Director of Consumer Affairs v Victorian Tourism Centre

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 7865 of 2009

DIRECTOR OF CONSUMER AFFAIRS VICTORIA	Plaintiff
v
AUSTRALIAN TOURISM CENTRE PTY LTD ACN 108 356 387 (In Liquidation)	First Defendant
and
STEPHEN IAN GLENISTER	Second Defendant

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JUDGE:	Daly AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	31 May 2010, written submissions dated 14 September 2010 and 6 October 2010
DATE OF JUDGMENT:	9 December 2010
CASE MAY BE CITED AS:	Director of Consumer Affairs v Victorian Tourism Centre
MEDIUM NEUTRAL CITATION:	[2010] VSC 571

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CATCHWORDS: telephone marketing agreements ― Fair Trading Act 1999 ― consumer protection remedies

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Ms S. Bhojani with Mr P. Hiland	Solicitor to the Director of Consumer Affairs, Victoria
For the First Defendant	No appearance
For the Second Defendant	In person

HER HONOUR:

Introduction

The Director of Consumer Affairs Victoria (“Director”) is the public official responsible for the monitoring and enforcement of consumer protection legislation in Victoria. The Director is assisted in this task by officers employed by Consumer Affairs Victoria (“Consumer Affairs”).

The first defendant, Australian Tourism Centre Pty Ltd, operated a business trading as “Victorian Tourism Centre” (“VTC”) between 2004 and 2008. The second defendant, Mr Glenister, was the sole director of VTC at all relevant times. VTC carried on business as a supplier of holiday accommodation vouchers and a discount card for various goods and services. VTC employed a number of sales staff to recruit customers through its telemarketing operations.

On 21 July 2009, the Director commenced this proceeding against the VTC and Mr Glenister[1] seeking injunctive and declaratory relief, orders for the payment of refunds and compensation, and other orders under the Fair Trading Act 1999 (Vic) (“Act”).
[1]The Director obtained leave to proceed against the first defendant pursuant to s 500(2) of the Corporations Act 2001 on 17 July 2009. At the commencement of the trial the Director and the Court were informed that a trustee in bankruptcy had been appointed to administer Mr Glenister’s affairs.

The Director alleges that in carrying on its business operations, VTC contravened various provisions of the Act by:

(a) engaging in misleading and deceptive conduct;

(b) making false representations in relation to goods and services; and

(c) breaching the provisions of the Act which regulate telephone marketing agreements.

The Director also alleges that Mr Glenister, as the sole director of VTC, breached the relevant provisions of the Act by causing VTC to operate its business in the manner that it did, and refusing or failing to take action with respect to certain breaches of the Act. In the alternative, the Director asserts that Mr Glenister was a person involved in VTC’s contraventions of the Act within the meaning of s 145 of the Act.

The conduct complained of by the Director falls into three main categories, being:

(a) by using the business name “Victorian Tourism Centre” and promoting the business in a particular manner, VTC represented that it was either part of, affiliated with, sponsored by, or otherwise connected with the Victorian Government;

(b) VTC overcharged customers and failed to pay refunds to customers; and

(c) VTC failed to comply with the regulatory requirements of the Act with respect to agreements reached with consumers solicited by VTC sales staff by telephone (“telemarketing provisions”).

The Director relied upon a number of affidavits to support of the proceeding. Fifteen VTC customers swore affidavits in relation to their dealings with VTC. Affidavits were also sworn by officers of Consumer Affairs regarding their investigations into and dealings with VTC.

Consumer Affairs first received complaints from VTC customers regarding VTC’s operations in July 2004. Initially, these were dealt with by a conciliator employed by Consumer Affairs, Ms Sally Landberg. In August 2006, a CONSUMER AFFAIRS inspector, Inspector Baker, contacted Mr Glenister regarding a number of consumer complaints. Between August 2006 and April 2008, Inspectors Baker, Ridout and Foyster held a number of meetings with Mr Glenister and other staff of VTC, and engaged in extensive correspondence with Mr Glenister and VTC’s solicitors regarding customer complaints and VTC’s business practices, including VTC’s record of compliance with the telemarketing provisions.

On 30 August 2008 a search warrant was issued by the Magistrates’ Court under s 122 of the Act authorising Inspector Foyster and other Consumer Affairs officers to enter and search VTC’s business premises in William Street, Melbourne. The search warrant was executed on 12 May 2008, and a number of documents were taken from the premises.

After this time, Consumer Affairs inspectors continued to correspond with VTC and its solicitors (Pryles & Co) regarding outstanding customer complaints. On 22 August 2008 the Director issued a notice under 106I(1)(a) and (b) of the Act directed at VTC (“Notice”) seeking information and the production of documents. Thereafter, extensive correspondence followed between Consumer Affairs and Pryles & Co regarding clarification of the terms of the Notice, extending the date for compliance with the Notice, and a possible legal challenge by VTC to the issue of the Notice. VTC ceased its business operations in or around September 2008.

On 11 December 2008, the Director instituted proceedings in this court seeking orders under s 152A of the Act seeking to compel VTC to comply with the Notice. This proceeding was discontinued by consent on 6 February 2009, and orders were made by consent that VTC pay the Director’s costs of the proceeding.

On 26 March 2009, VTC went into liquidation as a result of a creditors’ voluntary winding up. On 17 July 2009 this court granted leave for the Director to commence this proceeding (with the consent of the liquidator of VTC). This proceeding was issued on 21 July 2009. Orders were made for the filing and service of affidavits by the parties. On 6 October 2009 (approximately two weeks before the defendants’ affidavits were due to be filed) Pryles & Co filed and served a Notice of Ceasing to Act.

At the hearing of the trial of the proceeding, Mr Glenister attended court, but led no evidence on behalf of VTC or himself. He prepared a brief written submission and during the course of the hearing commented upon the submissions made on behalf of the Director, but otherwise did not take an active part in the proceeding. Accordingly, the evidence led on behalf of the Director was not contradicted.

Overview

The focus of VTC’s marketing efforts was the sale by telephone of “packages” comprising of holiday accommodation vouchers and a discount card which could be used for the purchase of groceries, petrol, personal computers and other consumer goods (“packages”). The typical approach of VTC sales staff was to call people randomly selected from the telephone directory to inform them that they had been selected by VTC to participate in a survey regarding their vacation habits. If the responses to the survey indicated that participants might be potential customers, they were called back a week or so later and told they had won a competition for the opportunity to purchase specially priced holiday accommodation vouchers and a discount card. In order to receive the package, the consumer was required to agree to the purchase and authorise payment by credit card over the telephone, following which VTC would mail a parcel containing vouchers, a discount card, and a book showing where both could be used, and the conditions upon which the vouchers could be redeemed and the discount card be used. Basic packages could be purchased for $69.90, but VTC promotional efforts were directed at encouraging consumers to take up “bonus” packages at a cost of $139.80. Apart from some administrative staff, VTC’s sales staff were paid on a “commission only” basis.

The relevant provisions of the Act relied upon by the Director include section 9 of the Act (misleading and deceptive conduct), section 12 of the Act (false representations) and Part 4, Division 2A of the Act (the telemarketing provisions).

Section 9 of the Act provides that:

“A person must not, in trade or commerce, engage in conduct that is misleading or likely to mislead or deceive.”

The Director alleges that VTC breached section 9 of the Act by:

(a) taking out, charging or withdrawing more money from a customer’s credit card for purchases than agreed to or authorised by the customer; and

(b) refusing, delaying or failing to pay refunds in a timely manner to customers, when the customer contracts were void by reason of non compliance with section 67D of the Act, or where the customer had lawfully rescinded the contract.

Section 12 of the Act provides that:

“A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection
A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion or advertising by any means of the supply or use of goods or services—
(a) falsely represent that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use; or
(b) falsely represent that services are of a particular standard, quality, value or grade or have had a particular previous use; or

(c) falsely represent that goods are new; or
(d) falsely represent that a particular person has agreed to acquire goods or services; or
(e) represent that goods or services have a sponsorship, approval, performance characteristics, accessories, uses or benefits they do not have; or
(f) represent that any person has a sponsorship, approval or affiliation that the person does not have; or
(g)make a false or misleading representation with respect to the price of goods or services; or
(h)make a false or misleading representation concerning the availability of facilities for the repair of goods or of spare parts for goods; or
(i) make a false or misleading representation concerning the place of origin of goods; or
(j) make a false or misleading representation concerning the need for any goods or services; or
(k) make a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy; or
(l) make a false or misleading representation about the production, manufacture, preparation or supply of any goods; or
(m) make a representation which is unnecessary for the reasonable care and maintenance of any goods; or
(n) make a representation that is false, misleading or deceptive in any material particular.”

The Director alleges that VTC has breached sections 12(a), (b), (e), (f) and (n) of the Act by making the following representations:

(a) VTC was part of the Government of Victoria or had sponsorship from, approval of, or affiliation with the Government of Victoria;

(b) the holiday accommodation vouchers supplied by VTC were non-refundable; and

(c) customers could, for any reason, return the package supplied by VTC and be refunded their money immediately

when in fact those representations were not true.

Division 2A of Part 4 of the Act regulates the conduct of businesses which engage in telemarketing. Section 67A provides:

“What is a telephone marketing agreement?
(1) An agreement is a telephone marketing agreement if—
(a) it is for the supply in trade or commerce of goods or services of a kind ordinarily used for personal, household or domestic use; and
(b) the negotiations leading to the making of the agreement (whether or not they are the only negotiations that precede the making of the agreement) take place between the supplier or a person Acting on behalf of the supplier and the purchaser over the telephone; and
(c) the initial telephone call for the purpose of entering into the negotiations was made by or on behalf of the supplier; and
(d) the total consideration payable by the purchaser under the agreement—
(i) is not ascertainable at the time of making the agreement; or
(ii) is ascertainable at the time of making the agreement and exceeds $100.”

Notwithstanding the fact that the cost of the VTC’s “standard” package was $69.90, a number of Director’s witnesses deposed to having purchased multiple packages from VTC, the total cost of which exceeded $100.00. Therefore, the telemarketing provisions apply to a substantial proportion of VTC’s customer contracts.

Section 67D of the Act provides that:

“Purchaser must give explicit informed consent
(1)A telephone marketing agreement is void unless the purchaser has, prior to the telephone marketing agreement being made, given explicit informed consent to the supplier or a person Acting on behalf of the supplier.
(2)If a telephone marketing agreement is void under sub-section (1) any related contract or instrument is also void.
(3)Sub-section (2) does not affect the operation of the Consumer Credit (Victoria) Code in its application to a tied loan contract as defined in that Code.
(4) For the purposes of this section, "explicit informed consent" in relation to a telephone marketing agreement means the consent to make the agreement—
(a) must be given by the purchaser directly to the supplier or a person Acting on behalf of the supplier—
(i) in writing signed by the purchaser; or
(ii) orally; and
(b) if given orally, must be recorded in accordance with sub-section (5); and
(c) must be given only after the supplier or a person acting on behalf of the supplier has, clearly, fully and adequately disclosed all matters relevant to the consent of the purchaser, including each specific purpose or use of the consent.

