Guy Forsyth as trustee for Endure Trust Trading as Alignity Consulting ABN 51 100 486 105 v Canberra Consulting Pty Ltd ACN 139 224 436
[2019] ACAT 73
•5 August 2019
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
GUY FORSYTH AS TRUSTEE FOR ENDURE TRUST TRADING AS ALIGNITY CONSULTING ABN 51 100 486 105 v CANBERRA CONSULTING PTY LTD ACN 139 224 436 [2019] ACAT 73
XD 317/2019
Catchwords: CIVIL DISPUTE – labour hire contract – termination of contract consequent upon termination of assignment – breach of obligation to give notice of termination – claims for alleged breaches of sections 20 and 21 of the Australian Consumer Law (unconscionable conduct) – breach not made out – claim that term of contract providing for termination of contract, consequent upon termination of the assignment, was void under section 23 of the Australian Consumer Law – claim not made out
Legislation cited: Australian Consumer Law 20, 21, 22, 23, 24, 25
Competition and Consumer Act 2010 (Cth) s 7
Fair Trading (Australian Consumer Law) Act 1992 ss 6, 11
Cases cited:ACCC v Allphones Retail Pty Ltd (No 2) [2009] FCA 17
ASIC v National Exchange Pty Ltd [2005] FCAFC 226
Attorney-General (NSW) v World Best Holdings Ltd & Ors [2005] NSWCA 261
Codelfa v Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24
Fair Work Ombudsman v Ramsey Food Processing Pty Ltd [2011] FCA 1176
Hickey v Hickey and Ors [2007] ACTSC 31
The Commercial Bank of Australia Ltd v Amadio [1983] HCA 14
Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389
List of
Texts/Papers cited: Adrian Coorey, Australian Consumer Law (LexisNexis Butterworths, 2015)
Anthony Gray, Unfair Contract Terms: Termination for Convenience (2013) Vol 37(1) University of Western Australian Law Review 229
Tribunal:Presidential Member G McCarthy
Date of Orders: 5 August 2019
Date of Reasons for Decision: 5 August 2019AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) XD 317/2019
BETWEEN:
GUY FORSYTH AS TRUSTEE FOR ENDURE TRUST TRADING AS ALIGNITY CONSULTING ABN 51 100 4865 105
Applicant
AND:
CANBERRA CONSULTING PTY LTD ACN 139 224 436
Respondent
TRIBUNAL:Presidential Member G McCarthy
DATE:5 August 2019
ORDER
The Tribunal orders:
1.1. The respondent pay the applicant $5,000.00 within 28 days.
2.2. The respondent pay the applicant $160.00 interest within 28 days.
…………………………..
Presidential Member G McCarthy
REASONS FOR DECISION
Background
1.1. On 17 September 2018, the applicant, Dr Forsyth, entered into a written agreement to provide services to the respondent, Canberra Consulting Pty Ltd (the agreement). Dr Forsyth executed the agreement as trustee for Endure Trust trading as Alignity Consulting.
2.2. Under clauses 2.1-2.4 of the agreement, Dr Forsyth agreed to provide Canberra Consulting with the services specified in Attachment A to the agreement.
3.3. Attachment A set out a statement of requirement. Section A stated the client to be the Department of Foreign Affairs and Trade (DFAT). Section I describe the services, or duties, as follows:
Description of duties includes but is not limited to:
1. 1. Project Manager to deliver ICT Software Projects and manage defined projects or work streams to deliver outputs and products in accordance with budget and quality standards which contribute to the delivery of ICT solutions across the Department.
2. 2. The Specified Personnel must:
a.a) adhere to the APS Values and Code of Conduct as defined in the Public Service Act 1999 (Cth), the DFAT Code of Conduct for Overseas Service and DFAT’s Security instructions and comply with all terms conditions of the Deed in accordance with Clause 11 of Schedule 10.
b.b) Facilitate transfer of skills and knowledge relevant to the Services to DFAT staff.
1.4. Canberra Consulting entered into the agreement with Dr Forsyth because, under a separate agreement, it had contracted to provide services to DFAT of a kind described in its agreement with Dr Forsyth. In short, Canberra Consulting carries on a ‘labour hire’ business.
2.5. Under clause 3.1 of the agreement, Canberra Consulting agreed to pay Dr Forsyth for his services at the rate specified in Attachment A to the agreement. Section H to Attachment A specified an hourly rate of $125 per hour (ex GST). Section F specified a maximum of 40 hours per week, with any additional hours in a single week requiring client managerial approval. Section G specified a maximum of 1920 hours to be worked under the agreement.
