FEDERAL COURT OF AUSTRALIA

Hurley v McDonalds Australia Ltd [1999] FCA 465

JANETTE LYN HURLEY v McDONALDS AUSTRALIA LIMITED

Q 194 of 1999

DOWSETT J

14 OCTOBER 1999

BRISBANE

THE COURT ORDERS THAT:

1.         The application for leave to amend the statement of claim be refused.

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

REASONS FOR JUDGMENT

1                     The applicant seeks to amend the pleadings to raise a claim pursuant to s 51AB of the Trade Practices Act 1974 (Cth) which provides that a corporation shall not, in trade or commerce, in connection with the supply or possible supply of goods or services to a person, engage in conduct that is, in all the circumstances, unconscionable.  It is a little difficult to explain briefly the context in which this allegation arises.  It is alleged that in connection with a competition conducted by the respondent through its retail chain of fast food outlets, it invited customers to participate in a game of chance requiring the matching of tokens supplied with fast food and referring to “properties” of the kind found in the game of Monopoly.  The idea of the game was that if one acquired what has been called a “property set” - that is, two or three different properties in the same category - then one would win a prize.

2                     One aspect of the applicant's case is the assertion that a person who had possession of a set of winning tokens and forwarded them to the respondent would, by so doing, accept an offer made by the respondent, thereby becoming contractually entitled to receive the prize.  A weakness in this argument is that the conditions of participation in the competition were posted in the various stores and, it appears to be accepted for present purposes, were part of any such contract.  One of those conditions was:-

All prize claims and entries become the property of the promoter, and the promoter's decision on all matters pertaining to the game is final.  No correspondence will be entered into.

3                     A second condition is:

Printing and other quality control errors will not invalidate an otherwise valid prize claim.  Prize claims will be subject to security and verification checks at the absolute discretion of the promoter. Prize claims are ineligible if mutilated, illegible, stolen, forged, reconstructed, altered, incomplete or tampered with in any way, or if they fail any of the promoters security and verification checks.  McDonald's restaurant staff are unable to verify any claims other than instant win food prizes.

4                     A third condition is:

To the extent permitted by law the promoter, its franchisees, employees and agents shall not be liable for any claims, losses, damages, injuries, costs and expenses suffered, sustained, or incurred, including but not limited to, indirect or consequential as a result of or arising out of, or in any way connected with this promotion and/or its prizes.

5                     The last-mentioned clause would appear to have the effect - to the extent permitted by law - of excluding any liability in contract.  As far as I am aware, there is no law prohibiting parties to such an “arrangement” from agreeing that they do not intend to create contractual relations.

6                     For present purposes, it is necessary only to say that the proposed amendment asserts that the respondent may not rely upon any of these three clauses because to do so would be unconscionable conduct within the meaning of s 51AB.  In respect of the first and third clauses to which I have referred, it is submitted that it was inappropriate to use those clauses to avoid liability to provide a prize where it had, in fact, been legitimately won.  As I understand it, no other circumstances are relied upon to support the allegation of unconscionable conduct.  With respect to the second clause mentioned above, the submission is that if the respondent has, in fact, concluded that the prizes in question should not be awarded for any reason, then it did not make proper inquiries or simply reached the wrong conclusion.  Each of the present claimants has presented coupons apparently produced for a similar competition  in 1998, claiming that they received them in the course of the 1999 competition and that they are valid coupons for that competition.

7                     As is pointed out in the respondent's outline of submissions, the claimants do not allege any misconduct of the kind usually described as “unconscionable” inducing any of the claimants to enter into the relevant contracts or as to its terms, nor do they allege any such conduct surrounding the respondent’s determination to rely upon its contractual rights other than that determination itself.  This means that the claimants must assert that s 51AB is concerned with conduct other than that generally considered to be “unconscionable” in the sense in which that term is used in cases such as Commonwealth v Verwayen (1990) 170 CLR 394.  The claimants, as I understand it, accept that this is inherent in their argument and submit that such an approach is justified by the presence in the Act of both ss 51AA and 51AB.  It is said that s 51AA deals with unconscionable conduct in the traditional sense and that s 51AB relates to some other form of conduct. 

8                     The respondent submits that this is not the distinction between their respective operations.  It points out that s 51AA, on its face, relates to unconscionable conduct in trade or commerce while s 51AB relates only to conduct in trade or commerce in connection with the supply or possible supply of goods or services to a person.  There is, as is demonstrated in the respondent's outline of argument, much in the relevant material leading up to the adoption of each section which supports this view.  That material also suggests that whereas s 51AB was intended to include both the notions of unconscionable conduct and undue influence, s 51AA includes only the former, perhaps explaining the reference to “the unwritten law … of the States and Territories”.  Although that is consistent with the claimants’ submission that the conduct attacked respectively by ss 51AA and 51AB is different, it is of no assistance to the applicant in this case.  There is no present suggestion of undue influence.  For present purposes, therefore, unconscionable conduct in both sections encompasses traditional equitable concepts.  This approach also appeals to me because it avoids solving what appears to be an insoluble problem, namely what is meant by “unconscionable conduct” in s 51AB if it is not the meaning attributed to the expression in the various cases, with the addition of the concept of undue influence.  It is clear that no case based upon the facts as alleged could be successful if that is the correct meaning of the expression "unconscionable conduct" in s 51AB.  It follows that the amendment should not be allowed. 

9                     There is another equally compelling reason for that conclusion.  This case has been brought on quickly because I considered that both the claimants and the respondent have substantial interests in the matter being disposed of quickly.  It is true that this is proving increasingly difficult.  Nonetheless the case having progressed to this point on a particular basis, it is likely that any substantial change in that basis will require further investigation and consideration and extend the length of the trial.  That seems to me to be most undesirable in the circumstances.  The amendments in question ought not be permitted at this stage.

Associate:

Dated:              22 October 1999