McCracken, C. v Equus Financial Services Ltd & Ors [1995] FCA 580

Original Word Document (87 KB)

IN THE FEDERAL COURT OF AUSTRALIA )

)

VICTORIA DISTRICT REGISTRY ) VG 17 of 1994

)

GENERAL DIVISION )

BETWEEN: CHARLES McCRACKEN

Applicant

AND: EQUUS FINANCIAL SERVICES LTD

(ACN 006 012 344)

First respondent

VACATION OWNERSHIP RESORTS LTD

(ACN 006 110 603)

Second respondent

VACATION OWNERSHIP PTY LTD

(IN LIQUIDATION)

(ACN 006 097 141)

Third respondent

CLUB RESORTS (FINANCE) PTY LTD

(ACN 006 277 541)

Fourth respondent

CORAM: RYAN J

PLACE: MELBOURNE

DATE: 31 JULY 1995

MINUTE OF ORDER

THE COURT ORDERS THAT:

1. The question set down for trial as a preliminary issue be answered as follow:

"Yes, in the sense that it was a contract for the provision, grant or conferral of rights, benefits or privileges under a contract (being the contract enquired after itself) in relation to the provision of, or the use or enjoyment of facilities for recreation".

2. The application herein be adjourned for further directions before Ryan J on a date to be fixed.

3. The costs of the applicant and the first respondent of the preliminary question, including the costs of the hearing on 6 and 7 March 1995, be reserved.

NOTE: Settlement and entry of orders is dealt with in O 36 of the Federal Court Rules.

ReasonsIN THE FEDERAL COURT OF AUSTRALIA )

)

VICTORIA DISTRICT REGISTRY ) VG 17 of 1994

)

GENERAL DIVISION )

BETWEEN: CHARLES McCRACKEN

Applicant

AND: EQUUS FINANCIAL SERVICES LTD

(ACN 006 012 344)

First respondent

VACATION OWNERSHIP RESORTS LTD

(ACN 006 110 603)

Second respondent

VACATION OWNERSHIP PTY LTD

(IN LIQUIDATION)

(ACN 006 097 141)

Third respondent

CLUB RESORTS (FINANCE) PTY LTD

(ACN 006 277 541)

Fourth respondent

CORAM: RYAN J

PLACE: MELBOURNE

DATE: 31 JULY 1995

REASONS FOR JUDGMENT

RYAN J: On 18 November 1994, I ordered by consent that the following question be set down for trial as a preliminary issue pursuant to O 29 of the Rules of this Court:

"Does the contract referred to in paragraphs 3 and 4 of the Applicant's Amended Statement of Claim constitute a contract for the supply of goods or services within the meaning of the Trade Practices Act 1974."

Paragraphs 3 and 4 of the amended statement of claim are in these terms:

"3. In and between the months of December, 1991 and February, 1992 the second and third respondents ("the Suppliers") or one of them entered into a contract ("the Supply Contract") with the applicant.

PARTICULARS OF SUPPLY CONTRACT

The supply contract was in writing contained in a document headed "Application for units" dated 14 December 1991 and in a letter to the Applicant dated 23 December 1991.

4. Under the Supply Contract the Suppliers agreed to supply and in large measure did supply to the applicant goods and services within the meaning of the Act ("the Services").

PARTICULAR OF THE SERVICES

These particulars are set out in Schedules 1 and 2."

Schedule 1 to the amended statement of claim gave the following particulars of some 26 services:

" SCHEDULE

PARTICULARS OF THE SERVICES

(a) a time share in Club Mildura ("the Resort");

(b) a unit in the Club Mildura Interim Trust Deed ("the Deed");

(d) a fifty first interest in Lot 43 (alternatively a lot on Registered Cluster Plan No 1433Q ("the Cluster Plan")) and an undivided share in the common property for the time being described on the Cluster Plan;

(e) accommodation in a two bedroom villa part of the Resort as described in Schedule 2 together with the supply of all facilities including linen, towels, soap, toilet paper, washing up detergent and tea towels and the supply of access to community laundry facilities including washing machines and irons and of access to facilities including swimming pool, gymnasium, barbeques, bowling green, spa and sauna, tennis court and gardens all maintained and tended by caretakers;

(f) Rights of occupation constituted by:

(i) a licence from the Club to the Applicant pursuant to the Memorandum and Articles of Association of the Club ("the memorandum and articles") to occupy a lot on the Cluster Plan No and the common property for the time being described on the Cluster Plan for the one vacation week to which the Applicant's entitlement related;

(ii) an entitlement on the part of the Applicant pursuant the Regulations of the Club ("the Regulations") to be allocated by the Club a villa apartment at Club Mildura for his use for the one vacation week to which the Applicant's entitlement related;

(iii) an entitlement on the part of the Applicant pursuant the Regulations to invite visitors to the Resort for the one vacation week to which the Applicant's vacation entitlement related;

(iv) an entitlement on the part of the Applicant pursuant the Regulations to rent out the Applicant's rights of occupation at the Resort

(g) further services as follows:

(i) the issuing by the Trustee under the Deed of a Certificate of Unit Holding in the name of the Applicant;

(ii) the vesting in the Club by the Second Respondent and the Third Respondent of certain chattels;

(iii) the procurement and granting by the Second Respondent and the Third Respondent of a lease from the Third Respondent to the Club of Lot 43 on the Cluster Plan, or of some other lot on the Cluster Plan in the form annexed to the Deed and marked "G" and also of the Common Property relating to the leased allotment the lease to be duly executed stamped and lodged for registration;

(iv) the procurement by the Second Respondent and the Third Respondent of a management agreement between the Club and Second Respondent as manager in the form annexed to the Deed and marked "J" to be duly completed and executed by the Club;

(v) the procurement by the Second Respondent and the Third Respondent of the adoption by the Club of Regulations in the form annexed to the Deed and marked "E";

(vi) the registration in the Office of Titles by the Second Respondent and the Third Respondent of the Cluster Plan in the form annexed to the Deed and marked "K";

(vii) the due determination by the Second Respondent that the Applicant's Subscription monies could properly be disbursed by the trustee;

(viii) the giving by the Second Respondent to the Trustee of notice in writing of such determination;

(ix) the delivery by the Second Respondent to the Trustee of a duly executed transfer in registrable form from the Third Respondent to the Applicant of a fifty first interest in Lot 43 (or some other lot on the Cluster Plan) and an undivided share in the common property for the time being described on the Cluster Plan;

(x) the delivery by the Second Respondent to the Trustee of a share in the Club in the name of the
Applicant;

(xi) the procurement by the Second Respondent or the Third Respondent for the Applicant of a two year membership in the reciprocal exchange programme conducted by Resort Condominiums International Inc of Indianapolis, Indiana USA ("RCI");

(xii) the procurement of the Second Respondent or the Third Respondent of "Charter Ownership Benefits" for the Applicant and the Applicant's family namely:-

(aa) discounts through the Resort and RCI in services including hotels, travel, and shopping;

(ab) Club Mildura Charter Owner VIP Referral Programme;

(ac) Payment of RCI enrolment fee;

(ad) Payment of two years RCI membership dues;

(ae) Year round day use of all Club Resorts facilities, including Club Yarrawonga, Club Yarrawonga 11, Club Mildura, Club Woodleigh, Club Kirribilli and Club Resort Noosa River; and

(af) Special bonuses, including "special Club Mildura weeks", "developer weeks", "bonus weeks" and "tour packages."