(5) For the purposes of sub-section (4)(b), the supplier or a person Acting on behalf of the supplier must record the consent—
(a) in writing; or
(b) with the prior consent of the purchaser, by means of a recording device.

(6) The supplier or a person Acting on behalf of a supplier must not record (otherwise than in writing) the purchaser's consent to make a telephone marketing agreement, unless the purchaser has given his or her prior consent to the recording.
Penalty: 60 penalty units, in the case of a natural person.
120 penalty units, in the case of a body corporate.
(7) The supplier must keep the record of the purchaser's explicit informed consent for 12 months.
Penalty: 60 penalty units, in the case of a natural person.
120 penalty units, in the case of a body corporate.
(8) The supplier or a person Acting on behalf of the supplier must not enter, or purport to enter, into a telephone marketing agreement unless that supplier or person has, during the telephone negotiations which led to the agreement or purported agreement, advised the purchaser of the right to cancel the agreement within the cooling off period applying to that agreement.
Penalty: 120 penalty units, in the case of a natural person.
240 penalty units, in the case of a body corporate.”

The Director alleges that VTC:

(a) failed to obtain its customers’ explicit informed consent prior to making a telemarketing agreement; and

(b) failed to record or keep for 12 months records of its customers’ informed consent,

contrary to sections 67D(1) and (7) of the Act.

The Director also alleges that VTC entered into telephone marketing agreements with customers without advising them of their right to cancel the agreement within the applicable cooling off period, contrary to section 67D(8) of the Act.

Section 67E of the Act provides:

“Requirements for a telephone marketing agreement
(1) Within 5 days after making the telephone marketing agreement or any longer period agreed by the parties, the supplier must serve on the purchaser—
(a) a document evidencing the agreement (the "agreement document"); and
(b) a notice completed in accordance with Part 2 of Schedule 2 which may be used by the purchaser to cancel the agreement.

(2) The agreement document and notice referred to in sub-section (1) may be served on the purchaser—
(a) personally; or
(b) by post; or
(c) with the consent of the purchaser, by electronic communication.

(3) The following requirements must be complied with in relation to a telephone marketing agreement—
(a) the agreement document must set out in full all the terms of the agreement, including—
(i) the total consideration to be paid or provided by the purchaser under the agreement or, if the total consideration is not ascertainable at the time the agreement is made, the manner in which it is to be calculated;
(ii) any postal or delivery charges to be paid by the purchaser;

(b) the agreement document must—
(i) include on its front page a notice which must, in accordance with Part 1 of Schedule 2, advise the purchaser of the right to cancel the agreement; and
(ii) set out in full the name and business address (not being a post box) of the supplier; and
(iii) be printed clearly or typewritten (apart from any amendments to the printed or typewritten form which may be handwritten) and otherwise must comply with section 163; and

(c) any amendments to the agreement must be signed by both parties to the agreement.

(4) The information required under subsections (3)(a)(i) and (3)(a)(ii), (3)(b)(i) and (3)(b)(ii) must be conspicuous and prominent in the agreement document or notice (as the case may be).
(5) The Director may approve an agreement or class of agreements or an agreement document or class of agreement documents which do not comply with the requirements of sub-section (1)(b), (3) or (4) if the Director is satisfied that the agreements or agreement documents provide a level of disclosure substantially equivalent to the requirements of that provision.
(6) An agreement or agreement document approved, or in a class approved, under sub-section (5) is not required to comply with sub-section (1)(b), (3) or (4).”

The Director alleges that VTC did not within 5 days (or at all) after making one or more telemarketing agreements send to or serve upon the customer a document evidencing the agreement in compliance with section 67E of the Act.

Section 163 of the Act states as follows:

“163 Consumer documents to be clear
(1) In this section consumer document means –
(a)a consumer contract; or
(b)a statement, notice or other document required by this Act to comply with this section.

(2) A consumer document does not include a contract to which the Consumer Credit (Victoria) Act 1995 applies.
(3) A consumer document –
(a)might be easily legible; and
(b)to the extent that it is printed or typed, must use a minimum 10 point Times New Roman font, or a minimum font of an equivalent size; and

(c) must be clearly expressed.
(4) If a court or the Tribunal is satisfied, on application by the Director, that any provision of a consumer document does not comply with the requirements of this section, the court or the Tribunal may by order prohibit a supplier from using the provision in the same or similar terms in consumer documents.
(5) A supplier must comply with an order under this section.
Penalty:60 penalty units, in the case of a natural person.

120 penalty units, in the case of a body corporate.”

The Director alleges that the notices required to be sent to its customers did not comply with s 163 of the Act.

Findings sought by the Director

The Director submitted that the evidence before the Court in this matter and the inferences to be drawn from that evidence supports the following findings against VTC and Mr Glenister:

1.      The business name “Victorian Tourism Centre” was registered by Mr Glenister on 24 November 2003. Mr Glenister changed the ownership of the business name registration from himself to his company, Australian Tourism Centre Pty Ltd, on 7 July 2004. The company’s registration of that business name ceased on 24 November 2006. On 16 March 2007, Mr Glenister applied on behalf of his company, Australian Tourism Centre Pty Ltd, to again register the business name “Victorian Tourism Centre”. He nominated himself as the “authorised person” to deal with business names transactions for his company. On 13 August 2008, registration of the business name “Victorian Tourism Centre” ceased.
2.      Australian Tourism Centre Pty Ltd was incorporated and commenced business on or about 15 March 2004.
3.      In the period from about March 2004 to December 2009, VTC carried on a telemarketing business as a supplier for reward of holiday accommodation vouchers (“vouchers”); and a discount card for purchase of groceries; petrol; personal computers; communications; electronics; and entertainment goods; and restaurant meals at discount prices (“discount card for various goods and services”).
4.      The VTC business was a private company business carried on for profit.
5.        During the period 15 March 2004 to 25 March 2009, Mr Glenister was the sole director, secretary, and shareholder of VTC.
6.      During the period about March 2004 to December 2009, VTC engaged in conduct, in trade or commerce, by marketing, advertising, and selling the vouchers and the discount card for various goods and services to consumers.
7.      Mr Glenister engaged in conduct, in trade or commerce, by:
(a)registering, authorising the use of, and using the business name “Victorian Tourism Centre”;
(b)producing, or causing to be produced, the accommodation booklets and using them, or authorising their use, as part of the VTC business;
(c)producing, or causing to be produced, the vouchers and using them, or authorising their use, as part of the VTC business;
(d)producing, or causing to be produced, the discount card for various goods and services and using it, or authorising its use, as part of the VTC business;
(e)producing, or causing to be produced, scripts for the telephone calls made by the telephone sales staff of VTC to consumers as part of the business of VTC and using them, or authorising their use, as part of the VTC business;
(f)producing, or causing to be produced, the covering letter and other materials sent to consumers as part of the sale of the vouchers and discount card for various goods and services, as part of the VTC business;
(g)producing, or causing to be produced, the sales slips used by staff of VTC to record the payment details for the vouchers and discount card for various goods and services sold to consumers, as part of the VTC business;
(h)instructing VTC staff on how and when to deal with complaints and requests for refunds, as part of the VTC business; and
(i)being responsible for the signing of cheques for refunds to consumers and instructing, directing, or authorising staff regarding the payment and timing of refunds to consumers, as part of the VTC business.

8.      By using the business name “Victorian Tourism Centre”, Mr Glenister and VTC represented that either VTC had, or VTC’s business had, or both VTC and its business had, an association or affiliation with the Government of Victoria and, in particular, the Victorian Government tourism agency known as “Tourism Victoria”.
9.      Alternatively, by one or more of the following:
(a)     using the business name “Victorian Tourism Centre”;
(b)     a map of the State of Victoria;
(c)the logos “The Place to see” or “Taking you on holidays…” with a map of the State of Victoria; and

(d)     the website address “ –
Mr Glenister and VTC represented that either VTC had, or VTC’s business had, or both VTC and its business had, an association or affiliation with the Government of Victoria and, in particular, the Victorian Government tourism agency known as “Tourism Victoria”.
10.     Mr Glenister and VTC represented to customers on an unqualified basis that the vouchers were non-refundable.
11.     Sometime prior to late-August 2007, Mr Glenister made the decision and instructed, or directed, VTC staff to only pay refunds limited to 2 consumers per week.
12.     Mr Glenister was the only person authorised, on behalf of VTC, to sign cheques for refunds to consumers.
13.     Mr Glenister deliberately delayed the signing of cheques for refunds to consumers.
14. Mr Glenister was made aware of the requirements of the telephone marketing agreement provisions of the Act from in or about November 2004.
15. Mr Glenister represented to, or promised, officers of Consumer Affairs Victoria on numerous occasions that he would ensure that the VTC business complied with the requirements of the telephone marketing agreement provisions of the Act.
16. Mr Glenister produced, or caused to be produced, a changed or modified version of a notice of cancellation to send to consumers as part of VTC’s business and used, or authorised the use, of such a notice for a short period as part of VTC’s business, even though the notice did not fully comply with the requirements of section 67E(1)(b) and Part 2 of Schedule 2 of the Act.
17. Mr Glenister, despite being aware of the telephone marketing agreement provisions in the Act, did not, at any time, ensure that:
(a)persons acting on behalf of VTC had clearly, fully, and adequately disclosed all matters relevant to the consent of the consumer as purchaser;
(b)persons acting on behalf of VTC had, during the telephone negotiations which led to an agreement, advised the consumer of the right to cancel the agreement within the 10 day cooling-off period;

(c) persons acting on behalf of VTC had:
(i)obtained from the consumer their explicit informed consent to make the telephone marketing agreement; and
(ii)recorded the consumer’s explicit informed consent and securely stored the recorded explicit informed consent;

(d)persons acting on behalf of VTC were sending out, within 5 days after making the telephone marketing agreement, (or at all), a document evidencing the agreement which set out, in full, all the terms of the agreement, including the total consideration to be paid by the consumer and a notice on its front page, in accordance with Part 1 of Schedule 2 of the Act, advising the purchaser of the right to cancel the agreement;
(e)persons acting on behalf of VTC were sending out, within 5 days of making a telephone marketing agreement, (or at all), a notice of cancellation completed in accordance with Part 2 of Schedule 2 of the Act which may be used by the consumer to cancel the agreement; and
(f)where a consumer cancelled the telephone marketing agreement with VTC within the cooling-off period, VTC immediately repaid to the consumer the money paid by the consumer to VTC.
18.(a) As VTC did not obtain any consumer’s explicit informed consent before making its telephone marketing agreements, all the telephone marketing agreements entered into by VTC were, and are, void by operation of section 67D(1) of the Act; and
(b)VTC had a statutory obligation (under section 67M(1) of the Act) to repay to the consumer any money paid by the consumer to VTC under the purported agreements.