3.6. Section D to Attachment A specified a ‘start date’ for the agreement of 3 September 2018. Section E specified an ‘end date’ of 2 September 2019 with two twelve-month options to renew “per customer requirement”.
4.7. Clause 7.1 of the agreement provided for termination of the agreement as follows:
7.1 This agreement shall terminate:
ain accordance with clause 2.2, or
bon a date agreed by the signatories to this Agreement, or
con notice of termination of the assignment by the Customer.
dBy the giving of 5 working days’ notice in writing by either party.
1.8. Dr Forsyth commenced providing services under the agreement on 3 September 2018, but did not sign the agreement until 17 September 2018. Dr Forsyth provided Canberra Consulting with a nine page document titled “Alignity Consulting Conditions of Service” setting out his proposed conditions of service and was awaiting a response to those conditions before signing the agreement.
2.9. On 17 September 2018 Dr Forsyth telephoned Canberra Consulting’s branch manager, Ms Stavreas, in relation to his proposed conditions of service. Ms Stavreas explained that the only terms of engagement that Canberra Consulting would accept were those in the agreement. Dr Forsyth said he signed the agreement because he had no alternative. In his words, “I could either sign or not have an income stream.” He agreed that he knew that none of his proposed conditions of service were included in the agreement when he signed it.
3.10. DFAT became dissatisfied with Dr Forsyth’s performance. On 13 December 2018, Ms Stavreas and another employee of Canberra Consulting, Ms Wagstaff, met with two officers of DFAT including Ms Magda Gibbons to discuss DFAT’s concerns. In response to a subpoena caused to be issued by Dr Forsyth, Ms Gibbons gave evidence regarding DFAT’s concerns. She explained DFAT’s view that Dr Forsyth “was performing below the standards expected” and that he was not a cultural fit. She said that Dr Forsyth had refused to perform additional work without receiving additional payment and that his behaviour was “inappropriate”, especially his resistance to taking instruction from DFAT supervising officers. Ms Gibbons said that at the meeting on 13 December 2018 she explained that Dr Forsyth’s engagement at DFAT was no longer sustainable and needed to end. I accept her evidence.
4.11. At this time, Dr Forsyth was on leave overseas. Ms Gibbons explained that DFAT’s preference was to end Dr Forsyth’s services after he returned from leave in January 2019. She agreed there was discussion about giving notice to Dr Forsyth that his services were no longer required, and that a notice period of two weeks was discussed, but she could not recall the specifics.
5.12. Ms Stavreas gave evidence about additional concerns raised by DFAT at the meeting including concerns about Dr Forsyth providing inaccurate timesheets and his enquiries of DFAT officers about how he could obtain further business. Ms Stavreas said that as a result of its concerns, DFAT directed Canberra Consulting to bring Dr Forsyth’s assignment to an end.
6.13. Ms Stavreas said she thought it was inappropriate to discuss DFAT’s concerns and decision with Dr Forsyth whilst he was on leave overseas. She therefore telephoned him on Friday, 4 January 2019, following his return to Australia. She informed him that because of DFAT’s concerns about his performance his assignment would conclude at 9:00am on Monday, 7 January 2019.
7.14. Ms Stavreas said she had another telephone discussion with Dr Forsyth on 8 January 2019 about further work opportunities, but explained that Canberra Consulting could only provide opportunities based on opportunities provided to it. She said that an opportunity came up later in January 2019, which she discussed with Dr Forsyth, but nothing came of it.
8.15. The first occasion the Dr Forsyth received notice in writing that his services were no longer required was on 26 February 2019 when Mr Pepper, the Chief Executive Officer of Canberra Consulting, sent Dr Forsyth an email “out of professional courtesy” in response to a letter from Dr Forsyth dated 25 February 2019. In his email, Mr Pepper stated that Canberra Consulting notified Dr Forsyth on 4 January 2019 that his services “were no longer required”. In his email Mr Pepper contended that under the provisions of the agreement “there are no damages that arise from this termination” and that he considered the matter “closed”. Mr Pepper concluded by stating “Good luck for the future and I am happy to assist you for other opportunities and/or references.”
9.16. On 1 March 2019, Dr Forsyth commenced proceedings in the Tribunal claiming $25,000 in damages (representing the Tribunal’s jurisdictional limit), reimbursement of the filing fee ($559), payment of an ASIC search fee ($31.10) in relation to Canberra Consulting and interest. Dr Forsyth brought his claim on many different grounds. I deal with them in turn.
Invalid termination
1.17. Dr Forsyth submitted that Canberra Consulting could not validly terminate the agreement simply on the grounds that DFAT no longer wished Dr Forsyth to provide services to it. He submitted that clause 7.1c, upon which Canberra Consulting relied for the purpose of terminating the agreement, was invalid because it purported to give Canberra Consulting a right to terminate “at will”, meaning termination without cause.