Schedule 2 to the amended statement of claim gave particulars of apartment accommodation, furnishings, chattels and recreational facilities which, it was said, the resort at Mildura was intended to and did include.

THE FACTUAL BACKGROUND

The history against which the question has to be resolved commences with the desire by the applicant, Mr McCracken, in about December 1991 to acquire a time share interest in a holiday resort at Mildura known as "Club Mildura". The benefits of ownership were described as follows in a letter dated 16 November 1991 issued to Mr McCracken by Club Resorts Limited, a company related in some way to the second and third respondents:

" CLUB MILDURA

CHARTER OWNERSHIP BENEFITS

CLUB MILDURA CHARTER OWNERS:

CHARLES BLAINE McCRACKEN

THE BEARER OF THIS LETTER IS ENTITLED TO THE CHARTER OWNERSHIP BENEFITS FOR THEMSELVES AND THEIR FAMILIES AS FOLLOWS:

** RCI INITIAL ENROLMENT FEE WILL BE PAID

** TWO YEARS RCI MEMBERSHIP DUES WILL BE PAID

** THE MAINTENANCE FEE FOR THE CURRENT MAINTENANCE YEAR WILL BE PAID

** OWNERSHIP WILL BE EVIDENCED BY A GOVERNMENT REGISTERED TITLE

** YEAR ROUND DAY USE OF ALL CLUB RESORTS FACILITIES

** SPECIAL BONUSES

SPECIAL CLUB MILDURA WEEKS - ORGANIZE DIRECT WITH RESORT MANAGER

DEVELOPER WEEKS - ORGANIZE DIRECT WITH EACH DEVELOPER

BONUS WEEKS - ORGANIZE DIRECT WITH RCI AUSTRALASIA

TOUR PACKAGES - ORGANIZE DIRECT WITH TRAVEL PLEASURE

** DISCOUNTS THROUGH CLUB MILDURA AND RCI INCLUDE:

HOTELS AIRFARES TOURIST ATTRACTIONS

MOTELS CAR HIRES GOLF

RESORTS COACHES SHOPS

CRUISES TRAINS RESTAURANTS

TRAVEL INSURANCE HOME INSURANCE PHOTO PROCESSING

** CLUB MILDURA CHARTER OWNER VIP REFERRAL PROGRAM

BONUS DOLLARS EARNED CAN PROVIDE TO CHARTER OWNERS FREE!!!

AIRFARES RESORT MAINTENANCE

JEWELERY CLOTHING

APPLIANCES POWER TOOLS

CAMERAS LINENS

AUTO ACCESSORIES CHEMISTS SUPPLIES"

The reference in that letter to "RCI" was to Resorts Condominium Incorporated which, for a fee, arranges for owners of time share interests at resorts throughout the world to exchange holidays with owners of other, similar, interests at mutually desired locations. RCI apparently charges an initial enrolment fee and an annual subscription to each of its time-share owning "members".

A leaflet, also issued to prospective members, listed these benefits as accompanying purchase of a time-share unit in Club Mildura:

"YOU RECEIVE THESE WITH YOUR HOLIDAY OWNERSHIP PURCHASE

. Ownership with Deed and Title

. Sell it like any asset

. Rent it out

. Exchange for new places

. Bequeath to heirs

. Loan it to friends and relatives

. Equity and position

. Potential appreciation

. Freeze costs of future holidays

. Accommodations that beat Motel mediocrity

. Luxuriously furnished and fully equipped

. Special discounts on car rentals any time

. Special discounts on travel any time

. Guaranteed holiday

. Establish children's life style

. Improve your vacation lifestyle

. Ample resort facilities

. Belong to a special group

. New friendships

. Use it without reservations

. Worry free holidays

. Have a voice in holiday quality"

A letter of "welcome" addressed to Mr McCracken contained these passages:

" YOUR HOST - ALLAN WINSLADE

On behalf of the Management and Staff, we would like to welcome you to Club Mildura. The following information, we hope, will make your stay relaxing and enjoyable.

RECEPTION - The Reception Office is open from 7.30 am to 8.00 pm. With this in mind, please advise the office if you plan on vacating your unit before 7.30 am.

RESORT OWNERSHIP - Linda Scott or Lynda Hards are here to answer all enquiries regarding the purchase of Holiday Ownership at our beautiful resort.

CLUB LOUNGE - GYM & GAMES ROOM - SPA & SAUNA

The hours of the above areas are 7.30 am to 10.30 pm. You will need to use the Security Key on your key ring between 7.00 pm and 10.30 pm to gain access to these areas.

IN HOUSE VIDEOS - Three movies are shown daily, the movie roster is displayed on the notice board outside the Reception front door. The picture will be received on channel 0 or 1.

It is most important that you do not adjust the fine tuning of your sets. If you are experiencing problems please report them to the office and one of our maintenance staff will attend to them.

SWIMMING POOL - Hours of the swimming pools are 7.00 am to 12.00 pm. Children must be supervised at all times by an adult and no glass and no smoking rules apply to this area as well as the spa area. We also ask that great care be taken to ensure that the safety gate is kept locked at all times.

BARBECUES - Electric barbecues are free of charge and when using
these facilities at night you will find white light switches mounted on the wall near these installations.

BOWLING GREEN - The bowling green is strictly for adults and bowls are available at the front office on request. Children are allowed under adult supervision.

TENNIS COURT - For the use of guests and members. Please make your use of the court for a one half hour duration, this will ensure that all may enjoy this facility. Equipment is available at the office. If you require the equipment after 8.00 pm please sign them out before the office closes and return them first thing next morning."

The same letter indicated telephone numbers or locations outside the resort at which other services, recreational activities or entertainment were available to members, and included the names of traders in the Mildura area who offered discounted prices to members. Other facilities or services available within the resort were described as follows:

"IRONS/IRONING BOARD - Available at reception. Please return these as soon as you have finished ....

MESSAGES - Urgent messages will be delivered, otherwise please check the notice board.

