Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Bircan v Asia Invest Enterprises Pty Ltd and Anor [2018] NSWCATCD 51 Hearing dates: 6 March 2018 and 26 June 2018 Date of orders: 04 September 2018 Decision date: 04 September 2018 Jurisdiction: Consumer and Commercial Division Before: J A Ringrose, General Member Decision: (1) The first respondent, Asia Invest Enterprises Pty Ltd is to pay the second respondent the sum of $27,073.92 together with interest thereon at a rate 46.9% on that sum being a total of $40,286.50 as calculated in accordance with the rental contract between the second respondent and the applicant. Such payments are to be made immediately. (2) The second respondent is to pay the applicant the sum of $1,535.60 within 30 days of the date of these orders being the weekly payments for a Contas coffee grinder which was the subject of a rental agreement between the applicant and the second respondent by which grinder was never received. That sum is to be paid within 30 days of the date of these orders. (3) The applicant is not required to pay the second defendant the sum referred to in Order 1 herein being part of the monies claimed to be owing by her under the rental contract between them. (4) The Tribunal notes that the second respondent does not dispute the relief sought by the applicant that the first respondent refund a sum of $27,037.92 to it, being the difference between the purchase price of the goods as quoted to the applicant by the first respondent and the price at which the goods were sold by the first respondent to the second respondent for the purposes of a finance arrangement. The Tribunal notes further that the second respondent has indicated it is willing to cooperate with the first respondent and once a refund has been received it is willing to ensure that the applicant can continue a successful business relationship with the second respondent moving forward (should the applicant so which). (5) Each party is to bear its own costs. Catchwords: Misleading and deceptive conduct by a supplier of goods – unconscionable conduct by a supplier of goods – whether the second respondent is a linked credit supplier within the meaning of the Australian Consumer Law – whether the Tribunal should vary orders sought by the applicant to consider relief as is appropriate in the circumstances. Legislation Cited: Australian Consumer Law – Compensation and Consumer Act 2010, ss. 18, 20, 238, 250 and 278. Fair Trading Act 1987 ss. 4, 79D, 79H, 79I, 79F. Cases Cited: Asic v National Exchange Pty Ltd [2005] FCAFC 225 Bunnings Group Limited (formerly Bunnings Pty Ltd) v Laminex Group Limited [2006] FCA 682 Business and Professional Leasing Pty Ltd v Dannawi [2008] NSWSC 902 Butcher v Lachlan Elder Realty Pty Ltd [2004] 218 CLR 592 Campbell v Back Office Investments Pty Ltd [2009] 238 CLR 304 Sacks v Hammoud [2016] NSWCATAP 225 Safi v Hartland Motors Pty Ltd [2016] NSWCATAP 80 Tonto Homes Australia Pty Ltd v Tavares [2011] NSWCA389 Category: Principal judgment Parties: Zelal Bircan – Applicant Asia Invest Enterprises Pty Ltd – First respondent Silver Chef Rental Pty Ltd – Second respondent Representation: The applicant appeared in person. Mr Ayyash appeared for the first respondent. Mr Logan, solicitor, appeared for the second respondent. Solicitors Morgan Conley Solicitors Brisbane for the second respondent File Number(s): GEN 17/41963 Publication restriction: Nil REASONS FOR DECISION Application 1. By an application filed on 2 October 2017 Ms Zelal Bircan sought an order that she should not be required to pay a sum of $27,037.92 to the second respondent. 2. In giving reasons for the order she requested that the first respondent return $27,037.92 to the second respondent, that being the difference in price between the actual cost of items quoted to the applicant, namely a sum of $42,849.00 and the price at which those items were allegedly sold to the second respondent that is $69,887.32 for the purposes of enabling the second respondent to enter into a rental agreement with the applicant for the use of the equipment which was to be used in a café business in Cooma. 3. In the explanation filed with the application the applicant also sought an order that the second respondent refund to her the rental costs which she had been paying under the agreement for a coffee grinder which was never provided. Those rental payments were made between 28 November 2016 and 2 October 2017. 4. Mr Paul Ayyash was initially joined as a further respondent to the proceedings but when the matter came before the Tribunal on 28 November 2017 he was removed as a respondent because he was in fact a principal of the first respondent in any event. 5. On 28 November 2017 the applicant was required to provide all her documents to the Tribunal and to other parties by 22 December 2017 and the respondents were required to provide all documents by which they sought to rely at the Hearing, by 9 February 2018. Leave was granted to both parties to be legally represented and it was noted that if a party failed to provide documents in accordance with the Tribunal orders, that party may not be able to rely on documents at the Hearing unless leave was granted to do so. 6. Material was received from the applicant and from the second respondent in accordance with the Tribunal directions. 