Business Service Brokers Pty Ltd v Kim Anthony Beveridge
[2017] VSCA 184
•14 July 2017
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2016 0130
| BUSINESS SERVICE BROKERS PTY LTD | Applicant |
| v | |
| KIM ANTHONY BEVERIDGE | Respondent |
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| JUDGES: | SANTAMARIA and FERGUSON JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 14 June 2017 |
| DATE OF JUDGMENT: | 14 July 2017 |
| MEDIUM NEUTRAL CITATION: | [2017] VSCA 184 |
| JUDGMENT APPEALED FROM: | Business Service Brokers Pty Ltd v Beveridge (Unreported, Judge Murphy, 10 June 2016) |
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CONTRACTS – Construction and Interpretation of Contracts – Respondent’s mobile phone stolen while overseas – Theft was part of fraud – SIM card removed from phone and used for multiple international calls and SMSs using call forwarding – Applicant claimed Respondent owed $34,945 for international roaming charges – International roaming not standard service under contract and had to be activated before use – Whether obligation to pay for international roaming services encompassed obligation to pay for calls constituted by call forwarding or diversion services – Fees and charges for international roaming to be read in context of contract – Contract imposed obligation to pay for calls on international roaming when customer’s mobile phone used - SIM card used rather than phone – No obligation to pay – Appeal dismissed.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr J Whelen | Telco 7 |
For the Respondent | Mr JL Evans QC | Madgwicks Lawyers |
THE COURT:
Business Service Brokers Pty Ltd (‘TeleChoice’) provided a mobile phone service to Mr Kim Beveridge. Mr Beveridge’s mobile phone was stolen from him when he was travelling for work in Barcelona. The theft was part of a fraud. The fraud involved the SIM card from the mobile phone being used to divert hundreds of calls and text messages in quick succession from Australia to mobile phone numbers mainly in Latvia. In less than 20 hours, the duration of the diverted calls totalled 1161 hours. TeleChoice sent Mr Beveridge a bill for the diverted calls. He refused to pay. TeleChoice sued him, ultimately claiming that he owed $34,945.
A judge in the County Court held that TeleChoice was not entitled to be paid under the mobile phone contract between it and Mr Beveridge.[1] In the judge’s opinion, when the contract was properly construed, simultaneous call forwarding and SMS messages were not part of the value added service (that is, international roaming) that Mr Beveridge agreed to pay for under the contract. The judge dismissed TeleChoice’s claim and ordered that TeleChoice pay Mr Beveridge’s costs, in part on a standard basis with the remainder to be paid on an indemnity basis.
[1]Business Service Brokers Pty Ltd v Beveridge (Unreported, Judge Murphy, 10 June 2016) (‘Reasons’).
TeleChoice seeks leave to appeal. For the reasons which follow, we would grant leave to appeal. We would dismiss the appeal.
The mobile phone contract
The contract between TeleChoice and Mr Beveridge is made up of several documents. There is the application form which he signed, the TeleChoice General Terms April 2013, a document entitled ‘TeleChoice Postpaid Mobile Services’ and the appendices to that document. Mr Beveridge chose the ‘Global Liberty Leader’ month to month plan which is described in the application form as a Postpaid Mobile Service. Telephone calls and SMS messaging within Australia were included in the plan. The application form states:
The following call types are automatically barred and require TeleChoice approval to remove the barring and may require a prepayment or security bond deposit to allow access to the features:
International Calls, 19xx Numbers (Premium Content and Premium Services) and International Roaming.
In the ‘Critical Information Summary’ (which forms part of the contract) under the heading ‘WHAT’S EXCLUDED’ the following statements appear:
Your Monthly Call Allowance can’t be used for SMS or MMS to international numbers, any usage while overseas, video calls, calls or SMS to premium numbers (eg 19xx numbers) and satellite numbers, calls to 1234, 12 455 and 12 456 numbers or content charges (including third party charges). Charges for these calls, SMS and MMS can be found at telechoice.com.au/legal/terms.
Your Monthly Data Allowance can’t be used for data while you’re overseas.
