CPA Australia Ltd v Storai
[2015] VSC 442
•25 August 2015
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST
S CI 2014 5771
| CPA AUSTRALIA LTD | Plaintiff |
| v | |
| ROBERT JOHN STORAI | Defendant |
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JUDGE: | Bell J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 23 July 2015 |
DATE OF JUDGMENT: | 25 August 2015 |
CASE MAY BE CITED AS: | CPA Australia v Storai |
MEDIUM NEUTRAL CITATION: | [2015] VSC 442 |
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COMPETITION AND CONSUMER LAW – unconscionable conduct – operation of complaint and discipline system of accountancy body – whether involved supply of ‘services’ - whether any services supplied ‘in trade or commerce’ – appeal – Victorian Civil and Administrative Tribunal declaration of fair-trading jurisdiction in relation to operation of system – whether an error of law – Competition and Consumer Act 2010 (Cth), Sch 2 (the Australian Consumer Law), s 21(1), Victorian Civil and Administrative Tribunal Act 1998 (Vic) s 148(1).
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APPEARANCES: | Counsel | Solicitors |
| For the plaintiff | Mr F O’Loughlin | Ian Cunliffe Legal |
| For the defendant | In person |
HIS HONOUR:
Introduction
CPA Australia Ltd is a professional accounting organisation that operates a system for the certification of its members. Certification represents competence and integrity in the market for the provision of accounting services. Complaint and discipline procedures are integral to the system. As a certified member of CPA, Robert Storai was the subject of three complaints. After a hearing before the CPA disciplinary tribunal, two were found proven and he was severely reprimanded.
Separately, Mr Storai issued an application in the Victorian Civil and Administrative Tribunal claiming damages in the sum of $250,000 against three CPA employees. In that application, he relevantly alleged that those employees (not CPA) had acted unconscionably contrary to s 21(1) of the Australian Consumer Law in relation to the provision of services in trade and commerce. The alleged conduct concerned the investigation of the complaints and the conduct of the disciplinary hearing.
On the application of the employees and CPA (as a joined party), VCAT struck out Mr Storai’s proceeding, subject to a right of reinstatement, upon the basis that it could not succeed against the employees. It was accepted that, in the reinstated proceeding, he would formulate a claim against CPA that, contrary to s 21(1), it had acted unconscionably in relation to the conduct of the disciplinary hearing. Therefore VCAT considered the parties’ submissions as to whether it would have jurisdiction in relation to that claim. As now relevant, VCAT declared that it had that jurisdiction.
Pursuant to s 148(1)(b) of the Victorian Civil and Administrative Tribunal Act 1998 (Vic), CPA now appeals against that declaration. It contends that VCAT erred in law in deciding that the operation of the disciplinary tribunal system constituted a ‘service’ that was provided ‘in trade or commerce’ to Mr Storai, as specified in s 21(1). Voluntarily, Mr Storai has not exercised the right of reinstatement pending the result of the appeal.
Proceeding before CPA disciplinary tribunal
Three complaints against Mr Storai were referred to the CPA disciplinary tribunal:
(1)A complaint by a conveyancer that Mr Storai, in the course of his business as an accountant, had used insulting and offensive language in a telephone conversation with her.
(2)A complaint by that conveyancer that Mr Storai, in the course of that business, had used insulting and offensive language in a written communication with her.
(3)A complaint by CPA that Mr Storai, during the investigation of those complaints, had used insulting and offensive language in a written communication with its staff.
Each of the complaints was that Mr Storai’s conduct had been ‘derogatory to, or not in the best interests’ of CPA or its members contrary to art 39(a)(ii)B2 of the CPA Constitution (see below). It was the first complaint that was found not proven. The penalty of a severe reprimand was imposed in relation to the second and third.
Proceeding before VCAT
As we have seen, Mr Storai’s application to VCAT was brought under s 21(1) of the Australian Consumer Law. It relevantly provides that a person must not, ‘in trade or commerce’ and in connection with the supply of ‘services’ engage in conduct that is ‘unconscionable’.
Mr Storai’s claims before VCAT were made in various documents and summarised in his points of claim dated 24 July 2014. Although his application was initially brought against the three employees, CPA was later joined by the tribunal as an interested person pursuant to s 60(1)(b) of the VCAT Act. By virtue of s 59(1)(a)(iii), it thereby became a party to the proceeding. In that capacity, orders may be made against it in any reinstated proceeding.
The orders made by VCAT were:
1. The Applicant’s Points of Claim dated 24 July 2014 are struck out.
2.The Tribunal declares that, on the case as articulated by the Applicant in his initiating Application filed 5 March 2014, the documents filed on 7 May 2014 purportedly pursuant to the Order made 11 April 2014, and the Points of Claim dated 24 July 2014, the Tribunal does not have jurisdiction to hear and determine claims against the Respondents under sections 21 and 61 of the Australian Consumer Law, for breach of contract, or for breach of the Interested Party’s By-Law 5.
3.The costs of the Respondents are reserved but the proceeding against them is otherwise struck out.
4.The Tribunal declares that it has jurisdiction to hear and determine claims against the Interested Party set out in paragraphs 13 and 14 and 18A‑22 of the Points of Claim dated 24 July 2014, namely that the Interested Party:
(a)acted unconscionably in that it allegedly allowed one Michael Denham to sit in on the closed deliberations of the Disciplinary Tribunal;
(b)breached its obligation to investigate a complaint by the Applicant;
(c) allegedly breached its obligation to keep records.
