//
[2012] VSC 311
General information, not legal advice.
Supreme Court of Victoria
2012-07-20
LANSDOWNE AsJ
Original judgment source is linked above.
TRADE PRACTICES- Misleading or deceptive conduct - False representations-Unauthorised use of government logos - Representations as to quality of tap water- Demonstrations of water quality - Representations as to the need for filtered water and future benefits of using filtered water - Service agreements for water filtration - Solicitation of interest by survey - Contact sales - Relief - Fair Trading Act 1999 (Vic) ss 4, 6, 9, 10-12, Part 4, ss 149, 149A, 158, 163.
1 These proceedings commenced by originating motion filed on 30 September 2010 by which the plaintiff sought various declarations and injunctions, orders for compensation and a corrective publication order. The orders sought relate to alleged conduct by the defendant in the supply of water filters and the solicitation of expressions of interest in the supply of water filters and other goods, which conduct is said to be misleading or deceptive and to have caused loss to various consumers. The originating motion also alleges that agreements used by the defendant for the supply of water filters did not comply with the requirements of the Fair Trading Act 1999 (Vic) as to contact sales.
2 Orders for substituted service were made by this Court on 26 November 2010. On 1 December 2010, the Practice Court, constituted by Justice Osborn, made orders by consent enjoining the defendant from certain conduct pending further order. The defendant appeared in person at that time. The conduct enjoined was as follows:
3 Further, the defendant agreed that pending further order he would ensure that any contact sales agreement for the supply of a water filtration system entered into by him or on his behalf in Victoria contained the notices required by the Fair Trading Act 1999.
4 Pre-trial directions were made on 29 March 2011 in the defendant's presence listing the proceedings for trial on 20 June 2011 and making directions for the filing and service of evidence by way of affidavit. The defendant did not file any evidence on affidavit. On 20 June 2011 Justice Habersberger referred the trial of the proceedings to me for hearing. At the commencement of the trial the defendant made an application for adjournment to allow him to obtain further legal advice with a view to making a counterclaim in respect of damage he contended had been caused to his business by the plaintiff. After discussion and an indication from me as to the conditions on which I would grant that application, which was opposed, the defendant withdrew it.
5 The trial was conducted on 20 to 22 June 2011 inclusive and 27 June 2011. Mr Palamara was selfrepresented throughout the trial. He had not given notice to the plaintiff that he sought to cross-examine any of her witnesses and did not seek to do so at trial.[1] At the defendant's request, I gave him leave to give evidence orally notwithstanding that he had not complied with the pre trial directions requiring evidence to be on affidavit. He did not call any witnesses. In addition to his oral evidence, he supplied two written statements to the Court. The first, headed "Statement of Leon Palamara 21/06/2011" was addressed by him in his evidence and is Exhibit D-1. On 27 June 2011, Mr Palamara provided a written statement to the Court dated 26 June 2011 by way of submissions. This statement also contained assertions of fact as to damage caused to him by the plaintiff's investigations not otherwise supported by his evidence in the trial. I made orders on 27 June 2011 permitting him to set out that evidence in an affidavit if he wished the Court to have regard to it. No affidavit was filed by the defendant in accordance with those directions and accordingly I disregard those assertions.
6 The defendant asserted in his evidence in chief on Wednesday 22 June 2011 that it was permissible to supply customers and survey recipients with information as to water quality as an aspect of freedom of speech. Accordingly, the plaintiff and I alerted him to the notice requirements if he wished to rely on the Charter of Human Rights and Responsibilities Act 2006 ("the Charter"), and drew his attention to the decision of Justice Pagone in Director of Consumer Affairs Victoria v Operation Smile (Australia) Inc and ors[2] ("Operation Smile at trial") in relation to Charter issues. The defendant confirmed on the next sitting day, Monday 27 June 2011, that he did not wish to raise any issue under the Charter.[3]
7 The directions of 27 June 2011 also permitted the plaintiff to file and serve further submissions and the defendant to respond. The plaintiff filed further written submissions. The defendant did not file any further submissions in response.
8 On the oral application of the plaintiff and not opposed by the defendant, I gave an interim injunction on 22 June 2011 restraining the defendant until the next day of hearing, the following Monday 27 June 2011, from instructing, requesting or otherwise requiring the Registrar of certain websites to deregister or remove him as the registrant or to substitute another person. The order on the 22 June 2011 was made without prejudice to the defendant's right to contest ownership or control of those websites as his evidence was not complete. I extended the interim injunction indefinitely at the conclusion of the trial on 27 June 2011. The intent of these orders was to maintain the websites for the purpose of any corrective publication order.
9 At my invitation, the plaintiff made further written submissions in relation to the Court of Appeal decision Director of Consumer Affairs Victoria v Operation Smile (Australia) Inc and ors[4] ("Operation Smile on appeal") and as to the defendant's responsibility for the actions on sub contractors, by letters dated 28 May 2012 and 6 July 2012 respectively. The defendant did not take up the opportunity to make further submissions on these matters.
Comments on proceeding by way of originating motion and on the relief sought
10 The case proceeded by way of originating motion and affidavits, rather than by pleadings and oral evidence. In Director of Consumer Affairs Victoria v Scully and ors[5] ("Scully") Hargrave J. in a ruling published on 1 June 2011, not long before the commencement of this trial, expressed the view that that case should have been commenced by pleadings and involve discovery, and made orders that the trial continue as if commenced by writ. The plaintiff raised at the outset of the trial whether these proceedings could continue by way of originating motion, and I ruled for the avoidance of any doubt that the proceedings could continue by way of originating motion and affidavit.
11 These proceedings are on a smaller scale than Scully. In those proceedings the court book was apparently 26 volumes, here it is three. In those proceedings there were multiple defendants, here there is one. A key similarity, however, is that in each case some or all of the defendants are unrepresented and there are multiple aspects of conduct in issue. As to the first of these, an unrepresented defendant may lack the expertise or resources to seek clarification of the plaintiff's case in advance of the trial where that is fairly required. As to the second, in a case with pleadings, the facts said to constitute each aspect of conduct in contravention of the law would be identified, and issues isolated by the matters contested in the defence. Only the facts in issue would then need to be proved by evidence. Where the evidence is oral, the Court and the defendant each have an opportunity to absorb the evidence as it is given in person, rather than being required to absorb it by reading.
12 Commencement by originating motion as here means there is no identification of the elements that must be proved by the plaintiff, other than what may be divined from the relief sought. Further, there is no identification of the issues prior to the evidence. In this case, the plaintiff's evidence was entirely in written form, due to the failure of the defendant to take advantage of the opportunities afforded him to contest that evidence by seeking to cross examine witnesses or file his own evidence on affidavit. As a further consequence of that failure, the matter was set down for a limited hearing time, thus limiting the opportunities for oral elaboration of the plaintiff's case.
13 The relief sought does include detailed declarations as to conduct said to be in breach of sections 9, 10, 11 and 12 of the Fair Trading Act 1999 and those proposed declarations do give some indication of the impugned conduct. However, the evidence contains many specific instances of conduct or representation that might be impugned as misleading, and it is not immediately apparent from the relief sought which aspects of conduct are the subject of the various proposed declarations.
14 The difficulty is compounded by the complexity of the orders sought by the plaintiff. The relief sought is not simple. The revised orders sought run for 15 pages. They cover declarations, injunctions, orders for compensation and corrective publication. They are in a form that is difficult for a lawyer to understand, let alone an unrepresented defendant. I note that adverse comment has been made previously of the unnecessary complexity of relief sought by the Director. I echo the comments made by Hansen J. in Cousins v Merringtons Pty Ltd and Anor as follows:
It is important to keep the central simplicity of this case in mind as the raft of orders and findings sought by the plaintiff has the tendency to overshadow the case with unnecessary complexity. This is seen in the request for findings of multiple contraventions in relation to some complainants but also in the overlapping of subject matter dealt with by the declarations. If ultimately declarations are to be granted it will be necessary to give consideration to limiting them to the central substance of the matter thereby avoiding repetition in relief.[6]
15 The case has it developed also revealed a possible disconnect between the relief sought and the evidence. In particular, there was considerable evidence in the plaintiff's case, to which the defendant then responded and about which he was cross examined, as to the content of the sales folder and the representations there made about the quality of tap water. Yet this part of the case appears to be reflected only in the relief sought only by declaration 2(f) and injunction 7(j). The relief sought, in so far as it relates to misleading conduct, otherwise seeks multiple orders in respect of representations as to links with government agencies, and the demonstrations of water quality undertaken in consumer's homes. The impression accordingly given by the relief sought, including the corrective video which focuses on a misleading test of water quality, is that these are the areas of impugned conduct of greatest concern, yet the evidence ranged more broadly.
16 The number and similarity of the various declarations sought in relation to representations made of association with government agencies is a particular example of complexity. These declarations appear to cover essentially the same ground, with minor variations. I will seek further submissions as to whether an appropriate declaration or declarations can be expressed more simply. Also, as to whether it appropriate to make multiple declarations in respect of the same conduct, on the apparent basis that the conduct offends multiple sections of the Act.
17 Further, the declarations sought in order 2 seek in rolled up form declarations of contravention of sections 10, 11 and multiple paragraphs of 12 of the Fair Trading Act 1999 in respect of various representations said to have been made in four different businesses. This is, in my view, simply too confusing. The difficulty is particularly acute given that some paragraphs of section 12 prohibit false representations, and others representations that are misleading or deceptive, or liable to mislead. The plaintiff should link clearly the impugned conduct and the section it is said to offend.
18 The plaintiff did supplement her case with considerable written material, including written opening submissions, schedules of admissions and proposed declarations annotated by reference to the evidence said to support them. This written material is very dense, however, and the earliest of it, the opening submissions and first schedule of admissions, could not have been supplied to the defendant earlier than the day before the hearing given the dates indicated on the documents. The annotated declarations were supplied only towards the end of the trial. Thus while of some assistance to me, they could be of little assistance to the defendant in preparation of his case.
19 I give three examples of the difficulties this mode of presentation of the case and the limited hearing time created for the Court and the defendant. First, proposed declaration 2(f) and injunction 7(j) in the revised orders turn on findings that untrue representations have been made that tap water is "unsafe, unhealthy, contaminated, or of poor quality". With one exception discussed below, the material available to the defendant prior to the trial did not identify where in the evidence those representations were said to have been made or on what basis they were said to be untrue. The originating motion sought a declaration and injunction in similar terms to that sought in the revised orders (2(f) and 7(i) respectively) but did not identify the particular representations in question. The exception is paragraph 103 of the plaintiff's opening submissions, which sought a similar, but not identical, finding that it was false, misleading or deceptive for the defendant to make representations based on sources dated 1991-1999 in 2010 given the subsequent introduction of the Safe Drinking Water Act 2003 and associated regulations and Commonwealth guidelines. As indicated above, these submissions are dated the day before the trial and so gave little advance warning to the defendant. The findings otherwise sought in the opening submissions do not include a list of any statements in the surveys used by the defendant to solicit business or the sales scripts and presentation folders he instructed his representatives to use in sales that are said to be untrue, misleading or deceptive.
20 The defendant appeared at a loss in his evidence in chief to answer the plaintiff's case in this regard.[7] In the absence of a pleaded case or other clear identification of the representations in question, this is entirely understandable. In response to the concern he expressed to this effect, counsel for the plaintiff gave some examples of the material in his sales presentation which was said to be misleading or make promises of future benefit without reasonable grounds.[8] The defendant was also cross examined at length in relation to the sales presentation and scripts, and given an opportunity to supplement his evidence if he wished. On balance I consider this oral elaboration of the plaintiff's case sufficiently addresses what might otherwise have been a significant lack of procedural fairness to the defendant.
21 Other aspects of the plaintiff's case did not to my mind become sufficiently apparent in the course of the trial, even if adverted to in the written material. For example, it was only by reference to the annotated declarations, provided at the close of the trial, that I appreciated that declaration 1(e) sought by the plaintiff in the revised orders (that the defendant had represented that a survey, comparison or review of water quality was for public purposes when it was for his private business purposes) was said to be supported not only by the evidence as to the surveys, but by also comments made by sales staff of the defendant in the course of sales. In fairness to the plaintiff, this was flagged in her Outline of Argument for the Trial, but the density of the material is such that I did not absorb that at that time. The defendant was not cross examined about comments made by his sales representatives in consumers' homes about association with government, which is particularly significant given that he told Inspector Foyster when interviewed that customers were not told that the supply of water filters was part of a government program. The thrust of the cross examination in relation to unauthorised claims of connection to government was in relation to the surveys. Notwithstanding this, I have taken into account the evidence of false representations of association with government programs made in the course of sales because the defendant himself accepted responsibility for one such representation in the course of a sale in his own evidence.
22 The third example relates to proposed declaration 1(g), which declares that the defendant engaged in misleading or deceptive conduct by refusing or failing to pay required refunds in a timely manner to customers. The plaintiff did not elaborate on the basis for this proposed declaration during the trial, nor put to the defendant in cross examination that his conduct in this regard was misleading. The thrust of the case as it was presented at trial was that failure to pay refunds was in contravention of the contact sales provisions of the Act, not s.9. In response to my invitation, the plaintiff has made further submissions to the effect that the conduct was also misleading, and referred to authorities in that regard, but the defendant did not have the opportunity to address that way of articulating the case orally had he wished to do so.
23 As it has transpired, the mode of presentation of the plaintiff's case has not ultimately undermined the plaintiff's case to any considerable degree. I have made findings to support the thrust of the relief sought. I will address these findings by area of conduct, cross referencing the relief sought in respect of that aspect of conduct. The task of determining these proceedings has been made more difficult, however, by the form in which they were commenced and the evidence given, and the complexity of the relief sought. The plaintiff may wish to bear these matters in mind when commencing other proceedings.
24 The plaintiff relies on over 30 affidavits comprising three volumes of a court book, and several further affidavits. The plaintiff's case relates to the time period from February 2009 to December 2010. The plaintiff asserts that during this period the defendant has traded under a variety of trading names in Victoria and the Gold Coast and, by virtue of websites, potentially more broadly. The trading names it is said the defendant used are "Australian Water Solutions", "Australian Water and Solar", "Solar Assist", "Vic Save Water" and "Eco Assist". The websites said to be owned by the defendant are www.ozwater.com.au; www.solarassist.com.au; www.ecoassist.com.au; and www.solarsparkelectrical.com.au. Orders are sought for a corrective publication on each of these websites.
25 The plaintiff contends that Mr Palamara has used in these various businesses various government logos, slogans or coats of arms without the approval of the government authority in question and in so doing has represented that his business activities are being conducted for, or in association with, one or more of these government authorities when that is not the case. More generally, it is said by the plaintiff that the defendant has represented that one or more of his businesses are conducting a survey, comparison or review of water quality for public purposes when the purposes were private business purposes.
26 The plaintiff alleges that the defendant undertook or caused to be undertaken misleading demonstrations of the quality of tap water in consumers' homes. The effect of these demonstrations was to imply that the tap water was unsafe and that the consumer should purchase a water filtration system from the defendant to obtain safe drinking water. The plaintiff alleges that the defendant represented that the water filtration systems he supplied would produce better quality or healthier water than normal tap water when he had no reasonable grounds to make those representations and they were false. The plaintiff alleges that the defendant made representations that tap water in the Melbourne metropolitan area and other areas around Australia, including the Gold Coast, is unsafe or of poor quality when that is not true.
27 The plaintiff also makes complaint of the forms of agreement that the defendant entered into with consumers. It is said these were contact sales agreements and they did not contain the required notices, nor were they sufficiently clearly expressed. As a consequence, it is said by the plaintiff that all such agreements are unenforceable. In particular, the plaintiff seeks a declaration that Mr Palamara cannot enforce five particular agreements. The plaintiff also asserts that Mr Palamara has refused or failed to pay in a timely way refunds to particular consumers who are entitled to them and seeks compensation orders in respect of those consumers.
28 The plaintiff also seeks a corrective publication order which would require the defendant to place on websites he controls a video prepared by the plaintiff debunking the water quality demonstrations undertaken by the defendant and his employees in customer's homes.
29 The defendant conceded that he is or was the owner, as a sole trader, of the following businesses or web sites:
30 He did not dispute that he was formerly the registered proprietor of the business name Vicsafe Water, which registration on the evidence in the plaintiff's case expired on 18 May 2010.
31 The defendant says that during the period in question his main business was selling water storage systems. The defendant gave evidence that his current business proposal is to set up a bathroom renovation business involving a showroom and that he retains an interest in a plumbing business.[18] At another point in his evidence he said that as at the trial he has no business registered in Victoria.[19]
32 The defendant accepts responsibility for the content of the various brochures or flyers (in this judgment called surveys) distributed by Australian Water Solutions and EcoAssist. He concedes that the surveys displayed various government logos without permission but said that when that was drawn to his attention he withdrew the offending surveys from use in his business and destroyed them.[20] He disputes that the government logos gave a misleading impression that his business was sponsored by or associated with the government entity in question. Similarly, he disputes that the use of hyperlinks to government sites on the websites for his businesses was misleading or deceptive. He says this was intended merely to facilitate access to valuable and informative websites. He contends that the distribution of the surveys was in the public or community interest, rather than in the interests of his business, and that they contained accurate information as to water quality.
33 He concedes that water filters were installed on behalf of Australian Water Solutions and agreements entered into for their service as part of his business, but says these agreements were only a small part of the overall business constituted by Australian Water Solutions and that sales ceased eight months before the trial[21]. Generally he sought to minimise the significance of the evidence adduced by the plaintiff as to complaints, by asserting, for example, that any problems with consumers arose from dealings with one particular salesman, a Mr Mohan Ari, who he retained for two weeks only.[22] By contrast, in his assertion, the business had been running without difficulty from 2000, a period of 8 or 9 years.[23] The surveys had been distributed over 7 years. He said that most of the consumers who expressed dissatisfaction to the Department of Consumer Affairs had not paid him, or he had not made any money from those sales, and he was happy to give refunds if he could get his equipment back. He said some of the complaints had been sorted out.[24]
34 The defendant's evidence is that his sales staff were independent contractors who worked on commission. He says he trained them, and directed them to use the scripts and sales folder he prepared. He accepts responsibility for the content of those sales scripts and sales folder. He maintains that none of the material in the sales scripts or folder is misleading or deceptive, or likely to mislead or deceive. He claims that the material is sourced from reliable sources. He disputes the plaintiff's contention that the tests for water quality his sales staff used at his direction, which are identified in the sales scripts, do not in fact reveal water quality. He maintains that they do.
35 The defendant specifically contends that the plaintiff has not adduced any proof that the material in either the surveys or the sales presentations was misleading or deceptive. In relation to the use of government logos on the surveys, he relies on the fact that the plaintiff has adduced evidence from consumers who were not mislead into believing the defendant's business was linked to government, rather than from those who did so believe. In relation to claims as to water quality, he asserts that "it is fair to claim and represent tap water was being contaminated", and the level of contamination is irrelevant.[25] He says the issue of water quality is "highly debatable" and it is not for the plaintiff to make a judgment as to whether or not tap water needs filtering, and it cannot be determined by this Court.[26]
36 He says that it is a matter of "common knowledge" to claim that there are medical benefits by using "pure" i.e. filtered water and accordingly that it is valid to claim that his water filtration makes water safer. He says that the plaintiff has not proved that the promises made as to the benefits to be gained by the use of filtered water are not correct and contends that the plaintiff has not proved he intended to mislead or deceive. These latter two contentions reveal a misunderstanding of the law. As discussed later, it is not necessary for the plaintiff to prove intent, and it is for the defendant to prove that promises of future benefit are made on reasonable grounds, not for the plaintiff to show they are not.
37 The defendant denies that the agreements he entered into with consumers are contact sales agreements or otherwise unenforceable due to their content.
38 In relation to the relief sought, the defendant contends that the only relief that could be sought in relation to his use of government logos without permission is for breach of copyright, at the instance of the agency concerned. He says that, if the plaintiff's case is accepted that some or all of the representations by his businesses were misleading or deceptive, any relief should be limited in geographical range to Victoria. He contends that it is for the consumer protection in each state to take action in that state in respect of any infringement there. He opposes a corrective publication order because if it appears on a website, it cannot be limited to Victoria; the area of his business that had generated complaint and these proceedings was "a very small part of what we do"[27]; and whatever occurred in relation to water filters is not relevant to his current business. In relation to the compensation claims made by the plaintiff on behalf of a number of consumers, the defendant's case is that any such claims should have been made by the individual consumer him or herself in another forum, such as VCAT, so that the claim "can be heard in a just manner".[28]
Law relied upon: Fair Trading Act 1999 (Vic)
39 The plaintiff asserts breaches by the defendant of the Fair Trading Act 1999 (Vic) ("the FTA" or "the Act") over the period February 2009 to December 2010. The consumer protection provisions of the FTA including Parts 2 and 4 were replaced by the national scheme for consumer protection, the Australian Consumer Law, on 1 January 2011. Notwithstanding the repeal of these provisions they continue to operate in respect of any obligation imposed or liability accrued prior to repeal and legal proceedings may be brought, continued and enforced in respect of any such liability.[29]
40 One of the purposes of the FTA was to protect consumers (s.19(aa)). To that end, Part 2 of the FTA entitled "Unfair Practices", contained a number of provisions directed at ensuring fair conduct in trade and commerce. Part 4 of the FTA contained provisions that regulated transactions entered into off business premises, including at consumers' homes. The plaintiff contends that the defendant has breached provisions in each of these Parts.
Misleading or deceptive conduct; false representations
41 Dealing with Part 2 first, Section 9 provided the overarching protection:
(1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
(2) Nothing in the succeeding provisions of this Part is to be taken as limited by implication the generality of subsection (1).
42 The conduct must be in trade and commerce. Conduct for the purposes of s.9 may include promotional activities.[30]
43 Sections 10, 11 and 12 provided specific prohibitions on and penalties for certain types of conduct within the general prohibition of s.9. Section 10 prohibited misleading conduct as to "the nature, manufacturing process, the characteristics, the suitability for their purpose or the quantity" of goods; section 11 provided identical prohibition (save as to manufacturing process) in relation to services; and section 12 prohibited particular false or misleading representations in relation to the supply of goods or services (including false or misleading representations as to sponsorship, price, need for goods or services). Contravention of ss.10 or 11 is established if the conduct is liable to mislead the public i.e. those sections use similar terminology to s.9. A representation that is true may still be misleading[31] (as, for example, in relation to some of the representations made as to substances found in tap water). By contrast, some of the claimed contraventions of s.12 require the plaintiff to establish that the representation in question was "false". Such a representation must be objectively untrue.
44 Section 4 made special provision in relation to representations about future matters. Subsections (1) and (2) provided as follows:
(1) For the purposes of Part 2, if a person makes a representation about a future matter, including the doing of, or the refusing to do any act, and the person does not have reasonable grounds for making the representation, the representation is deemed to be misleading.
(2) Subject to subsection (2A), in any proceeding under this Act concerning a representation made by a person about a future matter, the person making the representation bears the burden of proving that the person had reasonable grounds for making the representation.
45 Thus it is for the defendant in these proceedings to prove that he had reasonable grounds for making the promises he made as to the future benefits of using filtered water-the plaintiff does not need to prove that they were false or misleading. The promises are deemed to be misleading unless the defendant can show he had such reasonable grounds.