Under the heading ‘USING YOUR SERVICE OVERSEAS’ the summary provides:
Your Monthly Call and Data Allowances don’t include use while you’re overseas (International Roaming), so you’ll be charged separately for this usage. TeleChoice Plans are not automatically provisioned to allow International Roaming. Customers will be required to contact TeleChoice Customer Service to apply for this feature. Credit Criteria and/or a security bond may be required to enable international Roaming.
In another part of the summary under the heading ‘CALLS TO OVERSEAS’ the document states:
The TeleChoice International calls feature is automatically barred when you connect your Mobile Service. If you want to activate access to international calls, please contact Customer Service. A list of available countries and call rates can be viewed at telechoice.con.au/legal and may change from time to time.
The TeleChoice Postpaid Mobile Services Description includes a number of terms that are relevant in the present case. Clause 2.1 provides:
2.1 What is the TeleChoice Mobile Service?
(a) The TeleChoice Mobile Service allows you to:
(i) Make calls from and receive calls to your mobile phone;
(ii)Send content from and receive content to your mobile phone, including data calls; and
(iii)Subject to clause 2.1(b), use a range of value added Mobile Service features,
on TeleChoice’s network for your own personal or business use only.
(b)TeleChoice does not activate all value added Mobile Service features when you connect to the TeleChoice Mobile Service. Many value added Mobile Services require specific equipment to use them (for example, video calls access on the 3G network and you will need a compatible mobile phone to make these calls using the TeleChoice Mobile Service). Appendix A contains detailed information on the value added Mobile Service features available to use with the TeleChoice Mobile Service, including whether there are special activation procedures, equipment requirements or limitations on use.[2]
[2]All emphasis in quotes from contract in original.
‘Call’ is defined as ‘Any type of call set out, or otherwise referred to in, the service description.’ ‘Service’ is defined as ‘the service specified in the application and described in the service description and any related goods or equipment and ancillary services that we supply to you in connection with that service.’ ‘Value added service features’ is defined as the ‘additional features you may obtain with the service. The value added service features available with the service and the associated fees and charges are described in the value added services table in Appendix A.’
Clause 3 deals with the TeleChoice Mobile Service charges. Clause 3.3(a) and (b) reads:
3.3What are the fees and charges for using the TeleChoice Mobile Service?
(a)You must pay:
(i)The fees and charges for the TeleChoice Mobile Service, which are set out in the pricing tables, on TeleChoice’s website or in any applicable special; and
(ii)Any additional fees and charges noted in the agreement (including in your application) or notified by TeleChoice in accordance with the agreement from time to time.
(b)You must pay all fees and charges which are incurred for the TeleChoice Mobile Service even if you did not authorise its use, including any fees and charges incurred by your secondary contact arising from that person’s access to and operation of your account.
Clause 3.4(d)(i) specifies that international roaming charges are not included in the plan. Clause 3.7 relevantly provides that fees and charges relating to international mobile services and international roaming are subject to variation and that the customer should contact TeleChoice before travelling overseas.
Clause 6 deals with the SIM card. Clause 6.1 sets out the requirement for the customer to have a SIM card; provides that if the customer does not have a SIM card, TeleChoice will provide one; and specifies that the customer must keep the SIM card secure and only use it to access TeleChoice’s Mobile Service. Clause 6.2 provides that TeleChoice owns the SIM card. Clause 6.3 concerns lost or stolen SIM cards. Under that clause, TeleChoice is not responsible for any lost or stolen SIM cards (cl 6.3(a)) and an obligation is imposed on the customer to call TeleChoice as soon as possible if the SIM card is lost, stolen or damaged so that
(among other things) TeleChoice can bar outgoing calls (cl 6.3(b)). Clause 6.3(d) provides:
You are responsible for all charges for calls made using the lost or stolen SIM card up until the time you notify TeleChoice that your SIM card has been lost or stolen and TeleChoice bars outgoing calls, or suspends the TeleChoice Mobile Service or activates IMEI blocking….
Clause 9.1(a) provides that the customer may obtain a mobile phone from TeleChoice or the customer may use a phone that they have or one obtained from a third party. If the mobile phone is lost or stolen, the customer is required to inform TeleChoice (cl 10.1).
