Director of Consumer Affairs Victoria v Mecon Insurance Pty Ltd
[2016] VSC 42
•12 FEBRUARY 2016
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
S CI 2014 06868
| DIRECTOR OF CONSUMER AFFAIRS VICTORIA | Plaintiff |
| v | |
| MECON INSURANCE PTY LTD & ANOR | Defendants |
---
JUDGE: | ELLIOTT J |
WHERE HELD: | MELBOURNE |
DATE OF HEARING: | ON THE PAPERS |
DATE OF JUDGMENT: | 12 FEBRUARY 2016 |
CASE MAY BE CITED AS: | DIRECTOR OF CONSUMER AFFAIRS VICTORIA v MECON INSURANCE PTY LTD |
MEDIUM NEUTRAL CITATION: | [2016] VSC 42 |
---
DECLARATORY RELIEF – Jurisdiction – Discretion – Circumstances where properly exercised – Effect of consent - Fire Services Levy Monitor Act 2012 (Vic), ss 26, 31, 102 and 105 - Supreme Court Act 1986 (Vic), s 36.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Consumer Affairs Victoria | |
| For the Defendants | Minter Ellison Lawyers |
HIS HONOUR:
A. Introduction
The plaintiff, the Director of Consumer Affairs Victoria (“the Director”), has continued[1] this proceeding against the defendants, Mecon Insurance Pty Ltd (“Mecon Insurance”) and Mechanical and Construction Insurance Pty Ltd (“Mecon”), for contraventions of various provisions of the Fire Services Levy Monitor Act 2012 (Vic) (“the Act”).
[1]The Director was substituted for the original plaintiff, the Fire Services Levy Monitor (“the Monitor”), by order of this court made on 13 March 2015 and pursuant to s 137A of the Australian Consumer Law and Fair Trading Act 2012 (Vic).
On 7 December 2015, following mediation, the parties provided to the court minutes of consent orders without any supporting material. The proposed orders sought declarations that the defendants had contravened ss 26 and 31 of the Act and an order, pursuant to s 102 of the Act, that Mecon Insurance and Mecon cause a notice to be published acknowledging such contraventions.
At the directions hearing on 11 December 2015, the parties were informed that the orders sought would not be made unless the court was satisfied that it was appropriate to exercise its discretion to award declaratory relief.[2]
[2]Ainsworth v Criminal Justice Commission (1992) 175 CLR 564, 581.8-582.5 (Mason CJ, Dawson, Toohey and Gaudron JJ) and 595.9-596.8 (Brennan J).
The parties were also referred to the fact that s 102 of the Act is only enlivened where a person is “found guilty of an offence against” the Act or where a person is “found to have contravened a pecuniary penalty provision” of the Act.[3] No such findings have been made in this proceeding.[4] The parties agreed that the orders sought should be amended accordingly.
[3]The Act, s 102(1).
[4]There was no allegation the defendants had committed an offence under the Act: cf ss 43 and 65-69. Further, although ss 26 and 31 are defined as “penalty provisions” (s 3), there was no application for a pecuniary penalty to be imposed under division 3 of Part 4 of the Act.
As a result, directions were made for the filing of any materials upon which the parties would rely to support their application for the relief sought.
On 2 February 2016, the Director filed a statement of agreed facts[5] and submissions, both of which were, in essence, subsequently adopted by the defendants.
B. Contraventions of the Act
[5]Pursuant to s 191(2) of the Evidence Act 2008 (Vic), evidence is not required to prove the existence of an agreed fact.
B.1 Statutory context
Prior to 1 July 2013, insurance companies insuring against fire were required to contribute to the funding of the Metropolitan Fire Brigade[6] and the Country Fire Authority,[7] depending on the location of the insured properties. These contributions were funded by including a levy in the premium payable for a policy of insurance against fire (“the Fire Services Levy”).[8]
[6]Metropolitan Fire Brigades Act 1958 (Vic), s 37(1)(c).
[7]Country Fire Authority Act 1958 (Vic), s 76(1)(b).
