FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Adata (Vic) Pty Ltd (No 3) [2015] FCA 583

THE COURT ORDERS THAT:

1.    The applicant’s application for default judgment against Adata (Vic) filed on 22 December 2014, but amended by submissions provided on 7 April 2015, is dismissed.

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

REASONS FOR JUDGMENT

Introduction

1    The Australian Consumer Law (Schedule 2 to the Competition and Consumer Act 2010 (Cth) – the ACL) contains a number of provisions that regulate the supply to consumers of unsolicited goods and services: see Division 2 of Part 3-2. Those provisions define what an unsolicited consumer agreement is and prescribe a number of things that must be done, in negotiating and entering into such an agreement. They include requirements that:

(a)    negotiations for the agreement must not take place on a Sunday, or a public holiday, or before 9.00 am and after 6.00 pm on any other day: s 73 of the ACL;

(b)    certain information must be supplied to the consumer: s 76 of the ACL;

(c)    a copy of the agreement must be provided to the consumer: s 78 of the ACL;

(d)    the agreement must comply with certain prescriptions as to form and content: s 79 of the ACL; and

(e)    a 10 business day termination period must be allowed in respect of the agreement (often described as a cooling off period): s 86 of the ACL.

2    In this proceeding the Australian Competition and Consumer Commission (the Commission) claims that Mr Wayne Wright, Adata (Vic) Pty Ltd ACN 099 814 749 (Adata (Vic)) and Adata (Carriers) Pty Ltd ACN 072 129 321 (Adata) entered into a large number of agreements in a variety of remote and regional communities in the Northern Territory and Western Australia, each of which, it is alleged, was an unsolicited consumer agreement, as defined in the ACL. Further, the Commission alleges that each of these agreements was entered into in breach, variously, of ss 73, 76, 78, 79 and 86 of the ACL.

3    During the period to which this proceeding relates, Adata (Vic), the first respondent, was a registered tax agent under Division 20 of Part 2 of the Tax Agents Services Act 2009 (Cth). Mr Wayne Wright, the third respondent, was an accountant by training and was the sole director and shareholder of Adata (Vic). Mr Wright was also the sole director and shareholder of a related company, Adata, the second respondent.

4    The services provided under the agreements referred to above were the preparation and lodgement of income taxation returns.

The corporate respondents are unrepresented

5    This proceeding was commenced in June 2014 by an originating application. The originating application was supported by a statement of claim.

6    Mr Wright has appeared in person throughout the proceeding. Neither Adata (Vic), nor Adata, has filed a notice under r 4.01 of the Federal Court Rules 2011 (Cth) (the Rules) appointing a lawyer to represent it in the proceeding. Since they are both corporations, r 4.01(2) prevents them proceeding other than by a lawyer. Initially, Mr Wright sought dispensation from that rule so that he could represent the two corporate respondents. He made successive applications for dispensation, both of which were rejected: see Australian Competition and Consumer Commission v Adata (Vic) Pty Ltd [2014] FCA 1453 and Australian Competition and Consumer Commission v Adata (Vic) Pty Ltd (No 2) [2015] FCA 272. Accordingly, the two corporate respondents remain unrepresented in this proceeding.

The Commission applies for default judgment

7    In December 2014, the Commission filed an application seeking judgment by default against the two corporate respondents. Oral and written submissions were made in respect of that application in March and April 2015. In the course of those submissions, the Commission sought to confine its default judgment application to Adata (Vic). These reasons therefore only relate to that application. The balance of this proceeding against Mr Wright and Adata is presently due to proceed to trial on 22 June 2015.

The defaults relied upon

8    In its application against Adata (Vic), the Commission relies on r 5.22 of the Rules. It provides:

5.22     When a party is in default

A party is in default if the party fails to:

(a)    do an act required to be done, or to do an act in the time required, by these Rules; or

(b)    comply with an order of the Court …

(Emphasis in original)

9    The Commission claims that Adata (Vic) is in default because it failed to comply with rr 5.02 and 11.02 of the Rules, and an order made in this proceeding on 18 November 2014.

10    Rule 5.02 provides that:

5.02 Parties to file notice of address for service before return date

A respondent who has been served with an originating application must file a notice of address for service, in accordance with Form 10, before the return date fixed in the originating application.

(Emphasis in original)

11    Rule 11.02 provides that:

11.02 Address for service—corporations

A notice of address for service for a corporation must be filed by a lawyer.

(Emphasis in original)

12    The order made on 18 November 2014 relevantly provided that:

2.     The respondents are to file and serve any defences by 4:00 pm on 27 November 2014.

13    I am satisfied on the evidence before me that Adata (Vic) has committed each of these defaults.

The principles on granting a default judgment including one for declaratory orders

14    The Commission’s application for default judgment was made under r 5.23(2)(c) of the Rules. That rule relevantly provides:

(2)    If a respondent is in default, an applicant can apply to the Court for:

…

(c)    if the proceeding was started by an originating application supported by a statement of claim, or if the Court has ordered that the proceeding continue on pleadings—an order giving judgment against the respondent for the relief claimed in the statement of claim to which the Court is satisfied that the applicant is entitled …

15    As Flick J pointed out in Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227 (Speedo Holdings), the discretionary power to make an order for default judgment is now contained in r 1.32 and is not expressly included in the above rule: see at [17].

16    The discretion conferred by the combination of rr 1.32 and 5.23 is broad and unconfined: Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 27 FCR 388 at 396 per Wilcox and Gummow JJ (in relation to an earlier equivalent Rule); Welsh v Digilin Pty Ltd [2008] FCAFC 149 at [14] per Tamberlin, Greenwood and Collier JJ (applying the aforegoing comments to O 35A of the previous Federal Court Rules); Yeo v Damos Earthmoving Pty Ltd, Re Beachwood Developments Pty Ltd (in liq) [2011] FCA 1129 (Yeo) at [9] per Gordon J; and Speedo Holdings at [18]–[19] per Flick J (that rr 5.22 and 5.23 are akin to O 35A of the previous Federal Court Rules).

