FEDERAL COURT OF AUSTRALIA

Australian Competition & Consumer Commission v Capalaba Pty Ltd (ACN 008 968 303) & Others [2003] FCA 1226

TRADE PRACTICES – unconscionable conduct – undue harassment – accessorial liability – whether respondents aided and abetted or were knowingly concerned in and party to contraventions under the Trade Practices Act 1974 (Cth) – whether inconsistency between Fair Trading Act 1987 (WA) and Trade Practices Act 1974 (Cth) – seizure of motor vehicle subject to a chattel mortgage – where respondents entered consumer’s property without his consent to effect seizure of the motor vehicle – where respondents made repeated attendances at the consumer’s residence – where respondents used physical force in connection with the supply of goods and services to the consumer – where the notice of demand for delivery up conveyed an understanding that seizure of the motor vehicle could not lawfully occur without a court order – consent orders – principles governing grant of consent orders

Australian Securities and Investments Commission 2001 (Cth) ss 12CB, 12DJ

Fair Trading Act 1987 (WA) s 23

Judiciary Act 1903 (Cth) s 78B

Trade Practices Act 1974 (Cth) ss 51AB, 60, 75(1), 75B, 84(2)

Commonwealth of Australia Constitution Act 1901 s 109

ACCC v McCaskey (2000) 183 ALR 159 applied

Ex parte McLean (1930) 43 CLR 472 cited

Glennan v Federal Commissioner of Taxation (2003) 198 ALR 250 cited

Grace Bros Pty Ltd v Magistrates, Local Courts of New South Wales (1988) 84 ALR 492 cited

Mallan v Lee (1949) 80 CLR 198 cited

Miller v Miller (1978) 141 CLR 269 cited

PSL Industries Ltd v Simplot Australia Pty Ltd (2003) 174 FLR 111 cited

Re:  Finlayson; Ex parte Finlayson (1997) 72 ALJR 73 cited

Yorke v Lucas (1985) 158 CLR 661 cited

AUSTRALIAN COMPETITION & CONSUMER COMMISSION v CAPALABA PTY LTD (ACN 008 968 303), NEIL ROBERT URQUHART, DAVID JOHN NAIRN, BARRY JAMES McCARTHY

W111 OF 2001

LEE J

7 NOVEMBER 2003

PERTH

BY CONSENT THE COURT DECLARES THAT:

1                           The second to fifth respondents aided and abetted, were directly knowingly concerned in and party to the following contraventions of section 51AB of the Trade Practices Act 1974 (the ‘TPA’) by the first respondent in connection with the supply of goods and services by the first respondent to Mr McPhee, pursuant to the “McPhee Agreement” referred to in par 10 of the Statement of Claim filed in the proceeding, by reason of:

1.1                     serving on Mr McPhee a notice of demand for delivery up of the “McPhee vehicle” in a form that conveyed, or was capable of conveying, the meaning to Mr McPhee that Esanda would not, or could not lawfully, repossess the “McPhee vehicle” without a court order authorising such action and then, by its agents or sub-agents, repossessing that vehicle without having obtained any such order; 

1.2                     entering the “McPhee residence” by jumping over a gate for the purpose of opening the garage door from the inside of the garage; and

1.3                     failing to desist from their attempts to repossess the “McPhee vehicle” when they had reasonable cause to apprehend that a physical confrontation may occur if they continued in those attempts.

2                           The second, fourth and fifth respondents aided and abetted, were directly knowingly concerned in and party to the use of undue harassment by the first respondent in connection with the payment for services by Mr McPhee in contravention of section 60 of the TPA, by reason of the repeated attendances of the agents and/or sub-agents of the first respondent at the “McPhee residence”, including their attendances to undertake surveillance at that residence. 

3                           The third respondent aided and abetted, was directly knowingly concerned in and party to the use of undue harassment by the first respondent in connection with the payment for services by Mr McPhee in contravention of section 60 of the TPA, by reason of the:

3.1.       repeated attendances of the agents and/or sub-agents of the first respondent at the “McPhee residence”, including their attendances to undertake surveillance at that residence; and

3.2.       third respondent approaching Mrs McPhee at her place of work, asserting that the “McPhee vehicle” was sold, hidden and/or stolen and demanding to know the whereabouts of the vehicle.