7. The matter was then listed for formal hearing on 6 March 2018 and on 5 March Pierre Safi, solicitor of Fortis Law Group sent an email to the Tribunal claiming that he was acting for the first respondent, noting that the applicant was required to file and serve her documents on 22 December 2017 (being the last day before the Christmas break) and yet the material was not filed until 2 January 2018 (being the first day when the Registry was open after the Christmas break). Mr Safi claimed that his client would be severely disadvantaged if proceedings were heard the following day and sought an order that the matter be dismissed or in the alternative adjourned to a date for further directions. He also sought an order that the applicant should pay the respondents' costs. 8. It was noted that although the second respondents had filed their documents in accordance with the directions, nothing had been heard from the first respondents until the email requesting an adjournment or dismissal of the matter on 5 March 2018. 9. In the circumstances where the applicant had taken time out to attend the Hearing and the solicitor for the second respondents had flown from Brisbane to attend the Hearing in Cooma. The representative of the first respondent agreed to pay all costs thrown away by the applicant and by the second respondent including legal costs and travel which were incurred as a result of the adjournment. The first respondent was then given until 27 March 2018 to file any or all documents on which he sought to rely at the Hearing. The matter was then transferred part heard to Sydney with an order that the solicitors for the second respondent were permitted to attend by telephone for the further hearing of the matter. Applicant's Submissions 1. The applicant claimed that on 12 January 2017 she, with her family opened a takeaway restaurant called Cooma Artisan Café. As they did not have capitol to purchase the range of equipment needed the applicant engaged the assistance of the catering equipment supplier Petra Equipment Supplies through Mr Ayyash who was introduced to her as the manager of Petra Equipment. The entity trading as Petra Equipment was the first named respondent Asia Invest Enterprises Pty Ltd. 2. It is claimed that through the process Mr Ayyash advised the applicant as to the equipment she should purchase and during negotiations Mr Ayyash informed her that a finance company called Silver Chef could buy the equipment from Petra who would then rent to Cooma Artisan Café under a no interest commercial leasing agreement. He noted that Petra would pay the bond of $4,827.24 to Silver Chef to enable the financing to proceed and he indicated that he would help with electrician's costs because the café did not have an appropriate electricity supply for café equipment. 3. During the course of discussions Mr Ayyash asked the applicant to obtain a quote from an electrician, which she provided to him. Neither Mr Ayyash nor the first respondent company paid any electrician costs and the account was paid in full by the applicant. 4. After considering the terms offered by the first respondent the applicant and her family agreed to go along with a suggestion of renting because it would be a lesser burden for the business. Equipment was selected to a total value of $42,849.40 as contained in two invoices, the one being for $41,717.50 and the other for $1,131.90. 5. The applicant claimed that, in turn, she was asked to sign a rental agreement with Silver Chef in respect of two different amounts which she believed to be the monies referred to in the invoices from the first respondent. She was not provided with any documents explaining terms and conditions of the agreement or contract but she was given a document which was highlighted in locations where she was required to sign. 6. The equipment was received in November 2016 and the operation of the café commenced on 12 January 2017. Payments for the equipment commenced two weeks after it had been delivered and by February 2017 the applicant had decided to buy the equipment from Silver Chef and requested buy out invoices for the different accounts. At that time she was provided with pay out figures for both contracts in a total sum of $69,887.32. Following conversations with a representative of Silver Chef she ascertained that the first respondent had sold the equipment to Silver Chef at a different and more expensive price than what was quoted in the original invoice. 7. On 2 February 2017 the applicant attempted to contact Mr Ayyash and Petra Equipment Supplies, the first respondent, on a number of occasions but none of the calls were returned. 8. A short time later Mr Ayyash called and advised that the prices were up because the applicant owed him $14,000.00 for an electrician notwithstanding that the electricians costs had in fact been paid by the applicant. He advised that he boosted his prices because he somehow had to cover his costs. 9. The applicant submitted that the first respondent had made a profit of $27,037.92 by offering the equipment to her at a cost of $41,849.40 and selling it then to the second respondent for a total cost of $69,887.32. 10. The applicant claimed that several items which were delivered had become defective and that a coffee grinder had never worked. Following conversations with the first respondent, the coffee grinder was sent back and the applicant was compelled to buy another grinder because the café could not operate without it. 11. It was claimed that during this time the second respondent, Silver Chef, was contacting the applicant for regular weekly payments of rent and advised that they would only negotiate if the overpaid money was paid back and the invoices were recreated correctly. The applicant was advised that she would not be released from the agreement and when she requested a copy of it she was provided with a seven page document which she had not signed and had never seen before. 