Origin Energy Electricity Ltd v Polar Kids Pty Ltd

[2018] QCATA 110

QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL

CITATION:

Origin Energy Electricity Ltd v Polar Kids Pty Ltd [2018] QCATA 110

PARTIES:

ORIGIN ENERGY ELECTRICITY LTD
(appellant)

v

POLAR KIDS PTY LTD

(respondent)

APPLICATION NO/S:

APL401-17

ORIGINATING APPLICATION NO/S:

MCDO2316-16 (Brisbane)

MATTER TYPE:

Appeals

DELIVERED ON:

6 August 2018

HEARING DATE:

On the papers

HEARD AT:

Brisbane

DECISION OF:

Senior Member Howard, Presiding

Member Traves

ORDERS:

1.   The application for leave to appeal is allowed.

2.   The appeal is allowed.

3.   The order of the Tribunal dated 14 November 2017 is set aside;

4.   Polar Kids Pty Ltd must pay Origin Energy Electrical Pty Ltd $5,965.88 within 21 days from the date of this Order.

CATCHWORDS:

APPEAL AND NEW TRIAL – NEW TRIAL – IN GENERAL AND PARTICULAR GROUNDS –  where minor civil dispute between trader and consumer – whether misleading and deceptive conduct in contract dispute - whether Schedule to electricity contract was misleading regarding network and other charges to be applied – whether customer suffered any loss or damage

Australian Consumer Law (Qld), s 18, s 236
Fair Trading Act 1989 (Qld) s 16, s 50
Queensland Civil and Administrative Tribunal Act2009 (Qld) s 12, Schedule 3

APPEARANCES:

This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld).

REASONS FOR DECISION

1. Polar Kids Pty Ltd (Polar Kids) commenced a minor civil dispute (MCD) in the Tribunal against Origin Energy Electricity Limited (Origin) arising out a contract for the sale of electricity entered into between Origin and Polar Kids on 20 October 2015.

2. In essence, Polar Kids claims it was misled by the contract documents, in particular the Schedule, because it did not provide an estimate of the network charges that Polar Kids could expect to pay under the contract. Polar Kids also argued that other charges were incurred which were more than the amount indicated in the Schedule and that it had not been informed of a break fee which applied if the electricity supply was disconnected prior to the expiration of the fixed term provided for in the contract. Polar Kids also submitted that it should not have incurred any charges from the time its electricity was disconnected by Energex due to a fire which destroyed Polar Kids’ business in February 2016.   

3. Polar Kids sought orders for relief from the payment of $10,000.00 outstanding to Origin and a refund of $10,000.00 of approximately $18,000.00 already paid.

4. The Tribunal made, in some respects curiously-worded, declarations and orders in the following terms:

   1.       Satisfied Schedule was misleading by not specifically listing network charges and other government charges.

   2.       Energex disconnected site from Grid on night of fire 21/22 February 2016. If Energex had recorded same no network charges would be payable from that date.

   3.       The applicant has paid $18,661.00 which includes some network and termination charges.

   4.       Discharge the Origin debt $12,122.35, no refund to the applicant.

5. Origin sought leave to appeal the Tribunal’s decision. The application for leave to appeal and if successful, the appeal, are listed before us for determination. It relies on several grounds of appeal. Origin contends that the Tribunal’s order is inconsistent with the terms and conditions of the Sale of Electricity contract which were notified to Polar Kids prior to its entry into the contract. It also contends that the Member appeared to be biased against Origin. In relation to this Origin refers to comments critical of Origin attending the Hearing by telephone and to call centres being based in India.

6. Having regard to evidence belatedly received by Origin from Energex, Origin has revised its position on appeal. It seeks recovery from Polar Kids in the amount of $5,965.88 as money owing to it under the contract, rather than the $12,122.35 it had claimed was owing before the Tribunal. Origin concedes it was not entitled to charge Polar Kids for usage after the electricity was disconnected by Energex from the site following the fire. Confirmation from Energex that it had disconnected the electricity at Polar Kids’ site due to a fire, was only received by Origin on 1 February 2018. Up until that time, Energex had denied, in response to Origin’s enquiries, that it had done so.

7. For the reasons to follow, we have concluded that leave to appeal should be granted and the appeal should be allowed. Leave should be granted because there is error in the Tribunal’s approach resulting in a substantial injustice which should be corrected.  It is in the interests of justice to grant leave to Origin to rely upon the recently provided evidence from Energex, as it was evidence not available prior to the original Tribunal hearing despite the reasonable efforts of Origin to clarify the issue it addressed and is directly relevant to the substantial merits of the dispute.

   Was the Schedule to the contract misleading?

