and rent and concludes with the sentence: 'We would also like someone like the police to investigate Ms Marwa Khalaf for attempted fraud.'
I have outlined the evidence that Ms Khalaf gave before me. Her oral evidence was consistent with the contents of her witness statement and her credit was not challenged by Mr Matysik when he cross-examined her.
The Director also relied on an affidavit of Sonia Barberio. I will deal with her evidence in considering the section 163 application.

[83]

As I have outlined, the respondent did not prepare witness statements but instead provided a great deal of written material as his evidence in chief. Mr Matysik was cross-examined briefly by counsel for the Director in relation to various matters.
Broadly, the evidence of the respondent was as to the type of business run by the respondent and its place in the market. Mr Matysik provided me with handwritten documents explaining the make-up of costing in the transport removalist industry. That evidence was directed to establishing that this respondent offers a much cheaper alternative for furniture removal than the major furniture removalist companies.
Mr Matysik identified all the components he expected that a removalist company would use in costing an individual job, and explained that the respondent was able to charge significantly lower prices than these estimates because its prices were based not on the full overheads and component costs but only on the costs of loading and unloading.
He used the load from Ballarat to Coburg which had been described in the evidence of Marwa Khalaf as an example of the respondents pricing structure. He suggested that if that job had been costed from start to finish it would include the cost of a driver, the cost of an offsider to travel with the driver, the cost for two men for one hour to load the items, two hours to drive to Melbourne, one hour to unload and two hours to drive back. It would also involve other expenses such as extra waiting time for employees to arrive, the cost of moving trucks in and out of the depot and the cost of refuelling. He then identified all of the overheads which would be contributed by an office operation and the costs of insurance.
He suggested that Marwa Khalaf's job should have been charged out at the rate of approximately $1,100 if all of those variables were taken into account. He estimated that Marwa had saved $300-$500 over all other competitors by accepting the respondent's quote.
He said the capacity of the respondent to offer such a low price depended upon the way in which the respondent's business was organised. Firstly he relied on his submission that the respondent's business was not that of the furniture removalist per se. He described the business as being that of an agent for over 7,000 contractors. These contractors were owner-drivers. Backloads would identify an owner-driver who had space in a truck and who could offer a cheap rate on the understanding that the delivery would be fitted in with the driver's other commitments.
The corollary of this, according to Mr Matysik, was that prices could only be maintained on this level if the contractors had absolute flexibility as to the time of pick-up and the time of delivery, and also the route of transportation. He pointed out that a load could be delivered by what appeared to be a circuitous route but which was in fact actually the cheapest because it fitted in with a particular driver's other delivery commitments.
He said that his quoted prices were able to be so cheap because they were based on the trucks driven by the contractors being full all the time, even on the return trip. Therefore the contractors had better productivity and lower charges could be levied. He further pointed out that he did not charge credit card surcharges in the way that they were charged by his competitors.
Consistent with his argument that the respondent's role was of agent for the contractors he said that some of the terms of his contract were terms which applied as between the consumer and Backloads, but that a substantial number of the terms were actually for the customer's benefit in respect of the contractor. He did not identify which terms fell into each category.
He asserted that the terms in the Backloads contract created guaranteed service from the contracting drivers where otherwise the customer would have no written agreement with the drivers at all. He described the role of the respondent as being like a franchisee having a supervisory role over the transaction between the consumer and the ultimate contractor, and said that in carrying out this role the respondent provided a safer option for the consumer than if the consumer had attempted to contract directly with one of up to 7,000 contractors.
He described the evolution of the contract terms and conditions presently on the website. He said that he would prefer not to have to use a contract but that contracts were valuable in determining what to do in unplanned situations. He told me that twenty years ago he copied terms from other contracts and started using them and those terms had evolved from there . He said that contract terms were valuable in situations where his employees became sick and tired of explaining matters such as delays in delivery to consumers, and could fall back on written terms.
He also gave evidence that the contract terms were continually updated in response to new situations.
Mr Matysik also gave evidence relevant to the issue of font size, and I will consider this evidence when dealing with the Director's section 163 application.

[85]

Mr Matysik presented as evidence various other contracts. He presented a printed version of an AFRA contract which he said was a contract designed by and recommended by the Australian Furniture Removalists Association and endorsed by the Department of Consumer Affairs.
He also supplied copies of contracts used in other industries, and has referred extensively in argument to what he says are almost identical terms to the terms impugned in this proceeding. I did not hear any evidence from any person other than Mr Matysik in relation to these contracts or the circumstances of their use.
It appeared to me that he introduced these contracts for two main reasons.
Firstly, he wished to demonstrate that there were contracts being used in the furniture removal industry and in other industries which were far harsher on consumers than the contract terms used by this respondent. He suggested the applicant should direct her attention to those contracts rather than to his contract.
This is clearly an irrelevant consideration for me. This proceeding does not concern whether or not other contract terms are unfair. I take the view that even if the respondent was able to establish that other traders, in other industries or in the removalist industry, may be using more harsh terms than those used by this respondent, such a finding does not assist me to ascertain whether the terms used by this respondent which are impugned in this proceeding are unfair.
Secondly, he wished to demonstrate that there were good commercial reasons why he used each of the terms which are impugned in this proceeding, and that this argument was buttressed by the fact that other traders used similar terms. Where this argument was put I have considered it. However, the argument was undercut because Mr Matysik could not demonstrate one instance in which exactly the same term was used as one of the terms impugned in this proceeding. In all cases the terms which he relied on were different in some respect. Generally the difference contained the crucial element that has led the Director to challenge the term.
The Director challenged Mr Matysik's assertion that the AFRA contract was endorsed by the Department of Consumer Affairs. As I have noted, there was no evidence before me that any of the contracts presented to me were in the form currently used in the marketplace apart from Mr Matysik's assertion that he had retrieved the contracts from various websites. There was also no admissible evidence that the AFRA contract was endorsed by the Department of Consumer Affairs.
However, even if I were to accept that the printouts of contracts which I have been provided with are up-to-date versions of the contracts used by other traders, and even if I were to accept that that version of the AFRA contract provided to me has been in some way endorsed by the Department of Consumer Affairs, in the key areas which I have identified later in these reasons the contracts presented by Mr Matysik are simply not the same as the contract terms under consideration by me in this case.
The AFRA contract and the other contracts which I have previously mentioned may be relevant in showing commercial practice in the removalist industry. I acknowledge that the Director submits that commercial practice should not be a deciding factor in my consideration of any of these terms. However, even if commercial practice is to be taken into account in assessing whether or not a term is unfair, the relevant commercial practice must be commercial practice in respect of the conduct authorised by those specific terms.
In other words, a term in another contract is of no assistance in my analysis as evidence of commercial practice or necessity unless it can be seen that the exact behaviour which is comprehended by the offending terms is replicated by other similar businesses in circumstances which can be described as examples of good commercial practice or good business morality.
It is not enough, for instance, to rely upon the fact that terms may be generally used within trade or commerce which provide a mechanism for a trader to take a lien, to justify any term at all purporting to grant a lien no matter how unfair that term may be in the context of the contract under consideration.

[86]

The Director has provided me with a document setting out the orders which the Director seeks me to make in this proceeding. In that document the Director describes the respondent's contract as being constituted by the following:
1. A quotation either in writing or oral identifying location of the goods and the destination to which they are to be carried, an inventory of the goods, the price at which the consumer's goods will be carried and an estimate of the approximate transit time; and
2. Incorporating by reference the respondent's conditions of contract on the respondent's website; and
3. An acceptance of the offer, either in writing or oral by the consumer.
Mr Matysik gave evidence that in his experience each of the contracts he enters into with his clients is unique. Sometimes such contracts are completely oral in that they consist of a telephone enquiry and a delivery being made the following day before any documents regarding the enquiry are generated. In some circumstances they incorporate the conditions of contract on the website. In some situations they involve the final acceptance being made on behalf of the respondent. In other situations the final acceptance is made on behalf of the consumer.
Mr Matysik also gave evidence that he considers that in some circumstances a document entitled 'Handy Hints' which is on the respondent's website also forms part of the contract. These handy hints include issues about safety regarding the transportation of hazardous goods and issues about packaging. They also refer to the need to have a representative of the consumer available at the time of pick-up and delivery of the goods to be moved.
The existence of the Handy Hints document and its relationship to contracts entered into by the respondent was not put to the Director's witnesses in this case and it is not referred to in the document headed "Conditions of Carriage" on the respondent's website. However, Mr Matysik's evidence was that depending on the circumstances it may be incorporated into an individual contract.
The question of whether this document is to be incorporated into the contract may make a difference in individual cases. It may be that some of the terms impugned in this proceeding may need to be read in conjunction with the contents of the Handy Hints document. Mr Matysik submitted that this was so in respect of terms 11(a) and 11(b). I will deal with this further when discussing the individual terms.
I accept that the description proffered by the Director of the elements of the Backloads contract is an accurate one, and I have adopted it in the orders which I have made in this proceeding. Just because the contract may take a different form in different individual consumer transactions with Backloads, does not exclude the operation of Part 2B, which is expressed broadly enough to cover a contract that is completely oral, completely in writing, or a combination of various oral and written terms.