12. The applicant produced the original invoice from Asia Investor Enterprises t/a Petra Equipment dated 16 September 2016 relating 25 separate items to be provided at a total cost of $41,717.50 including GST. It is noted that none of the items of equipment exceeded the sum of $10,000.00 in cost. 13. She provided a further invoice from the first respondent for a total of $1,131.90 for a stainless steel sink bench with the splashback, together with delivery. 14. The Silver Chef rental agreement dated 10 November 2016 required a return of the documents together with a payment of $5,631.71 and it contained a schedule of rental items with a total weekly rent of $804.53. The agreed price in that document was a sum of $38,349.37 with a security bond of $4,827.18 and the document provided by the applicant appeared to have been signed by both parties to the agreement. Attached to that document was a debit request authority in favour of the ANZ Bank account in the name of the applicant. The amount required in that debit authority was $804.53. A further contract requiring a rental payment of $82.50 was described as a rental agreement for small wares. The agreed price for those items was $3,932.56 together with a security bond of $495.00 which coincidentally equates to the bond payable under the original agreement. 15. The applicant has also attached invoices addressed to Silver Chef Rentals Pty Ltd from the first respondent also dated 16 November 2016 and referring to an order date being 30 August 2016 for appliances and equipment totalling $63,387.27 with a further invoice for a total sum of $6,500.00. It is claimed that those items were ordered on 10 November 2016. The applicant claims that she has not ever seen those invoices or in fact any invoices other than the order dated 30 August 2016 and the invoice dated 16 September 2016 showing her as the customer t/a Cooma Artisan Café and the first respondent as the supplier. 16. The applicant has also attached a payout quote for the rental agreement dated 2 February 2017 which included the coffee grinder which was returned as not working when it was delivered. The total payout quote was $66,663.45 including a payout of $94.81 on the coffee grinder. 17. The applicant has also produced a receipt from an electrician showing payment of a sum of $14,140.00 for shop fitout and it is noted that that invoice was dated 23 October 2016 and was paid by the applicant. 18. In summary the applicant submitted that she initially signed agreements for a total of $1,131.90 for small items and $41,717.50 for larger items. This represented a total payment of $42,849.40 against a total claim of $73,695.76 which had been invoiced against her to the second respondent. She claimed that she questioned the difference in prices but received no response or resolution from either the first or second respondent and at that time she stopped paying weekly rentals. She claimed that the second respondent had threatened that they would collect the equipment and as a result she resumed making payments until June 2017. 19. Following legal advice she became aware of her rights and stopped paying the weekly payments and the second respondent sent a debt collector to her shop to request that she sign another agreement with them. Upon refusing to sign that agreement she was again threatened with all equipment being repossessed in less than a week. She noted that she had filed a complaint against the second respondent. First Respondent's Evidence and Submissions 1. No documents or written submissions were provided by or on behalf of the first respondent notwithstanding the extension of time provided for that to be done. 2. Mr Ayyash, on behalf of the first respondent, claimed that it had been engaged by the applicant and that each item had been agreed upon and delivered. He claimed that there had been business dealings with the applicant from August 2016 and that no pressure was ever applied to her or to those who were conducting the business with her. He indicated that he did not wish to address ss. 18, 20, 21 or 22 of the Australian Consumer Law relating to misleading or deceptive conduct or unconscionable conduct. 3. He was questioned by the Tribunal in relation to particular variations in price between the quote provided to the applicants in August 2016 and the charge on price to the second respondent in November 2016. In particular it was noted that the price of the oven had increased from $2,620.00 to $5,500.00, the price of the fryer had increased from $1,880.00 to $3,500.00 and the price of the bench had increased from $1,980.00 to $4,000.00. These matters were put before him for an explanation and he simply indicated that prices had increased because the sale was on a different day and that he had to make money from the transaction. He claimed that a copy of the agreement had been sent to the applicant but this was denied by the applicant and there was no evidence that a copy of the later material was sent or copied to the applicant when it was sent to the second respondent. Second Respondent's Evidence and Submissions 1. The second respondent was represented by Mr Logan, solicitor of Morgan Conley Solicitors in Brisbane. Mr Logan attended the initial proceedings in Cooma on 6 March 2018 when by an email dated 5 March 2018 the first respondent through its then solicitor, Mr Safi, of Fortis Law Group sought an adjournment to enable evidence to be provided. At that time directions were made for both respondents to put on evidence and by consent the first respondent agreed to pay the costs of all parties thrown away as a result of the adjournment. 