Consideration - does s 51AF exclude the operation of s 73?
71 The issue raised by the appeal is essentially one of statutory interpretation. The question for the Court is the manner in which effect is to be given to the legislative intention evinced, in particular, in ss 51AF and 73 of the TPA and, if those provisions are inconsistent in their effect, the way in which that inconsistency is to be resolved.
72 In Project Blue Sky, the plurality said (at 381-382 [69]-[71]):
The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined "by reference to the language of the instrument viewed as a whole". … Thus, the process of construction must always begin by examining the context of the provision that is being construed.
A legislative instrument must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals. Where conflict appears to arise from the language of particular provisions, the conflict must be alleviated, so far as possible, by adjusting the meaning of the competing provisions to achieve that result which will best give effect to the purpose and language of those provisions while maintaining the unity of all the statutory provisions. Reconciling conflicting provisions will often require the court "to determine which is the leading provision and which the subordinate provision, and which must give way to the other". Only by determining the hierarchy of the provisions will it be possible in many cases to give each provision the meaning which best gives effect to its purpose and language while maintaining the unity of the statutory scheme.
Furthermore, a court construing a statutory provision must strive to give meaning to every word of the provision. …
(Citations omitted)
73 More recent decisions of the High Court have emphasised the importance of regard to the text of the statute in question, in statutory construction. For instance, in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) [2009] HCA 41; 239 CLR 27 at 46-47 [47], Hayne, Heydon, Crennan and Kiefel JJ said:
This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy.
(Citations omitted)
74 In Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; 293 ALR 257 at 268-269 [39], French CJ, Hayne, Crennan, Bell and Gageler JJ said:
"This court has stated on many occasions that the task of statutory construction must begin with a consideration of the [statutory] text". [Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27; 260 ALR 1: [2009] HCA 41 at [47]]. So must the task of statutory construction end. The statutory text must be considered in its context. That context includes legislative history and extrinsic materials. Understanding context has utility if, and in so far as, it assists in fixing the meaning of the statutory text. Legislative history and extrinsic materials cannot displace the meaning of the statutory text. Nor is their examination an end in itself.
75 The place of the context and purpose of a statute and their relationship with its text has also been the subject of detailed consideration by the High Court since 1990: see the cases referred to in Wilson v State Rail Authority of New South Wales [2010] NSWCA 198; 78 NSWLR 704 at 707-710 [12]-[14]. Often, the relationship between context (including pre-enactment history), purpose and text will be illuminated by the subject matter of the statute, as well as by the approach to expression by the drafter. Statutes drafted in broad simple language that set a principled framework for a well-known body of law may well be approached with an eye to context, and especially pre-existing law. On the other hand, in legislation that is closely structured and finely worded, the importance of the text may be paramount: Joffe v The Queen; Stromer v The Queen [2012] NSWCCA 277; 82 NSWLR 510 at 518 [36]. Nevertheless, even in closely structured and finely worded legislation such as the TPA and ASIC Act, context and purpose may be important. Nothing in Alcan or Consolidated Media Holdings requires a decision about the clarity of meaning of text without reference to context and purpose. What was said in CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408; Newcastle City Council v GIO General Ltd (1997) 191 CLR 85 at 99; Network Ten Pty Ltd v TCN Channel Nine Pty Ltd [2004] HCA 14; 218 CLR 273 at 280-281 [10]-[11] and in the other High Court cases cited in Wilson at [12]-[14] remains binding authority.
76 Here, both the appellants and the respondents had recourse to context and purpose to assist in the process of ascribing meaning to the words in question.
77 In the present context, this means that the Court should seek to ascertain the meaning of ss 51AF and 73 by having regard, primarily, to the text but also to the context and purpose of these provisions, and should, if possible, adopt a construction which will give them a harmonious effect. The principle emphasised in Project Blue Sky that a court should strive to give meaning to every word in a statutory provision is also important in the resolution of these appeals.