4                           The second respondent, by operation of section 84(2) of the TPA, used physical force in connection with the supply of goods and services by the first respondent to Mr McPhee, and the payment for services by Mr McPhee, pursuant to the “McPhee Agreement”, in contravention of section 60 of the TPA by reason of the physical restraint of Mr McPhee by the second respondent’s sub-agents while the “McPhee vehicle” was removed from the “McPhee residence”. 

5                           The third, fourth and fifth respondents aided and abetted, were directly knowingly concerned in and party to the use of physical force by the second respondent in connection with the supply of goods and services by the first respondent to Mr McPhee and the payment for services by Mr McPhee, pursuant to the “McPhee Agreement”, in contravention of section 60 of the TPA by reason of the physical restraint of Mr McPhee while the “McPhee vehicle” was removed from the “McPhee residence”.

AND ORDERS THAT:

6                           The second respondent, (including by its agents and sub-agents) and the third to fifth respondents be restrained for 3 years:

6.1     from making a demand upon a consumer for the delivery up of mortgaged, leased or hired goods in the form of the document A8-1 in the Bundle of Agreed Documents filed in the proceeding;

6.2     from taking any steps to repossess goods that are subject to a mortgage that is not regulated by the Consumer Credit and which are located in an enclosed area on private property including garages with closed doors and driveways and closed gates, without first obtaining the consent of the occupier of that property or a court or tribunal order permitting repossession in those circumstances;

6.3     from repeatedly observing a consumer or third party in or around their home or place of employment;

6.4     from contacting consumers by attending or telephoning them at their place of employment unless; 

6.4.1    requested to do so by the consumer;

6.4.2    there is no effective alternative means to contact the consumer; or

6.4.3    the consumer is the proprietor or a director of a business to which the relevant finance contract relates; 

6.5     from contacting a member of a consumer’s family unless the purpose of that contact is to seek to contact or locate the consumer;

6.6     from contacting a consumer by attending or telephoning them at their home or place of employment on more than 5 occasions unless: 

6.6.1    specifically requested to do so by the consumer for the purposes of making a repayment arrangement or the voluntary surrender of goods; or

6.6.2    in relation to a repayment arrangement that has been made by the consumer, but has subsequently been breached (following which, up to 5 further contacts may be made). 

6.7     from taking any action to repossess mortgaged, leased or hired goods from a consumer if and when it believes that there is a real prospect that a physical confrontation may occur during the repossession of the goods, or if an attempt is made to repossess the goods. 

7                           The second respondent be required at all times during the 3 year period from the date of this order to ensure that, if the principal for whom they are acting asserts a contractual right to take possession of mortgaged, leased or hired goods from a consumer without the consumer’s consent, then any notice served on the consumer on behalf of that principal states that the action that may be taken to recover the goods may include taking possession of the goods without the consumer’s consent ‘in certain circumstances’.

8                           The second, third, fourth and fifth respondents attend a compliance seminar conducted by an independent external professional with trade practices law experience, and who is acceptable to the applicant, in the terms of the seminar outline set out in the Schedule hereto and which addresses the provisions of sections 51AB and 60 of the TPA and the provisions of sections 12CB and 12DJ of the Australian Securities and Investments Commission Act 2001 (Cth) (the “ASIC Act”) and within one (1) week of attending the seminar, notify the applicant of their respective attendances.

9                           The second, third, fourth and fifth respondents pay so much of the applicant’s costs in the proceeding as relate to the each of them, respectively, to be taxed if not agreed.

SCHEDULE

Compliance Seminar Outline

“1    Introduction

2        The Trade Practices Act 1974 (Cth) (the ‘TPA’) and the Australian Securities and Investments Commission Act 2001 (Cth) (the ‘ASIC Act’);

2.1          Section 51AB of the TPA and Section 12CB of the ASIC Act; and

2.2          Section 60 of the TPA and Section 12DJ of the ASIC Act;

3        Conduct principles:

3.1.              unconscionable;

3.2.              physical force;

3.3.              undue harassment;

3.4.              coercion;

3.5.              communicating with the debtor and other parties, such as the debtor’s representative;

3.6.              communicating with debtors and other parties in public;

3.7.              frequency of communications;

3.8.              personal visits and surveillance;

3.9.              allowing arrangements and other process to work;

3.10.          responding to debtor complaints;

3.11.          reviewing reasonableness of fees incurred in collecting debts;

3.12.          engage in conduct;

3.13.          in connection with;

3.14.          goods and services (personal domestic and household use);

3.15.          financial services;

3.16.          supply or possible supply;

3.17.          payment for goods or services; and

3.18.          consumer.