MAINTENANCE - In the adult lounge near the book shelf you will find a shelf with a book on it. This book is there for you to fill in with any maintenance problems you may have in your villa."

On 14 December 1991 Mr McCracken signed an "understanding and acknowledgment" under Club Resorts Limited's letterhead in these terms:

" CLUB MILDURA CHARTER OWNERSHIP

UNDERSTANDING AND ACKNOWLEDGMENT

1. We understand that we have purchased a CHARTER OWNERSHIP at CLUB MILDURA in a TWO BEDROOM HOLIDAY HOME that will accommodate six people.

2. We understand that our ownership will be evidenced by a GOVERNMENT REGISTERED TITLE issued from the Registrar of Titles of Victoria.

3. We understand that Club Mildura is affiliated with the World's Largest Holiday Exchange Company, RCI (Resort Condominiums International) and that we may reserve our holiday week up to two years in advance at Club Mildura and with RCI to travel
anytime we want based on space availability.

4. As CHARTER OWNERS at CLUB MILDURA, we must pay a common owner maintenance fee that is currently $215.00.

5. We understand that Club Mildura cannot resell our ownership for us.

6. We have given due consideration to our financial commitments and understand that financial arrangements are being made on our behalf and when the repayments come due as stated on the finance contract, we will have sufficient income or funds with which to meet this additional commitment to complete the payment of our purchase.

7. We understand that all documents we have signed today are legal and binding at the time of signing.

8. The developer will pay the RCI Enrolment fee of $200.00 and 2 years RCI Annual Subscription fee $258.00. The developer will pay this years Maintenance fee $215.00.

WE HAVE READ AND UNDERSTAND EACH OF THE EIGHT POINTS LISTED ON THIS DOCUMENT AND ACKNOWLEDGE SAME BY OUR SIGNATURES BELOW."

Also on 14 December 1991 Mr McCracken made written application "to Vacation Ownership Resorts Limited for one unit with a view to obtaining a Fractional Interest in a Lot(s) (as chosen by the Manager in its absolute discretion) in Registered Cluster Plan No 1433Q and the following shares in the Club:

Proposed Share in the Club Subscription Moneys

One floating week @ ($)10750".

Then followed a statement of estimated stamp duties, registration fees and legal fees bringing the total application moneys to $11,317.

That application was accepted by Club Resorts Limited which wrote to Mr McCracken on 23 December 1991 in these terms:

"Congratulations! We are delighted to advise that your Application for Units in the Club Mildura Trust has been accepted by Vacation Ownership Resorts Limited.

Registration has been completed so we attach to this letter your photocopy of the accepted Application.

All of the wonderful benefits of Resort Holiday Ownership are now opening for you and your family.

A whole lifetime of quality, luxury holidays are yours to enjoy in exotic settings all around the world.

We welcome your enquiries to assist in the selection and enjoyment of these wonderful vacations which are now available to you and your family.

PURCHASE OF RESORT OWNERSHIP

We are pleased to advise you that the legal requirements for the purchase of your Resort Ownership has now been completed.

Your Share Certificate and the Transfer of Land for your property at Club Mildura, have been collected by the Permanent Trustee and are in the process of being issued in your Legal Names.

The time taken by the Titles Office to issue (sic) the Certificate of Title can take up to as much as eleven (11) months. This time frame is strictly controlled by the workload at the Titles Office. The process will be to get them stamped at the Stamps Office and lodge them with the Titles Office.

Hopefully, you can appreciate that Club Mildura has no control over this time frame, however, please be assured that your rights to use your Holiday Ownership is in no way affected and that your entitlements commenced on the date of your purchase.

We again welcome you to Club Mildura and we know that you will enjoy your stay at the resort for many years to come. We feel that the RCI Exchange System will ensure many happy holidays to come, both in Australia and around the world."

Attached to that letter were a sample Certificate of Title and a sample Certificate of Shareholding in Club Mildura Limited which was described as having an authorised capital of $5125 divided into 5125 shares of one dollar each. The sample Certificate of Title suggested that there would be transferred to Mr McCracken from Vacation Ownership Pty Ltd "one equal undivided fifty first part or share in Lot 43 delineated on Registered Cluster Plan No 1433Q and an undivided share in the common property for the time being described on the said plan."

The entitlements attaching to membership were further described in a prospectus which included these statements:

"1. Club Mildura is a Title-based Resort Ownership resort consisting of both fixed and floating time. The Resort is being constructed in stages. For the definition of fixed and floating time, refer to page 7.

2. For each Resort Ownership Interval purchased a purchaser obtains a 1/50th (stage 1) 1/51st (stage 2) or 1/102nd (stages 3-7) undivided part or share as a tenant in common in the lot upon which that villa in the resort is located and a share in Club Mildura Ltd. As evidence of ownership a purchaser receives a Certificate of Title issued by the Land Titles Office and a Share Certificate for their share in the Club. For further details, refer "Legal Safeguards", page 8.

3. Owners at Club Mildura can exchange their intervals at approximately 1800 similar Resorts in 53 countries around the world. For further details, refer page 7.

4. Your application fee is a once only capital payment entitling you to the benefits set out in paragraphs 2 and 3 above. There is an annual maintenance fee (similar to Council Rates) which for the year commencing 1st July 1990 is $196,00 per Resort Ownership Interval. For a full description, refer to "Maintenance Fee", page 8.

5. The Resort is managed by Vacation Ownership Pty Ltd pursuant to a management agreement. A fee will be claimed by the Resort Manager from the Club for this service during the term of this Prospectus. The management agreement provides that the Resort manager is entitled to a fee equal to 10% of the annual outgoings. Refer to "Additional Statutory Information", Item 23, page 11. Pursuant to clause 13.4 and 8.4 respectively of the Management Agreement and Licence Agreement referred to on page 11 No 23 the Club may become liable to pay $300,000 to the Developer under each agreement if they terminate the agreement otherwise than in accordance with the respective provisions.

...

9. On signing the application form, payment of the deposit and acceptance by the Manager, a purchaser obtains a unit in the Trust. After payment of the balance of the application monies and the application of these moneys pursuant to the Trust Deed this unit is cancelled and the documents referred to in paragraph 2 are issued.

10. The Trust Deed provides that the stages of the Resort will be constructed and available for use as follows:

Stage 3 31st December, 1990 12 Villas

Stage 4 31st December, 1991 12 Villas

Stage 5 31st December, 1992 12 Villas

Stage 6 31st December, 1993 12 Villas

Stage 7 31st December, 1994 60 Villas

(or such later date as is agreed between the Developer and the Trustee).

Construction may be suspended at the completion of any stage. However the Developer intends to complete construction of the whole Resort. Refer "Legal Safeguards", page 8."

