Plaintiff v Defendant

Plaintiff v Defendant - [2010] VSC 67 - VSC 2010 case summary — Zoe

[211]

1. Those definitions of agency that take the principal and agent relationship itself as their particular focus: emphasise that that relationship "can only be established by the consent of the principal and the agent".

2. The consents so given need not necessarily be to a relationship that the parties understand, or even accept, to be that of principal and agent. It is sufficient if "they have agreed to what amounts in law to such a relationship"; notwithstanding that they may have "artfully disguised" it by express disclaimers.

3. It is legitimate for parties to avoid the "unwanted consequences" of a particular category of legal relationship by seeking to cast it in a form that takes it outside that category of relationship. But whether or not they are successful in achieving that end does not depend simply upon whether, in an express provision of their agreement, they attribute or deny to their relationship a particular legal character - be this, for example, employer and employee; principal and principal or principal and agent or partners. The parties cannot by the mere device of labelling, no matter how genuinely intentioned, either confer a particular legal character on a relationship that it does not possess or deny it a character that it does possess.

4. Save where an express labelling provision is shown to be a sham, the provision itself (as a manifestation of the parties' intent) must be given its proper weight in relation to the rest of their agreement and such other relevant circumstances as evidence the true character of their relationship. This may lead to its being disregarded entirely; or to its being given full force and effect. And such will depend upon whether, given the actual incidents and content of the relationship (that is, "the factual relation") to which the parties have consented, they have consented "to a state of fact upon which the law imposes the consequences which result from agency".

5. Though there is no uniformly agreed definition of agency; the two whose authoritative character has resulted in their wide citation are those of the Restatement, Second, Agency, s1 and of Bowstead and Reynolds, above, 1-001 (the latter being based upon the Restatement provision). The Restatement's definition is that:

s1 Agency is the fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act.

I would note in passing that the definition proposed in the Restatement, Third, Agency, Tentative Draft No 1, s1.01 proposes no material departure from the above. Bowstead and Reynolds' definition is that:

Agency is the fiduciary relationship which exists between two persons, one of whom expressly or impliedly consents that the other should act on his behalf so as to affect his relations with third parties, and the other of whom similarly consents so to act or so acts.

The necessary consents apart, the required characteristics of the relation are that (a) one party acts on the other's behalf, but (b) subject to that other's control or direction.

6. The second of the above characteristics (control or direction) does not appear to figure prominently as a decisive indicator of agency in common law case law save in two settings. The first is where it is contended that a company is an agent of its parent company, shareholders, or of particular officers because of the control it or they exercise over it. Here, and to accommodate the perceived demands of the principle established in Salomon v Salomon & Co that a company is a legal person separate from its parent, officers and shareholders, the control characteristic has had to undergo a degree of refinement which it is not relevant to explore in this proceeding. The second setting in which resort has been had to the control characteristic is where a party that is expressed to stand in the relation of independent contractor to another is claimed as well to be the agent of that other. The two relationships are not mutually exclusive. Though "[c]ontrol by itself is insufficient to establish agency" - the "acting on behalf of" or "representative" characteristic must be able to be discerned in the factual relation of the parties - where that characteristic can properly be inferred in circumstances in which the alleged principal exercises, or is entitled to exercise, a significant degree of control over the contractor's performance of its services (and in particular over contracts entered into), the contractor is apt in consequence to be characterised as an agent. It probably is the case that the control exercisable by one party can in some settings itself bear on the determination whether the other acts on its own account or on behalf of the former when dealing with third parties. (Citations omitted). (My emphasis)[147]

[337]

Without in any way limiting the matters to which the court may have regard for the purpose of determining whether a corporation or a person (the supplier ) has contravened subsection (1) or (2) in connection with the supply or possible supply of goods or services to a person or a corporation (the business consumer ), the court may have regard to:

(a) the relative strengths of the bargaining positions of the supplier and the business consumer; and

(b) whether, as a result of conduct engaged in by the supplier, the business consumer was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the supplier; and

(c) whether the business consumer was able to understand any documents relating to the supply or possible supply of the goods or services; and

(d) whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the business consumer or a person acting on behalf of the business consumer by the supplier or a person acting on behalf of the supplier in relation to the supply or possible supply of the goods or services; and

(e) the amount for which, and the circumstances under which, the business consumer could have acquired identical or equivalent goods or services from a person other than the supplier; and

(f) the extent to which the supplier's conduct towards the business consumer was consistent with the supplier's conduct in similar transactions between the supplier and other like business consumers; and

(g) the requirements of any applicable industry code; and

(h) the requirements of any other industry code, if the business consumer acted on the reasonable belief that the supplier would comply with that code; and

(i) the extent to which the supplier unreasonably failed to disclose to the business consumer:

(i) any intended conduct of the supplier that might affect the interests of the business consumer; and

(ii) any risks to the business consumer arising from the supplier's intended conduct (being risks that the supplier should have foreseen would not be apparent to the business consumer); and

(j) the extent to which the supplier was willing to negotiate the terms and conditions of any contract for supply of the goods or services with the business consumer; and

(ja) whether the supplier has a contractual right to vary unilaterally a term or condition of a contract between the supplier and the business consumer for the supply of the goods or services; and

(k) the extent to which the supplier and the business consumer acted in good faith.