[87]

A consumer contract is defined in s3 of the Fair Trading Act 1999. A consumer contract is, pursuant to that section, an agreement, whether or not in writing, and whether of specific or general use, to supply goods or services of a kind ordinarily acquired for personal, domestic or household use or consumption, for the purposes of the ordinary personal, domestic, or household use or consumption of those goods and services.
It is clear therefore that the fact that the Backloads contract may be partly in writing and partly oral, or constituted by several different documents, does not exclude it from being a consumer contract.
The Director submitted that the services to be provided under the contract, that is the services of removal and transport of household items and effects, are services of a kind ordinarily acquired or used for personal, domestic or household use or consumption and that the services were used for the purpose of ordinary personal, domestic or household use or consumption of those services.
The respondent has submitted that the contract is not a consumer contract. It says that the contract in question is used mainly for interstate transport services. It says that interstate transport services are not part of the "ordinary activity" within the lives of the general population. It suggests that most people might only use transport services once or twice in their lives, and may never use interstate transport services at all.
The respondent suggests that there must be an element of regular use before an activity can be described as a kind ordinarily acquired for personal, domestic or household use or consumption.
Mr Matysik asserted that the respondent's services were used for the carriage of a wide variety of goods, many of which were not household or consumer goods. He was unable to give me any specific information as to the percentage of household or consumer items carried, or the percentage of transportation work performed for companies, rather than for individuals.
The respondent suggests that if its contract were characterised as a consumer contract, this must also apply to many other contracts in the transport industry, and this would not be an outcome contemplated by this legislation, which he said was designed to cover simple consumer-trader relationships. The respondent suggested that in contrast its contracts cover complex issues. The subject matter of its contracts includes the prospect of derailment and large-scale crashes involving loss of the items to be carried. The respondent said that such incidents cannot have been contemplated in an agreement relating to ordinary consumer activity.
Mr Matysik referred me to many Acts of Parliament which cover transport in general, and commercial transport in particular.
He suggested that the respondent's agreements did not cover simple issues in the way that (for instance) gym contracts covered simply attendance and activity at the one place. He submitted that there were thousands of things that could go wrong in interstate transportation and most of those things were beyond anyone's control.
At one point Mr Matysik conceded that the work of a local removalist may well be covered by the description of a consumer contract but he submitted that the work of an interstate removalist would not be.
In contrast the applicant relied upon the very photos presented by the respondent of goods transported by the respondent to support the applicant's argument that the contract was a consumer contract. Counsel for the applicant pointed out that the goods, insofar as they can be seen in the photos, are of an ordinary consumer nature, such as a domestic breadmaker.
The Director took me to the evidence contained in the affidavits of witnesses of the kinds of objects described as having been moved by the respondent. These items were all common household items and not items of machinery or of a business or commercial description.
Further, the applicant relied upon Mr Matysik's evidence that in pricing its services the respondent does not compete with the larger and more expensive removalist services. Instead of competing in that market, he said his company's services are used by consumers who would otherwise use a hire truck and trailer and do the work themselves. Mr Matysik also gave evidence that the respondent provides a service for consumers who need to obtain delivery of purchases on ebay which would otherwise be too expensive for a consumer to buy if full rates were paid for the transportation of those goods.
Therefore the applicant says that this evidence reinforces the characterisation of the respondent's contracts as contracts which cover the supply of services of a kind ordinarily acquired for personal, domestic or household use or consumption, for the purposes of the ordinary personal, domestic or household use or consumption of those goods or services and that the market in which the respondent operates can be contrasted with the market for commercial transportation of goods.
The Director urged me to apply the authorities in relation to the phrase "of a kind ordinarily acquired for personal, domestic or household use or consumption" which have arisen under federal sales tax legislation. The cases to which the Director referred me pointed to the principle that the word 'ordinarily' means commonly or regularly and not principally, exclusively or predominantly, and that in any particular case it is important to enquire as to the essential character of the goods and services in question, and that this question is ultimately a question of fact and degree, with a common sense approach to the issue being required.
This means that I do not have to be satisfied that the respondent offers its services exclusively, or even predominately to consumers, or that the items to be transported are solely or predominately items of a domestic nature. The Director says that even if there was evidence of commercial use of Backloads services, the evidence which I have in this case is amply sufficient to show that the respondent commonly or regularly offers removalist services for personal, domestic or household use or consumption, and that those services are are for the purposes of the use or consumption of those goods or services.
In my view the applicant's arguments were persuasive and the contract of the respondent is properly characterised as a consumer contract, because it fits within both aspects of the definition in section 3 of the Act. It is a contract to supply services - viz removalist and transport services offered to the public for the transport of ordinary domestic personal items- for the purposes of ordinary domestic personal use of those services.

[88]

S32W of the Fair Trading Act provides that a term in a consumer contract is to be regarded as unfair if, contrary to the requirements of good faith and in all the circumstances, it causes a significant imbalance in the parties' rights and obligations arising under the contract to the detriment of the consumer.
Section 32X attempts to give some guidance to the Tribunal in deciding whether or not any particular term in a consumer contract is to be regarded as unfair. It provides that without limiting the terms of s32W, the Tribunal may take into account whether the term was individually negotiated, whether the term is a prescribed unfair term (this does not apply in this case) and whether the term has certain other objects or effects.
The Director submitted that to the extent that the respondent's contracts were in writing, the contract was one for general use and in a standard form. The terms and conditions are placed on the respondent's internet site. There is no evidence that the terms and conditions are ever negotiated individually by the respondent. The evidence of Joanne Hogan was that she never saw any written terms and conditions, and her contact with the respondent was solely by telephone. Marwa Khalaf and Bardia Ghostine gave evidence that they each received a letter enclosing the terms and conditions in response to their internet enquiry. The circumstances in which contracts came to be entered into by Khalaf and Ghostine demonstrate that to the extent that the respondent's contracts were in writing, consumers were presented with "take it or leave it" standard form contracts.
I have suggested in previous cases that the question of whether the term was individually negotiated might be taken into account in the sense that if a term was in fact individually negotiated its apparent unfairness on its face may be discounted because of the knowledge that the parties had each voluntarily entered into the term after informed negotiation.
A similar approach was taken by the Supreme Court in Jetstar Airways Pty Ltd v Free [2008] VSC 539. and also in AAPT (2006) VCAT 1493, cases to which I will shortly refer in detail.
The balance of s32X describes particular aspects of unfairness including (for example) whether the term has the object or effect of permitting the supplier but not the consumer to avoid the contract or permitting the supplier but not the consumer to terminate the contract, penalising the consumer but not the supplier for breach or termination of the contract, permitting the supplier but not the consumer to vary the terms of the contract or to renew or not renew the contract.
The effect of an unfair term is that it is void. However, s32Y provides that the contract between the parties will continue to bind them if it is capable of existing without the unfair term.
As I have previously pointed out, it is important to note that the decision which I make in this case will therefore not directly affect the contracts of any of the persons who have given evidence in this case. The evidence I have heard in this case is not for the purpose of resolving the rights and obligations of those persons as against the respondent. The purpose of the evidence is to illustrate issues which the Director wishes me to take into account in determining whether or not the terms are unfair.
I need to bear in mind in analysing the impugned terms that section 32W clearly focuses on an imbalance which is to the consumer's detriment. The term is not concerned with an imbalance to the detriment of the trader. It is the effect on the consumer which should be uppermost in my mind when considering this definition.

[90]

In AAPT, the Director applied to this Tribunal to have certain terms of a standard form mobile phone contract declared unfair. One of the suggested aspects of unfairness was said to be the power of the respondent to unilaterally vary the contract conditions, or suspend the service offered, where the respondent changed its own supplier.
The respondent in that case submitted that the alleged unfairness should be looked at in the context of the mobile phone industry as a whole, and in particular the complex contractual arrangements within the communications industry. The respondent's argument was that the impugned terms reflected the terms to which it was itself bound with its own suppliers. The respondent suggested that the commercial framework of the entry into the contracts needed to be taken into account in considering whether a term was unfair. It submitted that the industry framework was a relevant factor to take into account because it showed that the respondent was not acting contrary to the requirements of good faith in imposing the term on the consumer.
Thus in AAPT it was necessary to consider the meaning of the words "contrary to the requirements of good faith" and "in all the circumstances" as they appear in section 32W.
The Director submitted in that case that the words "contrary to the requirements of good faith", should not be read as importing some additional element of good faith as an extra element to be taken into account in determining whether or not a contract was unfair. Instead, the use of the words was simply to describe what a significant imbalance in the parties rights and obligations was.
The issue is not just one of semantics. If the concept of the term being "contrary to the requirements of good faith" is viewed as a separate element of the definition, then a very broad range of matters may potentially be relevant in weighing up each term. These matters may include (depending on the term and its surrounding context) questions of the subjective intent of the trader, industry practice, the suppliers own relationships with its trading partners, the traders position in the industry, and so on.
Many of these factors may also be argued to be important because of the words "in all the circumstances" which also appear in the section. That term is broad enough to allow consideration of every conceivable aspect of the consumer transaction itself, and also all the circumstances surrounding the industry in which the trader operates, and perhaps the industrial framework generally. A liberal application of those phrases might be to take into account the market in which the supplier of the services operated. This might include such considerations as relevant industry practice, the use of standard form contracts in the industry, the convenience to both parties of industry usages and the relationship between the supplier and its own suppliers, or the degree of difficulty within the market of monitoring various behaviours.
It is a basic rule of statutory construction that each word or phrase in an Act is to be given effect, if it is possible to do so consistent with the purpose of the Act. The problem confronted by Morris J in AAPT was that in the Director's submission, (a submission repeated before me in this case) it would be contrary to the entire purpose of Part 2B if external factors, such as the competitiveness of the trader, or industry practice, were to be able to play a part in determining whether a contract term was unfair. The Director says it would be circular if these issues were to be taken into account, as the Part is designed by its very nature to address unfair contractual practices. The meaning of what is unfair cannot therefore be defined by what that industry presently sees to be unfair. If evidence of existing practices or external relationships were to be taken into account then the section could never be effective in the way that Parliament intended it to be.
In making this submission the Director relied upon the history of fair trading legislation and particularly on the public and remedial nature of the legislation. He said that the Tribunal should keep the remedial purposes of the legislation at the forefront in analysing the requirements of this section.
He suggested to Morris J, and repeated to me, that the Tribunal should keep in mind that there were other parts of the Fair Trading Act which dealt with unconscionable contracts, and various other consumer evils. Where Parliament had wished such matters as industry practice to be taken into account, Parliament had provided specifically for this to be done -referring to by way of example, the comprehensive listing in section 8A of factors to be taken into account when deciding whether or not behaviour is to be characterised as unconscionable. Counsel suggested the Tribunal should conclude that Parliament had deliberately omitted these considerations from Part 2B, because Part 2B was directed to a quite different consumer outcome. It was enacted to give power to the Tribunal to declare unfair contract terms which might otherwise, by dint of industry practice, or other external factors, be unassailable.
The Director suggested that the words "in all the circumstances" are expressed in the widest terms possible. He says that this shows the intention of Parliament that any aspect of the contractual relationship which may in any way have a bearing on the unfairness of a particular term can be taken into account. So, any aggravating or ameliorating factors in the contract which are present may be taken into account.
However, counsel for the Director submitted to Justice Morris, (and again also to me), that he should not allow the circumstances of the commercial relationships between the supplier and its suppliers, or industry practices generally, to influence what should or should not be regarded fair or unfair. Otherwise, for the same reasons which apply to consideration of the words "contrary to the requirements of good faith", industry practice might be used by a respondent to dictate what is judged to be fair or unfair in a contract between a trader and a consumer.
Justice Morris considered the role of the concept of good faith at length in AAPT and commented:-

