Miranda Corporation Pty Ltd v GC Leasing Sydney Pty Ltd

[2021] NSWCATCD 46

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Miranda Corporation Pty Ltd v GC Leasing Sydney Pty Ltd [2021] NSWCATCD 46

Hearing dates:

1 July 2021

Decision date:

16 July 2021

Jurisdiction:

Consumer and Commercial Division

Before:

B Shipp, Senior Member

Decision:

1. The Applicant’s claim is dismissed.

2. The Applicant is to pay the Respondent $6330.38 being the balance due under the lease agreement entered into on 3 July 2018 on or before 15 August 2021 (or as otherwise agreed between the parties).

Catchwords:

CONTRACTS — Breach of contract — Consequences of breach of Australian Consumer Law or contract — Lease agreement — Whether agency relationship — Meaning of “services” — Whether breach of Australian Consumer Law or contract — To whom the consumer guarantees attach

Legislation Cited:

Fair Trading Act 1987 (NSW)

Australian Consumer Law

Cases Cited:

Nil

Texts Cited:

Nil

Category:

Principal judgment

Parties:

Miranda Corporation Pty Ltd (Applicant)
GC Leasing Sydney Pty Ltd (Respondent)

File Number(s):

GEN 20/48072

Publication restriction:

NIL

REASONS FOR DECISION

Background and Application

1. The Applicant is the operator of a business known as Waratah Funerals. Mr Lionel Miranda is the principal of the applicant, and he represented the Applicant in these proceedings.

2. In October 2018, the Applicant negotiated with Optus (“the supplier”) to supply and install a phone system for his business. On 3 July 2018, the Applicant entered into a contract with the supplier (“the supply contract”) for the payment of a fixed sum for the provision of services over a 5 year period.

3. Mr Miranda alleges the phone system failed after a short period of time, and he arranged with the supplier to cancel the contract and to return the equipment.

4. On 3 July 2018, the Applicant also entered into a Equipment Lease Agreement (‘the lease agreement”) with the Respondent to these proceedings (also known by its trading name “Grenke”). By this agreement, the Applicant agrees to pay $154.98 per month plus GST for a term of 60 months for the lease of the equipment by the Respondent. Mr Miranda states he only ever dealt with the representative of the supplier Optus, and was unaware of the existence or involvement of the Respondent until asked to sign the lease agreement by the supplier.

5. Following the failure of the equipment, Mr Miranda states that he returned the equipment to an address in Melbourne as instructed by the supplier. He then received a full refund of all monies paid to the supplier. It was only about 6 months later that he realised that the Respondent was continuing to direct debit his account. Attempts to contact the Respondent to explain the circumstances and have the payments sopped proved fruitless. The direct debits to the Respondent continued until August 2020 when Mr Miranda directed his bank to cease the direct debits. The Respondent then sought to enforce the terms of the lease contract, seeking payment of the balance of the amount owing.

6. In November 2020, Mr Miranda applied for an order that he be reimbursed the amount debited by the Respondent.

Proceedings

7. The matter first came before the Tribunal on 30 March 2021, when the Tribunal adjourned the hearing with directions the Respondent file and serve any documents upon which it intended to rely within a certain timeframe. The Applicant had already filed his documents. The orders include the following comments:

The applicant entered a leasing agreement with the respondent finance provider to purchase phone system from Optus. The phone system turned out to be unsuitable for the given application and components were returned to Optus. Optus released the applicant from his “service” agreement but the respondent finance provider says the applicant is still liable to pay the full amount owed under the lease agreement. Full payment due under the least terms being $10,228.68 (including GST)

The applicants seeks reimbursement of $3,898.30 which he claims has already ben paid under the lease terms and also relief from payment of the balance of $6,330.38. He claims he was misled at the time he entered the agreement with the respondent. The respondent disputes the claim and seeks to be paid the entire $10,228.68 due under the contract terms.

8. No documents were submitted by the Respondent.

9. The matter was listed for final hearing before me on 1 July 2021. On that day, Mr Miranda appeared by phone for the Applicant. The Respondent was represented by Ms Flavia Campos who also appeared by phone. Both parties gave evidence on oath.

10. I reserved my decision at the end of the hearing.

Jurisdiction

11. The Tribunal's Consumer and Commercial division has jurisdiction in relation to matters arising under various legislation including the Fair Trading Act 1987 (NSW)(FTA) which in turn may raise issues and rights under general contract law and under the Australian Consumer Law (ACL).

12. In the present case the Applicant’s business is incorporated in NSW, and is a small proprietary company to whom a supplier has supplied or agreed to supply goods or services, whether under a contract or not. The Applicant is therefore a consumer within the extended definition in the Corporations Act and the FTA.