Clause 16 provides that details of ‘value added Mobile Services’ are set out in Appendix A. International roaming is one of those services. It is dealt with in section 6.2 of Appendix A. So far as relevant, that section reads:
Name of the value added service
International Roaming
The services you use the value added service with
- The Postpaid Mobile Service
What the value added service is used for
International Roaming is used to make and receive calls using your mobile phone whilst travelling overseas.
How the value added service works
International Roaming allows you to use the GSM networks of overseas mobile digital carriers.
How you activate the value added service
To activate International Roaming you must contact Customer Service….
Limitations or restrictions on using the value added service
International Roaming cannot be activated by all customers, due to credit risk….
Fees and charges
When you activate international roaming we will charge you the rates set out in the table below:
International Roaming calls will be ineligible for any discounts in your pricing plan unless otherwise specified.
Activity Charge Using your mobile phone to make a voice or video phone call while roaming overseas The rate applicable to the country you are roaming in as varied from time to time. Rates are subject to variation and vary by call origin, destination and type. Before you travel overseas you should contact us by calling Customer Service for further information. Receiving a voice call or video on your mobile phone while roaming overseas The standard rate for an international call to the country concerned will be applied to the international leg of the call plus the carrier charge applicable to the country you are roaming in. Rates are subject to variation and vary by call origin, destination and type. Before you travel overseas you should contact by calling Customer Service for further information. Sending a standard SMS to a mobile phone service while roaming overseas $0.25 per message sent (up to 160 characters) plus the carrier charge applicable to the country you are roaming in. Before you travel overseas you should contact us by calling Customer Service for further information. Using GPRS while roaming Before you travel overseas you should contact us by calling Customer Service for further information and pricing.
Appendix H is headed ‘TELECHOICE BROADBAND AND HOME PHONE BUNDLE VALUE ADDED SERVICES.’ As the heading suggests, this appendix applies where the customer has a fixed landline service (in contrast to a mobile phone service). Appendix H includes a table setting out charges for special phone features that may be used with the fixed landline. One of those features is call forwarding which is described in the following terms:
Call Forward transfers calls from your home phone to a number you choose, you can forward your calls to your mobile, pager, answering service or another phone.
The judge’s reasons
Having outlined the events which led to the theft of Mr Beveridge’s mobile phone, the judge recorded that it was not in dispute that Mr Beveridge’s ‘handset and/or SIM card had been the subject of a sophisticated fraud’ such that over about 17 ½ hours a total of 1161 hours of calls were billed to his mobile number.[3] The original bill sent to Mr Beveridge was for $191,453. The judge noted that after the proceeding had been commenced for recovery of that amount, TeleChoice reduced its claim to $34,945. TeleChoice does not use its own network. Rather, it is a user or reseller of the Telstra mobile network. The amount of $34,945 was the negotiated amount that TeleChoice paid to Telstra Wholesale in respect of the fraudulent calls and SMSs.[4]
[3]Reasons [10].
[4]Reasons [12].
The judge reviewed the evidence to assess whether it was Mr Beveridge’s phone or the SIM card that was used to effect the fraud. He concluded that the SIM card was used to activate call forwarding on Mr Beveridge’s mobile number and that following this, ‘the number was available for multiple simultaneous calls, and for large and multiple SMS messages’ to be forwarded.[5] The judge was satisfied that the SIM card was removed from the phone and then ‘as a result of a call forward setting being put in place on [Mr Beveridge’s] number, the number was able to be simultaneously used for multiple calls, such that 1116 hours of calls for tolling purposes were generated in less than 24 hours leading to the original bill for $191,453.25 under the relevant international roaming tariff charges.’[6]
[5]Reasons [37].
[6]Reasons [38].
The judge was of the view that the call forwarding function was at the heart of the fraud that was perpetrated.[7] He held that call forwarding was not included as a value added service in Appendix A. In this regard, he accepted Mr Beveridge’s submission that the absence of an express reference to call forwarding and the references in Appendix A to ‘your mobile phone’ meant that charges for calls generated by the transfer of the SIM card to another device were not captured.[8] The judge reached a similar conclusion in relation to the SMS charges finding that the contract contemplated the mobile phone user being the person who sends the message.[9] Here, Mr Beveridge did not send the messages.
[7]Reasons [57].
[8]Reasons [47], [49], [57].
