FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Fuji Xerox Australia Pty Ltd [2021] FCA 153

ORDERS

THE COURT ORDERS THAT:

1.    The respondents’ application for summary dismissal is dismissed with costs.

2.    The applicants are directed to file and serve a further amended concise statement within 14 days of these orders dealing with the matters identified in paragraph 68 of the reasons for judgment published today.

3.    The respondents are directed to file and serve a response to the applicants’ further amended concise statement within 21 days of service on them of the further amended concise statement.

4.    The matter is listed for further case management on 21 April 2021, or such other date as may be arranged with the Associate of Stewart J.

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

REASONS FOR JUDGMENT

STEWART J:

Introduction

1    The respondents seek by interlocutory application the summary dismissal of the applicants’ proceeding on the basis that the applicants have no reasonable prospect of successfully prosecuting the proceeding. The respondents rely in that regard on s 31A of the Federal Court of Australia Act 1976 (Cth) (FCA Act), r 26.01 of the Federal Court Rules 2011 (Cth) which gives further expression to that provision, and the Court’s inherent jurisdiction.

2    The applicants are the Australian Competition and Consumer Commission (ACCC) and a delegate of the Australian Securities and Investments Commission (ASIC). The ACCC and ASIC are established and exercise powers under the Competition and Consumer Act 2010 (Cth) (CCA) and the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) respectively.

3    The respondents are Fuji Xerox Australia Pty Ltd and Fuji Xerox Finance Ltd, whom I will refer to together simply as FX. The respondents, either individually or one as agent for the other, supply office equipment including printers and copiers to Australian businesses for their use. Such supply is, relevantly, by way of sale with ongoing support services or lease.

The applicants’ case

4    The proceeding was commenced by originating application and concise statement in October 2020. Although in November 2020 FX was directed to file and serve a concise response to the applicants’ concise statement by 16 December 2020, that course was subsequently overtaken by FX’s application for summary dismissal.

5    Shortly before FX’s summary dismissal application was due to be heard, the applicants filed an amended originating process and an amended concise statement. At the hearing, senior counsel for FX accepted that the amendments were properly made and directed the summary dismissal attack at the applicants’ case as expressed in the amended documents. In the alternative to summary dismissal, senior counsel for FX put FX’s application as a strike out application directed to any parts of the applicants’ amended originating documents that I might find objectionable on the basis of the summary dismissal submissions even if those submissions were not found by me to justify summary dismissal.

6    The applicants’ case as set out in their amended originating application and amended concise statement may be summarised as follows.

7    The applicants seek declarations and injunctions concerning the use by FX of nine different template forms of contract with its customers since 12 November 2016 (being the date on which the relevant statutory provisions commenced) which are said by the applicants to be:

(1)    “small business contracts” within the meaning of s 23(4) of the Australian Consumer Law (ACL) (Sch 2 to the CCA); and

(2)    “standard form contracts” within the meaning of s 27 of the ACL.

8    The applicants’ case is that a number of the terms of the template form contracts are “unfair terms” within the meaning of s 24 of the ACL. It is said that each of the identified terms is an unfair contract term because it:

(1)    causes a significant imbalance in the rights and obligations of FX on the one hand and the small business it contracts with on the other;

(2)    is not reasonably necessary to protect the legitimate interests of FX; and

(3)    would cause detriment to FX’s customers if relied on by FX.

9    Because of the nature of the argument advanced by FX which goes principally to the terms of the relief that the applicants seek, it is necessary to set that relief out in full (underlining and strikethrough indicating the amendments made by the applicants shortly before the hearing):

1.    A declaration pursuant to s 21 of the Federal Court of Australia Act 1976 (Cth) (the FCA) and/or s 250 of the Australian Consumer Law (the ACL) contained in Schedule 2 to the Competition and Consumer Act 2010 (Cth) (the CCA) and/or s 12GND of the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act) that the following terms of any small business contracts within the meaning of s 23(4) of the ACL or s 12BF(4) of the ASIC Act entered into, or renewed, after 12 November 2016 between either of the Respondents and any of their customers based on any of the SLSSA, the SSA, the RA, the PA, the FLRA, the PCRA, the DRA, the FTRA or the DMA (the Captured Contracts) are unfair contract terms within the meaning of s 24 of the ACL or s 128G of the ASIC Act and void by operation of s 23 of the ACL or s 12BF of the ASIC Act:

(a)     Unilateral Variation Terms – clauses 2, 8.6 and 10.3 of the SLSSA, clauses 4(a)(vi), 7(c) and 7(e) of the SSA, clause 9(c) of the RA, PA, FLRA and PCRA, and clauses 4(a)(vi), 7 and 9(f) of the RA, PA, FLRA, PCRA, DRA, FTRA and DMA;

(b)    Automatic Renewal Terms – clauses 5 and 7.2 of the SLSSA, clause 2(b) of the SSA, RA, PA, PCRA, DRA and FTRA, and clause 2(c) of the DMA and FLRA;

(c)    Extraneous Documents Terms – clause 2 of the SLSSA and clause 4(a)(vi) of the SSA, RA, PA, FLRA, PCRA, DRA, FTRA and DMA;