46 In Operation Smile on appeal[32] the Court of Appeal made it clear that it is not necessary for the Director to establish any intent or any other element of mens rea under s.9. All that is relevant is whether, tested objectively, the conduct was misleading or deceptive, or likely to mislead or deceive.[33] To determine whether a representation is misleading or deceptive, or likely to mislead or deceive, it is necessary to consider the whole of the context.[34] The representation will breach s. 9 if there is a "real and not remote possibility, be it more or less than a chance of 50 per cent, of the statement leading into error the readers at whom it is directed."[35] In that case, Justice Nettle, with whom Warren CJ and Cavanough AJA agreed in that analysis, considered it relevant that the representations there in question were made on a website aimed at the widest possible range of ordinary readers, not a highly educated class in the community.[36] There was a similarly broad range of potential customers who may have received surveys, gone on the defendants' websites or otherwise become aware of the defendant's businesses in these proceedings.
47 The Court of Appeal held in Operation Smile that various representations were false and misleading even though the author may have honestly believed the statements to be true.[37] Similarly, in the case of representations as to a future matter, in that case that various treatments would be efficacious in the treatment of cancer, the Court held that the reasonableness of the defendant's grounds for making the representation under s.4 of the FTA are to be determined objectively as a question of fact, as opposed to one of subjective belief.[38] Where it is possible that some aspects of a representation may ultimately prove to be true, but that cannot be said to be the case on the present state of scientific knowledge, the representation will be misleading and deceptive "not because it (is) objectively true or false but because it represented that there was an objective truth when, at least on the present state of knowledge, that was not so."[39]
48 In relation to representations said to breach s.12 by being false, it is similarly not necessary to show that the defendant intended to make a false representation.[40]
49 In relation to Part 4, the plaintiff contends that the defendant has breached the contact sales provisions. I will consider these sections of the Act in more detail later in this judgment. For present purposes, it is sufficient to state that sections 60 and 61 require a contract for the supply in trade and commerce of goods or services of a kind ordinarily used for personal, household or domestic purposes where that agreement is entered into at the purchaser's home to contain clear notification in prescribed form that the purchaser may cancel the agreement within ten days and also to contain a form to utilise for that purpose. Section 63 provides for longer periods for cancellation where this notice is not provided. Sections 62B, 62C and 62E also provide that a supplier carrying on negotiations at the consumer's home must not stay longer than one hour without obtaining the consumer's consent in writing, must leave on request from the consumer, and must inform the consumer of those restrictions. The defendant contends in these proceedings that the agreements entered into in relation to water filtration are not contact sales agreements within these requirements.
50 The conduct at consumers' homes that is in question in these proceedings was undertaken not by the defendant personally, but by contractors working as sales staff. In respect of the claimed breaches of the contact sales provisions, in my view it is clear from the wording of those sections, and their reference to a person acting on behalf of a supplier, as an alternative to the supplier personally, that if the defendant is the supplier, he is liable for the actions of the persons who attended the consumers' homes in breach of those provisions, whether they were employees or contractors.
51 Part of the relief sought turns on findings that the defendant was also responsible for conduct at consumers' homes said to have been misleading or deceptive, or likely to mislead or deceive. As set out earlier, in his interview with Mr Foyster, the defendant said that he was responsible for the content of the surveys, for the sales script and for the content of the sales folder, but that the staff who attended consumers' homes were contractors, paid on commission, not employees on a wage. He said he trained them to stick to the sales script and folder, but acknowledged that there was a risk that they would not do so.[41] In particular, he said that the staff were not instructed to say that the supply of water filters was part of a government program[42], although in one instance, that of Mrs Hussein, he acknowledged in his evidence at trial that that had occurred and he accepted responsibility for the actions of his sales person.[43]
52 The plaintiff specifically referred me at trial to section 144(4) of the FTA, which provided that:
(4) For the purposes of any proceedings under this Act, any conduct engaged in on behalf of a person other than body corporate (the principal) is deemed to have been engaged in also by the principal if the conduct was engaged in by -
(a) an employee of the principal within the scope of the employee's actual or apparent authority; or
(b) any other person at the specific direction or with the specific consent or agreement of an employee of the principal, if the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the employee.
53 It will be observed that the section extends liability to the principal for the acts of his employees. In the usual sense, "employee" does not include a contractor. In the further submissions supplied by letter dated 6 July 2012, the plaintiff has clarified that the basis on which the defendant is said to be responsible for the actions of his sales staff, even if contractors, is not s.144, but general principles of agency. Section 144 makes the employer personally liable for the actions of his employees, as well as vicariously, but is not a limiting provision that excludes liability that would exist at general law. I accept the plaintiff's submissions in this regard.
54 Under general principles of agency, a principal, here the defendant, is responsible for the actions of his agent, here the sales staff, if the actions of the sales person are either within the actual authority of the agent (here to follow the script) or within his or her apparent authority. Apparent authority is created when the principal makes a representation to the person with whom the agent is contracting, that the agent is permitted to engage in that conduct. I will return to this issue when considering the defendant's evidence as to his sales practice.
55 The plaintiff asserts that the surveys distributed by the defendant were misleading and deceptive in a number of respects. The evidence shows there were broadly two types of surveys- one relating to water quality (bearing attribution to Australian Water Solutions and VicSafe Water), and the other to water tanks, solar hot water and solar electricity (bearing the attribution of www.ecoassist.com.au). The plaintiff says the surveys were misleading and deceptive because they displayed government logos which gave the impression of a government connection that did not exist. Even where no government logo was used (for example, the survey received by Ms Healy discussed below), the surveys gave the impression that they were for public purposes, when they were for the private business purposes of the defendant. Further, the content of the surveys relating to water quality was false in that it implied that tap water was of poor quality when that was not true, and misleading and deceptive by virtue of selective extraction from government reports on water quality.
56 Complaint was first made, on the evidence, to Consumer Affairs Victoria about these surveys in May 2009. In May 2009 a Ms Healy from Beaumaris received an unsolicited document in her mail headed on the front page "NOTICE: PUBLIC AWARENESS QUESTIONAIRE IMPORTANT INFORMATION Presented in the interests of Public Health and Safety". The inside of the questionnaire commenced with the statement "IMPORTANT NOTICE: Tap water supplied in this area contains carcinogenic (cancer causing) pesticides, herbicides, insecticides-dieldrin, chlordane, DDT, mercury, heptachlor, atrazine, lindane, lead, aluminium, chlorine & up to 50 different treatment chemicals." It then requested the reader to answer a list of questions which assumed these assertions to be correct and essentially asked if the reader was concerned.
57 Before the last two questions the following words were boxed: "Australian Water Solutions are genuinely concerned & is working to improve water quality. We have FREE Water Purification Systems to give away as part of this Public Water Awareness Campaign". The last two questions were these: "Would you agree to receive a FREE Water Purification System?" and "If you receive a FREE Water Purification System would you agree to have it serviced at your expense?". The survey asked the reader to complete his or her name, address and phone number and leave the completed form for collection near the front door. The final words inside the document were "Disclaimer: This is a residential survey carried out in the interest of Public Health an Safety by Australian Water Solutions, and is not affiliated with any specific water authority." By contrast, the following words appeared on the back page "Confirmation of the presence of chemical additives found in tap water, may be obtained from-www.southeastwater.com.au Distributed by AWS 1300 760 647". Beaumaris is in the distribution area for South East Water Ltd.[44]
58 Ms Healy looked up this web site but found no confirmation of the information in the document. She was concerned that the document may alarm members of the public and was being used as part of a sales pitch and made a complaint about it to Consumer Affairs Victoria on 15 May 2009.
59 Reverend Gordon McIver Wright of McKinnon received a similar unsolicited survey in his mail in July 2009. The content of the document was substantially the same as that received by Ms Healy, save that on the back page the Victorian logo "Victoria: the place to be" appears and the web addresses for Melbourne Water, City West Water and Yarra Valley Water are given as well as that for South East Water. He too was concerned that the document could scare and mislead elderly residents, and made complaint to Consumer Affairs Victoria.
60 The plaintiff also adduces evidence from Ms Middleton of Cranbourne and Mr Riters, also of Cranbourne, who each say that she or he received a survey from Australian Water Solutions in April 2010. They also each made complaint to Consumer Affairs Victoria. The surveys they received are identical to each other. The internal content is similar but not identical to that in the Healy/McIver Wright surveys. The "IMPORTANT NOTICE" at the commencement of the text is the same, listing carcinogenic substances said to be in the tap water. Cranbourne is also in the distribution area of South East Water Ltd. The questions that then follow are similar, although not identical, in that they assume the content of the important notice to be correct and to be linked to disease.
61 The Middleton/Riters surveys differ from the earlier surveys in that they contain pictures of various components of the "AWS Smart-Flow Micro Purification Package" and ask the reader if he or she would like to receive a "FREE Water Purification Package by participating in this 14 day comparison review?" This is expressed to be free as "a thank you for your feedback". If so, the document is to be left on the doorstep for collection. The Middleton/Riters surveys also contain different front and last pages from the earlier surveys. The front page is headed "PUBLIC NOTICE: ANNUAL WATER QUALITY REVIEW IMPORTANT INFORMATION Presented in the interests of Public Health and Safety." The back page contains the following logos: the Victorian Government slogan and picture "Save Water Target 155" with a web reference to www.ourwater.vic.gov.au; Australian Water Solutions; the Water Quality Association and VicSafe Water.
62 The plaintiff has filed two affidavits from Victorian State government officials, Ms Mary-Anne Thomas and Ms Jasmine Fiegehen, as to whether the use of State government logos, slogans and websites on these pamphlets was authorised. In short, their evidence is that it was not. The defendant concedes this. The slogans or logos in question are "Victoria-The Place to Be" (as appeared, for example, on the pamphlet received by Mr McIver-Wright; the words and image "Save Water Target 155"; the website www.ourwater.vic.gov.au (both the "Save Water Target 155" and the address of this website appeared on the pamphlets as received by Ms Middleton and Mr Riters); and www.climatechange.vic.gov.au, which is also a website owned by the State Government.
63 The climate change website appeared on two surveys exhibited by Ms Fiegehen to her affidavit, together with the Save Water Target 155 logo and reference to www.ourwater.vic.gov.au. Those surveys have a similar front page "PUBLIC NOTICE: ANNUAL COMMUNITY ENVIRONMENTAL REVIEW IMPORTANT INFORMATION Presented in the interests of Climate Change". It is to be observed that the Review thus advertised is said to be environmental, rather than in relation to water quality. The questions inside relate to, and the products advertised are, water tanks, solar hot water and solar electricity. The distributor is named as www.ecoassist.com.au. The particularly distinguishing feature of these two pamphlets is that one bears the logo of the City of Casey, and the other the logo of the City of Frankston. Inside the reader is invited to participate in the "community buying program" of that City, followed by the words "Government Rebates and Eco Green Loans now apply". Each is completed, which suggests they had been distributed to and completed by a householder.
64 The Marketing Services Manager of Frankston City Council, Ms Maxine Sando, exhibits to her affidavit the same survey, distributed in Frankston in the period April -July 2010, as is exhibited to Ms Fiegehen's affidavit. She says that the Council received complaints about the survey from April to late June 2010, and then again from late June to July 2010 in relation to a further distribution of the same survey. She exhibits a copy of the survey as distributed in late June which contains the name and address of a resident. I draw the inference that residents supplied Ms Sando with both of these surveys, and she then supplied a copy of the first to Ms Fiegehen. Ms Sando deposes that it would be her role to give permission to use the Council logo, and she had not done so for the survey or to Australian Water Solutions, the defendant, Eco-Assist or other businesses operated by the defendant. The defendant concedes he did not obtain the consent of the Frankston Council to use their logo or suggest an association with them. Ms Sando expresses concern, on the basis of the complaints received from residents, that the unauthorised use of the City of Frankston logo has lessened the reputation of the Council and may have destroyed the trust between the Council and its residents.
65 Ms Roslyn Weadman deposes that she is Manager Communications for the City of Casey, and as such authorised to give permission to use the brand and logo of the City of Casey. She was shown by Ms Nicola Ward, Manager Environment for the City, an example of a survey being distributed in the City of Casey in mid May 2010. Both she and Ms Ward exhibit the survey, which is the same as that exhibited by Ms Fiegehen, and so was presumably passed onto Ms Fiegehen by one or both of them. Ms Weadman deposes that she did not give permission to the named distributor, www.ecoassist.com.au, to use the City of Casey logo, nor to the defendant, Australian Water Solutions or any other of the defendant's named businesses. She expresses concern that residents may have been mislead and taken advantage of, and that the integrity of the City of Casey logo has been compromised. In response to the distribution of the survey, the City of Casey issued a press release on 20 May 2010 advising residents that the City was not associated with EcoAssist and warning residents to be careful of the "fraudulent brochure".
66 The press release is in the name of Ms Nicola Ward. She deposes in her affidavit that she is responsible for overseeing partnerships between the City of Casey and third parties in relation to environmental matters. She received the completed survey which she then showed Ms Weadman from another council officer. The survey had been dropped of by a resident at the front counter of the City of Casey offices. She deposes that she had not had discussions with any person about an "Annual Community Environmental Review" or "Community Buying Program", and in fact the City of Casey has not been involved in any "Community Buying Program". In particular, she says she did not have any dealings with the defendant, Australian Water Solutions, EcoAssist or any of the other businesses conducted by the defendant the subject of these proceedings. She expresses particular concern that as a result of the misuse of the City of Casey name a legitimate City household assessment program which would have involved visits to residents' homes has had to be put on hold, and that the illegitimate activities of the distributor will impact adversely on legitimate environmental businesses in the City of Casey.
67 The plaintiff's complaint about the use of government logos is not limited to the surveys. The defendant concedes that he has used the Commonwealth Coat of Arms on his websites, together with hyperlinks to various government environmental websites.
68 In February 2009 Mr Peter Rush, the Commonwealth government official responsible for approving the use of the Commonwealth Coat of Arms, became aware that a website www.solarassist.com.au was using the Commonwealth Coat of Arms.[45] The defendant acknowledges that he was the registrant and operator of that website at that time. A print out of the website as at 7 April 2009 which is exhibited to Mr Rush's affidavit shows the Commonwealth Coat of Arms prominently displayed with the words "An Australian Government Initiative" underneath it. The use of the Coat of Arms was not authorised. On 14 April 2009 Mr Rush caused a letter of that date under his signature to be sent to the operator of the website, using the provision on the website for contact, requiring the operator to cease using the Coat of Arms and to confirm that had occurred. The defendant acknowledged in his evidence at the trial that there was a request made via that website to remove the government logo, but said that "that website was never operating and whatever emails went there were not being received."[46]
69 An inspector with the plaintiff, Mr Foyster, subsequently sent a print out of the websites www.solarassist.com.au and www.ecoassist.com.au as at 14 December 2010 to Mr Rush. The print outs show that each website continued to display the Commonwealth Coat of Arms and the words "An Australian Government Initiative" now with a reference (which may have been a hyperlink-it is not clear) to www.climatechange.gov.au. Mr Rush deposes that this use was not authorised. On 1 December 2010 the defendant was present in Court and agreed to an interim injunction restraining him from using in Australia for the purpose of his business various government symbols, including the Commonwealth Coat of Arms, unless he had obtained the written permission of the Commonwealth Government and provided a copy of that written permission to the plaintiff 48 hours prior to use of the Coat of Arms.[47]
70 Mr Foyster again checked the defendant's websites on 15 and 16 June 2011.[48] The Commonwealth Coat of Arms no longer appeared on the websites www.solarassit.com.au or www.ecoassist.com.au . What remained on both websites on 15 June 2011 was what appears to be a hyperlink to the Australian government website www.climatechange.gov.au.
Admissions in relation to the use of the surveys and government logos
71 On 20 July 2010 officers of the plaintiff, lead by Inspector Foyster, together with police conducted a search pursuant to search warrant of the defendant's premises at his then residential address 16 Dunsterville Crescent, Frankston. When Mr Foyster first arrived the defendant was not present. Present were a Mr Robert Peters, who said he had his own business but did printing and other work for the defendant at his direction as his unpaid mentor and some other persons. The defendant subsequently attended and was interviewed by Mr Foyster. He made numerous admissions against interest in that interview, as set out below. I accept the submissions of the plaintiff that Mr Foyster's evidence of those admissions is admissible pursuant to the Evidence Act 2008 as an exception to the rule against hearsay, and that there is no occasion to exclude them in the exercise of my discretion given that the defendant was properly cautioned prior to interview.
72 Mr Peters, who the defendant confirmed to Mr Foyster was not an employee, but a friend or mentor who was helping him, showed Mr Foyster a completed water quality survey that he said the business was currently distributing. This is exhibited to Mr Foyster's affidavit as SF-1. The document was completed by a resident of Narre Warren South and Mr Peters said it had been collected from that resident. It is in the same form as the survey received by Ms Middleton and Mr Riters in April 2010. The defendant was subsequently shown another copy of this form of survey (which became part of Exhibit P34) in cross examination (without being informed it was the same as SF-1) and said it was in use in October/November 2009.[49] He was also shown at this time a green survey headed "PUBLIC NOTICE COMMUNITY ENVIRONMENTAL REVIEW IMPORTANT INFORMATION Presented in the interests of Climate Change" (also part of Exhibit P34) which contains questions about water tanks, solar electricity and solar hot water similar to other surveys in evidence. This survey does not contain any Council logo, but refers to a "Community Solar Buying Program" and contains on the back page a box containing the website name www.environment.gov.au, the Commonwealth Coat of Arms and the words "An Australian Government Initiative". The distributor is said to be www.ecoassist.com.au. The defendant stated that this survey was in use in 2009-2010.
73 Mr Palamara confirmed to Mr Foyster that the water filtration business operated by distributing water quality surveys, collecting completed ones, then contacting the person who completed the survey to install water filtration. He told Mr Foyster that the "aim of the brochures is to get feedback. It gives us marketing information. In the feedback we are looking for, we ask the consumer if they are interested in participating in marketing or promotional products. If the person ticks the box on the brochure, or on the website, then we will go around and offer them to enter into a program to purchase a water filter."[50] He added "we go and visit those people who responded to sell the product".[51] If the customer later declines to proceed with a service agreement an appointment is made to remove the system and "we bring the place back to normal as much as possible."[52]
74 Mr Palamara estimated that after the 14 day period, "out of ten, may be seven or eight people would say 'Yes I want it'. Maybe three or four people will say, 'I won't'" and that he had sold maybe 100 water filtration systems per year, as that was a small department in his businesses. He was also involved in solar panels, solar hot water and water taps.[53] Mr Palamara in explaining to Mr Foyster that the deposit is required only at the end of the 14 days if the customer wished to proceed volunteered that "their 10 day cooling off period doesn't start until they sign the documents, anyway. That's their cooling off."[54] This would appear to be an admission that the service agreements are contact sales agreements, which was denied by Mr Palamara at trial.
75 In his interview with Mr Foyster, the defendant said he had no links with local councils, was registered with the Victorian State Department of Sustainability and Environment for the purpose of offering rebates on solar hot water but the supply of water filtration products was not part of any government program. He said customers are never told that it is.[55] This conflicts with the experiences detailed by every purchaser or intending purchaser except Ms Hanstock, all of whom were told either by the plumber installer or the salesman that the filtration system was part of a government program. Ms Hanstock does not say she was told that, but she assumed the sales representative was from Goulbourn Valley Water.
76 When asked why government logos then appear on the brochures, Mr Palamara said that there was space on the back of the brochure and "we" thought it a good idea to put a message there about water, as the business was to do with water. He confirmed that "ever since they (Councils) asked us not to use them, we agreed" but "because we had them all here, the decision was made to distribute those out." When asked if the Council approved that, he said "No, no. Just our decision. The Council never approved for us to distribute them." He denied that he had ever been contacted by any other government department about the use of its logo.[56] The only evidence that the defendant or his businesses had been so contacted either before this interview or after is the letter that Mr Rush sent by the Commonwealth Government in April 2009, which was sent on line. As discussed earlier, there is no evidence that it came to the defendant's attention and the defendant denies that it did.
77 Mr Palamara acknowledged to Mr Foyster that he was aware that "the Council" was unhappy about use of its logo. It is unclear whether he was referring to Frankston or Casey Council - the context of his first remark suggests it was Frankston, but he later noted in the plural that "I know the Councils aren't happy with that". In his oral evidence in chief at the trial he said at one point that Frankston Council had brought their concern to his attention.[57] He subsequently said that he had not received any letter of objection from either Frankston or Casey Council.[58]
78 The defendant said it was his decision to put "the Council logo" on the brochures, and he still had some outstanding brochures with the logo, but was no longer printing them with the logo. "Up to this week, we are still sending out the brochures with the logos, but as of next week, we won't be sending any out with Council logos on them." He volunteered that "it does mislead the public with the Council logos".[59] He later said surveys shown to him with the City of Casey logo (SF-3) and the City of Frankston logo (SF-5) were also outdated and the surveys had since been amended. These surveys do not relate to water quality, but are headed "PUBLIC NOTICE: ANNUAL COMMUNITY ENVIRONMENTAL REVIEW" and relate to water storage, solar hot water and solar electricity. They are identical to the brochures that had come to the attention of the Casey and Frankston officers in April 2010 and which are exhibited to their affidavits. The brochure bearing the City of Frankston logo (SF-5) was completed by a resident.
79 Mr Palamara acknowledged to Mr Foyster that his business used to use the names "StateSafeWater" and "VicSafeWater" which appeared on other promotional material found at the premises.[60] "VicSafeWater" appears on, for example, the surveys received by Ms Middleton and Mr Riters. "StateSafeWater" appears on a survey located during the execution of the search warrant and attached to Inspector Foyster's affidavit as part of SF-4. The survey is headed "NOTICE: StateSafeWater PUBLIC SURVEY (Public Water Awareness Campaign)" and contains a barcode with the words "STATESURVEY". In cross examination, the defendant said that this form of survey was used in the period 2007-2009 and was distributed by a contractor, StateSafeWater, not his business, although it led to sales by his business. He accepted the description "joint venture" for that operation. He accepted responsibility for the content of the survey.[61]
80 Mr Palamara told Inspector Foyster that he had approved the use of all the logos on SF-1, which included the Victorian Government logo "Save Water Target 155". In cross examination he accepted responsibility for the content of another survey exhibited as part of SF-4 to Inspector Foyster's affidavit sworn 30 September 2010 which bears the Victorian Government logo "Victoria: The Place to Be" and a reference to the Victorian Government website www.climatechange.vic.gov.au. Similar to other surveys in evidence, the survey is headed on the front page "COMMUNITY ECO AWARENESS QUESTIONNAIRE: IMPORTANT INFORMATION Presented in the interests of Climate Change". The survey states it is distributed by "AWS", which the defendant acknowledged was Australian Water Solutions. The questions inside asks householders if they would like information about water saving, solar hot water or solar electricity incentives or rebates. The defendant said this survey was in use in early 2009, from about February to April 2009. He agreed that he prepared and authorised its content.[62]
81 It is unclear from the photographs taken by Mr Foyster's officers what quantities of the brochure bearing the City of Casey logo (compare SF-10 and SF-16) remained on the premises, but the photographs suggest large quantities of a brochure headed "PUBLIC NOTICE: COMMUNITY ENVIRONMENTAL REVIEW" with the Australian Government Coat of Arms (SF-11 and SF-16 item 2) and large quantities of a brochure bearing the Victorian Government Save Water Target 155 logo headed "PUBLIC NOTICE: ANNUAL WATER QUALITY REVIEW" on the premises (SF-12 and SF-16 item 3).
