FEDERAL COURT OF AUSTRALIA Joseph v La Trobe University [2004] FCA 746 TRADE PRACTICES – university fees – application for damages and declarations pursuant to ss 82 and 87 of the Trade Practices Act 1974 (Cth) ("the Act") – student required to pay General Service Fee upon enrolment in University course – whether payment made for provision of non‑academic services – whether such a payment constitutes exclusive dealing and coercion pursuant to ss 47 and 60 of the Act – whether the University had reasonable cause to believe that it had a right to payment within the meaning of s 64(2A) of the Act. PRACTICE AND PROCEDURE – application pursuant to O 20 r 2(1)(a) for dismissal of the proceeding on the basis that the applicant has failed to disclose a reasonable cause of action. Trade Practices Act 1974 (Cth): ss 47(6), 47(7), 60, 64(2A) Federal Court Rules: O 20 r 2(1)(a) General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125 – followed Spotwire Pty Ltd v Visa International Services Association Inc (2003) ATPR 41‑949 - followed Australian Competition and Consumer Commission v Maritime Union of Australia (2001) FCR 472 – considered DAVID JOSEPH v LA TROBE UNIVERSITY V 557 of 2003 GOLDBERG J 15 JUNE 2004 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 557 of 2003 BETWEEN: DAVID JOSEPH Applicant AND: LA TROBE UNIVERSITY Respondent JUDGE: GOLDBERG J DATE OF ORDER: 15 JUNE 2004 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. Pursuant to Order 20 rule 2(1)(a) of the Federal Court Rules the application filed on 16 July 2003 be dismissed. 2. The applicant pay the respondent's costs of and incidental to the application. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 557 of 2003 BETWEEN: DAVID JOSEPH Applicant AND: LA TROBE UNIVERSITY Respondent JUDGE: GOLDBERG J DATE: 15 JUNE 2004 PLACE: MELBOURNE REASONS FOR JUDGMENT Introduction 1 The respondent, La Trobe University ("the University"), seeks an order pursuant to O 20 r 2(1)(a) of the Federal Court Rulesthat the proceeding brought by the applicant, David Joseph, be dismissed on the ground that the applicant has failed to disclose a reasonable cause of action. 2 On 16 July 2003, Mr Joseph filed an application seeking declarations and damages pursuant to the Trade Practices Act 1974 (Cth) ("the Act") claiming coercion and exclusive dealing by the University and alleging that it had demanded a payment from him for unsolicited services. 3 Mr Joseph enrolled as a full‑time student at the University in February 2000 and 2001 and March 2002, at the beginning of each academic year. Upon each enrolment, Mr Joseph was required to pay, and paid, a General Service Fee ("the GSF") to the University. 4 Mr Joseph objected to the payment of the GSF on the grounds that by requiring its payment the University had forced him to acquire non‑academic services that were unconnected to the academic services he wished to acquire from the University, and which were superfluous to his needs. 5 Mr Joseph claimed that the University imposed an unlawful condition on the purchase of academic services when it required him to purchase non‑academic services from the University as a condition of his purchase of academic services ("the condition"). 6 In response the University submitted that the collection and distribution of the funds raised through the GSF did not constitute the imposition of a condition that Mr Joseph acquire non‑academic services from third parties. The University submitted that its collection and administration of the GSF was consistent with its powers under its constituent documents and relevant legislation. The statement of claim 7 In his statement of claim Mr Joseph made the following allegations: · The University supplied academic services to Mr Joseph on the condition that he acquired non‑academic services from "preferred suppliers"; · The "preferred suppliers" are the La Trobe University Union, the Student Representative Council Inc, the La Trobe University Post‑Graduates Association, the La Trobe University Sports and Recreation Association and the La Trobe University Children's Centre; · The services provided by the preferred suppliers include welfare programs, social and cultural programs, sporting facilities and clubs, special interest student groups, child care, bar, restaurant and bistro facilities; · Payment of the GSF was payment for acquiring the services provided by the five preferred suppliers; · Mr Joseph objected to the condition that he pay the GSF as a condition of enrolling in the University; · The University, by acting as a collecting agent for the preferred suppliers, or alternatively by demanding payment of the GSF directly, collected the fee for the non‑academic services; and · Mr Joseph never requested or required the non‑academic services. 8 On the basis of the above allegations, Mr Joseph asserted breaches of three provisions of the Act. First, the supply of academic services on the condition referred to constituted exclusive dealing or third‑line forcing within the meaning of s 47 of the Act. Secondly, the conditional supply of academic services on the condition referred to constituted coercion pursuant to s 60 of the Act. Thirdly, the University had contravened s 64(2A) of the Act by demanding payment for unsolicited services. 