2.18. Dr Forsyth submitted that he had not breached the agreement or done anything to repudiate it. He submitted that there was no proven misconduct or proven poor performance. Counsel for Canberra Consulting, Mr Moffett, agreed.
3.19. Dr Forsyth submitted that, for reasons of privity of contract, DFAT did not have any contractual right under the agreement to direct Canberra Consulting to terminate the agreement and that Canberra Consulting did not have a right to terminate the agreement “for no cause but at will”.
4.20. Dr Forsyth relied on an article by Professor Anthony Gray from the University of Southern Queensland entitled Unfair Contract Terms: Termination for Convenience in which Professor Gray comments on the “increased trend in business contracts to allow at least one contracting party to terminate the contract upon their convenience, or at will” and that “this is a departure from the traditional approach to termination whereby a contract could only be terminated for cause”. Professor Gray states that “through clauses such as this, the parties have effectively attempted to ‘contract out’ of the law of contract, or at least that part of contract law that traditionally determined the ability of contracting parties to validly terminate the contract.” Dr Forsyth also relied on a comment in Professor Gray’s article that “Warren CJ” had said that the exercise of a termination for convenience clause is often seen as an example of ‘bad faith’ conduct.
5.21. There were many problems with this submission.
6.22. First, Professor Gray acknowledges that his article proceeds on an “assumption” that the exercise by one contracting party of a unilateral right to terminate a contract without cause could be unfair, and that “recognition of this point by the courts has been relatively rare.” He also notes that acceptance of a doctrine to contract in good faith “continues to await High Court approval” and that the Court “has appeared displeased by attempts by lower courts to develop the law in somewhat novel ways”. Also, I could not find any reference to the circumstances in which “Warren CJ” made the asserted comment, or whether it is attributable to Warren CJ of the United States Supreme Court or Warren CJ of the Supreme Court of Victoria.
7.23. Second, clause 7.1c does not permit termination of the agreement ‘at will’ or without cause. It applies only in the event of “termination of the assignment”.
8.24. Third, Canberra Consulting did not terminate without cause. It did so because DFAT had directed that Dr Forsyth no longer provide services to it. That Dr Forsyth did not agree with the substance of DFAT’s concerns, or that they were not ‘proven’ or that, in his view, the concerns did not justify bringing the performance of his services to an end or could be remedied is irrelevant. Dr Forsyth had no contractual relationship with DFAT. It was its prerogative, under a separate agreement with Canberra Consulting, to bring Dr Forsyth’s services to an end irrespective of Dr Forsyth views about whether that should occur. Clause 7.1c of the agreement facilitated Canberra Consulting’s ability to terminate the agreement with Dr Forsyth if DFAT terminated Dr Forsyth’s assignment with it, as occurred. I accept Dr Forsyth’s submission that, for reasons of privity of contract, DFAT did not have a contractual right under the agreement to direct Canberra Consulting to terminate the agreement. However DFAT never did, or purported to do so.
9.25. Fourth, Dr Forsyth did not refer to any court, commission or tribunal authority to support his submission that clause 7.1c is invalid on the grounds of ‘bad faith’. Professor Gray’s article suggests that there are no such authorities. I doubt there is. In Fair Work Ombudsman v Ramsey Food Processing Pty Ltd the Federal Court, per Buchanan J, described labour hire arrangements as follows:
60. I accept, therefore, that arrangements whereby labour is provided by one company to another, without the recipient becoming thereby an employer, are longstanding and unremarkable. There appears no place for an assumption of illegality or illegitimate purpose from the mere fact that a “labour hire” arrangement has been put in place. The Australian cases recognise that, provided the arrangement meets certain objective criteria.
61 Utilisation in Australia of labour hire arrangements has increased significantly in past decades. There is no doubt that sometimes such arrangements reflect a desire by the proprietors of a business to avoid liability for employment related obligations. That is not illegal as an objective. It has been traditionally reflected in the ability of a business to let a contract “for services” (independent contracting) rather than making a contract “of service” (employment). At one level of analysis, a labour-hire contract is just an example of a business obtaining necessary labour on contract from another business ...
1.26. For these reasons, I am not persuaded that clause 7.1c of the agreement is invalid or that Canberra Consulting was not entitled to rely upon it for the purpose of terminating its agreement with Dr Forsyth.