82 The defendant's evidence at trial is that, with the possible exception of the final question asked in the water surveys - if the householder wants a free water filtration system which they pay to service only - and any sale of water tanks, solar electricity or solar hot water, the surveys were not conducted in his business interests. He said the surveys presented important information in the interests of climate change. Accordingly, it was not misleading to style them as in the public interest, or a "community environmental review".[63]
83 To obtain the relief that she seeks in relation to the surveys, the plaintiff must first establish that the defendant's conduct was in trade and commerce. The defendant does not dispute this in relation to the sale of service agreements. He does dispute it in relation to the surveys. In my view it is plain on the statements made by the defendant in his interview with Inspector Foyster in July 2010, that the surveys were intended to solicit interest in the purchase of goods or services to be supplied by the defendant's businesses. The defendant agreed in his interview that the householder who completed his or her details on the survey would be subsequently contacted, with a view to a sale. A number of the surveys in evidence have in fact been completed, apparently by householders. I find that the defendant distributed the surveys in trade and commerce.
84 There is no dispute that the defendant used government slogans, logos, websites and the Commonwealth Coat of Arms on his surveys and websites without the permission of the relevant agency. The defendant opposes any relief being afforded in respect of this because he contends that the surveys were not misleading - they did not make any claim of association with any government agency[64] and he was not responsible if a consumer drew that conclusion.[65] He also says there is no evidence that any householder was actually mislead, as the only evidence of receipt is from persons who were not mislead into believing there was a government connection. He says that his use of the Commonwealth Coat of Arms on websites and his use of hyperlinks to government websites on his websites was similar to what many businesses do and that his intention was solely to facilitate access by the public to these valuable and informative websites.[66] Further, he says the offending conduct ceased as soon as he was made aware of the objection. This could suggest there is no utility in any declaration or injunction now being made. His final objection to relief is that it should be for the copyright owner to bring a claim, not the plaintiff.[67]
85 Dealing first with this objection, the plaintiff's claim to relief is on the basis of breach of the FTA, not breach of copyright. The plaintiff is entitled to bring a claim for breach of the Act. The plaintiff seeks a declaration that the use of the Government of Victoria slogan and "Save Water Target 155" logo, the Frankston City Council logo, the City of Casey logo and the Commonwealth Coat of Arms and Australian Government slogan "An Australian Government Initiative" was misleading and deceptive or likely to mislead or deceive, in breach of section 9 of the Act by virtue of the absence of permission (declaration sought 1(a)). The plaintiff also seeks declarations that both the water quality and environmental surveys represented that the survey was in association with one or more of those government agencies (declarations 1(b) and (c)); that the defendant represented that goods and services supplied by his businesses were being supplied as part of a government program, when they were not (declaration 1(d)); and that he represented that a survey or comparison of water quality was for public purposes, rather than for his private business purposes (declaration 1(e)). Each of these representations are said to have been misleading or deceptive, or likely to mislead or deceive. The annotated declarations indicate that the last declaration is sought not just in relation to the surveys, but also in relation to the sales of service agreements.
86 The plaintiff also seeks declarations (declarations 2(a)-(d)), on the basis of largely the same evidence, that the defendant has breached s.12(e) of the Act by representing that the goods and services supplied by his businesses have a sponsorship they do not have.
87 I have reservations as to whether it is necessary for the orders to so finely distinguish between different aspects of essentially the same conduct, and also as to whether it is appropriate for declarations to be made of contravention under different sections of the Act when the conduct is the same. Subject to these reservations, I find that the surveys were misleading and deceptive, or likely to mislead or deceive, and also made false representations, by the use of government logos, which implied a link to government programs which did not exist, and by the use of words such as "Public Notice", "State Survey" and "Community Review" suggesting a public or community purpose, when the purpose was the business interests of the defendant. The defendant claims that the plaintiff has failed to prove her case because there is no evidence from a person who was mislead. Such evidence is not necessary. It is for the Court to determine whether or not the representation is misleading.[68]
88 The defendant contended that he ceased using unauthorised logos when made aware of the objection. The large supplies of surveys with government logos found on his premises on the execution of the search warrant suggests this may not have been the case. Even on his own admissions, he put economic interests before the objection when made aware of it. He told Inspector Foyster that he made the decision to "distribute out" the remaining surveys he had, even though aware of the objection.[69] In his oral evidence at trial the defendant said he continued to distribute the surveys for that week so as not to put his distributors out of work, or because there was a delay in reprinting. He says that thereafter "we basically threw them out, and there was a fair bit there". [70]
89 The plaintiff also adduced evidence that surveys with Victorian government logos continued to be distributed after the execution of the search warrant. Mr Brian Shaw of Bentleigh swears in his affidavit that he received what he describes as a flyer in his mail in early September 2010. This survey is identical to that received by Ms Middleton and Mr Riters in April 2010. That is, notwithstanding the contact the defendant had with the Department of Consumer Affairs on the execution of the search warrant and his discussion with Mr Foyster, the survey still contains the Victorian Government trade mark "Save Water Target 155" and the Victorian Government website www.ourwater.vic.gov.au.
90 Mr Shaw deposes that his initial response to the survey, given the words "PUBLIC NOTICE" and the sponsers listed on the back page, being Australian Water Solutions, Water Quality Association, and VicSafe Water, was that it was distributed by a public or governmental body. He sought to obtain details of these sponsers. When he was unable to do so, except in relation to Australian Water Solutions, he began to doubt whether it was really part of a community program, as opposed to private enterprise. He formed the view that the survey's claims as to so many harmful metals and chemicals in the water could hardly be true and contacted the Department of Consumer Affairs. He was particularly concerned that the survey could potentially deceive others not as wary as himself, and that it was for private enterprise yet "masquerades as one produced by a public body with the public interest at heart".
91 The use of hyperlinks on the defendant's websites continued to the trial, and the use of the Commonwealth Coat of Arms continued after the interim injunction forbidding such use. I add that there was no evidence before me from the defendant as to the circumstances in which the Coat of Arms appeared on the website after the interim injunction, and I make no finding relevant to any contempt proceedings.
92 For all these reasons I consider there is utility in the relief sought.
Content of surveys as false, misleading or deceptive
93 The plaintiff seeks a declaration that the defendant made a false representation in the surveys, as well as in his sales scripts and presentations, that "the tap water in the Melbourne metropolitan area ... is unsafe, unhealthy, contaminated, or of poor quality when that is not true" in breach of s.12 of the Act (declaration sought 2(f)). It is not entirely clear from the form of this proposed order, which is in a rolled up form covering a number of different aspects of the defendant's businesses and conduct, but I assume that it is said that the content of the surveys infringed either s.12(j) or s.12(n). They provided as follows:
A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion or advertising by any means of the supply or use of goods or services -
(j) make a false or misleading representation concerning the need for any goods or services; or
(n) make a representation that is false, misleading or deceptive in any material particular.
94 The false or misleading representation as to need is presumably that consumers needed a water filtration system for healthy water.
95 The plaintiff has not specifically identified in any of her documents served on the defendant prior to his evidence which part of the survey content is said to be objectionable. The finding sought in the Outline of Argument at [101] is that the survey forms "can cause substantial alarm and distress to consumers". I do not understand the relevance of this submission. No compensation is sought in respect of the distribution of the surveys, and alarm and distress are not the same as the content of the surveys breaching s.12 by virtue of being false, misleading or deceptive, which is what the proposed declaration asserts. The defendant gave evidence in chief in relation to the beginning words headed "Important Notice", and it was not put to him in cross examination that any other portion of the survey content was false, misleading or deceptive, with the exception of those questions in the surveys which are drawn from the sales presentation folder and were the subject of cross examination. Accordingly, I will confine my consideration of the survey content in relation to declaration sought 2(f) to the "Important Notice" and those questions.
96 The "Important Notice" lists "heavy metals & carcinogenic (cancer causing) pesticides, herbicides & insecticides" in tap water. The defendant's evidence in chief is that he obtained that information from the 2006-2007 Annual Water Quality Report prepared by South East Water Ltd.[71] He says the information was not misleading because it was obtained from this very reliable source and just stated the facts. Further, he says that the information was not misleading because he made no claim that the levels of these substances exceeded any guidelines, and accordingly did not imply that tap water was unsafe or toxic. He added that to his knowledge there was no safe level, and the question of a safe level was highly debatable.[72] The plaintiff subsequently put this Report into evidence as Exhibit P32.
97 I will first consider the plaintiff's evidence in relation to water quality.
98 The plaintiff relies on affidavits from three persons as to the quality of tap water: Ms Anthea McManemin, the Senior Engineer Water Quality for South East Water Limited ("SEW"); Mr Nicholas Bray, Process and Water Quality Co-ordinator for Goulburn Valley Region Water Corporation ("GVW"); and Mr Anthony Seller, microbiologist, who deposes as to testing of water for South East Water Limited. The plaintiff engaged Mr Kenneth Marshall, chemist, to provide an independent expert report in relation to the tests as to water quality carried out by the defendant's sales staff. I will consider his evidence later in this judgment.
99 Ms McManemin deposes that SEW is one of three water retailers responsible for distributing water purchased from Melbourne Water Corporation across Melbourne. SEW has an exclusive licence to deliver water to homes in the south eastern suburbs. The map of the SEW licence area that she exhibits covers every suburb of every consumer complainant in these proceedings, except Ms Hanstock, whose tap water is supplied by GVW. Frankston City Council and Casey City Council are within the SEW licence area.
100 Ms McManemin deposes that water delivery services in Victoria are regulated by the Safe Water Drinking Act 2003 (Vic), the Regulations made under that Act and Commonwealth guidelines set by the National Health and Medical Research Council entitled the Australian Drinking Water Guidelines 2004 (Cwlth). The correct name of the Victorian Act and Regulations is in fact the Safe Drinking Water Act 2003 and the Safe Drinking Water Regulations 2005. She deposes that a unit in the Department of Health monitors the compliance of SEW and other water retailers with the Act, the Regulations and the Guidelines.
Safe Drinking Water Act 2003 and Regulations and Australian Drinking Water Guidelines
101 The Safe Drinking Water Act 2003 ("Drinking Water Act") was assented to on 11 June 2003 and came into force on 1 July 2004. Section 1 sets out the purpose of the Drinking Water Act as follows:
(1) The purpose of this Act is to make provision for the supply of safe drinking water.
(2) In outline this Act -
(a) requires water suppliers and water storage managers to prepare and implement plans to manage risks in relation to drinking water and some types of non-potable water; and
(b) provides for the auditing of those plans by approved auditors; and
(c) requires water suppliers to ensure that the drinking water they supply meets quality standards specified by the regulations; and
(d) requires water suppliers to disclose to the public information concerning the quality of drinking water; and
(e) provides for the variation, after community consultation, of water quality standards that relate only to aesthetic factors; and
(f) requires the reporting of known or suspected contamination of drinking water to the Secretary to the Department of Health; and
102 In her Second Reading Speech, the Minister for Health said that the regulatory framework introduced by then Bill, later Act, had been developed over a number of years involving three consultation stages during 2000, 2001 and 2002 covering the public, industry and key government stake holders.[73] She stated that the intention was to set standards in the Regulations based on the Australian Drinking Water Guidelines, published by the National Health and Medical Research Council.[74] By way of amplification of the purposes I have extracted above from section 1, section 17 of the Drinking Water Act requires water suppliers (such as South East Water) to ensure that all drinking water supplied by them complies with the quality standards specified for drinking water in the regulations; water suppliers are required to promptly notify the Secretary of the Department of Health of any non compliance (section 18) and, in particular, every officer of a water supplier is required to notify the Secretary of any contamination (section 22); and water suppliers are required to report to consumers on water quality (sections 23 and 26).
103 Regulation 10 of the Safe Drinking Water Regulations 2005 ("the Drinking Water Regulations") contain detailed standards for the purpose of s.17 of the Drinking Water Act as to the factor in water to be measured, how frequently samples are to be taken for measurement and the acceptable level for that factor in drinking water. The listed factors are esherichia coli, byproducts of disinfection by chlorine, byproducts of disinfection by ozone, aluminium and turbidity. In respect of other substances or chemicals not listed, the regulation requires that the sample must not contain that substance in an amount that may pose a risk to human health.
Results of testing by South East Water pursuant to the Drinking Water Act and Regulations
104 Ms McManemin describes the steps taken by SEW to monitor the quality of the water it delivers to comply with the Act, the Regulations and the Guidelines. The principal means is by routine testing conducted by an independent laboratory which collects water samples from a variety of locations for testing without prior notice to SEW. More than 6000 samples were collected and tested in each of 2008-2009 and 2009-2010. SEW also conducts non routine testing of tap water in individual homes on request. A summary of the results of the water sample tests are made available to the public each year by the publishing of an Annual Drinking Water Quality Report prepared and verified by Ms McManemin.
105 She exhibits to her affidavit the 2008-2009 Annual Drinking Quality Report and the draft of the 2009-2010 report. In relation to aluminium and the byproducts of treatment by chlorine, chemicals which are referred to in the defendant's sale folder, there were no non complying samples in either 2009-2009 or 2009-2010. In addition to the factors to be tested specifically listed in the Drinking Water Regulations, the SEW tested for a number of other factors as required by the Guidelines, including lead and mercury, and the pesticides chlordane, dieldrin, heptachlor, lindane, atrazine and DDT, all of which are listed in the surveys distributed by the defendant that are in evidence in these proceedings as contaminants in drinking water. In no instance in either 2008-2009 or 2009-2010 did the presence of these substances in sampled water exceed the permitted level, and in every instance the amount found was substantially less than the permitted level.[75]
106 The Reports also tested for total dissolved solids in each year, as required by the Guidelines. The significance of this test is that the defendant concedes this was a test performed by his sales staff in consumers' homes, as supported by the experience of the consumers who have given evidence in these proceedings. The national guideline, as reported in the SEW Reports, is 500. Fifteen samples were tested for total dissolved solids in 2008-2009. The maximum reading was 120, and the mean 61. Twenty samples were tested for total dissolved solids in 2009-2010. The maximum reading was 130, and the mean 71. Accordingly, the Reports state that in each year, the national guideline was complied with.[76]
107 Ms McManemin's summary of the Reports is that the water supplied by SEW from 1 July 2008 to 30 June 2010 complied with all the requirements of the Act, Regulations and Guidelines. In addition, the operations of SEW were subject to an audit by the Department of Health for the period 1 January 2009 to 7 December 2009 and the auditor confirmed that it had complied with the Act during that period. Ms McManemin says she is not aware of any fact or matter since 30 June 2010 by reason of which she would have any concern that the water supplied by SEW was or is in any way unsafe for human consumption. She concludes that from July 2008 to the date of her affidavit 28 September 2010, which period includes the dates of the distribution of all the surveys and the service agreements for water filtration in the SEW licence area considered in these proceedings, the drinking water supplied by SEW "was and is entirely safe for human consumption without the need for any water filtration to make it safe for human consumption."[77]
108 The affidavit of Mr Bray, who is responsible for water quality for the Goulburn Valley Region Water Corporation ("GVW") is broadly to the same effect for the treated water supplied by GVW in its licence area, which includes Shepparton. Water samples are collected weekly by GVW and tested by an independent laboratory. Mr Bray compiled and verified the results into a Water Quality Annual Report for the 2008-2009 and 2009-2010 financial years. Those reports, which he exhibits, show compliance with the requirements of the Act, Regulations and Guidelines except for some isolated instances in relation to the presence of aluminium and by products of disinfection by chlorine. He reports that the only instance of non-compliance since 30 June 2010 to the date of his affidavit (6 April 2011) was an isolated instance of E.Coli at Nagambie in December 2010. He concludes that during the period July 2008 to 6 April 2011 the drinking water supplied by GVW has been "entirely safe for human consumption without the need for any water filtration to make it safe for human consumption."[78]
109 Mr Seller corroborates Ms McManemin's affidavit as to the water testing conducted on SEW water. He is the Manger-Microbiology of Ecowise Australia Pty Ltd, which is the contracted laboratory to SEW to test its water. In his role he is responsible for that testing. Mr Seller sets out in detail the procedures followed for the testing, and the national standards to which his laboratory adheres. The laboratory is accredited for the purposes of that testing by the national accreditation authority. He confirms the manner of collection of samples and the number of samples deposed to by Ms McManemin and deposes that he prepared annual reports as to the results of the testing for each of the 2008-2009 and 2009-2010 years. He states that the drinking water supplied by SEW for those years complied with the drinking water standards prescribed in the Regulations and the guideline values set by the Guidelines, and that there was no instance, in either year, in any locality, where water did not meet the minimum standards. He confirms that the SEW Annual Drinking Water Quality Report for 2008-2009 and 2009-2010 (which, by the time of his affidavit, had been published), which Ms McManemin states she prepared, reproduce in full the contents of his reports, save for some changes in the order in which data is presented and some rounding of numerical results, which does not affect the results.
Findings as to the "Important Notice" in the surveys
110 There is no doubt that the 2006-2007 SEW Water Quality Report does state that every substance listed in the "Important Notice" could be found in tap water in the area of distribution of South East Water in that year (and indeed subsequent years). In other words, it was not false for the defendant to state that those substances were in the tap water distributed by SEW. What the "Important Notice" does not state is that the amounts found were minute, and all within legislatively mandated guidelines. Further, that aluminium, which is used to remove suspended particles from water, is only used at one water treatment plant from which South East Water draws its water, and so only affects one locality, South Melbourne, and not any of the localities in which the surveys in evidence were distributed.
111 The plaintiff does not seek a declaration specifically in relation to the "Important Notice", or any other aspect of the survey, but a more general declaration that it was false for the defendant to represent that "tap water is unsafe, unhealthy, contaminated or of poor quality". I consider that this representation was the clear implication from the Important Notice. The defendant does not dispute that he implied that tap water is contaminated, but puts his case on the basis that "it is fair to claim and represent tap water as being contaminated"[79], having regard to the dictionary definitions of water, contamination, chlorine, toxic and unsafe. He adds that "(t)he level of contamination and level of unsafeness bears no relevance in this trial."
112 I do not accept this submission. First, as a matter of semantics, even if it is accurate to say that some, at least, of the listed substances found in tap water have been added, it is not automatically the case that those substances thereby lessen the safety of the water. On the contrary, their impact, for example in the case of chlorine, may be to increase it. Thus the word "contamination", which necessarily implies a lessening of quality, may not be accurate. Secondly, it is the levels at which these substances are found and the consequences for the safety of the water that are not only relevant but critical. Listing these substances as found in tap water leads to the inference that the quality of the water has thereby been compromised and may be unsafe unless the further information, that the levels of such substances are carefully and compulsorily monitored and all fell within safety guidelines in the years in question, is added. It is the absence of this context that in my view makes the representations in the "Important Notice" in the water quality surveys misleading or deceptive. That is sufficient to constitute a breach of s.9 and also a breach of s.12(n) of the Act. Thirdly, the defendant continues to assert, as the factual foundation for this submission, that electrolysis reveals contaminants already in the water, as opposed to creating contaminants. As elaborated later in this judgment, that is completely at odds with the expert evidence of Mr Marshall, and is unsupported by any competing expert evidence. I find that it is false.
113 On the basis of the evidence adduced by the plaintiff as to the legislatively mandated guidelines for drinking water quality in Victoria, and actual drinking water quality in the areas in Victoria and for the years to which the surveys and service agreements for water filtration in evidence relate, I find that the representation made in the surveys (that tap water was unsafe, unhealthy, contaminated or of poor quality in those areas) is not true. I confine this finding to water distributed by South East Water Limited and water distributed by Goulburn Valley Water, as there is no evidence as to water quality in any other area of Australia against which the survey content may be compared. There is evidence, which I accept, that a water quality survey was distributed by Australian Water Solutions or Australian Water and Solar on the Gold Coast of Queensland in August 2010, which survey contained the same "Important Notice", but there is no evidence from the water authorities in that area against which the representations may be tested.[80]
114 Accordingly, I consider that declaration sought 2(f) must be limited to the areas of distribution of South East Water Ltd and Goulburn Valley Water.
Sales presentations in relation to water filters
115 I turn now to the sales presentations for agreements for the service of water filters installed by the defendant. I will consider under this heading proposed declarations 1(f) (demonstrations of water quality said to breach s.9 of the Act); 2(e) and (k) (representations that the filtration system will produce better quality or healthier water and representations as to other future benefits); 2(f)(untrue representation that tap water is unsafe, unhealthy, contaminated, or of poor quality, in so far as it is said that occurred in relation to sales of service agreements for water filters); and 2(g)-(j) (demonstrations of water quality). I will consider the claimed breaches of the contact sales provisions of the Act separately.
116 I will first set out under this heading the evidence adduced by the plaintiff of consumers who entered into such agreements, including their evidence as to the information given to them and tests of water quality carried out by the defendant's sales staff. I will compare this with the defendant's admissions and evidence at trial as to his sales practice and the expert evidence adduced by the plaintiff in relation to the water quality tests and express my findings and conclusions in relation to the proposed relief.
117 The plaintiff relies on the evidence of eight persons from six households who had discussions at their respective homes with sales staff of the defendant in relation to service agreements. These discussions resulted in five agreements, entered into at their homes. The exception was Mrs Hussein, who refused to enter an agreement after earlier installation of the water filters when she was told the cost. All of these persons except one live in the south east suburbs of Melbourne, that is within the area of distribution of South East Water. The other purchaser, Ms Hanstock, lives in Shepparton, in the area of distribution by Goulburn Valley Water. All of these discussions, with the exception of Ms Hanstock, were in the period December 2009 to April 2010. Ms Hanstock entered into the service agreement in October 2010. All of the purchasers were unhappy with the agreement and sought to cancel it. In addition to relying on their evidence in support of her case that the defendant has engaged in false, misleading or deceptive conduct, and other breaches of the Act relating to contact sales, the plaintiff seeks orders that all these service agreements are unenforceable at the instance of the defendant, and orders for refunds and compensation.
118 The experience of these eight persons was largely similar to each other. Each agreement was for the servicing of water filters for 10 years, with the exception of Ms Hanstock, whose agreement does not specify a time period. The total amount of the agreements was similar in each case (about $3000), again with the exception of Ms Hanstock's agreement, which does not contain a total amount. The printed terms and conditions of the service agreement are identical in each case. None of the agreements contained the statutory form of notice as to rights of cancellation, which is required for contact sales. In three cases, those of Mr Raminder Singh, Mr Kanwar Singh and Ms Hanstock, the purchasers were not informed by the sales man that he could only stay at his or her home for one hour within written consent, as required in respect of contact sales, and Mr Raminder Singh's evidence is that the sales man stayed longer.
119 In the three earliest sales in evidence, those of Mr Raminder Singh, Mr Kanwar Singh and Mrs Mantrala, the water filters were installed after the service agreement was entered into. In the other three cases, the water filters were installed either before the householder was asked to enter a service agreement (Mrs Hussein and Mrs Richardson) or at the same time (Ms Hanstock).