9 The University submitted that Mr Joseph's statement of claim failed to disclose a reasonable cause of action because the allegations in it and the particulars supplied were insufficient to support the causes of action alleged. The University's powers 10 The University characterised, correctly, the substance of Mr Joseph's complaint as being the imposition of the GSF at the time of enrolment. The University said it derived its power to collect the GSF from the objects set out in the La Trobe University Act 1964 (Vic), s 5(a)(ii) of which provides that the University shall be: "… an institution in which all enrolled students will have the opportunity of fitting themselves for life as well as becoming learned in a particular branch or branches of learning." The University raises funds through the imposition of the GSF, in connection with all student enrolments, in furtherance of these objectives. 11 The University's internal authority to charge fees in connection with a student's enrolment is derived from Statutes 18 and 23 of the University and regs 18.2 and 23.1. Statute 18 states: "1. The Council may make regulations for or with respect to the requirements for admission to courses of study in the University and for any other matter required to be regulated for the purposes of this statute. 2. A person shall be eligible for admission to a course if that person: a. has satisfied the requirements of regulations made under Section 1; … c. has paid the fees prescribed by the University for admission to that course and has signed a declaration in the form in the schedule." The declaration contained in the schedule to Statute 18 is an acknowledgement that upon enrolment the student becomes subject to the statutes and regulations of the University. 12 Regulation 18.2 provides, relevantly: "1. A person who seeks to enrol in a course or subject must: … (b) comply with the statutes and regulations governing enrolment; (c) pay the fees and charges prescribed; … (e) comply with such other requirements with respect to that enrolment as may be determined or prescribed by the University Secretary or by the Parliaments of Victoria or Australia or other authorities from time to time, not later than the date prescribed in each case." 13 Statute 23 of the University empowers the University Council to prescribe fees and charges for services provided by the University, including the use of facilities at the University and such other matters as it considers necessary or expedient. The Finance and Resources Committee of the University Council has power to levy fees and charges in accordance with requirements of the Higher Education Funding Act 1988 (Cth). The Finance and Resources Committee resolved to levy the GSF during the years Mr Joseph enrolled at the University. The power to publish and collect any fees prescribed under Statute 23 was given to the University Secretary pursuant to reg 23. 14 The GSF was collected by the University in its own right and put into the consolidated funds of the University and then applied by payment to various organisations operating on the University campus, including the organisations Mr Joseph described as the "preferred suppliers". 15 The University submitted that the purpose of the GSF was to raise funds that would be applied by the University by way of grant to the relevant University bodies at the Bundoora Campus (and similar bodies at the other campuses of the University), to facilitate the availability of various amenities for the benefit of students at each of the University's campuses who wished to use those amenities. The University regarded the payment of the GSF as a condition of enrolment at the University, and once satisfied it provided Mr Joseph with the right to be enrolled as a student at the University. 16 The University agreed with Mr Joseph's submission that the organisations which Mr Joseph described as the "preferred suppliers" were organisations that had received funding, albeit indirectly, from the imposition of the GSF. 17 The Tertiary Education Act 1993 (Vic) restricts the manner in which the University can distribute the GSF. In order to manage the University's compliance with its obligations under the Tertiary Education Act,the University grants the funds raised through the GSF to the preferred suppliers pursuant to funding agreements or memoranda of understanding entered into with each of the preferred suppliers on an annual basis. 18 The University submitted that the relationship between the University and the preferred suppliers, as established in the funding agreements and memoranda of understanding, is not one whereby the University acts as the agent of the preferred suppliers in collecting the GSF, as alleged by Mr Joseph. This was said to be clear from the manner in which the GSF is administered by the University, whereby the University Council retains a discretion as to whether the GSF is levied, the amount to be levied and whether, to whom and in what amounts, the GSF funds will be applied. 19 The University also contended that the preferred suppliers are not persons other than the University, as claimed by Mr Joseph. Three of the preferred suppliers, namely the Union, the Sports and Recreation Association and the Children's Centre, each of which is an unincorporated association, form part of the University and are recognised under the University statute. The SRC is incorporated under the Associations Incorporation Act 1981 (Vic). The Post‑graduates Association is not directly governed by any of the University statutes. According to the University, the preferred suppliers are all bodies or associations of persons, comprising primarily past and present students and staff. 