19.(a) Further, or alternatively, as VTC did not serve on consumers within 5 days after making the telephone marketing agreement:
(i)an agreement document (which includes on its front page, a notice in accordance with Part 1 of Schedule 2 of the Act, advising the consumer of the right to cancel the agreement); and
(ii)a notice of cancellation, in accordance with Part 2 of Schedule 2 of the Act, which may be used by a consumer to cancel the agreement –

the consumers were entitled to cancel the agreements by giving notice of the cancellation to VTC within 6 months from the day on which the agreement was made – under section 67H(3) of the Act. That is, because of VTC’s failure to comply with section 67E(1) or 67E(3)(b)(i) of the Act, the cooling-off period became 6 months from the date of making the agreement; and
(b)VTC had a statutory obligation (under section 67J(1) of the Act) to “immediately repay” to the consumer any money paid by the consumer where the consumer cancelled the agreement within 6 months from the date it was made.

20. As the sole director and shareholder of VTC, Mr Glenister had an obligation to ensure that VTC complied with its statutory obligation to “immediately repay” (or repay in a reasonable and timely manner) the monies paid by consumers to VTC under the purported telephone marketing agreements (as they were, and are, void for failure to obtain explicit informed consent) or the telephone marketing agreements were cancelled within the (6 month) cooling-off period.”

Consumer evidence

Affidavits were sworn by the following customers of VTC:

1. George Bartholomeusz

2. Cecile Bartholomeusz

3. Leopold Bloumis

4. Daisy Bloumis

5. Louise Greenwood

6. Shirley Louden

7. Robyn Murray

8. Amanda Prizzi

9. Jamie Roberts

10. Kathleen Squire

11. William Stewart

12. Sarah Sanderson

13. Stephen Tippet

14. Debra Tippett

15. Merle Turner

A brief summary of the evidence of VTC’s customers relevant to the allegations made by the Director follows.

George Bartholomeusz

Mr Bartholomeusz purchased a package from VTC at a cost of $139.80 on 31 March 2008. He thought VTC was part of the Victorian Government. He was not told of his rights to cancel the contract during the cooling off period. After he received the package from VTC he did not consider the services provided by the package were consistent with the benefits promoted by VTC’s salesperson. In particular, the booklet sent to him by VTC did not identify any caravan parks (he specifically asked the VTC salesperson whether the vouchers could be used at caravan parks, and had been told he could do so) and he realised that the discount card could not be used directly at Coles and Safeway. The package did not include notices informing him of the prescribed cooling off period or his rights to cancel the contract. Despite his efforts to obtain a refund from VTC (including numerous telephone calls and a visit to VTC’s offices) he was unsuccessful in obtaining a refund.

Cecile Bartholomeusz

Mrs Bartholomeusz corroborates her husband’s evidence.

Leopold Bloumis

Mr Bloumis was telephoned by a VTC salesperson and told that he was one of the people who had completed a survey to be selected for a prize. Mr Bloumis purchased a package for $139.80 on 5 December 2007. He thought VTC was part of the Victorian Government. He does not recall being told about a cooling off period. After he received the package from VTC he did not consider the services provided by VTC were consistent with the benefits promoted by VTC’s salesperson. The package did not include notices informing him of the prescribed cooling off period or his rights to cancel the contract. He made a number of efforts to obtain a refund, but was unsuccessful until Consumer Affairs’ conciliator made representations to VTC on his behalf.

Daisy Bloumis

Mrs Bloumis corroborates her husband’s evidence.

Louise Greenwood

Ms Greenwood was first contacted by VTC to participate in a survey about her vacation habits. She did so and was told she would be placed in a draw for a prize. She was contacted some weeks later and told she had won a prize. She asked the caller if VTC was a government department. The response was “Yes. Sort of”. She purchased a package from VTC for $69.90 on 18 December 2007. However, the sum of $139.00 was debited from her credit card account. The VTC salesperson made no reference to any cooling off period or cancellation rights. After she received the package from VTC she did not consider the services provided by VTC were consistent with the benefits promoted by VTC’s salesperson. In particular, there was no “VIP Card”, and the booklet stated that discounts at supermarkets were only available if she purchased a special “gift card”, which had not been explained to her during the call. The package did not include notices informing her of the prescribed cooling off period or his rights to cancel the contract. She made a number of efforts to obtain a refund, but was unsuccessful until Consumer Affairs’ conciliator made representations to VTC on her behalf.

Shirley Louden

Ms Louden purchased a package from VTC at a cost of $139.80 on 24 April 2008. She thought VTC was part of the Victorian Government. She was told that the Ambassador card could be used to obtain a five per cent discount when she shopped at Safeway. She was not told of her rights to cancel the contract during the cooling off period. After she received the package from VTC she did not consider the services provided by the package were consistent with the benefits promoted by VTC’s salesperson. The package did not include notices informing her of the prescribed cooling off period or her rights to cancel the contract. Despite her efforts to obtain a refund from VTC, she was unsuccessful in obtaining a refund.

Robyn Murray

Ms Murray was first contacted by a VTC salesperson asking her to participate in a survey. She was then offered a package which included a card that “you take to Coles and get five per cent off groceries, petrol and liquor.” On the following day, the VTC salesperson called back. When she asked how the discount card worked, she was told that she could take the card to Coles, they would swipe the card and she would get five per cent off. Ms Murray purchased a package from VTC for $139.80 on 24 January 2008. The VTC salesperson told her in response to a question from her that VTC was associated with the Victorian Government. No reference was made to any cooling off period or cancellation rights. After she received the package from VTC she did not consider the services provided by VTC were consistent with the benefits promoted by VTC’s salesperson. The package did not include any notices informing her of the prescribed cooling off period or her rights to cancel the contract. She made a number of efforts to obtain a refund but was unsuccessful.

Amanda Prizzi

Ms Prizzi purchased a package from VTC at a cost of $139.80 on 19 March 2008. She thought VTC was part of the Victorian Government. She was told that the discount card could be used to get a five per cent discount at Safeway, Coles and Big W if she showed her card at these stores. She was not told of her rights to cancel the contract during the cooling off period. After she received the package from VTC she did not consider the services provided by the package were consistent with the benefits promoted by VTC’s salesperson. The package did not include notices informing her of the prescribed cooling off period or her rights to cancel the contract. Despite many efforts to obtain a refund from VTC, she was unsuccessful in obtaining a refund.

Jamie Roberts

Mr Roberts was initially contacted by VTC to participate in a survey. When the VTC salesperson called back a week or so later, Mr Roberts purchased a package from VTC for $139.80 on 11 July 2008. The VTC salesperson told him that VTC was associated with the Victorian Government, and that her job was to do research for Tourism Victoria. She made no reference to any cooling off period or cancellation rights. After he received the package from VTC he did not consider the services provided by VTC were consistent with the benefits promoted by VTC’s salesperson. The package did not include any notices informing him of the prescribed cooling off period or his rights to cancel the contract. He made a number of efforts to obtain a refund but was unsuccessful.

Kathleen Squire

VTC contacted Ms Squire and was told she had been drawn out of its prize list and had won a special discount card and vouchers worth up to $250. She was told the discount card could be used to get discounts of 10-15 per cent at Liquorland and Coles Supermarkets. Ms Squire purchased a package for $69.90 on 19 March 2007. However, $139.80 was debited from her account. She thought VTC was part of the Victorian Government. She does not recall being told about a cooling off period. After she received the package from VTC she did not consider the services provided by VTC were consistent with the benefits promoted by VTC’s salesperson. The package did not include notices informing her of the prescribed cooling off period or her rights to cancel the contract. She made a number of efforts to obtain a refund, including visiting VTC’s premises, where she was sworn at by VTC staff, but was unsuccessful until she told VTC her complaint was in the hands of the police.

William Stewart

Mr Stewart was first contacted by VTC to participate in a survey. A week later, he was called again and told that as a result of his participation in the survey, he had been selected as a winner of four holiday discount vouchers. Mr Stewart purchased a package for $139.80 on 19 August 2008. He thought VTC was part of the Victorian Government. He does not recall being told about a cooling off period. After he received the package from VTC he did not consider the services provided by VTC were consistent with the benefits promoted by VTC’s salesperson. The package did not include notices informing him of the prescribed cooling off period or his rights to cancel the contract.

Sarah Sanderson

Ms Sanderson purchased a package from VTC for $139.80 on 23 August 2007. Unlike the other deponents, Ms Sanderson (a South Australian resident) approached VTC after seeing a promotional fax sent to her workplace from Australian Tourism Centre which referred to weekend holiday package specials in New South Wales, Victoria and South Australia. She telephoned VTC and asked if there were package for hotels located a short distance from Adelaide. She was told that VTC had arrangements with a number of hotels in South Australia, that the packages could be used on school holidays and at weekends, and the cost of dinner would be included. However, when she checked with various listed hotels, the vouchers were not able to be used except in limited circumstances. The package did not include any notices informing her of the prescribed cooling off period or her rights to cancel the contract. She obtained a refund after contacting VTC on numerous occasions.

Stephen Tippet

Mr Tippet purchased a package from VTC for $139.80 on 6 June 2008. He was contacted after his wife participated in a telephone survey. The VTC salesperson told him that VTC was a State Government body and that the discount card would enable him to get a five per cent discount at Safeway, Coles and Dan Murphy’s. The salesperson told him he could return the package within two weeks and get a refund if it was not suitable. After he received the package from VTC he did not consider the services provided by VTC were consistent with the benefits promoted by VTC’s salesperson. The package did not include any notices informing him of the prescribed cooling off period or his rights to cancel the contract. He made a number of efforts to obtain a refund but obtained only a partial refund.

Debra Tippet

Mrs Tippet corroborated her husband’s evidence.

Merle Turner

Ms Turner was contacted by VTC sales staff, who told her that she had been selected for a special discount holiday package. She purchased a package for $69.90. She thought that VTC was part of the Victorian Government. She discovered $209.70 had been debited to her account and, after contacting Consumer Affairs and VTC on a number of occasions, obtained a refund.

As can be seen from the above, some common themes run through the customers’ evidence. First, while only a few of the customers were actually told by VTC’s salespeople that the VTC was connected with the Victorian Government, most of the customers assumed by reason of VTC’s name that there was some connection between VTC and the Victorian Government, and that presumed connection was a factor in them deciding to enter into a contract with the VTC. Further, most customers deposed that they had not been told of the prescribed cooling off period or that they were entitled to cancel the contract. Some of the customers were overcharged.

The reason cited by most customers for seeking a refund was that upon receipt of the package from VTC, the benefits available under the package did not match the promises made by the VTC salespeople. A common complaint was that the accommodation for which the vouchers could be used was limited and/or of poor value. Another common complaint was that VTC sales staff erroneously told consumers that they could use the discount card to obtain a five per cent discount on purchases at Coles and Safeway supermarkets simply by presenting the card at the point of sale (when in fact consumers had to go through a convoluted process of purchasing gift vouchers for $100 or more online to receive any discount). Further, none of the packages supplied by VTC included the notices regarding customers’ cancellation rights and the prescribed cooling off period. Finally, customers experienced substantial difficulties in obtaining refunds from VTC. All of the customers reported making numerous attendances upon VTC’s officers regarding their request for refunds, and complained that their calls were not returned, and that promises made by VTC staff were not kept. A number of customers only received refunds after the Consumer Affairs’ conciliation officer intervened, and some customers received no refunds at all.