(d)     Liability Limitation Terms – clauses 4, 8.1, 8.5, 9.2(iii), 9.3 and 12.9 of the SLSSA, clauses 3(a), 7(a), 7(h), 9(b), 9(c) and 10(h) of the SSA, clauses 3(b), 9(a), 9(i), 11(b)(v), 11(c), 13(h) of the RA, PA, FLRA, PCRA, DRA, FTRA and DMA and clause 4(a)(ii) of the FLRA, PCRA, DRA, FTRA and DMA;

(e)    Disproportionate Termination Terms – clause 10 of the SLSSA, RA, PA, FLRA, PCRA, DRA, FTRA and DMA and clause 8 of the SSA;

(f)    Termination Payment Terms – clauses 10.5 and 10.6 of the SLSSA, clauses 8(d) and 8(e) of the SSA, and clauses 10(d) and 10(e) of the RA, PA, FLRA, PCRA, DRA, FTRA and DMA;

(g)    End of Contract Period Terms – clauses 2(b) and 3(e) of the FLRA;

(h)    Irrevocable Offer Terms – clause 1.1 of the SLSSA and clause 1 (a) of the SSA, RA, PA, FLRA, PCRA, DRA, FTRA and DMA;

(i)    Non-reciprocal Obligation Terms – clauses 12.5 and 12.6 of the SLSSA, clauses 10(d) and 10(e) of the SSA, and clauses 13( d) and 13(e) of the RA, PA, FLRA, PCRA, DRA, FTRA and DMA; and

(j)    Unfair Payment Terms – clause 9(d) of the RA, PA, FLRA, PCRA, DRA, FTRA and DMA, and clause 9(b) of the PA.

(the Unfair Terms).

1A.     Further or in the alternative to order 1, a declaration pursuant to s 21 of the FCA and/or s 250 of the ACL and/or s 12GND of the ASIC Act that the terms identified in column E of Schedule 2 of the small business contracts identified in columns A to D of Schedule 2 are unfair contract terms within the meaning of s 24 of the ACL and/or s 12BG of the ASIC Act and void by operation of s 23 of the ACL and/or s 12BF of the ASIC Act (Particular Business Unfair Terms).

2.    An order under s 23 of the FCA, s 232 of the ACL and/or s 12GD of the ASIC Act restraining each of the Respondents, whether by itself, its servants, agents or otherwise, from applying or relying on, or purporting to apply or rely on any Unfair Term contained in a Captured Contract.:

(a)    any Unfair Term contained in a Captured Contract;

(b)    further or in the alternative, any Particular Business Unfair Term as identified in column E of Schedule 2;

(c)    further or in the alternative, any Unfair Term contained in any contract that the Respondents have entered into after 12 November 2016 which was based on any of the SLSSA, the SSA, the RA, the PA, the FLRA, the PCRA, the DRA, the FTRA or the DMA unless one of the following conditions has been met:

(i)    the Respondents are reasonably satisfied that either (A) the other party to the contract was not a business that employed fewer than 20 persons (including casual employees employed by the business on a regular and systemic basis) at the time the contract was entered into or (B) either the upfront price payable under the contract exceeded $300,000 or, if the contract had a duration of more than 12 months, the upfront price payable under the contract exceeded $1,000,000;

(ii)    if the Respondents are not reasonably satisfied of the matters in order 2(c)(i), then either (A) the Applicants, or the party or parties to the contract. have provided written confirmation that they agree that the contract is not a standard form contract or (B) the Respondents have applied for and obtained an order from the Court declaring that the contract in question is not a standard form contract.

3.    An order under s 23 of the FCA, s 232 of the ACL and/or s 12GD of the ASIC Act restraining each of the Respondents, whether by itself, its servants, agents or otherwise, for a period of five years from the date of these orders, whether by itself, its servants, agents or otherwise howsoever, from entering into a standard form contract that is a small business contract containing an Unfair Term.

4.    An order under s 232 of the ACL and/or s 12GD of the ASIC Act and/or s 23 of the FCA that the First Respondent is, within 14 days of the date of this order, to publish in a prominent place on the home page of the First Respondent’s website (being https://www.fujixerox.com.au/) a corrective notice in such terms as is ordered by the Court.

5.    An order under s 232 of the ACL and/or s 12GD of the ASIC Act and/or s 23 of the FCA that the First Respondent, at its own expense, within 14 days of the date of this order, provide a copy of these orders to each person who is a party to a Captured Contract containing an Unfair Term which remains on foot as at the date of the order. and further, or in the alternative, a party to a contract identified in Schedule 2 containing a Particular Business Unfair Term, or a person who is or may be.

6.    An order under s 232 of the ACL and/or s 12GD of the ASIC Act and/or s 23 of the FCA that the First Respondent:

(a)    within 90 days of this order, to establish and implement a compliance program to be undertaken by each employee of the First Respondent or other person involved in the First Respondent’s business who deals or who may deal with small business customers of the First Respondent in relation to their contracts with the First Respondent, being a program designed to minimise the First Respondent’s risk of future use, application or reliance on unfair contract terms in standard form contracts that are small business contracts under the ACL or the ASIC Act;

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

7.    Costs.

10    As is apparent, the applicants do not rely on only the ACL. They also rely on provisions of the ASIC Act – presumably to cover the eventuality that any of the impugned contracts is found to be a “financial product” or in relation to the supply of “financial services” as defined in Pt 2 Div 2 of the ASIC Act which are excluded from the unfair contract terms provisions of the ACL by s 131A of the CCA but which are subject to materially identical provisions in the ASIC Act. The equivalent provisions in the two statutes are as follows:

11    For convenience, I will refer only to the ACL provisions which is also how the parties presented their submissions. Relevant parts of the relevant sections are the following:

23    Unfair terms of consumer contracts and small business contracts

(1)    A term of a consumer contract or small business contract is void if:

(a)    the term is unfair; and

(b)    the contract is a standard form contract.