8. We consider first whether there was error associated with the Tribunal’s finding or declaration that the Schedule was misleading. This requires us to determine whether the Tribunal, in determining the ultimate question of fact as to whether the Schedule was likely to lead the ordinary and reasonable large market consumer or potential large market consumer of energy services into error, ignored legal principle or, in applying the legal principle, erred in its conclusions of fact.

   The relevant legal principles

9. The Australian Consumer Law has been adopted as a law of our State by the Fair Trading Act 1989 (Qld) and is to be referred to as the ACL (Qld).[1] Relevantly, the Tribunal has jurisdiction in respect of actions under s 236 of the ACL (Qld) for a contravention of s 18 of the ACL (Qld) where the dispute can be categorised as a minor civil dispute.[2]

   [1]Fair Trading Act 1989 (Qld), s 16.

   [2]Fair Trading Act 1989 (Qld), s 50.

10. Section 18 provides:

    18 Misleading and deceptive conduct

    (1)     A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

11. The approach to whether conduct is misleading and deceptive involves a two stage enquiry, addressing:

    (a)First, what representations were conveyed here by Origin’s contractual documents, including the Schedule; and

    (b)Secondly, whether that was misleading or deceptive or likely to mislead or deceive.

12. It is insufficient that the conduct caused confusion or questioning: it is necessary to establish that the conduct tends to cause an ordinary or reasonable consumer to be led into error.[3] The conduct must be viewed as a whole and in its proper context. This may require consideration of the type of market, the manner in which the goods or services are sold, the habits and characteristics of purchasers in that market, as well as of any relevant disclaimers or explanations.[4]

    [3]Optus Mobile Pty Ltd v Telstra Corporation Ltd [2018] FCA 745, [20] citing Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; (2013) 250 CLR 640 (TPG), [39]; Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 634, [39].

    [4]Australian Competition and Consumer Commission v HJ Heinz Co Australia Ltd [2018] FCA 360, [42].

13. If the relevant conduct involves representations to the public or to a section of the public, such as prospective business consumers of a particular product or service, here the supply of electricity, regard must be had to the effect of the representations on “ordinary” or “reasonable” members of that class of prospective purchasers. The class may be quite broad and may include intelligent business owners as well as less intelligent business owners.[5] However, the class will not include those who fail to take reasonable care for their own interests.[6]

    [5]Ibid.

    [6]Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12; (2000) 202 CLR 45 at [101]–[103]; Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 634 at [43].

14. The question whether conduct is misleading or deceptive or likely to mislead or deceive is a question of fact that must be determined in light of the relevant surrounding circumstances.

15. If a person is found to have engaged in conduct that is misleading or deceptive and a person has suffered loss or damage because of that conduct, the person may recover the amount of the loss or damage by action against that person under s 236 of the ACL (Qld).

    Did the Schedule amount to misleading and deceptive conduct by Origin? 

16. An Electricity Supply Agreement (the Agreement) was entered into between Polar Kids and Origin on 20 October 2015 covering the period from 1 November 2015 to 31 October 2018 for a specified site at North Lakes. Polar Kids was a “large market consumer”. A large market consumer consumes a large amount of electricity, normally over 100 megawatts per annum. Polar Kids was likely to come within that category of consumption (based on previous consumption for the site as discussed below), having recently purchased an indoor trampoline park as a going concern which had operated at the site for the previous 12 months.

17. Origin and Polar Kids entered into discussions prior to signing the contract to discuss how much electricity was likely to be consumed and what Polar Kids’ needs would be. For this purpose, Origin asked Polar Kids to submit the previous owner’s energy bills. Polar Kids did this, emailing the previous owner’s bills from AGL which, amongst other things, set out in respect of each month what the network charges and other charges were for the site. 

18. The following AGL invoices were obtained by Polar Kids and forwarded to Origin:

    (a)Invoice of 1 June 2015 for $8,130.75 (which included $4,664.27 in network charges);

    (b)Invoice of 1 July 2015 for $4,667.46 (which included $2,006.17 in network charges);

    (c)Invoice of 4 August 2015 for $5,765.76 (which included network charges of $2,075.43);

    (d)Invoice of 1 September 2015 for $3,978.02 (which included network charges of $2,238.57).

19. On 12 October 2015 Origin forwarded a package of documents to Polar Kids by way of an “offer” from Origin to supply electricity to Polar. The package of documents comprised:

    (a)The Schedule;

    (b)The Site List;

    (c)The Sale of Electricity – Agreement Terms, including Annexure A; and

    (d)A document titled “Encompass a simple electricity reporting tool for business”.

20. The covering letter enclosing the above documents provided relevantly:

    Summary of Offer

    This offer is valid for acceptance until 21/10/2015, unless withdrawn earlier by us. We may in our discretion extend the date for acceptance. If you accept this offer, the Sale of Electricity Agreement will apply for 36 months commencing on 01/11/2015. This offer may only be accepted for the full term.