Consumer Affairs Officers’ Evidence

The Director tendered a number of affidavits sworn by Consumer Affairs inspectors and other officers, including:

1. Inspector Shane Foyster;

2. Inspector Scott Ridout;

3. Inspector Stephen Baker;

4. Ms Sally Landberg; and

5. Ms Mindy Lim.

The Consumer Affairs officers’ affidavits go into extensive detail regarding their dealings with VTC and its staff, including Mr Glenister, and its investigations into VTC’s conduct of its business. Their evidence is summarised below.

Ms Sally Landberg

Ms Sally Landberg has been a conciliator in the Dispute Resolution Branch of Consumer Affairs since 1986. Her duties involve conciliating disputes between purchasers and suppliers of goods and services on behalf of the Director.

VTC first came to the attention of Ms Landberg in July 2004, when she contacted Mr Glenister regarding two customer complaints she had received. Between July 2004 and May 2008, Ms Landberg conciliated approximately 80 customer complaints involving VTC, most of which were resolved by VTC paying refunds to the customers concerned. A number of these complaints required numerous attendances upon Mr Glenister and VTC staff to achieve resolution.

In November 2004, Ms Landberg drew Mr Glenister’s attention to the new telemarketing provisions. On 5 November 2004, she sent Mr Glenister a letter enclosing a copy of the telemarketing provisions.[2]
[2]Exhibit SL-2” of her affidavit sworn 27 May 2009.

Ms Landberg received no further complaints until November 2005. After receipt of a further complaint, she contacted Mr Glenister and expressed concern that VTC salespeople may still be relaying incorrect information to customers regarding VTC’s products.

Further complaints were received by Ms Landberg in February 2006, May 2007, August 2007, February 2008 and April 2008. Issues raised by customers included misleading information regarding the ability to use accommodation vouchers, difficulties in obtaining refunds and overcharging. From about mid 2007, Ms Landberg was experiencing difficulties in resolving customer complaints with VTC. She wrote a number of letters to VTC (on 16 May 2007, 31 July 2007, 3 August 2007, 16 August 2007, 22 August 2007, 19 September 2007, 13 February 2008, 13 March 2008, 26 March 2008 and 18 April 2008). She also spoke to numerous staff of VTC identified as being responsible for managing customer complaints. During one such conversation (on or about 30 August 2007) she was told by a staff member of VTC that “I am only allowed to put through a specific number of refunds each week.” In another conversation with the same staff member, she was told that the staff member could only send out two cheque refunds each week because Mr Glenister would only sign two refund cheques each week.[3]
[3]Paragraphs 39-40 of her affidavit sworn 27 May 2009.

On a number of occasions, Ms Landberg’s letters referred to the requirements imposed upon VTC by the telemarketing provisions.

Inspector Baker

Inspector Baker has been an inspector with Consumer Affairs since 1990. His role was to investigate and resolve complaints involving allegations that a trader has contravened the provisions of the Act and other consumer protection legislation. As part of his duties, between April 2006 and June 2007 he investigated a number of customer complaints made to the Director about VTC.

Inspector Baker’s first contact with VTC was in August 2006 when he sent an email to Mr Glenister regarding seven outstanding customer complaints. The customers concerned received refunds from VTC.

In November 2006, Inspector Baker was contacted by a disgruntled former employee of VTC. She provided a bundle of documents to Inspector Baker, including letters of complaint from customers and a copy of a statement she had provided to the police. During a meeting with Mr Glenister in January 2007, Inspector Baker raised concerns Consumer Affairs had in relation to the number and nature of consumer complaints received by Consumer Affairs in respect of VTC. He also informed Mr Glenister of the requirements of the telemarketing provisions. Mr Glenister told Inspector Baker that a lot of the complaints were caused by the conduct of a particular staff member, who had since been dismissed.

VTC provided refunds to each of the customers identified by Inspector Baker. However, further complaints were received in February and March 2007, which remained unresolved. On 13 March 2007, Inspector Baker sent a warning letter to VTC.[4] In summary, the letter stated that:

(a) the customer complaints received by Consumer Affairs regarding misrepresentations in relation to the benefits of the holiday vouchers, in particular the variety of accommodation available for use with the vouchers may indicate a potential breach of section 12 of the Act; and

(b) the analysis of the customer complaints revealed that VTC may have failed to provide a notice to purchasers advising of their rights to cancel their agreements, potentially in breach of section 67E of the Act.

[4]See exhibit “SB-8” to his affidavit sworn on 29 May 2009.

The letter asked VTC to show cause why VTC should not be prosecuted for alleged breaches of sections 12 and 67E of the Act.

Despite reassurances provided by Mr Glenister, Consumer Affairs continued to receive complaints from customers. A further warning letter was sent by Consumer Affairs to VTC on 19 June 2007.[5] Shortly after this time, Inspector Baker handed over responsibility for Consumer Affairs’ investigations to Inspector Ridout.

[5]See exhibit “SB-12”.

Inspector Scott Ridout

Inspector Ridout has been a Consumer Affairs inspector since July 2005. On 3 August 2007, Inspector Ridout sent a further letter to VTC[6] expressing Consumer Affairs’ concerns regarding further customer complaints received by it, which included further allegations of misleading and deceptive conduct. The letter stated that if these allegations were made out, VTC may have contravened sections 12 and 67D and 67E of the Act. Further, the letter stated that Consumer Affairs had received information that customers were being misled by the VTC’s business name into believing there was a connection between VTC and the Victorian Government. The letter requested that VTC provide confirmation and documentary evidence that VTC had amended its call centre scripts in order to ensure that customers were aware of all of the terms and conditions of the accommodation vouchers, the 10-day cooling off period, and to include a statement that the business is not affiliated with the Victorian Government in any way.
[6]See exhibit “SWR-1” to his affidavit sworn on 29 May 2009.

Mr Glenister provided written assurances to Consumer Affairs in relation to each of the above matters. He informed Consumer Affairs that VTC was changing its business name to “Getaways Club”. These assurances were also provided orally by Mr Glenister in a telephone conversation between Inspector Ridout and Mr Glenister on 6 September 2007.

As Consumer Affairs continued to receive customer complaints regarding VTC, on 16 October 2007 Inspector Ridout attended VTC’s offices and met with Mr Glenister. Mr Glenister stated that changes were being made to VTC’s business practices. He provided Inspector Ridout with a copy of the script used by VTC’s call centre staff.[7] Inspector Ridout told Mr Glenister that he was instructed to commence enforcement Action against VTC, and offered to draft an enforceable undertaking. A draft undertaking was sent to Mr Glenister on 2 November 2007.[8] Inspector Ridout and Mr Glenister continued to correspond regarding the enforceable undertaking and the provision of “cooling-off” notices to customers. As VTC did not execute an enforceable undertaking within the time nominated by Inspector Ridout, the offer to accept an enforceable undertaking lapsed. By this time, VTC had instructed Pryles & Co to act on VTC’s behalf in its dealings with Consumer Affairs. On 20 December 2007, Inspector Ridout moved to a different area of responsibility within Consumer Affairs, and responsibility for conduct of Consumer Affairs’ investigations into VTC passed to Inspector Foyster.
[7]Exhibit “SWR-10” – the script makes no reference to the 10-day cooling off period.
[8]Exhibit “SWR-19”.

Inspector Shane Foyster

Inspector Foyster has been a Consumer Affairs inspector since December 2007. He took over the investigation into VTC’s conduct and practices in January 2008. He first contacted Mr Glenister in or about 15 January 2008 when he raised the issue of VTC changing its business name, the possibility of VTC providing an enforceable undertaking to the Director, and concerns regarding VTC’s complaint-handling procedures. Mr Glenister stated that VTC was changing the business name, that complaints were only a small percentage of sales, and that Consumer Affairs’ proposed complaint-handling procedures would be too expensive.

Over the course of the following months, Inspector Foyster met with Mr Craig Sheilds and Ms Maryanne Hughes of VTC regarding unresolved customer complaints. He also met with a number of VTC customers (including customers who have sworn affidavits in this proceeding).

On 30 April 2008, the Magistrates’ Court issued a search warrant under section 122 of the Act, authorising Inspector Foyster and other Consumer Affairs officers to enter and search VTC’s premises. The search warrant was executed by Inspector Foyster and three other Consumer Affairs officers on 12 May 2008. During the course of the inspection, Inspector Foyster was informed that VTC did not make any recordings of any telephone conversations with its customers, but that sales were recorded on “sales sheets”. Inspector Foyster took possession of a bundle of sales sheets, along with a bundle of envelopes ready to be sent to purchasers, and arranged for the contents of a VTC computer to be imaged. During the course of the search, Mr Pryles, a solicitor, attended VTC’s premises.

Copies of the documents taken from VTC’s premises by Inspector Foyster are exhibited to his affidavit.[9] Further, at paragraph 27 of his affidavit, Inspector Foyster provides an account of his conversation with Mr Mark Mason, who identified himself as the manager of VTC.
[9]See exhibits “SCF-8” to SCF-14” of his affidavit inclusive.

(Inspector Foyster said) “You will notice the warrant states we are looking for recordings of telephone marketing agreements with consumers. Do you have any recordings of the agreements you make over the phone?”

(Mr Mason said) “No, we don’t record any of the conversation (sic). We don’t type them or write them down. All we have are sales sheets which we put into an envelope, and then take downstairs to be sent to purchasers. We don’t record anything. From time to time Stephen Glenister comes and collects the sales sheets, but that is all we have.”

At paragraph 28 of his affidavit, Inspector Foyster provides an account of a conversation with Ms Violet Arvanitis, who was sitting at the front desk of VTC’s office.

(Inspector Foyster said) “Hello, I am looking for any recordings you have of the telephone marketing agreements you make with purchasers. What do you record of the telephone calls? Where are the records?”

(Ms Arvanitis said) “The only thing we record are the sales sheets. Here there are heaps of them here.”

Ms Arvanitis handed Inspector Foyster a bundle of envelopes. The contents of three of the envelopes were reproduced at exhibit “SCF-9” to Inspector Foyster’s affidavit. Each “sales sheet” is a single page document. The right hand side of the page sets out the survey script, the answers provided by customers, the name of the surveyor and the first name, location and telephone number of the customer. The left hand side of the page records the VTC sales consultant’s name, the date, the customer’s name, address and credit card details, along with the amount paid and number of vouchers sold.

Inspector Foyster continued to correspond with VTC and Pryles & Co regarding outstanding customer complaints during the course of 2008. By September 2008, Consumer Affairs was aware of 73 outstanding customer complaints against VTC. He continued to meet with disgruntled VTC customers, each of whom stated that they had not been provided with notices informing them of the 10-day cooling-off period or cancellation notices. From his discussions with VTC customers, Inspector Foyster formed the view that despite assurances from VTC and its solicitors, VTC was not addressing the outstanding customer complaints.