[93]

The requirements of section 32X and 32W have now also been considered by a single judge of the Supreme Court in Jetstar Airways Pty Ltd v Free [2008] VSC 539.
That case was an appeal from a senior member of this Tribunal.
In that case the applicant at the Tribunal had sought that the Tribunal declare the term of the contract unfair so that she could avoid its operation against her.
It was not made clear either in the original decision or the appellate decision as to how the consumer could have had standing to make this application, given that applications under this Part may only be made by the Director of Consumer Affairs, but that point does not appear to have been argued in the appeal.
Mrs Free had made an on-line booking for plane tickets. It was a condition of the booking that the tickets were not transferable to any other person.
After having made the booking, Mrs Free found that one of the persons in whose name she had made the booking was ultimately not able to use the tickets, and so she sought to transfer them to another person, in contravention of this condition.
The question for the Tribunal at first instance, and the Supreme Court on appeal, was whether the term limiting her right to do this was an unfair term.
In the course of deciding the appeal Justice Cavanough considered the reasoning in AAPT and in particular the meaning of the words "contrary to the requirements of good faith_"_ in section 32W. In the view of Justice Cavanough, the true role of that expression was misunderstood in AAPT.
He considered the requirements of good faith and significant imbalance to be quite separate elements and expressly rejected the suggestion that the words "contrary to the requirements of good faith" performed only an adjectival role, rather than constituting an element for separate consideration.
He then went on to consider the way in which that term could be applied in the context of Part 2B. He considered that the various matters set out in section 32X showed a common theme which could be used to amplify the requirements of good faith. He said that each paragraph of s32X supplied an example of a term which was not only one-sided but which also would tend to 'derogate from the enforceability or value of a promise made by the supplier (or of a right conferred on a consumer) by another express or implied term of a contract'.
He suggested that one of the ways one could look at the absence of good faith might be that it could be displayed in a term which might be unobjectionable if agreed to explicitly by a consumer, but which might be objectionable if it was not specifically brought to the attention of the consumer. It might then be an "unfair surprise", a concept which he described in these terms:

[102]

Justice Cavanough did not go on to decide in that case whether or not the term was in fact unfair. He said only that the balancing process must take place in accordance with the principles which he had outlined, and remitted the matter to the Tribunal.
Thus the decision in Jetstar v Free is authority for the proposition that I must address the question of whether or not the term is contrary to the requirement of good faith as a separately identifiable element of the test of unfairness under s32W and that in doing so I should consider the question of whether or not the term involves the departure from good standards of commercial morality or practice.
It is also authority for the proposition that a term otherwise justifiable in the marketplace might be characterised as unfair if it came as an "unfair surprise" to a consumer.
The Director criticises the decision in Jetstar as having not taken into account an analysis of the role of Part 2B within the Fair Trading Act itself, and within the context of Australian consumer legislation. He pointed out that the cases cited in Jetstar concerning the definition of good faith emanate from jurisdictions which have no Part2B equivalent. He warned against uncritically applying foreign law without considering its context.
In the Director's submission Part 2B must be read in accordance with the principles to be found in Project Blue Sky v ABC 1998 HCA 28 - that is, that legislation must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals, and that where conflict appears to arise from the language of particular provisions, the conflict must be alleviated, as far as possible, by adjusting the meaning of the competing provisions to achieve that result which will be to give effect to the purpose and language of those provisions whilst maintaining the unity of all the statutory provisions.
The Director relied also on that case for the further proposition that whilst the duty of a court or tribunal is to attempt to apply the grammatical meaning of words in a statute, an overriding consideration is the duty to give the meaning to the words that Parliament intended them to have, a duty which may in some cases require a meaning to be ascribed to words which may not be its dictionary or grammatical meaning.
Thus the Director submitted that I should construe the phrases "contrary to the requirements of good faith" and "in all the circumstances" so that these phrases are construed in accordance with the "harmonious goals" of Australian consumer legislation to avoid consideration of the matters of industry practice and circumstances raised by the respondent in this case.
The differences in approach between AAPT and Jetstar on the proper interpretation of the reference to good faith in section 32W will not ultimately be of importance to future proceedings under part 2B, as the Parliament has introduced a bill - the Fair Trading and Other Acts Amendment Bill 2008, which will, if passed, amend section 32W by removing the element of good faith from the section entirely. The explanatory memorandum to the bill states that the change is to be made as a consequence of the decision in AAPT.
The issue is however still of importance in this case. I have decided to consider each term taking into account the matters approved as elements in Jetstar v Free, whilst acknowledging myself not technically bound by that decision, in order to give the respondent in this case the benefit of the most liberal interpretation of the elements of section 32W.
I have reached the conclusion in this case, as I have in past cases, that it is impossible to make a decision in general terms or in isolation as to whether the phrases "the requirements of good faith" and "in all the circumstances" have any independent meaning. I can only do this in the context of each individual term. I need to look at each impugned term to see whether these words have any application to the term I am considering. If there are no "requirements of good faith" or no "circumstances" to be considered in relation to that individual term, then I need not concern myself further with those phrases in relation to that term.
However, if from the evidence it appears that there are some circumstances which may be relevant, or some breach of the requirements of good faith, then I need to weigh up those factors as part of my overall consideration of whether or not the term is unfair.
I have heard evidence from Mr Matysik as to the cheapness of the services provided by the respondent. Some of this evidence is equivocal. Some of the examples he has given do not show a significant difference in price between his service and the services of his competitors, and I have not heard any evidence from any other competitor of the respondents as to what services are included in comparable prices. However, on the assumption that the evidence discloses a clear price differential between this respondents services and those of its competitors, Mr Matysik submitted that I should use this evidence to transform what may have been otherwise an unfair term into a term which was reasonable in the circumstances. It appeared to me that he relied upon Jetstar v Free for this proposition.
It is important to recognise that the decision in Jetstar v Free did not finally decide whether or not the term which it was considering in that case was properly to be described as an unfair term, That issue was remitted to the Tribunal for further determination. The Court decided only that the Tribunal, by applying the principles set out in AAPT, had misdirected itself by refusing or failing to take into account certain matters.
One of those matters the Tribunal was said to have ignored was the extraordinary cheapness of the fare obtained by Mrs Free, and the context of the impugned term as part of the contract as a whole.
The Court did not decide that a trader could impose whatever terms it wished just because it was offering a cheaper service than its competitors. It emphasised that each term must be looked at in the context of the contract as a whole and not in isolation. Justice Cavanough found that the context of the special fare offer on the respondent's website, clearly contrasted with the cost of a regular fare, was a relevant matter to be taken into account when assessing the unfairness of the term.
It is clear then, from Jetstar that I must take into account the relationship between the individual term to be considered in this case and the whole of the document in which it appears. I cannot consider only that part of the contract which contains the impugned term.
However, even if I were to accept that the services provided by Backloads were cheaper by far than the services provided by its competitors, it is my view that Jetstar v Free does not require me to take account of cheapness per se as an excuse for an otherwise unfair contract.
The Director drew my attention to the fact that in Jetstar it appeared that the cheapness of the flight was specifically brought to the attention of the consumer on its website. There is nothing in this case, apart from the evidence of the witnesses that they had obtained other more expensive quotes than the quotes they accepted from Backloads, to put consumers on notice that the price being obtained by them was very cheap. Consumers were certainly not placed on notice that by reason of this cheapness they would be obliged to give up rights they would otherwise have had or rights they would have presumed they would have had when entering into a furniture removals contract.
The respondent pointed to the fact that the witnesses did not give evidence that the terms impugned in these proceedings were unfair. The respondent also asserts that their individual fact situations would not have been helped by any declaration that the terms in this proceeding are unfair.
In my view there is no need in proceedings such as these for the Director to produce evidence that individual consumers thought the contract terms unfair. The evidence presented by the Director is not evidence led to establish the elements of the unfairness of the contract. It is evidence which illustrates situations in which the contract terms can lead to unfairness. In my view it is not to the point that none of the witnesses gave evidence that they believed their contracts unfair. It is my task to decide whether or not the terms before me are unfair.
There are some other areas in which the approaches of AAPT and Jetstar to Part 2B proceedings differ. In relation to the word 'significant', Justice Morris made the following observation in AAPT:

[110]

This case was cited in a decision of the commercial list of the Supreme Court of New South Wales in Mendelson-Zeller Co Inc v T&C Providores Pty Ltd [1981] NSWLR 366. In that case the goods were delivered in Sydney but payment was made for the goods in the United States of America. In that case the question was whether or not the proper law of the contract which was the subject of the proceeding was the law of New South Wales or the law of the State of California.
Justice Rogers decided the question by examining which system of law the transaction which he was considering had its closest and most real connection. He considered the relevant circumstances to be the place of contracting, the place of performance, the places of residence or business of the parties, and the nature and subject matter of the contract.
The Director's first contention in the case before me was that as the evidence in this case demonstrates that the acceptance of each contract occurred by the respondent at its principal place of business and registered office, which was in Victoria, I should find that the proper law of the respondent's contract was in fact the law of Victoria.
Thus term 2(e) was an attempt by the respondent to artificially require that the contract be interpreted in accordance with the law of the Australian Capital Territory contrary to the operation of the general law of contract.
Mr Matysik relied upon the evidence which he had given as to the multifarious ways in which contracts between Backloads and consumers can be concluded. Mr Matysik suggested that the contract could be accepted anywhere in the world and could be accepted by either Backloads or the consumer, as offers and counteroffers were often made between the parties.
The Director's second contention was that even if this is so, and whatever view I come to on the law which in fact governed each individual contract, the vice of clause 2(e) was that it sought to automatically preclude the operation of Victorian law, and thus the protection of the Fair Trading Act, whatever the real legal position might be.
Thus, insofar as the respondent enters into contracts with consumers in Victoria, or otherwise enters into contracts which would be governed by the laws of Victoria, this term deprives consumers of the protection of the Fair Trading Act, and particularly the protection of Part 2B and section 163 of that Act, as the ACT has no equivalent to those provisions in its consumer legislation.
Also, the Director submits, whatever the true legal position, the fact that a term such as this is inserted in the contract will have the effect of deterring consumers from enforcing rights they may otherwise have had under Victorian Law.
Mr Matysik told me that he inserted term 2(e) into his contract because his company did not want to be seen to be identified with or centred in any particular state jurisdiction. Mr Matysik described 2(e) as a marketing device. He said the company did not wish to be known as Victorian based because some consumers may not wish to deal with a Victorian company. He said that the ACT was chosen as the appropriate law because it had an element of neutrality about it and that because the respondent was in the business of obtaining the interstate transport of goods, these transactions required the law of a relatively neutral location. The respondent suggested further that the laws of Victoria would not be a good choice because the predominant job flow for the respondent was not Victorian based and most of its work was nearly totally unconnected with Victoria.
It is interesting to note that the equivalent term in the AFRA contract provides that the law applicable will be the law of the State where the contract was entered into.
The respondent's submission was that 2(e) provided a fairer result than the AFRA contract because it provided certainty to the transaction for consumers as to what law will apply to the contract.
The Director pointed to some correspondence from the respondent which she says shows that the respondent had quite a different intention in inserting section 2(e) into the contract.
In the points of defence filed by the respondent in November of 2007 the following paragraph appears:

[113]

The Director says that I should infer from this paragraph and from the statements made by Mr Matysik in this case that the respondent deliberately chose the law of the ACT as the applicable law specifically because it had no equivalent to Part 2B of the Fair Trading Act, and in order to deny consumers the right of protection under the Fair Trading Act.
The respondent says that it is well-known in commerce that many companies use clauses in which a particular jurisdiction is nominated as the applicable law. Although he was not able to point to any particular contracts in which such a clause appears, in my view I should take judicial notice that this is so.
The Director pointed out that any terms of a similar nature to clause 2(e) which may be used in commercial contracts are not affected by the provisions of Part 2B of the Act.
The Director further submitted that if there were any clauses in consumer contracts similar to term 2(e) which had been individually negotiated, where the choice of law was a matter of genuine negotiation, those terms were unlikely to be defined as unfair. The Director suggested that the unfairness in this case arose because the respondent had unilaterally and without any warning to the consumer chosen the law of a jurisdiction to apply to its contract which had no necessary connection with the transaction, and had chosen it in order to exclude the operation of the Fair Trading Act.
In my view term 2(e) of the contract is unfair. The term causes a significant imbalance in the parties' rights and obligations under the contract to the detriment of the consumer. It does this because it unilaterally declares the law to be applied to be that of the Australian Capital Territory without regard to the proper law to be applied under general contractual principles. It is unfair because it artificially imposes the law of the Australian Capital Territory onto every contract whether or not the contract could by law be characterised as being made in the Australian Capital Territory.
There are no circumstances which have been the subject of evidence which justify the inclusion of this clause. In particular I reject the respondent's evidence that the term was inserted for marketing purposes. This evidence was in my view fanciful. I find as a fact that it was inserted to avoid the operation of the Victorian Fair Trading Act.
I agree with the Director's submission that the clause has about it the elements of a discrete, unusual and one sided burden and may be considered an "unfair surprise" in the manner in which this concept was discussed in Jetstar v Free.
The argument that the respondent offers a cheaper service to consumers, even if accepted, cannot be used to justify this clause, or neutralise its obvious unfairness.

[121]

The Director says that should be remembered that this is a contract for the removal of a potentially large number of small household goods, in which the consumer is required under the contract to identify the precise goods to be moved. The Director says I should take into account that it is likely that accurate identification of a vast number of small items is likely to be very difficult. Estimates of this nature may well change and more goods may need to be added after the contract is concluded, and up until the time of removal and transport.
If, as this clause suggests, the consumer is required to perform the contract strictly in accordance with the quote, the Director says this may well lead to unfairness because the consumer is given no chance to vary the contract except by incurring a penalty, whereas there are other clauses of the contract which allow the trader to vary the contract without penalty - such as clause 11(c) (to which I will later refer).
The Director relied upon the evidence given by the witnesses Joanne Hogan, Marwa Khalaf, and Bardia Ghostine in this case to illustrate the likelihood that extra goods will often be identified to be added to the list of items to be moved after the contract is entered into, and the difficulties that this term causes in practice to the consumer.
Thus, the Director submitted, read in the context of the removalist industry, clause 8(b) unfairly penalised the consumer.
The respondent suggests that the clause is not very different from other clauses used in the industry, particularly the AFRA contract. The respondent suggested that its own term was much more specific than other clauses in use and this therefore meant that there was no uncertainty for the consumer as to what would happen if the consumer sought to add extra items to the list of goods to be moved.
Mr Matysik says he had previously employed a term which simply said that it would charge a fair price for any extras to be carried but that this term had been criticised by the Department of Consumer Affairs for uncertainty. Clause 8(b) was simply an attempt to spell out with certainty what would happen if a consumer sought to add extra items to be carried at the last minute.
The respondent also submitted that this clause should be read in conjunction with the fact that the price offered by the respondent was a low price, much lower than other prices in the market. This means that the respondent had very little room to manoeuvre, both literally, (in terms of space booked on trucks) and in terms of its own contractual arrangements with contractors.
The respondent says that clause 8(b) must be read in conjunction with clause 8(a). Clause 8(a) provides that the client warrants the information provided is accurate. In other words, clause 8(a) gives the client the obligation to specify precisely what is to be carried and 8(b) simply provides what is to happen if the client does not comply with section 8(a).
Mr Matysik emphasised that the problem of inaccurate information from consumers as to exactly what is to be moved was a very difficult problem for his company. He emphasised that it was not just a question of billing the customer for the extra space taken by items not previously identified. By the time a consumer notifies the respondent of extra items, all available space may already be allocated on the truck. If extra goods were added then other deliveries which had already been contracted for may not be able to be accommodated. It was not just the extra time required to load extra bits and pieces that needed to be costed. The requirement to take extra goods may jeopardise contractual arrangements with other parties in a way which was not easy to compensate for in monetary terms.
The Director suggested in relation to clauses 8(a) and 8(b) that at the very least the clauses should be looked at as being deficient in providing notification to consumers. There is no evidence that consumers were told that precise identification of items is critical for the price. A term with such consequences should contain a warning to consumers to prevent its unfairness.
The Director suggested that I should apply the unfair surprise concept in Jetstar to this clause. As with 2(e), it is a discrete, unusual, one-sided term. The Director suggests that if it is so important to the transaction for a consumer to supply accurate information to the respondent as to the precise items to be moved, then the consequences of not providing accurate information should be clearly brought to the attention of the respondent in a prominent and clear way. In her submission this was not done in any of the respondent's material.
In my view clause 8(b) is an unfair term. The practical problems identified by Mr Matysik and the cheapness of the services offered by the respondent are relevant circumstances in weighing up the unfairness. Those factors may well justify the charging of a relatively high fee to properly reflect the difficulties involved in a change to the description or number of goods to be transported.
It cannot however justify an absolute discretion given to the respondent to charge what it likes, in the way this term does.
By giving to the respondent an absolute discretion to enforce the contract or to vary its charges, without having given any warning to the consumer of the importance of the provision by the consumer of a correct and full description of goods to be carried, the clause causes a significant imbalance in the parties' rights and obligations arising under the contract to the detriment of the consumer.
The respondent has suggested that no other mechanism is available to properly recompense the respondent for incorrect or inadequate specification of goods.
It appears to me that the term may be able to be rectified to accommodate the Director's concerns by making it clear that charges may only be increased to reflect a reasonable allowance for the factors identified in the evidence of Mr Matysik. However, as term 8(b) is presently expressed, in my view it is an unfair term.
In the words of subsections 32X (c), (d) (f) (g) and (h) of the Act, it has the object or effect of penalising the consumer by permitting the respondent in its discretion to perform the contract without regard to the consumers desire or need to vary the contract, and permits the respondent to vary the price or the characteristics of the services to be supplied under the contract, and to determine whether the contract has been breached and determine its meaning.