17    Furthermore, in Yeo, Gordon J also observed that an application for default judgment under rr 5.22 and 5.23 (at [9]):

1.    does not require proof of the claim by evidence, but only requires that – on the face of the statement of claim – there is a claim for the relief sought; and

2.    the claim must fall within the jurisdiction of the Court …

18    The second matter identified in Yeo above can be disposed of briefly. Section 86(1) of the Competition and Consumer Act 2010 (Cth) (the CCA) relevantly confers jurisdiction on this Court in relation to any matter arising under the CCA and s 138 of the CCA confers specific jurisdiction on the Court in relation to any matter arising under Part XI of the CCA or the ACL.

19    With respect to the first matter identified in Yeo above, in Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd (2006) 236 ALR 665; [2006] FCA 1427 (Dataline), Kiefel J held that r 35A (of the previous Federal Court Rules) and the English practice upon which it was based proceeded on the footing that, in an application of this kind, the allegations of fact pleaded in the statement of claim are taken to have been admitted by the respondent: at [36] and [44]. This ruling was confirmed on appeal: see Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd (2007) 161 FCR 513, [2007] FCAFC 146 at [42] per Moore, Dowsett and Greenwood JJ. See also Speedo Holdings at [23]–[26] and the cases cited by Flick J.

20    Of particular importance for present purposes, Flick J also observed in Speedo Holdings (at [24]) that:

… to be satisfied that an applicant “is entitled” to the relief claimed in the statement of claim, the Court needs to be satisfied that “each element of the relevant civil wrong involved is properly and discretely pleaded in the statement of claim”: Macquarie Bank Ltd v Seagle [2005] FCA 1239 at [24], 146 FCR 400 at 406 to 407 per Conti J; Macquarie Bank Ltd v Seagle [2008] FCA 1417 at [20] per Jagot J.

21    However, this proceeding also raises another consideration. In its originating application, the Commission has sought declaratory relief against Adata (Vic). In this respect, it is well-established that s 21 of the Federal Court of Australia Act 1976 (Cth) (the Federal Court Act) gives this Court a wide discretionary power to make declarations of right: see Forster v Jododex Australia Pty Limited (1972) 127 CLR 421 (Forster) at 437–438; Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 581–582; and Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (No 2) (1993) 41 FCR 89 (Tobacco Institute) at 99.

22    Furthermore, it is now also well-established that this Court can make declaratory orders based on deemed admissions or agreed facts: see Dataline at [35]–[59] per Kiefel J and the cases cited by myself in Australian Competition and Consumer Commission v EDirect Pty Ltd (in liq) (2012) 206 FCR 160; [2012] FCA 976 at [23].

23    Nonetheless, as Kiefel J observed in Dataline, when declaratory orders are made on deemed admissions, rather than evidence, it is important to make that matter clear in the orders themselves. Her Honour said (at [59]):

Cases such as this, involving the protection of consumers, are of public interest. Declarations are often utilised in such cases to identify for the public what conduct contributes a contravention and to make apparent that it is considered to warrant an order recognising its seriousness. It is however important that there be no misunderstanding as to the basis upon which they are made. This could be overcome by a statement, preceding the declarations, that orders are made: “upon admissions which [the respondent in question] is taken to have made, consequent upon non-compliance with orders of the court”.

(Emphasis added)

24    There is also a number of broader discretionary factors that fall to be considered when a court is asked to make declaratory orders. They include the court being satisfied that the orders in question are directed to determining “a legal controversy and not answering abstract or hypothetical questions”, that “the party seeking the declaration has a real interest in seeking that relief”, and that “there are sufficient consequences flowing from the making of the declaration” to justify it being made: see Australian Competition and Consumer Commission v Grove & Edgar Pty Ltd (2008) ATPR 42-269, [2008] FCA 1956 at [19]. See also Forster at 437–438; Tobacco Institute at 99–100; Yeo at [17]; and Australian Competition and Consumer Commission v Powerballwin.com.au Pty Ltd [2010] FCA 378 at [41] per Tracey J.

25    The first matter identified in Yeo at [17] above and the observations of Flick J in Speedo Holdings at [15] above therefore require attention to be given to “each element” of the contraventions of the ACL alleged by the Commission and the allegations of the fact that it has pleaded in its statement of claim to establish those elements, in order to be satisfied “on the face of the statement of claim” that the Commission is entitled to the relief it has claimed against Adata (Vic).

The factual background

26    Before turning to consider the application of these principles in this matter, it is convenient first to outline the factual background to this proceeding. I have already provided some brief details of it at [2]–[3] above.

27    In all, this proceeding relates to 193 agreements. A list of the 193 consumers who entered into those agreements (identified by initials only for privacy reasons), along with the name of the communities in which they resided and the dates on which they entered their agreements, is set out in Annexure A to these reasons.

28    As is already noted above (at [4]), the services provided under these agreements were the preparation and lodgement of income taxation returns.

29    As the registered tax agent, Adata (Vic) was responsible for preparing and lodging those returns with the Australian Taxation Office. It did so on a fee for service basis.

30    Mr Wright was the individual who performed the services on behalf of Adata (Vic). He did that by travelling to the communities concerned in, or around, July to November in 2012 and 2013. At each community, he generally positioned himself near to the local council office, or the office of a government agency within the community, and offered to supply the services in question.

31    Although Adata (Vic) was the corporate entity that supplied the services, Adata was the corporate entity that received payment from each consumer for the services. To this end, Adata had an agreement with the Commonwealth Department of Human Services to receive periodic payments from each consumer’s Centrelink benefits under the “Centrepay Scheme” operated by that Department.

32    The standard rate charged for the services was $110.

The apposite provisions of the ACL

33    As mentioned in [1] above, the unsolicited goods and services provisions of the ACL are contained in Division 2 of Part 3-2. While I have briefly outlined some of the requirements of that Division above (at [1]), at this point, it is convenient to describe those requirements in some more detail. Division 2 begins at s 69. That section defines what an unsolicited consumer agreement is. It relevantly provides:

(1)    An agreement is an unsolicited consumer agreement if:

(a)    it is for the supply, in trade or commerce, of goods or services to a consumer; and

(b)    it is made as a result of negotiations between a dealer and the consumer:

(i)    in each other’s presence at a place other than the business or trade premises of the supplier of the goods or services; or

(ii)    by telephone;

whether or not they are the only negotiations that precede the making of the agreement; and

(c)    the consumer did not invite the dealer to come to that place, or to make a telephone call, for the purposes of entering into negotiations relating to the supply of those goods or services (whether or not the consumer made such an invitation in relation to a different supply); and

(d)    the total price paid or payable by the consumer under the agreement:

(i)    is not ascertainable at the time the agreement is made; or

(ii)    if it is ascertainable at that time—is more than $100 or such other amount prescribed by the regulations.