20 The University submitted that whilst the preferred suppliers make available certain amenities and services to students, students are free to ignore or take advantage of those services as they see fit. Payment of the GSF does not entitle students to membership of any of the preferred suppliers. Principles of law in applications for summary dismissal of proceedings 21 In General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125 Barwick CJ stated (at 128‑129): "… the jurisdiction summarily to terminate an action is to be sparingly employed and is not to be used except in a clear case where the Court is satisfied that it has the requisite material and the necessary assistance from the parties to reach a definite and certain conclusion." It is clear from that judgment that the Court should only make such an order in exceptional cases, where there is no real question of fact or law to be tried. Barwick CJ propounded the view that argument may be necessary to establish that there are no questions of fact or law to be determined (at 130): "Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed" 22 The test to be applied has been variously expressed. Recently, in Spotwire Pty Ltd v Visa International Services Association Inc (2003) ATPR 41‑949, Bennett J summarised the manner in which the test has been applied (at 47,410): "Such an order would only be made where it is clear that there is no real question to be tried (SmithKlein Beecham (Australia) Pty Ltd v Chipman [2002] FCA 674; Douglas v Tickner (1994) 49 FCR 507) or that it is hopeless and bound to fail (Orchard v Comrie (1998) 80 IR 76) or clearly untenable (Faessler v Neale (1994) 29 IPR 1) or hopeless to the extent that it should not be permitted to go to trial (Bray v F Hoffman‑La Roche [2003] FCAFC 153 per Carr J). It must be plain and obvious that the impugned portions of a statement of claim are unarguable (Murex Diagnostics Australia Pty Ltd v Chiron Corp (1995) 55 FCR 194) or it must be very clear that there is no issue deserving of a hearing (Anderson v Commonwealth Bank of Australia [1995] FCA 787). However, proceedings will not be dismissed summarily merely on the ground that it appears, at the hearing of the motion, that the claim may fail (Australia Building Industries Pty Ltd v Stramit Corp Ltd [1997] FCA 1318." Exclusive dealing s 47 23 The first allegation made by Mr Joseph is that the University has engaged in exclusive dealing in contravention of s 47 of the Act. 24 Section 47 of the Act provides: "(1) Subject to this section, a corporation shall not, in trade or commerce, engage in the practice of exclusive dealing." … "(6) A corporation also engages in the practice of exclusive dealing if the corporation: (a) supplies, or offers to supply, goods or services; (b) supplies, or offers to supply, goods or services at a particular price; or (c) gives or allows, or offers to give or allow a discount, allowance, rebate or credit in relation to the supply or proposed supply of goods or services by the corporation; on the condition that the person to whom the corporation supplies or offers or proposes to supply the goods or services or, if that person is a body corporate, a body corporate related to that body corporate will acquire goods or services of a particular kind or description directly or indirectly from another person. (7) A corporation also engages in the practice of exclusive dealing if the corporation refuses: (a) to supply goods or services to a person; (b) to supply goods or services at a particular price to a person; or (c) to give to allow a discount, allowance, rebate or credit in relation to the supply of goods or services to a person; for the reason that the person or, if the person is a body corporate, a body corporate related to that body corporate has not acquired, or has not agreed to acquire, goods or services of a particular kind or description directly or indirectly from another person." 25 Mr Joseph contended that either it was a requirement that he pay the GSF as a condition of enrolment, or that the University refused to supply its academic services unless he also acquired the services of the preferred suppliers (by paying the GSF). Accordingly the University engaged in exclusive dealing within the meaning of subss 47(6) and (7) of the Act. Mr Joseph contended that the preferred suppliers are persons distinct from the University because "they arise independently of the respondent, are separately constituted, form no function directly or indirectly related to the functions of the respondent and the respondent lends money to students to pay the GSF". Mr Joseph relied on Paul Dainty Corporation Pty Ltd v National Tennis Centre Trust (1990) 22 FCR 495, Australian Competition and Consumer Commission v IMB Group Pty Ltd (2003) ANZ Ins Cas 61‑545; [2003] FCA 402, Trade Practices Commission v Tepeda Pty Ltd (1994) ATPR 41‑319, Trade Practices Commission v Legion Cabs (Trading) Co‑Operative Society Ltd (1978) 35 FLR 372. 26 The critical exclusive dealing allegations are contained in pars 7 and 12 of the statement of claim: "7. At all material times the Respondent supplied academic services to the Applicant on the condition ('the condition') that the Applicant acquired from the preferred suppliers the particular non‑academic services as offered by those preferred suppliers. PARTICULARS (a) The condition is in writing and forms part of the application for enrolment at the University. (b) The Respondent acting as agent for the preferred suppliers collects the fees for the non‑academic services so offered by way of what is described as the General Services Fee ('the GSF'). … 12. On or about the dates referred to in para 11 [the dates on which Mr Joseph enrolled] the Respondent informed the Applicant that the Respondent would only supply the academic services sought if the Applicant paid for and thereby acquired the non‑academic services from the preferred suppliers." 