120 Mr Raminder Singh and Mrs Mantrala responded to advertisements at their local shopping centre and were subsequently contacted by Mr Mohan Ari from Australian Water Solutions. Mr Kanwar Singh was present at Mr Raminder Singh's house when Mr Ari attended, and then asked him to come to his home. The defendant said that most of the problems with the water filter agreements arose from Mr Ari's sales. In fact, in the other three cases in evidence the salesman was not Mr Ari. These were the later transactions in evidence (two in April and one in October 2010). In the case of Mrs Hussein, the sales staff were an Ashley and Mr Sam Mustafa; in Mrs Richardson's case, Mr David Flanders; and in the case of Ms Hanstock, Mr Des Collins. In the case of both Mrs Hussein and Mrs Richardson they were approached after they responded to water quality surveys left at their homes. These surveys were in similar form to those in evidence. Ms Hanstock was approached by Mr Collins by direct knock at her door.
121 Mr Ari showed each of Mr Raminder Singh, Mr Kanwar Singh and Mrs Mantrala a folder of material. They were not left with a copy of this folder, but, as set out further in the discussion of the defendant's evidence, from the description of what they remembered when later shown a copy of the sales folder located on the defendant's premises, I conclude that it was the same or a similar folder to that located at the defendant's premises when the search warrant was executed, and which was subsequently the subject of his evidence in chief and cross examination. In each of the six cases, the salesman conducted at least one demonstration on tap water at the property which he said showed it was of poor quality. Further, in each case, except that of Ms Hanstock, the purchaser's evidence is that he or she was told by a person apparently acting on behalf of Australian Water Solutions that the supply of the water filters was associated with a government program. Ms Hanstock does not say she was told this by Mr Collins, but she did assume he was part of Goulbourn Valley Water.
122 I set out below the detail of these purchasers, or intending purchasers', experiences.
123 Mr Raminder Singh deposes that he responded to an advertisement for a free water quality check of the water supply to his home by Australian Water Solutions in late October or early November 2009 at his local shopping centre at Berwick. On 13 December 2009 he received a telephone call in response from a man who introduced himself as Mohan from Australian Water Solutions. By arrangement he came to Mr Singh's home later that evening. Mohan said on the telephone that the provision and installation of the water filters was free. At Mr Singh's home that evening, he said "this is a Government program. The services we are offering are from the Government." He carried out three tests of the quality of the tap water at Mr Singh's home. Mr Singh called his brother, Mr Kanwar Singh, also of Berwick, who attended and also observed some or all of the tests.
124 In the first test, Mohan held a device that looked like a thermometer which he placed in tap water. He told Mr Singh that the reading was "beyond the limit" and showed the water was not safe. In the second test, Mohan put a tablet in a glass of tap water and said that if there is chlorine in the water the colour will change. The water quality changed to mauve. In the third test, Mohan inserted a device with two sets of cathodes attached to a box with a power cord into a glass of tap water. When he turned the device on at the power point, the water in the glass turned to black at the top, brown in the middle and remained clear at the bottom. Mohan said that "this electricity splits the water into pure water and impurities. That way you can see all the impurities that are in your water when you drink it."
125 Mohan told Mr Singh there were various health problems related to drinking tap water including skin rashes, hair loss, irritable bowel syndrome, memory loss in children, breast cancer, prostate cancer and contamination of breast milk and that tap water contained chlorine, lead, chemicals and microbes. He showed Mr Singh various documents in support from a file he had with him. Mr Singh later identified some of these documents from a copy of sales manual shown to him by Mr Foyster, which Mr Foyster had located while executing a search warrant at the defendant's premises in July 2010. The defendant agreed in an interview with Mr Foyster that day that he had prepared the information in the sales manual, and that it was used by sales staff when seeking to obtain a service agreement for the installation of water filtration. The documents identified by Mr Singh as having been shown to him were a chart headed "Typical Analysis of Melbourne's Water", a document headed "Chlorine linked to cancer", another about breast milk headed "Women Beware!", another about prostate cancer headed "Men Beware!", a document about lead in tap water headed "Kids Run Better on Unleaded" and a document about AWS products headed "AWS Pure Water". Mr Singh deposes that he believed what he was told because Mohan said he was working as part of a Government program.
126 Mr Singh agreed to the installation of a water filtration system. He signed a service agreement in the name of Australian Water Solutions giving three addresses, in Melbourne, Brisbane and Sydney. The document was counter signed by Mohan, whose full name is Mohan Ari. Certain named items are listed as "free", but under them are the hand written words "10 yr Service Guarantee $2980 less deposit $300". The figure "$2600" is listed as the balance, although $2980 less $300 is $2680. Next to the heading "Maintenance Service" appears the printed words "Agreement Period Ten Years", and next to the heading "Promotional offer" which is ticked yes, the figure "$165 per annum" is inserted in handwriting. The terms and conditions on the reverse of the document states that the service "shall commence from the date of installation and continue subject to these conditions for the agreement period mentioned overleaf". The conditions require annual servicing to be carried out by "an authorised AWS service technician" and refer to an additional annual cartridge replacement cost per year.
127 There are two apparently inconsistent statements in relation to fees chargeable if the contract is cancelled. One paragraph states that "If the client decides to cancel the service agreement within the agreement period, or refuses to pay for filters, AWS has the right to charge in full the cost of the total water treatment package at the price of the package at the time of the agreement being signed by the client." The other paragraph states that "Cancellation of 'Service Agreement' once installation has taken place, will incur a fair and reasonable cost for both installation and removal of the AWS package and this will be charged at 20% of the total service cost. Any cancellations must take place within 10 days of purchase."
128 Prior to signing the agreement, Mr Ari told Mr Singh that "Everything's free. The installation is free. We will charge you only for two maintenance services a year, because the water filters need servicing after some time. It's just $300 upfront for two services a year, nothing else. It's a cost in advance. After six months, you have to pay $150 per service" He also said "There is a one month trial period. If you don't like the service, that's fine-we will take our stuff back and I'll return your money." When Mr Singh queried the figure of $2600 on the service agreement, Mr Ari tod him "You just have to pay for the services twice a year and that's it. The 300 dollars for the two services a year is not a deposit-it's a one year service." Mr Singh signed the service agreement and paid Mr Ari $300. He says Mr Ari did not say anything about a ten year contract.
129 The water filtration system was installed the next day at Mr Singh's home. Mr Singh noticed that the water started to smell bad and was not clear about 10 days later, on or about 24 December 2009. He then read the terms and conditions, and was surprised to see the requirement that cancellation must be within 10 days, as Mr Ari had said it was a one month trial. He did not wish to pay for ten years, as he had believed he was only required to pay $300 and then $150 if he wished to service the filters. He contacted Australian Water Solutions by telephone on the 1300 number provided on the business card supplied by Mr Ari on 24 December 2009 and said he wished to cancel the agreement. He was asked to leave his number, which he did, and that someone would ring him back after Christmas. He did not receive a return call, and so rang again on 29 December 2009. Again he left his number and was told someone would ring him back. He did not receive a return call. He and his brother tried ringing Mr Ari directly. His brother reported that Mr Ari said he was not in Melbourne, but on his return would take back the water filters. When Mr Singh rang Mr Ari's number, no one answered.
130 Mr Singh deposes that the service agreement he signed did not contain the prescribed notice that he could cancel the agreement within 10 days, setting out details about his rights in relation to cancellation and containing a form to use to cancel. He says that Mr Ari was at his home in excess of an hour (an hour and fifteen minutes) and Mr Ari did not tell him that he, Mr Ari, could only stay for a limited period without Mr Singh's written consent and had to leave if requested.
131 Mr Kanwar Singh is Mr Raminder Singh's brother. After observing the tests Mr Ari conducted at his brother's house on 13 December 2009, Mr Kanwar Singh requested Mr Ari to also attend his house, which he did the next day. Mr Ari conducted four tests on the tap water at Mr Singh's home, the first using a device to pass electricity through a glass of tap water ("the electricity test"); the second to insert a tablet into a glass of tap water, which then turned pink ("the chlorine test"); the third to insert a device that looked like a thermometer into a glass of tap water to give a reading ("the percentage test"), and the fourth a repeat of this test on boiled water. Mr Kanwar Singh subsequently identified to Mr Foyster as being photographs of the device used by Mr Ari for the electricity test the same photographs as identified by his brother Mr Raminder Singh as being used for that purpose. These photographs were taken by Mr Foyster of a device he found when executing a search warrant at the premises of the defendant in July 2010. The defendant denied that the device was used at customers' homes.
132 After Mr Ari conducted the electricity test the glass of water turned dark brown. Mr Ari told Mr Singh that this showed "There a lot of chemicals, such as chlorine, as well as heavy metals in the water. These can cause cancer, skin and stomach problems and loss of memory." In relation to the chlorine test, Mr Ari said "It turned pink because the water contains a lot of chlorine. This chlorine can cause cancer and problems with the digestive system. Especially for breast feeding mums, it contains a lot of chlorine that goes straight through to your baby through the breast milk." In relation to the percentage test, Mr Ari said words to the effect that the percentage was very high and that as a consequence the water was not very good and not safe to drink. He repeated the test on boiled water and said the results were much worse.
133 Mr Ari said that the tap water in their area contained a lot cancer causing chemicals, including aluminium; that chlorine damages skin and can cause skin cancer; that their son's eczema could be because of the tap water; that Mr Singh's hair loss "must be" because of the water, which will also affect his brain and cause him to lose his eyesight; and that leakage in the pipes of the whole of Melbourne's water supply causes unclean, dirt and smelly water to come into the drinking water. Mr Ari showed Mr Singh and his wife various documents to support his statements, but refused on request by Mrs Singh to provide them with copies. Mr Foyster subsequently showed Mr Kanwar Singh the same set of documents he had showed Mr Raminder Singh, and Mr Kanwar Singh recalled being shown certain of them, being a document headed "Water woes cause rethink"; a document about "Poison Breast Milk" (this is the same document Mr Raminder Singh identified which is headed "Women Beware!"); a document about prostate cancer (apparently the same as shown to Mr Raminder Singh headed "Men Beware!"); a copy of an article apparently in the Daily Telegraph of 20 August 1998 headed "Slime on tap"; and a document about lead in water.
134 Mr Ari also showed Mr and Mrs Singh what is described as a certificate to show he was related to and supported by the Government to supply water filters in the marketplace. There is no copy of this document in evidence.
135 Mr Ari told them that if they wished to install the water filters it was "only $300 upfront for installation" (later purchasers who entered agreements after installation were not explicitly charged for installation), $300 per year for servicing and maintenance and a ten year contract. He said that if Mr Singh was not happy in 30 days he could cancel the agreement. Mr Singh agreed to proceed and signed a service agreement in identical terms to that signed by Mr Raminder Singh and paid Mr Ari $300 in cash. He subsequently confirmed to Mr Foyster that the agreement did not contain the prescribed notice to purchaser about cancellation and nor did Mr Ari inform him he could only stay for an hour and was required to leave if requested to.
136 A man who introduced himself as Lawrence and said he was a qualified plumber attended the next day and installed a kitchen faucet; a water filtration unit under the sink connecting the water supply to the faucet; a water filter connected to the tap on the bath and a water filter on each shower.
137 Mr Singh began to have doubts about what he had been told by Mr Ari first when Mr Ari did not re-attend to test the filtered water as he had said he would do and did not return calls. Mr Singh also then read the terms and conditions on the service agreement and saw that the cooling off period was 10 days, not 30 days as Mr Ari had said. Mrs Singh's uncle and aunt had come to their house at some point in Mr Ari's demonstrations and the aunt told Mr Singh few days later that she too had signed a service agreement and been told she would have to pay $80 per month, causing Mr Singh further concern about what his commitment was under the agreement. He also received a telephone call from the Commonwealth Bank on 19 December 2009 from a woman who said she had received a credit card application in Mr Singh's name, which he did not recall signing.
138 Mr Singh sought to cancel the agreement by letter dated 20 December 2009 to Australian Water Solutions which he sent to the Melbourne address on the service agreement. He called Australian Water Solutions on the 1300 number provided on the business card on 21 December 2009 confirming he wished to cancel and leaving his name and number so someone could call back. In late December or early January 2010 he called Mr Ari again, who returned his call. Mr Ari said he would cancel the contract but neither he nor the company would refund the $300. He said Mr Singh could keep the product. Mr Singh agreed that the $300 not be repaid provided he did not have to pay more. He subsequently rang Australian Water Solutions again in early January 2010 to ensure the contract was cancelled. He left his name and number and was told someone would ring him back. He never received a call or a reply to his letter of 20 December 2009.
139 Mrs Mantrala answered a brochure she saw in her shopping centre at Rowville in January 2010. On 21 January 2010 she received a call from a man who said he was Mohan from Australian Water Solutions and agreed that he come around that evening to do some tests of their water. It transpired that it was Mr Ari and when he attended she asked if he worked for the government. He answered that he worked for Australian Water Solutions, which Mrs Mantala assumed was a government agency although she did not ask him this. In the course of the visit Mr Ari said that the water filtration unit and installation was free and all the customer had to pay for was servicing because "the government is giving a rebate on these units as part of a program" and "the government in Victoria cannot change the pipelines, so instead they are offering a rebate to install water filtration units in people's houses. That is the reason why the unit is free."
140 Mr Ari conducted a test he described as electrolysis on a glass of tap water, which turned brown and looked thick and filthy after he inserted a metal rod connected to the power supply into the glass. He said the test showed the particles in the water and that the water also contained chemicals very harmful to children and which would cause Indians in Australia to lose their hair. He said in response to Mrs Mantrala's query that water would be worse if boiled. Mrs Mantrala does not appear to have been shown by officers of the plaintiff photographs of the device used for this test as have other complainants but the description corresponds to that of the test performed for each of the Singhs.
141 Mr Ari also conducted what he described as a test of the amount of chlorine in the tap water, by inserting tablets into a glass of water which then became pink in colour. He referred to a chart which he said showed that more than 30% of chlorine in water is dangerous and Mrs Mantrala's tap water had 45% or more, which meant that drinking the water may affect her lungs, her children might be affected and she might lose her hair. He said the chemicals in water are absorbed through the skin when showering or bathing, that she had a very high level of chlorine in the water and chlorine is linked to cancer. He spoke about other diseases and other effects which Mrs Mantrala can no longer recall, but made her very scared to drink the tap water. He referred to documents in a file. Mr Foyster subsequently showed Mrs Mantrala the same sales manual shown to the Singh brothers and Mrs Mantrala recalled seeing the document headed "Men Beware!" about prostate cancer; what appears to be a reprint of an article in the Sydney Morning Herald dated 28 March 1995 with sections highlighted by enlarged print bearing the heading "Memory loss may start with a glass of water!"; the document headed "Kids run better on unleaded"; and a document about the quantity of chemicals in Melbourne water being apparently the document headed "Typical analysis of Melbourne's water nominal chemical values" in the file.
142 Mr Ari told her that installation of the water filtration system was free and the unit, valued at $4000, was also free - she only needed to pay for servicing and maintenance every six months. This would cost her $145 for servicing every six months, plus $165 per year. He told her a deposit of $380 was required. Mrs Mantrala paid Mr Ari that amount in cash and signed a service agreement in the same terms as that signed by each of the Singhs, save that the service cost is described in handwriting as "10 yr service" and the balance of that sum of $2980, less a deposit of $380 is the arithmetically correct balance of $2600. He told her that "our technician Lawrence" would install the filters the next day. Mrs Mantrala deposes that she was later shown by Mr Foyster the prescribed notice to purchase giving information about cancellation and that she was not given any such document by Mr Ari and nor did he say anything about cancellation.
143 Just before he left, Mr Ari told Mrs Mantrala, as he had done with each of the Singh brothers, that if she recommended his service to a friend she would receive a $50 gift voucher. This caused her to have doubts after he left as to whether he was from the government and so she did an internet search to locate government rebates or programs about water filtration. She could not find any information. Accordingly, the next day, 22 January 2010, she rang Mr Ari and said she wished to cancel the agreement. He said she had to ring Australian Water Solutions on the 1300 number which she did. She spoke to a Ruth and told her she wished to cancel and Ruth said she would speak to her accountant and let her know. She rang AWS again the next day when she had not heard from them and again spoke to Ruth, who again said she would speak to her accountant. After no reply, she rang again on 26 January 2010, spoke to Ruth, who repeated that she needed to speak to her accountant. Mrs Mantrala followed this up with an email on 28 January 2010, referring to the cancellation of the agreement and seeking a refund of $380. She rang AWS for the fourth time on 30 January 2010, spoke again to Ruth and threatened to complain to consumer affairs.
144 Later that day she received a call from "Leon from Australian Water Solutions" who said that she needed to speak to Mohan as "we don't have your money". She rang Mohan (Mr Ari) who repeated that he did not have her money and she needed to speak to the company. After speaking to Consumer Affairs Victoria she wrote a letter dated 9 February 2010 to Australian Water Solutions seeking a refund within 7 days or she would complain to VCAT (the Victorian Civil and Administrative Tribunal). She did not receive a reply and subsequently made application to VCAT.
145 Mrs Hussein found a survey about the water supplied to her house attached to her front door at Cranbourne in early April 2010. The survey contained the words Australian Water Solutions. She identifies the content of this survey as being the same as the content of a Water Quality Test and Questionnaire later supplied to her by a Mr Mustafa from Australian Water Solutions. The questions asked if the reader was aware that cancer causing pesticides and herbicides are found in tap water; that over 50 different chemicals are used to treat tap water including aluminium which research shows is more linked to the brain disorders of Alzheimer's disease and dementia than any other factor; that chlorine in drinking water is linked to cancer and heart disease, enters the body through the skin, kills friendly bacteria and can cause skin irritations and dry skin and hair; that food prepared in tap water absorbs chemicals and heavy metals and that most bottled water also contains harmful chemicals and impurities. The final question was "If it were affordable to you would you purify the water you use?". This content is similar to that in the surveys received by Ms Healy and Reverend McIver-Wright.
146 Mrs Hussein was alarmed by the survey and so filled in her name and address and left the survey out for collection as it instructed. She noticed it was gone sometime over the next few days and a few days after leaving it outside she received a call from an Ashley who said he was from Australian Water Solutions and was calling to make a time to install the water filtration equipment. She asked how much it would cost and he replied "Nothing. Everything is for free. It is government funded equipment as part of solving the water problems in Australia. You don't have to pay anything for the equipment." She asked about installation and he said that was free as well. When she asked if there was any cost at all, he said "There will be a charge for changing the filters after 12 months" and that this would be "about 30 dollars". In response to her question "And if I don't want to change it?" he said "You can keep it for as long as you like, for five years or even up to ten years, and decide when you want to change it."
147 On 6 April 2010 a man came to her house and introduced himself as Ashley from Australian Water Solutions and that he was there to install the water filtration products. He repeated in answer to her questions about cost that the only cost was $30 for each filter once a year. He said that the work was part of a government program and "a sort of advertisement". She allowed him to proceed. He was at her house for approximately two hours, and did not obtain her written consent to remain for that period of time. He installed two under sink filters and a faucet. He had initially said that he would need to make only two small holes under the sink to find the pipes, each about the size of a twenty cent coin. After about 30 minutes he said he was having trouble locating the pipes and needed to make a third hole about the same size as the others. After he left, Mrs Hussein inspected his work and saw that the holes were in fact each about 10-15 cms in diameter and had only been sealed by a piece of cardboard glued on with silicon, which has since dried so the cardboard is permanent.
148 After he had completed his work, Ashley required Mrs Hussein to sign a document headed "Yes ... I would like to participate in the Australian Water Solutions Water Quality Comparison Review". The document asks the participant to "compare your current water supply to PURE WATER for 14 days & provide your feedback" and states that "As a thank you for your participation you will be entitled to keep the entire AWS WATER PURIFICATION package-FREE. You only ever pay for future service & filter replacement-service agreement. If for any reason after the trial period, you wish not to keep the package, we will remove all equipment and install a stainless steel sink hole cover." Ashley told Mrs Hussein that someone would call her in two weeks to review the effectiveness of the equipment and repeat a survey about comparison of water quality.
149 About two weeks later, Mrs Hussein received a call from someone who introduced himself as Sam from Australian Water Solutions wanting to make a time to come and test her water. They arranged for him to attend on 22 April 2010. He introduced himself at her home as Sam Mustafa from Australian Water Solutions. Mr Mustafa conducted two tests, comparing the water from the filtration system and tap water. In the first test, he inserted a device which he connected to the power point into each glass, which he referred to as having "electrodes". He said that the device "puts electricity into the water to warm it up. This shows what is in the drinking water to the naked eye." The tap water changed to brown and orange, looking like a glass of coffee. Mr Mustafa said "the water is brown because it contains herbicides, pesticides and debris from live animals and plants." The filtered water remained relatively clear.
150 He then conducted a test on the tap water and on filtered water which he said was to show the amount of chlorine, by inserting a tablet into each cup. The tap water turned pink, and the filtered water slightly pink. Mrs Hussein retained the glasses and cups used for these tests, and later gave the contents to Mr Foyster.
151 Mr Mustafa then asked her the same questions as had appeared on the survey she had previously completed, being the Water Quality Test and Questionnaire. He said that the tests showed that her water was contaminated, and told her that while the equipment was free she would be required to replace and service the filter for ten years. He said the required filter change was once a year, but then said twice a year, but Mrs Hussein relied on what Ashley had told her, that she could choose whether or not to change the filter. Mr Mustafa then said that the cost would be $2980 for the first two years which she could pay fortnightly in instalments of $61 per fortnight. Mrs Hussein objected on the basis that she had been told by Ash that the program was government funded and was free except for $30 to replace the filter, and that she had not been told she would need to sign a contract. Mr Mustafa said "alright, we will remove the equipment then and take everything back" but Mrs Hussein refused. Mr Mustafa asked her to speak to his manager, "Des", which she did by telephone. She repeated her concern that she had been told everything was free except for $30 to replace the filter, and was now told the cost was $2980. She refused to bring back the filters as requested by Des because she had been deceived.
152 The particular concern Mrs Hussein conveyed to Des was that the company had gone about it the wrong way. She said the right way would be to "tell people all the costs involved first and everything they are liable to and then install the equipment. You shouldn't deceive people and tell them everything is for free, that it is government funded, that the equipment is given by the government and then come and say they have to pay for the service." After she had spoken to Des, she spoke again to Mr Mustafa who said that in the past he would do the testing first and then offer the products for sale and install the equipment, "(b)ut the business didn't sell many filters in that way so now they put the filters in first and then I come around and get people to sign the contracts."
153 Mrs Hussein subsequently contacted her local Member of Parliament, Consumer Affairs Victoria, the Water Ombudsman and South East Water Limited. She remained very worried about the quality of her water, even when a technician from South East Water tested it and assured her it was safe. She deposes to sleepless nights for about six weeks, feeling deceived, and continued worry and distress, including a lingering disgust of tap water given what she had seen in the electricity test.
154 Mr Foyster deposes in his affidavit sworn 5 April 2011 that he kept the contents of the tested water given to him by Mrs Hussein in secure storage until 18 March 2011, when he supplied them to Mr Ken Marshall of ALS Laboratory Services, who extracted about a half of each for testing. Mr Marshall has provided an affidavit as to the results of his tests, to which I will return.
155 In April 2010 Mr John Richardson of Cranbourne received what he describes as a coloured brochure in his mail from Australian Water Solutions containing a questionnaire about the quality of the water at his home. It offered a free water filtration system for a trial period of 14 days. The brochure is not exhibited to his affidavit, but from the description it sounds similar or identical to that received by Mrs Hussein. Mr Richardson completed the questionnaire and left it out for collection.
156 He was subsequently contacted by telephone to confirm if he was still interested in installation of the water filtration system. When Mr Richardson asked about the cost, the caller (whose name he does not recall) said that the program "is similar to the Commonwealth roof insulation program ... You will not have to pay for the installation, but there is an annual charge for the filters." They arranged a time for installation.