…

(4)    A contract is a small business contract if:

(a)     the contract is for a supply of goods or services, or a sale or grant of an interest in land; and

(b)    at the time the contract is entered into, at least one party to the contract is a business that employs fewer than 20 persons; and

(c)    either of the following applies:

(i)    the upfront price payable under the contract does not exceed $300,000;

(ii)    the contract has a duration of more than 12 months and the upfront price payable under the contract does not exceed $1,000,000.

24    Meaning of unfair

(1)    A term of a consumer contract or small business contract is unfair if:

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

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

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

(2)      In determining whether a term of a contract is unfair under subsection (1), a court may take into account such matters as it thinks relevant, but must take into account the following:

(a)    the extent to which the term is transparent;

(b)      the contract as a whole.

(3)      A term is transparent if the term is:

(a)      expressed in reasonably plain language; and

(b)      legible; and

(c)      presented clearly; and

(d)      readily available to any party affected by the term.

(4)      For the purposes of subsection (1)(b), a term of a contract is presumed not to be reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term, unless that party proves otherwise.

25    Examples of unfair terms

Without limiting section 24, the following are examples of the kinds of terms of a consumer contract or small business contract that may be unfair:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

27    Standard form contracts

(1)     If a party to a proceeding alleges that a contract is a standard form contract, it is presumed to be a standard form contract unless another party to the proceeding proves otherwise.

(2)     In determining whether a contract is a standard form contract, a court may take into account such matters as it thinks relevant, but must take into account the following:

(a)     whether one of the parties has all or most of the bargaining power relating to the transaction;

(b)     whether the contract was prepared by one party before any discussion relating to the transaction occurred between the parties;

(c)     whether another party was, in effect, required either to accept or reject the terms of the contract (other than the terms referred to in section 26(1)) in the form in which they were presented;

(d)     whether another party was given an effective opportunity to negotiate the terms of the contract that were not the terms referred to in section 26(1);

(e)     whether the terms of the contract (other than the terms referred to in section 26(1)) take into account the specific characteristics of another party or the particular transaction;

(f)     any other matter prescribed by the regulations.

232    Injunctions

(1)    A court may grant an injunction, in such terms as the court considers appropriate, if the court is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes or would constitute:

(a)     a contravention of a provision of Chapter 2, 3 or 4; or

…

(3)    Subsection (1) applies in relation to conduct constituted by applying or relying on, or purporting to apply or rely on, a term of a contract that has been declared under section 250 to be an unfair term as if the conduct were a contravention of a provision of Chapter 2.

250    Declarations relating to consumer contracts and small business contracts

…

(2)     The Court may declare that a term of a small business contract is an unfair term, on application by:

(a)     a party to the contract, if the party was a business of the kind referred to in paragraph 23(4)(b) at the time the contract was entered into; or

(b)     the regulator.

(3)     Subsections (1) and (2) do not apply unless the contract is a standard form contract.

The respondents’ grounds for summary dismissal

12    FX’s submissions in support of the application for summary dismissal may conveniently be summarised as follows.

13    FX says, first, that the relevant provisions of the ACL, being ss 23-27, are concerned with the characteristics of actual contracts that have in fact been made between identified parties. It says that this conclusion arises, in particular, from the following:

(1)    There are three necessary elements, each of which is separately defined, for a finding that a term of a small business contract is unfair under s 23(1), namely that the term is:

(a)    in a contract that is a “small business contract”;

(b)    in a contract that is a “standard form contract”; and

(c)    “unfair”.

(2)    Establishment of each of these elements requires consideration of factors that can only be assessed in relation to actual contracts between identified parties. For example:

(a)    The requirement of s 23(4)(b) in relation to a “small business contract” must be established with respect to a contractual counterparty who, at a particular point in time, employed fewer than 20 people. That is not apt to be decided or determined in relation to unidentified parties.

(b)    In relation to whether the term is “unfair”, s 24 directs attention to various matters including, in s 24(2), “such matters as [a court] thinks relevant”. That might be expected to include considerations peculiar to particular contracting parties.

(c)    In relation to whether the contract is a “standard form contract”, s 27(2) directs attention to matters that may be peculiar to particular contracting parties such as their relative bargaining power, who prepared the contract, the negotiations that took place and whether the terms of the contract (other than the terms referred to in s 26(1)) “take into account the specific characteristics of another party or the particular transaction”.

14    FX accordingly submits that it is impossible to apply these provisions to any given “contract” unless the contract in question has been identified, which in turn allows for an assessment and determination of whether the contract satisfies each of the elements. FX submits that satisfaction in relation to each of those elements constitutes a jurisdictional predicate to the grant of any relief by the Court.

15    Put differently, FX submits that there could be no proper basis for the Court to declare that a term is void as an unfair contract term, and to make any associated injunction to reinforce that declaration, unless the Court had considered such a term as a term in an actual contract that has been made between particular parties and the Court has made a judicial determination that all of the necessary statutory criteria concerning the parties, the contract and the term are satisfied.