34    Section 70 (within Division 2) is important because it contains what is often described as a reverse onus provision. It states:

(1)    In a proceeding relating to a contravention or possible contravention of this Division (other than a criminal proceeding), an agreement is presumed to be an unsolicited consumer agreement if:

(a)    a party to the proceeding alleges that the agreement is an unsolicited consumer agreement; and

(b)    no other party to the proceeding proves that the agreement is not an unsolicited consumer agreement.

(2)    In a proceeding relating to a contravention or possible contravention of this Division (other than a criminal proceeding), it is presumed that a proposed agreement would be an unsolicited consumer agreement if it were made if:

(a)    a party to the proceeding alleges that the proposed agreement would be an unsolicited consumer agreement if it were made; and

(b)    no other party to the proceeding proves that the proposed agreement would not be an unsolicited consumer agreement if it were made.

35    The meaning of the expressions “dealer” and “negotiations” (see ss 69(1)(b) and (c) above at [33]) are defined in ss 71 and 72 of Division 2, respectively. Those definitions are as follows:

71    Meaning of dealer

A dealer is a person who, in trade or commerce:

(a)    enters into negotiations with a consumer with a view to making an agreement for the supply of goods or services to the consumer; or

(b)    calls on, or telephones, a consumer for the purpose of entering into such negotiations;

whether or not that person is, or is to be, the supplier of the goods or services.

72    Meaning of negotiation

A negotiation, in relation to an agreement or a proposed agreement, includes any discussion or dealing directed towards the making of the agreement or proposed agreement (whether or not the terms of the agreement or proposed agreement are open to any discussion or dealing).

(Emphasis in original)

36    Thereafter, Division 2 sets out a series of requirements relating to unsolicited consumer agreements. For present purposes, the apposite requirements are, in the order in which they appear in Division 2:

(a)    Section 73 – permitted hours for negotiating an unsolicited consumer agreement;

Section 73 relevantly provides:

(1)    A dealer must not call on a person for the purpose of negotiating an unsolicited consumer agreement, or for an incidental or related purpose:

(a)    at any time on a Sunday or a public holiday; or

(b)    before 9 am on any other day; or

(c)    after 6 pm on any other day (or after 5 pm if the other day is a Saturday).

(b)    Section 76 – informing person of termination period etc;

Section 76 provides:

A dealer must not make an unsolicited consumer agreement with a person unless:

(a)    before the agreement is made, the person is given information as to the following:

(i)    the person’s right to terminate the agreement during the termination period;

(ii)    the way in which the person may exercise that right;

(iii)    such other matters as are prescribed by the regulations; and

(b)    if the agreement is made in the presence of both the dealer and the person—the person is given the information in writing; and

(c)    if the agreement is made by telephone—the person is given the information by telephone, and is subsequently given the information in writing; and

(d)    the form in which, and the way in which, the person is given the information complies with any other requirements prescribed by the regulations.

…

(Note omitted)

(c)    Section 78 – requirement to give document to the consumer;

Section 78 relevantly provides:

(1)    If an unsolicited consumer agreement was not negotiated by telephone, the dealer who negotiated the agreement must give a copy of the agreement to the consumer under the agreement immediately after the consumer signs the agreement.

…

(Note omitted)

(d)    Section 79 – requirements for all unsolicited consumer agreements etc; and

Section 79 provides:

The supplier under an unsolicited consumer agreement must ensure that the agreement, or (if the agreement was negotiated by telephone) the agreement document, complies with the following requirements:

(a)    it must set out in full all the terms of the agreement, including:

(i)    the total consideration to be paid or provided by the consumer under the agreement or, if the total consideration is not ascertainable at the time the agreement is made, the way in which it is to be calculated; and

(ii)    any postal or delivery charges to be paid by the consumer;

(b)    its front page must include a notice that:

(i)    conspicuously and prominently informs the consumer of the consumer’s right to terminate the agreement; and

(ii)    conspicuously and prominently sets out any other information prescribed by the regulations; and

(iii)    complies with any other requirements prescribed by the regulations;

(c)    it must be accompanied by a notice that:

(i)    may be used by the consumer to terminate the agreement; and

(ii)    complies with any requirements prescribed by the regulations;

(d)    it must conspicuously and prominently set out in full:

(i)    the supplier’s name; and

(ii)    if the supplier has an ABN—the supplier’s ABN; and

(iii)    if the supplier does not have an ABN but has an ACN—the supplier’s ACN; and

(iv)    the supplier’s business address (not being a post box) or, if the supplier does not have a business address, the supplier’s residential address; and

(v)    if the supplier has an email address—the supplier’s email address; and

(vi)    if the supplier has a fax number—the supplier’s fax number;

(e)    it must be printed clearly or typewritten (apart from any amendments to the printed or typewritten form, which may be handwritten);

(f)    it must be transparent.

(Note omitted)

(e)    Section 86 – prohibition on supplies etc for 10 business days.

Section 86 provides:

(1)    The supplier under an unsolicited consumer agreement must not:

(a)    supply to the consumer under the agreement the goods or services to be supplied under the agreement; or

(b)    accept any payment, or any other consideration, in connection with those goods or services; or

(c)    require any payment, or any other consideration, in connection with those goods or services;

during the period of 10 business days starting:

(d)    if the agreement was not negotiated by telephone—at the start of the first business day after the day on which the agreement was made; or

(e)    if the agreement was negotiated by telephone—at the start of the first business day after the day on which the consumer was given the agreement document relating to the agreement.

…

(2)    If the supplier supplies goods to the consumer in contravention of this section, the consumer has the same rights in relation to the goods as if the goods were unsolicited goods.