The attractions of Club Mildura and the nature of interests available to members were set out as follows at pp 6-7 of the prospectus:

"LET'S TALK ABOUT THE CLUB MILDURA DEVELOPMENT:

Club Mildura, situated in a quiet, spacious, professionally landscaped garden setting is a First Class Holiday Resort.

Stages 1 and 2 of the resort comprise 47 luxurious villas with facilities for the whole family.

They include a spacious adult club lounge with billiards and facilities to share with other members.

The facilities include:

Swimming pool and outdoor spa

Synthetic all-weather tennis court

Synthetic bowling green

Heated indoor spa

Sauna

Gymnasium

Games room

Playground equipment

Bar-B-Ques.

Photographs of the development are shown on pages 1, 5 and inside front cover. Stages three to seven commenced building in 1990 and will include a further 108 villas, a second large swimming pool, a complete indoor sporting complex with spa, a second fully-equipped gymnasium, a second games room with free electronic games, table tennis and billiards. However, we are required to inform you that there is no obligation upon Vacation Ownership Pty Ltd to proceed with stages four to seven. For further information refer to Legal Safeguards.

The dates upon which it is anticipated that construction of Stages three to seven will be completed are set out on page four, Item 10. Vacation Ownership Pty Ltd ("the Developer") has reserved the right to suspend the construction of the Resort at the completion of any stage. The Developer is under no legal obligation to complete stages three to seven of the Resort or the additional sporting facilities, however it has every intention of doing so. The Developer has also reserved the right to vary the type of villas proposed to be built in stages three to seven. The Developer has agreed to complete the second swimming pool, the Indoor Sporting Complex, the second gymnasium and games room by the 31st of December, 1991. The Manager may sell Resort Ownership Intervals prior to completion of those additional amenities.

THE VILLAS

All villas are architecturally designed and are luxuriously furnished and decorated in a similar fashion by expert interior decorators.

Each villa in stage one comprises two generous bedrooms, fully equipped kitchen and laundry, bathroom (with bath and shower), separate toilet, and spacious dining/lining area, all on ground floor level for your added enjoyment. Each villa in stages two to seven comprises two generous bedrooms, fully equipped kitchen, two bathrooms and a spacious dining/living area.

Villas are set in beautiful garden surrounding with access roads and amply under-cover parking.

WHAT DO WE HAVE IN THE VILLAS?

We have included everything you would expect in a luxury holiday villa. Included are heavy-duty quality carpet, bedding for 6, including a Queen size bed, 8 towels, 10 settings of crockery, cutlery and glassware, 2 color television sets (with remote control in the main bedroom), refrigerator, microwave oven, air-cooling, dishwashing machine - even the coat hangers!

WHAT WEEK(S) WOULD SUIT ME?

You buy your time at Club Mildura in intervals of weeks. In units 1 to 47 inclusive each week commences at 4 pm on a Saturday and check out time is at 10 am on the following Saturday. In units 48 onwards the commencement and check out day is on a Friday at the same times.

There are two types of weeks: Fixed weeks and Floating weeks.

FLOATING WEEKS:

Fixed weeks relate to periods of peak demand. They are always available to you without the need to make a reservation. There are 13 fixed weeks in the year which are as follows:

Weeks X1, X2, X3, X4, X51, X52 which are the weeks commencing on the 1st, 2nd, 3rd, 4th, 51st and 52nd Saturday or Friday in each year (Saturday for units 1 to 47 inclusive, and Friday for units 48 onwards). Weeks 52 and 1 must be purchased together as approximately every five years you will get an extra week.)

Easter week E1 which is the one vacation week commencing on the Saturday preceding Good Friday in units 1 to 47 inclusive, and on the Friday preceding Good Friday in units 48 onwards.

Easter week E2 is the one vacation week commencing on the Saturday following Good Friday in units 1 to 47 inclusive, and on Good Friday, in units 48 onwards, in that year.

Weeks Winter School Holidays 1 and 2 (formerly designated ASH1 and ASH2) are the two (2) consecutive vacation weeks commencing on the first Saturday of the Victorian State School second term holidays in units 1 to 47 inclusive, and on the last Friday of the second term of the Victorian State School calendar in units 48 onwards. You may purchase these weeks single or together.

Weeks Spring School Holidays 1, 2 and 3 (SSH1, SSH2, SSH3) are the three (3) consecutive vacation weeks commencing on the Saturday immediately following the last day of the Victorian State School third term in units 1 to 47 inclusive, or on the last Friday of the third term of the Victorian State School calendar in units 48 onwards. These weeks may also be purchased singly or together.

The weeks X51 Spring School Holidays 1 and Easter Week E1 are called Special Fixed Weeks. This means that by giving six (6) months notice to the Manager of the Club before commencement of that week, the week can be treated as a Floating week for that year. This Floating week can be taken within twelve (12) months of the date of notice of the election. In many ways therefore these Special Fixed Weeks have the best of both worlds.

FLOATING WEEKS:

Any week not included as a Fixed Week is a Floating Week. This means that you can holiday at Club Mildura at any time of your choosing
subject to availability during each 12 month period, other than at Fixed Week times. Reservations may be made up to 12 months in advance.

The commencing date for each 12 month period shall be the anniversary date that you are registered as a Unit Holder in The Club Mildura Interim Trust in relation to that week.

EXCHANGE INTERNAL/AUSTRALASIA AND INTERNATIONAL:

When you purchase one or more weeks at Club Mildura you are permitted to participate in the exchange network managed by Resort Condominiums International (Aust) Pty Ltd (RCI). RCI is the world's oldest and largest exchange network. Audited figures for 1989 show that 98.7% of all properly submitted exchange requests (including exchange alternatives that were offered by RCI and subsequently accepted by members) were satisfactorily fulfilled. The initial two-year membership programme to RCI is paid for you, after which period you have the option of continuing your subscription (annual fee in 1990 is $79.00). This membership entitles each member to deposit his week or weeks at Club Mildura in the RCI SPACEBANK ^TM pool and be eligible to draw from the RCI SPACEBANK^TM pool equivalent time in one of approximately 1800 affiliated resorts in 53 countries around the world. Exchange is subject to availability, the exchange rules (season and occupancy limited) and a processing fee. In 1990 this fee is $89.00 per week exchanged within Australasia and $119.00 per week for international exchanges. Exchange Areas available through RCI.

RCI classifies accommodation into types by occupancy ratings, which can be less than the maximum occupancy limit allowed by the Club. The occupancy rating assigned to each villa at Club Mildura is six persons.