[123]

The Director submitted that this term is unfair because it creates uncertainty for the consumer. It does not specify the period of time which will be initially allowed for the loading or unloading of the consumer's goods or the basis upon which the period of delay is to be calculated.
Further, it imposes an unreasonable burden on the consumer by making the consumer liable for a range of charges for delay where such delay may arise from circumstances beyond the consumer's control.
Thus, it has the object or effect of penalising the consumer but not the respondent for breach of the contract.
The respondent suggested that cancellation charges as were specified in this clause are necessary because once the space is booked in a vehicle, that job forms part of a viable interstate trip, and cancellations after a trip is established can impact on other customers and their times. Because of the way the respondent organises its business, late cancellations cannot easily be filled with last minute bookings.
The respondent suggested that other industries such as the airline industry had similar terms. The respondent says that in this clause it has attempted to spell out its cancellation terms precisely rather than just to provide for a reasonable amount in order to give some certainty to consumers.
This term is different to the AFRA contract in that the AFRA contract contains the word "reasonable".
The respondent says that this term has changed many times and now is not presently used in these same terms. Mr Matysik told me says that he previously used to utilise a term saying that the respondent would charge reasonable expenses where a consumer cancelled a booking. He now uses this wording to give flexibility to the respondent in recouping its costs of cancellation. Mr Matysik said that that word "reasonable" was not contained in section 8(c) because it did not need to be there as the respondent would act reasonably in any event.
Mr Matysik told me the impact on the respondent of a cancellation can be tremendous. He points out that if the job is cancelled close to the time of pickup the truck driver may have already incurred the cost of getting to the location to pick up and this can be especially costly if the trip is part of an interstate trip. He emphasised that the effect of cancellation is not like the effect of cancellation of an airline ticket where cancellation may only result in the loss of a single fare. The cancellation has a knock-on effect on other contractual arrangements.
In my view term 8(c) is not an unfair term. The Director says that the quantum of the charge under 8(c) bears no obvious relationship to any actual loss the respondent might suffer as a consequence of a postponement or cancellation. However, I take into account the circumstances advanced by the respondent.
In particular, I accept that cancellation charges are necessary because once the space is booked in a vehicle that job forms part of a viable interstate trip and cancellations after a trip is established can impact on other customers and their times and that late cancellations cannot easily be filled with last-minute bookings. The impugned term comes into operation only where delay is caused by factors outside the respondent's control, or where a job is cancelled or postponed by the consumer on or after the date on which pickup is due.
It is true that the term does not specifically set out that the respondent's charges must be reasonable, or that they must bear a proportional relationship to the loss suffered by the respondent as a result of the matters set out in the clause. But the term does not provide an absolute discretion to the respondent. The consumer would not be prevented by this term from challenging a disproportionate additional charge imposed for delay. The proposed charge for cancellation is not obviously disproportionate, given the factors I have identified.
The burden of proving that this is an unfair contract lies on the Director. The term does not, in my view, impose an unreasonable burden on a consumer in the limited circumstances in which it applies.
I decline to characterise it as an unfair term.

[125]

The Director says that this term is unfair because it assigns to an unidentified non-party (described as "the contractor") all of the rights the respondent would otherwise have enforce the contract terms. In doing so it creates confusion and uncertainty for the consumer. It permits this unidentified non-party to issue invoices and collect charges directly from the consumer.
Who is this unidentified non-party? There appears to be no way provided in the contract for the consumer to find this out. The respondent's argument appears to be that this assignee is whichever truck driver actually carries out the pickup and perhaps also delivery of the goods. It is not clear from the evidence whether this will always be the same person. Mr Matysik submitted that this assignment clause reflects the fact that the respondent does not contract directly with the consumer, but passes on the consumer's contractual obligations to the contractor. The way in which this was said to occur was put in the vaguest of terms.
The respondent says that this way of doing business is extremely important to the consumer because it provides for a cost effective way of accessing removalist services. It says that clause 9(b) is central to this operation because the heart of what it offers is a facility for consumers to make their own contractual arrangements with the individual truck driver.
Mr Matysik suggested, without expanding on the idea, that this arrangement is similar to a franchise. He says that the AFRA contract does not contain a term such as this term because AFRA does not use the respondent's agency system.
It seems to me that the difficulty with the respondent's argument is that it is not apparent from any of the respondent's material or the conditions of contract that the respondent holds itself to be simply an agent or franchisor who introduces consumers to a contractor, nor that the contractual obligations under the contract are to be assumed by that contractor and not by the respondent.
The Director asks me also to note that this assignment purports to occur at the time of formation of the contract. The uncertainties caused by clause 9(b) are increased when clause 9(b) is seen in conjunction with clause 10 which provides that the respondent (not the assignee) is to have a lien on the consumer's goods until payment is received.
Term 9(b) is, in my view an unfair term. It creates confusion. It clearly causes a significant imbalance in the parties' rights and obligations to the detriment of the consumer because the identity of the entity to whom the assignment is made is unclear and the rights and obligations of the consumer vis ά vis that non-party are unclear.
I do not take the view that all assignment clauses must by definition be unfair terms but the confusion and inconsistency of this clause with the rest of the contract, in my view, makes it unfair for the reasons I have stated.
The fact that the service may be cheaper than alternatives can be no justification for a complete failure to specify the identity of the assignee or the terms of the proposed assignment.
The confusion also has the effect of rendering the term contrary to requirements of good faith in the way in which that term has been interpreted in Jetstar Airways because the purported involvement of the non-party in the contract, and the use of this clause as an artificial device to attempt to transfer rights and obligations to this non-party is a departure from good standards of commercial morality or practice.
Subsection 32X (j) allows me to take into account as an element when assessing whether a term is unfair, that the term permits the supplier to assign the contract to the consumer's detriment without the consumers consent. In my view it is clearly to the consumer's detriment to attempt to assign the consumers rights and obligations to an unknown person.

[130]

The Director does not complain about the concept of a lien itself. The Director submits that although these terms purport to create a lien, which is a device born of the common law, and subject to certain characteristics and limitations at law, these subclauses, when read together and in the context of the contract as a whole, in fact seek to create a different set of obligations which do not have the characteristics of a general lien at law, and produce a much harsher result.
For instance, one of the characteristics of a lien is that a trader who exercises it cannot pass on the costs of storage or detention of the goods held. This is usually a significant impediment to a trader who seeks to exercise a lien.10(c) gives this right to the respondent.
As another example, 10(a) purports to extend the right to a lien in respect of monies owed to the respondent by a person other than the consumer.
But further, these clauses allow the creation of a lien in circumstances where the company may have already assigned all of its contractual rights to a person other than the company (pursuant to term 9(b)) .
Thus, the Director says, these terms purport to extend the lien in an overreaching and excessive way to include past debts and debts due in relation to any previous agreement and to any other owner of the goods, and to do so where the respondent has already assigned all its rights and obligations under the contract to another unnamed person. The terms therefore use the word "lien" but do not in fact create a lien as that concept is known to the law.
The Director also complains that term 10(c) allows the respondent to make charges which are disproportionate to the legitimate charges that the respondent might other wise be entitled to make under the general principles governing the exercise of a lien by reserving to itself the right to sell the consumers goods by auction or private treaty at its absolute discretion.
The respondent has made several comments in its documents filed with the Tribunal as to the reason why lien clauses were inserted in the contract. Essentially the respondent says that the clauses are necessary in order to avoid consumers refusing to pay for goods once the work is done.
The respondent suggests that it is human nature to avoid paying when it is possible to do so. Mr Matysik gave evidence that although the contract provides that payment must be made by the consumer on pick-up, there are sometimes circumstances in which this does not occur, for example, if goods are picked up from self-storage and delivered to a customer's home. Mr Matysik estimated that some 25-30% of the Respondent's jobs were not paid for on pick-up.
The respondent suggested the lien clauses are the expression of the same principle as appears in a normal sales contract, that is, that title to the goods is retained by the trader until the customer has paid for the service. As best I can understand it, the respondent's position about the lien clause is that the nature of carrying goods as a removalist means that it is very difficult to collect monies owed once the goods are on the van and at the delivery address. There are some charges which cannot be predicted in advance - such as the presence of extra items not previously notified, or the need to take extra time in delivery because of various physical factors at the location at which the goods are to be delivered, and because these are small amounts it is not practicable to collect them without having the security of a lien.
The respondent also points out that the AFRA agreement provides for a lien. However, I note that the respondent did not suggest that the lien clause in the AFRA contract was in identical terms to the impugned terms. Mr Matysik did not produce any terms imposing a lien which were in identical terms to the terms 10(a), 10(b) or 10 (c).
It seemed to me that Mr Matysik failed to grasp the point being made by the Director. It was not that lien terms are of their very nature unfair. It was that the way in which the respondent had crafted its lien terms had caused unfairness for the consumer.
The Director says that I should not conclude that the respondent is simply misguided. She says these terms have been introduced deliberately to mislead consumers. She points to particular comments of the respondents as to clauses 10(a), 10(b) and 10(c), in documents filed by Mr Matysik, and particularly in his points of defence, which reads as follows:

[132]

The Director relies upon comments such as this as an indication that even the respondent agrees that these terms overreach and are excessive in the circumstances, but uses them to bluff consumers into thinking they have no right to complain about unfair treatment. The Director says that the respondents comment reveals that the respondent knows that the lien clauses in its contract are unfair and legally unenforceable. The Director says that I can use this comment to conclude that the respondent is prepared to unscrupulously rely upon unenforceable terms in its contract to trick consumers into thinking that they are bound by those terms.
Mr Matysik repeated his assertions of bluff in his oral submissions before me, but toned down his words in his final submissions, after having clearly realised the point being made for counsel for the Director. He then suggested that the words were used by him only in the sense that all laws were bluff, and relied upon citizens to cooperate for their efficacy. However Mr Matysik still maintained that the clauses referring to a lien were very important as a deterrent even though it was uneconomic for the respondent to enforce those terms and did not acknowledge the force of the Directors specific concerns about these terms.
An appropriately worded lien clause, as I have said, is not by reason of the creation of the lien, unfair.
However, the elements which I have referred to make these particular lien clauses unfair. Insofar as the requirements of good faith need to be taken into account in the manner suggested in Jetstar v Free, it is my view that the assertions of the respondent in its defence that he regards the clauses as bluff and his repetition of this in the material filed makes it clear that the purpose of insertion of the lien is not for a purpose consistent with the application of good standards of commercial morality or practice.
In my view the lien clauses, being clauses 10(a), 10(b) and 10(c) are each unfair terms.

[135]

The Director points out that this clause applies even if the movement of incorrect goods or non-movement of goods is the fault of the respondent. Thus, it allows the respondent to avoid or limit performance of the contract and penalises the consumer but not the respondent.
The respondent says that this clause is an attempt to put the responsibility onto a supervisor on the site to make sure the right things are moved. The respondent says this is very important because at the time of pick up the goods are almost never the same as the description on the customer's list. The respondent says the clause is there to highlight that the responsibility is that of the customer .The respondent refers to the fact that the Handy Hints document deals with this issue as well by suggesting that the consumer should nominate a person to be present at the point of pick up and delivery of the goods.
Mr Matysik says that due to the nature of the business of removalists there is a difficult problem that arises with left behind goods. The respondent says this happens frequently and causes a great deal of dislocation when it occurs. The respondent says this clause is necessary to bring to the attention of the consumer the fact that if extra items are required to be moved or goods are left behind the consumer will be responsible for any extra costs.
Mr Matysik submitted that if the term did not appear in the contract the respondent would have to decide whose fault it was that goods were left and this may be a difficult task. He thus defended the approach contained in term 11(a). He suggested that there was a similar clause in the AFRA contract. The AFRA clause is, however, not identical to section 11(a) or 11(b).
In my view clause 11(a) is an unfair term because it does not make it clear that the term applies only in the event of default by the consumer. The clause gives the respondent the right to make charges of an additional nature resulting from the movement of incorrect goods or the non-movement of goods, even when the respondent may have been at fault.
As read literally, this term therefore clearly causes a significant imbalance in the parties' rights and obligations arising under the contract to the detriment of the consumer. I observe that it would not appear to be difficult to amend the clause to remove that detriment.

[137]

In this clause, the Director complains only about the phrase 'shall be entitled at its discretion to leave the goods at that place'. She does not complain about the mechanism of storage of goods, or the charging of a reasonable amount for storage. She says that the addition of the phrase objected to allows the respondent to abandon the goods and that this is an inappropriate response which imposes an unreasonable burden on consumers.
The respondent says that it is not unreasonable to expect consumers to be home to receive delivery of the goods and that there is no alternative, if no-one is at home, to leaving the goods at the location to which they were to be delivered. Once again the respondent relies on the AFRA contract. It is interesting to note however, that the AFRA contract reproduced does not include provision for the company to leave the goods at the place nominated if there is no-one there to collect them.
Mr Matysik also relied on the suggestion in the Handy Hints document as providing notice to intending consumers that they should nominate a person to be present at the time of pickup and delivery of the goods.
The respondent challenges the applicant to identify what it is that a removalist is expected to do in a situation where a person is not available at the destination point. The respondent says there are often no local self-storage areas to use in country areas. The respondent suggests that the consequences to the respondent of failure to deliver are much more serious than those to the consumer. This is because there are costs incurred to take back the load to any appropriate point. The respondent also suggests that the clause has been inserted for a genuine reason and is not an example of bad faith.
This term creates a potentially very difficult problem if it is read in conjunction with the rest of the contract. If you read 11(b) in conjunction with 11(c) then the following are the possible consequences.
Clause 11(b) allows the respondent to leave the goods at the house or make an extra charge if no-one is at the point of destination. 11(c) provides that the time of delivery is entirely at the discretion of the company. There is no obligation under that clause on the company to notify the consumer in advance of the time of delivery or to give any reasonable notice.
Thus, the combined effect of these clauses is that the consumer has no power to require reasonable notice of when the goods are to be delivered, and no comeback if they are delivered at a time when the consumer is not there.
The respondent says that in practice this won't happen, but the Director points out that this is the combined effect of the clauses and this is a major reason for the Director's objection to the use of the clauses.
In determining whether or not a contract is unfair I must look at the clause within the context of the contract as a whole. There is nothing within the contract to alert the consumer that the goods may be so left, or of the combined effect of clauses 11 (b) and 11(c).
The respondent asked me to take into account all the circumstances surrounding the delivery of goods and that the respondent has no alternative than to conduct its business on the presumption that consumers will be home to receive the goods at the location to which they are to be delivered.
The Director submits that the clause must be seen in the context of the respondent's contract being a standard form contract . The Director suggests that this clause is another example of an unfair surprise within the terms of Jetstar v Free, that is, a term imposing a discrete, unusual one sided burden on a consumer which has not been specifically drawn to the attention of the consumer.
On balance it is my view that this is an unfair term because it may lead to a result which is out of proportion to the potential breach by a consumer in not being at the designated location. The respondent is given the power to abandon the goods. The term is thus in breach of subsection 32X(g) of the Act, as it permits the respondent unilaterally to vary the characteristics of the services to be supplied under the contract, and pursuant to section 32X(a) of the Act, permits the respondent but not the consumer to limit performance of the contract, and to vary the contract.
The consumer is placed in the position of not being able to insist on a certain time for delivery, and put in jeopardy of the goods being left unattended if they happen to be delivered at a time when there is no one home to receive them.
This is clearly unfair within the definition set out in section 32W.

[139]

The Director says that this term is unfair because it creates uncertainty for the consumer by giving the respondent the right to unilaterally vary these critical matters at any time and without notice to the consumer. Thus, there is no certainty as to what the bargain is that has been struck between the parties. The clause therefore permits the respondent but not the consumer to limit performance of the contract contrary to s32XA of the Act. It permits the respondent but not the consumer to vary the terms of the contract pursuant to s32XD of the Act and it permits the respondent to unilaterally vary the characteristics of the services to be supplied under the contract contrary to s32XG of the Act.
The respondent says that this clause is necessary as the respondent sometimes needs to take the goods via what might seem to be an unreasonable route, in order to achieve the cost savings possible when small part loads are consolidated into larger full loads. It says that it is unfair to compare its term with that of a normal removalist company, as the respondent charges much lower prices for its services precisely because it is able to use the most cost-effective routes.
The respondent says the price of its competitors is far higher because the prices are based upon a truck being at the sole service of the consumer, and with the trader allowing in its price for the risk of the truck making the return journey empty. The respondent submitted that because its services were so much cheaper the respondent wished to have leeway in transit time. If there were no such term in the contract, the respondent says there could have been debate between his staff and a disgruntled consumer as to what was a reasonable route and that the shortest route may not necessarily be the cheapest or most convenient.
The Director points out that the respondent's submission on clause 11(c) shows that the respondent sees the clause as giving him an absolute discretion and that the respondent will not hesitate to exercise that discretion in its favour and against the consumer's interests in the event of a consumer complaint.
The respondent says that the contract provided by AFRA provides for similar provisions although it provides that the removalist is to take any reasonable route. The AFRA contract does not however, give an absolute discretion to the trader as to the time at which the goods are delivered.
Mr Matysik told me that the respondent inserted the clause as it wishes to avoid having a debate with consumers as to whether a route is reasonable because its prices are so much cheaper. He says that clause 11(c) is there as a fallback in the event that his staff need to tell a customer that goods have been sent to the wrong destination by mistake. Mr Matysik suggested that if the customer was told that goods were accidentally sent elsewhere and did not accept this as an explanation then the respondent's staff needed a term such as this to back up their position so that they could deal appropriately with a disgruntled consumer.
In my view clause 11(c) is unfair but only to the extent by which it purports to give the company total discretion as to the time by which the goods are to arrive. In her submissions, the Director suggested that the broad discretion given to the respondent in this term to decide the route and method of transportation may also be characterised as unfair. I do not agree. It is difficult to see how any unfairness could be caused to a consumer by the respondent reserving to itself the right to determine the method and route by which transportation is to take place.