2. The initial submissions of the second respondent were filed by Mr Logan on 15 November 2017. Mr Logan was permitted to attend by telephone on the adjourned hearing. 3. The evidence provided on behalf of the second respondent included:- 1. a rental agreement between the second respondent and the applicant dated 28 November 2016. 2. Contract statement for contract number 16784 as at 2 October 2018. 3. Rental agreement between the second respondent and the applicant dated 28 November 2016 for contract number 161814. 4. Contract statement for contract number 161814 as at 2 October 2017. 5. Silver Chef's standard terms and conditions. 6. Rent, Try, Buy application dated 29 August 2016. 7. PPSR Registration Number. 1. The rental agreement required a payment of a deposit of $5,631.71 together with payments in accordance with the weekly rental schedule totalling $804.53 per week. An "On Demand" coffee grinder which was never delivered in a working order required weekly payments of $34.90 under that schedule. The final page of that contract referred to a security bond of $4,827.18 and an agreed price of goods at the end of one year was $38,349.37. A copy of the agreement provided by the second respondent appears to have been signed by the applicant and by a Mr Sam Endicott as the owner of Silver Chef Rentals Pty Ltd. 2. A contract statement No.161784 provided in the respondent's material showed that the applicant made regular payments of $804.54 from 28 November 2016 through to the last date shown on the payment schedule being 2 October 2017, and the unexpired rent as at October 2017 was shown to be $64,103.10 notwithstanding payments of $38,527.50 and a bond of $5631.77. The charges over almost a year appear to be 46.9% of the stated value of the goods. 3. A further rental contract No.161814 required, regular payments of $83.50 per week through until 2 October 2017 and it showed that customer donations were apparently being taken at a rate of $1.00 per week. The unexpired rent on the later contract was shown to be $7065.70 notwithstanding payments totalling $4175 plus a bond of $577.50. 4. In submissions Mr Logan, on behalf of the second respondent, argued that no relief had been sought against the second respondent and that the only relief sought by the applicant was against the first respondent with limited complaints being made by the applicant against the second respondent. He noted that the second respondent had written to the applicant outlining why it should not be a party to the proceedings and should not be required to participate in them. 5. He claimed that the applicant had failed to comply with directions and had failed to deliver documents to the second respondent and that these documents were obtained by him through the Tribunal. 6. It was admitted that the applicant had signed two rental agreements with the second respondent but it was claimed that full copies of the agreements together with the copy of the standard terms had been provided to the applicant at the time of signing. 7. In addressing the allegations Mr Logan noted that the applicant had apparently selected goods to a value of $42,849.00 from the first respondent and that the first respondent had told the second respondent that the goods were in fact valued at $69,887.32 including GST and invoiced the second respondent for that amount. It is claimed that that sum was paid to the first respondent for the purchase of the goods and rent was charged to the applicant accordingly. In those circumstances Mr Logan submitted that the second respondent did not dispute the relief sought by the applicant namely that the first respondent refund to the second respondent the sum of $27,037.92 and he claimed that the second respondent was then willing to cooperate with the first respondent once that refund had been processed. The evidence suggests that any refund should include any interest or other charges paid in respect of that additional amount at the rate calculated from the payment schedule. Decision 1. At all relevant times the first respondent was trading as a supplier of kitchen and catering equipment under the name of Petra Equipment Supplies. The second respondent provided financial services which would enable consumers to finance the purchase of products through leasing or hiring as well as through other methods. 2. The applicant claimed that she was planning, with her family, to open a take-away restaurant and café in Cooma and that on 30 August 2016 she had obtained a quote to purchase equipment including ovens, fridges, basins, fryers, benches, dishes, plates and other utensils for use in the restaurant. 3. The total quote to purchase all of these items from the first respondent was a sum of $42,849.40. 4. During the course of discussions, Mr Ayyash for the first respondent indicated to the applicant that a company called Silver Chef, being the second respondent, could buy the equipment from the first respondent and then rent it to the applicant at her café under a no interest commercial leasing agreement. Mr Ayyash also indicated that he would be able to assist to pay for electrician's charges to convert the property to a power system capable of dealing with some of the café equipment. 