FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v JJ Richards & Sons Pty Ltd [2017] FCA 1224

ORDERS

THE COURT DECLARES THAT:

1.    The following terms (as set out in Annexure A) of any small business contracts within the meaning of s 23(4) of the Australian Consumer Law (ACL) which are standard form contracts within the meaning of s 27 of the ACL entered into, or renewed, after 12 November 2016 between the respondent and any of its customers (Captured Contracts) are unfair contract terms within the meaning of s 24 of the ACL and are void by operation of s 23 of the ACL:

(a)    automatic renewal (clause 1),

(b)    price variation (clause 4),

(c)    agreed times (clause 6),

(d)    no credit without notification (clause 7),

(e)    exclusivity (clause 9(i)),

(f)    credit terms (clause 16),

(g)    indemnity (clause 17) and

(h)    termination (clause 18),

(the Impugned Terms).

THE COURT ORDERS BY CONSENT THAT:

2.    The respondent is restrained, whether by itself, its servants, agents or otherwise howsoever, from applying or relying on, or purporting to apply or rely on any Impugned Term contained in a Captured Contract.

3.    The respondent is restrained for a period of five years from the date of these orders, whether by itself, its servants, agents or otherwise howsoever, from entering into a standard form contract that is a small business contract containing an Impugned Term.

4.    The respondent is, within 14 days of the date of this order, to publish in a prominent place on the home page of the respondent’s website, on its customer portal, and any other URL used by the respondent to market and supply waste management services a corrective notice in the terms set out in Annexure B.

5.    The respondent, at its own expense, within 14 days of the date of this order, provide a copy of these orders to each person who is a party to a standard form contract entered into, or renewed, by the respondent after 12 November 2016, except that the respondent need not provide a copy of these orders to a party that, at the time the contract was entered into, employed 20 or more persons.

6.    The respondent is:

(a)    within 90 days of this order, to establish and implement an ACL Compliance Program to be undertaken by each employee of the respondent or other person involved in the respondent’s business who deals or who may deal with Australian customers (including small business customers of the respondent) in relation to their contracts with the respondent, being a program designed to minimise the respondent’s risk of future use, application or reliance on unfair contract terms in standard form contracts that are small business contracts under Part 2-3 of the ACL; and

(b)    for a period of three years from the date of this order, maintain and continue to implement the ACL Compliance Program referred to in order 6(a) above.

7.    The parties bear their own costs of the proceeding.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

MOSHINSKY J:

Introduction

1    JJ Richards & Sons Pty Ltd (JJ Richards) carries on a business, in trade or commerce, providing waste management services in Australia. Since 12 November 2016, when relevant provisions of legislation came into force, JJ Richards has entered into, or renewed, at least 26,000 contracts for it to provide such waste management services. The contracts are standard form contracts.

2    By this proceeding, the Australian Competition and Consumer Commission (the ACCC) seeks declaratory and injunctive relief against JJ Richards on the basis of the unfair contract terms provisions of the Australian Consumer Law, being Sch 2 to the Competition and Consumer Act 2010 (Cth) (the Australian Consumer Law). The ACCC contends that the approximately 26,000 contracts include contracts that are “small business contracts” as defined in s 23(4) of the Australian Consumer Law and that certain terms of those contracts are “unfair” within the meaning of s 24 of the Australian Consumer Law. It follows, the ACCC contends, that the relevant terms are void under s 23(1) of the Australian Consumer Law.

3    The ACCC and JJ Richards have reached an agreement in relation to both the declarations and injunctions sought, and have put forward agreed minutes of proposed declarations and orders (the Minutes of Proposed Declarations and Orders).

4    The parties have also prepared a statement of agreed facts and admissions (the Statement of Agreed Facts), which provides the factual basis for the proposed declarations. A copy of the Statement of Agreed Facts is annexed to these reasons. I am satisfied that the agreed facts and admissions are sufficient for the Court to determine the appropriate declarations to make in this proceeding, and provide a sound and proper basis for the making of those declarations and the other proposed orders: see Australian Securities and Investments Commission v Newcrest Mining Ltd (2014) 101 ACSR 46 at [10] per Middleton J and the cases there cited.

5    The parties have each provided written submissions in support of the proposed declarations and orders.

6    For the reasons that follow, I am prepared to make declarations and orders substantially in the terms of the Minutes of Proposed Declarations and Orders.

Orders by consent and declarations

7    As I noted in Australian Securities and Investments Commission, in the matter of NSG Services Pty Ltd v NSG Services Pty Ltd [2017] FCA 345 at [11], the applicable principles as regards the making of orders by agreement and as regards declarations are well established. They were summarised by Gordon J in Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405 at [70]-[79] as follows:

2.3.1    Orders sought by agreement

…

70    The applicable principles are well established. First, there is a well-recognised public interest in the settlement of cases under the Act: NW Frozen Foods Pty Ltd v Australian Competition & Consumer Commission (1996) 71 FCR 285 at 291. Second, the orders proposed by agreement of the parties must be not contrary to the public interest and at least consistent with it: Australian Competition & Consumer Commission v Real Estate Institute of Western Australia Inc (1999) 161 ALR 79 at [18].

71    Third, when deciding whether to make orders that are consented to by the parties, the Court must be satisfied that it has the power to make the orders proposed and that the orders are appropriate: Real Estate Institute at [17] and [20] and Australian Competition & Consumer Commission v Virgin Mobile Australia Pty Ltd (No 2) [2002] FCA 1548 at [1]. Parties cannot by consent confer power to make orders that the Court otherwise lacks the power to make: Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150 at 163.

72    Fourth, once the Court is satisfied that orders are within power and appropriate, it should exercise a degree of restraint when scrutinising the proposed settlement terms, particularly where both parties are legally represented and able to understand and evaluate the desirability of the settlement: Australian Competition & Consumer Commission v Woolworths (South Australia) Pty Ltd (Trading as Mac’s Liquor) [2003] FCA 530 at [21]; Australian Competition & Consumer Commission v Target Australia Pty Ltd [2001] FCA 1326 at [24]; Real Estate Institute at [20]–[21]; Australian Competition & Consumer Commission v Econovite Pty Ltd [2003] FCA 964 at [11] and [22] and Australian Competition & Consumer Commission v The Construction, Forestry, Mining and Energy Union [2007] FCA 1370 at [4].

73    Finally, in deciding whether agreed orders conform with legal principle, the Court is entitled to treat the consent of Coles as an admission of all facts necessary or appropriate to the granting of the relief sought against it: Thomson Australian Holdings at 164.

2.3.2    Declarations

74    The Court has a wide discretionary power to make declarations under s 21 of the Federal Court Act: Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 at 437–8; Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 581–2 and Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (No 2) (1993) 41 FCR 89 at 99.