Notice of termination
1.27. Dr Forsyth submitted that even if clause 7.1c is valid, it is unworkable because it provides for termination of the agreement “on notice of termination of the assignment by the Customer” (defined as Canberra Consulting) but gives no indication as to what “the assignment” is. For example, does it refer to the duties described in Attachment A, section I to the agreement, or to Dr Forsyth’s placement at DFAT? Dr Forsyth submitted that clause 7.1c could only have meaning if the words “by the Customer” are read as meaning “by the Client”, meaning DFAT.
2.28. I accept that the meaning of “the assignment” in clause 7.1c is unclear, but nothing arises from the ambiguity because the different possible meanings all lead to the same result: termination of the agreement.
3.29. Also, I do not accept Dr Forsyth’s submission that “by the Customer” should be read as meaning “by the Client”. Clause 7.1c must be read as a whole, and the words used must be given effect where possible. It follows, in my view, that the words “by the Customer” connect with the words “on notice”, meaning that the agreement terminated upon the Customer (Canberra Consulting) giving Dr Forsyth notice of the relevant fact, namely “termination of the assignment”.
4.30. I am satisfied on the evidence of Ms Gibbons and Ms Stavreas that DFAT terminated the assignment. Clause 7.1c was engaged on 4 January 2019 upon Ms Stravreas giving Dr Forsyth notice of that termination.
5.31. Dr Forsyth next submitted that even if clause 7.1c is valid, termination did not validly occur because he was not given 5 working days’ notice in writing as required under clause 7.1d. He submitted that clause 7.1d applied irrespective of whether the agreement terminated pursuant to clause 7.1a, 7.1b or 7.1c.
6.32. Canberra Consulting agreed that Dr Forsyth was not given 5 working days’ notice that the agreement was terminated, and that he was not given notice in writing. It accepts that Ms Stavreas advised Dr Forsyth on Friday, 4 January 2019, by telephone, that his assignment would conclude at 9:00am the following Monday. Given that Dr Forsyth was still on leave on 4 January, the effect of Ms Stavreas’ advice was to terminate the agreement ‘then and there’.
7.33. Mr Moffett submitted however that Canberra Consulting was not required to give notice if it wished to terminate the agreement. He submitted that when clause 7.1 is read as a whole, it is plain that clauses 7.1a, 7.1b, 7.1c and 7.1d are four independent means by which the agreement “shall terminate”. He submitted that Canberra Consulting terminated the agreement pursuant to clause 7.1c, not 7.1d.
8.34. When construing a contract, the task is to determine and then give effect to the intention of the parties. Intention is to be determined objectively. It must be ascertained from the words used in the contract, not the parties’ actual intentions and still less their desires, aspirations or expectations.
9.35. In this case, poor drafting has created obvious ambiguity, but in my view the absence of the word “or” at the end of clause 7.1c, the placement of a full stop at the end of clause 7.1c (in contrast with the use of commas at the end of clauses 7.1a and 7.1b) and the commencement of clause 7.1d with the capitalised word “By” all suggest that clause 7.1d is not an independent basis for termination. Rather it is an obligation on each party, irrespective of whether termination occurs under clause 7.1a, 7.1b or 7.1c.
10.36. In my view the drafting of the ‘notice’ provision as clause ‘7.1d’, rather than as a ‘stand alone’ requirement regarding termination under clause 7.1, should be seen as poor drafting perhaps caused by careless use of ‘indenting’ software, rather than concluding that all the drafting factors mentioned in previous paragraph 35 were oversights.
11.37. Construed in this way, it follows that Canberra Consulting terminated the agreement in breach of clause 7.1d. Mr Moffett (properly) agreed.
12.38. I turn to quantum of damages arising from the breach.
13.39. Dr Forsyth submitted that I should award the full amount claimed ($25,000) because, he said, the notice period would have given him the opportunity to discuss DFAT’s concerns about his performance with them, resolve those concerns and proceed with the performance of his services. He submitted that “maybe we all got a little bit excited” and that if DFAT had raised its concerns with him it “wouldn’t have got to this point.” On this basis, he said, damages of $25,000 should be ordered (being the maximum amount that the Tribunal has jurisdiction to award) to reflect a portion of the ongoing income he would have earned had he been able to continue providing his services.
14.40. Mr Moffett submitted that the Tribunal should award damages of $5,000. Mr Moffett calculated this sum by reference to Dr Forsyth’s hourly rate of $125 per hour (ex GST) to a maximum of 40 hours per week which reflects a five day working week of eight hours per day. On this basis, Dr Forsyth would have earned $1,000 per day. Provision of “5 working days’ notice” equates with five further days of work and payment for that work totalling $5,000.