…

(3)    If the supplier supplies services to the consumer in contravention of this section, the consumer has the same rights in relation to the services as if the services were unsolicited services.

…

(Notes omitted)

37    With the exception of s 86, which sets out the consequences of a contravention within the section itself, (see subss (2) and (3)), the other four provisions above are stated to be pecuniary penalty provisions which are dealt with by proceedings under s 224 of the ACL. However, the Commission has not sought to have a pecuniary penalty applied to Adata (Vic) in this proceeding.

the statement of claim PLEADs the facts to establish the agreements were unsolicited consumer agreements

38    I now turn to consider whether the Commission’s statement of claim (SOC) pleads all the facts necessary to support each element of the contraventions it has alleged against Adata (Vic).

39    However, before any of those alleged contraventions arise for consideration, the Commission must first establish that the agreements in question were unsolicited consumer agreements. In this respect, it is important to reiterate that Adata (Vic) is taken to have admitted the allegations of fact contained in the SOC (see [19] above). For an agreement to be an unsolicited consumer agreement, s 69(1)(a) of the ACL (see at [33] above) requires that the agreement must be:

(a)    for the supply, in trade or commerce;

(b)    of goods or services;

(c)    to a consumer.

40    Before considering these three matters, it is convenient to record that Adata (Vic) is taken to have admitted the following general matters pleaded in the SOC:

(a)    The status of the Commission in this proceeding, as follows (at paragraph 1 of the SOC)):

The Applicant is a body corporate established pursuant to section 6A of the Competition and Consumer Act 2010 (Cth) (the Act), and is entitled to sue in its corporate name.

(Emphasis in original)

(b)    Mr Wright’s role with Adata (Vic), as follows (at paragraph 6(a) of the SOC):

(a)    in relation to Adata (Vic) [he was]:

(i)    the sole director and secretary of Adata (Vic);

(ii)    the sole shareholder of Adata (Vic);

(iii)    responsible for the day to day operations and management of the business of Adata (Vic); and

(iv)    the person responsible for the acts and omissions of Adata (Vic) alleged in this statement of claim; and

41    As to [39(a)] above, the SOC pleads (at paragraph 2) that:

The First Respondent, Adata (Vic) Pty Ltd (Adata (Vic)) at all material times:

(a)    was, and is, an Australian proprietary company, limited by shares, registered in Victoria;

(b)    was, and is, a trading corporation within the meaning of section 4 of the Act;

(c)    was, and is, carrying on business in trade or commerce, as a supplier to consumers of services; and

(d)    has been and is a registered tax agent under the Tax Agents Services Act 2009 (Cth) with agent number 74741002.

(Emphasis in original)

These facts, particularly those in (c) above (which are taken to be admitted by Adata (Vic)), are sufficient to establish the “supply, in trade or commerce” described in [39(a)] above.

42    Next, as to the matter described in [39(b)] above, the SOC pleads (at paragraph 8) that:

Since at least 28 May 2012, Adata (Vic) and/or Adata supplied, or offered to supply, to consumers (inter alia) the services of:

(a)    preparing a person’s income tax return in preparation for lodgement with the Australian Taxation Office (ATO); and

(b)    lodging the persons income tax return with the ATO,

(together, Tax Return Services)

on a fee for service basis.

(Emphasis in original)

Later in these reasons, I will return to the problems that are occasioned by the use of the expression “and/or” in the introductory words to this paragraph. However, putting that aside for the present, I consider that the facts pleaded above go to establish the services that were supplied for the purposes of [39(b)] above. It should be added that in this proceeding the Commission does not allege that any goods were supplied.

43    Finally, with regard to [39(c)] above, the SOC pleads (at paragraph 12) that:

Each of the persons referred to in Schedule A who entered into Adata Agreements acquired services from Adata (Vic) and/or Adata as a consumer by reason that:

(a)    the amount that was paid or payable for the Tax Return Services by each person did not exceed $40,000; or

Particulars

A.    The Applicant refers to and repeats particular D to paragraph 9 above.

B.    Particulars of the monetary amounts charged during the period between 28 May 2012 and 5 September 2013, including under the Adata Agreements, are set out in column E of the table in Schedule A to this Statement of Claim. The Applicant notes that, in addition to charges for Tax Return Services for the current year, Wright also sought payments from consumers’ Centrelink benefits to Adata under the ‘Centrepay Scheme operated by the Department for services allegedly provided by Adata (Vic) and/or Adata in previous years.

(b)    the services were of a kind ordinarily acquired for personal, domestic or household use or consumption.

(Emphasis in original)

44    As I have already mentioned above, with some alterations to protect the privacy of the individuals concerned, Schedule A to the SOC has been reproduced as Annexure A to these reasons. It is a moot point as to whether Adata (Vic) is taken to have admitted the particulars in this paragraph of the SOC because the pertinent material facts are pleaded in the body of paragraph 12 of the SOC above. In this respect, it should also be noted that the details contained in Schedule A to the SOC (which is referred to in Particular (b) above) are separately pleaded as material facts earlier in the SOC.

45    Insofar as it applies to services, the expression “consumer” is defined in s 3(3) of the ACL in the following terms:

A person is taken to have acquired particular services as a consumer if, and only if:

(a)    the amount paid or payable for the services, as worked out under subsections (4) to (9), did not exceed:

(i)    $40,000; or

(ii)    if a greater amount is prescribed for the purposes of subsection (1)(a)—that greater amount; or

(b)    the services were of a kind ordinarily acquired for personal, domestic or household use or consumption.

(Emphasis in original)

46    Again, putting aside for the present the problems occasioned by the use of the expression “and/or” in the introductory words to paragraph 12 of the SOC above, I consider the facts as pleaded (which Adata (Vic) is taken to have admitted) are sufficient to establish that the persons identified in Schedule A to the SOC were consumers for the purposes of the definition of that expression in s 3(3) of the ACL and, therefore, for the purposes of [39(c)] above.

47    Turning, then, to s 69(1)(b) of the ACL (see at [33] above), in order for an agreement to be an unsolicited consumer agreement, that subsection relevantly requires that the agreement has to be:

(a)    made as a result of negotiations;

(b)    between a dealer and the consumer; and

(c)    in each other’s presence at a place other than the business or trade premises of the supplier of the services.