[8]See the Act, s 3.
From 1 July 2013, insurance companies were no longer required to make such contributions as the funds were instead collected under the Fire Services Property Levy Act 2012 (Vic) (“the Fire Services Levy Reform”).[9]
[9]As adjusted by the Fire Services Property Levy Act 2012 (Vic), ss 97(1) and 105(1).
The parties seek a declaration that Mecon Insurance and Mecon contravened s 26 of the Act. Section 26(1) of the Act states:
An insurance company contravenes this section if it engages in price exploitation in relation to the [F]ire [S]ervices [L]evy [R]eform.
Section 26(2) of the Act states that an insurance company has engaged in price exploitation if:
(a) the insurance company issues a regulated contract of insurance; and
(b) the price for the supply of the regulated contract of insurance is unreasonably high having regard to—
(i) the [F]ire [S]ervices [L]evy [R]eform;
(ii) the amount to be contributed under section 37 of the Metropolitan Fire Brigades Act 1958 by insurance companies insuring against fire property situated within the metropolitan district;
(iii) the amount to be contributed under section 76 of the Country Fire Authority Act 1958 by insurance companies insuring against fire property situated within the country area of Victoria;
(iv) the historical fire services levy rates charged by the insurance company;
(v) the costs of supplying insurance against fire;
(vi) any other prescribed matters.
Further, the parties seek a declaration that the defendants contravened s 31 of the Act, which states:
A person must not engage in any conduct in trade or commerce which—
(a)falsely represents (whether expressly or impliedly) the effect, or likely effect, of the [F]ire [S]ervices [L]evy [R]eform; or
(b)misleads or deceives, or is likely to mislead or deceive, any person about the effect or likely effect, of the [F]ire [S]ervices [L]evy [R]eform.
The defendants were insurance companies under the Act, meaning that they issued, or undertook liability under, policies of insurance against fire in respect of property in Victoria.[10]
[10]See the definition of “insurance company”, the Act, s 3.
During the period 1 July 2013 to 31 May 2014, Mecon Insurance and Mecon issued “regulated contracts of insurance”, being policies of insurance against fire or combined or comprehensive policies of insurance which include insurance against fire (“the Relevant Policies”).[11]
[11]See the definition of “regulated contract of insurance”, the Act, s 3.
During the same period, the defendants collected premiums in respect of the Relevant Policies. The premiums included an amount payable for the Fire Services Levy despite the Fire Services Levy Reform.
As a result of this conduct, and in light of s 26(2) of the Act, Mecon Insurance and Mecon engaged in price exploitation in contravention of s 26(1) of the Act.
Also from 1 July 2013 to 31 May 2014, Mecon Insurance and Mecon issued invoices or other documents in relation to the Relevant Policies which specified that an amount or component of each premium payable was for the Fire Services Levy.
Further, during that period, the defendants issued documents relating to the Relevant Policies that stated:
“Notice relating to Fire Services Levy for insured property located in Victoria” and “Cancellation” – “In the event that this policy is terminated by you, where you are entitled under the Policy to a refund of premium, the component of the premium relating to Victorian Fire Services Levy will not be refunded to you.”
Such conduct contravened s 31 of the Act as it suggested that Mecon Insurance and Mecon remained under an obligation to contribute to the Metropolitan Fire Brigade and the Country Fire Authority, and therefore collect the Fire Services Levy, despite the implementation of the Fire Services Levy Reform.[12]
[12]See par 8 above.
C. Declaratory relief sought
The minutes of proposed consent orders provided to the court included 2 proposed declarations:
(1) In the period 1 July 2013 to 31 May 2014, Mecon Insurance Pty Ltd (ACN 059 310 904) and Mechanical and Construction Insurance Pty Ltd (ACN 106 907 055) issued regulated contracts of insurance in respect of property in Victoria (“Insurance Contracts”) and the price for the supply of the Insurance Contracts was unreasonably high having regard to the matters specified in s 26(2)(b)(i) to (vi) of the Act and because the companies collected money under insurance contracts as a Fire Services Levy after 1 July 2013, Mecon Insurance and Mecon thereby contravened s 26 of the Act.