5.The Tribunal declares the Applicant’s allegations referred to in paragraph 4(b) above – that the Interested Party breached its obligation to investigate a complaint by the Applicant – to be unsustainable. There was no complaint by the Applicant.
…
7.The principal registrar is directed to list a directions hearing on a date to be fixed, at which the Tribunal will hear the parties on:
(a) the costs of the applications heard on 3 September 2014, and
(b)whether the Applicant intends to proceed with claims against the Interested Party and if so what directions are appropriate.
As you can see, the orders struck out Mr Storai’s points of claim (cl 1) and the proceeding (cl 3) as formulated but declared certain claims would be within jurisdiction (cl 4). The claim in para 4(b) was found to be unsustainable (cl 5). That conclusion also applies to the claim in para 4(c), which relates to the same ‘complaint’. Therefore, the claim in para 4(a) is the only one outstanding. This is the claim that Mr Storai wishes to pursue in a reinstated proceeding.
CPA brought its appeal to this court under s 148(1)(b) of the VCAT Act upon a number of grounds of error of law. However, the central questions are whether the operation of CPA’s complaint and discipline system constitutes a ‘service’ within the meaning of s 21(1) of the Australian Consumer Law and whether any such service was supplied ‘in trade or commerce’ within the meaning of the opening words of that provision. These grounds subsume all the other grounds.
Reasons for decision of VCAT
In relation to the ‘service’ issue, the decision of VCAT contains a well-reasoned analysis of whether the operation of CPA’s complaint and discipline system fell within that term. It includes consideration of the main authorities, including Adamson v New South Wales Rugby League Ltd,[1] IW v City of Perth[2] and Obeid v Australian Competition and Consumer Commission.[3] Making reference to relevant articles of the CPA By-Laws and those authorities, VCAT gave this explanation for concluding that the operation of that system constituted the provision of services:
There are aspects of By-Law 5 which confer a benefit on Mr Storai, even though as the ‘respondent’ to a Complaint that may seem ironic. First, the opportunity to respond to the Complaint under paragraph 5.2, where that response might result in the Complaint being determined to be Unviable without a disciplinary hearing. This may be contrasted to the criminal law, in which accused persons are not consulted about whether or not they should be charged. Second, the right under paragraph 5.3(c) to any determination that there is a case to answer being made by the Chief Executive Officer ‘acting reasonably’. Third, the right to such a determination only being made on the basis of an investigation in which he had the right to respond. Fourth, the rights to a procedurally fair process before the Disciplinary Tribunal, under paragraphs 5.4–5.7.
I do not perceive these rights to be akin to the opportunities to train and be coached, which were held not to amount to ‘services’ in Adamson. Instead, I see them as elements of the CPA having to give proper consideration to the Complaint, of the kind which was held to be an element of ‘services’ in IW v City of Perth and within the ‘benefits, privileges or facilities’ in the definition of ‘services’ in the Australian Consumer Law and as discussed in Obeid. These rights to a fair process are within ‘the notion(s) of some assistance or accommodation being made available’ to which Wilcox J referred and which Farrell J considered to be undoubtedly correct.
[1](1991) 31 FCR 242 (Sheppard, Wilcox and Gummow JJ) (‘Adamson’).
[2](1997) 191 CLR 1 (Brennan CJ, Dawson, Toohey, Gaudron, McHugh, Gummow and Kirby JJ) (‘IW’).
[3][2014] FCA 839 (8 August 2014) (Farrell J) (‘Obeid’).
In the relation to the ‘trade or commerce’ issue, VCAT appears to have proceeded upon the basis that CPA had conceded that, if services were supplied, they were supplied ‘in trade or commerce’. Having read the submissions of the parties and the transcript of the hearing, I cannot conclude that it was open to VCAT to do so. CPA is therefore entitled to ventilate this question on appeal. I utter not a word of criticism of VCAT for thinking that this concession had been made because it was lulled into that belief by the parties in the way that the case was run.
Now to the central questions in the appeal, beginning with what is a ‘service’.
Does CPA’s complaint and discipline system constitute a service?
The issue here is whether the operation of the system comes within the supply of ‘services’, properly interpreted, as specified in s 21(1) of the Australian Consumer Law.[4] Section 21(1) relevantly provides:
[4]The Australian Consumer Law in Schedule 2 to the Competition and Consumer Act 2010 (Cth) and applies in Victoria by virtue of ss 7-9 of the Australian Consumer Law and Fair Trading Act 2012 (Vic): see generally Murphy v State of Victoria (2014) 313 ALR 546, 571-3 [83]-[88] (Nettle AP, Santamaria and Beach JJA) (‘Murphy’)..
A person must not, in trade or commerce, in connection with:
(a)the supply or possible supply of goods or services to a person (other than a listed public company); or
…
engage in conduct that is, in all the circumstances, unconscionable.