48    As to [47(a)] above, the expression “negotiation” is defined in s 72 of the ACL. That provision is already set out at [35] above and does not need to be repeated.

49    Paragraph 9 of the SOC pleads:

Between at least 28 May 2012 and 5 September 2013, Adata (Vic) and/or Adata carried on business supplying Tax Return Services in the Northern Territory (NT) and Western Australia (WA) including Indigenous communities in the following manner:

(a)    Wright was employed or engaged to sell and perform the work to supply the Tax Return Services;

(b)    Wright sold and performed the work to supply the Tax Return Services by travelling to towns and communities in the NT and WA including Indigenous communities in or around July to October/November each year and attending upon consumers at general community or public areas in those towns and communities;

(c)    Wright had discussions with persons he met with in those towns and communities to which he travelled in the NT and WA in order sell and perform the work to supply Tax Return Services to those persons;

(d)    by entering into agreements with consumers for the supply to each consumer of Tax Return Services and payment by each consumer for Tax Return Services by it (the Adata Agreements);

(e)    by entering into the Adata Agreements by discussions between Wright and the consumer;

(f)    Wright arranged for Adata (Vic), as a registered tax agent, to supply the Tax Return Services to each consumer; and

(g)    Wright arranged for Adata to receive payment for the Tax Return Services from each consumer for each of the Adata Agreements alleged in paragraph 11 below by a payment or payments from the consumer’s Centrelink benefits under the ‘Centrepay Scheme’ operated by the Department

Particulars

Since at least 28 May 2012:

A.    The majority of the consumers of Tax Return Services supplied by Adata (Vic) and/or Adata are persons who live in towns and remote communities in the NT and WA, including in Indigenous communities.

B.    Adata (Vic) and/or Adata supplied, and offered to supply, Tax Return Services by Wright in the towns and communities in the NT and WA and, in particular, Indigenous communities which Wright drove to in his vehicle. In the towns and communities to which Wright travelled, he met with and attended upon consumers at general community or public areas such as in or near council and government agency offices or outside near Wright's vehicle.

C.    Each Adata Agreement was partly oral and partly in writing.

(i)    Insofar as it was oral, each Adata Agreement arose from the discussions between Wright and the consumer at general community or public areas at the various towns and communities in the NT and WA to which Wright travelled.

(ii)    Insofar as it was in writing, each Adata Agreement was constituted by documents that Wright presented to the consumer when Wright met with him or her at general community or public areas at the various towns and communities in the NT and WA to which Wright travelled. In particular, Wright presented to consumers and requested that they sign a “Centrepay deductions” form directing a payment or payments from the consumer's Centrelink benefits to Adata under the ‘Centrepay Scheme’ operated by the Department.

D.    The standard rate charged for Tax Return Services was generally $110.

(Emphasis in original)

50    In my view, the facts pleaded in subparagraph (a) to (f) above, particularly those in subparagraph 9(c), go to establish the requisite negotiations for the purposes of [47(a)] above.

51    I have already concluded above (at [46]) that the persons identified in Schedule A to the SOC (being Annexure A to these reasons) were consumers for the purposes of the definition of that expression set out in s 3(3) of the ACL. The other expression used in [47(b)] above is “dealer”. The definition of “dealer” is already set out at [35] above and there is no necessity to repeat that provision here. The expression “in trade or commerce” that is used in this definition has already been dealt with at [41] above.

52    In this application for default judgment, Adata (Vic) is the person who is alleged to have been the dealer. Section 69(1)(b) requires attention to the persons between whom the negotiations are carried out – a dealer and the consumer – and the place where the negotiations are carried out. In this respect, it is important to note that the latter is fixed by reference to the business or trade premises of the supplier of the services, not the dealer who conducted the negotiations. Before considering that question (which is raised by [47(c)] – see [55] below), I will address the former question.

53    While paragraph 9(c) of the SOC (see [49] above) alleges that Mr Wright had the discussions with the persons concerned, paragraph (6)(a) of the SOC pleads that at all material times, Mr Wright was, among other things:

in relation to Adata (Vic):

…

(iii)    responsible for the day to day operations and management of the business of Adata (Vic); and

(iv)    the person responsible for the acts and omissions of Adata (Vic) alleged in this statement of claim; and

54    It is doubtful whether the allegation in paragraph 6(a)(iv) of the SOC above constitutes an allegation of fact, as distinct from a conclusion of law. Nonetheless, for present purposes, the separate allegation of fact in paragraph 6(a)(iii) of the SOC, combined with the allegations of fact pleaded in paragraph 9(c) of the SOC, go to establish that Adata (Vic) was a dealer for the purposes of [47(b)] above.

55    Finally, [47(c)] above is directed to the place where the negotiations with the consumer were carried out. As I have already observed above (at [52]), that “place” is fixed by reference to the business or trade premises of the supplier of the services. This raises the question in this case: who was the supplier of the taxation services concerned? It is in answering this question that the Commission first encounters the problems to which I have alluded above (see at [42]). Fortunately for it, I have ultimately concluded that, in this instance, those problems can be overcome. First, it is necessary to identify what the problems are.

56    In the introductory words to paragraphs 8 (see at [42] above) and 9 (see at [49] above) of the SOC, the supplier of the taxation services is identified as “Adata (Vic) and/or Adata”.

57    The use of the expression or symbol “and/or” and the problems it creates were highlighted by Burchett J in Re Moage Ltd (in liq) (1998) 153 ALR 711 at 716–717, where his Honour referred to a number of English decisions where that expression was variously described: as “a loose expression conveying a vague meaning”; as a “confusing expression”; and as being a “loose and ambiguous term”. His Honour said:

Although Lord Reid declared in John G Stein & Co Ltd v O’Hanlon [1965] AC 890 at 904 that “[t]he symbol ‘and/or’ is not yet part of the English language”, it has long been recognised as a loose expression conveying a vague meaning. An early version of it is to be found in Cuthbert v Cumming (1855) 24 LJ Ex 198 at 199; 156 ER 668 at 670, where Alderson B said:

… the contract on the face of the charter-party was, that the parties were to “load a full and complete cargo of sugar, molasses, and/or other lawful produce”, so that, according to the contract, the parties were either to load a full and complete cargo of sugar and molasses, and other lawful produce, or a full cargo of sugar and molasses, or a full cargo of other lawful produce, leaving it open in every way by reason of the words “and” and “or” being introduced into the charter-party.