A member may request an exchange unit of equivalent occupancy rating (or less) than that he has deposited in the RCI SPACEBANK^TM and the size of his party can never exceed the maximum occupancy limit of his deposited unit. (Sometimes the Exchange, at its discretion, may accommodate a member into a unit whose occupancy rating is greater than that being exchanged provided the party size does not exceed the RCI maximum occupancy limit of his unit. However, these requests are ranked on a low priority basis and only granted subject to availability.

Information about the Exchange system will be sent to you by the Developer upon completion of your purchase.

THE MANAGEMENT OF CLUB MILDURA:

You don't have to worry about a thing. The Club has entered into a Management Agreement with Vacation Ownership Pty Ltd ("the Resort Manager") to manage the Resort. The Resort Manager will claim a fee for the term of this Prospectus. The Management Agreement provides that the Resort Manager will be paid by the Club a management fee of 10% of the annual outgoings of the Resort, payable monthly in arrears. The Club will also reimburse the Manager for all out-of-pocket expenses incurred by the Manager in relation to its duties as Resort Manager, except for salaries and overhead expenses relating to or in connection with the discharge of the Resort Manager's obligations. The Management Agreement is referred to on page 11, no 23. The Resort Manager has appointed resident managers who ensure that facilities and equipment are professionally maintained and fully services. The resident managers' salaries are additional to the Resort Manager's management fee and will be paid by the Club out of your annual maintenance fees."

Under the heading "HOW TO APPLY", the prospectus recited:

"Each successful applicant will receive a certificate confirming his/her registration as a holder of units in The Club Mildura Interim Trust. Upon the Trustee in due course applying the subscriber's moneys in the manner mentioned before, you will receive your Certificate of Title in respect of your share in the villa and a share certificate in respect of your Share in the Club."

By a deed of trust dated 6 November 1984 there was established the "Club Mildura Interim Trust". The parties to that deed were Vacation Ownership Resort Limited, being the owner of the land on which the resort was to be developed, Vacation Ownership Pty Limited, Permanent Trustee Nominees (Canberra) Limited which was proposed as the trustee and Permanent Trustee Company Limited. The trust deed was prefaced by the following recitals:

"A. Vacation Ownership is the registered proprietor of the Lots;

B. Vacation Ownership proposed to develop the Resort to be used by members of the Club as a timesharing resort;

C. The Club is incorporated;

D. Vacation Ownership proposed to grant the Lease;

E. Vacation Ownership proposed to vest the Chattels free of charge in the Club;

F. The Manager proposes to invite members of the public to subscribe for Units;

G. The Trustee has agreed to hold the Trust Fund and to account for it in accordance with the provisions of this Deed."

Registration of the title to a unit in the trust of each applicant was provided by cl 4.5 of the trust deed:

"After acceptance of any application by the Manager, the Manager shall notify the Trustee accordingly and, upon clearance of any cheque given by the Unit Holder for the Application Moneys, the Manager shall thereupon enter the name of such applicant in the Register as the Holder of a Unit or Units and after such registration there shall, where the terms of issue of the Unit so require, be issued by or on behalf of the Trustee to such applicant a Certificate in or to the effect of the form annexed hereto and marked with the
letter "C" (or as near thereto as the circumstances will permit) evidencing the registration of such applicant and the title of such applicant each such Unit."

The covenants by the developer and manager for the benefit of each unit-holder were:

"9. Vacation Ownership and the Manager jointly and severally covenant with the Trustee with the intent that the benefit of their covenants shall enure not only to the Trustee but to the Unit Holders jointly and to each of them severally that:

(a) They shall, in relation to each Lot, subject always to sub-clause 23.8 of this Deed, use their best endeavours to:

(i) Vest the Chattels free of all encumbrances in the Club.

(ii) Cause the Lease so far as it relates to that Lot and the Common Property Lease to be duly executed, stamped, and lodged for registration;

(iii)Cause the Management Agreement to be duly completed and executed by the Club and by the Manager;

(iv) Cause the Club to adopt the Regulations;

(v) Register the Cluster Plan with the Victorian Titles Office;

(vi) Amend the by-laws of the Body Corporate in or to the effect of those annexed hereto and marked with the letter "F"; and

(vii)Pending the transfer of the lot referred to in paragraph 10(1) hereof make available for the exclusive use of the Club at no cost to the Club in relation to rent or acquisition costs residential accommodation suitable to be used as a Resident Manager's Apartment which is to be situated on the Land the subject of the Cluster Plan.

(b) Upon application of the Application Moneys as provided in this Deed they will subscribe the Unit Holder for a two year membership in the reciprocal exchange programme conducted by Resort Condominiums International Inc of Indianapolis, Indiana USA (or should that organisation not conduct the said exchange programme then with another organisation providing a similar service) free of charge.

(c) They shall each make available to the Trustee or to any registered company auditor appointed by the Trustee, for inspection all the books of themselves whether kept at the relevant registered office or elsewhere;

(d) They will each give to the Trustee or any such auditor such oral or written information as the Trustee or such auditor requires with respect to all matters relating to the business, undertaking, scheme or enterprises of Vacation Ownership and the Manager or any property (whether acquired before or after the date of this Deed)
of Vacation Ownership or the Manager or otherwise relating to the affairs thereof.

(e) They will make available or ensure that there is made available to the Trustee such details as the Trustee requires with respect of all matters relating to the undertaking, scheme or enterprise to which this Deed relates.

(f) They will do all things necessary to complete the registration of each Lease and the Common Property Lease."

The chattels referred to in cl 9(a)(i) were listed in the Second Schedule to the trust deed and included items of bedroom and bathroom furniture, kitchen appliances and utensils, crockery, cutlery, towels, bed linen, a dishwasher, washing machine and two television sets for each holiday apartment.

There were also specific covenants by the manager going to the proper and efficient conduct of its business and the due administration of the trust. The trustee likewise covenanted for the proper execution of the trust in the interests of the unit-holders. The termination of the trust was contemplated by cl 28.2 in these terms:

"Excepting for the continuation of Vacation Ownership's and the Manager's covenants pursuant to paragraph 9(b) hereof the Trust shall ipso facto be at an end and determined and the Trustee and Manager discharged from any further responsibilities hereunder, upon the transfer by Vacation Ownership of all of the Fractional Interests in all of the Lots, the transfer or allotment of all of the shares in the Club and the discharge by the Trustee of its obligations pursuant to clause 11 in relation thereto."

The memorandum and articles of association of Club Mildura Limited were also annexed to the trust deed. By Article 2 "Entitlement" was defined to mean "the entitlement of a shareholder to occupy one Lot for the one Vacation Week to
which his share relates." That definition was taken up by Articles 7 to 9.1:

"7. Subject to these Articles and the Regulations the holder for the time being of a share in the capital of the Club of a class designated in the first column of Article 90 shall be entitled to exercise his Entitlement during the Vacation Week specified in the third column of that Article during each Entitlement Period relating to that share so long as the Club holds a lease of the Resort.