4        ‘Unconscionable Conduct in Consumer Transactions – A guide to Section 51AB of the Trade Practices Act’, an Australian Competition and Consumer Commission publication.

5        ‘Debt Collection and the Trade Practices Act’, an Australian Competition and Consumer Commission publication.”

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

REASONS FOR JUDGMENT

LEE J:

1                     In this matter the applicant (“the ACCC”) and the second to fifth respondents (“the respondents”) have reached an accord as to the disposal of the proceeding by agreeing that orders may be made in the terms of a minute filed in the Court.  The parties ask the Court to make the orders proposed in the minute.

2                     The ACCC commenced the proceeding pursuant to authority vested in it by the Trade Practices Act 1974 (Cth) (“the Act”) and sought declarations and injunctive relief in respect of conduct engaged in by Esanda in relation to the seizure of a motor vehicle owned by a customer of Esanda, (“the consumer”) that was subject to a chattel mortgage in favour of Esanda.  The ACCC sought further declarations and injunctive orders in respect of the respondents, alleging that in respect of the seizure of the motor vehicle the respondents aided and abetted, or were directly knowingly concerned in and party to: 

a)    conduct engaged in by Esanda in connection with the supply of goods and services by Esanda to the consumer that was unconscionable and contravened s 51AB of the Act; and

b)    the use of undue harassment, coercion, or physical force by Esanda in contravention of s 60 of the Act. 

3                     It was also alleged that the second respondent had contravened s 60 of the Act and that the third, fourth, and fifth respondents were “involved” in that contravention and, further, that the third respondent had contravened s 23 of the Fair Trading Act 1987 (WA) (“the FTA”). 

4                     The parties have filed a statement of agreed facts.  Counsel agree that insofar as it is necessary to refer to affidavits filed in the proceedings in clarification to amplify the facts agreed it is permissible for the Court to do so.

5                     The relevant facts may be shortly stated as follows.

6                     In about July 1998 Esanda advanced a sum of $15,092.02 to the consumer to be applied to the purchase a motor vehicle from Esanda.  The sum advanced, and interest, was to be repaid to Esanda by forty‑eight monthly payments of $373.20, the first payment to be made on 24 July 1998.  The total amount repayable to Esanda, inclusive of interest, was $17,913.60.  The sum owing, as noted above, was secured by a chattel mortgage over the vehicle.

7                     From time to time the consumer defaulted in payment of the monthly instalments, due, in part, to adverse circumstances suffered by the consumer in his employment.  The consumer sought to replace loan from Esanda with a loan from another financier and also sought to obtain from Esanda a variation in the terms of the repayments.  None of these steps was successful. 

8                     By April 2000 the arrears exceeded $1,800 and in that month, by service of a formal notice, Esanda demanded that the consumer cure his default under the mortgage. 

9                     On 20 June 2000 the vehicle was “repossessed”.  The amount outstanding at that time was approximately $2,180.  The allegations made against the respondents by the ACCC in this proceeding arise out of the manner in which the “repossession” was effected.

10                  Esanda instructed the respondents to recover the vehicle.  Esanda stated that no remuneration would be paid by Esanda unless the respondents recovered the vehicle or payment in full of the arrears due by the consumer.  The respondents made numerous attendances on the consumer, or made it known to the consumer that the consumer’s movements were being monitored or kept under surveillance by them.  In addition, the third respondent attended at the place of work of the consumer’s wife in circumstances which caused that person embarrassment and humiliation. 

11                  Seizure of the vehicle was carried out by six persons, including the third-fifth respondents.  The third respondent jumped over a gate, entered the garage in which the vehicle was housed and released the securing mechanism on the inside of the garage door.  All six entered the property of the consumer without consent.  The respondents understood that the consumer may act to prevent the seizure of his property and that if he did so it would be necessary that he be restrained to allow recovery of the vehicle to be effected.  Events occurred as anticipated.  The consumer’s threat to use force to protect his property was overborne and the consumer was pinned to the ground whilst a tow truck was attached to his vehicle and the vehicle towed away.