Similarly, in Furness v Charles Tennant, Sons, & Co (1892) 8 TLR 336, Lord Herschell construed a charter-party requiring the loading of “a full and complete cargo of sugar in hogsheads and (or) bags, or other lawful merchandise” as entitling the charterers “to discharge their obligation by loading a cargo of sugar either in hogsheads or in bags, or partly in hogsheads and partly in bags”. But the expression, or symbol, as Lord Reid preferred to call it, has been found to create difficulties. In Millen v Grove [1945] VLR 259 at 260 Gavan Duffy J referred to a notice to quit as having “invited trouble by the common and deplorable affection for the form ‘and/or’”.

In Looke v Parbury Henty & Co Pty Ltd [1950] VLR 94 at 98 Barry J said:

… I agree that the expression “and/or” is commonly an indication that the draftsman is not clear in his own mind about the matters with which he has to deal; cf Piesse, Elements of Drafting, pp 52–7.

In Neame v Neame’s Trs [1956] SLT 57, the majority of the court read “and/or”, in a deed, as meaning nothing more than “and”. The Lord President, Lord Clyde, said (at 62):

But it would be most unfortunate if a confusing expression such as “and/or” were to become a common feature in Scottish marriage contracts or testamentary settlements.

Lord Carmont, who differed from the majority, went further, and said (at 64) that in his opinion “the obscurity is radical”. Lord Russell concluded his judgment with the comment (at 64):

I would venture to add that in my judgment the phrase “and/or” is at best a loose and ambiguous term which would be better not to be used in formal legal writs affecting patrimonial interests.

Lord Sorn joined the chorus of disapproval when he said (also at 64):

The expression “and/or” is not a happy one and, if occurring in a simple gift, might give rise to a serious problem of construction.

58    After referring to these observations, Burchett J then added his disapproval of the use of the expression “and/or” in a statement of claim, as follows (at 717):

In my opinion, the expression is particularly unhappy when it is used in a statement of claim, which should express precisely the foundation of the proceeding. In the present case, as has been explained, an almost endless series of additional and alternative allegations would be conveyed by an analysis of the claim made in this way.

59    All the observations above reinforce the problems that arise with the use of the expression “and/or” in the present SOC. Hence, based on the introductory words in paragraphs 8 and 9 of the SOC – that is, “Adata (Vic) and/or Adata” – it is unclear which of Adata (Vic), or Adata, is alleged to have supplied the services described. Was it Adata (Vic) alone? Was it Adata alone? Or was it both Adata (Vic) and Adata? More significantly, for the purposes of this default judgment application against Adata (Vic), which allegation of fact is it taken to have admitted?

60    If the Commission were left to rely upon the pleading in paragraph 8 of the SOC, the confusion and vagueness created by the use of the expression “and/or” in the introductory words to that paragraph would, in my view, be fatal to this application. That is so because it would mean that it would be unclear which of the corporate respondents is alleged to have supplied the services in question. That, in turn, would mean that it would be uncertain whether the place where the negotiations were carried out was other than the supplier’s business or trade premises (see at [47(c)] above). And that, in turn, would mean that it would be unclear whether the agreements in question were unsolicited consumer agreements for the purposes of the definition in s 69 of the ACL. I should add that I do not consider this ambiguity affects the description of the Tax Return Services described in the body of paragraph 8 of the SOC, because that description does not make use of the expression “and/or” and is not affected by the use of that expression in the introductory words to that paragraph.

61    However, in this instance, I consider the Commission’s salvation lies in the distinct and separate pleadings in the sub-paragraphs to paragraph 9 of the SOC. While the introductory words to that paragraph also contain the expression “and/or”, its subparagraphs separately and distinctly describe the roles played by each of Mr Wright, Adata (Vic) and Adata. In particular, paragraph 9(f) of the SOC describes Adata (Vic)’s role in the following terms:

[Mr] Wright arranged for Adata (Vic), as a registered tax agent, to supply the Tax Return Services to each consumer …

62    This allegation can then be correlated with the allegation in paragraph 2(d) of the SOC (see at [41] above) that Adata (Vic) was, during the period in question, the registered tax agent under the Tax Agents Services Act 2009 (Cth). Conversely, there is no allegation in the SOC that either of Mr Wright personally, or Adata, was a registered tax agent. Since these facts are separately and distinctly pleaded in relation to Adata (Vic), I consider they allow for the conclusion that Adata (Vic) is taken to have admitted that it was the supplier of the taxation services for the purposes of [47(c)] above.

63    The remaining question for the purposes of [47(c)] above is whether the place where the negotiations were carried out was other than the supplier’s (Adata (Vic)’s) business or trade premises. In this regard, paragraph 3 of the SOC pleads:

At all material times:

(a)    the registered office of Adata (Vic) was 28 Viewpoint Drive, Chirnside Park, Victoria; and

(b)    the principal place of business of Adata (Vic) was 28 Viewpoint Drive, Chirnside Park, Victoria.

These allegations of fact go to establish that 28 Viewpoint Drive, Chirnside Park, Victoria was the business or trade premises of Adata (Vic) at the material times.

64    The final step is to consider whether the negotiations were carried out at a place other than the premises identified above. In this regard, paragraph 9(c) of the SOC (see at [49] above) pleads that the discussions took place “in those towns and communities to which [Mr Wright] travelled in the NT and WA”. When subparagraph 9(c) is read in the context of the preceding subparagraph 9(b), it is apparent that the word “those” refers to the towns and communities described in that subparagraph, namely the “towns and communities in the NT and WA including Indigenous communities [Mr Wright travelled to] in or around July to October/November each year and attend(ed) upon consumers at general community or public areas in those towns and communities”. Since these facts are taken to have been admitted by Adata (Vic), I consider it follows that the place where the negotiations were carried out was other than Adata (Vic)’s business or trade premises at 28 Viewpoint Drive, Chirnside Park, Victoria.