75    Where a declaration is sought with the consent of the parties, the Court’s discretion is not supplanted, but nor will the Court refuse to give effect to terms of settlement by refusing to make orders where they are within the Court’s jurisdiction and are otherwise unobjectionable: see, for example, Econovite at [11].

76    However, before making declarations, three requirements should be satisfied:

(1)    The question must be a real and not a hypothetical or theoretical one;

(2)    The applicant must have a real interest in raising it; and

(3)    There must be a proper contradictor:

Forster v Jododex at 437–8.

77    In this proceeding, these requirements are satisfied. The proposed declarations relate to conduct that contravenes the ACL and the matters in issue have been identified and particularised by the parties with precision: Australian Competition & Consumer Commission v MSY Technology Pty Ltd (2012) 201 FCR 378 at [35]. The proposed declarations contain sufficient indication of how and why the relevant conduct is a contravention of the ACL: BMW Australia Ltd v Australian Competition & Consumer Commission [2004] FCAFC 167 at [35].

78    It is in the public interest for the ACCC to seek to have the declarations made and for the declarations to be made (see the factors outlined in ACCC v CFMEU at [6]). There is a significant legal controversy in this case which is being resolved. The ACCC, as a public regulator under the ACL, has a genuine interest in seeking the declaratory relief and Coles is a proper contradictor because it has contravened the ACL and is the subject of the declarations. Coles has an interest in opposing the making of them: MSY Technology at [30]. No less importantly, the declarations sought are appropriate because they serve to record the Court’s disapproval of the contravening conduct, vindicate the ACCC’s claim that Coles contravened the ACL, assist the ACCC to carry out the duties conferred upon it by the Act (including the ACL) in relation to other similar conduct, inform the public of the harm arising from Coles’ contravening conduct and deter other corporations from contravening the ACL.

79    Finally, the facts and admissions in Annexure 1 provide a sufficient factual foundation for the making of the declarations: s 191 of the Evidence Act; Australian Competition & Consumer Commission v Dataline.Net.Au Pty Ltd (2006) 236 ALR 665 at [57]–[59] endorsed by the Full Court in Australian Competition & Consumer Commission v Dataline.Net.Au Pty Ltd (2007) 161 FCR 513 at [92]; Hadgkiss v Aldin (No 2) [2007] FCA 2069 at [21]–[22]; Secretary, Department of Health & Ageing v Pagasa Australia Pty Ltd [2008] FCA 1545 at [77]–[79] and Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543.

8    Further, in Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482, French CJ, Kiefel, Bell, Nettle and Gordon JJ said at [57]:

… in civil proceedings there is generally very considerable scope for the parties to agree on the facts and upon consequences. There is also very considerable scope for them to agree upon the appropriate remedy and for the court to be persuaded that it is an appropriate remedy.

(Emphasis in original.)

9    In this proceeding, by parity of reasoning with Gordon J’s judgment in Coles, the Court is entitled to treat the consent of JJ Richards as an admission of all facts necessary or appropriate to the granting of the relief sought against it. Further, the three requirements for the making of declarations referred to by Gordon J are satisfied. The question that is being resolved by the declarations (namely whether the relevant contractual terms are void) is real and not a hypothetical or theoretical one. The ACCC, as the public regulator under the Australian Consumer Law, has a real interest in raising the question. And there is a proper contradictor, namely JJ Richards (albeit that it now consents to the declarations and orders).

10    In the circumstances, it is in the public interest for the proposed declarations and orders to be made. A significant legal controversy is being resolved. The declarations are appropriate because they serve to record the Court’s disapproval of the conduct, vindicate the ACCC’s claim that the relevant contractual terms are void, assist the ACCC in carrying out its regulatory duties in the future, inform the public of the relevant conduct, and deter other companies from entering into relevant contracts with such terms.

Relevant legislative provisions

11    On 12 November 2016, amendments to the Australian Consumer Law contained in the Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Act 2015 (Cth) commenced. These amendments extended the operation of the protections in Part 2-3 of Chapter 2 of the Australian Consumer Law (relating to unfair contract terms) to small business contracts. The amendments apply in relation to contracts entered into or renewed on or after 12 November 2016.

12    In light of the amendments referred to above, s 23(1) of the Australian Consumer Law now provides that a term of a small business contract is void if the term is unfair and the contract is a standard form contract. A contract is presumed to be a standard form contract unless proved otherwise (s 27(1)). In determining whether a contract is a standard form contract, the Court is required to take into account the factors referred to in s 27(2) of the Australian Consumer Law.

13    Section 23(4) provides that a contract is a small business contract if: the contract is for, among other things, a supply of goods or services; at the time the contract is entered into, at least one party to the contract is a business that employs fewer than 20 people (not including casual employees, unless they are employed by the business on a regular and systematic basis); and either the upfront price payable under the contract does not exceed $300,000 or the contract has a duration of more than 12 months and the upfront price payable under the contract does not exceed $1,000,000.

14    Section 24(1) of the Australian Consumer Law provides that a term of a consumer or small business contract is unfair if:

(a)    it would cause a significant imbalance in the parties’ rights and obligations arising under the contract (s 24(1)(a));

(b)    it is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term (s 24(1)(b)); and

(c)    it would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on (s 24(1)(c)).

15    Section 24(2) of the Australian Consumer Law provides that in determining whether a term of a contract is unfair, the Court must take into account the extent to which the term is transparent and the contract as a whole. A term is transparent if the term is: expressed in reasonably plain language; legible; presented clearly; and readily available to any party affected by the term: s 24(3).

16    Section 25 of the Australian Consumer Law provides examples of terms that may be unfair. They include:

(a)    a term that permits, or has the effect of permitting, one party (but not another party) to avoid or limit performance of the contract;

(b)    a term that permits, or has the effect of permitting, one party (but not another party) to terminate the contract;

(c)    a term that penalises, or has the effect of penalising, one party (but not another party) for a breach or termination of the contract;

(d)    a term that permits, or has the effect of permitting, one party (but not another party) to vary the terms of the contract;

(e)    a term that permits, or has the effect of permitting, one party (but not another party) to renew or not renew the contract;

(f)    a term that permits, or has the effect of permitting, one party to vary the upfront price payable under the contract without the right of another party to terminate the contract;

(g)    a term that permits, or has the effect of permitting, one party unilaterally to vary the characteristics of the goods or services to be supplied, or the interest in land to be sold or granted, under the contract;

(h)    a term that permits, or has the effect of permitting, one party unilaterally to determine whether the contract has been breached or to interpret its meaning;

(i)    a term that limits, or has the effect of limiting, one party’s vicarious liability for its agents;

(j)    a term that permits, or has the effect of permitting, one party to assign the contract to the detriment of another party without that other party’s consent;

(k)    a term that limits, or has the effect of limiting, one party’s right to sue another party;

(l)    a term that limits, or has the effect of limiting, the evidence one party can adduce in proceedings relating to the contract;

(m)    a term that imposes, or has the effect of imposing, the evidential burden on one party in proceedings relating to the contract; and

(n)    a term of a kind, or a term that has an effect of a kind, prescribed by the regulations.