There is a definition of ‘services’ in s 2(1):
Services includes
(a)any rights (including rights in relation to, and interests in, real or personal property), benefits, privileges or facilities that are, or are to be, provided, granted or conferred in trade or commerce; and
(b)without limiting paragraph (a), the rights, benefits, privileges or facilities that are, or are to be, provided, granted or conferred under:
(i)a contract for or in relation to the performance of work (including work of a professional nature), whether with or without the supply of goods; or
(ii)a contract for or in relation to the provision of, or the use or enjoyment of facilities for, amusement, entertainment, recreation or instruction; or
(iii)a contract for or in relation to the conferring of rights, benefits or privileges for which remuneration is payable in the form of a royalty, tribute, levy or similar exaction; or
(iv) a contract of insurance; or
(v)a contract between a banker and a customer of the banker entered into in the course of the carrying on by the banker of the business of banking; or
(vi) any contract for or in relation to the lending of money;
but does not include rights or benefits being the supply of goods or the performance of work under a contract of service.
As was held by Allsop CJ, Mansfield and Middleton JJ in Obeid v Australian Competition and Consumer Commission,[5] the definition of ‘services’ in s 2(1) of the Australian Consumer Law is not exhaustive.[6] Therefore, held their Honours, when ‘interpreting the term “services”, unless a contrary intention appears in the substantive provisions being applied, the ordinary meaning of the term “services” is to be adopted along with the specified services in the definition itself’.[7] In the present case, the CPA complaint and discipline system does not come within the extended definition of ‘services’. Therefore it is the ordinary and natural meaning that is applicable.
[5](2014) 226 FCR 471.
[6]Ibid 487 [52].
[7]Ibid 487 [53].
According to the Macquarie Encyclopedic Dictionary,[8] the word ‘service’ means (relevantly):
n. 1. an act of helpful activity. 2. the supplying or supplier of any articles, commodities, activities, etc., required or demanded.[9]
Under the general category of ‘IV. Help, benefit, advantage, use’, the Oxford English Dictionary[10] defines ‘service’ to mean:
a. The action of serving, helping, or benefiting; conduct tending to the welfare or advantage of another.[11]
[8]Margaret McPhee and Susanne Read (eds), Macquarie Encyclopedic Dictionary (Macquarie Dictionary Publishers, 2nd ed, 2010).
[9]Ibid 1132.
[10]J.A Simpson and E.S.C. Weiner (eds), The Oxford English Dictionary (Clarendon Press, 2nd ed., Vol. XV, 1989).
[11]Ibid 36.
Of this ordinary and natural meaning of the word, Wilcox J (Sheppard and Gummow JJ agreeing) said in Adamson:
As a reference to any standard dictionary will show, although the word ‘services’ has a wide application, it imports always the notion of some assistance or accommodation being made available by one person to another.[12]
The court held that the mere freedom to negotiate a contract with a person or the opportunity to enter into a service agreement did not constitute a service within s 45(3) of the Trade Practices Act 1974 (Cth) as it did not involve the provision of any assistance or accommodation.[13]
[12](1991) 31 FCR 242, 262.
[13]Ibid.
In the leading case of IW, a relevant issue was whether giving or refusing planning approval in the exercise of discretion by a local government council constituted the provision of a service for the purposes of anti-discrimination legislation. Brennan CJ and McHugh J held that ‘services’ had a ‘wide’ meaning[14] but did not include the exercise of statutory discretion.[15] On the other hand, Dawson and Gaudron JJ held that ‘services’ was a word of ‘complete generality’ and included the administration and enforcement of the planning system.[16] Toohey J agreed,[17] as did Kirby J.[18] Gummow J said the term ‘service’ had a ‘wide and varied’ meaning.[19] The issue was not whether the council was exercising statutory discretion or providing a service, because:
There is no dichotomy here between the discharge of statutory functions and the provision of services to those seeking the discharge of these functions.[20]
In his Honour’s view, the council did provide services in exercising the discretion.[21]
[14](1997) 191 CLR 1, 11.
[15]Ibid 15.
[16]Ibid 23.
[17]Ibid 27.
[18]Ibid 75.
[19]Ibid 41.
[20]Ibid 44.
[21]Ibid 44-5.
In Obeid (at first instance) the applicant sought to have set aside two notices issued by the ACCC pursuant to s 155(1)(c) of the Competition and Consumer Act 2010 (Cth). The notices were issued in respect of alleged unlawful anti-competitive conduct. The conduct alleged was entering a contract, arrangement or understanding that imposed restrictions upon the parties in relation to making applications for commercially valuable mining approvals under legislation and regulations. At issue was whether the contract, arrangement or understanding related to the supply of ‘services’. That turned on a characterisation of the operation of the regulatory scheme pursuant to which the approvals were obtained.
Following Adamson and IW, Farrell J held that ‘services’ was a wide word that could encompass ‘the Minister’s consent and the right to apply for an exploration licence’.[22] In her Honour’s view, each of the consent and the right was ‘undoubtedly a “helpful act” or “accommodation” which the successful applicant … would derive’.[23] The appeal was dismissed, including on that point.[24]
[22]Obeid [2014] FCA 839 (8 August 2014) [87].
[23]Ibid.
[24]Obeid v Australian Competition and Consumer Commission (2014) 226 FCR 471, 487 [52]ff (Allsop CJ, Mansfield and Middleton JJ).
I do not accept the submission made for CPA that cases like IW and Obeid are of practically no assistance in the present context. True, IW was an anti-discrimination case in which (among other things) government-provided services were included in the definition of ‘services’.[25] But the emphasis in all of the judgments upon the wide ordinary and natural meaning of the word ‘services’, and the emphasis in the majority judgments upon whether a benefit was supplied to the recipient (however else the relevant activity may also be characterised), is equally applicable to the meaning of the word in s 21(1) of the Australian Consumer Law. It is also true that, in Obeid, the statutory mining approval found to constitute a commercial benefit was different to the operation of a complaints and discipline system. But the conclusion reached in Obeid was the product of the kind of benefit-focussed characterisation that must be undertaken in this case. IW and also Obeid show that it is not that the provider is government or private, or that the legal framework is public or civil, that is critical but rather whether some assistance or accommodation is provided to the recipient upon a proper characterising thereof.