    Charges

    The attached Schedule sets out your electricity charges and other charges payable under the contract, exclusive of GST.

    All energy charges are fixed for the term of the contract subject to the variation rights in the contract.

    Some charges are variable and remain subject to confirmation. Please refer to Annexure 1 of the attached ESA for all the charges applicable under this offer. (emphasis added).

21. The Schedule signed by the parties stated:

    This schedule forms part of, and is to be read in conjunction with, the Agreement Terms.

22. Clause 7 of the Agreement Terms is titled “Charges”.

23. Clause 7.1 provides:

    You must pay us the Charges.

24. Charges is defined to mean the charges in Annexure 1.

25. Annexure 1 provides that Charges include:

    (a)Energy charges;

    (b)Environmental charges;

    (c)Network charges;

    (d)Regulated charges;

    (e)Charges relating to Metering Services;

    (f)Administration Charge and billing Charges; and

    (g)Break fee.

26. Network charge is further defined in Annexure A as follows:

    Network charge is an amount equal to the costs charged by the Distributor and/or transmission service provider to us in relation to you or your Site.

[27]  The Schedule lists some charges in a Table as follows:

Energy Rates:

Energy Rates c/KWh excluding GST
Period	Peak	Off Peak
01/11/2015 to 31/10/2016	8.4900	4.4300
01/11/2016 to 31/10/2017	7.9100	4.5300
01/11/2017 to 31/10/2018	8.0700	4.8900

Non Energy Rates:

Non Energy Charges excluding GST
Metering Charge	$100.00/month/meter
Supplementary Metering Charge	$25.00/month/meter
Other Charges Service	$40.00/site/month

1. Following the Table, immediately above the provision for signatures the Schedule provides:

   This schedule forms part of, and is to be read in conjunction with, the Agreement Terms.

2. Polar Kids contends that the Schedule was misleading because it only itemised some charges and did not include network charges. Implicit in this submission is the suggestion that the Schedule left the impression that there were no network charges because they were not listed. Polar Kids argued that the Schedule should have indicated that network charges of between $3,000.00 and $4,000.00 could be incurred.

3. Origin submits that the Schedule was to be read with the Agreement Terms and that it was clear network charges were payable. Network charges are the costs of the energy distributor for the power used by a consumer at the site. They are billed to the retailer, here, Origin, which in turn bills them to the customer.  Origin submits that it was unreasonable, and indeed impossible, for it to predict what those charges might be. Origin explained during the Hearing, “if you took five customers in a row in the same street they would all have different network charge amounts because of the way they use their consumption”.[7] Origin maintain that the quote it provides is for the energy rate and metering charges, and that other charges, including network charges, are explained in the terms of the contract.

   [7]Transcript of Proceedings, Polar Kids Pty Ltd v Origin Ltd (Queensland Civil and Administrative Tribunal, MCDO2316/16, Member Cooke, 7 June 2018) I-12.

   Consideration

4. Network charges are not Origin-sourced charges but charges from the network, on-charged to Origin which Origin on-charges to the customer without any changes. The Schedule, in our view, informed customers as to the variable charges imposed by the energy retailer, that is, by Origin. The network charges, being a standard charge applicable to the site regardless of which retailer is used, were not referred to in the Schedule. That does not, in our view, make the Schedule misleading or the conduct of Origin misleading or deceptive.

5. The Schedule was not a stand-alone document but specifically incorporated the Agreement Terms which set out in a separate Annexure what charges were to be paid. The Annexure was also clearly referred to in the relevant covering letter. The list of charges in the Annexure clearly includes “network charges” and the Agreement terms make it clear that they are imposed by the distributor. It is not a reasonable interpretation of the Schedule, in our view, to conclude that no network charges are payable because they are not listed there. We do not find that the Schedule, in all the circumstances, was likely to lead a large market customer into error.

6. While we accept that Mr Roddick of Polar Kids required further information from Origin to understand the nature of network charges and how they were calculated, this does not mean the Schedule was misleading.  

7. The Schedule did not purport to be a quote of all electricity and associated costs. It gave a quote of the energy rates Origin would charge, minus the network charges. The amount of the network charges were not able, at that time, due to the way in which they are incurred and calculated, to be included in the Schedule. It is understandable, in our view, that Origin would focus in the Schedule on the variable charges which differentiated its services from those of its competitors.

8. Further, in context, most business consumers of electricity would be aware that network charges are payable in addition to energy charges.

9. If we are wrong about this, and the Schedule was misleading because it conveyed the impression there were no network charges or that they were included in the amount for “non-energy charges” we do not find that Polar Kids suffered any loss or damage because of that. This is because the network charges would have been the same had Polar Kids gone to another retailer.

10. In any event, there was no evidence of Polar Kids’ loss or damage other than Mr Roddick saying he would not have entered into the contract with Origin if he had known of the charges and break fee.  