157 The installer, whose name Mr Richardson does not recall, told him in answer to his enquiry about cost that "You will need to pay a deposit for the annual change over of the filters. The government would pick up the rest of it. There is no charge for the system being put in. It can be taken out within a certain period of time and you'll be paying $165 annually for the new filters." Mr Richardson was told someone would come back in a couple of weeks to see if he was happy with the filtration system.
158 About two weeks later, Mr Richardson received a call to say someone would come out to test the water. Mr Richardson says this gentleman, whose name was Mr Flanders, attended on 19 May 2010, but I conclude from the affidavits of Mrs Richardson and her son Michael Feary that in fact the date was 19 April 2010. Mr Richardson was present with his wife and step son while Mr Flanders conducted a test on a glass of tap water and a glass of filtered water. He plugged an electrical device into the power, then inserted it into each glass. The tap water changed colour from clear to dirty brown, like treacle, but the filtered water remained clear. Mr Flanders said that the change in the colour of the tap water showed the sort of water it was, that the colour was due to rusty pipes and dead rats, that there are chemicals and rubbish in tap water and that it was the chlorine that hides the true colour. The filtered water remained clear when the device was inserted, because, Mr Flanders said, the filter purifies the water.
159 Mr Flanders said if they wished to proceed they would need to pay a deposit of $340 together with an annual charge of $165 for the filters. Mr Richardson queried the deposit, as he had been told the only charge was for the filters, but they decided to proceed. Mr Flanders agreed to return later to collect the deposit.
160 Mrs Richardson confirms her husband's account of the "electricity test" and what was said. She described the device as having two metal prongs, a rectangular section and a power cord. She gave her details to Mr Flanders (who she recalls introduced himself as David Flanders) to insert into the contract. She told him she was unable to read the paperwork due to a recent operation on her eyes and he did not read it to her. She signed the contract, and some other documents.
161 The service agreement is exhibited to her affidavit. It is the same form as that signed by the Singhs, identifying the "annual cartridge change over " as costing $165 per annum, but for reasons that are unclear the cost of the handwritten item "20x services" (i.e. twice a year for 10 years) is said to be $3380 less $340 deposit i.e. substantially more than that charged the Singhs. The service agreement also contains the handwritten word "Certegy". The service agreement does not contain the statutory notice to purchaser required for contact sales and Mrs Richardson confirms that when she was shown these later by an officer of the plaintiff, she had not been given anything similar by Mr Flanders or Australian Water Solutions and Mr Flanders did not tell her anything about her ability to cancel the contract. The exhibited service agreement contains the same information in relation to cancellation as the agreements signed by the Singh brothers.
162 Mr Flanders returned as arranged on 28 April 2010 and collected the deposit of $340 from Mr Feary. Mr Feary confirms the account of events given by his mother and step-father.
163 Mrs Richardson became concerned when she received a payment schedule from a finance company called Certegy Ezi-pay dated 4 May 2010 which set out a payment schedule of $61.93 per fortnight by way of direct debit to finance her entry into the service agreement. The payments would continue for two years. She had not realised how long the fortnightly payments would continue. She then checked the copy documents she had been left by Mr Flanders and saw that she had signed a direct debit form authorising payment to Certegy and giving details of credit of $3,090 provided by Certegy. She cancelled the direct debit at her bank after three fortnightly payments had been deducted and advised Certegy in writing why she had done so. Her letter was subsequently acknowledged by a telephone call asking to be kept advised. She also called Australian Water Solutions and left a message. Some weeks later she received a return call from someone who said he was calling from Australian Water Solutions. She told him she wished to cancel the agreement and that they could collect the filter system once she had been repaid. The Australian Water Solutions caller said she could not be repaid.
164 Ms Elizabeth Hanstock, of Shepparton, deposes in her affidavit that a man whose name she later learnt was Mr Des Collins rang her doorbell on 26 October 2010 and asked if she wanted her water tested. She assumed he was from Goulburn Valley Water. They made an appointment for later that week. When he returned at that appointment, on 28 October 2010, Mr Collins tested her tap and bottled water with an instrument she describes as looking like a magnet with a round part that sat over the glass and three squarish prongs going into the glass. She did not see a power cord. After a few moments, the tap water changed to a slimy green colour and Mr Collins said that "the water is 360 per cent contaminated". He told her that this was the water she had been drinking, which has been treated with chlorine "which is like White King or Domestos". The bottled water did not change colour. Mr Collins said that the bottled water was only six per cent contaminated, and he could provide her with an Australian Water Solutions water filter that removes 100 per cent of contaminants.
165 Mr Collins told her that the filter would not cost her anything - "It is completely free". He arranged for a plumber to attend only a few minutes later, who installed filters in the kitchen and bathroom. While that was happening, Mr Collins asked Ms Hanstock how she would pay, saying "All this will cost you is $380, and after four years you will get that $380 back". She said she could not pay the deposit at that time, and they agreed she would pay it by 1 February 2011. They discussed weekly or fortnightly payments and she gave her bank details to Mr Collins. She asked what she was paying for, and he told her it was for checking and if required replacing the filters each twelve months. She signed the service agreement he had completed with information she provided. She deposes that he did not tell her for how long she would be making payments.
166 The service agreement is exhibited to her affidavit. The pre-printed information, including the terms and conditions, is the same as in the other service agreements referred to earlier in these reasons. The only information as to amount, however, is that payments are $19 pw by direct debit from a named account with a deposit of $380 to be paid by 1 February 2011. The agreement period does not appear to be completed and there is no total amount specified. Ms Hanstock confirms that Mr Collins did not give her or show her the statutory forms "Important Notice to Purchaser" and "Cancellation Notice" required for contact sales agreements.
167 Ms Hanstock says she became ill after Mr Collins left and she realised what she had done. She deposes that she felt he was in charge once she had invited him in, that she was not in control and could not ask him to leave. She says he did not tell her how long he could stay in her house, or that she could ask him to leave. Had he done so, she says that she may have felt more confident to stop the process and ask him to leave. She details health costs she has incurred as a result of the experience.
168 Ms Hanstock contacted the 1300 number provided for Australian Water Solutions on 1 November 2010 and again on 3 November 2010 saying she wished to cancel the agreement. On each occasion she was told it was just an answering service. She received a return call on 3 November 2010 from a woman from Australian Water Solutions who suggested that she change her bank account number so no payments could be made and said "they will soon turn up to remove your water filter if they don't receive any payments." On 4 November 2010 Ms Hanstock visited the Goulburn Valley Water Office and they made a complaint on her behalf to Consumer Affairs Victoria.
Defendant's admissions and evidence as to sales practice
169 In the course of the execution of the search warrant, the officers of the plaintiff located at the defendant's premises written scripts related to the sale of service agreements for water filters and a sales folder. These are exhibited to the affidavit of Mr Foyster sworn 30 September 2010 as SF-2 (sales folder); SF-4 (scripts and other material) and SF-9 (scripts and other material). There are three scripts, respectively headed "Appointment Setting Script" (part of SF-9), two different versions headed "Water Testing Script" (part of SF-9 and part of SF-4) and two slightly different versions of a sales presentation script, one headed "Sales Presentation Script" (part SF-9), which culminates in discussion of a five year service agreement, and the other headed "Sales Presentation Folder Script" (part SF-4) which culminates in discussion of a ten year service agreement. Apart from the different agreement length, the contents of each of the sales presentation scripts is otherwise very similar and matches the pages in the sales folder, SF-2. In cross examination the defendant said that purchasers were offered either a five year or a ten year agreement.[81] All the agreements in evidence in these proceedings are ten year agreements.
170 The defendant told Mr Foyster, and confirmed at trial, that he wrote the scripts and collated the sales folder, and is responsible for their content.[82] He also told Mr Foyster that he required his sales staff to adhere to the scripts he had prepared, but said that he could not control the actions of contractors. In particular, he said he did not instruct contractors to say that the supply of water filters was associated with a government program, and there is nothing in the scripts he required his contractors to use to this effect.
171 As set out earlier the aspects of the written material that were said to be misleading or untrue were not itemised in advance of the trial. In response to my request to confirm my summary of the plaintiff's case in this regard prior to the defendant's evidence in chief, counsel for the plaintiff said the plaintiff's case was that the manner in which the sales presentation proceeded was misleading by virtue of what was said and what was omitted, and as to the extent to which promises were made as to future benefits without reasonable grounds for those statements.[83] In response to the request the defendant then made for greater specificity, counsel for the plaintiff gave what he described as some examples.[84] The first was the absence of context for some statements, for example the replication in the sales presentation folder of a document headed "Typical Analysis of Melbourne's Water" said to have been sourced from the "Water Quality Branch" which contains highlighted entries for lead, aluminium, arsenic, cadmium, and chloride, without also indicating that the amounts found for those substances were all within legislative guidelines for safety. This page in the presentation folder was not marked for special comment in the sales script. Other pages of the sales presentation folder were also put to the defendant in cross examination as misleading in the absence of context.
172 Counsel for the plaintiff also took the defendant at this early stage of his evidence in chief to page 1340 of the court book, also part of SF-2, which is a page of the sales folder promising benefits from the use of filtered water. The fact that the source material for the presentation folder was old was also identified as a source of it being misleading.
173 The defendant conceded that a lot of the articles within SF-2 were out of date. He said he had a more up to date folder, but did not put it in evidence.[85] As noted earlier, officers of the plaintiff showed copies of the sales folder SF-2 to Mr Raminder Singh, Mr Kanwar Singh and Mrs Mantrala, and they recalled seeing particular pages during the salesman's talk. I find that the sales folder which appears as SF-2 was used in these sales. The defendant said that he created the sales folder (SF-2) perhaps five to ten years ago, having become interested in the subject of water quality around ten years ago.[86] He was adamant that the material in the folder was reliable. Most of the material consists of photocopied extracts from other publications, most frequently newspaper articles, together with a number of extracts said to be from publications by a John Archer. The source of some pages is not identified. On most pages parts of the article or extract are in enlarged print, and Mr Palamara said he directed his sales staff to focus on those sections.[87] The dates of identified sources range from 1991 to 1999 i.e. there is no source identified dated later than 1999.
174 The thrust of the defendant's case in relation to the information in the folder is that it was not misleading because he used reliable sources,[88] has not altered any of the sources he quoted (other than to highlight some portions of the text by enlarging or boxing it)[89] and because he did not say tap water was unsafe - he merely conveyed the facts.[90] As an example, he said that he had not made any claim in the folder, nor in the surveys, that the chemicals he listed in water, including chlorine, exceeded safe levels.[91]
175 Somewhat at odds with this submission, the defendant also claimed that there is no safe level of consumption of carcinogenic substances.[92] I take this to be a submission in the alternative that, if he did represent that water was unsafe because it contains carcinogenic substances, it is not misleading to so claim. The defendant did not adduce any expert evidence to support this submission, and it stands in the face of the determination by government authorities of safe levels of substances that may in larger amounts cause ill health. I reject the defendant's submission.
176 The defendant also submitted that the plaintiff had not proved that he intended to mislead, or that the benefits he claimed for filtered water were not correct. Proof of intention to mislead or knowledge that a representation is false, as stated earlier, is not necessary for contravention of either s.9 or s.12. In addition, it is for the person making a representation of future benefit to prove reasonable grounds for that belief, not for the plaintiff.
177 The defendant did not give evidence in chief in relation to the scripts, but was cross examined extensively in relation to them as well as the folder. On the basis of the whole of his evidence and admissions made to Mr Foyster I make the following findings in relation to the representations in the folder and scripts.
Findings as to representations in scripts and sales folder
178 First, I find that he required his staff to use these scripts at the homes of potential purchasers of service agreements, and the evidence of the various purchasers demonstrates they were so used. There is no evidence that he authorised his sales staff to represent that the installation of the water filters was related to a government program and his evidence is that he did not. However, as noted earlier I accept the submissions of the plaintiff put by letter dated 9 July 2012 that the responsibility of the defendant for the actions of his contractors is to be determined according to the usual principles of principal and agent. I find that the defendant, by arming his sales staff with forms of agreement, business cards and other documents bearing the name of Australian Water Solutions, of which he was the proprietor, represented to those customers that what his sales staff said and did was authorised by him. Accordingly, in my view he is responsible for misrepresentations made in the course of the sales, even if he did not in fact authorise them. As noted earlier, the defendant quite properly in his evidence accepted responsibility for one such misrepresentation.
179 I find that numerous representations made in the sales scripts and folder were misleading, and that the water quality demonstrations were misleading as follows. I have limited these findings to those representations or demonstrations which the defendant himself identified, or which were put specifically to him by counsel for the plaintiff.
180 First, the representation in the Sales Presentation Folder Script which is part of SF-4 that the guidelines that govern water quality in Victoria are "voluntary" and "not adhered to". The defendant repeated in re examination his claim that the guidelines are voluntary.[93] I find that representation is untrue. As set out earlier, since the Safe Drinking Water 2003 and consequent Regulations, which adopt the Commonwealth Australian Drinking Water Guidelines, the guidelines that govern water quality in Victoria are mandatory, not voluntary. The evidence of Ms Manemin establishes that in the years the defendant acknowledged that this script was used the quality of water distributed by South East Water was within these guidelines. The evidence of Mr Bray is substantially to the same effect for Goulburn Valley Water.
181 This representation, that "there are No Legally Binding Standards in Australia for drinking water" and that "Health Authorities" have said that the "existing legislation ... did not set standards for drinking water in Victoria" is repeated in the page headed "Water Woes Cause Rethink" in the sales folder, at court book page 1304. The dates of the sources there given are 1991 and 1999 respectively. No source document in the sales presentation folder is later than 1999, and many date from earlier in the 1990s. The age of these sources also renders them likely to be now false or misleading.
182 Next, I find that numerous statements made within the sales folder are rendered misleading not because the statements are necessarily false, but by virtue of what they do not say. In particular, court book page 1300 ("Australian Water: Why it's a Worry"); court book page 1310 headed "Chemical Additives"; and court book page 1326 (the page referred to earlier headed "Typical Analysis of Melbourne's Water") all list chemicals that indeed, according to the water quality reports in evidence, are present in water, but without stating that they are within the safety guidelines. The first two of these pages were used by the defendant in his evidence in chief as examples of purely factual information, and the last was identified by the plaintiff as an example of misleading by omission. The defendant's case in this regard was that because he made no statement as to whether the chemicals were within legislative guidelines or not, his material was not misleading. He did acknowledge that the material was designed to show that tap water was contaminated. I accept the submission of the plaintiff that these pages are examples of silence rendering the representation misleading. It is misleading to state that a substance is found in tap water, when that substance would be known by most to have health risks, without adding that the substance is found only within mandatory guidelines as to safe limits. The representation is misleading in the same way the representation made by the "Important Notice" in the surveys is misleading.
183 The plaintiff also put to the defendant a number of representations on pages that purchasers remembered seeing, that in fact do not link the adverse health impact there identified with tap water. These were the pages headed "Women Beware" and "Men Beware" at court book pages 1306 and 1308 respectively. The defendant conceded that the articles there quoted, which include apparently reliable sources such as the Australian Medical Journal, do not in fact state that the cancer causing substances there identified as being found in breast milk and causing prostate cancer are found in tap water.[94] Yet by the sales presentation script found at SF-9 the defendant directs his staff to link these pages to tap water.
184 Similarly, that sales presentation script at paragraph 8 directs the sales person to say that "your water comes out of the tap looking clear but it's full of aluminium". The defendant said in cross examination it was not misleading to describe tap water as being "full of" aluminium, although aluminium is only used as a filter chemical, as "full of" was just a "figure of speech".[95] I disagree. The clear implication from the sales script when linked with the pages in the sales folder headed "Alzheimer's may start with a glass of water" and "Aluminium leads to Alzheimer's, researcher says" (court book pages 1312 and 1314) is that tap water contains aluminium in quantities that are hazardous to health. This is misleading, given the limited use of aluminium as a filter chemical and the small amounts of it in fact found in drinking water distributed by South East Water as shown in the 2006-2007 Water Quality Report at page 15.
185 Counsel for the plaintiff also put to the defendant various representations in the scripts or folder that contain promises of the benefits of using filtered water. Paragraph 23 of the sales presentation folder script which is part of SF-4 directs staff to say that "By using pure water it not only pays for itself, it puts money into your pocket! These figures are taken from a research centre in Sydney...". The script may refer to a page in the sales folder, which appears as court book page 1344, which claims savings of 20% on soaps, shampoos and conditioners; 10%-40% on gas/electricity; up to 70% on household cleaning products and unspecified savings on bottled water and soft drinks. The defendant could not provide the source of these representations.[96] Similarly, paragraph 2 of the sales presentation script, which is part of SF-9, represents that "by using pure clean water you naturally have higher energy levels, better skin, better well-being & you just feel a lot healthier". The defendant did not adduce any evidence in support of these contentions, stating merely when put to him in cross examination that the claims were just logical and common knowledge.[97]
186 As set out earlier, the FTA requires that a person who in trade and commerce makes representations as to future benefits from using a product must have reasonable grounds for so doing, and the onus is on that person to prove those grounds. While the representations as to better health are general, and may seem intuitive, a health claim given the intended general audience and the counterpoint misleading claims as to the health impacts of tap water mean that in my view the grounds for the claim would only be reasonable if from a reliable expert medical source. The defendant has not adduced any such evidence. The representations as to savings are also without demonstrated reliable foundation. I find that the defendant has made representations as to the future benefits of using filtered water without reasonable grounds. Accordingly, those representations are misleading.
187 I turn now to the demonstrations of water quality used by the defendant's sales staff and compare the expert evidence adduced by the plaintiff as to those tests with what the defendant's staff were instructed to say the tests showed.
188 The Appointment Setting Script and Water Testing Script which are part of SF-9 both refer to testing the tap water by use of a device "that gets plugged into a power socket to read impurities in water" (Appointment Setting Script), which is called in the Water Testing Script the "ELECTRO TEST". The script continues: "What we are doing is simply placing a positive and negative charge into the water, if there are any impurities it will bring them up to a visual state so we can see". When the test is complete the script directs the sales staff to say "The charge has brought up the inorganic impurities, such as slime, dirt, rust, lead, aluminium in the water, does not look good at all."
189 The Water Testing Script which is part of SF-9 also directs the sales staff to do the "TDS Digital Test" which is described in the script as "This is called a TDS meter, it measures total dissolved solids, the higher the reading the higher the amount of impurities. You have a reading of ___. Very high! Pure water reads 0. Although up to 15 is kind of acceptable."
190 The Water Testing Script which is part of SF-4 directs the presenter to do one test only, called the DPD test, which is described as a test using DPD tablets used to measure chlorine in swimming pools: "If there are any chemicals in the water it will go a little pink...That's heaps, as you can see there are a lot of chemicals, especially chlorine in your water; these DPD tablets are designed for a 10ml test tube, here you have around 200 mls of water."
Expert evidence as to testing for water quality
191 The plaintiff has adduced evidence from a Mr Marshall, an experienced chemist specialising in water quality testing, and currently the Manager Client Services for ALS Water Resources Group, as to these tests. He was engaged by the plaintiff to give his expert opinion on the tests carried out by the defendant's sales staff, being the electrolysis, chorine and total dissolved solids tests. In particular, he was engaged to give his expert opinion as to whether those tests, individually or together, are capable of determining if drinking water is unsafe, unhealthy, contaminated or of poor quality, and if they are capable of determining if filtered water is of better quality or healthier than tap water. He was supplied with the affidavits of a number of consumers, the affidavits of Ms McManemin and Mr Seller, the AWS script (SF-9 to Mr Foyster's affidavit of 30 September 2010), sales manual (SF-2 to that affidavit) and pamphlet headed "Annual Water Quality Review" (SF-1 to that affidavit), photographs of the testing probe (SF-15 to that affidavit) and the water samples retained by Mrs Hussein, which she had supplied to Mr Foyster.
192 Mr Marshall's summary in relation to the chlorine test and the total dissolved solids test is that "when performed and interpreted correctly (they) can give an indication of drinking water quality, each with respect to only one aspect of the total water quality". He expresses concern, however, that "(t)hese tests may not ... have been performed correctly and have been interpreted incorrectly. A false impression of the water quality in their house has been given to the householder as a result of the misinterpretation."[98] In the body of the report, he testifies that the purpose of conducting a chlorine test on a sample of water is to determine the amount of chlorine that is present, and this can be done by using DPD tablets so that the intensity of any pink colour which develops is proportional to the amount of chlorine in the water. An accredited laboratory when conducting this test would use clean equipment, a set volume of sample and set amount of reagent, would calibrate the measuring equipment against standards, and conduct duplicate analysis to ensure no variation occurred in the testing process amongst other steps. The Australian Drinking Water Guideline maximum criterion for chlorine is 5mg/l. An accredited test "would produce a noticeable pink colour for chlorine concentrations of 0.10mg/l or even lower. At concentrations approaching 5mg/l the pink colour would be very intense."[99] He also comments that "(e)ven at levels significantly below 5mg/l most consumers would find the taste of the water to be unpalatable and to have a strong odour."[100]
193 Mr Marshall states that the purpose of a "total dissolved solids" test is to determine the amount of dissolved solids present in the sample for the purpose of comparison to a pre-determined criterion, which will depend on the reason for the test. For example, the test may be conducted on groundwater used for irrigation (as different plants tolerate different levels of dissolved solids) or in saltwater swimming pools to determine the amount of chlorine required. An accredited laboratory would take steps to ensure the testing was accurate, including reporting results at a standard temperature, using certified solutions and conducting duplicate analyses. The Australian Drinking Water Guideline for total dissolved solids is 500mg/l TDS for taste reasons. He says that "(a)t this level, some consumers would find the taste only 'fair' and may complain to the water authority".[101]
194 Mr Marshall concludes that the chlorine test and the total dissolved solids test are not capable on their own or together of determining whether drinking water is unsafe, unhealthy, contaminated or of poor quality (unless the chlorine or TDS concentrations exceed the Guidelines). This is because each test measures only one of over 180 different chemical or microbiological factors listed in the Australian Drinking Water Guidelines that can impact on the quality of drinking water. Nor can they determine if filtered water is of better quality or healthier.[102]
195 In relation to the electrolysis test, Mr Marshall states that this is not a recognised test for assessing water quality. Far from revealing contaminants already in the water, electrolysis inserts contaminants, being metal from the electrodes used in the demonstration. Mr Marshall describes electrolysis as a process by which external electrical energy is supplied to electrodes which are immersed in a solution to cause a chemical change to both the solution and the electrodes. Tap water has greater ability to conduct electricity than filtered water, and this is the reason for less precipitate being observed in filtered water.[103] Mr Marshall reports that the tap water used for the electrolysis test in Mrs Hussein's home contained significantly increased levels of iron, aluminium and manganese and that the electrical conductivity, which was consistent with that of Melbourne tap water, was sufficient to allow electrolysis of the water to "a significant extent, to allow the demonstration to produce the visible precipitate observed. A rusty brown precipitate was very obvious in this sample I received." The sample of filtered water which had also been subjected to the electrolysis test also contained higher levels of iron, aluminium and manganese than the base sample (the sample from Mrs Hussein used for the chlorine test), but the levels were much lower than in the tap water subjected to the electrolysis test and, he concludes, "would therefore not be as obvious visually". His conclusion in relation to the samples supplied by Mrs Hussein is that "(t)he dramatic increase in the levels of iron, aluminium and manganese by the electrolysis of tap water shows that the electrolysis process itself has contaminated the water."[104]
196 Mr Marshall concludes that the electrolysis test is not capable of determining, either alone or in conjunction with the total dissolved solids and chlorine tests, whether drinking water is unsafe, unhealthy, contaminated or of poor quality. Nor can it determine if filtered water is of better quality or healthier.[105]
197 The search team located in the execution of the search warrant a testing probe, and took photographs of it, which appear as SF-15. The photographs show a rectangular red and black box with two prongs and a power cord attached. The word "Electrolyzer-II" appears written on the box. These are the photographs which officers of the plaintiff subsequently showed some of the consumers who have given evidence. Those complainants identified the device as similar to the device which was inserted into a glass of their tap water and turned it dark brown. The defendant denied, however, that this testing probe was used by salesmen in consumers' homes, and said it was only used in his offices.[106] At trial, the defendant agreed in cross examination that he instructed his representatives to do the ELECTRO test referred to in the water testing script and that it is an electrolysis test.[107] I find that he did so instruct his representatives.