65    Next, for an agreement to be an unsolicited consumer agreement, the negotiations described above must have taken place without the prior invitation of the consumers concerned: see s 69(1)(c) of the ACL. This fact is obviously foundational to the characterisation of an agreement as an unsolicited consumer agreement. It is curious, therefore, that it is not specifically pleaded as a fact in paragraphs 8 and 9 of the SOC, where the circumstances of the negotiations for the unsolicited consumer agreements in question are pleaded. Nonetheless, it is pleaded, albeit incidentally, in paragraph 15(b)(ii) of the SOC in the following terms:

Each of the 193 Adata Agreements listed in Schedule A:

…

(b)    was made:

(i)    …

(ii)    in circumstances where that consumer did not invite Adata (Vic), Adata or Wright to come to that place for the purposes of entering into negotiations relating to the supply of Tax Return Services …

66    Since this allegation is taken to be admitted by Adata (Vic), at least insofar as it applies to that company, I consider this is sufficient to establish the absence of an invitation from the consumers concerned within the terms of s 69(1)(c) of the ACL. Significantly, this particular paragraph of the SOC does not use the expression “and/or”.

67    Finally, for an agreement to be an unsolicited consumer agreement, s 69(1)(d) of the ACL requires that:

the total price paid or payable by the consumer under the agreement:

(i)    is not ascertainable at the time the agreement is made; or

(ii)    if it is ascertainable at that time—is more than $100 or such other amount prescribed by the regulations.

68    As with the absence of a prior invitation to the consumers concerned above, this fact is not specifically pleaded in those paragraphs of the SOC where the details of the unsolicited consumer agreements in question are pleaded. Instead, it, too, is dealt with incidentally in paragraph 15(c) of the SOC, as follows:

Each of the 193 Adata Agreements listed in Schedule A:

…

(c)    was an agreement in respect of which the total price paid or payable by the consumer was:

(i)    more than $100; or

(ii)    alternatively, not ascertainable at the time the agreement was made …

69    Again, bearing in mind that this fact is taken to be admitted by Adata (Vic), I consider it is sufficient to establish that the total price paid or payable under the agreements falls within the terms prescribed by s 69(1)(d).

70    So, to sum up, this review of the facts pleaded in the SOC, by reference to the various matters set out in the definition of “unsolicited consumer agreement” in s 69(1) of the ACL, reveals that the Commission has, in its SOC, pleaded all the facts against Adata (Vic) necessary to establish that each of the 193 agreements described in Schedule A to the SOC was an unsolicited consumer agreement within the terms of that definition.

71    While I have descended into some detail before concluding that these agreements, as pleaded in the SOC, were unsolicited consumer agreements within the terms of the definition above, I should briefly return to the presumption set out in s 70 of the ACL (see at [34] above) because it provides an alternative, and more direct, path to the same conclusion. The Commission relied on this presumption in its submissions and pointed to paragraph 16 of its SOC where it pleaded that the 193 agreements listed in Schedule A were unsolicited consumer agreements. It also contended that Adata (Vic) had not adduced any evidence to rebut this presumption. I accept these submissions. I therefore consider that, quite apart from the detailed consideration I have carried out above, the Commission is entitled to rely on the presumption in s 70 to establish that these agreements were of the defined character.

The alleged contraventions of the ACL are not properly and clearly pleaded

72    Having established this threshold matter, the Commission next needs to show it pleaded all the facts in its SOC necessary to establish that Adata (Vic) committed each of the alleged contraventions of the ACL in relation to these agreements. In this respect, the Commission again encounters the problems associated with the use of the expression “and/or” in the SOC. However, in this instance, I do not consider it is able to overcome those problems by relying upon the necessary facts being separately and distinctly pleaded elsewhere in the SOC.

73    The provisions of the ACL which prescribe the alleged contraventions are already set out at [36] above. The facts pleaded in the SOC to support each of these five categories of contraventions are set out hereunder.

Section 73 – permitted hours for negotiating an unsolicited consumer agreement

74    The facts are pleaded in paragraph 20 of the SOC as follows:

Between 28 July 2013 and 1 September 2013, in the course of entering into 6 of the Adata Agreements listed in Schedule A, being the agreements numbered 1 to 5 and 139 in Schedule A, Adata (Vic) and/or Adata, called on each of these consumers on a Sunday.

(Emphasis added)

Section 76 – informing person of termination period, etc

75    The facts are pleaded in paragraphs 17(a) and (b) of the SOC as follows:

Between 28 May 2012 and 5 September 2013, in the course of entering into each of the 193 Adata Agreements listed in Schedule A:

(a)    Adata (Vic) and/or Adata did not, before making the Adata Agreement, give information to the consumer as to:

(i)    the consumer’s right to terminate the Adata Agreement during the termination period; or

(ii)    the way in which the consumer could exercise the consumer’s right to terminate the Adata Agreement;

(b)    Adata (Vic) and/or Adata did not give the consumer the information referred to in subparagraphs (a)(i) and (a)(ii) above in writing …

(Emphasis added)

Section 78 – requirement to give document to the consumer

76    The facts are pleaded in paragraph 17(c) of the SOC as follows:

Adata (Vic) and/or Adata did not give a copy of the agreement to the consumer immediately after the consumer signed the agreement …

(Emphasis added)

Section 79 – requirements for all unsolicited consumer agreements

77    The facts are pleaded in paragraph 17(d) of the SOC as follows:

Adata (sic – Adata (Vic)) and/or Adata did not ensure that the agreement:

(i)    set out the full terms of the agreement, including the total consideration to be paid or provided by the consumer under the agreement or, if the total consideration was not ascertainable at the time the agreement was made, the way in which it was to be calculated;

(ii)    on its front page, conspicuously and prominently informed the consumer of the consumer's right to terminate the agreement;

(iii)    was accompanied by a notice that may be used by the consumer to terminate the agreement;

(iv)    conspicuously and prominently set out in full the supplier's name, ABN, ACN, business address, email address or fax number; or

(v)    was transparent.