16    FX therefore submits that the applicants’ case is fundamentally flawed because (other than in the introduced paragraph 1A to the relief in the amended originating application) it does not identify any particular contract between FX and any particular customer. The result, so it is submitted, is that the applicants will in substance be asking the Court to rule upon wholly abstract questions – if a term of the kind which appears in FX’s template document features in a contract which happens to have the characteristics of a standard form contract and happens also to satisfy the requirements for a small business contract, would that be an unfair term within the meaning of s 24 of the ACL? FX submits that the Court cannot embark on answering that question because it is not grounded in facts that would enable the Court to make the necessary determinations that all of the necessary statutory criteria are present.

17    Secondly, FX submits that even if it were possible to make a determination with regard to whether a particular term in a template contract was “unfair” in the absence of an identification of a particular contract between particular parties, there would be no occasion for the granting of declaratory and injunctive relief where only one of the three necessary integers was determined. The remaining integers, being whether the contract was a “small business contract” and a “standard form contract”, would be left undecided leaving FX and each of its thousands of customers uncertain of whether the relief applied to their individual contracts.

18    Thirdly, FX presents an alternative argument as a variation of the second argument. It submits that because the relief in paragraph 1 of the relief in the amended originating application does not require the determination of whether the contracts identified by the applicants, that is those “based on” the various template documents, are “small business contracts” or “standard form contracts”, but only determines that the identified terms are “unfair”, the Court is being invited to give an advisory opinion. It submits that the Court in determining the application will not determine any dispute about the rights and liabilities of parties in any identified controversy and that there is thus no “matter” as required by s 39B(1A)(c) of the Judiciary Act 1903 (Cth) to enliven the jurisdiction of the Court.

19    In the latter regard, FX relies in particular on the following authorities:

(1)    Re Judiciary Act 1903-1920; Re Navigation Act 1912-1920 [1921] HCA 20; 29 CLR 257, particularly at 265 where it was said that “there can be no matter within the meaning of [s 76 of the Constitution] unless there is some immediate right, duty or liability to be established by the determination of the Court.”

(2)    Re McBain; Ex parte Australian Catholic Bishops Conference [2002] HCA 16; 209 CLR 372, particularly at [5] where Gleeson CJ explained that a court does not pronounce, in the abstract, upon the validity or meaning of statutes because to do so would not be an exercise of the judicial power of the Commonwealth; “such pronouncements are made in an adversarial context, where there is an issue concerning some right, duty or liability.”

(3)    Australian Institute of Private Detectives Ltd v Privacy Commissioner [2004] FCA 1440; 139 FCR 394 in which Sackville J dismissed declaratory relief which sought to establish that certain types of disclosures of personal information would not be contrary to the Privacy Act 1988 (Cth). The relief was dismissed on the basis that it did not quell any existing controversy between the applicant and the respondent, and that in effect the applicant sought an advisory opinion from the Court without reference to any concrete facts; the declarations, if made, would not determine finally the rights of the parties and could not amount to a binding decision creating a res judicata between them: at [31]-[32].

The evidence

20    Although FX’s application raises principally questions of construction and principle, there are certain facts established in evidence which are relevant. They are the following.

21    FX’s evidence is in the form of two affidavits by their solicitor, Mr Wilks. On the basis of instructions from his clients he deposes to the following facts.

22    There are approximately 23,500 current contracts that have been entered into by FX and customers that are based on, or negotiated from, the template contracts referred to in the amended originating application. Many of the customers will have entered into more than one contract with FX.

23    FX does not know which of the existing contracts are “small business contracts” within the meaning of the relevant provisions. That is because FX does not classify, and has not in the past had a process of classifying, any given customer as a small business or otherwise at the time of entering into or renewing a contract with that customer. FX does not make enquiries about, or prepare or maintain records of, how many persons a customer employs at the time of contracting or the time of any renewal.

24    Also, FX does not have a ready means of determining which of the existing contracts are “standard form contracts” within the meaning of the relevant provisions. FX does not classify, and has not in the past had a process of classifying, individual contracts as standard form contracts or otherwise. Also, FX does not keep records going specifically to the question of whether an individual customer has been given an effective opportunity to negotiate terms or whether an individual customer did in fact negotiate terms different from those in the template documents.

25    FX considers it likely given the breadth of the customer base, the number of contracts entered into and the variety of circumstances in which contracts are entered into that each of the versions of the template documents at issue would have been used as a basis for concluding some contracts with customers that, at the time the contract was entered into, employed fewer than 20 employees, and that at least some of those contracts were standard form contracts as defined.

26    During the course of the ACCC’s investigation, FX wrote to the ACCC by letter dated 6 December 2019 in which the following was stated:

Each of our templates have [sic] been used for contracts with an upfront price of less than $300,000, or less than $1,000,000 for deals that require a duration of more than 12 months.

Each of our templates have [sic] been used for contracts with customers who have less than 20 employees. We do not determine if our customers fall within the Australian Consumer Law definition of a ‘small business’ when we accept the offer to contract using our paperwork. When the small business provisions became effective, FXA reviewed those sales templates likely to be used by entities that may fall within the definition of a ‘small business’ and (1) amended the templates to address provisions that could fall foul of the legislation; and (2) we added an additional clause in most of our templates which automatically applies if the customer is considered a ‘small business’.

