Driscoll v Tomarchio

[2010] WASC 157

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   DRISCOLL -v- TOMARCHIO [2010] WASC 157

CORAM:   MARTIN CJ

HEARD:   3 JUNE 2010

DELIVERED          :   3 JUNE 2010

PUBLISHED           :  24 JUNE 2010

FILE NO/S:   CIV 1325 of 2010

BETWEEN:   ANNE MARIE DRISCOLL

[An Officer of the DEPARTMENT OF CONSUMER & EMPLOYMENT PROTECTION]
Plaintiff

AND

SALVATORE TOMARCHIO
Defendant

Catchwords:

Application for interlocutory injunction - Lending of funds said to be affected without credit provider's licence contrary to s 6 of the Credit (Administration) Act 1984 (WA) and said to be affected unconscionably contrary to s 11 of the Fair Trading Act 1987 (WA)

Legislation:

Credit (Administration) Act 1984 (WA), s 5, s 6
Fair Trading Act 1987 (WA), s 11, s 74, s 75, s 76

Result:

Application for interlocutory injunction granted

Category:    B

Representation:

Counsel:

Plaintiff:     Mr P G McGowan

Defendant:     Mr M J Hawkins

Solicitors:

Plaintiff:     Department of Consumer & Employment Protection

Defendant:     Bostock & Ryan

Case(s) referred to in judgment(s):

Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57

1. MARTIN CJ:  (This judgment was delivered extemporaneously on 3 June 2010 and has been edited from the transcript.)

Introduction

1. This is an application for an interim injunction brought by the Commissioner for Consumer Protection against Mr Salvatore Tomarchio.  Because it is an application for an interim injunction, the principles enunciated by the High Court in the decision in Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57 are pertinent. Those principles require me to identify, first, whether there is a serious question to be tried as to the plaintiff's entitlement to relief and, second, if so, where the balance of convenience lies in relation to that relief.

2. There is of course a relationship between those two aspects of any application for an interlocutory injunction.  That relationship was described by the High Court in ABC v O'Neill as being, in very broad and general terms, that the strength of the case required to support an interlocutory injunction will depend upon the extent to which the defendant's rights would be interfered with by the injunction sought.

3. There was a gap in the documentary evidence as to the status of the plaintiff.  That gap has been cured by admission by the defendant who concedes that the plaintiff is the Commissioner for Consumer Protection; that the Department of Consumer and Employment Protection is charged with the administration of the Credit (Administration) Act 1984 (WA); that the plaintiff is the executive officer of that department as designated under s 53 of the Credit (Administration) Act; and that the plaintiff is also the relevant Commissioner under s 5 of the Fair Trading Act 1987 (WA).

Alleged breaches of statutory provisions

1. The relief sought is based on contravention of two statutory provisions. The first is s 6 of the Credit (Administration) Act, which provides that 'a person shall not carry on a business of providing credit unless the person is the holder of a credit provider's licence'.  Relevant also is s 5 of that Act which provides that a reference in the Act to 'carrying on a business of providing credit includes a reference to carrying on the provision of credit in the course of or as part of or as incidental to or in connection with the carrying on of another business'.

2. The second statutory provision upon which reliance is placed is s 11(1) of the Fair Trading Act.  That section provides that 'a supplier shall not, in trade or commerce, in connection with the supply or possible supply of goods or services to a consumer, engage in conduct that is, in all the circumstances, unconscionable'. 

3. Subsection 11(2) provides for the matters to which the Court may have regard when determining whether or not conduct is unconscionable.  They include the relative strengths of the bargaining positions of the supplier and the customer; whether as a result of the conduct engaged in by the supplier the consumer was required to comply with the conditions that were not reasonably necessary for the protection of the legitimate interests of the supplier; whether the consumer was able to understand any documents relating to the supply or possible supply of the goods or services; and also, relevantly, the amount for which, and the circumstances under which, the consumer could have acquired identical or equivalent goods or services from a person other than the supplier.

The evidence

1. In this case the evidence that I have received, over objection, and which is not contradicted by any evidence adduced on behalf of the defendant establishes a very strong case to the effect that each of the two statutory provisions to which I have referred have been contravened by Mr Tomarchio.  I emphasise, of course, that at this interlocutory stage of the proceeding, it is not for me to make final determinations.  However, it is, consistent with the approach identified in ABC v O'Neill, appropriate for me to make an assessment of the strength of the case established by the evidence.  In my assessment, on the current state of the evidence, the plaintiff's case is very strong.

2. The evidence appears to establish that Mr Tomarchio has, for some 14 months or more, been lending money to significant numbers of Aboriginal people.  The method of operation adopted by Mr Tomarchio involves the provision of either cash or a cheque to people who approach him for funds.  Alternatively, his operations involve the transmission of instructions to third parties (who might be in the community where the Aboriginal person is) who then, in accordance with these instructions, provide funds to the Aboriginal person and are reimbursed by Mr Tomarchio.

3. The evidence satisfies me to the degree required for this inquiry, and Mr Tomarchio has admitted on a DVD that I have received into evidence, that he has provided these funds to over 100 people.  The evidence of the book in which Mr Tomarchio has maintained records of these transactions confirms that view and confirms that these lending transactions have been undertaken repeatedly and continuously over a significant period of time.  That impression is confirmed also by the 'With compliments' slips which are in evidence, and which appear to be the transmission of instructions to third parties for the delivery of cash to people to whom Mr Tomarchio has agreed to lend money.