12                  In the orders proposed in the minute of consent the respondents concede that the Court may make declarations that the respondents aided and abetted and were directly knowingly concerned in and party to unconscionable conduct engaged in by Esanda in contravention of s 51AB of the Act by reason of:

(a)        serving on the consumer a notice of demand for delivery up of the vehicle in a form that conveyed, or was capable of conveying, an understanding that Esanda would not, or could not lawfully, repossess the vehicle without a Court order authorising such action and acting to repossess the vehicle without such an order being obtained; and

(b)        entering upon the customer’s property by jumping over a gate for the purpose of entering the garage and releasing the mechanism securing his garage door; and

(c)        failing to desist from their attempts to repossess the vehicle when they had reasonable cause to apprehend that a that a physical confrontation may occur if they continued in those attempts.

13                  Further the respondents concede that declarations may be made that they aided and abetted and were directly knowingly concerned in and party to the contravention of s 60 of the Act by Esanda by use of undue harassment in connection with the payment for services by the consumer by making repeated attendances at the consumer’s residence and carrying out surveillance at the residence.  The third respondent concedes that he aided and abetted and was directly knowingly concerned in and party to the contravention of s 60 of the Act by Esanda by use of undue harassment in connection with the payment for services by the consumer by approaching the consumer’s wife at her place of work and asserting that the vehicle had been sold, hidden and/or stolen and demanding to know the whereabouts of the vehicle.

14                  The second respondent concedes that it contravened s 60 of the Act in that, by its servants or agents, it used physical force in connection with the supply of goods and services to the consumer by Esanda by physically restraining the consumer while a tow truck was attached to his vehicle and the vehicle removed from the consumer’s garage.  The third-fifth respondents concede that they aided and abetted, and were directly knowingly concerned in and party to the foregoing contravention of the Act by the second respondent.

15                  In the proposed orders the third, fourth and fifth respondents concede that by repeated attendances at the consumer’s residence including undertaking surveillance, they contravened s 23 of the FTA by use of undue harassment in connection with the payment for services by the consumer and the third respondent concedes that by approaching the wife of the consumer at her place of work and asserting that the consumer’s vehicle had been sold, hidden and/or stolen, and by jumping over the gate on the consumer’s property to open the garage door from the inside, he contravened s 23 of the FTA by use of undue harassment and physical force in connection with the payment for services by the consumer.  The conduct described constituted the contravention of s 60 of the Act committed by Esanda to which the third, fourth and fifth respondents were already liable as accessories pursuant to s 75B of the Act as set out in [13] above. 

16                  I invited the parties to make submissions on whether, insofar as s 23 of the FTA purported to impose direct liability on a person who was also a person “involved” in a contravention of the Act by a corporation, such a provision would be inconsistent with the terms of the Act and be rendered inoperative to the extent of that inconsistency by operation of s 109 of the Constitution.  (See:  Grace Bros Pty Ltd v Magistrates, Local Courts of New South Wales (1988) 84 ALR 492 per Gummow J at 502-505; Mallan v Lee (1949) 80 CLR 198 per Dixon J at 215-216).  That is to say, if by operation of s 75B of the Act a person is liable as an accessory to a contravention of the Act committed by a corporation would it follow that the Act would not permit the FTA to invert the principles of accessorial liability by purporting to make such a person directly liable as a principal in respect of the same circumstances and subject matter.  (See:  Mallan v Lee at 216).  In other words if the Act could not have so legislated by reason of that inconsistency in law may it be said that such a provision in the FTA would not be concurrent with the terms of the Act.  The question raised does not concern the legislative power of the Commonwealth or a State but inconsistency in provisions enacted by those parliaments purported to operate concurrently.