5. The applicant discussed the matter with her family and, having agreed to deal with the second respondent through a rental process she selected equipment to the value of $42,849.40 which was documented in two invoices which have been produced to the Tribunal. 6. In relation to her dealings with the second respondent, the applicant noted that she signed what she understood to be a rental agreement with the second respondent with two contracts but she claimed that she was not given any further information concerning the cost of the equipment which she was purchasing. She agreed that she was merely shown a rental schedule for the items which were to be supplied. 7. The equipment was received in November 2016 and the operation of the café commenced on 12 January 2017. The applicant claimed that she was given the option of either upgrading the equipment and continuing the rental agreement or purchasing the equipment from the second respondent in February 2017. 8. Upon applying to purchase the equipment she received a total payout figure of $69,887.32 which she felt seemed to be high for equipment worth $42,849.40. There is no evidence from either respondent that the applicant was advised as to any increase in price or that she was given any information which detailed any specific rate of interest or in particular any interest which would be likely to increase the price of the goods between November 2016 and February 2017. 9. Attempts to contact Mr Ayyash or his assistant proved fruitless but eventually Mr Ayyash advised that the prices had been increased because of a $14,000 electrician's account. Evidence before the Tribunal clearly establishes that account was paid by the applicant and not by the first respondent. It was claimed Mr Ayyash then indicated that the prices had been increased because he was required to cover his costs and he claimed that he did this by increasing the prices from $42,849.40 to $69,887.32. 10. The applicant has claimed that the coffee grinder originally provided by the first respondent and rented to her through the second respondent did not work and although it was returned she continued to be required to pay rental for it. She further claims that when she questioned the value of the goods which had been rented to her the second respondent threatened to repossess all of the goods unless she continued to pay her weekly rental. She continued to do so until June 2017 and in October 2017 the present proceedings were commenced. 11. The applicant has sought an order that she is not required to pay a sum of $27,037.92 to the second respondent and in providing reasons for the order she has suggested that she would like the first respondent to return $27,037.92 to the second respondent being the difference in price between the actual cost of the items quoted to her and the price at which the goods were sold to the second respondent. She has claimed further that she agreed to rent items worth $42,849.40 and not $69,887.32 and that she had signed the rental agreement in the belief that those were the prices for the equipment provided. 12. Despite being given an opportunity to provide evidence and submissions the first respondent failed to provide any documents in support of its defence. Mr Ayyash, who appeared for it, claimed that the applicant had been given an opportunity to get advice from her solicitors and that no pressure had been applied. He had great difficulty in explaining to the Tribunal how the price of an electric pizza oven had been increased from $2,620.00 in the quote to the applicant, to a sum of $5,500.00 being the price at which it was sold to the second respondent. He had similar difficulty in explaining how the cost of a refrigerator had gone from $2,670.00 to $4,000.00, the cost of a fryer had gone from $1,880.00 to $3,500.00 and the cost of a bench had gone from $1,980.00 to $4,000.00. In an endeavour to explain these discrepancies he simply noted that "he had to make a profit". 13. Submissions provided by the solicitor for the second respondent on 7 February 2018 noted that the first respondent had told the second respondent that the goods were in fact valued at $69,887.32 and had invoiced the second respondent for that amount. That sum had been paid and the goods were then leased or hired to the applicant based on those figures. 14. It was agreed in the circumstances that the second respondent would not dispute the relief sought by the applicant and that if the first respondent were to refund to the second respondent the sum of $27,037.92 then the second respondent could work with the applicant once the refund had been processed (should the applicant wish). 15. The starting point for the determination of the jurisdiction of the Tribunal in relation to a consumer claim is Pt 6A of the Fair Trading Act 1987. s.79D(c) defines a consumer whilst under s.79H of that Act a person or body is presumed to be a consumer until the contrary is proved and the other party bears the onus of proving that the applicant is not a consumer. In the present instance neither of the respondents have challenged the assertion that the applicant is a consumer but it is nevertheless appropriate to consider two matters in relation to the definition of the consumer which is prescribed under s. 4 of the Fair Trading Act to have the same definition as contained in the Australian Consumer Law 2010. 16. It is noted that there is a $40,000.00 limit on the amount payable for goods although in the present case the amount seeking to be recovered under the claim does not exceed $40,000.00. 