15.41. I accept Mr Moffett’s submission. The giving of notice entailed, by definition, giving notice of termination of the agreement, not, as Dr Forsyth implicitly submitted, notice of possible termination with an opportunity to persuade DFAT not to end his services. The purpose of giving Dr Forsyth notice was (or should have been) to inform him that the assignment had been terminated and that the agreement would therefore end at the conclusion of the notice period. Notice is given for the purpose of enabling a person (and in this case Dr Forsyth) time to arrange their affairs, not time to try to dissuade someone from a decision that has already been made.
16.42. Also, there was no suggestion from Ms Gibbons that DFAT was merely considering cessation of Dr Forsyth’s services: the purpose of the meeting on 13 December 2018 was to inform Canberra Consulting that Dr Forsyth’s services were to end upon his return from leave. It is mere speculation, and without basis, to think that DFAT would have changed its mind had Dr Forsyth returned to the workplace in order to work out the notice period between 7 and 11 January 2019.
17.43. As Mr Moffett implicitly accepts, it is not to the point that Dr Forsyth did not perform any services between 7 and 11 January 2019. He was ready and willing to do so, but Canberra Consulting terminated the agreement at the commencement of that working week.
18.44. I should add that DFAT’s willingness (if that were accepted) to give Dr Forsyth two weeks’ notice is irrelevant. Dr Forsyth contracted with Canberra Consulting, and his rights must be determined under the agreement. DFAT’s attitude towards notice, whatever it may have been, does not convert into a claim against Canberra Consulting.
19.45. I will order Canberra Consulting to pay Dr Forsyth $5,000 arising from its breach of clause 7.1d of the agreement.
20.46. As I understand it, having regard to its character, the money should be declared as wages earned and wages paid in the tax returns of Dr Forsyth and Canberra Consulting, respectively.
Australian Consumer Law, sections 20 and 21
1.47. Dr Forsyth submitted that Canberra Consulting engaged in unconscionable conduct, contrary to section 20(1) of the Australian Consumer Law (ACT) (the ACL). The ACL applies in this matter because Dr Forsyth ordinarily resides in the ACT.
2.48. Section 20(1) of the ACL states:
20 Unconscionable conduct within the meaning of the unwritten law
1. (1) A person must not, in trade or commerce, engage in conduct that is unconscionable, within the meaning of the unwritten law from time to time.
1.49. Dr Forsyth also relied upon section 22 of the ACL in support of his claim of unconscionability. That section is directed to “matters to which the court may have regard for the purpose of determining whether a person (the supplier) has contravened section 21”. The submission was confusing because section 20(2) of the ACL provides that section 20 “does not apply to conduct that is prohibited by section 21”. In other words, sections 20 and 21 are mutually exclusive.
2.50. Section 21(1) of the ACL states:
21 Unconscionable conduct in connection with goods or services
(1) A person must not, in trade or commerce, in connection with:
(a)the supply or possible supply of goods or services to a person; or
(b)the acquisition or possible acquisition of goods or services from a person;
engage in conduct that is, in all the circumstances, unconscionable.
1.51. I elected to treat Dr Forsyth’s claim as a claim under section 20 or section 21 because Canberra Consulting did not challenge that it was engaging “in trade or commerce” or that it was acquiring “services from a person”, namely Dr Forsyth. It defended the claim, whether made under section 20 or section 21, on the basis that it did not engage in conduct that was “unconscionable.”
2.52. In his written “addendum to applicant’s response” dated 19 June 2019, Dr Forsyth relied on 21 factors that, he said, demonstrated Canberra Consulting’s unconscionable conduct. These included Canberra Consulting’s failure to entertain his proposed conditions of service, the “harsh and unfair” nature of the agreement, the inclusion of unfair terms in the agreement “in defiance of the requirements for fairness under Australian law”, the failure to provide him with instruction about DFAT’s timesheets and reporting requirements, its refusal to allow amendments to the agreement, the failure to tell him about DFAT’s request to terminate his services and the withholding of information which he said was a “deliberate causing of loss” to him. He contended that it was unconscionable to impose upon him an obligation to comply with the Australian Public Service Code of Conduct in the course of providing services to DFAT without “reciprocal adherence” to abide by the same principles of respect, ethical conduct, honesty, integrity, care and diligence. He submitted it was unconscionable for Canberra Consulting not to have provided written notice or even the contractual basis for the termination of the agreement. He complained about “deception” and “collusion”. He complained about “negligence and indolence” on the part of Canberra Consulting regarding performance of their obligations “in a commercial and professional manner” with respect to his services to DFAT. He complained about Canberra Consulting’s failure to “attempt to equitably resolve the contract termination” and its “failure at any stage to act in good faith”.