78 The inclusion in s 73(1) of the TPA of a breach of the warranty implied by s 12ED of the ASIC Act as a circumstance which, on satisfaction of its other conditions, will give rise to the liability of a linked credit provider, can be taken to be an express indication of the legislative intention that s 73 was intended to operate in circumstances involving the supply of financial services. The question seems, therefore, to be whether that legislative intention has been negated (perhaps unintentionally) by the terms of s 51AF(1).
79 The following observations may be made concerning the text of s 51AF(1).
80 First, it provides that Pt V of the TPA does not apply to the supply, or possible supply, of services that are financial services. Effect has to be given to the words "the supply, or possible supply". They appear to be words of limitation with the effect that subs (1) is not to be read as though it provided that Pt V does not apply to financial services generally or in any respect at all. The nouns "supply or possible supply" seem to connote the activity of providing financial services so that Pt V of the TPA has no application to that activity, as distinct from precluding it having application to financial services generally and in all respects.
81 The heading to s 51AF provides "Part does not apply to financial services". This could be regarded as an indication that s 51AF is not limited in the way just suggested. Prior to the passing of the Acts Interpretation Amendment Act 2011 (No 46 of 2011) (Cth), s 13 of the Acts Interpretation Act 1901 (Cth) provided that no heading to a section shall be taken to be part of the Act. Leaving aside the effect of s 15AB of the Acts Interpretation Act, prior to 2011, the section heading had no role to play in construction of the Act. The replacement in 2011 of s 13 by the current provision means that headings to sections are part of the Act. Section 13 is now in the following terms:
13 Material that is part of an Act
(1) All material from and including the first section of an Act to the end of:
(a) if there are no Schedules to the Act - the last section of the Act; or
(b) if there are one or more Schedules to the Act - the last Schedule to the Act;
is part of the Act.
(2) The following are also part of an Act:
(a) the long title of the Act;
(b) any Preamble to the Act;
(c) the enacting words for the Act;
(d) any heading to a Chapter, Part, Division or Subdivision appearing before the first section of the Act.
82 Nevertheless, the section heading is just that - a heading. The text of the provision is crucial.
83 The second matter to note concerning the text of s 51AF is that s 51AF(1) does not contain a prepositional clause such as "in relation to" or "in respect of". It does not, for example, provide that Pt V does not apply "in relation to financial services" or "in respect of the supply, or possible supply, of financial services". Use of such prepositional clauses is a recognised drafting technique to indicate a wide relationship between two subject matters. In the present case, use of such a clause could have indicated that Pt V was not to have any application in relation to matters relating to, incidental to, or consequential upon, the supply or possible supply of financial services.
84 The absence of such a prepositional clause in subs 51AF(1) contrasts with the use of such a clause in subs (2)(a), which provides that ss 52 and 55A of the TPA "do not apply to conduct engaged in in relation to financial services". This difference in drafting technique was adopted also in s 51AAB of the TPA concerning the application of the provisions in the TPA concerning unconscionable conduct to financial services. It supports an inference that s 51AF precludes the application of Pt V of the TPA only to the supply, or possible supply, of financial services, rather than being a preclusion with wider effect.
85 The appellants drew attention to another feature of the text in s 51AF. Subsection (2) has the preface "[w]ithout limiting subs (1)". The appellants' submission is that this is an indication of legislative intention that s 51AF is to be read according to its terms. One may accept that that is so, but it does not, with respect, assist in identifying the meaning of those terms. All the preface does is to indicate that the express provisions in subs (2) are not to be regarded as limiting the meaning which subs (1), properly construed, conveys.
86 However, the presence of subs (2) in s 51AF may be significant. It may indicate a legislative understanding that, on its terms, subs (1) does not exclude the application of Pt V of the TPA to financial services altogether, and that it recognised the necessity for some provisions to be expressly excluded by subs (2). In other words, the very presence of subs (2) may indicate a legislative intention that subs (1) is not to be regarded as "covering the field" of the possible application of Pt V of the TPA in relation to financial services.