17    The explanatory memorandum to the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 (Cth) stated at [5.49]-[5.57], in relation to the examples set out in s 25, that:

(a)    items (a), (b), (d), (e), (f), (g) and (h) are examples of types of terms that allow a party to make changes to key elements of a contract, including terminating it, on a unilateral basis;

(b)    items (i), (k), (l) and (m) are examples of types of terms that have the effect of limiting the rights of the party to whom the contract is presented;

(c)    item (c) refers to terms that penalise, or have the effect of penalising, one party for a breach or termination of the contract (reflecting the common law concept of penalties); and

(d)    item (j) refers to terms that allow for a party to assign the contract to the detriment of the other party, without that party’s consent.

18    In relation to s 25 of the Australian Consumer Law, Edelman J said in Australian Competition and Consumer Commission v Chrisco Hampers Australia Ltd (2015) 239 FCR 33 (Chrisco) at [44] that:

a contextual approach to statutory interpretation cannot ignore the matters provided in s 25 which are specifically provided for the purpose of giving examples of potentially unfair terms: see also Jetstar Airways Pty Ltd v Free (2008) VAR 295 at [110] and [114] (Cavanough J); Director-General of Fair Trading v First National Bank plc [2002] 1 AC 481 at [17] (Lord Bingham). Further, the Explanatory Memorandum to the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) in which these provisions were introduced, provided in [5.44] that the examples in s 25 “provide statutory guidance on the types of terms which may be regarded as being of concern. They do not prohibit the use of those terms, nor do they create a presumption that those terms are unfair”. See also the Second Reading Speech of the Trade Practices Amendment (Australian Consumer Law) Bill 2009 (Cth), Hansard, House of Representatives, 24 June 2009, 6986 (Dr Emerson).

19    In ACCC v CLA Trading Pty Ltd [2016] ATPR 42-517; [2016] FCA 377, Gilmour J summarised the authorities on unfair contract terms (in the context of unfair consumer contracts) as follows at [54](a)-(g):

(a)    The underlying policy of unfair contract terms legislation respects true freedom of contract and seeks to prevent the abuse of standard form consumer contracts which, by definition, will not have been individually negotiated: Jetstar Airways Pty Ltd v Free (2008) 30 VAR 295; [2008] VSC 539 at [112].

(b)    The requirement of a “significant imbalance” directs attention to the substantive unfairness of the contract: Director General of Fair Trading v First National Bank plc [2002] 1 AC 481; [2001] UKHL 52 at [37].

(c)    It is useful to assess the impact of an impugned term on the parties’ rights and obligations by comparing the effect of the contract with the term and the effect it would have without it: Director General of Fair Trading v First National Bank plc at [54].

(d)    The “significant imbalance” requirement is met if a term is so weighted in favour of the supplier as to tilt the parties’ rights and obligations under the contract significantly in its favour. This may be by the granting to the supplier of a beneficial option or discretion or power, or by the imposing on the consumer of a disadvantageous burden or risk or duty: Director General of Fair Trading v First National Bank plc at [17] per Lord Bingham, applied in Australian Competition and Consumer Commission v ACN 117 372 915 Pty Limited (in liq) (formerly Advanced Medical Institute Pty Limited) [2015] FCA 368 at [950].

(e)    Significant in this context means “significant in magnitude”, or “sufficiently large to be important”, “being a meaning not too distant from ‘substantial’”: Jetstar Airways Pty Ltd v Free at [104]-[105] per Cavanough J; cf Director of Consumer Affairs Victoria v AAPT Limited [2006] VCAT 1493 at [32]-[33].

(f)    The legislation proceeds on the assumption that some terms in consumer contracts, especially in standard form consumer contracts, may be inherently unfair, regardless of how comprehensively they might be drawn to the consumer’s attention: Jetstar Airways Pty Ltd v Free at [115].

(g)    In considering “the contract as a whole”, not each and every term of the contract is equally relevant, or necessarily relevant at all. The main requirement is to consider terms that might reasonably be seen as tending to counterbalance the term in question: Jetstar Airways Pty Ltd v Free at [128].

20    In relation to the former Victorian equivalent of the unfair contract terms provisions, in Paciocco v Australia and New Zealand Banking Group Ltd (2015) 236 FCR 199 at [363]-[364], Allsop CJ (Besanko and Middleton JJ agreeing) emphasised the evaluative nature of the assessment of unfairness, which is to be carried out with a close attendance to the statutory terms. The Chief Justice also observed that “unjustness and unfairness are of a lower moral or ethical standard than unconscionability”.

21    As Edelman J stated in Chrisco at [39], in relation to consumer contracts, s 24 of the Australian Consumer Law creates broad evaluative criteria to be developed incrementally in the decided cases. Edelman J referred to Plevin v Paragon Personal Finance Ltd [2014] 1 WLR 4222; [2014] UKSC 61, where the United Kingdom Supreme Court considered a legislative provision that permitted reopening of credit transactions where the relationship between the creditor and the debtor was “unfair”. Lord Sumption, who delivered the leading judgment, said at [10] that it was not possible to state a precise or universal test for the application of such a provision.

22    Edelman J (at [40] of Chrisco) also referred to the statement by Leeming JA, writing extra-judicially, that open-ended statutes that turn on broadly expressed concepts “naturally and indeed necessarily attract a more purposive and less minutely textual mode of construction” (Leeming M, “Equity: Ageless in the ‘Age of Statutes’” (2015) 9 Journal of Equity 108 at 116). Edelman J characterised the legislative concept of “unfairness” in s 24 as a “guided form of open-ended legislation”.

23    As Edelman J set out in Chrisco at [41] and [42], paragraphs [5.2] to [5.4] of the explanatory memorandum to the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 (Cth) state that the regime which contains s 24 was introduced following an agreement between the Council of Australian Governments to establish a national law. The national law had been recommended by the Productivity Commission and proposed by the Ministerial Council on Consumer Affairs. The Productivity Commission had noted that common unfair contract terms provisions had already been adopted in the United Kingdom and Victoria: Productivity Commission, Review of Australia’s Consumer Policy Framework, Report No 45, 30 April 2008) vol 2, p 159. However, Parliament departed from the precise terms of the UK provision. In particular, the reference in the UK legislation to the requirement of “good faith” was not included in the Australian provision, having regard to what was considered to be the unsettled status of the doctrine of good faith in the Australian law of contract.