3.53. Mr Moffett submitted, with reliance on the High Court’s decision in The Commercial Bank of Australia Ltd v Amadio that unconscionable behaviour entails taking advantage of a person’s known special disadvantage or special disability in relation to an intended transaction. He noted that the ACT Supreme Court followed that decision in Hickey v Hickey. From there, Mr Moffett submitted that Dr Forsyth does not have a special disability. He is, evidenced by his curriculum vitae, an educated and intelligent man who carries on a business of providing services in project management, computer operations, programming and systems analysis. He entered into the agreement with full knowledge of its content and an ability to understand it.
4.54. I am not persuaded that unconscionable behaviour is confined to taking advantage of a person with a special disability. Amadio is but an illustration of unconscionable behaviour. The courts have not attempted to provide a precise or comprehensive definition of unconscionable conduct. It is a concept that will expand or change as new cases or circumstances arise. Courts have described it as “doing what should not be done in good conscience” or conduct that demonstrates a “high level of moral obloquy.”
5.55. In Tonto Home Loans Australia Pty Ltd v Tavares, the NSW Court of Appeal said:
The range of conduct is wide and can include bullying and thuggish behaviour, undue pressure and unfair tactics, taking advantage of vulnerability or lack of understanding, trickery or misleading conduct. A finding requires an examination of all the circumstances.
1.56. In ACCC v Allphones Retail Pty Ltd, the Federal Court, per Foster J, described “unconscionable” as follows:
When used in that section, the expression requires that the actions of the alleged contravenor show no regard for conscience, and be irreconcilable with what is right or reasonable. Inevitably the expression imports a pejorative moral judgment.
1.57. Once these aspects of trickery, taking advantage of vulnerability and pejorative moral judgement are applied, it becomes clear that nothing done by Canberra Consulting has that character. As Buchanan J noted in Ramsey Food Processing, labour hire contracts are an unremarkable, lawful and legitimate method of obtaining labour. Persons who obtain work through a labour hire contract do not enjoy the job security and statutory protections that are held by employees, particularly public service employees, but that does mean that labour hire contracts are unconscionable.
2.58. A person seeking work can do so through a labour hire contract, or not, as they choose. I accept that for some people, and Dr Forsyth would seem to be one, their options for obtaining work are limited and work by means of a labour hire contract is better than no work at all. But that is a function of the market. It does not mean that labour hire contracts are unconscionable. I accept Dr Forsyth’s position that he felt he had no real option but to enter the agreement because he “needed the money”, but that too is unremarkable. Most people work because they need the money.
3.59. Much of Dr Forsyth’s claim of unconscionability centred upon Canberra Consulting’s unwillingness to entertain his proposed conditions of service, and the alleged unfairness of the agreement. I have considered both documents, and neither supports a claim of unconscionability.
4.60. Dr Forsyth’s document, described as conditions of service for Alignity Consulting, was in my view unworkable in the context of a labour hire contract or at all. Clause 1, for example, states that the services “shall be provided for the delivery of the result”, with “result” defined as “delivery of a nuclear and chemical database” without further comment anywhere about the content of the database or how Dr Forsyth (or Alignity Consulting) would create it. Clause 2 provides that the Consultant (meaning Alignity Consulting) “will provide the services in the schedule” but the schedule does not identify any services. Clause 3 provides that Alignity Consulting would provide Canberra Consulting “with access to services at the complete discretion of the Consultant” (meaning Alignity Consulting) and that the “availability of these services by any means constitutes the discharge of the contractual obligation”. Clause 4 provides that Alignity Consulting “reserves the right to substitute any suitable personnel to deliver the result”. Clauses 3 and 4 are completely inconsistent with DFAT’s engagement of Dr Forsyth, personally, to provide services to it at its direction.
5.61. Clauses 27-33 of Dr Forsyth’s document set out complex and ambiguous mechanisms for cessation of Alignity Consulting’s services including a proposed agreement that Canberra Consulting would pay damages to Alignity Consulting if it terminated Alignity Consulting’s services “prior to the end date”, with “end date” defined in the schedule to be “3 Mar 2018”.
6.62. Unsurprisingly, Canberra Consulting did not entertain the proposed conditions of service. They were completely inconsistent with a labour hire business model. Dr Forsyth chose to obtain work via that business model. If the arrangement was unacceptable to him, he was under no obligation to proceed and Canberra Consulting would have looked elsewhere for a person able to provide the services that DFAT was seeking. I am not persuaded that there was anything unconscionable about Canberra Consulting not entertaining Dr Forsyth’s proposed conditions of service when drafting the terms of the agreement. Nor do I find anything unfair or unconscionable about the agreement: it is a simple and unremarkable document that enabled Dr Forsyth’s assignment to DFAT under a labour hire business model.