[25]Equal Opportunity Act 1984 (WA) s 4(1).
In the same way, some assistance is provided by Trade Practices Commission v Legion Cabs (Trading) Co-operative Society Ltd.[26] In a prosecution proceeding under the Trade Practices Act, the Commission contended that Legion Cabs had engaged in exclusive dealing contrary to s 47 of that Act. It was contended that it was a condition of the supply of radio facilities by Legion Cabs to its members that they purchased petrol from a particular supplier. At issue was whether the provision of the radio facility constituted the supply of ‘services’ by Legion Cabs to its members or, rather, was an entitlement by virtue of membership. Applying the broad ordinary and natural meaning of the word, Franki J held that ‘the supply of the radio service by [Legion Cabs] falls comfortably within the words “… the supply … of … service”’.[27] Further, his Honour held that Legion Cabs had supplied the service to members as an entity distinct from the members.[28]
[26](1978) 35 FLR 372 (‘Legion Cabs’).
[27]Ibid 380.
[28]Ibid 383.
This early case preceded Adamson, IW and Obeid but its reasoning is consistent with the principles discussed therein. Legion Cabs demonstrates that, when considering whether facilities provided by a trade association to its members constitutes ‘services’, it is important to characterise the benefit provided without being unduly influenced by the co-operative setting.
In Johnstone v Victorian Lawyers RPA Ltd,[29] a solicitor sought an injunction to restrain the respondent from investigating a complaint made against the solicitor in accordance with the complaint and disciplinary system established by the Legal Practice Act 1996 (Vic). He alleged that the investigation constituted unconscionable conduct contrary to s 51AA of the Trade Practices Act.[30] The application was refused by Sundberg J who held that the investigation was not conducted in trade or commerce.[31] I will consider this judgment further in that context. It does not assist in relation to the question whether the operation of the CPA complaint and discipline system constitutes a service.
[29](2003) 132 FCR 411.
[30]Section 51AA provided:
A corporation must not, in trade or commerce, engage in conduct that is unconscionable with the meaning of the unwritten law, from time to time, of the States and Territories.
[31](2003) 132 FCR 411, 416 [14].
CPA submitted that, contrary the view of the tribunal, the operation of the complaint and discipline system did not constitute the conferral, or promise of conferral, of any sort of facility, accommodation or assistance on Mr Storai. Rather, it constituted the investigation and determination of a complaint under the By-Laws of the CPA. Therefore the operation of the system did not meet the test stated by Wilcox J in Adamson. That submission must be rejected.
To begin, CPA is a company limited by guarantee that, by art 5 of its Constitution, was established for this object:
The objects of the Company are to promote excellence, enterprise and integrity amongst Members and the financial, accounting and business advisory professions generally, to educate Members with respect to their duties and responsibilities as members of the financial, accounting and business advisory professions, and to prescribe the highest standards of ethics and professional conduct for Members. In fulfilling these objects, the Company will:
(a)take an interest in legislative, economic and social matters affecting the Company’s objects;
(b) affiliate with organisations with similar objects; and
(c)do all such other things incidental or conducive to the attainment of the Company’s objects.
At all material times, Mr Storai was a member of CPA in which capacity, by art 10(a) of the Constitution, he ‘agree[d] to be bound by [the] Constitution, the By-Laws and the Applicable Regulations, in each case as amended from time to time’.
Under art 52, the CPA board has power with respect to the conduct and discipline of members, more particularly:
(e)to prescribe standards of behaviour required of Members and to regulate the conduct of Members, including the investigation of the conduct of Members and the imposition of penalties on Members;
In regulating the conduct of members pursuant to art 52(e), the board may consider whether, contrary to art 39(a)(ii)B, he or she, while a member, has been guilty of:
1) dishonourable practice in any profession or undertaking; or
2)conduct which is derogatory to, or not in the best interests of the Company or its Members.
If of that opinion, the board may, by art 39(b), impose a number of penalties, including:
(i)forfeiture of membership on such terms and conditions as to Readmission (or non-Readmission) as may be prescribed;
(ii)suspension from membership for any period not exceeding 5 years on such terms and conditions as to Reinstatement as may be prescribed;
(iii) a fine not exceeding the Maximum Fine;
(iv) admonishment;
(v) a severe reprimand;
(vi) for such period and upon such terms as may be imposed:
A.cancellation or suspension of any certificate, privilege, right or benefit issued or granted to the Member; and/or
B.prohibition on the use of any designation permitted to be used by the Member.
By art 39(d), members may be required to pay the costs of investigating and determining complaints, as follows:
The Board may require a Member to pay all or any of the costs and expenses (not exceeding the Maximum Costs) reasonably incurred by the Company in the investigation of and the making of the Determination in relation to any matter arising under Article 39(a) and, except where the Determination is subject to an appeal (pending which the time specified in this Article 39(d) shall not run) or the Board otherwise resolves, in default of such payment within 30 days, or such further period as the Board shall allow, the membership of that Member shall be forfeited. No appeal shall be available to a person whose membership is forfeited pursuant to this Article 39(d).