We would also like to note that we do allow our customers the opportunity to negotiate contracts. It is not unusual for our legal team to accept several contract amendments each week.

27    In his second affidavit, Mr Wilks explains that following further investigations by FX his instructions are as follows.

28    First, there are at least 8,560 current contracts for outright purchase of equipment and support services combined that have been entered into by FX and customers. Such contracts may be based on template documents referred to in the amended originating application, including earlier versions of those documents, or third-party paperwork (such as contracts prepared by the customer).

29    Secondly, there are at least 2,177 current contracts that are internally classified as rental contracts. Such contracts may be based on one of the template documents referred to in the amended originating application, including earlier versions of those documents, or third-party paperwork.

30    Thirdly, without a manual review of the individual contracts FX is not able to determine how many current contracts there are that have been entered into by FX and customers that are based on one of the identified template documents, namely the Software License and Support Services Agreement (SLSSA) referred to in the amended originating application. That is because software can be sold via multiple different contracts and FX’s systems do not classify contracts for software based on the agreement type.

31    The applicants rely on two affidavits of their solicitor, Mr Jarvis. Mr Jarvis’s first affidavit identifies and exhibits a number of template contracts that were produced by FX to the ACCC in response to requests that were made prior to the proceeding being commenced. The template contracts are the ones that the proceeding is directed at.

32    Mr Jarvis’s second affidavit identifies and exhibits responses given by FX to statutory notices served by the ACCC requiring certain information. Relevantly, by notice dated 5 March 2020 the ACCC sought from FX, for each of nine template contracts, ten of the most recent “small business contracts” (within the meaning of s 23(4) of the ACL) entered into by it before 4 March 2020 in both altered and unaltered form. The reference to the altered and unaltered form of such contracts arose because FX had previously said that sometimes during the course of concluding contracts with customers negotiations take place which result in alterations to the template form contracts.

33    On 16 March 2020, FX’s solicitors wrote to the ACCC stating that FX was “incapable of complying with the Notice, insofar as it cannot identify contracts that are Small Business Contracts with precision or confidence”. That is because FX “will not usually know the number of employees of each of its customers, both because that information is rarely available to suppliers and because FX generally contracts with small businesses via agents”.

34    On 24 March 2020, the ACCC varied the notice by removing the requirement that FX identify that the contracts were entered into with small businesses. On 17 April 2020, FX produced approximately 179 contracts to the ACCC which included contracts in both altered and unaltered form. At least 92 of the contracts produced appeared to the ACCC to be unaltered. Some of the 179 contracts were between FX and the same customer and, in some cases, a single customer was party to as many as seven contracts with FX. As a result, there were fewer than 179 customers identified from the contracts produced by FX.

35    By conducting its own investigations, the ACCC was able to confirm that approximately 54 of the customers who are party to the 179 contracts were businesses with more than 20 employees at the date of entering into the contracts with the result that their contracts were not “small business contracts”. The ACCC then emailed approximately 92 of the other customers and sought confirmation of whether they had less than 20 employees at the relevant time. After follow-up emails, ultimately about 26 of the customers provided the ACCC with written confirmation that they had fewer than 20 employees at the time of entering into their contracts.

36    The result is that on the ACCC’s investigations, the ACCC is able to identify at least 20 contracts since the relevant date that it contends are “small business contracts”. These are presumably the contracts that form the basis to the amendments to the originating application and concise statement.

Summary dismissal principles

37    There is no controversy with regard to the applicable principles which are well-established.

38    It has been emphasised that the power to dismiss an action summarily should not be exercised lightly. Also, the test previously expounded in Dey v Victorian Railways Commissioners [1949] HCA 1; 78 CLR 62 at 90-91 and General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; 112 CLR 125 at 130, namely that a party should not be denied the opportunity of placing their case before the court in the ordinary way unless there is a high degree of certainty about what would be the ultimate outcome of the proceeding if allowed to go to trial in the ordinary way, does not apply to summary dismissal under s 31A of the FCA Act (and hence under r 26.01). See Spencer v Commonwealth [2010] HCA 28; 241 CLR 118 at [24] per French CJ and Gummow J and [56] and [60] per Hayne, Crennan, Kiefel and Bell JJ; Trkulja v Google LLC [2018] HCA 25; 263 CLR 149 at [22] per Kiefel CJ, Bell, Keane, Nettle and Gordon JJ.

39    A proceeding or claim need not be “hopeless” or “bound to fail” for it to have no reasonable prospects of success: s 31A(3), FCA Act. Summary dismissal may be justified where, inter alia, there is unanswerable or unanswered evidence of a fact fatal to the pleaded case or any permissible modification, but the exercise of the power of summary dismissal should be used with caution, particularly where complex questions of fact or law or involved. See Upaid Systems Ltd v Telstra Corporation Ltd [2016] FCAFC 158; 122 IPR 190 at [46]-[49] per Perram, Jagot and Beach JJ.

Could the relief be granted?