Ms Mindy Chi Ai Lim

Ms Lim is a Compliance and Enforcement Officer in the office of the Director. She is also a qualified lawyer. Since 1 July 2008 she, along with Inspector Foyster, investigated consumer complaints made against VTC. Ms Lim deposed to the following matters:

(a) the issue by the Director of a Notice under s.106I(1) of the Act;

(b) correspondence between Consumer Affairs and Pryles and Co regarding compliance with the Notice;

(c) the issue of Supreme Court proceedings by the Director with respect to the Notice;

(d) the provision of information and documents by VTC to Consumer Affairs;

(e) the resolution of the Supreme Court proceeding in February 2009;

(f) the issue by the Director of further notices under s.106I of the Act directed at the Bendigo Bank and the Commonwealth Bank; and

(g) the examination under oath of Mr Mark Mason, Ms Violet Arvanitis and Ms Jacqui Reffo of VTC’s staff.

The transcripts of the examinations referred to in subparagraph 67(g) above were exhibited to Ms Lim’s affidavit. In the course of his examination, Mr Mason gave evidence about the management, staffing and operations of VTC, including the recruitment and training of telemarketing staff. Ms Arvanitis gave evidence about her employment history at VTC as a telemarketer and administrator, and matters such as VTC’s refund policy, training arrangements for VTC’s staff, VTC’s record keeping practices, the issues raised by customer complaints (including the quality of the packages and the alleged association with the Victorian Government), the use of “surveys” to identify potential customers, the use of scripts by telemarketers, VTC’s complaint handling arrangements, and Mr Glenister’s involvement in preparing VTC documentation. Significantly, Ms Arvanitis gave evidence that at one stage VTC did provide notices in the packages sent to consumers regarding the 10-day cooling-off period, but that this practice was discontinued because of the increasing number of cancellations which occurred.[10] Further, Ms Arvanitis gave evidence that the process for customers seeking a refund from VTC was designed to be deliberately complicated to deter customers from requesting refunds.[11]
[10]Page 130 of exhibit “MCAL-10”
[11]Page 104 of exhibit “MCAL-10”

Ms Jacqueline Reffo, an administrative assistant employed by VTC, gave evidence regarding the contents of the packages provided by VTC to its customers. She gave evidence that she was not instructed to include cancellation notices in the packages sent to customers.[12] She also gave evidence about the staffing and management arrangements at VTC, the use of “surveys” to identify prospective customers, the nature of the complaints received from VTC customers regarding VTC’s products and difficulties in obtaining refunds, and VTC’s response to those complaints.
[12]Page 17 of exhibit “MCAL-11”

During the course of the examinations referred to above, the former VTC staff were provided with and identified a number of documents used by VTC in its business, including scripts used by VTC sales staff, records kept by VTC in relation to sales made by VTC, promotional material used by VTC, and the contents of the packages sent by VTC to its customers.

Mr Glenister’s submissions

Mr Glenister attended the trial of the proceeding, but did not file any affidavits or offer to give evidence in rebuttal to the evidence led by the Director. He explained to the Court that he could no longer afford legal representation. He provided brief written submissions, which are summarised below. At my request, he provided me with an annotated version of the document produced by the Director titled “Findings sought against the first defendant and the second defendant by the plaintiff” to indicate which findings he disputed.

In his written submissions, Mr Glenister stated:

(a) the business name was changed from “Go Away Packages” to Victorian Tourism Centre in 2003 because the business received a number of referrals from the Victorian Tourism Authority kiosk in Federation Square;

(b) he had little day to day involvement in the operations of VTC;

(c) the business had a good product, employed many people, helped boost occupancy rates in country hotels, and was popular with its customers;

(d) complaints were received from less than one in one thousand customers;

(e) the business installed a $20,000 phone system (which could record telephone conversations with customers) in response to demands made by Consumer Affairs;

(f) Consumer Affairs’ concerns and investigations were motivated by a directive from the Victorian Tourism Authority to shut down VTC; and

(g) the conduct of Consumer Affairs caused VTC’s business to shut down, his coffee business to “shut down”, and his personal bankruptcy and health problems.

Mr Glenister’s annotations upon the document entitled “Findings sought against the First Defendant and the Second Defendant by the Plaintiff” shows that:

(a) Mr Glenister agrees with the findings sought in paragraphs 1 to 9 (refer to paragraph 29 above), save that he was only responsible for instructing VTC staff on how to deal with complaints and requests for refunds and authorising refunds up to September 2006, and that while VTC represented it had an affiliation with Tourism Victoria, it did not represent it had an association with the State Government;

(b) Mr Glenister denied that the findings in paragraphs 10 to 13 (regarding non payment of refunds) were correct; and

(c) Mr Glenister accepted that VTC had certain obligations under the telemarketing provisions and that Consumer Affairs had informed him of those requirements, but denied that VTC had breached these requirements. He stated that VTC had installed a telephone call recording system, to record customer agreements, at a cost of $20,000 (paragraphs 14 to 20 of the findings). He agreed that customers who cancelled their agreements were not always provided with an immediate refund, depending upon the staff member involved.

The summary of submissions referred to above are included in these reasons for the sake of completeness. No evidence was led (either in writing or orally) by Mr Glenister regarding these matters. In any event, many of Mr Glenister’s submissions are inconsistent with the evidence led on behalf of the Director, including the transcripts of the evidence given by VTC’s former staff in the course of their examinations.

Conclusions

Taking together the evidence tendered by the Director, being the customers’ evidence, the evidence of Consumer Affairs officers who investigated and dealt with VTC, the records of examination of VTC staff members, and the VTC documents gathered by Consumer Affairs staff during the course of their investigations and examinations, it is apparent that VTC’s conduct of its business operations under the management of Mr Glenister was, at best, ethically dubious and, at worst, transgressed the law.

First, the very use of the name “Victorian Tourism Centre”, coupled with the use of such slogans as “the place to see” on VTC’s promotional documents[13] had the effect of misleading consumers that VTC’s business was associated with the Victorian Government. In some cases, consumers were actually told by VTC staff that VTC was part of the State Government. The evidence from VTC’s customers is that they were influenced to purchase VTC’s packages by this perceived association. Despite assurances given by Mr Glenister to Consumer Affairs officers to the contrary, there is no evidence that VTC took any steps to cease using this business name or to inform customers of the correct position.
[13]Mr Glenister stated during the course of the hearing that he had got the idea for the slogan from the slogan used on Victorian vehicle registration plates, “The Place To Be”.

Secondly, VTC’s main mode of identifying and attracting potential customers was through the use of asking potential customers to participate in a survey, then later informing them that they had won a competition. The survey had no other purpose than to identify potential customers and to provide a pretext to call participants back in order to promote the packages. There was no competition.

Thirdly, VTC sales staff consistently oversold the value and benefits of the packages. In particular, there were restrictions on the ability of customers to use the accommodation vouchers in peak periods, and the range of accommodation options for which the vouchers could be used was more limited than that promised by VTC. Further, VTC staff led customers to believe that the discount card could be used to obtain a five per cent discount on groceries and petrol at the point of sale, when in fact the card only allowed discounted purchase of gift cards with a minimum spend. This feature of the package was the source of particular complaint by customers.

Fourthly, VTC staff, upon the instructions of Mr Glenister, made it very difficult for customers to obtain refunds from VTC. A number of customers who sought to cancel their contracts (and were within their rights to do so) only received refunds after Consumer Affairs officers made representations on their behalf. At the time that VTC ceased operations in late 2008, a number of customers had not received refunds.

Finally, VTC flagrantly breached the requirements of the telemarketing provisions. Despite the fact that a substantial proportion of VTC’s transactions involved the expenditure by customers in excess of $100.00, and that Consumer Affairs officers had drawn Mr Glenister’s attention to the telemarketing provisions on a number of occasions, the evidence demonstrates that:

(a) customers were generally not informed of the 10-day cooling-off period;

(b) customers were not provided with the notices required to be provided under the Act, in particular, notices which informed customers of their rights to cancel the agreement; and

(c) VTC did not have in place record keeping systems which recorded customers’ explicit informed consent, and arguably did not obtain the explicit informed consent of their customers.

Accordingly, I am satisfied that I should make the factual findings put forward on behalf of the Director, as set out in paragraph 29 of these reasons. I am also satisfied that, in making such findings, VTC has breached certain provisions of the Act. Further, I agree that the evidence tendered by the Director supports the conclusion that Mr Glenister contravened the Act, and was knowingly concerned with VTC’s contraventions of the Act.

In addition to the factual findings sought by the Director, I consider there is sufficient evidence to make the following additional factual findings, being that:

(a) VTC staff represented to customers that the holiday accommodation vouchers could be used at all times, including during weekends and peak holiday periods; and

(b) VTC represented that the discount cards purchased from VTC could be used by customers to obtain a five per cent discount on purchases from Coles, Safeway and other retail outlets at the point of sale.

Breaches of the Fair Trading Act 1999

The Director submitted that the factual findings lead to a conclusion that both VTC and Mr Glenister breached the following sections of the Act:

(a) section 9 (misleading and deceptive conduct);

(b) section 12 (making false representations); and

(c) part 4, division 2A (telephone marketing provisions).

The Director submitted that I should make the following orders under the Act:

A. Declarations pursuant to section 158(2)(h) of the Act (and section 36 of the Supreme Court Act) with respect to VTC’s and Mr Glenister’s breaches of the Act;

B. Injunctive relief pursuant to section 149 of the Act;

C. Orders for compensation and recovery of loss and damages pursuant to sections 149A and 158 of the Act; and

D. Publication of notices and an adverse publicity order pursuant to sections 149A and 153(1) of the Act.

Was VTC engaged in trade or commerce?

In order for VTC and/or Mr Glenister to be liable under section 9 or section 12 of the Act, or be subject to the requirements of the telemarketing provisions, the conduct complained of must be “in trade or commerce”. The authorities make it clear that the phrase “in trade or commerce” is to be given its plain and ordinary meaning.[14] In this case, there is no dispute (and nor could there be) that the telemarketing activities of VTC and its staff, and the entry into agreements with customers was conduct “in trade or commerce”.
[14]Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594.

Further, I note that for the purpose of determining whether either or both of VTC or Mr Glenister engaged in conduct in breach of the Act, the term “engaging in conduct” includes:[15]

(a) the doing of any act by the person;

(b) the refusal by the person to do any act; and

(c) the person refraining (otherwise than inadvertently) from doing an Act.

[15]See section 3 of the Act.

Goods and Services

In order for VTC and/or Mr Glenister to be subject to the requirements of the telemarketing provisions, the relevant agreement must be for goods or services “of a kind ordinarily used for personal, household or domestic use” (section 67A(1)(a)). The evidence demonstrates that the packages were ordinarily purchased for personal or domestic use.

Breaches by VTC

The Director submitted that VTC had engaged in misleading and deceptive conduct by:

(a) overcharging customers for the packages[16]; and

(b) refusing, delaying or failing to pay refunds in a timely manner to customers where the relevant agreement was void because it failed to comply with the telemarketing provisions of the Act, or the customers had lawfully rescinded the relevant agreements.