As can be seen, this article makes provision for costs-recovery, not fee-for-service.
Pursuant to art 39(d), CPA rendered an invoice to Mr Storai for $597.25 (including GST) in respect of ‘Disciplinary Hearing Costs’, which he paid. The summary attached to the invoice itemised the costs thus:
Cost excluding GST GST Total including GST 1 Service
Delivery of Casebooks to Disciplinary Tribunal
138.20 13.82 152.02 Personal Service on Member 45.45 4.55 50.00 2 Printing
Casebooks68.39 6.84 75.23 3 Transcription
Cost of Transcribed Record
290.91 29.09 320.00 Sub total 542.95 54.30 Total 597.25
As can also be seen, these amounts were modest and based on recovering costs, not a fee for service.
Article 52(d) gives the board a power to make and vary By-Laws, which it has exercised. Among other things, the By-Laws deal with membership, continuing professional development and regulation of professional conduct. Using the power of delegation in art 54(a) of the Constitution, the board has delegated disciplinary powers to the disciplinary tribunal established under the By-Laws.[32]
[32]By-Laws, art 1.1 (definition of ‘Disciplinary Tribunal’).
Part 5 of the By-Laws contains a comprehensive scheme for dealing with complaints in relation to professional conduct. As relevant here, the elements of the scheme are making a complaint and its initial assessment (art 5.1), investigating a complaint (art 5.2), assessing whether there is a case to answer (art 5.3), referring complaints to the disciplinary (or other) tribunal (art 5.4), determination of the complaint, including by the disciplinary tribunal (art 5.5) and on appeal (on the specified limited legal grounds) to the Appeals Tribunal (art 5.6).[33]
[33]Mr Storai had a right of appeal against the determination of the disciplinary tribunal but he did not exercise it.
The provisions of pt 5 are very detailed and it is not necessary to go into all of the various elements of the scheme. As relevant here, I note:
·complaints may be made by any person or the manager of professional conduct of CPA (art 5.1);
·complaints may be made about conduct that contravenes the standards in art 39(a) of the Constitution (pt 5 generally);
·the investigation, assessment and referral procedures are quite formalised and may be compared with those applied in statutory professional regulatory processes (arts 5.2, 5.3 and 5.4);
·likewise the disciplinary tribunal and appeal tribunal procedures are quite formalised involving hearing and determination of the complaint and any appeal (arts 5.5 and 5.6).
In the present case the complainant for the first and second complaints was the conveyancer and the complainant for the third complaint was CPA. The complaints were not made by a client in respect of accountancy work performed by Mr Storai, not that I think that would make any difference, for it would not. Each of the complaints alleged that Mr Storai had engaged in misconduct as specified in art 39(a)(ii)B2 of the Constitution. The complaints were investigated, assessed and referred to the disciplinary tribunal in accordance with pt 5 of the By-Laws. That resulted in the hearing before the disciplinary tribunal.
At that hearing, Mr Storai was legally represented. The CPA presented its case against him and his legal representative was heard in opposition. After retiring to consider the evidence and submissions, the tribunal announced its determination and imposed the penalty to which I have referred. These actions were all taken in accordance with art 5.5 of the By-Laws.
Each member of CPA has an individual interest, and members generally have a collective interest, in the maintenance of public confidence in the competence and integrity of CPA accountants. Under the CPA Constitution and By-Laws, the operation of the CPA complaint and discipline system is an important means of maintaining that confidence. Participation by all members of CPA in the system is compulsory as a condition of membership. Consumers and businesses in the market place would see this to be a central feature of the certification of competence and integrity that CPA provides to member accountants. All members of CPA, individually and collectively, obtain a valuable benefit from the operation of the system because it helps to ensure public confidence in the quality of that certification and therefore the CPA ‘brand’.
So conceived, the operation of the system involves the delivery of complaint-handling and complaint-determining services to a member who is the subject of complaint. It matters not that participation in the system is compulsory for members because all members voluntarily join CPA upon the condition that they will accept provision of the service, and participate in the system, when a complaint is made. The individual member obtains the substantial benefit of being able to hold out to clients and the business community that, as a certified CPA accountant, his or her work is supported by a professional complaint and discipline system that complainants can access. Further, where a complaint is made, as in Mr Storai’s case, the member obtains the substantial benefit of having it investigated, assessed, referred and determined according to the highly-developed procedures specified in the Constitution and By-Laws.
It is not significant that the complaint and discipline system is operated by CPA (a company limited by guarantee and incorporated for particular professional membership-based objects rather than for profit) or that complaints may be made (for example) by clients, other accountants or traders or CPA. It is the character of the benefit afforded and not the identity of the provider or the complainant that is critical. Nor is it significant that, as a member, Mr Storai paid CPA membership fees. The payment of such fees offers little (if any) insight into the character of the benefit provided to members by the operation of the system. Lastly, it is not significant that CPA charged Mr Storai for disciplinary hearing costs. These costs were calculated on a cost-recovery and not a fee-for-service basis and likewise provide little (if any) insight into the character of the benefit.
In my view, the operation of the CPA complaint and discipline system provides a substantial benefit to members of the CPA generally and to members who are the subject of complaint specifically. In the present case, the operation of that system involved the provision of ‘services’ to Mr Storai within the meaning of that term in s 21(1) of the Australian Consumer Law. VCAT did not err in law in so deciding.