13. Section 79J FTA gives the Tribunal jurisdiction to hear claims falling under the FTA.

14. The claim arises from the supply of services to the consumer (under a contract or not), and constitutes a claim by payment of a sum of money (FTA section 79E). The services to which the claim relates were supplied in NSW (FTA section 79K).

15. The Applicant’s claim was made within the period of time allowed in Section 79L FTA.

16. The claim is therefore maintainable under the FTA and is within the Tribunal's monetary jurisdiction.

17. If the Tribunal is satisfied the applicant has proved a breach of any relevant provision of the ACL, the Tribunal may make orders under Section 79N of the FTA, including orders for payment of a sum of money, and orders for the return of goods. The Tribunal has a discretion in respect of which remedy it determines is appropriate. Under Section 79R(2) of the FTA, the Tribunal can impose such conditions on any order it deems appropriate. Under Section 79U of the FTA, the Tribunal must make remedial orders which are "fair and equitable to all the parties to the claim."

Analysis of the Applicant’s Claim

18. Mr Miranda did not refer to any specific remedies under the Australian Consumer Law.

19. His argument is essentially that the Applicant should not be required to pay any amounts under the lease agreement because he did not have the equipment that was being leased. He also claims in his application that:

1. After finding the phones did not work, he “read the contracts that I signed and found hidden fees and charges”.

2. He then contacted the person he had been dealing with at Optus who attended his premises but “could not give me a satisfactory explanation of the extra fees”.

3. Had he known of the extra fees, he would never have had the phone system installed

4. The salesperson at Optus provided him with “false and misleading information about the performance of the system they were supplying me with”.

20. The Applicant did not specify exactly what hidden fees and charges he refers to. Nor does he indicate exactly the false and misleading information aout the performance of the system.

The Applicant’s evidence as a whole raises for consideration the following potential causes of action against the Respondent:

Liability of the Respondent for Misleading or deceptive conduct

Liability of the Respondent as a linked credit provider

Liability of the Respondent for statements made or the actions of Optus as its agent

Liability of the Respondent under contract

Liability of the Respondent under the consumer guarantee provisions of the ACL

Each of these are considered in turn.

Consideration

Liability of the Respondent for Misleading or deceptive conduct

21. Claims of this nature may found a cause of action pursuant to Section 18 of the ACL which deals with misleading or deceptive conduct. Despite the summary of the Applicant’s claim in Paragraph 7 above, the Applicant does not allege any misrepresentation by the Respondent. All of his dealings were with Optus, or their direct representatives. Accordingly, any representations, misleading or otherwise, or any failure to disclose fees (if correct), must have been made by Optus – the supplier of the phone system. Optus is not a party to these proceedings, and accordingly no order can be made against that entity.

Liability of the Respondent as a linked credit provider

22. The law provides some circumstances in which a supplier (such as Optus in this matter) and another party (such as the Respondent) can be found to be jointly liable for damages or loss occasioned for misrepresentation or breach of a contract with both or either, or for a failure of consideration. This occurs if the consumer is a party to a linked credit contract as set out in Section 278 of the ACL. Having considered that definition, I am satisfied that the Applicant did enter into a linked credit contract in so far as the lease agreement provided credit by the Respondent to the Applicant for the supply by Optus of the phone system to the Applicant.

23. In order to bring an action under these provisions, the consumer must bring an action against the supplier and the linked credit provider jointly (Section 279(2) of the ACL). This has not occurred, and none of the exceptions in subsection 279(3) apply. In these circumstances, the named Respondent cannot be liable under these linked credit provider provisions.

Liability of the Respondent at common law for the acts of Optus as its agent

24. At common law, a party can be liable for the actions of its agent – in this case, the Applicant might argue that the phone system supplier Optus was acting as the agent for the Respondent in these proceedings, and that the Respondent is therefore liable under the common law to a third party such as the Applicant in these proceedings for any loss suffered in reliance upon any misrepresentations made by Optus. This requires a finding that there is an agency relationship. Usually this requires the principal (the Respondent in these proceedings) to grant the agent the authority the act on its behalf to deal with a third party. This authority can be actual or apparent. Actual authority is usually in writing and determined by the term of a written contract between principal and agent. Apparent or ostensible authority is to be viewed from the perspective of the third party. If a third party is led to believe by the representation of the principal that the agent has an apparent authority and the agent commits the principal to a third party within that authority, then the principal can be bound to the same extent as if the principal expressly authorised the agent to do so.

25. In this matter, there is no evidence of any actual or formal authority for Optus to act as the Respondent’s agent. Indeed Clause 1.2 of the lease agreement provides:

No dealer or supplier who supplied the Equipment or any other person not employed by us who this transaction may have been introduced, negotiated or conducted by or through has the authority to act as pour agent. We will not be liable to you for any actions or statements of such person under any circumstances.