24    In Chrisco, Edelman J said at [43] that:

(a)    for a term to be unfair it must satisfy each of the requirements of ss 24(1)(a) to (c);

(b)    the onus of proof lies upon the applicant to prove the matters in ss 24(1)(a) and 24(1)(c), but lies upon the respondent in relation to s 24(1)(b);

(c)    section 24(2)(a) only requires the Court to consider transparency in relation to the particular term that is said to be unfair and only in relation to the matters concerning that term in ss 24(1)(a) to (c);

(d)    similarly, the assessment of the contract as a whole in s 24(2)(b) only requires the Court to consider the contract as a whole in relation to the particular term that is said to be unfair and only in relation to the matters concerning that term in ss 24(1)(a) to (c);

(e)    as the explanatory memorandum to the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 (Cth) stated in effect at [5.39], if a term is not transparent it does not mean that it is unfair and if a term is transparent it does not mean that it is not unfair; and

(f)    regard can be had to s 25, which provides examples of unfair terms.

25    There is a rebuttable presumption that a term is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by it: s 24(4) of the Australian Consumer Law.

26    In relation to the question of whether a term creates a significant imbalance in the parties’ rights and obligations arising under the contract, Edelman J (at [47] of Chrisco) applied the approach taken by Lord Bingham in Director General of Fair Trading v First National Bank plc at [17] referred to above. However, Edelman J noted (at [49]) that the focus remains on the terms of the section.

27    The fact of a lack of individual negotiation of the contracts between an entity and its customers is not relevant to whether a term causes a significant imbalance in the parties’ rights and obligations arising under the contract: see Chrisco at [50]; Jetstar Airways Pty Ltd v Free at [112]; Paciocco v Australia and New Zealand Banking Group Ltd (2014) 309 ALR 249 at [331].

28    An assessment of whether there is a significant imbalance requires consideration of the relevant term, together with the parties’ other rights and obligations arising under the contract, in order to assess whether the term causes a significant imbalance in the rights and obligations arising under the contract: Chrisco at [51].

29    It may be relevant if a small business can “opt out” of an unfair term: Chrisco at [52].

30    It may also be relevant if the contract gives one party a right without imposing a corresponding duty, or without giving any substantial corresponding right to the counterparty: Chrisco at [53].

31    A term is less likely to give rise to a significant imbalance if there is a meaningful relationship between the term and the protection of a party, and that relationship is reasonably foreseeable at the time of contracting. The fact that a party might profit from breaches of contract by a customer, without the customer in breach acquiring something in return, would not alone be sufficient to allow it to be concluded that the term caused a significant imbalance in the parties’ rights and obligations arising under the contract: Paciocco v Australia & New Zealand Banking Group Ltd (2016) 258 CLR 525 at [201] per Gageler J.

32    The explanatory memorandum to the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 (Cth) described, at [5.38], a lack of transparency in the terms of a consumer contract as a matter that may be “a strong indication of the existence of a significant imbalance in the rights and obligations of the parties under the contract”. Language that is not clear leads to a lack of transparency: Chrisco at [80].

Application to the facts of the present case

Background facts

33    The facts set out below are based on the Statement of Agreed Facts.

34    Since the amendments to the Australian Consumer Law referred to above commenced, JJ Richards has:

(a)    carried on a business, in trade or commerce, providing waste management services in Australia (JJR Waste Management Services); and

(b)    entered into or renewed at least 26,000 contracts for it to provide JJR Waste Management Services in Australia (JJR Waste Management Contracts).

35    The JJR Waste Management Contracts contain pro forma terms entitled “Terms and Conditions” (the Standard Terms).

36    The Standard Terms include terms relating to automatic renewal (clause 1), price variation (clause 4), agreed times (clause 6), no credit without notification (clause 7), exclusivity (clause 9(i)), credit terms (clause 16), indemnity (clause 17) and termination (clause 18). These clauses (the Impugned Terms) are set out below.

37    On 6 December 2016, the ACCC wrote to JJ Richards to: draw JJ Richards’ attention to a report produced by the ACCC on unfair terms in small business contracts; inform JJ Richards that the ACCC was investigating whether terms in existing and new contracts being offered by providers of waste management services gave rise to concerns under the Australian Consumer Law; and request copies of relevant contracts from JJ Richards.

38    On 15 December 2016, JJ Richards replied to the ACCC’s letter of 6 December 2016. In its response, JJ Richards confirmed that it was aware that the small business unfair contract terms protections had commenced on 12 November 2016. JJ Richards stated that it was in the process of undertaking a review of its service agreements and, upon completion of that review, would be open to providing the ACCC with copies of the agreements.

39    During the period 19 December 2016 to 31 March 2017, the ACCC made further requests of JJ Richards for relevant contracts. On 31 March 2017, the ACCC notified JJ Richards of the ACCC’s intention to seek preliminary discovery unless JJ Richards provided copies of all standard form contracts entered into, renewed or varied since 12 November 2016 with JJ Richards’ small business customers in the Melbourne and Brisbane metropolitan areas.

40    On 28 April 2017, the ACCC received a letter from JJ Richards, which stated that JJ Richards could not determine which contracts were with small businesses. The letter enclosed a USB containing copies of 10,071 contracts that JJ Richards had entered into since 12 November 2016 with customers in the Melbourne or Brisbane metropolitan areas (the Melbourne and Brisbane Contracts). The Melbourne and Brisbane Contracts are a subset of the total number of contracts that JJ Richards has entered into in the relevant period. JJ Richards categorised the Melbourne and Brisbane Contracts by location and length.

41    The vast majority (9,776) of the Melbourne and Brisbane Contracts are for standard durations, being any of:

(a)    a one year initial period, with one year periods of auto-renewal;

(b)    a two year initial period, with two year periods of auto-renewal;

(c)    a three year initial period, with three year periods of auto-renewal;

(d)    a four year initial period, with four year periods of auto-renewal; and

(e)    a five year initial period, with five year periods of auto-renewal.

42    The remaining 295 of the Melbourne and Brisbane Contracts have custom length durations (eg, 1 month, 2 months, 72 months). Some of the contracts with a custom duration also have other modifications, namely:

(a)    the automatic renewal clause (clause 1) has been struck out of 288 of the 295 custom length contracts; and

(b)    for the other seven custom length contracts, the automatic renewal clause (clause 1) has been included but the duration of the initial term is a different length to the period of the subsequent terms.

43    The competitive pricing clause (clause 2) has also been struck out in 149 of the standard length contracts.

44    Except in the respects set out above, the Standard Terms are identical in all of the 10,071 Melbourne and Brisbane Contracts.

45    Clause 1 of the Standard Terms (the automatic renewal clause) provides:

The Term. Both Parties agree the prices overleaf reflect a long-term relationship and that is the spirit of the agreement.

The term of this agreement shall be for an initial period of [initial term] years.

The term shall be automatically renewed for further periods of [initial term] years thereafter unless terminated by either party giving written notice within 30 days prior to the end of the initial term or any renewed term.