[9]Reasons [64]-[66].
The judge held that TeleChoice was not entitled to the amount it claimed from Mr Beveridge under the contract.
Mr Beveridge had also raised a defence based on unconscionability. The judge held that had TeleChoice pursued its claim for the original bill of $191,453 that would have been unconscionable.[10] Conversely the judge held that if TeleChoice had had a contractual entitlement to be paid, it was not unconscionable for TeleChoice to pursue the amount of $34,945 that being the amount that it had paid to Telstra Wholesale.[11]
[10]Reasons [72]-[75].
[11]Reasons [76]-[80].
In his Reasons, the judge referred to the fact that Mr Beveridge had admitted liability for $78 in respect of services provided by TeleChoice before his phone was stolen.[12] The judge did not make any order in this respect. Instead, he dismissed the claim by TeleChoice. He also dismissed Mr Beveridge’s counterclaim (which was based on his unconscionability arguments).
[12]Reasons [12].
The judge also made costs orders against TeleChoice. He delivered separate reasons[13] in this respect. On 14 October 2014, Mr Beveridge had made an offer of compromise, offering to settle the case on the basis of a payment to TeleChoice of $8000 together with legal costs on a party/party basis. The judge was satisfied that TeleChoice unreasonably refused to accept that offer.[14] Relying on r 26.08(4) of the County Court (Civil Procedure) Rules the judge ordered that Telechoice pay Mr Beveridge’s costs on a standard basis in respect of costs incurred up to 11am on 20 October 2014 and on an indemnity basis after that time. Rule 26.08(4) provides:
Where an offer of compromise is made by a defendant and the plaintiff unreasonably fails to accept the offer and the claim to which the offer relates is dismissed or judgment on the claim is entered in favour of the defendant, then unless the Court otherwise orders—
(a)the defendant shall be entitled to an order against the plaintiff for the defendant’s costs in respect of the claim until 11.00 a.m. on the second business day after the offer was made, taxed on the ordinarily applicable basis; and
(b)the defendant shall be entitled to an order against the plaintiff in respect of the defendant’s costs after the time referred to in paragraph (a) taxed on an indemnity basis.
Did the contract require Mr Beveridge to pay for calls and SMS messages that were forwarded after his phone was stolen? (Ground 1)
[13]Business Service Brokers Pty Ltd v Beveridge (Unreported, Judge Murphy, 19 August 2016) (‘Costs Reasons’).
[14]Costs Reasons [23].
TeleChoice has one principal ground of appeal:
His Honour erred by construing the contract to mean that TeleChoice was not entitled to charge any fees at all for calls made via call-forwarding or diversion services. Instead, his Honour ought to have construed the contract to mean that the general obligation to pay for calls encompassed an obligation to pay for call-forwarding or diversion services (which were simply calls of a particular type).
TeleChoice submits that properly construed, the contract provides for the provision of its Post Paid Mobile Service in exchange for payment of fees and charges for the use of the service. To use the service, both a SIM card and a mobile phone are required but, TeleChoice contends, the contract is primarily concerned with the supply of the service. In this regard, it says that the value added service of international roaming is defined in the contract as ‘the ability to use an overseas network when travelling overseas.’ TeleChoice says that section 6.2 of Appendix A explains that international roaming is used to make and receive calls using ‘your mobile phone’ whilst travelling overseas. TeleChoice contends that it can be seen from this description that the value added service of international roaming is separate and distinct from the concept of ‘your mobile phone’: the service being supplied is international roaming (that is, using overseas networks to make and receive calls), which requires a mobile phone. So, it contends, the contractual effect is that the payment obligation applies to use of the value added service (international roaming) in connection with the service. It follows, TeleChoice submits, that as the amount claimed was incurred on Mr Beveridge’s account for international roaming service charges from the time he activated international roaming those charges are properly payable.
TeleChoice submits that call forwarding or diverting is accommodated within the definition of the ‘Service’ set out in cl 2.1(a) of the TeleChoice Postpaid Mobile Service Description. To recap, that clause relevantly provides:
2.1 What is the TeleChoice Mobile Service?
(a) The TeleChoice Mobile Service allows you to:
(i) Make calls from and receive calls to your mobile phone;
(ii)Send content from and receive content to your mobile phone, including data calls; and
(iii)Subject to clause 2.1(b), use a range of value added Mobile Service features,
on TeleChoice’s network for your own personal or business use only.