Introduction

40    FX’s attack on the applicants’ case raises a fundamental point with regard to the way in which the applicants’ case is put. FX submits that the legislative scheme simply does not allow for the approach taken by the applicants, namely to cast a wide net for contracts which they say are small business contracts and standard form contracts and to then identify within them particular terms in respect of which they seek declarations that they are unfair terms without identifying actual contracts between identified parties. They say that there are two reasons for that, namely because unfairness cannot be determined other than in relation to an identified contract between particular parties (ground 1) and because declaratory and injunctive relief will not be granted in circumstances where there is no determination with regard to whether the contracts in question are small business contracts and standard form contracts (grounds 2 and 3).

41    An obstacle to FX in advancing this argument is that courts have on previous occasions ordered similar relief to that which is sought in this case where both those features were present. FX’s answer to that is to distinguish those cases in certain respects, to which I will return, and to point out that the particular arguments advanced in this case were apparently not advanced in those cases where the relief was made by consent. It is necessary to consider those cases in turn.

ACCC v JJ Richards

42    In ACCC v JJ Richards & Sons Pty Ltd [2017] FCA 1224, a declaration was made by Moshinsky J the in the following terms:

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

43    Eight particular terms were then identified and defined as being “the Impugned Terms”. Orders 2 and 3 were injunctions restraining the respondent from relying on any Impugned Term in any Captured Contract and for a period of five years from entering into a standard form contract that is a small business contract containing an Impugned Term. Orders 4 and 5 set out requirements for publishing the Court’s orders and providing them to the respondent’s customers. Order 6 required the respondent to establish a compliance program designed to minimise the risk of the respondent’s use or reliance on unfair contract terms in standard form contracts that are small business contracts in the future.

44    The reasons for judgment explain that in the proceeding the ACCC contended that approximately 26,000 contracts concluded by the respondent since 12 November 2016 included “small business contracts” that contained “unfair” terms within the meaning of s 24 of the ACL: at [2]. The ACCC and the respondent reached agreement on the declarations and injunctions and put forward agreed minutes of proposed orders: at [3]. The parties also prepared a statement of agreed facts and admissions which provided the factual basis for the proposed declarations and which were regarded by the Court as sufficient to determine the appropriate declarations to make, and to provide a sound and proper basis for making those declarations: at [4].

45    With reference to various authorities, in particular ACCC v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405 at [70]-[79] per Gordon J, the Court identified the applicable principles as regards the making of declarations by agreement: at [7]. These include that the court must be satisfied that it has the power to make the orders proposed and that the orders are appropriate, and parties cannot by consent confer power to make orders that the court otherwise lacks the power to make: Coles at [71]. Also, before making declarations three requirements should be satisfied: (1) the question must be a real and not a hypothetical or theoretical one; (2) the applicant must have a real interest in raising it; and (3) there must be a proper contradictor: Coles at [76], citing Forster v Jododex Australia Pty Ltd [1972] HCA 61; 127 CLR 421 at 437-438.

46    The Court then held as follows:

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

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

47    In dealing with the agreed facts, the Court noted that the respondent produced 10,071 contracts just from the Melbourne and Brisbane metropolitan areas and said that it was not able to determine which contracts were with small businesses: at [40]. Some of the contracts had custom modifications: at [42]. The respondent admitted that the contracts were “standard form contracts” and it agreed that “at least some” of its customers who were counterparties to the contracts were such as to make the contracts “small business contracts”: at [54].

48    There are a number of observations to be made about the case for present purposes:

(1)    The declaratory relief in order 1 determined only that the identified terms are unfair terms if they are in small business contracts which are standard form contracts, but did not determine that any particular contracts were small business contracts or standard form contracts. That is to say, only one of the three necessary integers to a determination under s 23(1) was determined by the Court, being that the term is unfair, and the remaining two integers were left for the parties themselves to determine – or possibly to some future proceeding/s. That is essentially the same as the relief that is sought in the present case.

(2)    The Court identified that it was necessary for it to be satisfied that it had the power to make the orders in that form, and it was so satisfied. That is against FX’s jurisdiction point.

(3)    The Court was satisfied that the question that it determined, namely that the terms are unfair, was a real and not a hypothetical or theoretical question, notwithstanding that the other components to a determination under s 23(1) were not determined by the Court. The Court characterised that as the resolution of a “significant legal controversy”. That is against FX’s point criticising the form of the declaratory relief and the jurisdiction point.

(4)    The Court treated the consent of the respondent as an admission of all facts necessary or appropriate to the granting of the relief sought against it. That aspect is lacking in the current case, at least at this stage, which serves to distinguish the case from the present.

(5)    As in the present case, tens of thousands of contracts were potentially caught by the relief which the Court was prepared to grant notwithstanding that no particular contracts with identified parties were identified.

(6)    Unlike the present case, it was agreed that all the contracts potentially caught by the relief were “standard form contracts”, and as in the present case, it was agreed that at least some of the customers were such as to render contracts with them “small business contracts”.

49    FX relies in particular on points (4) and (6) above as distinguishing JJ Richards from the present case. Whilst those are distinguishing features, I do not consider them to be relevant. In relation to the first, that is because of the stage at which the point is being considered, namely summary dismissal. It therefore cannot be said at this stage that there is unanswerable or unanswered evidence of a fact fatal to the pleaded case, or that on any other basis there is no reasonable prospect of the case succeeding.

50    In relation to the second point of distinction, the agreement in JJ Richards that all of the contracts in question were “standard form contracts” means only that in that case one of the three necessary integers to a finding that a term of a contract is unfair was not determined, whereas the relief in the present case will leave two such integers undetermined. That difference is not relevant to the point of principle raised by FX, namely that if any necessary integer is left undetermined then there is no proper basis for the declaratory and hence the injunctive relief. Although that point was not expressly canvassed by the Court in JJ Richards, it was implicitly rejected.