11. In the circumstances, we are satisfied that Polar Kids should pay to Origin the sum of $5,965.88, being money due and owing under the contract for network charges to the time of disconnection due to the fire.

    The charges incurred subsequent to and as a result of the disconnection of the service

12. This part of the dispute related to the disconnection of Polar Kids’ energy supply by Energex. The disconnection had occurred as a result of fire to the site which had totally destroyed the business. Origin was not notified by Polar Kids or Energex that the site had been disconnected. Having not received notification, it continued to charge Polar Kids for energy usage and ultimately charged Polar Kids a break fee to which it believed it was entitled due to the early termination by Polar Kids of the electricity supply agreement.

13. Origin claimed these charges incurred after the fire, including the break fee in their application for leave to appeal. However, by document filed 5 February 2018, Origin revised its position, and advised the Tribunal that it was no longer seeking to recover any charges incurred from 23 January 2016, that is, an amount totalling $6,156.67. The change in position was due to information received from Energex on 1 February 2018 that it had attended Polar Kids’ premises due to fire to disconnect the energy supply but had omitted to submit the correct paperwork to Origin advising them of this.

14. There is therefore no need to address this ground further.

15. We are satisfied that Polar Kids is properly entitled to relief from payment of $6,156.67 being the amount of charges incurred after the disconnection.

    Allegation of bias by Origin

16. Origin submits that the Member was biased against it. It argues that the Member made comments during the hearing that were critical of Origin appearing remotely; made disparaging remarks in enquiring whether Origin’s call centre staff are based in India; and refused to read the contract document in its entirety. Origin applied for another Member to determine the proceeding following the adjournment of the matter part-heard by the Tribunal. The application effectively sought that the Member recuse himself. It was to be determined at the commencement of the resumed hearing date. It was not determined by the Member, who proceeded to then resume the hearing and determine the application.

17. Origin does not allege actual bias. That said, bias may be reasonably apprehended. The Appeal Tribunal has said that the test for apprehended bias is whether a reasonable observer, aware of the facts, could properly suspect a lack of impartiality or feel a reasonable apprehension that the Tribunal might not bring fair and unprejudiced views to the resolution of the question.[8]

    [8]Zanetti & Anor v Pierpoint (No 2) [2011] QCAT 334, [24].

18. Origin argues the Member was critical of Origin attending remotely, despite directions allowing it to do so, in a general sense, saying he found it extraordinary that a big company like Origin wouldn’t appear in person and suggesting that they make some arrangements to ‘get up here’ because the attendance became an issue when Origin sought to rely on documents that the Member could not access. So understood, those observations of the Member did not demonstrate bias, whether actual or apprehended bias. 

1. Origin suggests that the remarks about the location of its employees were made in a disparaging way.[9]

   [9]Transcript of Proceedings, Polar Kids Pty Ltd v Origin Ltd (Queensland Civil and Administrative Tribunal, MCDO2316/16, Member Cooke, 7 June 2018) I-13, lines 5-35.

2. Further, the Member  made comments as follows:

   ..Why should people have to search through your terms and conditions, which was no doubt in small print?[10]

   … trying to contact Origin and get some satisfaction is a problem which is common to a lot of people that ring up. You never get onto the same person. You never get on to a person who knows anything about what you’ve got to talk to them about.[11]

   [10]Ibid I-11, lines 46-47. Our emphasis.

   [11]Ibid I-30, lines 41-15.

3. We would accept that the learned Member’s comments do tend to support a finding that a reasonable observer could properly suspect a lack of impartiality. We would accept that the Member should have recused himself and the tribunal should have been reconstituted for hearing.

4. The failure to do so resulted in a breach of natural justice: this is an error of law.

   Conclusions and orders

5. In the circumstances, the Tribunal below erred in law and in fact in finding the conduct of Origin to be misleading and deceptive, as well as failing to observe natural justice. On our analysis as explained throughout these reasons for decision, the errors are material: the orders made were not appropriate in the substantial merits of the matter. Therefore, a substantial injustice has resulted that must be corrected. Accordingly, leave to appeal is granted.

6. For the reasons explained, on rehearing of the MCD, we find that there was no misleading and deceptive conduct by Origin and that accordingly Polar Kids should not have been relieved of the debt owed to Origin, excepting the amount owed from the date of disconnection.  

7. We order Polar Kids pay Origin $5,965.88 within 21 days of the date of this Order.

   Observations

8. The appeal grounds did not include failure to provide adequate reasons for decision. Failure to provide same is an error of law.

9. However, the learned Member’s reasons for decision consisted of the four sub-points of the orders made and little more. Although oral reasons for decision delivered in a busy list need not be as detailed as written reasons might usually be, they must nevertheless expose the Member’s reasoning.