87 A third feature of s 51AF(1) is that it provides that Pt V does not apply to the supply, or possible supply, "of services that are financial services". This manner of expression indicates that s 51AF is intended to exclude a subclass of services from the range of services to which Pt V would otherwise be applicable. Those services are indicated by the broad definition of "services" in s 4(1) of the TPA:
services includes any rights (including rights in relation to, and interests in, real or personal property), benefits, privileges or facilities that are, or are to be, provided, granted or conferred in trade or commerce, and without limiting the generality of the foregoing, includes the rights, benefits, privileges or facilities that are, or are to be, provided, granted or conferred under:
(a) A contract for or in relation to:
(i) the performance of work (including work of a professional nature), whether with or without the supply of goods;
(ii) the provision of, or the use or enjoyment of facilities for, amusement, entertainment, recreation or instruction; or
(iii) the conferring, of rights, benefits or privileges for which remuneration is payable in the form of a royalty, tribute, levy or similar exaction;
(b) a contract of insurance;
(c) a contract between a banker and a customer of the banker entered into in the course of the carrying on by the banker of the business of banking; or
(d) any contract for or in relation to the lending of moneys; but does not include rights or benefits being the supply of goods or the performance of work under a contract of service.
88 It is the services of this kind, to which the substantive provisions in Pt V apply, from which the subclass of financial services is to be excluded.
89 This understanding of s 51AF is important to the resolution of the present appeals. It suggests that s 51AF(1) is to be applied by first determining the services to which Pt V would apply in the absence of s 51AF, and then excluding those which are financial services as defined. That is to say, one first needs an understanding of the services to which the provisions in Pt V would apply before one excludes from that class of services those which are financial services. This is different from the approach which was implicit in the appellants' submissions, namely, by enquiring whether a given service is a financial service and on that question being resolved in the affirmative, concluding that Pt V can have no application to it.
90 A number of provisions in Pt V refer expressly to "services" (for example, ss 53, 53C, 54, 55A, 56, 57, 58, 60, 64, 65A, 67, 68A, 68B, 73 and 74), There are others which, by their nature or by implication, are capable of referring to "services" as defined (for example, ss 52, 53B, 68 and 74J). It is reasonable to suppose that it is the class of services to which these provisions refer from which the subclass of financial services is excluded.
91 Section 73 refers to "services" in subs (1)(b). That subparagraph relates to the circumstance in which a consumer acquires goods or services (or goods and services) from a supplier and enters into a contract with a linked credit provider for the provision of credit in respect of that supply. They are the class of services in respect of which the preclusion in s 51AF(1) operates. That is to say, s 51AF(1) has the effect that the expressions "goods or services" and "goods and services" in s 73(1) do not include financial services.
92 An analysis in these terms gives effect to the expression "services that are financial services" in s 51AF(1). Those words indicate that the preclusion effected by s 51AF is in respect of services, being financial services, in respect of which the provisions of Pt V would otherwise operate. An analysis in these terms also avoids construing s 51AF(1) as though it provided only that "this Part does not apply to financial services".
93 The terms of s 73(1)(a) and (b), and in particular the latter, indicate that a consumer's contract with a linked credit provider does not involve a service of the contemplated kind. So much is made clear by the text of s 73(1)(b), as it refers to a contract between a consumer and a linked credit provider for the provision of credit in respect of the supply of goods or services, or goods and services.
94 This understanding suggests that the provisions concerning the liability of a linked credit provider in s 73 are left untouched by s 51AF in relation to the provision of credit by a linked credit provider in respect of goods and services other than financial services.
95 A similar conclusion may be reached by an alternative analysis. Reference was made earlier to the fact that s 51AF(1) provides that Pt V of the TPA does not apply to the supply, or possible supply, of financial services. The understanding that s 51AF(1) precludes the application of Pt V to "the supply, or possible supply" of financial services and not to financial services more generally, raises a question of characterisation; namely, is s 73(1) and, to a lesser extent, subs (2) to be characterised as a provision concerning the supply, or possible supply of financial services.