7.63. Referring to Dr Forsyth’s other grounds of unconscionability, his many complaints about the circumstances leading to DFAT’s decision to terminate his services and the manner in which this was done again overlook the contractual arrangements involving DFAT’s hire of his labour via a separate contract with Canberra Consulting. Dr Forsyth knew or should have known upon reading clause 7.1c that if he received notice of termination of the assignment then the agreement with him would terminate. Why the assignment was terminated, and whether he was at fault or could have remedied any perceived shortcomings in order for it to continue, is not to the point. I am not persuaded that there was anything unconscionable about Canberra Consulting acting in accordance with clause 7.1c.
8.64. Finally, views may differ about the appropriateness of Canberra Consulting not informing Dr Forsyth until his return from his overseas holiday that his services at DFAT were no longer required, rather than informing him during his holiday, but I am not persuaded that there was anything unconscionable about Canberra Consulting electing to wait until he had returned.
9.65. For these reasons, I am not persuaded that Dr Forsyth’s claim under section 20 or section 21 of the ACL is made out.
Australian Consumer Law, section 23
1.66. Dr Forsyth submitted that clause 7.1c is void under section 23 of the ACL, which states:
23 Unfair terms of consumer contracts and small business contracts
(1) A term of a consumer contract or small business contract is void if:
a.(a) the term is unfair; and
b.(b) the contract is a standard form contract.
a.67. ‘Consumer contract’ and ‘small business contract’ are defined under section 23(3) and (4), respectively. There was no suggestion that the agreement was a consumer contract. Dr Forsyth submitted that it was a small business contract, as defined in section 23 (4), because it was (i) a contract for a supply of services; (ii) at the time the agreement was entered into at least one party to the contract was a business that employed fewer than 20 persons; and (iii) the upfront price payable under the agreement did not exceed $300,000.
b.68. Mr Moffett led evidence that Canberra Consulting employs greater than 20 persons, and submitted that I could not be satisfied that the agreement is a small business contract because there is no evidence that Dr Forsyth (as trustee for the Endure Trust or otherwise) employed fewer than 20 persons.
c.69. I am not prepared to find against Dr Forsyth on this basis. Mr Moffett never put it to Dr Forsyth in the course of cross-examination that he employed more than 20 persons, and I find it inherently unlikely that he did so. If his business was on that scale, it is nonsensical that he would enter into a labour hire contract to provide his services on a full-time basis at DFAT. I think it probable that he did not employ anyone at all, apart (perhaps) from himself via the trust structure.
d.70. I am prepared to accept for the purpose of this matter that the agreement was a small business contract, as defined. I have decided Dr Forsyth’s claim by reference to the substantive question of whether clause 7.1c is “unfair” and therefore void under section 23(1)(a) of the ACL.
e.71. What is ‘unfair’ for the purpose of section 23(1) of the ACL is not at large. It is a term defined in section 24 as follows:
24 Meaning of unfair
(1) A term of a consumer contract or small business contract is unfair if:
(a)it would cause a significant imbalance in the parties’ rights and obligations arising under the contract; and
(b)it is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; and
(c)it would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on.
(2) In determining whether a term of a contract is unfair under subsection (1), a court may take into account such matters as it thinks relevant, but must take into account the following:
(a)the extent to which the term is transparent;
(b)the contract as a whole.
(3) A term is transparent if the term is:
(a)expressed in reasonably plain language; and
(b)legible; and
(c)presented clearly; and
(d)readily available to any party affected by the term.
(4) For the purposes of subsection (1)(b), a term of a contract is presumed not to be reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term, unless that party proves otherwise.
a.72. ‘Unfair’ is a three limb test under section 24(1), and each limb must be satisfied.
b.73. Dr Forsyth submitted that clause 7.1c is unfair, as defined, because (a) “it gives the right to termination solely to [Canberra Consulting] to terminate at any time”; (b) “it is not necessary for the performance of the contract insofar as it is not contingent upon some material breach or affront to the contract”; and (c) “it causes a significant financial detriment to [him] and did so.”
c.74. Section 25 of the ACL gives “examples of the kinds of terms of a consumer contract or small business contract that may be unfair”. These examples include, per section 25 (b), “a term that permits, or has the effect of permitting, one party (but not another party) to terminate the contract”. Dr Forsyth submitted that clause 7.1c of the agreement “is an exact reflection” of section 25(b).
d.75. Mr Moffett submitted that section 24(1)(a) is not met because there is not a ‘significant inbalance’ between the parties’ rights and obligations. In this respect, he relied upon Dr Forsyth’s significant skills and training. He relied on paragraphs 5.23 and 5.24 of the Explanatory Memorandum to the Bill, which state that an assessment about significant inbalance requires a common sense approach or value judgement, and that the onus of proof is on the claimant.