Is CPA’s complaint and discipline system operated in trade or commerce?
The issue here is whether the operation of the system involved the supply of services ‘in trade or commerce’ (emphasis added) as specified in s 21(1) of the Australian Consumer Law. I have emphasised the word ‘in’ because it highlights the critical issue.
The content of the requirement that the service be supplied ‘in trade or commerce’ was explained in Concrete Constructions (NSW) Pty Ltd v Nelson.[34] Making a deliberate choice between a wide and a narrow view of that expression,[35] the High Court adopted the narrow view. As explained by Mason CJ, Deane, Dawson and Gaudron JJ, to be ‘in trade or commerce’ it was necessary for the conduct (as it was in that case) to be ‘itself an aspect or element of activities or transactions which, of their nature, bear a trading or commercial character’.[36]
[34](1990) 169 CLR 594 (‘Concrete Constructions’).
[35]Fletcher v Nextra Australia Pty Ltd (2015) 229 FCR 153, 165 [31] (Middleton, McKerracher and Davies JJ), citing Robin Pty Ltd v Canberra International Airport Pty Ltd (1999) 179 ALR 449, 459 [44] (Gyles J).
[36](1990) 169 CLR 594, 603. It was held in Murphy that the narrow meaning of ‘in trade or commerce’ adopted in Concrete Constructions in relation to the Trade Practices Act was equally applicable to that expression in the Australian Consumer Law: (2014) 313 ALR 546, 574 [90]-[94] (Nettle AP, Sanatamaria and Beach JJA).
It follows that it will not be sufficient for the conduct of a service to be ‘in relation to’ or ‘in connection with’ trade or commerce.[37] Nor will it be sufficient to identify the conduct or service, note that the relevant corporation is generally engaged in trade or commerce, and then search for a link between the two.[38] The focus of attention must be upon whether the conduct or services in question are trading or commercial in character in and of themselves.
[37]Fletcher v Nextra Australia Pty Ltd (2015) 229 FCR 153, 165 [31] (Middleton, McKerracher and Davies JJ), citing Toben v Jones (2012) 298 ALR 203, 211[40] (Yates J).
[38]Hearn v O’Rourke (2003) 129 FCR 64, 73 (Dowsett J) (dissenting) (the judgment of Dowsett J was approved in Village Building Co Ltd v Canberra International Airport Pty Ltd (2004) 139 FCR 330, 339 [44] (French, Sackville and Conti JJ)).
So, in Plimer v Roberts,[39] the activity of organising lectures for which the public was charged, plus that of producing post-lecture publications for sale, was (assumed to be) ‘in trade or commerce’. The question was whether a lecture by an unpaid presenter came within that term. Davies, Branson and Lindgren JJ held that it did not. In the leading judgment, Lindgren J said that, following Concrete Constructions, ‘in trade or commerce’ meant ‘in (as part of) a particular trading or commercial dealing, transaction or activity’.[40] While the lectures were provided to the public in the organiser’s trade or commerce, the presenter did not deliver the lecture therein. As he was unpaid and not part of the organiser’s business, his presentation was not in trade or commerce at all.[41]
[39](1997) 80 FCR 303.
[40]Ibid 323.
[41]Ibid 326-7.
Now a trading or professional association constituted as a company limited by guarantee may be a trading corporation within the meaning of s 51(xx) of the Constitution; therefore it may be amenable to federal trade practices regulation.[42] But it is a different question whether such an association has, in particular circumstances, engaged in conduct, or supplied services, in trade or commerce. That is the issue here.
[42]The Australian Beauty Trade Suppliers Ltd v Conference and Exhibition Organisers Pty Ltd (1991) 29 FCR 68, 73 (Morling, Wilcox and Hill JJ); Shahid v The Australasian College of Dermatologists (2007) 72 IPR 555, 569 [36] (Nicolson J).
The need to focus specifically upon the activities in question is usefully demonstrated by Monroe Topple and Associates Pty Ltd v Institute of Chartered Accountants in Australia,[43] a case with similarities to the present. The respondent institute (‘ICAA’) is one of two peak professional bodies representing and certifying accountants in Australia. CPA is the other. The circumstances were that the applicant education provider brought proceedings alleging that ICAA had engaged in anti-competitive and unconscionable conduct contrary to the Trade Practices Act in relation to the provision of education services to applicants seeking certification.
[43](2001) ATPR (Digest) ¶46-212 (Federal Court of Australia) (‘Monroe Topple’).
Applying Concrete Constructions, Lindgren J found that ICAA had provided the education services in trade or commerce:
In my opinion, ICAA supplies the education and training it provides in connection with its CA Program pursuant to its Charter ‘in trade or commerce’. It seems to me that this conclusion is compelled by the fact that the ICAA sells those services to many students for a very substantial monetary return on a highly organised, systematic and ongoing basis. While it may not be necessary that all of those features be present in order to satisfy the expression ‘in trade or commerce’, the presence of all of them makes it clear that the expression is satisfied in this case.[44]
In his Honour’s view, it was not relevant that the training was provided to intending members of the ICAA pursuant to its Charter,[45] nor that it was provided without making a profit.[46] However, the application was dismissed because his Honour found that anti-competitive and unconscionable conduct had not occurred.
[44]Ibid 52,340 [139].
[45]Ibid 52,341 [146].
[46]Ibid 52,343 [150].