96 Section 73(1) establishes the liability of a linked credit provider in two distinct circumstances: first, when it is the linked credit provider which acquires goods from a supplier and provides credit to a consumer for their sale, lease, hire or hire purchase; and, secondly, when a linked credit provider provides credit to a consumer in respect of a consumer's acquisition of goods or services from a supplier. If either of those circumstances exists, and the consumer suffers loss or damage as a result of a defined circumstance, s 73(1) specifies that the supplier and the linked credit provider are jointly and severally liable to the consumer for the amount of the loss and damage.
97 On its face, s 73 is not directed to the supply, or possible supply, of financial services. It seems better characterised as a remedial provision: remedial in the sense that it provides that, when the defined circumstances exist, a consumer will have a remedy against both the supplier and the linked credit provider in the case of goods (subs (1)(a)); and in the case of goods and/or services (subs (1)(b)). Its remedial nature is indicated by subs (1) (which establishes the joint and several liability of the linked credit provider and the supplier); by subs (2) and (3) (which identify circumstances in which the remedy against the linked credit provider will not arise); by subs (4) (which allows a set-off by a consumer of a liability arising under subs (1) against any liability which the consumer may have to the credit provider); by subs (5), (6), (8), (9), (10) and (13) (which indicate that the primary remedy of the consumer should be against the supplier); and by subs (7) (which caps the liability of the linked credit provider).
98 It is true that one of the conditions for the operation of s 73(1) is that the consumer has entered into a contract with a linked credit provider for the provision of credit. It is also true that, at least following the 2001 amendments that inserted the new definitions of "financial product" and "financial service", the provision of credit will be a supply of a financial service. This might be taken to indicate, as the appellants contend, that because it refers to the supply, or possible supply, of financial services, s 51AF necessarily operates to exclude the application of s 73. There is force in this submission, but, in our opinion, it should not be accepted. That is because s 73 does not make the supply, or possible supply, of a financial service one of the conditions for its operation. Instead, it selects as the relevant criterion the entry by a consumer into a contract with a linked credit provider for the provision of credit. The entry by a consumer into such a contract with a linked credit provider for the provision of credit cannot be said to be co-extensive with the concept of a supply, or possible supply, of a financial service. A consumer may enter into a contract with a credit provider without there being any subsequent supply of a financial service. Similarly, there may be a supply of credit without the consumer having entered into a contract with a supplier (as when, for example, a credit provider advances credit in the mistaken belief that the consumer has entered into such a contract). Circumstances of these respective kinds may be uncommon, but the fact that they exist serves to indicate that the predicate on which s 73(1) operates is not intrinsically the supply, or possible supply of a financial service.
99 Accordingly, the characterisation of s 73 as a remedial provision, rather than one directed to the supply, or possible supply, of financial services, is not affected by the circumstance that one of the predicates for its operation is the entry by a consumer into a contract with a linked credit provider for the provision of credit. This has the consequence that s 73 is not a provision concerned with the supply, or possible supply, of financial services to which s 51AF(1) is directed.
100 Construing ss 51AF and 73 in this way is consistent with the construction accepted by Foster J in ASIC v Bank of Queensland and with the purpose of the FSR Consequential Amendments Act of 1998. Plainly enough, that purpose was to transfer regulatory control of the provision of financial services to ASIC. There is no indication of a legislative purpose to reduce the protections or remedies available to consumers at the same time. On the contrary, the legislative intention was to maintain the existing consumer protection provisions. So much is apparent from the FSR Explanatory Memorandum. The FSR Explanatory Memorandum included the following relevant passages:
[3.7] The removal of consumer protection functions in relation to financial services from the regulatory responsibility of the ACCC to ASIC reflects widespread support for the proposal that there should be one regulator with full and dedicated responsibility for consumer protection in the financial system. This arrangement will avoid possible regulatory duplication and inconsistency, which are ultimately costly to the consumer, and will provide a high level of service from a specialist financial service consumer protection regulator.