ASIC v Bendigo and Adelaide Bank Ltd

51    In ASIC v Bendigo and Adelaide Bank Ltd [2020] FCA 716, Gleeson J granted declaratory relief in orders 1-12 in respect of specified terms in identified contracts to the effect that those terms were “unfair” and void ab initio. However, in orders 13 and 14 the Court declared any term in the same form as the identified terms in any small business contract between the defendant and any of its customers which is a standard form contract to be an “unfair” term and therefore void ab initio.

52    The Court was expressly satisfied that it had the power to make those orders and that it was appropriate to do so: at [6].

53    There were thousands of contracts that contained the impugned terms: at [40]-[41]. The parties agreed that “some, likely a significant number” of the relevant contracts were “small business contracts: at [44]. The defendant bank accepted that each contract was a “standard form contract”: at [46].

54    The Court identified the three requirements on which it was required to be satisfied before granting declaratory relief, being the same three requirements that had been identified in JJ Richards: at [86]. The Court was satisfied that there was a significant legal controversy which was resolved by the relief that it granted: at [88]. As in JJ Richards, the Court was satisfied that the declarations were appropriate because they serve to record the Court’s disapproval of the contravening conduct, vindicate the regulator’s claims that the Bank contravened the ASIC Act, assist the regulator to carry out the duties conferred upon it by the ASIC Act, and deter other corporations from contravening the ASIC Act: at [90].

55    Many of the features of the case are the same as in JJ Richards, including:

(1)    The declaratory relief in orders 13 and 14 determined only that the identified terms were unfair and left open the remaining necessary components for them to be void, namely that they were in small business contracts which were standard form contracts.

(2)    The Court identified that it was necessary for it to be satisfied that it had the power to make the orders in that form, and it was so satisfied.

(3)    The Court was satisfied that the question that it determined, namely that the terms are unfair, was a real and not a hypothetical or theoretical question.

(4)    Unlike the present case it was agreed that all of the contracts potentially caught by the relief were “standard form contracts”, and, as in the present case, it was agreed that at least some of the contracts were “small business contracts”.

56    For the same reasons that I have given in relation to JJ Richards, in my view the points of distinction between Bendigo and Adelaide Bank and the present case are not such as to mean that the case cannot be taken as authority in support of relief in the form that the applicants seek in the present case.

Further consideration

Ground 1: no identified contracts and counterparties

57    Albeit in the case of making orders by consent, in both JJ Richards and Bendigo and Adelaide Bank the Court was satisfied that the impugned terms were unfair notwithstanding that no actual contracts between identified parties were proved. In my view, that outcome is possible within the statutory scheme. For example, it may be that there are no relevant factors in a particular case to distinguish between the respective positions of a group of contractual counterparties who have all contracted with the particular supplier on a particular standard form contract containing the impugned terms. That is to say, the fact that the counterparty is a small business and that the contract is a standard form contract may be sufficient to determine the unfairness of a particular term, there being no other relevant considerations in relation to that counterparty that go to the assessment of unfairness.

58    FX has thus far identified no circumstances peculiar to particular customers that would require such customers to be considered separately from the group of small business customers who all contracted on the same standard form contracts. The state of the evidence at this stage is therefore such that the whole group can be considered together.

Ground 2: relief too uncertain

59    In my view there is force in the submission made on behalf of the applicants that the effect of s 23(1) is that contractual terms that satisfy the three elements of the provision are, by the operation of the statute, void, and no order of a court is required for that result as the provision does not make the relevant terms “voidable”. Therefore, to the extent that any party to a contractual term that might be unfair under the provision is uncertain as to whether the term is void or not, that is a function of the statute. By the Court granting relief in the form sought by the applicants in due course, assuming that the “unfairness” element is ultimately established on the evidence, the Court will be deciding a live controversy and will be reducing the extent of any uncertainty.

60    The relief also includes orders 5 and 6 that are designed to remove the remaining uncertainty with regard to which of FX’s customers are small businesses by putting in place a mechanism for identifying those businesses. Very similar orders and to the same effect were also made in JJ Richards.

61    Particularly in the light of existing authority against FX’s criticism of the relief in the form in which it is framed, I am not in a position at this stage to say that there is no reasonable prospect that the declaratory and injunctive relief might be granted.

62    On the evidence it is apparent that at least some of FX’s counterparties to the contracts in issue are small businesses such as to render those contracts “small business contracts”. Also, the applicants are entitled to rely on the presumption in s 27(1) by contending that all the template contracts are “standard form contracts”. FX has not at this stage displaced that presumption in relation to any of the contracts, let alone all of them. Indeed, FX accepts that at least some of the contracts are standard form contracts. Thus, a finding of unfairness in relation to any of the impugned terms will operate on existing contracts between FX and at least some of its customers.

63    The amendments made by the applicants to their case by introducing identified contracts with identified counterparties is also significant. That development means that FX’s criticism does not bite against all the relief that the applicants seek. The fact that the identified contracts do not include amongst them all the template forms that are caught by the broader declaratory and injunctive relief does not alter that assessment. The point is that there is some relief that the applicants seek which is not caught by FX’s criticisms, so this is not a proper case to summarily dismiss the proceeding.