When the international roaming service is activated, TeleChoice argues that it is encapsulated in the service. TeleChoice contends that the calls that were diverted or forwarded were calls made on the service. In TeleChoice’s submission, to interpret the contract as being exclusive of calls made using a call forwarding or diverting function would be to rely on an implication to contradict the express terms of the contract and such an interpretation should not be accepted.
In short, TeleChoice submits that the obligation to pay for the services encompassed an obligation to pay for calls constituted by call-forwarding or diversion services (which were simply calls of a particular type) as well as SMSs.
We reject TeleChoice’s ground of appeal. The contract distinguishes between the standard service provided by TeleChoice and the value added features (such as international roaming). The standard service does not include international roaming calls. This is made clear in a number of parts of the contract; for example, the application form (which states that international roaming calls are barred[15]); in the Critical Information Summary (which specifies that usage while overseas is not included in the call allowance with customers required to contact TeleChoice to activate international roaming[16]); and in cl 3.4(d)(i) (which specifies that international roaming charges are not included in the plan[17]). Critically, cl 2.1 distinguishes between the standard service which TeleChoice provides and the value added services. Cl 2.1(a)(iii) and (b) make it clear that it is only if the value added service features (relevantly here, international roaming) are activated that they become part of the service provided by TeleChoice to the Customer. In turn, the definition of ‘Value added service features’ makes it clear that the associated fees and charges for those features are set out in Appendix A. The reference in cl 2.1(a) to the service allowing the customer to make calls from and receive calls to the customer’s mobile phone must be read in this context. That provision does not impose an obligation to pay for the features that come with international roaming once it is activated. Rather, one must look to section 6.2 of Appendix A which sets out that international roaming is used to make and receive calls using the customer’s mobile phone while travelling overseas. Critically, under the heading ‘Fees and charges’ section 6.2 provides that when international roaming is activated, TeleChoice will charge the customer the rates set out in the table. The first two activities in the table concern the use of the customer’s mobile phone to make or receive calls while roaming overseas. Here, the judge found that Mr Beveridge’s mobile phone was not used. Rather, the judge found that the SIM card was removed from his phone and manipulated. On the basis of those findings of fact (which were not challenged on the application for leave to appeal), Mr Beveridge did not have any liability under section 6.2 of Appendix A for the calls that were forwarded or diverted. Moreover, call forwarding or diverting of calls is not encapsulated in any of the activities listed in section 6.2. Yet when that type of service is intended to be included, the contract makes specific mention of it. It will be recalled that in the list of value added services for TeleChoices broadband and home phone bundle in Appendix H, the value added services include the special phone feature of call forwarding described in the following terms:
Call Forward transfers calls from your home phone to a number you choose, you can forward your calls to your mobile, pager, answering service or another phone.
[15]See [4] above.
[16]See [5]-[7] above.
[17]See [11] above.
A monthly charge for that feature is listed alongside it. If TeleChoice was to charge for call forwarding as part of its mobile phone service when roaming, then a term to that effect was required. It is absent.
Little attention was paid on the application for leave to appeal to the SMSs that were forwarded. In our view, the contract did not provide for Mr Beveridge to be charged for them. The activity in section 6.2 of Appendix A that deals with SMSs while roaming is described as ‘Sending a standard SMS to a mobile phone service while roaming overseas.’ We read that as limited to SMSs that the customer or someone authorised by them sends. There has to be an act of sending. But here, Mr Beveridge took no part in the forwarding or diverting of the SMS messages.
Finally, TeleChoice pointed to cl 3 of the TeleChoice Postpaid Mobile Service Description as imposing an obligation to pay even where there is unauthorised use of its service.[18] But that provision does not take matters any further – properly construed, it only imposes an obligation to pay charges for the service that has been purchased; relevantly here, international roaming. The charges for that service are specified in section 6.2 of Appendix A. For the reasons given, section 6.2 does not impose any charge for the forwarded calls and SMSs in this case.
[18]See [10] above.
Ground 1 must fail.