8.1 No member shall be entitled to occupy any specific Lot but will occupy such Lot as the management may in its absolute discretion allocate to the member.

8.2 Notwithstanding anything in these Articles contained or implied no member shall be entitled to exclusive occupancy of any apartment and any rights of residence shall be by way of license and shall not create any relationship of landlord and tenant.

9.1 Subject to sub-Article 9.2 hereof a member's Entitlement shall enure for the member, his family, guests and invitees. Every member may sub-licence his Entitlement during any Entitlement Period and any such sub-licensee shall enjoy the same rights and privileges and shall observe the same conditions as would have been applicable to the member had he used his Entitlement personally. The member shall be entitled to charge and receive from such person such fee as the member determines."

By Article 11 it was provided that an entitlement not used in any Entitlement Period could not be carried forward to a subsequent period but should lapse with the member remaining liable for his entitlement costs in respect of the period during which the lapse occurred. The right to use an Entitlement could also be terminated or suspended pursuant to Article 27 upon the member or a person invited to the Resort by the member being found guilty by the Committee of conduct "which is unbecoming of the member or prejudicial to the interest of the Club." By Article 90 it was provided as follows that shares in the Club were divided into classes reflecting different times of the year at which holidays might be taken:

"90. The capital of the Club is Five thousand and five dollars ($5,005.00) divided into Five thousand and five (5,005) shares of One dollar ($1.00) each classified as hereunder.

Class of Share Number of Shares Vacation Week

in Each Respective

Class

(a) Subscriber 4 Nil

Promoter's As per Articles

Subscriber 1 12.1 and 12.3

(b) X1 100 l

X2 100 2

X3 l00 3

X4 100 4

X51 100 51

X52 100 52

E2 100 Easter 2

(d) ASH1 100 Autumn School

Holidays 1

ASH2 100 Autumn School

Holidays 2

(e) SSH1 100 Spring School

Holidays 1

SSH2 100 Spring School

Holidays 2

SSH3 100 Spring School

Holidays 3

(f) F 3,700 Floating

5,005"

The "floating week" referred to in Article 90(f) was defined to mean any vacation other than those occurring at Easter or during the school holiday periods specified in the earlier paragraph of the article.

THE ISSUES RAISED BY THE QUESTION

Mr Berkeley QC who appeared with Mr Bingham for the applicant, submitted that the preliminary question did not require consideration of whether the documents of 14 December and 23 December 1991 constituted a contract at all, or of who were the parties to the contract. Those questions, he submitted, were foreclosed by the acceptance, in the question posed for the Court, of the existence of a contract. All that the Court had to resolve, according to Mr Berkeley, was whether the contract which is presumed to exist was one for the supply of goods or services. I do not accept that submission in its entirety. The question is posed of the contract referred to in paragraphs 3 and 4 of the amended statement of claim and paragraph 4, if given its full literal effect, itself answers the question. It is also not without significance that, by its defence, the first respondent has simply denied the allegations in paragraph 3 of the amended statement of claim and as to paragraph 4 has pleaded:

"It denies the allegations in paragraph 4 and says further that if there was a supply contract as alleged (which is not admitted but is specifically denied) then the supply contract was not a contract for the supply of goods and services within the meaning of the Act."

I consider that the question can only be productive of a useful answer if it is read as requiring the Court to examine the contract presumptively brought into existence by the application of 14 December and the letter to the applicant of 23 December 1991 and determine whether that contract can be characterised as one for the supply of goods or services within the meaning of the Trade Practices Act.

It is true that the question so formulated presupposes the existence of some contract, but, before it can be answered, it is necessary to identify what is to pass from the obligor to
Mr McCracken as obligee in order to answer the ultimate question whether the passing of whatever is so identified can be characterised as the supply of goods or services. The difficulty of answering the question in a way which will contribute to a resolution of the present litigation is made more acute because the phrase "contract for the supply of services" as a compound expression does not occur in the definitional provisions in s 4 or s 4C of the Trade Practices Act or in s 73 which is the only other section of that Act to which I have been referred.

The word "services" is defined in s 4 of the Trade Practices Act as including:

"... 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."

The same section contains this definition of "supply":

""supply", when used as a verb, includes:

(a) in relation to goods - supply (including re-supply) by way of sale, exchange, lease, hire or hire-purchase; and

(b) in relation to services - provide, grant or confer;

and, when used as a noun, has a corresponding meaning, and "supplied" and "supplier" have corresponding meanings."

The concept of "supply" is also elaborated in s 4C which provides:

"4C. In this Act, unless the contrary intention appears:

(a) a reference to the acquisition of goods includes a reference to the acquisition of property in, or rights in relation to, goods in pursuance of a supply of the goods;

(b) a reference to the supply or acquisition of goods or services includes a reference to agreeing to supply or acquire goods or services;

(c) a reference to the supply or acquisition of goods includes a reference to the supply or acquisition of goods together with other property or services, or both;

(d) a reference to the supply or acquisition of services includes a reference to the supply or acquisition of services together with property or other services, or both; and

(e) a reference to the re-supply of goods acquired from a person includes a reference to:

(i) a supply of the goods to another person in an altered form or condition; and

(ii) a supply to another person of goods in which the first-mentioned goods have been incorporated."

THE SUBSTANCE OF THE CONTRACT

It can be seen that the inclusive definition of "services" in s 4 extends to "rights, benefits, privileges or facilities that are, or are to be provided, granted or conferred ... under a contract for or in relation to (amongst other things) "the provision of, or the use or enjoyment of facilities for, amusement, entertainment recreation or instruction". It is necessary, therefore, to consider, first, whether the presumptive contract concluded on 23 December 1991 answers that description.

The application of 14 December 1991 was for a unit in a unit trust "with a view to obtaining a Fractional Interest in a Lot ... in Registered Cluster Plan No 1433Q" and "one floating week" share "in Club Mildura Limited". It was addressed to Vacation Ownership Resorts Limited as manager which, it was acknowledged, had the right to accept or reject the application. The reply advised that the application had been accepted by Vacation Ownership Resorts Limited and can be taken to have been written on behalf of that company.

The applicant's offer, so far as is relevant, was to acquire a unit in a unit trust which, if things turned out as intended, would be replaced in due course by a share of the specified class in Club Mildura Limited. Acceptance of that offer by or on behalf of Vacation Ownership Resorts Limited created a contract between the applicant and Vacation Ownership Resorts Limited as Manager and Permanent Trustee Nominees (Canberra) Limited as trustee of the unit trust. That contract, I consider, was for the proper and efficient management and administration in good faith of the trust which, it was expected, would result in the allotment to Mr McCracken of a share in Club Mildura Limited with its attendant entitlement to use the facilities, chattels and services available at the resort.