[16]See the affidavits of Louise Greenwood, Kathleen Squire and Merle Turner

Direct overcharging of customers clearly amounts to misleading or deceptive conduct (as well as breach of the relevant agreement).

The assertion that a failure to provide refunds, or failing to provide them in a timely manner, amounts to misleading or deceptive conduct that requires more analysis. In my view, the correct position is as follows: if a customer is entitled to a refund, either by the terms of the relevant contract, representations made by the VTC or its staff, a failure of consideration on the part of VTC (in that the accommodation packages or discount cards did not fulfil the apparent promises made by VTC), or by reason of the provisions of the telemarketing provisions of the Act, a failure by VTC to provide refunds, or its conduct in representing that customers had to provide a written request and reasons for the obtaining of refunds amounts to misleading or deceptive conduct because it misrepresents to customers the nature of their legal rights and entitlements. Further, it could be that a repeated failure by the VTC to fulfil its contractual obligations could be seen as indicative of misleading conduct in making the promises set out in the contracts.

A similar reasoning was adopted by Lee CJ in Holloway v Whitlam[17], where he noted that the evidence in the case before him showed that:

“The course of each transaction was substantially the same and a review of 13 transactions discloses almost a ‘pattern’ of conduct by the first defendant in regard to the manner in which he performed his part of the bargain, that pattern consisting of making promises and giving assurances which were consistently false and not fulfilled.”

[17](1990) 21 NSWLR 70 at 72.

This is a particularly apposite comment. Therefore, I find that by failing to give refunds to consumers, and by failing to provide refunds in a timely manner, VTC has breached section 9 of the Act.

The Director also submitted that VTC made false or misleading representations within the meaning of section 12 of the Act in that:

(a) the VTC represented that it or its business was part of the Government of Victoria or had sponsorship from, approval of or affiliation with the Government of Victoria when, in fact, neither VTC nor its business had ever been part of the Government of Victoria or had sponsorship from, approval of or affiliation with the Government of Victoria;

(b) the holiday accommodation vouchers supplied by VTC were non refundable; and

(c) customers could, for any reason, return the package, including accommodation, holiday vouchers and a discount card and would be refunded their money when in fact customers were asked for explanations and reasons for returning their packages and/or were required to fill in an application form requiring the customer to provide, amongst other things, reasons for returning the package as a condition or requirement of VTC considering whether or not to pay a refund or paying a refund.

As can be seen from the summary of customer evidence referred to above (and uncontradicted by evidence from VTC) there is cogent evidence available to the court to make a finding that VTC, through its marketing material, and in some cases by the statements of its representatives, claimed an affiliation with the Victorian Government that it simply did not have. It is not necessary to show that the material actually misled customers,[18] however, the evidence here is that customers were in fact misled.
[18]See Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1980) 149 CLR 191 at 198.

The Director’s submissions that VTC made misrepresentations regarding the ability of customers to obtain refunds appear at first glance to be contradictory. However, the evidence shows that the practices of VTC sales and administrative staff were inconsistent. VTC sales staff told prospective customers on the one hand that if they could not receive the packages without paying by credit card over the telephone, but if they were not happy with the packages, they could contact VTC and arrange an immediate refund. However, the customers’ evidence shows that many customers experienced lengthy and frustrating delays in obtaining refunds, and some did not receive refunds at all. In some cases, customers were told that the packages were not refundable, when in fact the customers were entitled to refunds by reason of representations made by VTC’s sales staff or by reason that the contracts were void by reason of the operation of section 67D(1) of the Act.

Accordingly, VTC is liable for making false representations with respect to goods and services by reason of both of the matters set out in subparagraphs 87(b) and (c), notwithstanding the apparently inconsistent nature of these representations.

Further, in addition to the declarations sought by the Director, it was apparent to me upon review of the evidence that other representations made by VTC to customers would fall within the ambit of section 12 of the Act. In particular, there is evidence that VTC had made false representations that its goods and services were of particular standard in contravention of sections 12(a) and 12(b) of the Act by:

(a) making representations to customers that the holiday accommodation vouchers were available for particular types of accommodation and were available during peak holiday periods that were not able to be made;[19] and

(b) by making representations to customers that they could obtain a five per cent discount on groceries, petrol and other goods and services by presenting a discount card at the relevant retailer at the point of sale, which were incorrect.[20]

[19]See, for example, the affidavits sworn by George Bartholomeuz and Sarah Sanderson.

[20]See, for example, affidavits sworn by Louise Greenwood, Robyn Murray, Amanda Prizzi, Kathleen Squire and Stephen Tippet.

I am satisfied by the evidence that it is open to the court to make findings that VTC breached section 12 of the Act in relation to the matters referred to above.

The written submissions of counsel for the plaintiff indicate that this is the first occasion upon which the telemarketing provisions have been subject to judicial consideration. Counsel for the plaintiff submitted that given the objectives of the telemarketing provisions, that is to ensure that consumers are able to make informed choices, to reduce the incidence and effectiveness of high pressure sales techniques, and to ensure consumers have an opportunity to reconsider a purchase made in the course of an unsolicited telephone call, I should construe the telemarketing provisions in a manner which gives effect to these purposes.

This proposition is uncontroversial. However, in my view, no particular problem of statutory construction arises in this case which would require me to determine whether I should adopt a literal or a purposive approach. Of course, if such a problem arose, I would adopt an expansive and purposive approach given that the telemarketing provisions are remedial in nature.

The evidence of VTC’s customers and Consumer Affairs officers, as well as the evidence of VTC staff given under oath during the examinations referred to in Ms Lim’s affidavit, transcripts of which were annexed to Ms Lim’s affidavit, also make it clear that VTC, whenever it sold packages of a value of $100 or more, breached the telemarketing provisions of the Act by failing to:

(a) obtain a purchaser’s explicit informed consent prior to making a telephone marketing agreement for the supply by VTC of the packages; and

(b) to record and keep for 12 months the purchaser’s consent to make the telephone marketing agreement contrary to the requirements of section 67D of the Act.

Section 67D(4)(c) provides that, in order for a consumer to give explicit informed consent to entering into a telemarketing agreement, the person acting on behalf of the supplier (in the current case, VTC’s sales staff) must clearly, fully and adequately disclose all matters relevant to the consent of the purchaser.

In my view, a customer’s right to cancel the agreement within the 10-day cooling off period must be a matter relevant to the consent of the customer. Indeed, section 67D(8) imposes a penalty upon a supplier for not disclosing these matters for the purposes of section 67D(4)(c). The customers’ evidence in this case overwhelmingly points to a conclusion that, by reason of the routine business practice of VTC, the matters relevant to procuring the explicit informed consent of customers were not disclosed.

In any event, even if these matters were disclosed, the sales sheets do not adequately record the consent given by the VTC’s customers. On one view, it is arguable that the fact that the customer provides his or her credit card details could be said to amount to consent, and the sales consultants’ written record of these details is sufficient recording of that consent. However, in my view, the recording of the customer’s consent must extend to recording the consent in a manner which evidences that the supplier has complied with section 67D(4)(c) of the Act, that is, the record must verify that the salesperson has disclosed all matters relevant to the consent, including an acknowledgement by the customer that they have been advised of the 10-day cooling off period. In the absence of a telephone recording device, this could be achieved by the salesperson checking a box which confirms that these matters (along with the key features of the package, including any exclusions) have been disclosed to the customer. However, the sales sheets do not adequately record these matters.

For completeness, while Mr Glenister’s submissions refer to a telephone recording system having been installed, there was no evidence regarding this matter, and the evidence tendered in court is inconsistent with this contention.

Finally, the evidence of the customers makes it clear that VTC did not within five days, or at all, after making telephone marketing agreements send to or serve upon the relevant purchaser:

(a) a document evidencing the agreement which sets out in full all the terms and conditions of the agreement and, in particular, including:

(i) the total consideration to be paid by the purchaser under the agreement; and

(ii) a notice on its front page in accordance with Part I of Schedule 2 of the Act advising the purchaser of the right to cancel the agreement (more familiarly referred to as a “cooling off” notice)

(b) a document evidencing the agreement which complies with section 163 of the Act by being clearly expressed and in the correct minimum font size; and

(c) a notice completed in accordance with Part II of Schedule 2 of the Act which could be used by the purchaser to cancel the agreement in contravention of sections 67E, 67F(1) and 163 of the Act.

The consequences of VTC’s non-compliance with the telemarketing provisions are as follows:

(a) if the relevant agreement is void for failure to comply with the requirement that VTC obtain and keep records of the customer’s explicit informed consent, the agreement is void (section 67D(1)) and VTC is under an obligation to repay any money paid by the purchaser under the purported agreement; and

(b) if VTC did not send a notice to its customer with the agreement document informing the customer of their right to cancel the agreement within 10 days of receipt of the agreement, the customer may cancel the agreement within six months of the date of the agreement by providing written or oral notice to VTC (sections 67H(3) and (6)). If the agreement is cancelled, VTC is obliged to immediately repay to the customer the money paid by the customer under the agreement (section 67J(1)).

The combined evidence of VTC’s customers and staff, along with the evidence of and documents obtained by Consumer Affairs inspectors demonstrates that at all material times:

(a) VTC regularly sold packages of a value of greater than $100.00;

(b) VTC staff routinely did not inform customers of their rights to cancel the agreement within 10 days of receipt of the package;

(c) VTC had no system in place to record the explicit informed consent of their customers (even if it could be said that such consent had been obtained);

(d) VTC did not send to customers agreement documents and notices (either “cooling off” or cancellation notices) required by the telemarketing provisions, despite being provided with precedent forms and notification of VTC’s obligations arising under the telemarketing provisions on a number of occasions. Indeed, the evidence suggests that VTC did in fact provide the required notices to customers for a period of time, but ceased to use them in response to a rise in the number of customer cancellations and request for refunds; and

(e) there was a pattern of conduct on the part of VTC whereby it refused to pay refunds immediately to customers upon request, and did not pay any refund at all to some customers.

Accordingly, it is open to the court to infer in a significant number of transactions that:

(a) the telemarketing provisions were applicable to the relevant agreement;

(b) the agreements were void or voidable by reason of:

(i) VTC’s failure to obtain and/or record the customer’s explicit informed consent; and

(ii) VTC failed to comply with its statutory obligations by failing to immediately refund payments made by customers in circumstances where the relevant agreements were void or voidable by reasons of sections 67D(1) or 67H(3) of the Act.

Breaches by Mr Glenister

In relation to Mr Glenister, the Director submitted that Mr Glenister has engaged in conduct which was misleading or deceptive or likely to mislead or deceive in contravention of section 9 of the Act by:

(a) refusing, refraining or failing to ensure that VTC did not represent to its customers that VTC or its business were part of the Government of Victoria or had sponsorship approval of or affiliation with the Government of Victoria;

(b) refusing, refraining or failing to ensure that VTC obtained purchasers’ explicit informed consent prior to making any telephone marketing agreements;

(c) refusing, refraining or failing to ensure that VTC, within five days or at all after making telephone marketing agreements, served on a purchaser:

(i) a document evidencing the agreement and a notice advising the purchaser of the right to cancel the agreement;

(ii) a document evidencing the agreement which complies with the requirements of section 163 of the Act by being clearly expressed and in the correct minimum font size; and

(iii) a notice completed in accordance with Part II of Schedule 2 of the Act which could be used by the purchaser to cancel the agreement

(d) refusing, refraining or failing to ensure that VTC recorded and kept for 12 months the purchaser’s consent to make a telephone marketing agreement for the supply by VTC of the package; and

(e) refusing, refraining or failing to pay refunds in a timely manner to customers of VTC:

(i) with whom the agreement was void because it was purported to be contrary to the requirements of section 67D of the Act; or

(ii) had lawfully rescinded their agreements with VTC.