(2) In the period 1 July 2013 to 31 May 2014, Mecon Insurance and Mecon in trade or commerce, engaged in conduct that falsely represented to some persons incepting or renewing Insurance Contracts that a component of their insurance premium was attributable to or charged for or required to be paid as a Fire Services Levy, when in fact that was not the case from 1 July 2013, and have thereby falsely represented the effect or likely effect of the Fire Services Levy Reform and contravened s 31 of the Act.
D. Power to make declarations under the Act
Section 105(1) of the Act gives the court the power to make "any order it considers fair” where first, the court finds that the person against whom the proceedings were brought (defined as “the accused”) has contravened a provision of the Act and, second, where another person has suffered or may suffer loss or damage as a result of that contravention. Section 105(2) then sets out some examples of the kinds of orders the court may make, including, in s 105(2)(g), “an order declaring that the accused has contravened a provision of this Act”.
For the purposes of the proposed declarations, the parties’ statement of agreed facts establishes that the defendants contravened ss 26 and 31 of the Act. Further, the statement of agreed facts, supported by affidavit material filed earlier with the court, provides evidence of the loss or damage suffered by various customers of the defendants who were charged the Fire Services Levy as part of their insurance premiums. The court’s power to make declarations under the Act is therefore enlivened.
E. Declarations generally
The court’s jurisdiction to grant declaratory relief is not in issue.[13] The exercise of the discretionary power is not possible or desirable to fetter.[14] A proceeding is not open to objection on the ground that a merely declaratory judgment is sought.[15] However, certain factors are relevant to the consideration of the appropriateness of declaratory relief in a particular circumstance:
[13]See, for example, C E Heath Casualty & General Insurance Ltd v Pyramid Building Society (in liquidation) [1997] 2 VR 256, 283.9-285.5 (Phillips JA) and the cases there cited.
[14]Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421, 437.9 (Gibbs J).
[15]Supreme Court Act 1986 (Vic), s 36.
(1) The declaratory relief “must be directed to the determination of legal controversies and not to answering abstract or hypothetical questions”.[16]
[16]Ainsworth v Criminal Justice Commission (1992) 175 CLR 564, 582.2 (Mason CJ, Dawson, Toohey and Gaudron JJ).
(2) The plaintiff or applicant must have a “real interest” in seeking the relief.[17]
[17]Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421, 437.10 (Gibbs J), citing Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438, 448 (Lord Dunedin).
(3) There must be a “proper contradictor” in the sense of a person who has “a true interest to oppose the declaration sought”.[18] In appropriate cases, this requirement may be fulfilled notwithstanding the declarations are sought by consent.[19]
(4) Declaratory relief may not appropriate where the “declaration will produce no foreseeable consequences for the parties”.[20]
[18]Ibid, 438.1.
[19]Australian Competition and Consumer Commission v MSY Technology Pty Ltd (2012) 201 FCR 378, 387 [30] (Greenwood, Logan and Yates JJ). See also Australian Softwood Forests Pty Ltd v Attorney-General (NSW); Ex rel Corporate Affairs Commission (1981) 148 CLR 121, 136.4 (Mason J with whom Gibbs CJ and Stephen J agreed), 137.7 (Murphy J), 145.2 (Wilson J).
[20]Gardner v Dairy Industry Authority of New South Wales (1977) 18 ALR 55, 69.7 (Mason J, with whom Jacobs and Murphy JJ agreed). See also 71.6 (Aickin J), cf 60.7 (Barwick CJ).
F. The appropriateness of the declarations sought
The proposed declarations represent the determination of a legal controversy, namely whether the court has found that the Act was contravened by the defendants in the manner alleged by the Director.
Under the Act, the Director (standing in place of the Monitor) is the only entity empowered to investigate and prosecute alleged contraventions of the Act. As such, the Director has a “real interest” in seeking the declarations. The defendants have a contrary interest in opposing the grant of the declarations, notwithstanding they are choosing, now, to consent to it. They are therefore “proper contradictors”.