27 Particulars of the condition alleged in par 7 were sought by the University and the following particulars were provided: "2(a) (i) The condition does not appear in the application [form] for enrolment. The condition forms part of the process of applying for enrolment. The respondent is referred to the applicant's letter to Mr Stern of 4th August 2003 detailing and explaining this condition. (ii) The condition is in writing and may be viewed at: www.latrobe.edu.au/union/MG/gsf.html 'Management and Governance - General Service Fee', and on page 3 of the La Trobe University Court Handbook 2000. A further document entitled 'Important Notice' dated July/August 2003 threatens students who have not paid the GSF with termination of their enrolment unless the GSF is paid. This notice is provided to students who varied their enrolment by taking on extra units of study during the mid year break. Such variation increased their course load. The GSF is levied in proportion to course load. A copy of this document will be made available upon request. (iii) By its conduct in refusing to allow enrolment unless the GSF has been or is otherwise agreed to be paid, and in the context of the published material cited at sub‑para (ii) above, the condition may be inferred by force of s 47(13) of the Trade Practices Act. (iv) The respondent is aware of the condition and of the fact that it applies the condition. 28 Particulars were also sought of the allegation that Mr Joseph was to acquire the particular non‑academic services from the preferred suppliers, and the following particulars were given: "2(b) (i) By payment of the GSF a contractual right to the services was acquired. By s 4 of the Trade Practices Act a 'service' is thereby acquired. (ii) Enrolment was not possible unless the GSF had been paid and the condition so applied by the respondent thereby met. (iii) The GSF funds the bodies referred to in para 5 of the statement of claim. (iv) By being forced to pay the GSF the applicant was thereby forced to acquire the non‑academic services that were provided by those bodies." 29 Those allegations and particulars make it clear that the conduct alleged in par 7 is essentially the same as the conduct alleged in par 12, namely that the supply of academic services to Mr Joseph was conditional upon him acquiring non‑academic services from the preferred suppliers. 30 There is no dispute that Mr Joseph was required to pay the GSF as a condition of enrolment but that requirement was not objectionable. Such a requirement and condition does not contravene ss 47(6) or (7) of the Act as there is not "another person" involved apart from the University and Mr Joseph. 31 The University confined its submissions on exclusive dealing to the proposition that although the preferred suppliers make those services available, the University does not require any student to acquire or make use of the services provided by a person other than the University. 32 I am satisfied that Mr Joseph does not make a case that the University has actually supplied or offered to supply any services on the condition that he acquires other goods or services from a person other than the University. The GSF is paid to the University, not to "another person" and not to the University in any capacity as agent for the preferred suppliers. Further, the University does not require any students to acquire the goods or services of the preferred suppliers. The particulars to which I have referred do not raise such a case and the pleading that the University supplied academic services on the condition that the applicant acquire services from other persons is not made out on the particulars. The only condition appended to the supply of academic services is the payment of the GSF which is itself a condition of enrolment. 33 The applicant's allegation that the University has acted as a collecting agent for the preferred suppliers or has demanded payment of the GSF directly insofar as it asserts a right to payment for non‑academic services pursuant to the condition asserted shows that the payment was not made pursuant to conditions other than a condition of enrolment that the GSF be paid. When the condition alleged in par 7 is considered in light of the particulars provided, it is apparent that the condition alleged is not a condition that the applicant acquire services from the preferred supplier; rather Mr Joseph is alleging that the University supplied or agreed to supply academic services on the condition that Mr Joseph pay the GSF. It follows that the exclusive dealing claim in relation to non‑academic services cannot be made out on the case raised by Mr Joseph. Coercion 34 Mr Joseph alleged that the University had engaged in coercion within the meaning of s 60 of the Act, which provides: "A corporation shall not use physical force or undue harassment or coercion in connection with the supply or possible supply of goods or services to a consumer or the payment for goods or services by a consumer." 