46    Clause 4 of the Standard Terms (the price variation clause) provides:

Price Variations. JJR may adjust its prices during the term of the agreement for reasons such as but not limited to increased operation costs, changes in disposal fees, site profitability, changes to disposal facility locations or increased government charges and levies by giving customers 30 days notice of such increase.

47    Clause 6 of the Standard Terms (the agreed times clause) provides:

Agreed Times. JJR will use all reasonable endeavours to perform the collection at the times agreed but accepts no liability where such performance is prevented or hindered in any way.

48    Clause 7 of the Standard Terms (the no credit without notification clause) provides:

No credit without notification. Unless previously notified JJR shall be entitled to render charges for the service if it attends the customer’s premises and is unable to perform the service due to holiday closure, lack of access or other reason. All credit requests must be within 14 days of invoice date.

49    Clause 9(i) of the Standard Terms (the exclusivity clause) provides:

The customer agrees to:

…

i.    Grant JJR exclusive rights to the removal of waste, recyclables, combustible liquids and dangerous goods from the premises specified and not engage a second party for waste, recyclables, combustible liquids and dangerous goods removal during the term of this agreement.

50    Clause 16 of the Standard Terms (the credit terms clause) provides:

Credit terms 7 days. The customer agrees to pay for the service subject to the credit terms and acknowledges service may be suspended if payment is not received. During the period of suspension normal charges will apply to cover expenses associated with the overdue payment including but not limited to, interest, administration, legals and equipment capital return.

51    Clause 17 of the Standard Terms (the indemnity clause) provides:

Indemnity. To the maximum extent permitted by law, the customer shall be responsible for and indemnify JJR from and in respect of all liabilities, claims, damages, actions, costs and expenses which may be incurred by JJR on a full indemnity basis (whether successful or not) as a result of or arising out of or otherwise in connection with this agreement, including any breach by the customer of any of the warranties, covenants and conditions herein.

52    Clause 18 of the Standard Terms (the termination clause) provides:

No termination without final payment. Payment in full of all monies outstanding must be made before this agreement can be terminated. The equipment will not be removed until such payment is made and rental for the equipment may be charged if delays in payment of the final account occur.

53    It is agreed that JJ Richards prepared the Standard Terms before it participated in any discussion with potential customers in relation to providing JJR Waste Management Services to those potential customers. JJ Richards admits that the JJR Waste Management Contracts are standard form contracts for the purposes of s 23(1) of the Australian Consumer Law.

54    It is also agreed by the parties that at least some of JJ Richards’ customers, who were the counterparties to the JJR Waste Management Contracts, were businesses that employed fewer than 20 persons at the time when they entered into the contracts (small business customers). JJ Richards agrees that the JJR Waste Management Contracts with small business customers are small business contracts for the purposes of s 23(4) of the Australian Consumer Law.

55    Finally, it is agreed by the parties that the upfront price payable under the JJR Waste Management Contracts is less than:

(a)    $300,000 in the case of the JJR Waste Management Contracts with a duration of 12 months or less; and

(b)    $1,000,000 in the case of the JJR Waste Management Contracts with a duration of more than 12 months.

Significant imbalance

56    The parties agree that each of the Impugned Terms creates a significant imbalance between JJ Richards’ and its customers’ respective rights and obligations arising under the JJR Waste Management Contracts. The ACCC submits, and I accept, that each of the Impugned Terms creates a significant imbalance for the following reasons:

(a)    The automatic renewal clause binds customers of JJ Richards (JJR Customers) to subsequent contracts, unless the JJR Customer cancels the contract within 30 days before the end of the initial or any subsequent contract term. In the majority of cases the subsequent contracts, which customers are automatically bound by, are of equal duration to the initial contract’s duration. The clause and, in particular, the limited period of time within which a JJR Customer can terminate the contract and the lack of any requirement in the contract for JJ Richards to provide notice to a customer that the contract is about to expire and that the automatic renewal will otherwise occur, may result in JJR Customers inadvertently missing the opportunity to terminate the contract and therefore remaining contracted to JJ Richards for extensive periods with no opportunity to change to an alternative supplier during the term of the renewed contract. In the context of the whole contract, the automatic renewal clause creates a significant imbalance in the respective rights and obligations of the parties as JJ Richards is more likely to be aware of when customers’ contracts are coming up for renewal than small business customers, who as small businesses have limited resources and competing demands that mean they may not have effective systems in place to identify the termination period for their waste management contract. The significant imbalance arising from the operation of this clause is exacerbated by the operation of certain of the other Impugned Terms, such as the price variation, exclusivity and termination clauses. For example, while JJ Richards has an incentive to contract with, and remain contracted with, as many customers as possible, as the contract requires the customer to use JJ Richards exclusively, the JJR Customer relies on its ability to periodically choose whether to renew or change its supplier of waste management services.

(b)    The price variation clause allows JJ Richards to unilaterally increase the price of JJR Waste Management Services for any reason. It creates a significant imbalance because there is not any corresponding right given to the JJR Customer to terminate the contract or obtain a change in the scope or scale of the service provided by JJ Richards or a lower price.

(c)    The agreed times clause removes any liability for JJ Richards where performance of JJR Waste Management Services has been prevented or hindered, even where the JJR Customer is not in any way responsible for the prevention or hindrance or where JJ Richards is better placed than the JJR Customer to manage or mitigate the risk of the prevention or hindrance occurring. The agreed times clause causes a significant imbalance in the parties’ rights by absolving JJ Richards of its performance obligations and requiring JJR Customers to assume the risk of non-performance under circumstances that they do not control, without any corresponding benefit to JJR Customers.

(d)    The no credit without notification clause allows JJ Richards to charge JJR Customers for services it has not rendered for reasons beyond the JJR Customer’s control or potentially even for reasons that are due to circumstances within JJ Richards’ control, such as failure of its equipment. As JJ Richards is only required to use reasonable endeavours to perform collections at the agreed time due to the operation of clause 6, if JJ Richards attends the JJR Customer’s premises at a different time and is unable to collect the waste for any reason, JJ Richards can still charge the JJR Customer. This causes a significant imbalance in the parties’ rights and obligations under the contract. Further, the clause puts the onus on the JJR Customer to make a credit request, even if the non-performance is in no way the fault of the JJR Customer.

(e)    The exclusivity clause requires JJR Customers to obtain all their waste management services from JJ Richards, even when the JJR Customer is seeking additional services to those provided by JJ Richards. Restricting JJR Customers from contracting with other parties for additional services causes a significant imbalance in the parties’ rights and obligations under the contract, because it limits JJR Customers’ general right to contract with whomever they want.

(f)    The credit terms clause requires JJR Customers to pay for their account within seven days and allows JJ Richards to suspend services if payment is not received. It also allows JJ Richards to continue charging the JJR Customer while services are suspended to cover costs associated with the overdue payment. This term creates a significant imbalance in the parties’ rights and obligations under the contract, because it confers no corresponding right on JJR Customers, such as the right to withhold payment for the failure to provide services or pass on associated costs that JJR Customers may incur as a result of such a failure.