Mr Berkeley argued that the right which I have just identified and which he described as a right to "trust services" was a right to be provided under a contract in relation to the provision use or enjoyment of facilities for recreation. This argument essentially paraphrases the question for the Court as one asking whether the agreement concluded on 23 December 1991 was a contract for the provision, grant or conferral of a right, benefit, privilege or facility under a contract in relation to the provision, use or enjoyment of facilities for recreation. When it is realized that the contract twice referred to in that paraphrase is one and the same the circularity of the question becomes apparent.

WAS THERE A CONTRACT "IN RELATION TO" THE PROVISION OF FACILITIES FOR RECREATION?

A similar transaction to the present was examined by Mathews J in the Supreme Court of New South Wales in AFA v Garendon Investments Pty Ltd [1994] ASC 58,941 where the Court had to consider whether certain transactions were "regulated credit sale contracts" or "regulated loan contracts" within the meaning of the Credit Act 1984 (NSW), s 5 of which defined "credit sale contract" to mean "a contract of sale of goods or services where in respect of the payment for the goods or services credit is, or is to be, provided to a debtor being a buyer ... by a supplier in the course of a business carried on by the supplier ...". Her Honour identified the first question arising for decision as being whether there had been a sale. She went on to observe, at 58,949:

"To some extent the answer to this question must depend upon the commodity which is taken to be the subject of the transaction. Was it the unit in the Trust Fund which the plaintiffs acquired after their application was accepted by the Manager? Or was it the fractional interest and the share in the Club, which were acquired by the Trustee on their behalf at some later time? It was, after all, their share in the Club which entitled the plaintiffs to the Resort's recreational facilities, and which thus - if anything - constituted the provision of "services".

On the other hand it could not assist the plaintiffs to argue that the commodity which they purchased was the share in the Club and thus that the "sale" was constituted by the allotment to them of a share in the club. Even if it could be shown that this transaction amounted to a "sale" (a matter I shall discuss in a moment) it was a transaction between the plaintiffs - or the Trustees on their behalf - and the Club, not between themselves and Garendon. Accordingly it could not be said, within the terms of the third definitional requirement that Garendon was the seller of the commodity. Further, this transaction substantially post-dated the loan agreement and therefore could not be said, within the fourth definitional requirement, to be contained in the same contract as that which allowed for the provision of credit. Finally, there is substantial authority to the effect that the acquisition of property in exchange for the surrender of units in a trust does not constitute a "purchase" on the part of the recipient, and therefore could not be a "sale" under the Credit Act."

After citing the relevant extracts from Anantamul Pty Ltd v Innes-Iron [1984] 2 Qd R 180, her Honour concluded that the commodity which was the subject of the presumptive sales could not have been the share in the club but could only have been the unit in the trust fund which was acquired by a subscriber upon the acceptance of his or her application and the payment of the deposit. On the basis of further authority her Honour inclined to the view that the allotment to the plaintiffs of a unit in the trust fund did not constitute a "sale". However, she went on to consider the further argument on behalf of the plaintiffs that the contract was one for the supply of "services" which, so far as relevant, were defined in s 5 of the Credit Act as follows:

"`Services' includes the rights and benefits that are, or are to be, supplied under:

(a) a contract for or involving:

(i) ... or

(ii) the provision of, or the use or enjoyment of, facilities for amusement, entertainment, recreation or instruction."

Mathews J was disposed to find that, because the underlying purpose of the creation of the trust fund was that unit holders would ultimately obtain the use and enjoyment of the resort facilities, the contract was one "involving" the provision, use or enjoyment of recreational facilities.

The reasoning in support of that premise was expressed as follows, at 58,951:

"In my view there is considerable force in Mr Basten's [Counsel for the plaintiff] submission that the word "involving" should be given its full meaning and shall be taken to include the benefits which were intended by all parties to ultimately accrue through the obtaining by a subscriber of a unit in the Trust Fund. This was after all not a transaction in which prospective applicants were hoping to obtain any other benefit through the holding of a unit. The whole object of the enterprise was to enable applicants to enjoy the facilities of the Resort through participating in the time share scheme. The Trustee and the Trust Fund were inserted into the arrangements for the purpose only of protecting subscribers in the event of the project not proceeding to completion. In that event their money was to be refunded. But absent a situation which frustrated the underlying purpose of the enterprise, it was a "necessary consequence" of the issue of all units in the Fund that their holders would ultimately obtain the use and enjoyment of the Resort facilities.

It follows from all I have said that I would disagree with the Tribunal's finding on this aspect of the matter. I would be disposed to find that the contract was one "involving" the provision, use or enjoyment of recreational facilities."

Although the contract concluded on 23 December 1991 was not one "for" the services intended to be available at the resort, I have been led to conclude by parity of reasoning to that employed by Mathews J that the words "or in relation to" the "provision of, or the use or enjoyment of facilities for, amusement, entertainment, recreation or instruction" are sufficient to extend the definition of "services" in s 4 of the Trade Practices Act to the rights and benefits conferred under the subject contract. I consider that the phrase "in relation to" is, if anything, more elastic than the word "involving" to which Mathews J gave effect in the case just discussed. Accepting, as I do, that the phrase "in relation to" postulates a connection between the contract and the provision, use or enjoyment of the relevant facilities which is not tenuous or indirect, I am satisfied by the volume of documentary references to the achievement of an annual holiday and the provision of facilities requisite for it, that the necessary relationship exists in this case. Thus, although the rights conferred by or under the subject contract are not rights immediately to the enjoyment of the contemplated facilities for recreation, they are rights and benefits which are conferred under a contract which is sufficiently connected to the enjoyment of the contemplated facilities to bring it within the connotation of the phrase "a contract ... in relation to" the enjoyment of those facilities.

For these reasons I have concluded that I should answer as follows the question set down for trial:

"Yes, in the sense that it constitutes a contract for the provision, grant or conferral of rights, benefits or privileges under a contract (being the contract enquired after itself) in relation to the provision of, or the use or enjoyment of facilities for recreation."

LIMITED UTILITY OF THE PRESENT QUESTION

However, the application of concepts elaborated in the definitions of "services" in s 4 of the Trade Practices Act
and of "supply" in the same section as further explained in s 4C depends on, and can vary according to, the context of the operative sections of the Act in which those concepts are used. For example, in SWB Family Credit Union Ltd v Parramatta Tourist Services Pty Ltd (1980) 32 ALR 365 a Full Court of this Court had to consider the prohibition in s 47(6) of the Trade Practices Act against the supply of goods or services "on condition that the person to whom the corporation supplies or offers or proposes to supply the goods or services ... will acquire goods or services of a particular kind or description directly or indirectly from another person ..." The context in that case did not permit the Court to concentrate on the definitions of "services" and "supply" in ss 4 and 4C of the Act but required it to ask the further question whether the services had been supplied on the proscribed conditions. Thus Smithers J observed, at 373:

"The very concept of one person supplying services to another on condition that the other will do something presumes the existence of a transaction one of the terms of which is that the person supplied with the services promises to do that thing.