[142]

The respondent says this clause is necessary because moving goods is a risky business. It is a transaction involving many people over a lengthy time span with many unknown uncontrollable variables, compared to a consumer service such as providing a gym membership, or the sale of a consumer item.
The respondent says that by using clause 14(b) he is trying to draw customers' attention to the high risks associated with transport, particularly interstate transport, of fragile goods, and to the fact that the respondent will have no control over catastrophic events which might occur such as derailment or collision.
Further, the respondent says that the inherently flimsy quality of much of the merchandise to be moved must be taken into account when assessing the fairness of this term. Merchandise is often breakable and of poor quality and is often not well packed. The respondent relied on some photos produced to support this contention.
The nature of his submissions on this term suggested that Mr Matysik wished to avoid any responsibility at all for the transport of his customers' goods. He said that many customers were asking for trouble in their failure to attend to proper packing of their goods. He asserted that many consumers might make a claim for damaged goods if they think they can get away with it, and that the respondent's staff were instructed to tell people that they shouldn't use the respondent's service if they don't want to take the risk themselves, or else they should pay for transit protection.
The respondent says that term 14(b) must be read subject to term 14(c) The respondent says the whole of the contract should be taken as context for 14(b). The whole of the contract makes it clear that the contract is subject to various consumer warranties. I note, however, that there is nothing in section 14(b) to this effect.
The respondent says AFRA has a similar mention of liability for loss and damage in its clause. There is however, no clause in the AFRA contract identical to terms 14 (b) or (c).
The Director submits that term 14(b) is unfair because it limits the respondent's liability for matters which are clearly under the respondent's control. It purports to exempt the respondent from liability for failing to perform the very work that it has contracted to do. It explicitly states that the Company shall not be responsible for losses. The wording of the term is broad enough to exempt the respondent from liability even where the loss is the fault of the respondent, or was within the control of the respondent.
It seeks to suggest to the consumer that the consumer will not be able to make any claims for non-performance of the contract unless the consumer has taken out separate transit protection insurance.
I agree. For the reasons advanced by the Director, it is my view that this term is unfair.

[150]

The Director says that this term is unfair because it confers an unreasonable benefit upon the respondent by purporting to make the consumer liable for the consequences of any proceedings against the respondent by the consumer, but also by the respondent's contractor and by any third party arising out of, or as the consequence, of any breach of the contract by the respondent, even a breach involving negligence or fraud by the respondent.
The respondent says this term assists the client by pointing out the legal responsibility of the consumer and it is only used to highlight to consumers who may not be aware that their actions may have legal consequences.
The respondent says that clause 14(f) does not do anything but restate the normal law except for the addition of solicitor/client costs. The respondent points out that provision for solicitor/client costs is also in many other contracts.
In my view this clause is unfair because of its breadth. The customer is obliged to indemnify the respondent against any breach of terms 10, 12 or 14 of the contract. These breaches may be caused by the respondent, not just the consumer.
The Director also says that the obligation in the contract to pay solicitor client costs is unfair. It is certainly unfair to require a consumer to pay the respondents solicitor client costs of defending an action brought against the respondent by a person other than the consumer.
I consider that it is also unfair for a standard form contract term to require a consumer to pay solicitor client costs. There are some circumstances in which courts and tribunals may make an award of solicitor client costs. This term presumes that those circumstances will apply in every consumer contract. It removes the consumer's right to argue as to whether solicitor client costs should apply to the particular circumstances of their individual contract. There is no equivalent term in the contract requiring the respondent to pay the consumers costs to be assessed on a solicitor client basis in the event of default by the respondent. I doubt whether a consumer would understand what the term solicitor and client costs means, or how it differs from costs which might otherwise be payable by the consumer in the event of a default.
A term requiring the payment of solicitor client costs may not be unfair if it is clearly notified to and understood by a consumer and if it is the subject of genuine and informed negotiation. This is not the case here.
For all of the above reasons, it is my view that term 14(f) is an unfair term.

[152]

Section 163(3)(b) provides that a consumer document, to the extent that it is printed or typed, must use a minimum 10 point font.
The affidavit of Sonia Barberio deals with the question of whether the respondents contract terms and conditions comply with that section.
Ms Barberio is employed by the Director as an administrative support officer. She deposes that she has experience in document production and in business software applications.
She exhibits a copy of the respondent's terms and conditions, which she has typed in 10 point font. It is clear when this document is compared to the terms and conditions in the contracts exhibited to the affidavits of Khalaf and Ghostine, which were posted to both those consumers by the respondent, that the latter documents are in a font which is smaller than 10 point font.
Mr Matysik told me that smaller than 10 point font was used only for purposes such as on correspondence to his contractors, and never in correspondence with consumers. This argument was somewhat undercut by the evidence of Ghostine and Khalaf.
Thus, the Director submits that I should find that, in breach of section 163(3)(b), the respondent has provided a written form of its contract to consumers in printing and typing that is less than 10 point font.
The Director further asserts that the respondents webpage contains the contract terms and conditions in less than 10 point font, and seeks a declaration that in so doing, the respondent is also in breach of section 163(3)(b).
Ms Barberio's evidence also goes to this issue. She gives evidence that on being shown the conditions of contract printed from the respondent's internet web page she identified the font and copied the document and pasted it into a blank Microsoft Word document using her computer skills. In doing so, she identified the size of the font created as 8.5-point font size.
It was clear from her evidence that the document which she created by using this method of downloading from the respondents internet website is significantly smaller than 10 point font.
The respondent submitted that it was not possible to ascribe a font size to a document posted on the internet. He said that the font size was created only when it was printed out, using a printer, and that a consumer could print out the contract on any font size a consumer chose.
He gave evidence which he said illustrated this. He said that he had accessed the Europcar website and the conditions of contract on that website. He said that it was possible for him to print out part of the conditions of contract from the Europcar website and in the process of printing convert the font size of the document to a font size greater than what was on the website. He identified the font size of the Europcar terms and conditions as being 10-point font. He said that if part of the document was highlighted and then that highlighted part was cut and pasted into another document, then when it appeared in the second document it would appear at a larger size than originally displayed on the website.
Thus, he said, the size of a document on the website does not bear any necessary relationship to the size that document will appear if printed out by an end user.
He also submitted that the provisions of s163(3)(b) only applied when a document was printed or typed and that a document which appears on the website is only displayed and cannot be accurately described as having been printed or typed. It is only when action is taken to print it by means of a printer of some description that s163(3)(b) comes into operation. The respondent contended that s163(3)(b) was only violated if that printing process was carried out by the trader, and that it did not apply where the consumer would print out their own copy from their own computer.
It is to be noted that Mr Matysik conceded that when printed out in the normal way, the Europcar contract printed as a 10 point font document.
In my view the application of the section is not to be avoided by means of the artificial means described by Mr Matysik of cutting and pasting parts of documents from the internet. The witness Barberio provided affidavit evidence on the issue of font size and was not required for cross-examination at all. Certainly none of the matters submitted on behalf of the respondent were put to her.
Doubtless, s163 (3) (b) of the Act was inserted at a time when the words typing or printing could only have applied to use of a typewriter or printer. In my view these words are wide enough to comprehend the display of conditions on a website. The conditions displayed must have been at some point typed to be so displayed. They cannot be described as handwritten. If I were to confine the words printed or typed to mean printed on a printer, or typed on a typewriter, that would be to restrict the application of the subsection by denying the section application to all consumer contracts displayed on the internet.
I have described the public policy and framework of the Fair Trading Act. It is remedial legislation, and its terms should be interpreted broadly to advance its purposes, particularly the purposes of protection of the consumer and to promote and encourage fair trading practices and a competitive and fair market.
If a construction of these words can be ascertained, without doing violence to the section, which is consistent with the purpose of the Act, I should follow that construction. In my view the word typed is wide enough to cover the use of a typewriter for mechanical reproduction on paper, or the action of pressing keystrokes onto a computer keyboard for display onto an internet site.
The respondents submitted that if the consumer contract font was too small then the Act provided that the contract terms were void and therefore part 2B in its entirety would not apply.
In my view the size in which the contract is printed cannot be used to avoid a trader's responsibility under Part 2B of the Act.

[153]

Section 163(3)(c) of the Act provides that a consumer document must be clearly expressed. There is no assistance in the section as to what the words 'clearly expressed' mean.
As in previous cases, the Director submitted to me that the words 'clearly expressed' should be given their ordinary dictionary meaning. It was submitted that the policy behind the section was to make sure that consumer documents were in plain English and free from uncertainty, confusion and doubt. It was said that one of the reasons why this was important was expressed in the second reading speech to be the fact that Victoria had many diverse linguistic and cultural backgrounds.
The Director points out that the contract refers to an unidentified non-party who is named as 'the contractor'. Some rights and obligations are conferred in respect of the contractor under the contract without that person being identified or being a party to the contract.
Further, the Director points to the inconsistency between the granting of rights to the unnamed contractor and the retention of rights in the respondent to seize, retain, or defer or refuse delivery of goods or to sell any of the goods to recover payment.
However, the bulk of the Director's argument under s163(3)(c) was that the contract contained various inconsistent terms. Many of these inconsistencies are already relied upon by the Director as arguments as to why the terms are unfair terms. For instance, term 11(c) which gives a complete discretion to the respondent to determine the method, route and time by which the contract is performed is inconsistent with warranties implied by the Trade Practices Act and specifically referred to in term 14(a).
Similarly, term 11(c) which allows the respondent to perform the contract at its 'absolute discretion' was said to be inconsistent with the implied terms in the contract pursuant to s32JA(1) of the Fair Trading Act.
The Director also relied upon the terms which he said were likely to mislead consumers as to their rights. The Director relied upon the fact that the respondent had suggested that the contract was between the respondent, the consumer, and an unnamed assignor, as an example of the real confusion which was contained within the contract itself.
Mr Matysik spoke of the use of plain English as a "fad" without substance-- for instance, he decried popular use of terms such as "you" and "us" in contracts instead of client and contractor.
He pointed out that none of the witnesses has said they can't understand the contract and no-one has reported to the respondent that they can't understand the contract. The respondent says that what is clear is a matter of interpretation.
Mr Matysik said that the respondent says that it has done its best to express the contract clearly and that what is clear and what is not clear can be a very subjective concept having regard to a reader's cultural and educational background. Further, the respondent says that a contract expressed in 'layman's language' may mean that the language that is used does not express its real legal meaning.
The submissions of the Director are powerful. Mr Matysik did not deal with them in his answering submissions. He spoke only in generalities. He appeared to want the Director to do the work of redrafting his contract for him, to give him a set of acceptable words.
In my view the respondent's contract is not clearly expressed by reason of the matters relied on by the Director.