4. The evidence also supports a strongly arguable case to the effect that Mr Tomarchio has been charging a very substantial rate of interest.  He asserts in the DVD to which I have referred that the interest charged is 33%, but it is clear from what he says in that DVD that in fact the interest being charged is 50% of the funds advanced.

5. There also seems a strongly arguable case to the effect that the people who borrowed money from Mr Tomarchio in this way were not provided with any records or statements of the funds borrowed, or of the interest being charged, and it seems a reasonable inference that in many cases the people concerned would have been unaware of the rate of interest that they were charged.  That is because of the other aspect of the method of operation adopted by Mr Tomarchio which involves the taking of security from the person to whom he lends money in the form of bank cards, together with information as to the personal identification number required to utilise those bank cards, in order to repay himself from their accounts.

6. It seems clear from the bank statements that have been placed in evidence that Mr Tomarchio has adopted that practice and that, in at least some of the cases, this appears to have involved removal of almost all of the funds from those accounts so that the affected people have no or very little access to funding.  It is also clear from those bank statements, and from what one knows of life in these communities, that much of the funding placed into those accounts was by way of Centrelink payments intended to enable the recipients and their families to acquire the necessities of life.  Mr Tomarchio's method of operation allows him effectively to take whatever he likes when he likes from the bank accounts of the people to whom he has lent money. 

7. Dealing first then with the question of a possible contravention of s 6 of the Credit (Administration) Act, it seems to me that there is a strongly arguable case that that section has been contravened.  That conclusion flows from the evidence of the continuity, repetition and regularity with which the lending transactions have been undertaken, the clear element of profit derived by Mr Tomarchio from those transactions, and the evidence that he is not currently, and has never been, the holder of a credit provider's licence.

8. There is also a strongly arguable case for contravention of s 11 of the Fair Trading Act in that Mr Tomarchio has been engaging in unconscionable conduct in connection with the supply of a service being, in this case, the provision of credit.  The terms upon which credit is supplied are extremely onerous, the interest rate is extraordinary and the method of securing repayment is extraordinary.  There is a clear inference from the material presently available that vulnerable Aboriginal people who are in an unequal bargaining position are being exploited by Mr Tomarchio for his own benefit.

9. The terms upon which the transactions are undertaken are so far removed from normal commercial terms that a clear inference of unconscionability arises from them.  It is also relevant to the question of whether or not relief should be granted that there is, at least at this stage on the evidence, a strongly arguable case that this conduct is likely to cause significant harm to the people who engage in transactions with Mr Tomarchio because the consequence of his conduct is effectively to deprive them of access to payments that are made by the Commonwealth government for their own benefit and the benefit of their families.

Relief and orders

1. The legal basis for the grant of injunctive relief in this case is established by s 74 and s 75 of the Fair Trading Act. Section 74 provides that the court may grant an injunction on the application of the Commissioner, where it is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes or would constitute a contravention of a provision of that Act. Section 74(2)(a) expressly provides that the power of the court to grant such an injunction may be exercised whether or not it appears to the court that the person intends to engage again, or to continue to engage, in conduct of that kind.

2. That section plainly grounds the grant of injunctive relief to restrain contravention of s 11 of the Fair Trading Act. In addition, s 75(1)(b) provides that the court may also grant an injunction on the application of the Commissioner to restrain conduct that would constitute a contravention of a provision of any other legislation administered by the Minister. The Credit (Administration) Act is legislation of that kind, so s 75(1)(b) expressly empowers the court to grant injunctive relief to restrain a contravention of s 6 of the former mentioned Act.

3. Section 76(5) of the Fair Trading Act provides that an interim injunction may be granted pending final determination of the proceedings and s 76(3) provides that where it is the Commissioner who applies to the court for the grant of injunctive relief, the court is not to require, as a condition of the grant of the injunction, an undertaking as to damages or costs.

4. For the reasons I have given there seems to me to be a strongly arguable case for contravention of each of the statutory provisions to which I have referred.  The balance of convenience seems to me strongly to favour the grant of interlocutory relief to restrain Mr Tomarchio's conduct until final determination of these proceedings.  That conclusion is supported by the likelihood of adverse consequences to the Aboriginal people involved.

5. In relation to the terms upon which the relief is sought, counsel for Mr Tomarchio pressed the proposition that there should be some reference to the legislation in the relief sought.  I do not accept that submission.  Reference to the legislation carries with it the risk that a number of questions would be begged as to whether or not any particular transaction involved a contravention of the two Acts.  It is important when interlocutory injunctive relief is granted that the person who is the subject of the relief knows precisely what they are and are not able to do.

6. In those circumstances, it seems to me that the terms upon which relief is sought are appropriate.  Relief will be granted then in the form of an injunction restraining Mr Tomarchio from entering into any agreement or arrangement, whether express or implied and whether oral or in writing, with any other person whereby Mr Tomarchio provides, directly or indirectly, money to that person in return for which Mr Tomarchio is entitled under the agreement or arrangement to recover from that person an amount of money which is greater than the sum initially provided.

7. He will also be restrained from taking possession, custody or control of any bank card belonging to any person who has entered into an agreement or arrangement of the type referred to in the first order and he will also be restrained from obtaining money by any means whatsoever from any bank card or by utilising any bank card currently in his possession, custody or control which belongs to a person who has, prior to this order, entered into an agreement or arrangement of the type referred in the first order.  Finally, there will be liberty to apply on seven days' notice to dissolve or vary the injunction, and the costs of this application should be reserved.