(g)    The indemnity clause creates an unlimited indemnity in favour of JJ Richards, even where the loss incurred by JJ Richards is not the fault of the JJR Customer or could have been avoided or mitigated by JJ Richards. There is no corresponding benefit for the JJR Customer. This broad indemnity causes a significant imbalance in the parties’ rights and obligations under the contract.

(h)    The termination clause prevents JJR Customers from terminating their contracts with JJ Richards if they have payments outstanding and entitles JJ Richards to continue charging JJR Customers equipment rental after the termination of the contract, despite the fact that no services are provided. This causes a significant imbalance in the parties’ rights and obligations under the contract as the JJR Customer has no corresponding right and obtains no benefit from the term.

Other matters referred to in s 24

57    Because of the effect of the rebuttable presumption created by s 24(4), the onus is on JJ Richards to show that the terms are reasonably necessary to protect its legitimate interests.

58    JJ Richards has not sought to rebut the presumption and has agreed that the Impugned Terms are not reasonably necessary to protect its legitimate interests. In any event, I am satisfied that each of the Impugned Terms is not reasonably necessary to protect JJ Richards’ legitimate interests for the following reasons:

(a)    The automatic renewal clause: Contracts with JJR Customers are usually low value, with a low marginal cost to JJ Richards for each additional customer. Consequently, the automatic renewal clause is not reasonably necessary to protect JJ Richards’ legitimate interests.

(b)    The price variation clause: Although JJ Richards’ costs may increase for reasons beyond its control, the price variation clause goes beyond what is reasonably necessary in order to protect JJ Richards’ legitimate interests. For example, on one view, the price variation clause would allow JJ Richards to increase its prices simply because it wished to increase its revenue or profitability. While increasing prices in order to increase its revenue or profitability would be in JJ Richards’ interests, those are not legitimate interests in this context.

(c)    The agreed times clause: The agreed times clause goes beyond what is reasonably necessary to protect JJ Richards’ legitimate interests by absolving JJ Richards of its performance obligations and requiring JJR Customers to assume the risk of non-performance under circumstances that they do not control.

(d)    The no credit without notification clause: The right to render charges when JJ Richards is unable to perform the service for any reason goes beyond what is reasonably necessary to protect JJ Richards’ legitimate interests.

(e)    The exclusivity clause: The exclusivity clause goes beyond what is reasonably necessary to protect JJ Richards’ legitimate interests. JJ Richards does not need to have exclusivity in relation to waste management in order to conduct its business.

(f)    The credit terms clause: The short credit term of seven days and the obligation on the JJR Customer to pay “normal charges” during suspension without any limitations, irrespective of whether JJ Richards had in fact incurred any expenses, goes beyond what is reasonably necessary to protect JJ Richards’ legitimate interests.

(g)    The indemnity clause: The unlimited indemnity in favour of JJ Richards, even where the loss incurred by JJ Richards is not the fault of the JJR Customer, goes beyond what is reasonably necessary to protect JJ Richards’ legitimate interests.

(h)    The termination clause: Where monies remain outstanding from a JJR Customer, JJ Richards could recover those funds through ordinary legal recovery processes. JJ Richards could also charge interest for outstanding fees. By enabling JJ Richards to continue to charge JJR Customers for equipment they no longer require or enjoy, in circumstances where JJ Richards could recoup outstanding fees through other means, this clause goes beyond what is reasonably necessary to protect JJ Richards’ legitimate interests in recovering outstanding monies.

59    JJ Richards and the ACCC agree that the Impugned Terms would cause detriment if they were relied on by JJ Richards. I am satisfied that each of the Impugned Terms would cause detriment if relied on by JJ Richards.

60    I am also satisfied that the Impugned Terms are not transparent for the following reasons. The Standard Terms are drafted in legal language, rather than in plain English. Further, the Impugned Terms could have been presented in a manner that was clearer and more readily accessible to a small business customer. The font size of the Standard Terms was very small. The Impugned Terms were not presented in a way that drew them (as distinct from the other terms) to the customer’s attention: Chrisco, [89]. The Standard Terms can fairly be described as a “densely packed page of small print terms and conditions” (Chrisco, [90]).

61    Further, as noted above, the Impugned Terms are likely to interact in a way that is even more detrimental to JJR Customers. To give one example, the agreed times clause and the no credit without notification clause have the combined effect (at least on one view) that JJ Richards can attend to make a collection outside of agreed hours, fail to collect and still charge the customer. To give another example, where a customer is not aware of the automatic renewal of the contract, and has not monitored the term of the agreement, the agreement may be automatically renewed. Where the customer then seeks to terminate the contract, but has not paid for the first week’s service under the renewed contract, JJ Richards is, on one view, entitled to leave unwanted equipment on the JJR Customer’s property and to continue to charge the customer for that equipment.

62    Although (given the early stage of resolution of this proceeding) the ACCC has not led evidence as to whether the Standard Terms were otherwise clearly presented and readily available to customers (that is, evidence as to whether JJR Customers were given the opportunity to review the terms before signing), I find that the Impugned Terms are not transparent. In any event, although a relevant factor, lack of transparency is not an essential element in assessing whether a term of a small business contract is unfair.

63    The evaluative exercise requires the Court to take into account the contract as a whole. Here, the other terms of the contract do not appear substantially to ameliorate the impact of the Impugned Terms. Further, the Impugned Terms tend to exacerbate each other, increasing the overall imbalance between the parties and the risk of detriment to JJR Customers.

Conclusion as to the Impugned Terms

64    For the reasons set out above, I conclude that each of the Impugned Terms is “unfair” within the meaning of s 24 of the Australian Consumer Law. In circumstances where all of the JJR Waste Management Contracts are standard form contracts, it follows that, insofar as the Impugned Terms are contained in small business contracts, they are void under s 23(1) of the Australian Consumer Law. I consider it appropriate in the circumstances to make the declarations sought, being declarations made pursuant to s 250(2) of the Australian Consumer Law.

Injunctions

65    The ACCC seeks the imposition of injunctions under s 232 of the Australian Consumer Law, restraining JJ Richards from relying on the Impugned Terms and from entering into standard form contracts that are small business contracts containing an Impugned Term.

66    The ACCC also seeks injunctions requiring JJ Richards to publicise the decision, notify affected customers and implement a compliance program.

67    JJ Richards consents to these injunctions. The ACCC submits that it is appropriate for the Court to order those injunctions.