26. The Applicant in these proceedings had no direct dealings with the Respondent. His first knowledge of the leasing arrangements was in a document the supplier Optus asked him to sign. In those circumstances, if there were no other contrary indicators, the Applicant may have regarded Optus as acting as the agent of the Respondent and therefore being bound by the representations of the supplier. However, I am satisfied that Clause 1.2 of the lease agreement is a clear indicator to the contrary which would make it unreasonable for the Applicant to have assumed such agency. I am not satisfied that any representations or actions of the supplier Optus were made as agent of the Respondent.

Liability of the Respondent under contract

27. I have also considered whether the Applicant has any remedy under the ACL or under the contract. The Applicant effectively argues that his liability to the Respondent should have ceased and the contract cancelled when he was no longer in possession of the leased equipment.

28. Mr Miranda relevantly gives evidence that:

1. The phone system failed because Optus did not sell him sufficient bandwidth to work both the phone and internet.

2. Optus accepted that the system was insufficient for his needs.

3. Mr Miranda followed the advice of his Optus contact to return all components of the phone system to an address in Melbourne.

4. When he became aware of the involvement of the Respondent, he sent various emails which went unanswered. When he phoned the Respondent, he was occasionally told he would get a return call from the Manager. This never occurred

5. In 2018 and part of 2019, Mr Miranda was dealing with a number of personal health and family issues. During this time, he assumed that the contract with the Respondent would also be cancelled

6. Mr Miranda sent further correspondence to the Respondent on 3 April 2019 seeking reimbursement of the amounts already debited. There was also no reply to this.

7. There was no response from the Respondent until he instructed his bank about 12 months later to cease the periodic payment.

29. Ms Campos provided the following response:

1. The Respondent is a finance company that has arrangements with a range of suppliers to supply their equipment.

2. The Respondent purchases the equipment from the supplier and then leases it back to the customer.

3. The Respondent does not guarantee the condition of the equipment. She refers to Clause 3 which relevantly provides:

3.1 You acknowledge that you have used your own judgement to select the Equipment and supplier and that we are not able to give you any advice or assurances regarding the Equipment or its suitability for any use required by you

3.4 You must inspect the Equipment when it is delivered to you by the supplier, … to ensure it is complete, free of defects and in full working order … and is suitable for all purposes required by you …

4. The Respondent expects the customers to read all terms and conditions.

5. The Respondent may have failed in its obligation to communicate promptly with the Applicant.

6. There are no circumstances in which a contract can be cancelled at the request of the customer.

7. The Respondent did not authorise the equipment to be sent to the address in Melbourne.

30. I have carefully considered the terms of the contract. There is no representation in those terms as to the condition of the equipment, or that any failure in that condition entitles the Applicant to cancel the lease contract and/or recover any amounts already paid under that contract. The only basis in the contract for termination of the agreement is where the customer has breached a term, or cannot pay his debts, becomes bankrupt or is liquidated, dies or where the equipment is at risk (Clause 5). In those circumstances, the Respondent has the right to terminate, but the Applicant will remain liable for any amounts already due, and any further amounts payable under the leasing agreement (Clause 6).

Liability of the Respondent under the consumer guarantee provisions of the ACL

31. Under section 32 of the FTA, the ACL (NSW) applies to and in relation to:

1. (a) Persons carrying on business within this jurisdiction, or

2. (b) Bodies corporate incorporated or registered under the law of this jurisdiction, or

3. (c) Persons ordinarily resident in this jurisdiction, or

4. (d) Persons otherwise connected with this jurisdiction.

32. I have considered the Respondent’s potential liability under Part 3.2 of the ACL relating to consumer guarantees. Clause 3.2 of the leasing agreement notes that Part 3.2 of the ACL is not modified or excluded (as mandated by Section 64 of the ACL). However, I find that the consumer guarantees in Part 3.2 do not provide a remedy for this Applicant for the following reasons:

1. The guarantee that any goods supplied be of acceptable quality (Section 54 of the ACL) attaches to the supplier of those goods. Optus is clearly identified on the Lease agreement as the supplier of the equipment, and in the service agreement with Optus.

2. The Respondent to these proceedings has supplied services to the Applicant in the form of a contract for the lending of money. This is captured in the definition of “services” in Section 95A of the Competition and Consumer Act. Under the ACL, suppliers of services guarantee that the services will be rendered with due care and skill (Section 60), be reasonably fit for a purpose made known by the consumer (Section 61(1)), will achieve a result made known by the consumer (Section 61(2)), and will be supplied within a reasonable time (Section 62).

3. There is no suggestion or evidence that the Respondent has breached any of these consumer guarantees in the manner in which the credit has been provided to the Applicant.

Summary

33. I have not found in favour of the Applicant in relation to any potential causes of action. In the absence of any other cause of action, I dismiss the Applicant’s claim. The Applicant will remain liable to pay the balance owing under the lease agreement.

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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 17 August 2021