(Emphasis added)

Section 86 – prohibition on supply, etc for 10 business days

78    The facts are pleaded in paragraphs 18 and 19 of the SOC as follows:

18    Between 28 May 2012 and 5 September 2013, after the making of each of the 193 Adata Agreements listed in Schedule A, Adata (Vic) and/or Adata, supplied to the consumer the Tax Return Services to be supplied to the consumer under the agreement within 10 business days, starting from the first business day after the day on which the agreement was made.

Particulars

A.    The Applicant refers to and repeats the particulars to paragraph 15(a) above.

B.    Wright’s practice when performing the work to supply the Tax Return Services was to do so by preparing the consumer’s tax return and lodging it with the ATO on the day that the consumer entered into the Adata Agreement, or within a few days of the consumer entering into the Adata Agreement.

19    Between 18 July 2012 and 5 September 2013, after making each of the 138 Adata Agreements listed in Part 1 of Schedule A, Adata (Vic) and/or Adata, in each instance accepted part or full payment by or on behalf of consumers within 10 business days, starting from the first business day after the day on which the agreement was made.

Particulars

A.    The Applicant refers to and repeats the particulars to paragraph 15(c) above.

B.    Particulars of the dates of payment (or the date of first payment if payment was to be made in instalments) under the Adata Agreements are set out in column G of the table in Schedule A to this Statement of Claim.

(Emphasis added)

79    It can be seen from the emphasised parts of each of the five sets of pleaded facts above that the expression “and/or” is pivotal to all of the alleged contraventions of the ACL. That being so, and having regard to the confusion and uncertainty associated with the use of that expression (see at [57]–[58] above), it is not possible, in my view, to say with any certainty which of the critical allegations of fact in those paragraphs Adata (Vic) is taken to have admitted: whether Adata (Vic), or Adata, or both Adata (Vic) and Adata, committed the alleged contraventions of the ACL. This may not present a problem in relation to the first and third of these alternatives, but it certainly does in relation to the second. If that alternative were taken to be the admitted and established fact, it would mean that Adata, alone, and not Adata (Vic), committed the alleged contraventions.

80    I have considered whether these problems might be overcome by focusing on the specific roles that Adata (Vic) and Adata had in the alleged contraventions. As I have already outlined above, it is separately and distinctly pleaded that Adata (Vic) was the registered tax agent that supplied the services in question (see at [61]–[62]). There is a similar pleading in paragraph 9(g) of the SOC (see at [49] above) to the effect that Adata’s role was to collect the payments from the consumers concerned. On this approach, it may be open to conclude that Adata (Vic) committed the fifth category of alleged contraventions above, that is, those involving s 86 of the ACL insofar as they related to the supply of the services as pleaded in paragraph 18 of the SOC (see at [78] above) and conversely, that Adata committed that category of alleged contraventions insofar as they related to the payments it received from the consumers concerned as pleaded in paragraph 19 of the SOC (see also at [78] above). This approach would essentially require me to ignore the corresponding references to Adata in paragraph 18 of the SOC and Adata (Vic) in paragraph 19 thereof.

81    However, in the circumstances where all the allegations of contraventions pleaded in the SOC against Mr Wright and Adata are presently due to proceed to trial in Darwin on 22 June 2015, I do not consider it would be appropriate to exercise my discretion to make the declaratory orders sought against Adata (Vic) in relation to the fifth category of contraventions above. To do so may, among other things, result in conflicting findings on this issue. Furthermore, even if I were minded to take this approach in relation to the fifth alleged category of contraventions, for the reasons expressed in [82] below, I am not willing to follow it in relation to the other four categories of alleged contraventions above. That being so, this approach would only resolve a small part of the controversy that arises in this proceeding. In those circumstances, I consider it is preferable for all the allegations against all the respondents to be determined at the forthcoming trial, rather than my summarily determining one small part of all those allegations against one respondent in this application.

82    As to the other four categories of alleged contraventions above, my unwillingness to make the declaratory orders sought by the Commission is based on the following considerations. First, the effect of the declarations sought by the Commission in relation to these allegations is that Adata (Vic) has committed various contraventions of Australia’s consumer laws. The seriousness of such orders is obvious. Indeed, it is the seriousness with which the Court views such contraventions that partly justifies them being the subject of declaratory orders in the public interest (see at [23] above). That being so, I consider I must be particularly cautious to ensure that the factual foundation for the alleged contraventions has been properly pleaded in the Commission’s SOC. Having regard to this caution and the confusion and uncertainty I have mentioned above (at [79]), I do not consider the factual foundation for those alleged contraventions has been properly pleaded in the Commission’s SOC. Secondly and relatedly, since the declaratory orders the Commission seeks are based upon the premise that Adata (Vic) is taken to have admitted the allegations of fact pleaded in the Commission’s SOC, the Commission has sought to allay the traditional concerns that arise when a court is being asked to make declaratory orders based on such deemed admissions, by urging the adoption of the approach taken by Kiefel J in Dataline. That approach involves the declaratory orders containing a preface to the effect that they are made: “upon admissions which [the respondent in question] is taken to have made, consequent upon non-compliance with orders of the court”: see at [23] above. Again, having regard to the confusion and uncertainty mentioned above, I do not consider I can confidently include this suggested preface to the declaratory orders sought by the Commission. For these reasons, I am not willing to exercise my discretion to make the orders sought in relation to the other four categories of alleged contraventions above.

Conclusion

83    I am therefore not satisfied that the Commission has, in its SOC, properly and clearly pleaded each element of the alleged contraventions of the ACL against Adata (Vic) such that it is entitled to the relief it has claimed. For this reason, and given the imminence of the trial against the other two respondents, I am not willing to exercise my discretion to enter default judgment against Adata (Vic). This conclusion is reinforced by the fact that, as outlined above, the default judgment sought by the Commission includes declaratory orders. Having reached this conclusion, it is unnecessary to consider the other discretionary factors that may apply to the making of such declaratory orders (see at [24] above).

84    The Commission’s application for default judgment against Adata (Vic) must therefore be dismissed.

Associate:        

Dated:    12 June 2015

ANNEXURE A

LIST OF CONSUMERS WHO ENTERED AGREEMENTS