35 Mr Joseph relied on Australian Competition and Consumer Commission v Maritime Union of Australia (2001) 114 FCR 472 at 485 where coercion is defined as carrying with it "the connotation of force or compulsion or threats of force or compulsion negating choice or freedom to act." Mr Joseph submitted that his freedom to enrol in the course of his choice was denied, as a result of his being compelled to pay the GSF. He submitted that there was coercion in relation to acquiring both the academic and non‑academic services. Again, it is clear that the contravening conduct complained of by Mr Joseph is the imposition of the GSF in connection with enrolment. 36 The University submitted that requiring the payment of the GSF in connection with enrolment could not constitute coercion within the meaning of the Act. Mr Joseph retained the right to decide whether or not he enrolled at the University and the University was validly exercising its power to charge the GSF in connection with enrolment. In short, the University submitted that Mr Joseph was free to undertake studies elsewhere. 37 I am not satisfied that there is any contravention of s 60 involved in relation to Mr Joseph acquiring academic services from the University. Mr Joseph retained, at all times, the choice to enrol or not enrol in the course as he wished and the allegations made do not support or disclose a cause of action in contravention of s 60 of the Act. 38 In relation to the claim of coercion in connection with the supply of non‑academic services I am not satisfied that there is an arguable case that the University has contravened s 60 of the Act. It is apparent from the material before the Court that the University is empowered to impose and collect the GSF as a condition of enrolment and that upon enrolment, students must submit to the rules and statutes of the University. Payment of the GSF is a valid requirement of enrolling in the University, one that enrolling students accept by signing the declaration in the schedule to Statute 18. There is no compulsion for students to pay the GSF per se, rather the payment is a valid consequence or condition of their choice to enrol. As the payment of the GSF is not payment for the supply of non‑academic services, but rather is a condition of enrolling in the University, it cannot fall within the ambit of s 60. Payment for unsolicited services 39 The third cause of action raised by Mr Joseph is that the University asserted a right to payment for unsolicited services in contravention of s 64(2A) of the Act, which provides: "A corporation shall not, in trade or commerce, assert a right to payment from a person for unsolicited services unless the corporation has reasonable cause to believe that there is a right to payment." 40 Mr Joseph submitted that he did not solicit the services of the preferred suppliers, acquired through the payment of the GSF, for which the University asserted a right to payment when it charged the GSF. Mr Joseph submitted that the University has no authority to charge the GSF, and no reasonable cause to believe that it could assert a right to payment. 41 There is a fundamental flaw in this submission by Mr Joseph. No services are offered at the time of enrolment for which the payment of the GSF is said to be payment. The University did not assert a right to payment from Mr Joseph for unsolicited services, as the GSF is not a payment for the provision of any services. The proper characterisation of the GSF is that it is a charge or levy imposed on all students enrolling at the University, which is then disbursed to University bodies who spend the funds on a variety of activities, some of which involve the provision of services. The University submitted that the payment of the GSF does not create any entitlement in an enrolling student to receive services from the University bodies, or to membership of such bodies. I accept that submission. The GSF is properly characterised as payment for the right to be enrolled as a student at the University, to undertake the course as a student, with all ancillary rights and benefits, including the overall amenity of the University. 42 The University also submitted that it has a reasonable cause to believe that it has a right to payment of the GSF, on the basis that it falls within the powers and objects of the University as outlined in pars [10]‑[13] above. 43 Section 64(2A) of the Act requires that there be an assertion of a right to payment for unsolicited services, but that such an assertion will not contravene the section where the person making the assertion has a reasonable cause to believe that there is a right to payment. The University's right to levy and collect the GSF is established by s 5(a)(ii) of the La Trobe University Act 1964 (Vic), Statues 18 and 23 of the University and regs 18.2 and 23.1. As a result, even if Mr Joseph were successful in establishing that the non‑academic services were unsolicited and that payment of the GSF was for the provision of those non‑academic services, the University would still succeed as it has a reasonable cause to believe that there is a right to payment under s 64(2A) of the Act, deriving from lawfully levying and collecting the fee. Conclusion 44 There are no real questions to be tried and the causes of action alleged are not arguable. The application will be dismissed pursuant to O 20 r 2(1)(a). I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg. Associate: Dated: 15 June 2004 Counsel for the Applicant: Applicant in person Counsel for the Respondent: M H O'Bryan Solicitor for the Respondent: Corrs Chambers Westgarth Date of Hearing: 17 December 2003 Date of Judgment: 15 June 2004