[346]

In Blomley v Ryan, Fullagar J, after pointing out that the circumstances of disability or disadvantage that can be involved in unconscionable conduct are of great variety and are difficult to classify, gave, as examples, 'poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary.' The common characteristic of such circumstances is that they place one party at a serious disadvantage in dealing with the other.

In the present case, French J said that the lessees suffered from a 'situational' as distinct from a 'constitutional' disadvantage, in that it did not stem from any inherent infirmity or weakness or deficiency. That idea was developed somewhat in a joint judgment, to which French J was a party, in Australian Competition and Consumer Commission v Samton Holdings Pty Ltd, where it was said that, under the rubric of unconscionable conduct, equity will set aside a contract or disposition resulting from the knowing exploitation by one party of the special disadvantage of another, and then it was said:

'The special disadvantage may be constitutional, deriving from age, illness, poverty, inexperience or lack of education: Commercial Bank of Australia Ltd v Amadio. Or it may be situational, deriving from particular features of a relationship between actors in the transaction such as the emotional dependence of one on the other: Louth v Diprose; Bridgewater v Leahy'.

While, with respect to those who think otherwise, I would not assign the facts of Bridgewater v Leahy to such a category, the reference to emotional dependence of the kind illustrated by Louth v Diprose as a form of special disadvantage described as 'situational' rather than 'constitutional' is understandable and acceptable, provided that such descriptions do not take on a life of their own, in substitution for the language of the statute, and the content of the law to which it refers. There is a risk that categories, adopted as a convenient method of exposition of an underlying principle, might be misunderstood, and come to supplant the principle. The stream of judicial exposition of principle cannot rise above the source; and there is nothing to suggest that French J intended that it should. A problem is that the words 'situation' and 'disadvantage' have ordinary meanings which, in combination, extend far beyond the bounds of the law referred to in s 51AA; and, it may be added, far beyond the bounds of what was explained to Parliament as the purpose of the section.(citations omitted) [212]

[350]

Section 51AC was introduced into Pt IV of the TPA by the Trade Practices Amendment (Fair Trading) Act 1998 (Cth). It came into effect on 1 July 1998. Sections 51AA and 51AB were already in the TPA as at 1998.

Subsections (3), (4), (5) and (6) set out statutory guidance as to the factors to which the court can and cannot have regard for the purposes of determining whether a corporation has contravened either subs (1) or (2) of s 51AC. The list of factors set out in those sub-paragraphs to which the court is permitted to have regard is not exhaustive.

...

There is a body of authority in this court which establishes the following propositions:

(a) The scope of s 51AC is wider than that of s 51AA. The meaning of unconscionable for the purposes of s 51AC is not limited to the meaning of the word according to established principles of common law and equity.

(b) The ordinary or dictionary meaning of unconscionable, which involves notions of serious misconduct or something which is clearly unfair or unreasonable, is picked up by the use of the word in s 51AC. When used in that section, the expression requires that the actions of the alleged contravenor show no regard for conscience, and be irreconcilable with what is right or reasonable. Inevitably the expression imports a pejorative moral judgment.

(c) Normally, some moral fault or moral responsibility would be involved. This would not ordinarily be present if the critical actions are merely negligent. There would ordinarily need to be a deliberate (in the sense of intentional) act or at least a reckless act.

The above statements of principle provide useful guidance as to the content of the concept of unconscionability or unconscionable when used in s 51AC of the TPA. Of necessity, the authorities to which I have referred do not prescribe a precise definition which would be able to be applied to every set of circumstances presented to the court for consideration. The application of the meaning accorded to the concept will always be a matter of judgment in every case and will depend upon a careful consideration of the circumstances of each case.

It must also be remembered that, as is the case with other sections of the TPA contained in Pts IVA, IVB and V, s 51AC establishes a norm of conduct. Failure to observe that norm has consequences provided elsewhere in the Act. (Citations omitted). [214]

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Cases Cited (35)