17. In Business and Professional Leasing Pty Ltd v Dannawi [2008] NSWSC 902, two pizza ovens were purchased for a cost in excess of $40,000.00. The question arose as to whether in terms of s.4B of the Trade Practices Act the price should relate to a cost of each item or the aggregate purchase price. Young C J in Equity held that the prices of the separate albeit identical items in one transaction ought not be aggregated to determine whether it was a consumer sale. The position appears to be that in each case matters should be considered on their own factual merits but it is clearly noted that in the present case there has been no challenge to the position of the applicant being a consumer. 18. In Safi v Heartland Motors Pty Ltd [2016] NSWCATAP 80 the Appeal Panel of the Tribunal was required to consider whether a Jeep which had been purchased for business use removed the applicant from the category of a consumer within the Competition and Consumer Act 2010. Reference was made to a decision of Young J in Bunnings Group Limited (formerly Bunnings Pty Ltd) v Laminex Group Limited [2006] FCA 682 for the purposes of construing the meaning and application of the phrase in the context of the Trade Practices Act 1974 and in that case His Honour observed:- That the word "ordinarily" within the definition mean commonly or regularly and not principally, exclusively or predominantly. He noted it would be relevant to inquire into the essential character of the goods in question which should be determined objectively having regard into the evidence concerning the design marketing pricing and potential uses of the goods in question. His Honour noted further that the language focused on what the goods of a kind are ordinarily required for not ordinarily used for and it invited attention to design features and purchases. 1. Taking these observations into account the Appeal Panel of the Tribunal was satisfied that the vehicle was of a kind which would ordinarily be acquired for personal, domestic or household use and accordingly, notwithstanding the subjective intentions, it held that the Australian Consumer Law applied. Once again it is appropriate to note that neither of the respondents sought to challenge the assertion that the applicant was a consumer within the meaning of the legislation. 2. Taking into account these circumstances under s. 28 of the Fair Trading Act the Australian Consumer Law is a law of New South Wales and the Tribunal has jurisdiction to apply the provisions of the Australian Consumer Law as well as common law principals pertaining to the law of contract (See Sacks v Hammoud [2016] NSWCATAP 225). 3. The concept of misleading or deceptive conduct within s.18(1) of the Australian Consumer Law is not defined. There are no specific categories of misleading or deceptive conduct although some guidance is provided in relation to misrepresentations concerning future matters. In determining whether conduct is misleading or deception under s.18 it is noted that pre-contractual representations may be regarded as misleading if assessed as to the individual applicants alone (See Butcher v Lachlan Elder Realty Pty Ltd [2004] 218 CLR 592). 4. Where conduct in issue contains a representation as to a future matter the person making the representation must adduce evidence that there were reasonable grounds for making that representation where it would be deemed misleading. There must necessarily be a cause or connection between the respondents conduct and the applicant's alleged error of misconception (see Campbell v Back Office Investments Pty Ltd [2009] 238 CLR 304). 5. Section 20 of the Australian Consumer Law generally prohibits unconscionable conduct or conduct that has the potential to apply to transactions in favour of all types of victims. Conduct is prohibited by s.21. 6. Under s.29 of the Australian Consumer Law a person must not in trade or commerce make false or misleading representations of the type set out in s. 29 of the Australian Consumer Law. A person must not engage in conduct that is misleading or deceptive or likely to mislead or deceive. The conduct of parties is assessed objectively in respect of whether or not a representation is false, misleading, deceptive or likely to deceive. 7. Section 21 of the Australian Consumer Law provides that a person must not engage in conduct that is unconscionable in respect of the supply of goods or services in trade or commerce. Conduct is unconscionable if it was not done in good conscience or is irreconcilable in what might be right or reasonable (see ASIC v National Exchange Pty Ltd [2005] FCAFC 225). 8. There is little doubt on the evidence available that the conduct of the first respondent could be regarded as misleading, deceptive and unconscionable if one is to accept that there was an agreement to provide the goods to the applicant at a stated price of $42,849.40, yet without any notification by either the first or second respondents the goods were on-sold and rented back to the applicant at a stated value of $69,887.32. The inability of the first respondent or its representative to give a satisfactory explanation for this conduct is a matter of significance. 