e.76. Mr Moffett submitted with reference to section 24(1)(b) that Dr Forsyth held a similar unilateral right to terminate under clause 7.1d by giving five days’ notice in writing.
f.77. With reference to section 24(1)(c), as I understood it, there was no dispute that Canberra Consulting’s reliance on clause 7.1c would cause financial detriment to Dr Forsyth if it were applied, as occurred.
g.78. I am not persuaded that clause 7.1c is unfair, as defined. Under section 24(2), the Tribunal may take into account such matters as it thinks relevant, and must take into account the extent to which clause 7.1c is transparent and the contract as a whole. These factors return me to the character of the agreement, as a labour hire contract, and Canberra Consulting’s consequential need for clause 7.1c.
h.79. Referring to section 24(1)(a), clause 7.1c does not cause a ‘significant imbalance’ in the parties’ rights and obligations or, as Dr Forsyth submitted, give Canberra Consulting a “unilateral right” to terminate. The right to terminate is dependent upon termination of the assignment, which is dependent on the wishes and circumstances of DFAT for whom Dr Forsyth was engaged to provide his labour. In other words, Canberra Consulting’s interests and Dr Forsyth’s interests were equally dependent on the wishes of DFAT. For the same reason, clause 7.1c is not a term of the kind described in section 25(b) of the ACL
i.80. Referring to section 24(1)(b), Canberra Consulting does not itself use Dr Forsyth’s services. Its business is to connect (for a fee) an entity in need of labour (in this case, DFAT) with a person able to provide the labour. Its commercial ability to engage a person to provide labour, and to continue to provide labour, is dependent on an entity in need of that labour and continuing to want that labour from that person. A necessary component of any agreement to hire a person (and in this case Dr Forsyth) for the purpose of providing labour to a third party (and in this case DFAT) is therefore a right to end the hire if the third party no longer requires the person’s labour. In other words, Canberra Consulting have a “legitimate interest”, and I would say essential interest, in ensuring that if the assignment ends so too can Canberra Consulting’s engagement of the person. Were it otherwise, Canberra Consulting would find itself with a contractual obligation to continue the engagement of the person to provide services that it, itself, no longer needs.
j.81. Where I am not persuaded that clause 7.1c is unfair, as defined, it was unnecessary to decide whether the agreement is a standard form contract.
k.82. For these reasons, I am not persuaded that Dr Forsyth’s claim under section 23 of the ACL is made out.
Conclusion
a.83. For the reasons given, I will order Canberra Consulting to pay Dr Forsyth $5,000 by way of damages for its breach of clause 7.1d. I will also order it pay interest from the date of the breach (4 January 2019) to the date of my order (5 August 2019). This is a sum of $160 calculated under the Court Procedures Rules.
b.84. Under section 48 of the ACT Civil and Administrative Tribunal Act 2008, each party ordinarily bears its own costs but the Tribunal has a discretion to order payment of the filing fee and any other fee incurred by an applicant that the Tribunal considers necessary for the application “if the tribunal decides an application in favour of the applicant.”
c.85. In this case, I am not persuaded to exercise my discretion in relation to the filing fee or the ASIC search fee.
d.86. Dr Forsyth’s claim was, in the main, unsuccessful. So too was his claim for damages beyond an amount equivalent to what he would have received for five days of service consequent upon the breach of clause 7.1d. For reasons of commercial expediency and prospects, I doubt this application would have been defended had it been confined to a claim for five days’ wages.
e.87. I will also not order Canberra Consulting to pay the ASIC search fee. It was a small and necessary administrative cost that the tribunal requested Dr Forsyth, like any other applicant, to pay in order to bring proceedings against a corporate entity. Where the claim was largely unsuccessful, I am not persuaded that Canberra Consulting should reimburse Dr Forsyth for this cost.
……………………………….
Presidential Member G McCarthy
HEARING DETAILS
FILE NUMBER:
XD 317/2019
PARTIES, APPLICANT:
Guy Forsyth as trustee for Ensure Trust trading as Alignity Consulting ABN 51 100 486 105
PARTIES, RESPONDENT:
Canberra Consulting Pty Ltd ACN 139 224 436
COUNSEL APPEARING, APPLICANT
N/A
COUNSEL APPEARING, RESPONDENT
Mr J Moffett
SOLICITORS FOR APPLICANT
N/A
SOLICITORS FOR RESPONDENT
N/A
TRIBUNAL MEMBERS:
Presidential Member G McCarthy
DATES OF HEARING:
12 July 2019
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