68    The injunctions may be made under s 232 of the Australian Consumer Law. Section 232(1)(a) empowers the Court to grant an injunction, in such terms as it considers appropriate, if the Court is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes, or would constitute, a contravention of a provision of Chapter 2 of the Australian Consumer Law. Section 232(3) provides that s 232(1) applies in relation to conduct constituted by applying or relying on, or purporting to apply or rely on, a term of a contract that has been declared under s 250 to be an unfair term as if the conduct were a contravention of a provision of Chapter 2. Pursuant to s 232(4)(a), the Court may grant an injunction whether or not there is a likelihood of the conduct being repeated.

69    Further, under s 233 of the Australian Consumer Law, if an application is made under s 232, the Court may, if it considers that it is appropriate to do so, grant an injunction by consent of all the parties to the proceedings, whether or not the Court is satisfied as required by s 232(1).

70    In the circumstances, I consider the injunctions proposed by the parties to be appropriate.

Conclusion

71    In light of the above, I am prepared to make the declarations and orders set out in the Minutes of Proposed Declarations and Orders.

Associate:

Dated:    18 October 2017

APPENDIX STATEMENT OF AGREED FACTS AND ADMISSIONS

1.    This Statement of Agreed Facts and Admissions is made jointly by the Applicant (the ACCC) and the Respondent (JJ Richards) for the purposes of section 191 of the Evidence Act 1995 (Cth).

AGREED FACTS

JJ Richards’ standard form contracts

2.    The Applicant (the ACCC) is the statutory authority responsible for enforcing the Competition and Consumer Act 2010 (Cth) (CCA). Schedule 2 of the CCA includes the Australian Consumer Law (ACL).

3.    On 12 November 2016 amendments to the ACL contained in the Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Act 2015 (Cth) (the ACL Small Business Amendments) commenced.

4.    The ACL Small Business Amendments extended the operation of the protections in Part 2-3 of Chapter 2 of the ACL to small businesses (the Small Business Unfair Contract Terms Protections).

5.    In the lead up to the commencement of the Small Business Unfair Contract Terms Protections, the Applicant published a report titled Unfair terms in small business contracts: A review of selected industries (the Report).

6.    The Report identified a number of common terms used in standard form contracts which the ACCC was concerned might be unfair under the Small Business Unfair Contract Terms Protections (Terms of Concern). The Report discussed ways to avoid including unfair terms in standard form contracts. Waste management was one of seven industries to which a chapter of the Report was dedicated. This chapter identified automatic renewal clauses, unilateral variation clauses, limited liability and wide indemnities as areas of particular concern in this industry.

7.    Since at least 12 November 2016, JJ Richards has carried on a business, in trade or commerce, providing waste management services in Australia (JJR Waste Management Services).

8.    Since 12 November 2016, JJ Richards has entered into or renewed at least 26,000 contracts for it to provide JJR Waste Management Services in Australia (JJR Waste Management Contracts).

9.    At least some of the counterparties to the JJR Waste Management Contracts (JJR Customers) were businesses that employed fewer than 20 persons at the time they entered into the contracts (Small Business Customers).

10.    The upfront price payable under the JJR Waste Management Contracts is:

(a)    less than $300,000 in the case of JJR Waste Management Contracts with a duration of 12 months or less; and

(b)    less than $1,000,000 in the case of JJR Waste Management Contracts with a duration of more than 12 months.

11.    The JJR Waste Management Contracts contain pro forma terms entitled ‘Terms and Conditions’ (the Standard Terms). An example contract using the Standard Terms is annexed to this Statement.

12.    JJ Richards prepared the Standard Terms before it participated in any discussion with potential JJR Customers in relation to providing JJR Waste Management Services to those potential JJR customers.

13.    The Standard Terms included terms relating to automatic renewal (clause 1), price variation (clause 4), agreed times (clause 6), no credit without notification (clause 7), exclusivity (clause 9(i)), credit terms (clause 16), indemnity (clause 17) and termination (clause 18) (the Impugned Terms).

14.    On 6 December 2016 the ACCC wrote to JJ Richards to:

(a)    draw JJ Richards’ attention to the Report; and

(b)    inform JJ Richards that the ACCC was investigating whether terms in existing and new contracts being offered by providers of waste management services gave rise to concerns under the ACL; and

(c)    request copies of relevant contracts from JJ Richards.

15.    On 15 December 2016 JJ Richards replied to the ACCC’s letter of 6 December 2016. In its response, JJ Richards confirmed that it was aware that the Small Business Unfair Contract Terms Protections had commenced on 12 November 2016. JJ Richards stated that it was in the process of undertaking a review of its service agreements, and, upon completion of that review, would be open to providing the ACCC with copies of the agreements.

16.    During the period 19 December 2016 to 31 March 2017 the ACCC made further requests of JJ Richards for relevant contracts. On 31 March 2017, the ACCC notified JJ Richards of the ACCC’s intention to seek preliminary discovery unless JJ Richards provided copies of all standard form contracts entered into, renewed or varied since 12 November 2016 with its small business customers in the Melbourne and Brisbane metropolitan areas.

17.    On 28 April 2017 the ACCC received a letter from JJ Richards, which stated that JJ Richards could not determine which contracts were with small businesses. The letter enclosed a USB containing a copy of 10,071 contracts that were entered into since 12 November 2016 with customers in the Melbourne or Brisbane metropolitan areas (the Melbourne and Brisbane Contracts).

18.    The 10,071 Melbourne and Brisbane Contracts are a subset of the total JJR Waste Management Contracts referred to in paragraph 8 above.

19.    JJ Richards categorised the Melbourne and Brisbane Contracts by location (i.e. Melbourne or Brisbane) and length (i.e. a ‘standard length’ or ‘custom length’).

20.    The majority of the Melbourne and Brisbane Contracts (i.e. 9,776 of 10,071 contracts) are for one of the following standard length contract durations:

(a)    1 year initial period, 1 year period of auto-renewal;

(b)    2 year initial period, 2 year period of auto-renewal;

(c)    3 year initial period, 3 year period of auto-renewal;

(d)    4 year initial period, 4 year period of auto-renewal; and

(e)    5 year initial period, 5 year period of auto-renewal.

21.    The term of 295 of the Melbourne and Brisbane Contracts is a custom length contract duration (i.e. 1 month, 2 months, 72 months) rather than a standard length contract duration.

22.    The Standard Terms are identical in the Melbourne and Brisbane Contracts except that:

(a)    the automatic renewal clause (clause 1) has been struck out of 288 of the 295 custom length contracts;

(b)    the automatic renewal clause (clause 1) is included in 7 of the 295 custom length contracts, however, in each of these contracts the duration of the initial term is a different length to the period of the subsequent term;

(c)    the competitive pricing clause (clause 2) has been struck out in 149 of the standard length contracts.

The Term (clause 1)

23.    Clause 1 of the Standard Terms reads:

1.    The Term. Both parties agree the prices overleaf reflect a long-term relationship and that is the spirit of the agreement.

The term of this agreement shall be for an initial period of [five] years.