The appeal to the Full Court of the Federal Court of Australia was dismissed.[47] In the leading judgment, Heerey J (Black CJ and Tamberlin JJ agreeing) made this general observation about the organisation of the accounting profession in this country:
In Australia there is no statutory regulation of the accountancy profession or restriction on the use of the description ‘accountant’, although some of the functions carried on by accountants are subject to statutory regimes such as those dealing with company liquidators, bankruptcy trustees, auditors and tax agents. However, the badge of membership of a professional accounting body is important in the market for the provision of accounting services.[48]
I have drawn on this observation in this judgment because it provides useful general context for the present case. On the trade and commerce issue, his Honour expressed agreement with the conclusion of Lindgren J:
His Honour, in my view correctly, rejected the argument that because the Institute was a non-profit organization and conducted its PY Program and CA Program education only seeking to recover costs it was necessarily not conducting those activities in trade or commerce. What is important in this context is not the profit making or non-profit making status of the entity or whether, for whatever reason, it does or does not obtain a profit or desire to make a profit from the activities in question. Rather, attention must be focused on the nature of the activities themselves. The expression ‘in trade or commerce’ in Part IV of the Act, as well as in s 52, ‘can be construed as referring only to conduct which is itself an aspect or element of activities or transactions which, of their nature, bear a trading or commercial character’[49] … The provision, for reward, of training and education services, if carried on systematically, is a trading and commercial activity. Everyday examples are the provision of education and training in relation to foreign languages, or English, or skills such as cooking or photography, or sports such as golf or tennis.[50]
[47]Monroe Topple and Associates Pty Ltd v Institute of Chartered Accountants in Australia (2002) 122 FCR 110 (Black CJ, Heerey and Tamberlin JJ).
[48]Ibid 114 [16].
[49]Concrete Constructions (1990) 169 CLR 594, 603 (Mason CJ, Deane, Dawson and Gaudron JJ).
[50]Ibid 131 [78].
Following Monroe Topple and having regard to the objects of CPA, the evidence about its wide-ranging activities and its importance in the market for accountancy services, I would be prepared to assume that it is a trading corporation within s 51(xx) of the Constitution and that many of its particular activities are carried out ‘in trade or commerce’ because they are, in of themselves, trading or commercial in character. While this assumption provides useful general context for the examination of the question whether the CPA complaint and discipline system operates ‘in trade or commerce’, it does not, for the reasons I have given, determine it.
On the other side of Monroe Topple is Shahid v The Australasian College of Dermatologists.[51] The applicant was a candidate for a medical position that was selected according to a procedure operated by the College. She alleged (among other things) that the College had engaged in misleading and deceptive conduct in the provision of services contrary to s 52 of the Trade Practices Act. The elements of the procedure were: providing information to potential candidates, inviting candidates to apply, publishing a training handbook with selection criteria, conducting an interview process, maintaining an appellant process and engaging in a debriefing exercise.[52] Nicholson J held that these activities were not of themselves ‘of a trading or commercial character’,[53] even though applications were sought by advertising and modest fees were charged.[54]
[51](2007) 72 IPR 555 (Nicholson J).
[52]Ibid 575 [51].
[53]Ibid 576 [53].
[54]Ibid 576 [54].
Also on the other side of Monroe Topple were Johnstone and Markan v Bar Association of Queensland.[55] As we have seen, it was held in Johnstone (that it was not arguable) that the statutory complaint and discipline system for lawyers in Victoria was not operated in ‘trade or commerce’. In reaching that conclusion, Sundberg J stated:
In my view it is clear beyond serious argument that the despatch by the respondent of the letter of 11 September was not conduct in trade or commerce. Once the respondent had decided not to dismiss the complaint under s 141 of the Legal Practice Act, it came under a mandatory obligation, imposed by s 146, to investigate the complaint. In sending the letter it was discharging that obligation. The letter was part of the respondent's function of investigating complaints against practitioners and firms. The letter does not have a commercial or trading character. It is the letter of a body, which may be assumed to be a ‘corporation’ as defined in s 4 of the Trade Practices Act, exercising a regulatory function imposed on it by statute in relation to the professional conduct of legal practitioners.[56]
Johnstone was followed in Markan,[57] a case involving the equivalent statutory complaints and disciplinary system for barristers in Queensland. I think the reasoning of Sundberg J does point the correct result in the present case in relation to the ‘in trade and commerce’ issue.
[55][2013] QSC 146 (7 June 2013) (Atkinson J) (‘Markan’).
[56](2003) 132 FCR 411, 416 [14].
[57][2013] QSC 146 [59].
I turn now to the application of these principles. In doing so I note that, as here relevant, the requirement in s 21(1) of the Australian Consumer Law is that the service (in my view) constituted by the operation of the CPA complaint and discipline system be supplied ‘in trade or commerce’. The service does not have be supplied in any particular trade or commerce and the various possibilities have to be considered.
The analysis needs to take account of a particular complication. The complication is that the disciplinary hearing dealt with the three complaints made but the claim (that would be pursued) in the VCAT proceeding is that CPA engaged in unconscionable conduct in that hearing. On one view, that conduct stands entirely removed from the communications between the conveyancer and Mr Storai, and between him and CPA staff, that gave rise to the complaints. However, to examine whether CPA’s conduct in the hearing into the complaints was, in itself, trading or commercial in character without examining the character of the underlying complaints would, I think, be too narrow an inquiry. The possibilities now to be examined reflect this conclusion.