For the purposes of the sub-section it would matter not that the commitment or obligation was unenforceable, whether it was given formally or informally, was express or implied, or in any form of arrangement or understanding. Provided the parties understood one another the condition would arise and be a condition for the purpose of the sub-section."

See also per Sheppard J where his Honour noted, at 384:

"Secondly, the only provision which I have considered is s 47(6) of the Act. I express no view in relation to any other provision of the Act. In particular I am not to be taken as deciding that a payment of money can never be a benefit for the purposes of the definition of "service" in s 4 of the Act."

In the present case I have been constrained by the form of the
question to confine my attention to the definitional provisions. The limited utility of the answer which, so constrained, I have formulated is pointed up, first by a review of the competing contentions of the parties. For the applicant it is contended that he entered into a transaction which, in substance, was the purchase of a package of entitlements and services comprised in an annual holiday for one week at the Mildura resort. On behalf of the first respondent, on the other hand, it is submitted that the contract alleged in paragraphs 3 and 4 of the amended statement of claim was not for the supply by the second or third respondents of anything. What those respondents did, so the argument went, was to introduce the applicant to the concept of the resort but they did not agree to supply him with the accommodation or any of the other services which together comprised the holiday. The right to the holiday, was, on this view, an incident of ownership of a share in Club Mildura which would be acquired if the trust were executed as contemplated.

Those disparate approaches to the question reveal that the operative section of the Trade Practices Act to which the pleadings ultimately direct attention is s 73(1) which provides:

"73. (1) Where:

(a) a corporation (in this section referred to as the "supplier") supplies goods, or causes goods to be supplied, to a linked credit provider of the supplier and a consumer enters into a contract with the linked credit provider for the provision of credit in respect of the supply by way of sale,
lease, hire or hire-purchase of the goods to the consumer; or

(b) a consumer enters into a contract with a linked credit provider of a corporation (in this section also referred to as the "supplier") for the provision of credit in respect of the supply by the supplier of goods or services, or goods and services, to the consumer;

and the consumer suffers loss or damage as a result of misrepresentation, breach of contract, or failure of consideration in relation to the contract, or as a result of a breach of a condition that is implied in the contract by virtue of section 70, 71 or 72 or of a warranty that is implied in the contract by virtue of section 74, the supplier and the linked credit provider are, subject to this section, jointly and severally liable to the consumer for the amount of the loss or damage, and the consumer may recover that amount by action in accordance with this section in a court of competent jurisdiction."

It is alleged in the amended statement of claim that the fourth respondent was, in relation to each of the second and third respondents ("the suppliers") a linked credit provider within the meaning of s 73 and thereby attracted joint and several liability for misrepresentations allegedly made to the applicant by the suppliers in contravention of s 52 of the Trade Practices Act.

The question to which I have formulated an answer does not take the parties very far along the road to a resolution of what I perceive to be the ultimate question. That is whether the applicant entered into a contract with the fourth respondent for the provision of credit in respect of the supply by the second and third respondents or one of them of services to the applicant. In a somewhat analogous way the tentative conclusion reached by Mathews J in AFA v Garendon Investments Pty Ltd (supra) that the contract was one "involving" the provision, use or enjoyment of recreational facilities did not avail the plaintiff because, on her Honour's view, the defendant Garendon could in no way be regarded as the supplier of the relevant services through the sale of shares in the club. The reasoning in support of that conclusion is to be found at 58,952:

"It must be remembered that it is the sale of the unit in the Trust Fund, carrying with it the eventual entitlement to use the Resort facilities, which is the relevant transaction. Certainly only a small portion of the total purchase moneys went to the Trustee at that time. But it was the Trustee, not Garendon, which provided the applicants with their units. Garendon played no part in this aspect of the transaction.

In my view this is sufficient in itself to take this transaction outside the definition of "credit sale contract". And even if one goes beyond the Trustee and looks at the situation which existed following the surrender of the units, the plaintiffs can gain no comfort. Certainly the subscribers' moneys were to be paid by the Trustee to Garendon or at its direction. Certainly also, part of those moneys constituted payment to Garendon for the fractional interest in the land. But this cannot avail the plaintiffs, for the fractional interests carried no entitlement to enjoy the Resort's recreational facilities. It was the holding of a share in the Club which carried the recreational entitlements. And these were allotted by the Club, not transferred by Garendon.

There is no evidence as to the proportion of the subscriber moneys which were allocated for the payment of the share in the Club. It might have been as little as $1. But this makes no difference to the ultimate effect of the transaction, namely that the plaintiffs obtained their share from the Club not from Garendon.

Mr Basten sought to argue that as Garendon was obliged, under clause 11.1.5(b)(6) of the Deed, to procure the Directors of the Club to meet and approve the allotment of share to unit holders, this - in effect - makes it the "supplier" of the shares.

...

On no way of looking at it was Garendon the "supplier" of the shares in the Club. Garendon had no power to provide, grant or confer them. It was obliged to procure their allotment to the unit holders. But the definition does not extend to procurement, which is an entirely different concept from providing, granting or conferring.

It follows that the obligation on Garendon to procure the allotment of shares to unit holders did not have the effect of making it the "supplier" of those shares."

As I have already noted, the question which the parties have asked the Court to resolve is directed in terms to a phrase or concept "a contract for the supply of goods or services" which does not, in so many words, appear in s 73(1). For that reason, and because the application of s 73(1) and, in particular, the words "in respect of the supply by the supplier of goods or services" has not been fully argued, it is inappropriate, on the basis of submissions so far received, to formulate another, different, question and attempt to answer it without giving the parties an opportunity to reflect on these reasons. I shall therefore answer the present question in the way indicated above and adjourn the whole application for further directions before myself on a date to be fixed. The costs of the applicant and of the first respondent of the preliminary question including the costs of the hearing on 6 and 7 March 1995 shall be reserved.

I certify that this and the preceding thirty (30) pages are a true copy of the reasons for judgment of his Honour Justice Ryan

Associate:

Date:

Counsel for the applicant: Mr H Berkeley QC

with Mr P Bingham

Solicitors for the applicant: Madgwicks

Counsel for the first respondent:Mr A Archibald QC

with Mr J Ribbands

Solicitor for the first

respondent: Alan Herskope

Hearing dates: 6 and 7 March 1995

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