9. In relation to the conduct of the second respondent it is noted that the solicitor for the second respondent argued that the goods were on-sold on by the first respondent without any indication that they had been quoted at a much lesser price. Although it is suggested that no evidence has been provided in relation to the second respondent, it is clear that the documentation provided failed to give any indication of the total price or value of the goods which were to be rented and failed to provide any evidence of any applicable interest rate. Furthermore it would appear up until June of 2017 the second respondent sought to enforce its agreement against the applicant notwithstanding that it was by that time appraised of the alleged breaches by the first respondent. 10. The applicant has made two additional complaints in the application concerning a coffee grinder and a pizza oven. In the application itself she noted that the coffee grinder, when delivered, did not work and the adjusting buttons for the pizza oven also failed to work satisfactorily and screws came off three days after it had been received. The coffee grinder was returned as inoperable. Because it was faulty and necessary for use in the café, another one was purchased independently by the applicant. She noted that instalments had been paid for the coffee grinder which was defective and these instalments should be deducted from monies owed to Silver Chef or repaid by the second respondent to the applicant. 11. Ms Bircan claimed that she sought to return the coffee grinder to the second respondent Silver Chef but she was advised that a return was not acceptable unless the first year's rent on the equipment had been paid. 12. In relation to the pizza oven she contacted the first respondent and was told that the manufacturer would contact her. The manufacturer requested photographs and advised the applicant that the oven had been sold to the first respondent probably a year earlier and that it had been sitting in the showroom for that time. The manufacturer claimed that it was the responsibility of the first respondent to check the quality of the oven before they sold it. 13. After the evidence had closed and the matter had been reserved for a decision the applicant sent to the Registry photos of what apparently relates to a pizza oven. As no leave had been sought by the applicant or given by the Tribunal for additional evidence this material was disregarded and will not be taken into account into the determination of the Tribunal. 14. There is insufficient evidence to determine the nature or extent of any loss arising from the leasing of the pizza oven because that oven was initially to be sold to the applicant at a cost of $2,620.00 but in fact it was on sold through the leasing company for a cost of $5,500.00. There is insufficient information to determine whether the pizza oven was ever repaired or whether steps were taken by the manufacturer. 15. In relation to the coffee grinder it is noted that initially a different brand of coffee grinder was to be purchased by the applicant under the quote of 30 August 2016 but a different type of coffee grinder was sold by the first respondent to the second respondent for a sum of $2,500.00. The applicant was never advised by either of the respondents concerning the increase in cost but the coffee grinder was rented to the applicant at a rate of $34.90 per week. The evidence is that the coffee grinder never worked and attempts to have it replaced were unsuccessful, noting that the second respondent required payment of one year's rent before any attempt would be made to change the goods. In relation to the claim for the coffee grinder it is appropriate on the evidence to order that the second respondent should pay the applicant the sum of $1,535.60 being the rent paid for equipment which was never functioning during the period it was leased. 16. It is necessary to determine whether the first and/or second respondents engaged in misleading, deceptive or harsh and unconscionable conduct within the meaning of the Australian Consumer Law. 17. In Tonto Homes Australia Pty Ltd v Tavares [2011] NSWCA389 the Court of Appeal held that it was neither possible nor desirable to provide a comprehensive definition of unconscionable conduct. The range of conduct which was included was wide and could include bullying and thuggish behaviour, undue pressure and unfair tactics, taking advantage of vulnerability or lack of understanding, trickery or misleading conduct. It was noted that the finding required an examination of all of these circumstances. 18. The interpretive provisions of s. 21(4) in the Australian Consumer Law provide principals to give some indication of parliaments intention regarding the scope of the section in the following terms:- (4) it is the intention of the parliament that; (a) This section is not limited by the unwritten law relating to unconscionable conduct; and (b) This section is capable of applying to a system of conduct or pattern of behaviour whether or not the individual is identified as having been disadvantaged by the conduct or the behaviour: and (c) In considering whether conduct to which a contract relates is unconscionable, a court's consideration of a conduct may include:- (i)The terms of the contract (ii)The manner in which and the extent to which the contract is carried out and is not limited to consideration of the circumstances relating to the formation of the contract. 1. As it can be seen from the definition of the authorities referred to, the conduct of the first respondent and the conduct of the second respondent could be defined as unconscionable conduct particularly having regard to the manner in which and the extent to which the contract for supply of goods in the first instance and the contract for letting of goods in the second instance were in fact undertaken. 