It is, therefore, appropriate for the court to consider granting declaratory relief.
Some potentially relevant factors to the consideration of whether declaratory relief may be appropriate when a regulatory authority seeks to enforce a particular piece of legislation do not apply in this case.[21] The Act, the contravention of which is at issue, has been “sunsetted”.[22] No further proceedings may be brought under the Act and no other authority is given power to bring proceedings under the Act (unless those proceedings were, like this proceeding, brought before 31 December 2014).[23]
[21]See generally Australian Competition and Consumer Commission v The Construction, Forestry, Mining and Energy Union (2007) ATPR 42-140, 46,726 [6] (Nicholson J).
[22]Section 117 of the Act provides that the Act is repealed on 31 December 2014.
[23]Ibid. See also fn 1 above.
Therefore, there can be no question of whether a declaration would dissuade insurance companies from infringing the Act.[24] Similarly, there can be no empowering effect assisting the Director in exercising its power and no role that the declaratory relief can play in clarifying the law for future proceedings.[25] Further, declaratory relief will not assist consumers in identifying contravening conduct in the future, nor assist insurance companies in understanding their obligations as those insurance companies are no longer subject to the provisions of the Act.[26] Furthermore, there is no suggestion the contravention was “flagrant or dishonest”.[27] Indeed, the parties accept that the relevant conduct was inadvertent and without financial gain to the defendants.
[24]Cf Australian Competition and Consumer Commission v Midland Brick Co Pty Ltd (2004) 207 ALR 329, 333 [22] (Lee J).
[25]Cf Australian Competition and Consumer Commission v Goldy Motors Pty Ltd (2001) ATPR 41-801, 42,630 [34] (Carr J).
[26]Cf Australian Competition and Consumer Commission v Smash Enterprises Pty Ltd [2011] FCA 375, [13] (Gordon J); Australian Competition and Consumer Commission v Eurong Beach Resort Ltd [2005] FCA 1134, [5]-[6] (Kiefel J).
[27]Cf Australian Competition and Consumer Commission v Goldy Motors Pty Ltd (2001) ATPR 41-801, 42,630 [32] (Carr J).
In summary, the declaratory relief sought can have no function in relation to current or future conduct of the parties, other insurers or the public in general. However, the utility[28] in making the declarations is to state publicly that the Act was contravened by the defendants in the manner alleged by the Director.[29] From this it follows that the grant of declaratory relief “give[s] formal effect to the court’s conclusions”[30] and vindicates the Director’s claim that the Act has been contravened.[31] Further, the grant of declaratory relief in the form sought indicates that the court disapproves of or condemns that contravention.[32] These circumstances, considered with the overall facts of the case, provide a proper basis for the relief sought.
[28]See, for example, Australian Competition and Consumer Commission v Eurong Beach Resort Ltd [2005] FCA 1134, [5]-[6] (Kiefel J); RAIA Insurance Brokers Limited v FAI General Insurance Co Ltd (1993) 41 FCR 164, 177.5 (Beaumont and Spender JJ).
[29]In other words, absent the declaratory relief, the “controversy between the parties … will not be ‘quelled’”: Alinta Asset Management Pty Ltd v Essential Services Commission(No 3) [2007] VSC 353, [12] (Hollingworth J).
[30]Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (No 2) (1993) 41 FCR 89, 94.8 (Sheppard J).
[31]Cf Australian Competition and Consumer Commission v Goldy Motors Pty Ltd (2001) ATPR 41-801, 42,630 [34] (Carr J).
[32]Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (No 2) (1993) 41 FCR 89, 100.5 (Sheppard J). See also Australian Competition and Consumer Commission v Chen (2003) 132 FCR 309, 322 [48] (Sackville J).
The declarations will be made accordingly, together with an order, by consent, that the defendants pay the plaintiff's costs of and incidental to the proceeding (including any reserved costs) by payment of $20,000 within 30 days of the making this order.
---
13
11
0