Having considered the evidence, I will examine the issue by reference to whether the CPA complaint and discipline system was operated ‘in [the] trade or commerce’ of:
(1) The conveyancer who made the two complaints.
(2) Mr Storai.
(3) CPA.
In relation to the first possibility, the conveyancer and Mr Storai were in communication in the course of a business transaction in their respective capacities as conveyancer and accountant. The communications giving rise to the two complaints were made in that trade and commerce because it formed a particular part thereof. Therefore the communications were a particular part of the conveyancer’s trade and commerce.
However, the complaints made to CPA by the conveyancer were not made in the conveyancer’s trade and commerce. They were made in the operation of the CPA complaint and discipline system. The operation of that system in relation to the conveyancer’s complaints did not form part of the conveyancer’s trade and commerce. The conveyancer was not, as a service provider, in the business of selling access to that system for fee or reward – that example is far removed from the present case. In no sense did the conveyancer, as a consumer, ‘purchase’ the service that was provided through the operation of the system – that example too is far removed. The conveyancer was simply an individual complainant. Although making the complaint was connected to the conveyancer’s trade and commerce as a conveyancer, the requirement is that the activity itself be ‘in trade and commerce’. Making the complaints and participating in the complaint and discipline system was not, in and of itself, part of the conveyancer’s trade and commerce. That conclusion applies a fortiori in relation to CPA’s conduct in the disciplinary hearing.
In relation to the second possibility, this should be examined at the general level of Mr Storai’s professional work as a CPA accountant and the particular level of his communications with the conveyancer.
As the general level, as I have explained, accountants collectively and Mr Storai individually have a strong commercial and professional interest in the operation of the CPA complaint and discipline system. It is an important component of being certified as a member of CPA and practising in trade and commerce as a CPA accountant. But, because the term ‘in trade and commerce’ requires that the particular activity be trading or commercial in character, a general connection between the operation of the system and the practice of CPA accountants collectively, and Mr Storai individually, in the trade and commerce of accounting is not sufficient.
At the particular level, as I have also explained, the communications between the conveyancer and Mr Storai occurred in the course of the conveyancer’s trade and commerce as a conveyancer. The communications also occurred during the course of Mr Storai’s trade and commerce as an accountant. The complaints made by the conveyancer about the communications, and Mr Storai’s response thereto under the CPA’s complaint and discipline system, were connected with his trade and commerce as an accountant but, when properly characterised, were not of themselves trading or commercial in character. The complaints gave rise to a new transaction, as it were, in which the parties were the conveyancer, Mr Storai and CPA (in various roles). The transaction that occurred between these parties obtains its character from the operation of the CPA complaint and handling system, not the business setting in which the complained-of communications occurred. As with the conveyancer, in no sense did Mr Storai ‘purchase’ the service that was provided by the operation of that system. Neither his CPA membership fees, nor the amount he was charged by way of cost-recovery in respect of the disciplinary tribunal hearing, constituted a ‘price’ (directly or indirectly) for the delivery to him of that service. That conclusion also applies a fortiori in relation to CPA’s conduct in the disciplinary hearing.
The same conclusion may be reached in relation to the complaint made by CPA itself. The relevant communication to CPA staff obtains its character from the operation of the complaint and discipline system of which it formed part. The communication was not made in Mr Storai’s trade and commerce. Nor was CPA’s conduct in the disciplinary hearing.
In relation to the third possibility, CPA does not operate the complaint and discipline system as a commercial activity. Access to the system is not sold in the market place. Complainants are not charged to make a complaint and have it dealt with. Nor are accountant members of CPA charged a fee for participation in the system, although an amount may be payable by way of cost recovery in respect of a disciplinary hearing. The system is an important element of the certification that CPA provides to eligible accountants. As I have explained, it helps to ensure public confidence in the competence and integrity of CPA accountants and the professional qualities represented by the CPA ‘badge’. But the operation of the system generally and in particular cases is not, in and of itself, commercial or trading in character, and certainly not in respect of the conduct alleged against CPA in relation to the disciplinary hearing.
In my view, neither generally in relation to the complaints of the conveyancer or CPA nor specifically in relation to the conduct of CPA at the disciplinary hearing did the CPA complaint and discipline system operate ‘in trade or commerce’ within the meaning of that term in s 21(1) of the Australian Consumer Law. Mr Storai’s intended claim against CPA under that provision in relation to its conduct at the disciplinary hearing is not within VCAT’s jurisdiction. VCAT erred in law in failing to so decide.
Conclusion
For the reasons given in this judgment, the word ‘services’ in s 21(1) of the Australian Consumer Law has a wide meaning that encompasses the operation of the CPA complaint and discipline system. VCAT correctly so decided.
But the term ‘in trade or commerce’ in s 21(1) has a narrow meaning that includes only activities that, in and of themselves, have a trading or commercial character. While the operation of the CPA complaint and discipline system is connected with the business of accounting in various ways, that is not sufficient. The operation of that system does not, in and of itself, have a trading or commercial character and Mr Storai’s claim therefore falls outside VCAT’s jurisdiction. VCAT erred in law in failing so to decide.
The order of the court will be to the effect that the appeal is upheld, paragraphs 4, 5 and 7(b) of the orders of VCAT dated 17 September 2014 are set aside and it is declared that VCAT does not have jurisdiction under s 21(1) of the Australian Consumer Law in relation to Mr Storai’s claim.
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