198 The defendant's evidence in cross examination is that an electrolysis test measures total dissolved solids. He rejected the contention put to him, consistently with Mr Marshall's evidence, that the brown slush created in the test is created by a reaction with the prongs, and is not from the water itself. He equally rejected the view expressed by Mr Marshall that the electrolysis test has no bearing on the quality of the water. He was firm in his view that "any sludge in the water is in fact from the water. Definitely not the device" and "It (the test) has every relevance to the water being tested."[108]
199 The defendant conceded he has no qualifications in science. He did not call any evidence to support his contention. It is in direct conflict with the clear expert evidence of Mr Marshall. I find he is simply wrong. It is untrue to claim, as does the script he prepared and the representatives he instructed, that the electrolysis test shows that tap water is contaminated, and that filtered water is not.
200 The defendant's claim that the test shows total dissolved solids suggests he may have confused the two tests. Whatever the source of his error, he also resisted the contention put to him in cross examination that the TDS (total dissolved solids) test required by the script in SF-9 has no relevance to the safety or quality of water.[109]
201 The script directs the presenter to describe the reading as very high, irrespective of what it is in fact. Mr Marshall's evidence is that, at best, the test measures one aspect of water quality only. His evidence is also that the test should be conducted under controlled conditions. I consider that from the description given by the purchasers of the conduct of the TDS test (I find that the thermometer test some describe was in fact the TDS test), the absence of laboratory conditions in consumers' homes and the requirement in the script to find a high reading in every case, it is not likely that the test was properly conducted. Thus, although I do not consider the evidence supports the plaintiff's contention that the test has no relevance to water quality, I do find that, in the circumstances in which the test was conducted, it was misleading to represent by this test, as the defendant did, that tap water was contaminated or of poor quality and that filtered water was of better quality.
202 The specific representation in relation to the chlorine test by use of DPD tablets, contained in the water testing script which is part of SF-4, is that the amount of chlorine shown by the test in tap water is equivalent to at least 2-3 drops of Domestos. The plaintiff's counsel put to the defendant that this statement was incorrect. The defendant disagreed, and there is no evidence to the contrary. The script requires the salesperson to say, irrespective of what the test shows, that it shows "heaps" of chlorine and continues that "the long term health effects can be fatal". The defendant was not cross examined about these matters. Mr Marshall's evidence is that the test should be conducted under controlled conditions. As with the TDS test, I consider it unlikely that it was so conducted. Further, he says that the permitted level for chlorine under the Australian Drinking Water Guidelines is 5mg/l. On the evidence of the South East Water and Goulburn Valley water quality reports, the level for chlorine in the areas in which those authorities distributed water did not approach this level. Accordingly, I conclude that it was misleading for the script to suggest that the amount of chlorine was excessive, and that there are deleterious long term effects on health from the amount of chlorine demonstrated to be in tap water by use of the DPD tablets.
203 On the basis of the above findings I would make proposed declaration 1(f). As currently drafted it may relate only to the electrolysis test. The plaintiff could consider redrafting it to refer to the water quality tests generally. In relation to the proposed declarations sought in order 2, I require the plaintiff to redraft them to clarify which section of the FTA is said to be contravened and to consider the general question as to whether it is appropriate to make multiple declarations in respect of the same conduct under different sections of the Act. Subject to resolution of those matters, I would also make declarations to the effect of proposed declaration 2(f) (limited to the areas of distribution of South East Water Limited and Goulburn Valley Water for the reasons set out in relation to the representations in the surveys); 2(g)-(j) ((i) to be redrawn to replace "no direct relevance" to "limited relevance" or similar); and 2(e) (limited to lack of reasonable grounds) and (k). It would also assist with clarity if the proposed declarations were more clearly grouped by subject matter.
204 Under this heading I discuss proposed declarations 3-6, which relate to the service agreements for water filtration systems. The plaintiff first seeks a declaration that the "Service Agreements" for water filtration utilised by the defendant were contact sales under the FTA. The proposed declaration is not limited to the particular agreements in evidence. The plaintiff next seeks a declaration that "the Service Agreements" failed to comply with the FTA in three respects- failing to include the required notice advising the purchaser of the right to cancel the agreement and obtaining the purchaser's signature thereto; failing to attach to the service agreement a notice that could be used by the purchaser to cancel; and failing to ensure the agreements were clearly expressed. By adopting the term "Service Agreements" as used in proposed declaration 3, this proposed declaration is similarly not limited to the service agreements in evidence. It is also important to note that failure to comply with the provision of the FTA requiring that agreements be clearly expressed applies whether or not the agreement was a contact sale.
205 Proposed declaration 5 would declare that the service agreements with the five purchasers whose agreements are in evidence are not enforceable, and also that no agreement which does not comply with s. 61 of the FTA is enforceable. I will discuss shortly whether it is appropriate to extend any of these declarations beyond the service agreements in evidence. In addition, I have doubts as to the utility of a declaration that merely restates the effect of s. 61 and s. 62(2) in relation to other service agreements.
206 Proposed declaration 6 would declare that the defendant and persons acting on his behalf failed to inform consumers that they could only remain for one hour without written permission and must leave if requested, contrary to s.62E. As with the other proposed declarations, the terms of the proposed declaration are not limited to those consumers who gave that evidence.
207 These proposed declarations are implemented by proposed injunction 7(l), which would restrain the defendant from enforcing any service agreement without the compulsory notices or which was not "clearly expressed", and proposed injunction 8 which requires the defendant to notify each customer who purchased a service agreement for water filtration from him, trading as Australian Water Solutions or Australian Water and Solar, that the customer may seek a refund and informing the customer that the defendant had also been found to have engaged in misleading conduct in other respects. If the customer seeks a refund, the proposed injunction provides that it must be given, and also provides a mechanism for return of the filtration equipment and remediation.
208 I will also consider under this heading proposed declaration 1(g), which declares that by refusing to pay refunds in a timely manner when required the defendant engaged in misleading or deceptive conduct.
209 There are five service agreements for water filtration in evidence - one for each consumer who has given evidence, with the exception of Mrs Hussein who refused to enter an agreement when advised of the costs. They are apparently pro forma documents, and each contains the same printed terms on the reverse headed "Maintenance Service Agreement Terms". Section 60 of the FTA sets out the preconditions for an agreement to be a contact sale, and so subject to the requirements of that Act, as follows:
(a) it is an agreement for the supply in trade or commerce of goods or services of a kind ordinarily used for personal, household or domestic use; and
(b) the agreement is made or entered into in the presence of the purchaser (or a person acting on behalf of the purchaser) and the supplier (or a person acting on behalf of the supplier) at -
(i) a private residence other than a private residence which is the business premises of the supplier or the person acting on behalf of the supplier;... and
(c) the total consideration payable by the purchaser under the agreement -
(i) is not ascertainable at the time of making the agreement; or
(ii) is ascertainable at the time of making the agreement and exceeds $50.
210 The plaintiff contends that all these requirements were met in the case of these service agreements, and others in these terms, and so the service agreements were contact sales. The defendant disputes this. He says that the agreements were not contact sales, because the consumers participated in a:
fourteen day trial comparison review where all the paperwork and the contract is given to them at the time of installation. Fourteen days go by and then it's up to the customer whether they return that paperwork to us completed, sometimes the sales person does attend the home and they then have the completed paperwork to present to the sales person. So being a product where it's not really a contact sale, where the contract is written up in the home and signed off on with a sales person you see.[110]
211 This oral evidence at trial is consistent with what he told Inspector Foyster at interview in July 2010[111] and his written submissions[112]. The defendant also contended in his oral evidence that the service agreements were not contact sales because "a lot of the time they're ordered over the internet. Most of the time a sales person does not attend their property, it's only a plumber which would."[113]
212 Whatever the situation with other service agreements, the situations described above were simply not what occurred in respect of the purchasers who have given evidence. It is noteworthy, in particular, that Ms Hanstock's experience postdates the defendant's interview with Inspector Foyster. In each of these five cases, the agreement was entered into at the purchaser's home by the purchaser and a person acting on behalf of the defendant, as the supplier, in each other's presence, and the total consideration exceeded $50. The requirements of s.60(1)(b) were accordingly satisfied. I find that the requirements of s.60(1)(a) were also satisfied - the agreement was for the supply in trade and commerce of services of a kind ordinarily used for personal, household or domestic use.
213 In the case of Mr Raminder Singh and Mr Kanwar Singh the agreement preceded the installation of the water filtration equipment. There was no fourteen day trial prior to the agreement. Installation would also have followed the agreement in the case of Mrs Mantrala, had she not cancelled the agreement. In Ms Hanstock's case, the installation and the agreement were at the same time. Interestingly, Ms Hanstock's case is the only one of these five in respect of which the defendant concedes that she should have received a cooling off notice i.e. it was a contact sale.[114]
214 There was a fourteen day trial in the case of Mrs Hussein (who did not then enter into an agreement) and Mrs Richardson (who did). The defendant's evidence about Mrs Richardson's agreement is that "the paperwork was also not signed in the presence of Mr Flanders. It's left in an envelope and it's picked up by Mr Flanders along with any deposit once confirmation is made over the phone that they wish to go ahead."[115] This is not Mrs Richardson's evidence as to what occurred. Her evidence, at paragraph 24 of her affidavit, is that she signed the form at her home with Mr Flanders present, and he then signed it too. She does not say the defendant Mr Palamara was also present, and nor does he, and so his evidence is not first hand evidence. It was also not put to Mrs Richardson, and is objectionable on that basis. I find that the service agreement with Mrs Richardson was signed by her and Mr Flanders, the defendant's representative, in each other's presence, and is a contact sale. It is immaterial that the equipment had been installed fourteen days earlier.
215 I will make a declaration that these service agreements were contact sales. The declarations that the plaintiff seeks appear to assume that all sales of service agreements were contact sales. That this is the plaintiff's case is also made plain by the Outline of Argument for the Trial, at paragraphs 8-9. This assumption may be the basis on which the proposed declarations extend beyond the cases in evidence. In my view, the declarations should not extend beyond these service agreements, or others entered into in an identical manner, as it is possible, on the defendant's evidence, that other service agreements in the same terms were entered into in a different manner, and so were not contact sales. The plaintiff did not cross examine the defendant about his evidence as to the mode of operation, although her closing submissions make the point that this evidence was not borne out by the cases in evidence. That is not enough in my view, without the defendant being cross examined on the issue, to conclude that his evidence was false, and the mode of operation illustrated by these cases was, in fact, the only mode.
216 Relevant portions of section 61 of the FTA provided that:
(1) The following requirements must be complied with in relation to a contact sales agreement -
(a) the agreement must set out in full all the terms of the agreement, including -
(i) the total consideration to be paid or provided by the purchaser under the agreement or, if the total consideration is not ascertainable at the time the agreement is entered into, the manner in which it is to be calculated;
(ii) any postal or delivery charges to be paid by the purchaser;
(b) the agreement must include on the front page of the agreement a notice which -
(i) must in accordance with Part 1 of Schedule 2 advise the purchaser of the right to cancel the agreement; and
(c) the agreement must be accompanied by a notice completed in accordance with Part 2 of Schedule 2 which may be used by the purchaser to cancel the agreement;
(d) the agreement must set out in full the name and business address (not being a post box) of the supplier;
(e) the agreement must be printed clearly or typewritten (apart from any amendments to the printed or typewritten form which may be handwritten) and otherwise must comply with section 163;
217 None of these five agreements contained the statutory notice required on the front page by s.61(b) that the purchaser may cancel the agreement, nor were they accompanied by a form to use for that purpose as required by s.61(c). I am satisfied that the defendant has in these respects contravened s.61 of the FTA and will make the declarations sought as declarations 4 (a) and (b) and 5 in respect of these purchasers. Although the defendant did not personally enter into the agreements, as the owner of the business he was responsible for the drawing of the agreements and ensuring the FTA was complied with, and as "the supplier" for the purpose of the contact sale is responsible for the actions of the persons acting on his behalf at consumers' homes.
218 Proposed declaration 4(c) relates to the claimed failure by the defendant to comply with the obligation imposed by s. 163 of the FTA. Section 163(3)(c) requires that a "consumer document" be "clearly expressed". By virtue of s.163(1) and the definitions in the Act a "consumer document" includes an agreement to supply goods or services ordinarily acquired for personal, household or domestic use for that use. The obligations imposed by s. 163 are not limited to contact sales, but apply generally. Section 61(1)(e) also makes it a specific requirement for a contact sale agreement that it comply with s.163.
219 The plaintiff says that the service agreements in evidence used terms that were confusing or did not make sense ("Failure to not accept", "void warranty" and "void any liabilities from AWS"), or were inconsistent (the two inconsistent terms in relation to payment on cancellation I have identified earlier), used words or phrases without a defined or ascertainable meaning, and used different words to mean the same thing. The defendant says that these were honest mistakes and technical breaches.
220 I accept the plaintiff's submission that the agreements lack clarity as to the first two of these categories, which form the content of proposed declaration 4 (c) (i) and (ii). I agree, however, with the defendant that, with the exception of the inconsistent provisions relating to payment on cancellation, the lack of clarity is not such as to justify remedy by court order. I am also not persuaded that the words and phrases identified in proposed declaration 4(c)(iii), even if unclear, are so unclear as to justify remedy by court order.
221 I take a different view in relation to rights on cancellation as they are particularly significant. In the case of contact sales, the major contravention in relation to rights on cancellation is of course the failure to give the statutory notification and provide a form to use for cancellation. Had the notice been given, then it would have been unnecessary and, arguably, undesirable for the agreement to contain any other terms about cancellation. The obligation to comply with s.163 as to clarity applies to agreements with consumers generally however, not just contact sales. Accordingly, there is in my view some utility in proposed declaration 4 (c) but, if it is to be made, it should be redrawn to apply to rights on cancellation only in respect of service agreements that did not require a statutory form of notice as to these rights.
222 The plaintiff also seeks a declaration, proposed declaration 6, that the defendant and persons acting on his behalf failed to comply with s.62E of the Act in relation to time limitations at consumers' homes. The relevant sections provide as follows:
62B Duty not to remain on premises for long periods
(1) Subject to subsection (2), a supplier or person acting on behalf of a supplier who is carrying on negotiations at a premises which may lead to a contact sales agreement or for an incidental or related purpose must not remain on the premises for more than one hour.
Penalty: 120 penalty units, in the case of a natural person.
240 penalty units, in the case of a body corporate.
(2) Subsection (1) does not apply if the supplier or person acting on behalf of the supplier remains on the premises with the consent of the person with whom the negotiations are being conducted and the consent complies with subsection (4).
...
(4) A consent under subsection (2) -
(b) must only apply to a period of one half hour; and
(c) must not be given during a period referred to in section 62A(1).
(5) More than one consent may be provided under subsection (4).
(6) Nothing in this section limits the operation of section 62C.
A supplier or a person acting on behalf of a supplier who is carrying on negotiations at a premises which may lead to a contact sales agreement or for an incidental or related purpose must leave the premises immediately on the request of -
(a) the occupier of the premises, or any person acting with the actual or implied authority of the occupier; or
(b) the person with whom the negotiations are being conducted.
Penalty: 120 penalty units, in the case of a natural person.
240 penalty units, in the case of a body corporate.
223 Section 63E imposes an obligation to inform consumers of these rights. It provides as follows:
Before commencing negotiations which may lead to a contact sales agreement, a supplier or person acting on behalf of a supplier must orally inform the person with whom the negotiations are being conducted that the supplier or person acting on behalf of a supplier -
(a) is not permitted to remain on the premises for more than one hour unless the person with whom the negotiations are being conducted consents in writing to an extension in accordance with section 62B(2) or the negotiations are in the course of a party plan (within the meaning of section 62A); and
(b) must leave the premises if requested to do so by the occupier of the premises, or any person acting with the actual or implied authority of the occupier, or the person with whom the negotiations are being conducted.
Penalty: 120 penalty units, in the case of a natural person.
240 penalty units, in the case of a body corporate.
224 Mr Raminder Singh, Mr Kanwar Singh and Ms Hanstock all say in their affidavits that the AWS salesman did not tell them or their rights under ss. 62B and C. The salesman for both Mr Singhs was Mohan Ari (who the defendant said had caused a lot of problems). For Ms Hanstock however it was Mr Collins, who the defendant told Mr Foyster in July 2010 was the only person other than himself selling service agreements, and it appeared from the course of his evidence that Mr Palamara relied on Mr Collins and regarded him highly. Accordingly, while there is evidence in only three cases of failure to comply with s.62E, on balance I consider that a declaration of the contravention is appropriate. I would confine the proposed declaration to persons acting on behalf of the defendant and to "some" consumers.
Consequences of failure to comply with contact sales provisions
225 By proposed declaration 5 and proposed order 10, the plaintiff seeks relief for these purchasers, and others. The plaintiff seeks relief for other consumers by proposed injunctions 7(h) and (l), and proposed orders 8 and 9. I will consider that relief shortly.
226 Proposed declaration 5 would declare that the agreements with the purchasers whose agreements are in evidence, and other persons who have entered into "such" an agreement, are not enforceable due to failure to comply with s.61 of the FTA. In its terms, proposed declaration 5 is thus explicitly limited to contact sale agreements.
(1) If section 61 is not complied with in relation to a contact sales agreement, the supplier under the agreement and any person entering into the agreement on behalf of the supplier are each guilty of an offence and liable to a penalty of not more than -
(a) 120 penalty units, in the case of a natural person; or
(b) 240 penalty units, in the case of a body corporate.
(2) The supplier under a contact sales agreement cannot enforce the agreement against the purchaser if the supplier or a person entering into the agreement on behalf of the supplier fails to comply with section 61.
228 Accordingly, the agreements with these purchasers are not enforceable by virtue of s.62(2). I will make proposed declaration 5 in respect of the five purchasers who have given evidence. I do not consider that the declaration can be expressed more broadly, so as to apply to other consumers. On the defendant's evidence, which was not contradicted, other service agreements may not have been contact sales, and so could not involve a breach of s.61. A declaration that seeks to merely restate the effect of s.61 and s.62(2) in respect of other service agreements not in evidence which were contact sales lacks utility. I consider that the way to ensure that other consumers who may have rights under the FTA are notified is by way of publication of these findings and notification to them that they should contact the plaintiff to pursue their rights if they consider them infringed. I will address the content of such publication and notification, and the mechanisms for achieving it later in this judgment.
229 The effect of s.61 and proposed declaration 5, as limited above, is that if the purchaser does not comply with the agreement, the defendant cannot force him or her to do so. The plaintiff seeks more wide ranging relief than this in respect of these five purchasers. What they and the plaintiff seek on their behalf is refund of all monies paid to the defendant, together with compensation. Proposed order 8 would also require the defendant to pay a refund to any purchaser of a service agreement, whether or not a contact sale, on request.
230 The defendant says that, if a purchaser was entitled to a refund by virtue of cancellation, the maximum period for cancellation was six months. After that time, the purchaser has no right to cancel, and so no right to refund, even if the agreement was a contact sale and did not comply with the notice requirements.
231 The provisions of the FTA in relation to cancellation of a contact sale were as follows:
(1) The purchaser under a contact sales agreement may cancel the agreement by giving notice of cancellation to the supplier within 10 days from and including the day on which the agreement was made or within such longer period as the agreement may provide.
(1A) Without limiting subsection (1), if a supplier or a person acting on behalf of a supplier represents to the purchaser that the purchaser may cancel the agreement in a manner other than in accordance with subsection (1), (3) or (5), the purchaser may cancel the agreement in that manner.
(2) If a contact sales agreement (other than an agreement approved or in a class approved under section 61(3)) does not comply with section 61(1)(b), 61(1)(c) or 61(1)(i), the purchaser under the agreement may cancel the agreement by giving notice of cancellation to the supplier within 6 months from the day on which the agreement was made.
(2A) If a supplier or a person acting on behalf of a supplier does not comply with sections 62A to 62E in relation to negotiations leading to a contact sales agreement, the purchaser under the agreement may cancel the agreement by giving notice of cancellation to the supplier within the period of 3 months from and including the day on which the agreement was made.
(3) Subject to subsection (1A), a notice of cancellation must be in writing and may be given in the form of the notice in Part 2 of Schedule 2.
(4) Subsection (3) does not apply to an agreement approved or in a class approved under section 61(3) if the Director approves a different method of notice of cancellation in the case of that agreement or class of agreements.
(5) Subject to subsection (1A), a notice of cancellation under this section may be given -
(a) by leaving it at or posting it to the business address of the supplier or other address of the supplier shown on the form of notice of cancellation accompanying the agreement; or
(b) by faxing it to the facsimile number of the supplier shown on that form; or
(c) if the form of notice of cancellation does not accompany the agreement, by leaving it at or posting it to the last known place of business of the supplier.
(1) If a contact sales agreement is cancelled during the cooling-off period, the agreement is deemed to have been rescinded by mutual consent.
(2) If a contact sales agreement is cancelled during the cooling-off period, any related contract or instrument is void.
(3) Subsection (2) does not affect the operation of the National Credit Code in its application to a tied loan contract as defined in that Code.
(1) If a contact sales agreement is cancelled within the cooling-off period, the supplier must immediately repay to the purchaser any money paid by the purchaser under the agreement or a related contract or instrument.
(2) If a contact sales agreement is cancelled within the cooling-off period, the supplier must return to the purchaser any goods taken as a trade-in under or in respect of the agreement.
(3) The goods must be returned within 10 days after the supplier receives the notice of cancellation of the agreement.
(4) The goods must be returned in a condition substantially as good as when the goods were taken.
(5) If the supplier has disposed of the goods taken as a trade-in under or in respect of the agreement before the cancellation of the agreement, the supplier must pay to the purchaser the reasonable cost of replacing the goods.
(1) The supplier under a contact sales agreement may make a reasonable charge for any goods which the purchaser is unable to return on cancellation of the agreement under this Division.
(2) If a contact sales agreement is cancelled under this Division, a supplier is not entitled to charge for services provided under the agreement before it is cancelled, except in accordance with this section.
(3) If a purchaser cancels a contact sales agreement under this Division, the supplier may apply to the Tribunal for an order that the purchaser must pay to the supplier a reasonable amount (to be determined by the Tribunal) for services provided under the agreement before it was cancelled.