2. It is noted that neither the first nor the second respondent ever sought to provide information to the applicant to indicate that the original quoted price for goods which were to be supplied in the first instance by the applicant had been changed. The first respondent did not notify the applicant of any change and the second respondent, rather than detailing a schedule of goods purchased with the particular value, elected to simply provide a schedule of rentals which clearly avoided any requirements to indicate that the price of a acquiring the goods had substantially increased when the rental contract was entered into. 3. It is further necessary to consider whether the first and second respondents could be considered to be a supplier of goods and a linked credit provider within the meaning of s. 278 of the Australian Consumer Law. 4. Part 5.5 of the Australian Consumer Law makes suppliers of goods and services and a person providing certain types of connected finance jointly reliable for breaches of contract in either the contract for sale or the linked credit contract. 5. S. 278(1) provides:- 1. If a consumer who is a party to a linked credit contract suffers a loss or damage as a result of:- 1. A misrepresentation relating to the credit provided under that linked credit contract or for the supply of goods or services (a related supply) to which a contract relates or, 2. a breach of the linked credit contract or the contract for related supply or, 3. failure of consideration in relation to the linked credit contract or the contract for related supply or, 4. a failure to comply with a guarantee that applies under ss. 54, 55, 56, 57, 60, 61 or 62 in relation to a related supply or, 5. a breach of a warranty that is implied in a linked credit contract by s.12ED of the Australian Security and Investments Commission. The linked credit provider who is a party to the contract and the supplier of the related supply are jointly and severally linked are liable to the consumer for the amount of the loss or damage. 1. Section 278(2) of the Australian Consumer Law defines a "linked credit contract" to mean a contract that a consumer enters into with a linked credit provider or a person (the supplier) for the provision of credit in relation to:- 1. the supply by way of sale, lease, hire or hire purchase of goods to the consumer by the linked credit provider where the supplier supplies the goods or causes the goods to be supplied to the linked credit provider or, 2. the supply by the supplier of the goods and services to the consumer. 1. The term "linked credit supplier" is defined in s.2 to mean:- In relation to a supplier of goods or services a credit provider. (a) With whom the supplier has a contract arrangement or understanding relating to (i) the supply or supplier of the goods to which the supplier deals. (ii) the business carried out by the supplier supplying goods or services or, (iii) the provision to persons to whom goods or services are supplied by the supplier of credit in respect of payment for those goods or services. 1. The evidence provided by the applicant clearly suggests that a relationship of supplier and linked credit provider exists in the present circumstances. 2. In Business and Professional Leasing Pty Ltd v Dannawi [2008] NSWSC 902 Young CJ in Equity held that an arrangement or understanding between the linked credit provider and the supplier can be inferred from surrounding circumstances. It could be inferred even though the applications for finance were channelled through a different third party and even though the third party sometimes directed applications to other financiers. It depended on the closeness of the relationship between the particular parties. His Honour went on to note further that the purpose of establishing the link was to ensure that the credit supplier was sufficiently involved in the transactions so as to justify joint and several liability with the supplier. 3. For reasons outlined earlier in relation to misleading or deceptive conduct I am satisfied that both the first and second respondents have failed in their responsibility to the applicant in circumstances which can properly be defined as unconscionable conduct. It is noted that the second respondent is prepared to accept an order that the first respondent be ordered to pay to the second respondent the difference between the cost of goods quoted to the applicant by it and the price charged to the second respondent for such goods in order to determine hiring or leasing costs for them. The applicant's position can be protected by an order that she is not required to pay to the second respondent a sum of $27,073.92 and a further order that the said sum be paid by the first respondent to the second respondent. 4. A refund of rental paid in respect of the coffee grinder remains the responsibility of the second respondent but at the present time the financial contract between the applicant and the first respondent remains on foot subject to the orders that I have just made. It will no doubt be open to the applicant and the second respondent to arrange for an adjusted payout so that the goods can be finally released to the applicant for a continuation of the credit arrangement on the basis of the reduced value of goods. J A Ringrose General Member Civil and Administrative Tribunal of New South Wales 4 September 2018 I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. Registrar ********** I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 19 December 2018