The Director also sought declarations that Mr Glenister had by making representations to customers of VTC that the packages were not refundable:

(a) made a false or misleading representation concerning the existence, exclusion or effect of a condition, right or remedy in contravention of section 12(k) of the Act; or

(b) made a false or misleading representation in a material particular in contravention of section 12(n) of the Act.

Further and alternatively, the Director sought declarations that Mr Glenister by being the person responsible for content and form of the agreement letters, vouchers, booklets and other material published or produced by VTC, was a person involved in the contraventions by VTC of sections 9, 12, 67D, 67E, 67F and 163 of the Act.

The evidence of the Consumer Affairs officers regarding their communications with Mr Glenister, demonstrate that despite Mr Glenister being informed over a number of occasions of the requirements of the telemarketing provisions, VTC consistently failed to take steps to implement procedures to comply with the requirements of the telemarketing provisions. As the sole director of VTC, Mr Glenister was certainly knowingly involved in contraventions of the Act by VTC of the telemarketing provisions and, to the extent that VTC was found to be engaging in misleading or deceptive conduct by representing to consumers that it was part of the Government of Victoria, was a person knowingly concerned in those contraventions.

Further, the evidence of VTC’s staff demonstrates that Mr Glenister was actively involved in setting VTC’s refund policy: while there is no evidence that Mr Glenister was personally involved in decisions made by VTC staff to refuse to provide or delay providing refunds to particular customers, there is evidence that Mr Glenister refused to sign more than two refund cheques each week, which had the practical effect of at least delaying the provision of refunds to individual customers where they had a statutory or other right to claim refunds.

However, there is no direct evidence that Mr Glenister personally made representations to customers that the packages were not refundable.

Remedies

The Director seeks the following remedies in relation to the contraventions by VTC and Mr Glenister of the Act:

(a) declarations regarding breaches of sections 9 and 12 and the telemarketing provisions;

(b) injunctive relief;

(c) orders for the payment of refunds and compensation; and

(d) the publishing of a public notice/adverse publicity order.

Further, the Director also seeks against Mr Glenister declarations, injunctive relief, orders for compensation and an adverse publicity order in relation to breaches of sections 9 and 163 of the Act.

It is established law that in proceedings such as this, where a public official has brought civil proceedings in consumer protection matters, that the principles governing the grant of injunctive and declaratory relief in public interest proceedings differ from the considerations that affect proceedings between private parties.

The purpose of these proceedings is not only to prevent or compensate for injury done by contravention of a certain provision but also to enforce or induce compliance with the law.[21] It is accepted that the purpose of these proceedings is not simply to restrain unlawful conduct by individual businesses and persons, but to also establish and enforce a statutory norm of conduct. These considerations are particularly relevant in determining the relief applicable in this case in circumstances where the VTC is in liquidation and has no assets to meet any compensation orders and costs, and where Mr Glenister is bankrupt. However, in determining what relief ought to be granted, I am mindful of the fact that any relief by the court must have some utility. In particular, one can question the utility of making orders for the provision of refunds or payment of compensation in circumstances where the customers concerned are unlikely to be able to recover from either of the two defendants. Furthermore, the insolvency of both VTC and Mr Glenister means that it may be practically difficult for either of them to comply with the orders sought in relation to the publication of notices.
[21]Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (2000) 200 CLR 591 at 622.

Declarations

Having regard to the findings made above regarding VTC’s and Mr Glenister’s contraventions of the Act, it is appropriate to make declarations substantially in the terms of the orders sought by the Director as well as declarations in relation to my findings that VTC has breached sections 12(a) and (b) of the Act in relation to the representations it made regarding the attributes of the holiday packages, save that there is insufficient evidence before me to justify making a declaration that Mr Glenister personally made representations to customers that the packages were not refundable.

Injunctions

The Director seeks injunctive relief against both defendants: in the case of VTC, injunctions seeking to restrain VTC from refusing to pay refunds to customers and requiring it to pay refunds to customers; and, as against Mr Glenister, injunctions restraining him from engaging in certain conduct in the future.

While I accept that the considerations affecting the grant of remedies in public interest proceedings are different from those applicable to private litigation, there must be at least some utility in granting the injunctions. In the case of VTC, the company is under the control of a liquidator, who has informed the court that VTC has no assets. Accordingly, granting injunctive relief against VTC in the terms sought would have limited practical utility.

However, although Mr Glenister is currently bankrupt, there is some practical utility in granting the relief sought, in the event that he conducts a business in the future. Furthermore, granting the injunctions will have a deterrent effect, by demonstrating that the court is prepared to grant such relief in cases of this nature.

Publication of Notices and Adverse Publicity Orders

The Director seeks orders that VTC and/or Mr Glenister publish prominent notices in the major metropolitan daily newspapers in the form annexed to the Director’s draft minute of orders. Of course, for such orders to have any deterrent effect, it is appropriate that the declarations and injunctions be published to deter similar contravening conduct by other businesses, and for members of the public to be alert to possible unlawful conduct in their dealings with other businesses. The contents of the notice will of course reflect the nature of the orders.

Subject to some refinements in accordance with the proposed orders, it would be consistent with the objectives of the consumer protection provisions of the Act to require the publication of notices substantially in the form sought by the Director. However, the question arises as to who should arrange and pay for these notices. While the Director seeks orders that VTC and/or Mr Glenister be responsible for arranging and paying for the relevant advertisements, there may be practical problems in making such an order. First, VTC is in liquidation, and there are no assets from which the liquidator could fund the purchase of advertisements. There is certainly no basis upon which I could make an order that the liquidator personally fund the advertisements. Mr Glenister is bankrupt, and while he has not given evidence under oath upon these matters, I can readily infer that he has limited resources from which to fund the advertisements.

Enquiries made of “The Age” and the “Herald-Sun” regarding the cost of advertising space in the relevant pages of the weekday editions of these newspapers for notices of the size proposed by the Director are as follows:

(a)“The Age”: $16,861 (black and white) and $22,763 (colour); and
(b)the “Herald-Sun”: $36,787.80 (black and white) and $47,824.00 (colour) (noting that an advertisement of this size is a full page advertisement in a tabloid newspaper).

One option would be for the Director to arrange and pay for the advertisements of whatever size and style the Director thinks appropriate, with the costs of the advertisements to form part of the costs of the proceeding. While I acknowledge that recovery of these costs will be difficult, it may be that it is in the public interest, and therefore the additional burden upon the government’s resources is warranted.

Refunds, Compensation, Recovery of Loss or Damage

The court certainly has a basis upon which to order that the defendants pay refunds and/or compensation to the identified complainants: in particular, refunds to Mr George Bartholomeuz, Ms Shirley Louden, Ms Robyn Murray, Ms Amanda Prinzi, Mr Jamie Roberts and Mr Stephen Tippett. The court is also entitled to give orders that compensation be payable to identified customers. While there is no actual loss suffered by the customers who have given evidence, it is also possible for the court to order aggravated damages for the anxiety, stress and vexation caused by VTC’s conduct. I note that Hansen J, in Cousins v Merringtons Pty Ltd & Anor (No. 2),[22] has found that aggravated damages are recoverable under section 158 of the Act.
[22](2008) VSC 340 at 53

However, questions again arise as to utility of making orders for the provision of refunds and compensation. Neither VTC or Mr Glenister have any assets of any value. It is possible that any order for the payment of damages is unlikely to be able to be enforced. However, I will make orders that Mr Glenister pay refunds to the customers referred to in paragraph 136.

Further, the proposed public notice that was proposed to be ordered by the court included a statement that VTC and Mr Glenister are required to pay a refund compensation and/or damages to all customers of VTC with whom VTC tried to enter into a telephone marketing agreement for the supply of a package including holiday accommodation vouchers and a discount card for the purchase of various goods and services. The draft notice prepared by the Director invites VTC customers who wish to apply for a refund contact either VTC’s liquidator or Mr Glenister.

While of course the publication merely draws the attention of consumers to rights they may have under agreements which are either void or voidable at the instance of the relevant customer, it seems to me that making a public advertisement in such a form would simply create more confusion and aggravation among customers than they already experienced. If VTC ceased its operations more than two years ago, it is unlikely that customers who have not already complained to VTC or Consumer Affairs would seek refunds, except if prompted by the advertisement.

It seems to me that inviting these customers to contact VTC’s liquidator or Mr Glenister to seek refunds would confer no practical benefits upon the customers concerned, and only serve to create an undue administrative burden upon VTC’s liquidator. The court is not in the business of making orders of limited or no utility, especially if they may cause undue inconvenience to third parties.

Accordingly, subject to any submissions, the Director may wish to make regarding the publication of notices, I propose to make the following orders:

As against AUSTRALIAN TOURISM CENTRE PTY LTD (ACN 108 356 387) (In Liquidation), the First Defendant.

A.DECLARATIONS
The Court declares pursuant to section 36 of the Supreme Court Act 1986 or section 158(2)(h) of the Fair Trading Act 1999 (Vic) (“the Act”) that:

Misleading or Deceptive Conduct – Section 9 of the Act

In the period about September 2004 to December 2008 (“the period”)
Australian Tourism Centre Pty Ltd trading as Victorian Tourism Centre (“Victorian Tourism Centre”) has, in trade or commerce, engaged in conduct which was misleading or deceptive or likely to mislead or deceive in contravention of section 9 of the Act by:
(a)taking out, charging, or withdrawing more money from a customer’s credit card account in purported payment of an agreement for the purchase of a package including:
(i)      holiday accommodation vouchers; and
(ii)     a discount card for purchase of groceries; petrol; personal computers; communications; electronics; and entertainment goods; and restaurant meals at discount prices, being goods or services of a kind ordinarily used for personal, household, or domestic use (“various goods and services”) –
than was agreed to or authorised by the customer;
(b)refusing, delaying, or failing to pay refunds in a timely manner to customers:
(i) with whom the purported agreement to supply a package including holiday accommodation vouchers and a discount card for purchase of various goods and services was void because it was purported to be made without the explicit informed consent of the purchaser, contrary to the requirements of section 67D of the Act; or
(ii)     who had lawfully rescinded their agreements with Victorian Tourism Centre to supply a package including holiday accommodation vouchers and a discount card for purchase of various goods and services.