Did TeleChoice engage in unconscionable conduct by pursuing the amount of $34,945? (Notice of contention)
Before considering TeleChoice’s second proposed ground of appeal, it is convenient to mention Mr Beveridge’s notice of contention. He contends that if he was contractually bound to pay TeleChoice the sum of $34,945, TeleChoice should not succeed because it was unconscionable for it to pursue the claim and its conduct was in contravention of s 21 of the Australian Consumer Law. In short, Mr Beveridge contends that TeleChoice failed to involve him in the negotiations it had with Telstra Wholesale and sacrificed his interests for its own. Consequently, he argues that in pursuing him for the amount that it paid to Telstra Wholesale, TeleChoice acted unconscionably.
Given the view that we have reached that Mr Beveridge is not liable to TeleChoice under the contract, it is not necessary for us to address the notice of contention. Suffice to say, that we are not persuaded that the judge made any error in finding that TeleChoice did not act unconscionably. It seems to us that in the circumstances of this case it could not be said that Mr Beveridge had any entitlement to be involved in the negotiations between TeleChoice and Telstra. That was a matter relating to the contractual arrangements between them. It was a distinct and separate matter to any entitlement that TeleChoice had against Mr Beveridge which was governed by the contract between TeleChoice and Mr Beveridge.
Should the judge have entered judgment against Mr Beveridge for $78.48? (Ground 2)
As mentioned above, Mr Beveridge admitted liability for $78.48 in respect of charges for calls made by him before his mobile phone was stolen. The judge referred to this fact in his Reasons but said no more about it. TeleChoice’s second ground of appeal concerns the effect of this on the costs orders made against it. The proposed ground of appeal is framed as follows:
His Honour erred in not giving judgment for “the admitted portion” of $78.48. His Honour adverted to it, but did not otherwise deal with it or give any reasons for dismissing that aspect of the claim. His Honour ought to have given judgment for “the admitted portion” of $78.48, at the very least. Because his Honour did not do so, the costs argument miscarried; it proceeded as an application under rule 26.08(4) (which resulted in his Honour ordering TeleChoice to pay costs on a standard basis until 20 October 2014 and thereafter on an indemnity basis). Instead, the costs argument ought to have proceeded under rule 26.08(3) (in which case his Honour would have ordered that TeleChoice receive its costs up until 20 October 2014 on the standard basis, and thereafter TeleChoice pay costs on a standard basis).
TeleChoice recognised that it would be difficult to succeed in obtaining leave to appeal in respect of this ground alone.
Rule 26.08(4) provides that where a claim is dismissed after the plaintiff has unreasonably failed to accept an offer of compromise then, unless the court otherwise orders, the defendant is entitled to his costs on the ordinarily applicable basis until two business days after the offer was made and thereafter on an indemnity basis.[19]
[19]See [22] above.
On the other hand, r 26.08(3) provides:
Where an offer of compromise is made by a defendant and not accepted by the plaintiff, and the plaintiff obtains a judgment on the claim to which the offer relates not more favourable to the plaintiff than the terms of the offer, then, unless the Court otherwise orders—
(a)the plaintiff shall be entitled to an order against the defendant for the plaintiff’s costs in respect of the claim before 11.00 a.m. on the second business day after the offer was served, taxed on the ordinarily applicable basis; and
(b)the defendant shall be entitled to an order against the plaintiff for the defendant’s costs in respect of the claim thereafter taxed on the ordinarily applicable basis.
The debt of $78.48 was admitted. No attention was paid to it. TeleChoice did not seek an order from the judge for judgment in its favour for that amount. Had it done so, quite likely Mr Beveridge would have been quick to pay that amount. Most certainly, before entering judgment, the judge would have given Mr Beveridge the opportunity to pay. When costs were argued before the judge, TeleChoice did not submit that r 26.08(4) had no application because of the admitted debt.
In the circumstances of this case, it was open to the judge to proceed on the basis that the requirements in r 26.08(4) applied. TeleChoice has not identified any error on the part of the judge in the application of that rule.
We would refuse leave to appeal on this ground.
Conclusion
We would grant leave to appeal in respect of ground 1. We would otherwise refuse leave. We would dismiss the appeal.
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