(3A) The Tribunal must not make an order under subsection (3) unless the Tribunal is satisfied that the supplier or a person acting on behalf of the supplier has not contravened this Act in relation to the contact sales agreement.
(4) The supplier may deduct an amount payable by a purchaser under this section from any money required to be paid to the purchaser under section 65.
(1) If the purchaser under a contact sales agreement for the supply of goods cancels the agreement during the cooling-off period, the purchaser must immediately -
(a) return the goods to the supplier; or
(b) notify the supplier of the place where the supplier may collect the goods.
(2) If a purchaser gives a notice to a supplier under subsection (1) and the supplier does not collect the goods within 30 days after the cancellation of the agreement, the goods become the property of the purchaser free of any other right or interest.
(3) If the purchaser under a contact sales agreement fails to take reasonable care of goods which are returned to a supplier or collected by a supplier under this section, the purchaser is liable to pay compensation to the supplier for any damage to or depreciation in the value of the goods.
232 In short, as the defendant contends, the cancellation period in respect of a contact sale where the agreement complied with the FTA was ten days. Where the agreement did not, inter alia, contain the notice to purchaser required by s.61(1)(b) or a form of notice to use to cancel the agreement as required by s.61(2)(c), the purchaser could cancel within six months of the date of the agreement. The effect of cancellation is that the purchaser is entitled to a full refund, but the supplier can only charge for services already provided by order of the Victorian Civil and Administrative Tribunal. The supplier is entitled to return of goods, but the agreements here in question were for services.
233 Each of these five purchasers contacted Australian Water Solutions well within six months of the agreement to cancel the agreement. Only Mr Kanwar Singh and Mrs Mantrala did so, however, in writing by letter, as required by s. 63 (3) and (5). Mr Raminder Singh was told by Mr Ari that he could cancel the agreement within a month, and so s.63(1A) would apply to lengthen the period, but Mr Singh does not say that Mr Ari told him he could cancel by telephone. Accordingly, the attempts at cancellation which would trigger refund in accordance with the FTA, by Mr Raminder Singh, Mrs Richardson and Ms Hanstock, did not comply with the FTA requirements. The cancellations by Mr Kanwar Singh and Mrs Mantrala did so, but Mr Singh deposes that he agreed not to require a refund (paragraph 49 of his affidavit). Accordingly, it appears that only Mrs Mantrala is entitled to a refund by virtue of s.63. Her evidence is that she had made a complaint to VCAT. Clarification is required as to the outcome of that application, as it would not be appropriate to order relief for Mrs Mantrala if her complaint has already been the subject of determination.
234 I note that there may be an alternative basis on which the agreement entered by Ms Hanstock is void, entitling her to a refund, being that the agreement is void for uncertainty. The agreement does not appear to contain critical elements, being the total consideration and the period of the agreement. This basis was not explored in the plaintiff's case.
235 Whether or not s.63 was complied with is not critical, however, as it is apparent from the revised proposed orders that the plaintiff does not rely on s.63 as the source of power to award refunds to these purchasers. Order 10 of the revised proposed orders proposes orders for payment to these purchasers by way of refund, compensation, and damages pursuant to s.149A and s.158 of the FTA. These sections confer power to order a refund, amongst other things, in respect of any contravention of the FTA, not just the contact sales provisions.
(1) The Supreme Court or the County Court, on the application of the Minister, the Director or any other person, may grant an injunction requiring a person to do any act or thing if the Court is satisfied that the person is engaging in or has been engaging in conduct that constitutes -
(3) Without limiting subsection (1), an injunction under this section may require a person -
(d) to disclose information about the person's business activities or business associates;
237 Thus, s.149A confers power to grant an injunction requiring payment of refunds, if the Court is satisfied that the defendant has contravened (any) provision of the Act. Proposed order 8 identifies s.149A as the source of power for the proposed orders that the defendant notify all customers who purchased service agreements for water filtration of their right to a refund, and refund them their money if so requested.
158 Orders against persons found to have contravened this Act
(1) In any proceedings for an offence against, or a contravention of, this Act, the court may make any order it considers fair if the court finds that -
(a) the person against whom the proceedings were brought (the accused) has contravened a provision of this Act (including a provision under Part 2); and
(b) another person (the injured person) has suffered or may suffer loss or damage as a result of the contravention of this Act.'.
(2) Without limiting subsection (1), the orders that may be made under this section include -
(a) an order that the whole or any part of a contract between the accused and the injured person which is affected by the contravention or any agreement collateral to such a contract is void on and from the time specified in the order; or
(i) refund to the injured person money paid by that person under the contract or agreement;
(h) an order declaring that the accused has contravened a provision of this Act or the regulations.
239 Section 158 requires the Court to be satisfied of both a contravention of the Act and loss, and that the proposed order is "fair". That section is identified as the source of power to make proposed order 10, which is confined to orders for payment to the named purchasers who gave evidence.
Proposed order 10: orders for compensation and refund to named purchasers
240 I am satisfied in relation to the consumers who have given evidence, that the defendant has contravened both the contact sale provisions and the obligation not to engage in misleading or deceptive conduct. I must also be satisfied that they each have suffered loss, and that the proposed order is fair. I first set out the defendant's general contentions.
241 The defendant resists an order for refund, and says that if refund is ordered he will only be able to pay by payment plan.[116] He says that any compensation sought should be the subject of separate proceedings, brought by individual consumers in VCAT, on the basis that he could then better answer the complaint. If compensation is to be ordered, it should be limited in his submission to the monetary value they have paid i.e. refund of monies paid. Further, he says that no orders for payment should be paid where he has not profited from the sale. In particular, he claims that he should not be responsible for the refund of deposits paid to Mr Ari by the Singhs and Mrs Mantrala. In respect of some purchasers he also claims that monies paid have already been refunded.
242 These submissions, with the exception of the last, reveal a misunderstanding of the issue to be determined. Capacity to pay is not relevant to whether or not an order should be made, but only to whether it can be enforced. If orders are made that the defendant does not have the capacity to meet he may be able to seek appropriate orders for instalment payment. The Director is entitled to bring proceedings on behalf of an aggrieved consumer pursuant to s.105 of the FTA - the consumer is not required to bring proceedings for refund or compensation him or herself. Counsel for the plaintiff assures the Court that if refunds have already been made, or compensation otherwise paid, then it will not be sought in these proceedings. I will seek updated information as to what these purchasers have already received, if anything, before making orders for payment.
243 An order for compensation is in the nature of damages, i.e. it is not a refund of monies paid, but compensation for the loss occasioned by the contravention of the Act. Compensation need not be limited to actual financial loss, but can include compensation for anxiety, distress or inconvenience. It is established that both general and aggravated damages may be awarded, as well as a refund, pursuant to s.158.[117] The plaintiff seeks a modest sum by way of general damages for each consumer who has given evidence and may also seek aggravated damages in respect of Mrs Hussein.[118]
244 Whether or not the defendant has profited from the sale in question is immaterial. Provided it was entered into on his behalf, which is not disputed, failure of his agent to pass on the deposit is a matter between him and his agent - it does not affect what should otherwise be paid to the consumer.
245 An issue that is of relevance to each case, which was the subject of some discussion early in the trial between counsel for the plaintiff and myself, was whether persons entitled or awarded a refund should be required to return the filtration equipment. Any such return would, of course, be accompanied by an obligation on the defendant to bring the premises back to their original or acceptable condition. As noted earlier, there is no obligation under the FTA on a purchaser who cancels a contact sale agreement for services to return the goods the subject of the services. Where a refund is being ordered for reasons other than cancellation pursuant to the contact sale provisions, as in the case of these purchasers (with the possible exception of Mrs Mantrala) as a matter of fairness it may be appropriate to order the customer to return the equipment. This would reflect general law principles that the purchaser not be unjustly enriched by the termination of the agreement. The plaintiff proposes such a regime in respect of consumers other than those who have given evidence who seek a refund.
246 The conclusion I have come to in respect of the consumers in evidence is that return of the filtration equipment should be at their option. If they require the defendant to remove it, he must, and also remediate the premises. If they wish to keep it, they may. I consider this is appropriate because of the egregious nature of the misleading conduct of the defendant and his agents towards these consumers. The false representation that their tap water was harmful to health caused them all concern, and some considerable alarm. While that representation is found in this judgment to be false, the damage to their confidence in their water supply may not be easily dispelled, or satisfactorily remedied by any award of damages, which is sought only in modest amount. I consider in those circumstances they should be permitted to keep the filtration equipment if they wish. I turn now to the evidence in respect of each consumer. As set out in detail below, I am satisfied as required by s.158 that each has suffered loss and that it is fair to make the orders I propose.
247 The plaintiff on behalf of Mr Raminder Singh seeks a refund of the deposit of $300 Mr Singh paid. His evidence is that he feels taken advantage of, particularly as a newcomer to Australia, and annoyed that the terms and conditions were not made clear to him. He does not comment on whether or not he wishes to keep the filtration equipment. The defendant adduces no specific evidence in respect of Mr Raminder Singh, and, in any event, is not in a position to contradict his evidence given he did not cross examine him. I will order refund of $300 and $600 by way of general damages. I consider this sum to be a modest but appropriate recompense for his time and trouble in seeking refund, and compensation for the contraventions of the Act.
248 The plaintiff on behalf of Mr Kanwar Singh seeks refund of the deposit of $300, removal of the equipment (with consequent remediation of his premises) and damages. The tone of his evidence suggests a greater level of distress than that of Mr Raminder Singh, but it would be unsafe to reach this conclusion without oral evidence. Again, the defendant makes only the general submissions considered and rejected above in respect of Mr Kanwar Singh's case. I will order refund of $300 and $600 by way of general damages, on the same basis as in respect of Mr Raminder Singh.
249 On behalf of Mrs Mantrala the plaintiff seeks refund of her deposit of $380 and her application fee to VCAT of $36. Whether or not these, and any sum for general damages, should be ordered will depend on whether or not an order has been made at VCAT. If so, then that order would ordinarily prevent any order in respect of her claim by this Court. I will seek clarification from the plaintiff in this regard.
250 Mrs Hussein did not enter into an agreement with the defendant and so paid no deposit. The plaintiff seeks on her behalf damages only, and, if the filtration equipment is removed, remediation of the premises. The defendant does not seek return of the equipment and appeared to suggest that this should cancel any claim for damages.[119] I disagree. Damages should be awarded in my view for the anxiety and distress occasioned by the false representations, including the demonstrations, that her tap water was of poor quality. While the level of distress set out in Mrs Hussein's affidavit does appear greater from the page than in some other cases, I consider the better approach is to award the same amount by way of general damages in respect of each complainant. Accordingly, I will order the defendant to pay her $600 by way of general damages. Return of the equipment is, for the reasons set out earlier, at her option. In addition to those reasons, Mrs Hussein's case was one where the equipment was installed first, and she was told it was free and part of a government program. The defendant says he did not authorise his representative to say that it was government funded, but quite properly takes responsibility for the statement.[120] Accordingly, Mrs Hussein is at liberty to retain the equipment if she wishes. If she requires it to be removed, the defendant must remediate the property.
251 In the case of Mrs Richardson, the defendant asserts that he is "99 per cent sure" the money has been refunded to her.[121] He gives no corroborating evidence to this effect, and, more importantly, it appears to conflict with the accounts in her affidavit, and those of her son and husband, who corroborate hers. The deposit of $340 was paid by her son, Michael Feary. The defendant did not require Mrs Richardson or her son, Mr Feary, or husband to attend for cross examination to put this to them. In those circumstances, I do not accept his evidence that moneys paid have been refunded. The plaintiff seeks on behalf of the family the sum of $340, the deposit, to be repaid to Mr Feary, and $185.79, being three fortnightly payments of $61.93 paid by Mrs Richardson pursuant to a finance agreement. I will order repayment of these sums, subject to the plaintiff confirming that they remain outstanding. Such confirmation can be on affidavit by an official of Consumer Affairs Victoria dealing with all consumers on information and belief after enquiry of them. In addition, I will order payment of damages of $600 as in the other cases by way of compensation for the steps taken to cancel the agreement and payments and concern occasioned by the unfair nature of the agreement.
252 The defendant's case in respect of Ms Hanstock is that he has received no payment from her and her affidavit does not establish that the conduct of Mr Collins, his representative, caused her the stress and anxiety which lead her to seek assistance from therapists. He does not seek return of the equipment.[122] On that basis he resists any order for compensation. In my view, the affidavit is sufficient to establish a prima facie causal link between the conduct of Mr Collins, in particular his taking control of the situation without giving Ms Hanstock the statutory information that she could require him to leave and he could only stay an hour (as deposed to in paragraph 58 of her affidavit), and Ms Hanstock's consequent distress and need for medical assistance. If the defendant wished to challenge Ms Hanstock on this evidence, he should have required her to attend for cross examination and filed his evidence in answer or that of Mr Collins on affidavit. In the absence of such proper challenge, I accept Ms Hanstock's evidence. I will order payment of $156 by way of compensation for economic loss, and $600 by way of general damages. There was a suggestion on the last day of the trial that in fact some payments under the agreement had been charged to Ms Hanstock, although this was not set out in her affidavit.[123] Her Bendigo Bank statement was tendered to this effect as Exhibit P36. I give leave to the plaintiff to adduce further evidence in relation to any such payments and will consider that before orders are made. I consider all payments made should be repaid.
Proposed declaration that failure to pay refunds was misleading or deceptive
253 The plaintiff proposes a declaration, proposed declaration 1(g), to the effect that the defendant, whether trading as Australian Water Solutions, Australian Water and Solar, VicSafe Water, Solar Assist or Eco Assist, has engaged in misleading or deceptive conduct by failing to pay refunds in a timely manner to customers who had cancelled their service agreement within the cooling off period, or "otherwise lawfully rescinded their agreements." I will first consider this proposed declaration now in relation to the named consumers, whose agreements were all with Australian Water Solutions.
254 The first requirement of this declaration is a finding that the named consumers had either cancelled their agreements within the cooling off period, or otherwise had lawfully rescinded their agreements. It is only if I am satisfied of this, that it is necessary to consider whether the second element of the proposed declaration is established i.e. that failure to pay refunds to them in a timely manner was misleading and deceptive.
255 As set out earlier, on the evidence the only consumers who cancelled their agreements in accordance with the requirements of the contact sales provisions were Mr Kanwar Singh, who agreed not to require a refund, and Mrs Mantrala, who may have already received a refund through her VCAT proceedings. Accordingly, I do not consider there is a sufficient basis for the proposed declaration in respect of the consumers who have given evidence under its first limb, as the reference to cancellation within the cooling off period implies cancellation pursuant to the contact sales provision. I have found that the defendant engaged in misleading or deceptive conduct in respect of these consumers, by way of the representations in the sales material and the water quality demonstrations. The plaintiff did not, however, advance this as the basis on which they were entitled as a matter of right to refund, having "lawfully rescinded their agreements" within the second limb of the proposed declaration.
256 It is thus not necessary for me to consider whether the failure to pay refunds in a timely manner was also misleading and deceptive. The plaintiff's further submissions of 6 July 2012 refer me to previous authority by which judicial officers of this Court have found that refusal to pay refunds in a timely manner was misleading and deceptive. In my view, the conduct so held by Hansen J to be misleading or deceptive in Cousins v Merringtons Pty Ltd and anor[124] is distinguishable from this case, as in that case there was an explicit misleading representation made, that refunds could only be given if the original receipt was provided. There was no specific misleading representation identified in this case - what is relied upon is conduct, including silence as to when refunds would be paid.[125] There also appears to have been explicit misrepresentations made in the other case relied upon, Director of Consumer Affairs Victoria v Australian Tourism Centre Pty Ltd and anor[126] in which Daly AsJ held that failure to provide refunds in a timely manner is misleading or deceptive on the more general basis that where refund is required, failure to pay it "misrepresents to customers the nature of their legal rights and entitlements".[127]
257 Both the plaintiff's further submissions and the comments of Daly AsJ assume an entitlement to refund. The basis identified by the plaintiff in the further submissions is cancellation pursuant to the contact sale provisions. On my findings, that is not applicable. I will make orders for compensation including repayment to the named consumers pursuant to s. 158 because I consider those orders "fair", but the exercise of that power does not require a finding that they lawfully rescinded their agreements. There is no basis for an entitlement to refund asserted other than cancellation pursuant to the contact sales provisions. Accordingly, the factual basis for the conclusion by Daly AsJ, that of entitlement to refund, is not clear in this case.
258 For these reasons I do not consider proposed declaration 1(g) to be appropriate in respect of the purchasers who have given evidence. I will consider it in relation to purchasers generally below.
259 The plaintiff seeks orders that would have the effect of requiring the defendant to do the following in respect of his customers generally - to pay refunds in a timely manner, not restricted to agreements that are contact sales or for water filtration (proposed injunction 7(h)); not to enforce any service agreement in relation to water filtration where there is a breach either of the requirements for notification of cancellation rights for contact sales, or which is not clearly expressed (proposed injunction 7(l)); to notify all customers from whom he took payment in respect of a service agreement for water filtration that they are entitled to seek a refund, and to pay such refund on request (proposed order 8). The identified sources of power are s.149 (which confers power to grant injunctions restraining conduct) and s.149A (which confers power to make mandatory injunctions).
260 I set out the relevant portions of s.149A earlier. The relevant portions of s.149 provide as follows:
(1) The Minister, Director or any other person may apply to the Supreme Court, County Court or Magistrates' Court for the grant of an injunction restraining a person from engaging in conduct that constitutes -
(a) a contravention of any provision of this Act; or
(2) The Court may grant an injunction restraining a person from engaging in conduct of the kind referred to in paragraphs (a) to (e) of subsection (1) -
(a) if the Court is satisfied that the person is engaging in or has been engaging in conduct of that kind, whether or not it appears to the Court that the person intends to engage again or continue to engage in the conduct; or
(b) if it appears to the Court that, in the event that the injunction is not granted, it is likely that the person will engage in conduct of that kind, whether or not that person has previously engaged in conduct of that kind and whether or not there is an imminent danger of substantial damage to any person if the first-mentioned person engages in conduct of that kind; or
261 Thus, to grant an injunction pursuant to s.149 the Court must be satisfied that the defendant has either engaged in conduct that constitutes a contravention of any provision of the Act or is likely to do so. To grant an injunction pursuant to s.149A, which confers power to order refunds, and is the only identified source of power for requiring refunds on request to other consumers, the Court must be satisfied that the defendant has engaged in conduct that is a contravention of any provision of the Act. Should the proposed orders in respect of consumers generally be made?
Non payment of refunds when required in respect of other agreements
262 Proposed injunction 7(h), restraining the non payment of refunds in a timely manner, is not limited to service agreements for water filtration. There is evidence, in the form of two affidavits from conciliators employed in the Department of Consumer Affairs that consumers other than the consumers who have given evidence have complained to the Department about their dealings with the defendant, in particular in relation to the non payment of refunds, and not just in relation to agreements for water filtration.
263 Mr Joseph Krznaric, a conciliator employed by the plaintiff, deposes in his affidavit sworn 17 December 2010 that during the period February 2009 to January 2010 he attempted to conciliate five complaints between consumers and Australian Water Solutions and spoke to the defendant in that regard. The affidavit in fact sets out four complaints. He deposes that he is also aware that other complaints about Australian Water Solutions were received by the plaintiff, which were handled by different officers. The complaints he conciliated arose from a variety of transactions. The first was a complaint by a consumer who claimed to have been mislead as to the availability of a particular water tank size and wished to cancel the contract. After contact from Mr Krznaric in February 2009, the defendant agreed to collect the tanks and cancel the contract without penalty. The second complaint was by a consumer who had cancelled a contact sales agreement within the permitted cooling off period but had not been refunded her deposit. The subject matter of the contract is not stated. On 9 October 2009 Mr Krznaric spoke to the defendant, who in turn said he had spoken to his sales representative who would refund the deposit immediately. It took three further calls and eight months before that consumer advised she had received the refund of her $200 deposit.
264 The third complaint handled by Mr Krznaric was by a consumer who said he had failed to receive a promised government rebate from the purchase of solar panels. His contract with Australian Water Solutions was dated 11 June 2009 for nearly twelve thousand dollars. The defendant's initial response to the complaint made direct to him that the consumer had not received the rebate was that the rebate was not payable because installation commenced without prior approval of the rebate and that "We ALL missed the exactness of this pre-requirement". The defendant said he was pursuing this with the Minister "(a)lthough it is not the responsibility of AWS to guarantee this rebate". The defendant failed to respond to Mr Krznaric's email about this complaint dated 24 November 2009 and subsequent letter dated 8 December 2009.
265 The fourth complaint handled by Mr Krznaric related to failure to refund the deposit of $500 paid on a contact sales agreement for the installation of solar electricity. The agreement, which is exhibited, is dated 9 October 2009 in the sum of $14,115. Mr Krznaric contacted the defendant in relation to this complaint on 2 December 2009 and did not receive a reply.
266 Mr Wills, an officer in the service of the plaintiff, attempted to conciliate four complaints made by consumers against Australian Water Solutions in September and October 2009. All complaints related to a failure to refund deposits after a contact sales agreement was cancelled in the six months after the contract date. Mr Wills does not exhibit the contracts in question, but was of the view that the consumer was entitled to cancel within six months, which, as stated earlier, is the case where the contract fails to contain the necessary notice to purchaser and form to use to cancel. The significance of these matters for these proceedings is that Mr Wills deposes that he spoke to the defendant in person on 6 October 2009 in relation to the first three complaints and they discussed the obligations in relation to contact sales under the FTA. The defendant did not seek to cross examine Mr Wills in relation to his detailed account of the conversation, and accordingly I accept it.
267 In the absence of cross examination of these witnesses or evidence to the contrary from the defendant, I accept their accounts of their engagement with the defendant. In relation to complaints about non payment of refunds on termination (using a neutral word) of agreements, I accept that the defendant had not paid the requested refund in a timely manner. There is, however, insufficient evidence for me to be satisfied that these customers had lawfully rescinded their agreements, if that is said to be the basis for the proposed injunction under s.149A directed at customers of the defendant generally. The conciliators may have been of the opinion that the customers were entitled to refunds, and that may have been the case, but there is insufficient evidence of the agreements in question and the surrounding facts for the Court to reach that conclusion.
268 If this injunction is pressed, I will hear the parties further as to whether it should be made.
Service agreements for water filtration generally
269 Proposed declaration 1(g) (as to non payment of refunds being misleading or deceptive); proposed injunction 7(l) and proposed order 8 relate to service agreements for water filtration. As currently drafted, they would apply to any service agreement, whether or not a contact sale. As set out above, I do not consider the proposed declaration is justified on the evidence in relation to the consumers who have given evidence. The plaintiff also relies on the complaints recounted by Mr Wills and Mr Krznaric to justify this declaration. For the reasons set out above in relation to proposed injunction 7(h), I do not consider there is sufficient evidence for the Court to reach its own conclusion that the consumers whose complaints are there identified had cancelled their service agreements within the cooling off period, or otherwise lawfully rescinded them, which is the basis on which proposed declaration 1(g) is to be made. I do not consider that declaration should be made.
270 Proposed injunction 7(l) would restrain the defendant from seeking to enforce any service agreement for water filtration that does not comply with the contact sales provisions as to statutory notices or which was not clearly expressed. Proposed order 8 would require the defendant to notify every purchaser of a service agreement for water filtration that he or she may require a refund. The power to make these orders depends on a finding of contravention of the Act.