…
[3.31] The provisions of proposed Subdivision E will be based on Division 2 of Part V of the Trade Practices Act. The key provision in this Subdivision is proposed section 12ED, which will imply in contracts for the supply of financial services a warranty that the services will be rendered with due care and skill and any materials supplied in connection with those services will be reasonably fit for the purpose for which they are supplied.
[3.32] Proposed Subdivision E will not include provisions equivalent to sections 73, 73A and 73B of the Trade Practices Act. These provisions deal with linked credit contracts and are therefore outside the scope of Schedule 2. Section 73 of the Trade Practices Act enables consumers who have linked credit contracts to pursue a legal action against their credit providers if, for example, they suffer loss or damage as a result of a breach of a warranty implied in a contract of supply for goods or services. Proposed items 27 and 28 of Part II of Schedule 2 will amend section 73 of the Trade Practices Act so that consumers who suffer loss or damage because of a breach of proposed section 12ED of Subdivision E will also be able to rely on section 73 of the Trade Practices Act.
…
[3.53] Proposed items 27 and 28 will amend subsections 73(1) and 73(2) of the Trade Practices Act. These amendments will reflect the inclusion of proposed section 12ED, which will imply in contracts for the supply of financial services a warranty that the services will be rendered with due care and skill and any material supplied in connection with those services will be reasonably fit for the purpose for which they are supplied, in the ASIC Act. As outlined above in paragraph 3.30 above, section 73-73B of the Trade Practices Act are detailed provisions dealing with the recovery of amounts from a linked credit provider for a breach of this warranty. Section 73-73B will have no equivalent in the ASIC Act, but the amendments to subsections 73(1) and (2) made by items 27 and 28 will ensure that consumers have access to those provisions in relation to credit supplied for financial services.
101 These statements in the FSR Explanatory Memorandum confirm the natural inference arising from the references to s 12ED in s 73(1) and (2), namely, that the linked credit provider provisions in s 73 apply (and are to continue to apply) to circumstances that might involve financial services.
102 The appellants' attempt to explain the insertion of s 12ED by reference to the legislative history of the amendments to the TPA and ASIC Acts and in particular the original narrow definition of "financial services" is unduly strained. It also hinges on a narrow meaning being given to "security" in the context in which it appeared in the original definition of financial product. However, the word "security" is susceptible to more than one meaning (Handevel Pty Ltd v Comptroller of Stamps (Victoria) (1985) 157 CLR 177 at 196-197) and it is far from clear that the narrow meaning given to it by the appellants is the only meaning it can have in the context in which it appeared in the ASIC Act.
103 More significantly, the appellants' explanation imputes to the legislature an intention that the remedial operation of s 73 was to be limited to a very narrow class of contract (contracts for the provision of credit in respect of the supply of financial products) and that even that narrow operation of s 73 would be susceptible to further confinement by executive action through the promulgation of regulations. Given that the overriding legislative purpose of the relevant amendments was one of regulatory reorganisation, and that there is no indication of any intention to narrow any aspect of consumer protection, including the remedial operation of s 73, it is difficult to accept that the legislature had the intention to give s 73 such a narrow and fragile operation.
104 The provisions in the Competition and Consumer Act, which came into operation on 1 January 2011, cannot control the construction of ss 51AF and 73 of the TPA. It is worth noting, however, that s 131A(1) of the Competition and Consumer Act has the effect that the provisions establishing the liability of linked credit providers contained in Pt 5-5 of Sch 2 of the Australian Consumer Law do apply to the supply, or possible supply, of services that are financial services or are financial products.
105 For these reasons, the appellants' submission that s 51AF(1) of the TPA has the effect of making the linked credit provider provisions in s 73 inapplicable to the rental and hire contracts with the respective respondents to this appeal should be rejected. The primary judge was correct to find that s 51AF did not operate to deny the respondents recourse to s 73 in the circumstances.