The terms shall be automatically renewed for further periods of [five] years thereafter unless terminated by either party giving written notice within 30 days prior to the end of the initial term or any renewed term.

24.    The term clause binds the JJR Customer to subsequent contract terms, each equal to the initial contract term, unless the JJR Customer cancels the contract within 30 days before the end of the initial or any subsequent term (automatic renewal).

25.    The automatic renewal and limited period of time within which a JJR Customer can terminate the contract may result in JJR Customers inadvertently missing the opportunity to terminate the contract and therefore remaining contracted to JJ Richards for extensive periods with no opportunity to change to an alternative supplier during the term of the renewed contract.

The price variation clause (clause 4)

26.    Clause 4 of the Standard Terms reads:

4.    Price Variations. JJR may adjust its prices during the term of the agreement for reasons such as but not limited to increased operation costs, changes in disposal fees, site profitability, changes to disposal facility locations or increased government charges and levies by giving customers 30 days notice of such increase.

27.    The price variation clause allows JJ Richards to unilaterally increase the price of the JJR Waste Management Services. If JJ Richards exercises its rights under the price variation clause a JJR Customer may be faced with higher costs for their service without any opportunity to negotiate or any corresponding benefit.

The agreed times clause (clause 6)

28.    Clause 6 of the Standard Terms reads:

6.    Agreed Times. JJR will use all reasonable endeavours to perform the collection at the times agreed but accepts no liability where such performance is prevented or hindered in any way.

29.    The agreed times clause removes any liability for JJ Richards where performance of the JJR Waste Management Services has been prevented or hindered, even where the JJR Customer is not in any way responsible for the prevention or hindrance.

The no credit without notification clause (clause 7)

30.    Clause 7 of the Standard Terms reads:

7.    No credit without notification. Unless previously notified JJR shall be entitled to render charges for the service if it attends the customer’s premises and is unable to perform the service due to holiday closure, lack of access or other reason. All credit requests must be within 14 days of invoice date.

31.    The no credit without notification clause means JJ Richards can charge JJR Customers for services it has not rendered for reasons that are or may be beyond the JJR Customer’s control. As JJ Richards is only required to use reasonable endeavours to perform collections at the agreed time due to the operation of clause 6, if JJ Richards attends the JJR Customer’s premises at a different time and is unable to collect the waste for any reason, JJ Richards can still charge the JJR Customer. Further, the clause puts the onus on the JJR Customer to make a credit request, even if the non-performance is in no way the fault of the JJR Customer.

32.    If JJ Richards attends a customer’s premises at the agreed time but there is a fault with its equipment such that it is unable to collect the waste, it can still charge the JJR Customer.

33.    If JJ Richards fails to fulfil its obligations and relies on the no credit without notification clause, JJR Customers could be charged for services that were not supplied. Further, the JJR Customer carries the administrative burden of making a credit request.

The exclusivity clause (clause 9(i))

34.    Clause 9(i) of the Standard Terms reads:

9.    The customer agrees to:

i.    Grant JJR exclusive rights to the removal of waste, recyclables, combustible liquids and dangerous goods from the premises specified and not engage a second party for waste, recyclables, combustible liquids and dangerous goods removal during the term of this agreement.

35.    The exclusivity clause requires JJR Customers to obtain all their waste management services from JJ Richards. This prevents JJR Customers from obtaining services from any alternative supplier, even when the customer is seeking additional services to those provided by JJ Richards.

36.    Reliance by JJ Richards on this clause when a JJR Customer needs additional waste management services beyond those they have contracted for with JJ Richards, would prevent the JJR Customer from seeking a better or lower priced service.

The credit terms clause (clause 16)

37.    Clause 16 of the Standard Terms reads:

16.    Credit terms 7 days. The customer agrees to pay for the service subject to the credit terms and acknowledges service may be suspended if payment is not received. During the period of suspension normal charges will apply to cover expenses associated with the overdue payment including but not limited to interest, administration, legals and equipment capital return.

38.    The credit terms clause requires JJR Customers to pay for their account within 7 days and allows JJ Richards to suspend services if payment is not received. It also allows JJ Richards to continue charging the JJR Customer while services are suspended to cover costs associated with the overdue payment. It confers no corresponding right on JJR Customers, such as the right to withhold payment for the failure to provide services.

39.    If JJ Richards were to rely on the credit terms clause, JJ Richards can suspend services for non-payment after only eight days and the JJR Customer could be required to pay for services where JJ Richards is not providing any JJR Waste Management Services to the JJR Customer.

The indemnity clause (clause 17)

40.    Clause 17 of the Standard Terms reads:

17.    Indemnity. To the maximum extent permitted by law, the customer shall be responsible for and indemnify JJR from and in respect of all liabilities, claims, damages, actions, costs and expenses which may be incurred by JJR on a full indemnity basis (whether successful or not) as a result of or arising out of or otherwise in connection with this agreement, including any breach by the customer of any of the warranties, covenants and conditions herein.

41.    The indemnity clause creates an unlimited indemnity in favour of JJ Richards, even where the loss incurred by JJ Richards is not the fault of the JJR Customer. There is no corresponding benefit for the JJR Customer.

The termination clause (clause 18)

42.    Clause 18 of the Standard Terms reads:

18.    No termination without final payment. Payment in full of all monies outstanding must be made before this agreement can be terminated. The equipment will not be removed until such payment is made and rental for the equipment may be charged if delays in payment of the final account occur.

43.    The termination clause prevents JJR Customers from terminating their contracts with JJR if they have payments outstanding and entitles JJ Richards to continue charging JJR Customers equipment rental after the termination of the contract, despite the fact that services may not be provided by operation of the credit terms clause (clause 16).

44.    The JJR Customer has no corresponding right and obtains no benefit from the termination clause.

45.    The operation of the termination clause could lead to the contract being automatically renewed in accordance with clause 1 in circumstances where the JJR Customer wished to terminate the contract prior to its automatic renewal.

46.    Where monies remain outstanding from a JJR Customer, JJ Richards could recover those funds through ordinary legal recovery processes.

ADMISSIONS

47.    JJ Richards admits that:

(a)    the JJR Waste Management Contracts are standard form contracts for the purposes of s 23(1) of the ACL; and

(b)    the JJR Waste Management Contracts with Small Business Customers are small business contracts for the purposes of s 23(4) of the ACL.

48.    JJ Richards admits that each of the Impugned Terms:

(a)    causes a significant imbalance in the parties’ rights and obligations arising under a JJR Waste Management Contract;

(b)    is not reasonably necessary to protect the legitimate interests of JJ Richards; and

(c)    would cause detriment to Small Business Customers if relied on by JJ Richards.

49.    JJ Richards admits that any Impugned Terms included in a JJR Waste Management Contract with a Small Business Customer are unfair by virtue of s 24 of the ACL and void by virtue of s 23 of the ACL.