64    It is of course true that summary dismissal can be directed at part of a case; it need not go to the whole of the case. However, for the reasons I have given I am not satisfied that the broader relief has no reasonable prospects of success.

Ground 3: no “matter” to enliven jurisdiction

65    Insofar as FX’s jurisdiction point is concerned, for the reasons already given, the relief that the applicants seek will decide a real controversy, being the controversy between the applicants (as “regulator” referred to in s 250(2)(b) of the ACL) and FX with regard to whether the impugned terms in the identified template contracts are unfair. That means that the relief in question is not caught by the authorities that FX relies on. There is an existing controversy, at least part of which will be determined (assuming that the factual basis for a conclusion of unfairness is made out), and there will be a final determination of the rights of the parties in relation to the unfairness of the contractual terms.

66    It is important to identify that the criticisms of the relief that FX makes are not being finally dealt with at this stage. All that I am deciding is that I am not satisfied at this stage that there is no reasonable prospect that the relief that is sought will ultimately be granted.

67    That consideration is relevant to another matter that arose, which is whether FX’s jurisdiction point enlivened s 78B of the Judiciary Act 1903 (Cth). On the evening before the hearing, FX filed a notice under s 78B giving notice that the proceeding involves, or may involve, a matter arising under the Constitution or involving its interpretation within the meaning of s 78B. That matter was described as being whether or not the Federal Court would have jurisdiction to grant declaratory and injunctive relief of the kind sought by the applicants, having regard to the limitations arising from the nature of a “matter” in federal jurisdiction.

68    I decided to continue with the hearing and, since then, to deliver judgment without that notice having been given to the Attorneys-General of the Commonwealth and of the States and without a reasonable time having elapsed “since the giving of the notice for consideration by the Attorneys-General of the question of intervention in the proceedings or removal of the cause to the High Court.” That was in part because this question has arisen at the summary dismissal stage, and in the absence of summary dismissal being granted the question can be raised and argued again at the final hearing.

69    In Re Culleton [2017] HCA 3; 91 ALJR 302, Gageler J (at [29]) explained that s 78B is not enlivened unless the constitutional point is “real and substantial”:

French J made the point in Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd [(1999) 95 FCR 292 at 297 [14]] that s 78B “does not impose on the Court a duty not to proceed pending the issue of a notice no matter how trivial, unarguable or concluded the constitutional point may be”. To give rise to the obligation not to proceed without notice a cause pending in court must truly “involve” a matter arising under the Constitution or involving its interpretation. As Toohey J stated in Re Finlayson; Ex parte Finlayson [(1997) 72 ALJR 73 at 74], in a passage quoted with approval by Gummow, Hayne and Callinan JJ in Glennan v Commissioner of Taxation [(2003) 77 ALJR 1195 at 1197 [14]; 198 ALR 250 at 253], “[I]n terms of s 78B, a cause does not 'involve' a matter arising under the Constitution or involving its interpretation merely because someone asserts that it does”. In short, the constitutional point must be real and substantial.

70    FX’s jurisdiction point raised no issue with regard to the interpretation of the Constitution. There was no issue with regard to what is a “matter” that can give rise to the exercise of the judicial power of the Commonwealth. The authorities on that are extensive, apparently settled, and were in any event not in dispute. The only question was whether the relief set out in the applicants’ amended originating application gives rise to a “matter”. That is a question peculiar to the relief in this case on which there is existing authority in this Court, the relief might subsequently be amended depending on what the evidence establishes, and the point was sought to be dealt with at a summary dismissal stage. On those grounds, the point is not “real and substantial”.

The “pleadings”

71    During the course of the hearing, senior counsel for FX directed various criticisms at the applicants’ amended concise statement. It seems to me that there is some foundation to the following criticisms:

(1)    The amended concise statement does not deal with the 10 example contracts with identified customers that were introduced into the originating application by amendment. In particular, the amended concise statement does not make the allegation that those contracts are “small business contracts” and “standard form contracts”.

(2)    The amended concise statement does not explicitly make the allegation that the template contracts that it identifies are used in circumstances such as to be “small business contracts” and that they are “standard form contracts” within the meaning of the relevant provisions in the ACL and the ASIC Act. Whilst in my view those allegations are implicit, it is just as well that they are made explicit. That will invite FX to meet the points head on.

(3)    Although in argument the applicants said that they relied on the presumption in s 27(1) of the ACL, the concise statement does not say that the presumption is relied on. That should be made clear so that FX knows that it will carry the onus of displacing the presumption. The same goes for any other presumption that the applicants may intend relying on.

72    I propose to give the applicants the opportunity to further amend the concise statement to deal with those matters. Thereafter, FX should file a concise response. It is only thereafter that further case management decisions can be made.

Costs

73    It was not suggested that there is any reason why the costs should not follow the event. I do not consider the fact that I have found the amended concise statement deficient in certain respects to have any particular bearing on the costs question. That is because of how minor those matters are and because if they had been raised independently of the more fundamental attack that underpinned the summary dismissal application, I fully expect that they would have been dealt with by the applicants or, failing that, quickly and inexpensively as part of the case management function. I did not, however, take submissions on costs so in the event that either side wishes to reopen the question of costs that can be done.

Associate:

Dated:    3 March 2021