False or Misleading Representations – Section 12 of the Act

Victorian Tourism Centre, in trade or commerce, in connection with the supply, possible supply, or promotion of the supply of goods or services, namely a package including holiday accommodation vouchers and a discount card for purchase of various goods and services, by making to customers of Victorian Tourism Centre representations in the period that:
(a)Victorian Tourism Centre or its business was, or both Victorian Tourism Centre and its business were, part of the Government of Victoria or had sponsorship from, approval of, or affiliation with the Government of Victoria when, in fact, neither Victorian Tourism Centre, nor its business, has ever been part of the Government of Victoria or had sponsorship from, approval of, or affiliation with the Government of Victoria;
(b)the holiday accommodation vouchers supplied by Victorian Tourism Centre were non-refundable;
(c)customers could, for any reason, return the package including accommodation holiday vouchers and a discount card for purchase of various goods and services supplied by Victorian Tourism Centre and would be refunded their money when, in fact, customers were asked for explanations and reasons for returning the packages and/or required to fill in an application form requiring the customer to provide, amongst other things, reasons for returning the package as a condition or requirement of Victorian Tourism Centre considering whether or not to pay a refund or paying a refund; and
(d)the holiday accommodation vouchers were available for a wide range of accommodation types and locations and were able to be used during weekends and peak holiday periods; and
(e)the discount card could be used to obtain a discount upon groceries, petrol and other goods and services from major retailers by presenting the card at the point of sale
has:
(f)made a false representation that its goods or services are of a particular standard in contravention of sections 12(a) and 12(b) of the Act;
(g)represented that goods or services supplied by Victorian Tourism Centre have a sponsorship, approval, or benefits they do not have in contravention of section 12(e) of the Act;
(h)represented that Victorian Tourism Centre has a sponsorship, approval, or affiliation that Victorian Tourism Centre does not have in contravention of section 12(f) of the Act;
(i)made a false or misleading representation concerning the existence, exclusion, or effect of a condition, right, or remedy in contravention of section 12(k) of the Act; and
(j)made a representation that was false, misleading, or deceptive in a material particular in contravention of section 12(n) of the Act.

Requirements for a Telephone Marketing Agreement – Division 2A, Part 4 of the Act and consumer documents to be clear – Section 163 of the Act

The agreements made over the telephone in the period between Victorian Tourism Centre as the supplier for the supply of a package including holiday accommodation vouchers and a discount card for purchase of various goods and services and consumers where the total price payable by the consumer as the purchaser under the agreements was more than $100.00 were telephone marketing agreements for the purposes of Division 2A of Part 4 of the Act.
In the period, Victorian Tourism Centre as the supplier failed, either directly or by a person acting on its behalf, to:
(a)obtain a purchaser’s explicit informed consent prior to making a telephone marketing agreement for the supply by Victorian Tourism Centre of a package including holiday accommodation vouchers and a discount card for the purchase of various goods and services; and
(b)record and keep for 12 months the purchaser’s consent to make the telephone marketing agreement for the supply by Victorian Tourism Centre of a package including holiday accommodation vouchers and a discount card for the purchase of various goods and services –
contrary to the requirements of section 67D of the Act.
In the period, Victorian Tourism Centre, as the supplier, entered, or purported to enter, into one or more telephone marketing agreements without Victorian Tourism Centre, in the telephone negotiations leading to the relevant agreement, or purported agreement, advising the purchaser of the right to cancel the agreement within the cooling-off period applying to that agreement, contrary to the requirements of section 67D(8) of the Act.
Victorian Tourism Centre did not within 5 days (or at all), after making one or more telephone marketing agreements for the supply by Victorian Tourism Centre of a package including holiday accommodation vouchers and a discount card for the purchase of various goods and services, send to or serve on the purchaser:
(a)a document evidencing the agreement which sets out, in full, all the terms and conditions of the agreement and, in particular, including:
(i) the total consideration to be paid by the purchaser under the agreement; and
(ii) a notice on its front page, in accordance with Part 1 of Schedule 2 of the Act, advising the purchaser of the right to cancel the agreement; and
(b)a document evidencing the agreement which complies with the requirements of section 163 of the Act by being clearly expressed and in the correct minimum font size; and
(c)a notice completed in accordance with Part 2 of Schedule 2 of the Act which could be used by the purchaser to cancel the agreement –
in contravention of sections 67E, 67F(1), and 163 of the Act.

As against STEPHEN IAN GLENISTER, the Second Defendant.

A.DECLARATIONS
The Court declares pursuant to section 36 of the Supreme Court Act 1986 or section 158(2)(h) of the Act that:

Misleading or Deceptive Conduct – Section 9 of the Act

In the period from about September 2004 to about December 2008 (“the period”) Stephen Ian Glenister has, in trade or commerce, engaged in conduct which was misleading or deceptive, or likely to mislead or deceive, in contravention of section 9 of the Fair Trading Act 1999 (“the Act”) by:
(a)refusing, refraining, or failing to ensure that Australian Tourism Centre Pty Ltd ACN 108 356 387 (In Liq) trading as Victorian Tourism Centre (“Victorian Tourism Centre”) did not represent to its customers that Victorian Tourism Centre or its business were part of the Government of Victoria or had sponsorship from, approval of, or affiliation with, the Government of Victoria;
(b)refusing, refraining, or failing to ensure that Victorian Tourism Centre obtained a purchaser’s explicit informed consent prior to making any telephone marketing agreement for the supply by Victorian Tourism Centre of a package including holiday accommodation vouchers and a discount card for the purchase of various goods and services;
(c)refusing, refraining, or failing to ensure that Victorian Tourism Centre, within 5 days, or at all, after making the telephone marketing agreements referred to in paragraph 4 above, served on the purchaser:
(i) a document evidencing the agreement and a notice advising the purchaser of the right to cancel the agreement;
(ii) a document evidencing the agreement which complies with the requirements of section 163 of the Act by being clearly expressed and in the correct minimum font size; and
(iii) a notice completed in accordance with Part 2 of Schedule 2 of the Act which could be used by the purchaser to cancel the agreement;
(d)refusing, refraining, or failing to ensure that Victorian Tourism Centre recorded and kept for 12 months a purchaser’s consent to make a telephone marketing agreement for the supply by Victorian Tourism Centre of a package including holiday accommodation vouchers and a discount card for the purchase of various goods and services; and
(e)refusing, refraining, or failing to pay refunds in a timely manner to customers of Victorian Tourism Centre:
(i) with whom the purported agreement to supply a package including holiday accommodation vouchers and a discount card for purchase of various goods and services was void because it was purported to be made without the explicit informed consent of the purchaser, contrary to the requirements of section 67D of the Act; or
(ii) who had lawfully rescinded their agreements with Victorian Tourism Centre to supply a package including holiday accommodation vouchers and a discount card for purchase of various goods and services.
Further and alternatively, Mr Glenister was involved in contraventions of the Act by Victorian Tourism Centre – Section 145 of the Act
As a result of information or advice provided to Mr Glenister in the period about July 2004 to about late 2008 by officers of Consumer Affairs Victoria, as deposed to in accompanying affidavits, and being the person responsible for the content and form of the agreement letters, vouchers, booklets, and other material published or produced by Victorian Tourism Centre, Mr Glenister was a person involved in (by being, directly or indirectly, knowingly concerned in or party to) the contraventions by Victorian Tourism Centre of sections 9, 12, 67D, 67E, 67F, and 163 of the Act (as set out in paragraphs 1 to 6 above).

INJUNCTIVE RELIEF

The Court orders pursuant to section 149 of the Act that Stephen Ian Glenister be restrained from:
(a)making or causing to be made, or being directly or indirectly knowingly concerned in or party to any person or company making, representations that either the person or goods or services (supplied by the person) are:
(i)      either part of or supplied by the Government of Victoria when they are not; or
(ii)     has or have sponsorship from, approval of, or affiliation with the Government of Victoria when they do not;
(b)making or causing to be made or being directly or indirectly knowingly concerned in or party to any person or company making unqualified representations in relation to the supply, in trade or commerce, of goods or services to the effect that the goods or services are “non-refundable” or that there are “no refunds” for the goods or services;
(c)allowing or permitting or being directly or indirectly knowingly concerned in or party to any person or company supplying, in trade or commerce, goods or services of a kind ordinarily used for personal, household, or domestic use, where the supply is to be under or covered by or governed by a telephone marketing agreement as defined in section 67A of the Act:
(i)      without obtaining prior to making the telephone marketing agreement the purchaser’s explicit informed consent, that is, consent to make the agreement given by the purchaser in writing signed by the purchaser or orally and recorded by the supplier either in writing or with the purchaser’s prior consent, by means of a recording device; and
(ii)     without sending to or serving on the purchaser:
(A)a document evidencing the agreement and a notice advising the purchaser of the right to cancel the agreement;
(B)a document evidencing the agreement which is clearly expressed and in so far as it is typed or printed, in at least 10 point Times New Roman or equivalent font size; and
(C)a notice completed in accordance with Part 2 of Schedule 2 of the Act which could be used by the purchaser to cancel the agreement; and
(iii)   without ensuring that the supplier records and keeps for 12 months a purchaser’s consent to make a telephone marketing agreement for the supply of the relevant goods or services.
The Court orders pursuant to section 149A of the Act that Stephen Ian Glenister:
(a)ensures that where he supplies or any other person or company of whom he is in effective control supplies, whether by their employees, agents, or otherwise, in trade or commerce, goods or services of a kind ordinarily used for personal, household, or domestic use (“the supplier”) and where the supply of the goods or services is to be under or covered by or governed by a telephone marketing agreement as defined in section 67A of the Act:
(i)      the supplier obtains, prior to making the telephone marketing agreement, the purchaser’s explicit informed consent, that is, consent to make the agreement given by the purchaser in writing signed by the purchaser or orally and recorded by the supplier, either in writing or with the purchaser’s prior consent, by means of a recording device;
(ii)     sending to or serving on the purchaser:
(A)a document evidencing the agreement and a notice advising the purchaser of the right to cancel the agreement;
(B)a document evidencing the agreement which is clearly expressed and in so far as it is typed or printed, in at least 10 point Times New Roman or equivalent font size; and
(C)a notice completed in accordance with Part 2 of Schedule 2 of the Act which could be used by the purchaser to cancel the agreement; and
(iii)   the supplier records and keeps for 12 months a purchaser’s consent to make a telephone marketing agreement for the supply of the relevant goods or services.
The Court orders pursuant to section 149A of the Act that Stephen Ian Glenister pay refunds to Mr George Bartholomeuz, Ms Shirley Louden, Ms Robyn Murray, Ms Amanda Prizzi, Mr Jamie Roberts and Mr Stephen Tippet.

As against both defendants

PUBLISHING PUBLIC NOTICE / ADVERSE PUBLICITY ORDER

The Court orders pursuant to section 149A of the Act that the Director, on behalf of the defendants, may cause to be published, within 28 days of this Order a Public Notice consistent with the terms of these reasons and orders in each of “The Age” and the “Herald Sun”, the size and placements of the notice to be determined by the Director.

COSTS

The Second Defendant pay the Plaintiff’s costs, such costs to include the costs of publishing the Public Notices referred to in paragraph 12 of these orders.

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[2010] VSC 571

9 December 2010