[160]

Section 32ZA (2) provides that I may grant such an injunction if I am satisfied that it is "just and convenient" to do so, and I may grant an injunction on such terms as I consider appropriate. Section 123 also provides that I may grant an injunction if it is just and convenient to do so, and further makes it clear that the injunctive relief may be made subject to conditions, and provides other clauses of a "machinery" nature in respect of the power. Section 32ZA(3) provides that the provisions of section 123(2) to (7) of the VCAT Act applies as if an injunction issued in this proceeding were an injunction under that section.
There is no specific power given to me in the Fair Trading Act to grant a declaration. I do, however, have a general power to grant a declaration pursuant to section 124 of the VCAT Act. Section 124 provides that I may make a declaration concerning any matter in a proceeding instead of, or in addition to any order I may make in a proceeding.
In AAPT the Director had sought from the Tribunal both declarations and injunctions, notwithstanding that the conduct had ceased, but relying on the public education principles outlined in Alinta. The respondent submitted that a declaration or injunction were inappropriate remedies, as the respondent had already abandoned use of the standard form agreement containing these terms, and had adopted new terms and conditions governing the use of mobile phone contracts, which operated retrospectively, to cancel out the effect of the terms said to be unfair.
Justice Morris held that in these circumstances, the relief sought - both declaratory and injunctive-was inappropriate. He declined to make the orders sought on the ground that it was not the role of the Courts or a Tribunal to provide advisory opinions on the law. The orders to be made should determine actual disputes, and not answer abstract or hypothetical questions. In his view this principle found support from the wording of section 123 of the VCAT Act, giving the Tribunal the power to give injunctive relief - "if it is just and convenient to do so".
At Paragraph 9 of the judgment, His Honour said this:-

[164]

This submission completely disregards the lengthy submissions of the Director as to the aims of this consumer protection legislation and the many examples given by the Director of the capacity of several of the respondent's contract terms to cause significant disadvantage to the respondent's customers.
There are other examples of submissions by the respondent which appear to completely misrepresent the facts. The respondent's evidence that the contract should be viewed as a contract between the consumer and one of 7000 contractors is, in my view, not credible. The respondent's evidence about the font size of its contract conditions was not credible. Mr Matysik's assertion that it has only ever used small font size documents for commercial uses and not in its correspondence to consumers has been found to be not true on the evidence of Khalaf and Ghostine, both of whom exhibited versions of the contract in less than 10 point font posted to them by the respondent.
The respondent suggested in its written submissions that it would be calling so much evidence that the case would run for eight weeks, then failed to file any witness statements at all. Mr Matysik tried to divert the hearing into marginal issues such as the reasonableness of solicitor's costs, and complaints about a wide range of industries.
I formed the view that Mr Matysik was prepared to make any submission he thought might put off the ultimate hearing of this case, without regard to whether his submission had any factual basis.
I am particularly concerned regarding the vilification of Marwa Khalaf by the respondent in statements on its website.
As at the date of the final hearing on 1 April 2009, some four months after the Directors first protest , the statements I have outlined were still on the website, despite there having been no cross-examination at any time of Khalaf as to these issues and despite her having been recalled at the respondents request for the purpose of cross-examination.
There was never any evidence of fraudulent conduct by Khalaf placed before me. The respondent maintained its submissions about her conduct in the face of challenge and it was not until the very last morning of this hearing, 3 April 2009, that the respondent announced that the material regarding Khalaf had been removed from its website.
In my view Ms Khalaf was deliberately targeted by the respondent. I view the reference to her on the website as a further indication that the respondent does not accept the authority of the Director to bring these proceedings and is unlikely to comply with orders made unless those orders are accompanied by the force of an injunction.
The Director urges me to denounce that conduct as otherwise it will provide a disincentive to consumers coming forward to give evidence in relation to cases such as this. I do so denounce the conduct and I use it as evidence that the respondent will not comply with any findings I make unless they are accompanied by orders compelling it to do so.
The respondent has challenged the authority of the applicant vigorously in this hearing and has maintained its right to use the clauses which I have found unfair. In my view the behaviour of Mr Matysik in his approach to the case generally shows a complete lack of perspective.
Given the generally intemperate nature of its submissions, I think it is unlikely that the respondent will carefully consider this judgment and amend its terms unless it is compelled to do so.
In this case it is therefore my view that both the remedies of a declaration and an injunction are of substantial value. A declaration will clearly have an educative purpose for this respondent and also for others in the same industry. It is also appropriate for the reasons outlined above that injunctive relief should be granted in order for the respondent to be compelled to abide by the findings that I have made.
I have also determined that the wording of the injunction should cover the respondent's use of any other similar terms to the ones which I have found unfair. The terms of an injunction under section 32ZA may relate not only to the use of a particular term in a consumer contract or standard form contract, but to any similar term, or to a term having like effect, used or recommended for use by any person.
The Director noted that the respondent had altered term 8(b) in a more recent version of the contract but the alterations still have the same vice. The Director suggested that the fact that the respondent had altered the clause and tried to rely on a different variant of it was a good example of why the Director needed to obtain injunctions broad enough to encompass any variations made to avoid the effect of these proceedings.
The respondent says that the danger in making orders of the type contemplated is that it will hinder creativity in the industry. It suggests that businesses will be reluctant to change their contracts to adapt to consumer needs and will be more likely to stay with safe options. At present the respondent says that its contract terms are being constantly reviewed to solve marketplace problems, for example, problems such as labelling, and that the respondent will often try a term to see whether it helps to solve a particular problem identified in the marketplace.
The respondent submits that if declarations or injunctions can be expected to follow - and particularly if those orders deal not just with the precise terms under consideration but with similar terms-, then the respondent and industry generally will stay with formulations which are safe, rather than try anything new.
However, I have made adverse findings as to the credit of Mr Matysik. I have formed the view that this respondent is likely to change the impugned terms to a minor extent in order to avoid the impact of this judgment unless the declarations and injunctions are framed in a broad manner. I have therefore extended the injunctive relief to include terms to similar effect. Unless I do so, there is a likelihood that the respondent may otherwise simply alter the offending terms in an inconsequential way, but without removing the effect of those terms.
I do not believe that the orders I am to make will create any difficulties for this respondent or others in the industry. I have outlined precisely the reasons why I have found each term unfair. I have taken up the Director's request to draft the orders as fully as possible, setting out as best I can the particular sections of the Act which each term contravenes, and the essence of the contravention. With the assistance of proper legal advice, I do not think it will be difficult for the respondent, or any other trader, to draft terms which do not offend against Part 2B of the Act.
The Director also seeks an order requiring the respondent to notify each of its clients of the orders I have made individually, and to publish a notification on its website.
I do not consider that orders should be made for the respondent to send individual notifications to each of its customers. I accept the respondent's submission that in some cases its contractual arrangements are entirely oral, and that the precise elements of each contract may vary. This is not a situation comparable to, for example, a gym contract, in which each consumer signs the same standard form contract and there is relative certainty about what documents form the contract.
Further, it seems to me that the nature of the industry is that contracts span a short time. They are not twelve month or indefinite term contracts. Accordingly notification does not have the same utility as with consumers who have long-term contractual arrangements with a trader.
For the same reasons I do not believe a notification on the website is necessary. I expect that the respondent will comply with the orders I have made and remove the offending terms from its website. Once that is done, the notification is unnecessary.
The respondent has suggested in argument that any orders I might make will have a retrospective effect. The respondent warns me that retrospectivity will undo business relationships and I must give very careful consideration to the consequences of this occurring. He reminds me that this is a case that started some two and a half years ago and suggests that the parties should not be subjected to the uncertainty of undoing previous commercial arrangements.
It is my view from the evidence I have heard of the respondent's business operations that there is unlikely to be any significant retrospective effect to the orders made by me. The respondent's contracts are not continuing contracts. Its contracts appear to be of a short time span. In any event, whether or not any consumer's rights will be affected by my decision will depend on the whole of the circumstances of each transaction. For these reasons I do not think it likely that there will be a significant retrospective impact on the respondent's contracts by reason of this decision.
The Director also seeks an injunction in respect of the declaration I have made that the contract is not clearly expressed, contrary to section 163(3)(c) of the Act. She seeks that the respondent be prohibited from using collectively the provisions which I have identified as uncertain, mutually contradictory, inconsistent or otherwise incorrect.
Injunctive relief should only be given when the conduct to be restrained can be precisely identified, so that a person restrained can ascertain what behaviour is to be the subject of the prohibition.
In my view the terms of the injunction sought in respect of section 163 are too wide, and are not capable of precise identification or effective enforcement. The inconsistencies and uncertainties in the contract terms have been pointed out by the Director and adopted by me in this judgment. I do not consider it appropriate to go further to make them the subject of injunctive relief.

At a glance

Court

Decision date

Source

Judgment (166 paragraphs)

Director of Consumer Affairs Victoria v Backloads.com Pty Ltd (Civil Claims) [2009] VCAT 754 (11 May 2009)

Parties

Legislation Cited (2)