271 Dealing firstly with the proposed injunction, I have found that the service agreements in evidence contravened the Act because they were contact sales, and did not comply with the requirements of such agreements in various respects. Accordingly, they cannot be enforced. Should the defendant be restrained generally from enforcement of any service agreements, entered into by him as Australian Water Solutions or Australian Water & Solar? On his evidence, not all service agreements were entered into at customers' homes. Accordingly, not all may be contact sales. As to form, the defendant conceded in cross examination that the form of service agreement in evidence was used in "maybe 30" cases of a total of 300 on his database. He said that many of the 300 were internet sales, which may not be caught by the proposed injunction or proposed order 8 in any event as he used a different trading name for those sales. He did not say what other forms of agreement were used for sales.[128] I consider there is a basis for proposed injunction 7(l) on the basis of apprehended breach of the contact sale provisions if limited to the form of agreement in evidence, and where the sale was also a contact sale.
272 The proposed injunction as currently drawn would also prevent enforcement of any service agreements for lack of clarity and so breach of s.163. As noted, on the defendant's evidence, which was not contradicted, other forms of agreement were used in other cases. As they are not in evidence, the Court cannot reach any conclusion as to whether or not they breach s.163. If the agreement was a contact sale in the form in evidence, then the agreement is already caught by the first limb of the proposed injunction. It is unclear from the plaintiff's case on what basis an agreement that does not comply with s.163, if not a contact sale, would be unenforceable. Accordingly, I consider that reference to agreements that are not clearly expressed should be removed from proposed injunction 7(l).
273 Proposed order 8 would require a refund in every case. By parity of reasoning, if it is not appropriate to restrain enforcement in every case, then it is also not appropriate to order a refund without examination of the circumstances, such as the form of the agreement, whether or not it was a contact sale, whether or not the agreement was entered into on the basis of misleading or deceptive, or false, representations, and whether the consumer him or herself had any complaint about the agreement.
274 The consequence is that I do not consider that order 8 as currently drafted should be made. I do consider it appropriate and necessary that the defendant's customers in relation to water filtration be made aware of this judgment and its findings, as they may have similar rights to the consumers who have given evidence, but the order should alert them that they may have a right to refund, not that they necessarily do.
General considerations in relation to the relief sought
Sale of the water filtration business; utility of injunctive relief
275 The defendant's evidence is that he has now sold the water filtration business, being his database of customers and equipment, for $5000. His evidence is that he has informed customers by letter that a different business will now meet the obligations under their agreements.[129] Should this militate against any orders that he notify customers of their rights under a redrawn order 8 or any other proposed relief? I have considered this issue in relation to two matters. The first is whether the defendant is now in a position to respond to customers who seek refunds or other action in response to notification. The second is whether sale of the business, if that has indeed occurred, limits the utility of the proposed injunctive relief.
276 In relation to the first, my conclusion is that if sale of the business creates a difficulty for the defendant in responding appropriately to customers that is a matter for him to resolve. The defendant's evidence is that he did not obtain the consent of his customers to transfer their rights in this way. It is not possible as a matter of contract law to transfer obligations under a contract without the consent of the other party to the contract.[130] Accordingly, he remains personally liable for the obligations under the service agreements.
277 The second issue relates to the purpose of injunctive relief. If the business has been sold it may be unlikely that the offending conduct will be repeated, particularly where the injunction is narrowly drawn to reflect particular businesses. Restraining repetition of conduct is not the only basis on which injunctions may be granted, however. They may also be appropriate to mark the Court's disapproval of the conduct and to deter future breaches.[131] Given the egregious nature of the defendant's conduct as found in this judgment, and the evidence from Mr Krznaric and Mr Wills of other similar complaints, I consider that injunctions are warranted on this basis. I also take into account that on the evidence of the plaintiff's conciliators, Messrs Krznaric and Wills, the defendant was on clear notice of the contact sales provisions of the FTA, and that his sales practice contravened those provisions in the view of those conciliators, from October 2009. Despite this notice, the defendant did not adapt his practice to comply. That suggests that injunctive relief may be required to make the necessity for compliance clear. I set out that evidence below. I also note that in any event the defendant's evidence of a sale was not corroborated and was not very credible. The letter to which he refers is not in evidence, and he was unable to give the name or other details of the new business accurately. I would not find on the basis of his evidence alone that he had in fact sold the business.
278 Mr Wills deposes that in his conversation with the defendant on 6 October 2009 he told the defendant that the cooling off period in the case of a contact sales agreement is extended to six months where the agreement does not contain notice of the ten day cooling off period; that the agreements in question in the complaints he was conciliating did not give the necessary notice; and accordingly the consumers could cancel and were entitled to a full refund. The defendant raised two concerns: he asked why he should give a full refund when he had undertaken work and incurred expenses; and disputed that the agreements were contact sales agreements because the attendance at the consumers' homes was not unsolicited. Mr Wills addressed both concerns, and sent the defendant information about the contact sales provisions, by email dated 6 October 2009. Mr Wills provided both a summary of the law, and copies of the relevant sections of the Act. He suggested in the email that "your business review its procedures for making agreements with customers in the light of this information, to prevent further complaints of this nature being made." Mr Wills did not obtain a reply indicating whether or not the email had been read, but given that he had spoken to the defendant personally I find that by early October 2009 the defendant was on notice that his agreements may not comply with the contact sales provisions and that the two specific concerns he raised were no answer. Mr Wills was unable despite efforts to contact the defendant again by telephone, but reforwarded his email of 6 October 2009 to the defendant on 19 October 2009 and referred to a fourth complaint of the same nature.
279 I set out Mr Krznaric's evidence as to complaints earlier. The particular significance of his evidence at this point is that Mr Krznaric advised the defendant in his email of 2 December 2009 that in his view the contract did not comply with s.62 of the FTA in relation to the customer's cooling off rights and rights to cancel the agreement. Mr Krznaric attached sections 59-67 of the Act, together with the relevant schedules setting out the form of notice to the purchaser of the cooling off period and right to cancel. He received an automated reply indicating that his email to the defendant had been opened. Thus by October 2009 the defendant had heard from one conciliator that his sales practices did not comply with the contact sales provisions, and by December 2009 two, yet he continued, at least in respect of the sales in evidence in these proceedings, to breach those provisions.
Limitations of relief to Victoria or particular businesses
280 I now consider the question of whether relief should be limited by particular businesses operated by the defendant. This was one of the defendant's concerns. He submitted that it would not be appropriate to mark him generally as having contravened the Act if the conduct in question was limited, as he claimed, to only a small part of his business activities. He also claimed that as at the conclusion of the trial he no longer owned or operated the trading names and websites Solar Assist and Solar Spark Electrical. A related concern was his strong objection to any orders with interstate operation.
281 Proposed declaration 1 is in my view appropriately limited to the named trading names. There is evidence that the defendant contravened the Act under each of those trading names. Proposed declaration 2 (which is required to be redrafted in accordance with this judgment) is not limited by trading name, but is limited by product. The identified products, other than water filtration, were the subject of one of the offending survey types in relation to false claims of sponsorship, government association and public purpose, accordingly I consider their inclusion to be appropriate. Similarly, proposed declarations 3-6, and the order for notification proposed as 8 are, or will be when redrafted in accordance with this judgment, be appropriately limited to Australian Water Solutions or Australian Water & Solar.
282 The issue really arises in relation to the injunctive relief proposed by order 7 and the corrective publication proposed by order 13. The plaintiff seeks in her closing submissions dated 27 June 2011 that orders be made on an Australia wide basis because the defendant's websites operated without state limitation; there is evidence that he conducted similar business in Queensland; his service agreements give a Queensland and New South Wales address as well as a Victorian one; and some other documents in use in Victoria in his businesses also suggest an interstate operation. There is no detailed evidence, other than that of Ms Price which I set out below, as to the nature of any interstate operation. The plaintiff relies on s.6 of the FTA as the basis of which orders with interstate operation may be made. That section provided:
(2) This Act applies outside Victoria to the full extent of the extra-territorial legislative power of the Parliament.
283 Ms Christine Price of the Queensland Office of Fair Trading sets out in her affidavit a conversation with Mr Palamara on 22 September 2010 in which he admitted distributing what she described as pamphlets on the Gold Coast headed "Annual Water Quality Review". He said they had been distributed about three weeks ago and would be distributed again in about three weeks. The internal contents of the pamphlet exhibited to her affidavit are identical to those received by Ms Middleton and Mr Riters in Cranbourne in April 2010, save that one of the pictures of the filtration system is slightly different, but the back page does not contain any government logos, and indeed the only attribution is the statement in very small type "Distributed by AWS Ph 1300 760 647". This is the same 1300 number as given to consumers in Victoria.
284 The survey makes the same opening statement as in the surveys distributed in Cranbourne i.e. in another state and so a totally different water distribution network "IMPORTANT NOTICE: Tap water supplied in this area contains heavy metals & carcinogenic (cancer causing) pesticides, herbicides & insecticides-including dieldrin, DDT, chlordane, heptachlor, atrazine, lindane, mercury, lead, aluminium, chlorine and over 50 different types of chemicals" (emphasis added) save that in the Victorian surveys the number of chemicals is described as "up to 50 different types of chemicals".
285 When told by Ms Price that her Office had concerns that the representations made in the pamphlets about water quality may be misleading, Mr Palamara said he could substantiate all the representations, that she should contact the water suppliers and get information from them, and "(t)his has all been dealt with in Victoria. I have spoken to Consumer Affairs in Victoria and it has all been sorted out." The only change apparent in the survey following his discussions with Mr Foyster in July 2010 i.e. the month before distribution, would appear to be the removal of government logos.
286 Ms Price also records that she discussed with Mr Palamara a complaint made by a consumer in Queensland about the purchase of solar panels from Australian Water & Solar. Ms Price ascertained from government records that Australian Water & Solar was registered as a business name in Queensland in July 2010 with owner Tony Vincent. The defendant confirmed he had used that name "in the past", that he was the owner of Australian Water & Solar and that his business had had about 20 installations of solar panels on the Gold Coast. The affidavit does not set out the details of the complaint or the conversation in relation to it.
287 On the basis of Ms Price's evidence I find that the defendant did operate at least on the Gold Coast, as well as in Victoria. As noted earlier, if there is water quality legislation in Queensland it was not part of the plaintiff's case at trial, and nor was there any evidence as to actual water quality in the area of distribution of the survey there. It is entirely possible that the representations made in the survey distributed on the Gold Coast are misleading, but in the absence of evidence I do not consider a finding to that effect to be warranted.
288 Accordingly, I consider the injunctions in proposed order 7 which relate to water quality and would as currently drawn have interstate effect, being (g), (i) and (j), should be redrawn to be limited to Victoria. I consider the injunctions may extend beyond the distribution areas of South East Water Limited and Goulburn Valley Water, unlike the declarations, because they turn on the existence of the state wide legislation, rather than a comparison between the representation and evidence of actual water quality in a particular area.
289 The injunctions in proposed order 7 which relate to demonstrated inappropriate use of government logos, or claims of association with government or that activity is for a public purpose, are appropriately drawn to be Australia wide and unlimited by business, but some need to be redrawn to prohibit only false statements, for example by the addition of words such as "if that is not the case". These are proposed injunctions 7(d) and (f). I consider proposed injunction 7(k) is too broad and must be limited to water filtration.
290 I turn now to the reach of proposed order 13 for corrective publication on various websites. This order as drafted would require the defendant to place corrective material not just on the ozwater and ecoassist websites, but also solarassist and solarsparkelectrical. The contravention of the Act in relation to Solar Assist and the related website is misuse of the Commonwealth Coat of Arms and other indications of links to government such as hyperlinks. The evidence of contravention by the defendant in the guise of Solar Spark Electrical is scant. The defendant concedes that the account details of that business were used for collection of monies from Ms Hanstock, although her agreement was with Australian Water Solutions. The defendant says this was an error.[132] There is also evidence that the defendant used his email address at that website on 10 June 2011 for the purpose of answering complaints directed to him there by email and letter of 8 June 2011 from Consumer Affairs Victoria in relation to the non supply of solar panel products in 24 cases. These complaints do not form the subject of these proceedings and the plaintiff does not seek any findings of contravention in respect of them.[133]
291 The defendant does not deny that at one time he was the registered proprietor in Victoria of the business name "Solar Assist Australia" and that that business was, according to a search on 22 June 2011[134], the registrant of a website www.solarassist.com.au . He said in evidence on 27 June 2011 that the business registration had been cancelled and the website transferred to Charles Zammit.[135] The defendant's evidence is that he had asked his accountants to deregister the business name two or three months before, but he had not completed the necessary online request at that time. He asked someone to submit the request on his behalf on the Monday on which the trial commenced, which was backdated to the date the business ceased trading. He later conceded that the request was lodged by his former wife, Ms Merryl Villafuerte. The plaintiff obtained an updated business name search on 27 June 2011 which shows that the business name was deregistered that day, by virtue of an online request made 24 June 2011. The request to cease the business name states that the business ceased on 2 May 2010.[136]
292 There is disputed evidence as to whether or not the defendant was or remained the owner of the business name Solar Spark Electrical and the website www.solarsparkelectrical.com.au. The plaintiff obtained a business name search on the last day of the trial, 27 June 2011, which showed the defendant, under the name by which he acknowledges he is also known, Tony Vincent, as registered owner of the business together with Ms Meryl Villafuerte.[137] Notwithstanding this, the defendant claimed he had evidence by email from Consumer Affairs Victoria that the business was deregistered[138], but did not produce that evidence. He said that he took the same action in relation to registration of Solar Spark Electrical as he did in relation to Solar Assist to cause it to be deregistered[139]. To counsel for the plaintiff he conceded that as at 10 June 2011, the date of his email to Inspector Foyster referred to above, he owned the Victorian distributorship under that name, but said he ceased to do so by 15 or 16 June.[140] The defendant, under the name Tony Vincent, is shown as the registrant of the website www.solarsparkelectrical.com.au as at 22 June 2011.[141] The print out of that website by Inspector Foyster on 16 June 2011 and exhibited to his affidavit of 17 June 2011 states that it operates in Melbourne, Sydney and Adelaide but does not reveal any connection to the defendant.
293 Having regard to the limited evidence of use of the Solar Spark Electrical trading name in the conduct the subject of these proceedings, I do not consider the defendant should be required to place any corrective information on the website of that name. It is unnecessary for me to make any finding as to when or if the defendant ceased to be the owner of the business name. I note that the proposed corrective publication in written form does not refer to the defendant trading as Solar Spark Electrical. I will return to the content of that corrective publication shortly.
294 Solar Assist is referred to in the proposed corrective publication and the unauthorised use of government insignia, which I find was present on the solarassist website, forms part of the conduct there described. I consider inclusion of Solar Assist in the written publication to be appropriate. The fact that the defendant is no longer the registered proprietor does not make publication of his past contraventions inappropriate. The solarassist website as at 16 June 2011 had, however, on the basis of the print outs exhibited to Inspector Foyster's affidavit of 17 June 2011, changed substantially in form to resemble the solarsparkelectrical website. It no longer contained the hyperlink to the Commonwealth website evident on 15 June 2011, nor the other unauthorised Commonwealth attributions present at earlier times. I do not consider there is justification for requiring the defendant to place a corrective video on that website.
295 The consequence is that any corrective video should be limited to the ozwater and ecoassist websites. I will consider the content shortly. The proposed corrective publication by newspaper is proposed not just in Victoria but also the Gold Coast. If the publication is redrawn to reflect this judgment the findings will be limited to Victoria. Nevertheless I consider there is utility and necessity for publication on the Gold Coast as well, as the defendant did there undertake similar activities to those that I have found were contraventions of the Victorian FTA. The evidence does not allow me to make findings of contravention in relation to his Queensland activities, but it does suggest that it would be appropriate to put consumers there on notice.
296 I turn now to the content of the video. The plaintiff supplied at the commencement of the trial a proposed corrective video. I accept the proposition that it may be appropriate to require the defendant to publish corrective information on the ozwater or ecoassist websites as well as the plaintiff publishing (at the defendant's cost) corrective information in newspapers. The defendant has used those websites for his businesses, in relation to water filtration as a means of interacting with customers and making sales, and in relation to ecoassist by inclusion of that website name on the environmental surveys. Publication of information on such a website will thus better ensure correction of misleading information because it is targeted at the defendant's actual or potential customers, and not just the public at large.
297 I also accept that it may be appropriate for such corrective information to be in the form of a video, rather than static written information. Videos are now commonly used on websites to engage interest, presumably because they are more likely to do so than static information.
298 I do not, however, consider the content of the proposed corrective video to be appropriate for the following reasons. First, there is no evidence of misleading information on the websites themselves other than the misuse of government logos or hyperlinks. This is not necessarily fatal- I accept that one purpose of the proposed video is appropriately to inform customers who may contact the website for other reasons, and may have been mislead by the content of the sales presentation or demonstrations of water quality. My main concerns are that the proposed video is too emotive and persuasive in tone and content, and that it focuses inappropriately on one area found to be misleading, the electrolysis test, without addressing in a balanced way the full range of conduct found to contravene the Act. For example, there is no reference at all to contravention of the contact sales provisions. Further, the proposed video may go beyond the evidence in these proceedings, for example by giving instances of "good" minerals that may be found in tap water, and by comparative application of electrolysis to "expensive bottled water" and "their filtered water" with salt added.
299 A corrective video sanctioned by Court order should, in my view, be factual, fairly represent the judgment and so indicate in a balanced way the full range of conduct found to contravene the Act, and be authoritative in tone rather than persuasive. It may be that the proposed video seeks to address the impugned demonstration most effectively by replicating it, accompanied by explanation as to why it is misleading. While this is understandable, the devices used to give the impression of a scientific experiment, and the colourful language and gestures used, such as "money down the drain", "take the sales pitch with a pinch of salt", and the toast at the end, in my view are too much like persuasive advertising, and too little like authoritative statement. The correction should in my view rise above the conduct it seeks to correct, not descend to the same level.
300 I will give further consideration to another draft video if the plaintiff pursues this order. I agree with the defendant that the content of the video must be approved by the Court. There is no evidence as to the cost of preparing the video, but if that is considerable the plaintiff may wish to give consideration as to whether it is warranted. If the cost of the proposed video and any further proposed video is included in any costs application, in my view there should be evidence of that cost. I otherwise accept the proposed order that the defendant bear the cost of publication of corrective information.
301 The plaintiff is required to redraft the orders it seeks in accordance with this judgment, and the proceedings will be adjourned for that purpose. I will hear the parties as to costs on that occasion.
[1] Transcript pages 4, line 129, and 5, line 130.
[3] Transcript page 402 line 19- page 403 line 2.
[9] Transcript page 250, lines 4-6, and page 274 lines 8-13
[10] Transcript page 273, lines 4-12 and page 462, line 26 to page 463 line 10 and following.
[15] Transcript page 274, lines 13-19 and page 275 lines 1-7
[22] See, for example, transcript pages 35, lines 29-31.
[23] Transcript page 29, lines 15-20 and page 35, lines 22-23.
[24] Transcript page 6 line 26-page 7 line 3.
[25] Statement dated 26 June 2011 tendered 27 June 2011 and treated as submission.
[29] Section 14(2) of the Interpretation of Legislation Act 1958 (Vic).
[30] Concrete Constructions (NSW) Pty Ltd v Nelson [1990] HCA 17; (1990) 169 CLR 594
[31] See the cases cited by the plaintiff in her Outline of Argument for the Trial at [56](r).
[33] Operation Smile, Warren CJ and Cavanough AJA at [18]-[19].
[37] Nettle JA, with whom Warren CJ and Cavanough AJA agreed, at [66].
[40] Murphy v Farmer [1988] HCA 31; (1988) 165 CLR 19
[41] SF-20 to Mr Foyster's affidavit of 30 September 2010, at pages 4-6
[44] South East Water Annual Drinking Water Quality Report 2008/09, being exhibit AM-2 to the affidavit of Anthea McManemin sworn 28 September 2010, at page 11.
[45] Affidavit of Peter William Rush, sworn 30 March 2011.
[46] Transcript page 256, lines 1-5, also page 507 and pages 514-517
[47] Order 1(a)(i) of the consent orders made by Justice Osborn on 1 December 2010.
[56] Ibid, SF-20, page 24 line 14-page 25 line 15.
[58] Transcript page 509 line 24 to page 512 line 28
[60] Ibid, [47] and [48] and SF-21 page 7.
[61] Transcript page 418 line 19-page 420 line 14
[63] Transcript page 205 line 27-page 206 line 206
[66] Transcript page 254 and Exhibit D1. See also transcript pages 281-283.
[67] Transcript pages 256-257, and page 268
[68] Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191.
[69] Interview transcribed as SF-20 to Inspector Foyster's affidavit of 30 September 2010 at page 24, line 34
[73] Assembly, Hansard, Thursday 10 April 2003, page 981.
[75] Pages 31-32 of the 2008-2009 Report, which is AM-2 to her affidavit and pages 30- 31 to her draft 2009-2010 Report, which is AM-3.
[76] Ibid, pages 31 and 30 respectively.
[77] Affidavit sworn 28 September 2010, at [19].
[78] Affidavit of Nicholas James Bray affirmed 6 April 2011, at [18].
[79] Statement of Leon Palamara 26/6/2011 at [5].
[80] In her Further Written Submissions dated 14 July 2011, the plaintiff refers to comparable drinking water legislation in other states, but this did not form part of her case at trial.
[82] Affidavit of Shane Foyster, sworn 30 September 2010, at [31]
[84] Transcript pages 217 and following.
[86] Ibid, SF-20, page 9 line 22 and page 11, line 10.
[90] Transcript pages 220, 258 lines 24-26, 348-349
[98] Page 1 of his expert report, being KJM-1 to his affidavit sworn 28 March 2011.
[101] Expert report, [3.1]-[3.8] and [13.2].
[104] Quotes are from paragraphs 1.6 and 1.7 of his expert report.
[105] Expert report, [4.1], [6.1] and [17.1].
[108] Transcript pages 449-450, also 451
[110] In evidence in chief, transcript page 201
[111] SF-20 to Mr Foyster's affidavit of 30 September 2010, at pages 2-3
[112] Statement of Leon Palamara 16/6/2011 at [22].
[113] Transcript page 201, in chief, and page 406 in cross examination.
[117] Cousins v Merringtons Pty Ltd and anor (No.2) [2008] VSC 340, at [52]-[53]
[120] Transcript page 305, lines 17-21
[121] Transcript page 328, line 16; page 330, line 27; page 332, line 19
[122] Transcript pages 289, 297-299, and 313-315.
[125] Plaintiff's further submissions dated 6 July 2012, at [16]-[20]
[126] [2010] VSC 571, see [99]-that customers had to provide a written request and reasons to obtain a refund
[128] Transcript page 406 (re internet sales); 408 (this agreement not used with every customer)
[130] Seddon and Ellinghaus, Cheshire and Fifoot's Law of Contract, 9th Australian edition at 8.48.
[131] Director of Consumer Affairs Victoria v Midas Trading (Australia) Pty Ltd [2009] VSC 141 at [72]
[134] PJH-1 to the affidavit of Peter James Hiland, sworn 22 June 2011.
[135] Transcript page 466, lines 8-28.
[141] Affidavit of Peter James Hiland sworn 22 June 2011
Director of Consumer Affairs Victoria
Palamara
(1990) 169 CLR 594
(1988) 165 CLR 19
(1982) 149 CLR 191