17                  Furthermore, it may be argued that if s 23 of the FTA purported to impose direct liability on a person whom s 75B of the TPA made liable as an accessory to the conduct of a corporation, such a liability imposed by the FTA would not be dependent upon satisfaction of a principal element required to be proved to attract liability under s 75B namely, that it be proved that the person had knowledge of the essential facts that constituted contravention of the Act by a corporation.  (See:  Yorke v Lucas (1985) 158 CLR 661 at 670).  Accordingly s 23 of the FTA may be considered to be directly inconsistent with the terms of the Act to that extent.  That is to say, s 75(1) of the Act, in providing that it operates concurrently with a State law, would not apply to a State law where, in respect of the same facts and the same subject matter, the Act and the FTA were not capable of “simultaneous obedience.”  (See:  Ex parte McLean (1930) 43 CLR 472 per Dixon J at 483).  It could be said that there would be “textual collision” between the Act and the FTA at that point.  (See:  Miller v Miller (1978) 141 CLR 269 per Barwick CJ at 275;  Grace Brothers per Gummow J at 504; PSL Industries Ltd v Simplot Australia Pty Ltd (2003) 174 FLR 111 at [11] – [17]).

18                  The parties submitted that s 75(1) of the Act applied because no conflict arose between s 23 of the FTA and the provisions of ss 60 and 75B of the TPA, and hence, no notice was required to be issued to the Attorneys‑General pursuant to s 78B of the Judiciary Act 1903 (Cth) to test the proposition.  Accordingly the cause before the Court is not to be treated as involving a matter arising under the Constitution and it is to be assumed that the s 23 of the FTA has force and effect according to its terms.  (See Glennan v Federal Commissioner of Taxation (2003) 198 ALR 250 at [14]; Re:  Finlayson; Ex parte Finlayson (1997) 72 ALJR 73 at 74).  However, it remains a matter of discretion as to whether a declaration should be made that the third, fourth and fifth respondents contravened s 23 of the FTA by the same acts that made them accessories to the contravention of s 60 of the Act by Esanda.  In all the circumstances I am not persuaded that it is either appropriate or necessary to make such a further declaration and will decline to do so. 

19                  The parties have agreed that prohibitory and mandatory orders be made for a prescribed period to bind the respondents to compliance with the Act in their future conduct.

20                  I have read the statement of agreed facts and the material relevant thereto and I am satisfied that orders may be made by the Court in the terms of the minute of consent filed by the parties.  In particular, I am satisfied that there is utility in making the injunctive orders proposed.

21                  The task for the Court is to satisfy itself that it has jurisdiction in the matter and that the orders proposed by the parties are within the power of the Court and, where relevant, are an appropriate exercise of the Court’s discretion.

22                  Plainly the Court has jurisdiction in the matter and the orders proposed are within power.  Insofar as the making of injunctive orders involves a particular exercise of the Court’s discretion, as noted above I am satisfied it is appropriate to so exercise it.  The proposed injunctive orders are expressed with sufficient clarity to avoid the respondents, as the parties bound thereby, being uncertain or in doubt as to the meaning or scope of the orders.  The period of operation of the proposed orders appears to be reasonable.

23                  There is a significant public interest in litigation being resolved in the manner proposed by the parties subject to it being plain that the accord is freely arrived at and that the parties have had the opportunity to be fully advised thereon.  There is no issue in that regard in this matter.  Each party has had the benefit of advice from senior or experienced counsel.  The principles to which the Court may have regard in considering compromised procedures in the nature have been discussed in detail by French J in ACCC v McCaskey (2000) 183 ALR 159 at [30] as follows:

“The approach of the Court to the making of consent orders is informed by a general principle of judicial restraint.  It is not the function of the Court to impede settlements between parties who are legally represented and able to understand and evaluate the desirability of agreeing to a settlement.  Nor will the Court refuse to give effect to the terms of a settlement by refusing to make orders or accept undertakings where they are within jurisdiction and otherwise unobjectionable.  The Court will not substitute orders which it thinks appropriate if those proffered are within power and within the range of appropriate dispositions of the case.  But in making orders by consent or otherwise, the Court must ensure that the orders are within power and appropriate for it is exercising a public function in doing so and must have regard to the public interest – Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc (1999) 95 FCR 114 at 131.   In considering the orders proposed in this case, I have regard to the observations about the scope of the injunctive power under s 80 and the power to order corrective advertising under s 80A discussed in ACCC v REIWA and the cases there mentioned at 132-134.”

24                  Applying the same principles I am satisfied that orders should be made in terms of the minute of consent filed by the parties as reflected in the minute of orders attached to these reasons.

Associate:

Dated:              6 November 2003