Quach v Telstra Corporation Limited ACN 051 775 556 (Civil Dispute)
[2020] ACAT 66
•3 September 2020
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
QUACH v TELSTRA CORPORATION LIMITED ACN 051 775 556 (Civil Dispute) [2020] ACAT 66
XD 1364/2019
Catchwords: CIVIL DISPUTE – whether advice given to a customer constitute implied terms in a contract – the extent of warranty to repair damage – whether it was an unfair contract under the Australian Consumer Law
Legislation cited: Australian Consumer Law ss 23, 24, 25, 26, 27
Cases cited:Hospital Products Ltd v United States Surgical Corp [1984] HCA 64
BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266
Tribunal: Senior Member H Robinson
Date of Orders: 3 September 2020
Date of Reasons for Decision: 3 September 2020
AUSTRALIAN CAPITAL TERRITORY
CIVIL & ADMINISTRATIVE TRIBUNAL XD 1364/2019
BETWEEN:
MICHAEL VAN THANH QUACH
Applicant
AND:
TELSTRA CORPORATION LIMITED ACN 051 775 556
Respondent
TRIBUNAL: Senior Member H Robinson
DATE:3 September 2020
ORDER
The Tribunal orders that:
The application is dismissed.
…..………Signed……………
Senior Member H Robinson
REASONS FOR DECISION
This is an application by Dr Michael Quach under the Australian Consumer Law in Schedule 2 of the Competition and Consumer Act 2010 (Cth) (the ACL).
By way of this application, Dr Quach seeks a refund for two things:
(a)the complete cost of a telecommunications package purchased from the respondent, on the basis that he paid for access to the 4G or 4GX network, but was instructed to lock his phone to the slower 3G network in order to ensure consistent reception; and
(b)the costs of repairs to phone, where those repairs should have been covered by the manufacturer’s warranty.
Issue One: The telecommunications package
Dr Quach filed a written witness statement, which was undated. He also gave evidence at the hearing. None of his evidence was seriously challenged by the representative for the respondent. I accept his history of the events.
On 12 September 2017, Dr Quach attended the Telstra shop at the Westfield shopping mall in Woden, ACT. While there, he entered a post-paid contract with Telstra for a Samsung Note 8 (the phone) and access to Telstra’s 4GX mobile phone network (the network access).
The contract for the phone and the network access was in writing and consisted of a bundle of documents:
(a)An “order estimate” dated 12 September 2017 that set out the total cost of the package.
(b)A document entitled “welcome to your new plan, Michael”.
(c)A “critical information summary” that set out “information about Telstra New Phone Feeling and New Tablet Feeling”, including information about price and billing.
(d)A “critical information summary” about the Go Mobile Plus Plan and the service (the plan terms).
(e)A “critical information summary” about Stay Connected Plus after sales service (the service terms).
Dr Quach planned to use the phone as a “hotspot” at his place of work in the suburb of Red Hill in the ACT, but he does not suggest that he expressly told the sales staff this.
Because he anticipated using considerable bandwidth, Dr Quach purchased the most expensive package, the “Go Plus Mobile Plan”, at $149 a month, with 50GB of data. Under this package, the phone was subsidised and no additional charge was payable for it.
When Dr Quach got home, he found the 4G reception at the Red Hill address to be unreliable.
On or about 25 September 2017, Dr Quach logged onto the Telstra website, which had a map of mobile coverage for the ACT. He noted that the website indicated that 4G was available in Red Hill. Dr Quach had not checked this site prior to his decision to purchase the phone and does not suggest that he relied upon it when deciding to purchase the phone or the network access.
Dr Quach then contacted Telstra for assistance. By way of email (the email advice) the Telstra customer service team advised him that his home was:
…mapped within poor 3G 850MHZ, 4G (LTE 1800 MHz), 4GX (LTE 700 MHZ).
4G (LTE 1800 MHz); 4GX (LTE 700MHZ) inbuilding mobile network coverage is not yet established in your location.
As of date, there are no planned upgrades for the surrounding base stations in that area.
The same email went on to explain that the Telstra wireless coverage maps are created using tools that “predict the likely areas of coverage”, and that there may be specific areas within the mapped areas where the mobile device will not function. This appears to be a concession that the coverage maps are unreliable.
The same email further stated that for a 4GX device, the acceptable download speed was 2Mbps – 75 Mbps for category 4 devices, and 2 Mbps to 100 Mbps for Category 6 devices. The email concluded that Dr Quach’s reported download speed of “5-7Mbps still falls within the expected typical results.”
The email is nothing if not frank. In the email, the respondent conceded that 4G coverage was not readily available in Dr Quach’s residential location, and that the download speed he received was at the very bottom of the broad scope of “acceptable download speeds” offered. Given the applicant paid a premium price for a premium product, it is not surprising that he was frustrated by the confirmation that he could not fully use it.
Finally, the email included the following two lines:
***We suggest you lock your device to 3G only to try and improve signal in your area, as the location reported doesn’t have 4G coverage.
***We suggest you lock your device to 3G only to try to see if there is an improved signal in your area (the 3G advice).
These appear to be form statements, cut and pasted into the email by the enquiry officer who addressed Dr Quach’s email.
At the hearing, Dr Quach argued that the 3G advice constituted an “unfair contract term” under Part 2-3 of the ACL and that it was, therefore, void.
Alternatively, Dr Quach appeared to argue that the phone or the telecommunications package was not of merchantable quality:
It’s clearly not merchantable if you say - if somebody is trying to sell you a premium product with a premium service and you're told not to use that premium service after you - - -
In terms of his loss, Dr Quach described the difference between 3G and 4G as “astronomical” and claimed that he would not get enough data through his phone for it to be useful as a hotspot. His unchallenged evidence was that:
the - you hardly get any data coming through. You know, we're talking one megabit or so, you know, and then lots and lots and lots of dropouts. It's not possible to have a reliable internet connection….
… It's not possible to have a reliable - when I say 'reliable internet connection', I'm saying I'm used to, you know, faster broadband and when you're used to faster broadband it is really frustrating. You know, there are at least two people working from the landline and, you know, that being the case, it makes it impractical and not reliable.[1]
[1] Transcript of proceedings 26 May 2020, page 10
Dr Quach acquired a landline broadband connection instead. This, he says, caused him extra expense.
Telstra’s position
Telstra’s position in relation to the service claim is that its contracts do not guarantee 4GX or 4G coverage at all locations, or indeed at any location.
In this regard, Telstra relied on a clause in the plan terms which provides that:
Mobile coverage
You can access 4GX coverage if you have a 4GX compatible device and area in a 4GX coverage area. If you’re outside 4GX areas or if you have a 4G or 3G device, you’ll receive access to our 4G or 3G coverage. Mobile coverage depends on a number of factors such as your device, location, surrounding landscape as well as a physical building you may be using your device from. To find out more about our mobile coverage and networks or how to optimise network performance visit Telstra.com/coverage.
Telstra argued that the 3G advice should not be taken to be a term of the contract as it was merely advice.
Consideration: Is this an unfair contract?
Part 2-3 of the ACL contains a series of provisions that provide that unfair terms of consumer contracts may be void in certain circumstances. The relevant provisions provide as follows:
23. Unfair terms of consumer contracts and small business contracts
(1)A term of a consumer contract or small business contract is void if:
(b)the term is unfair; and
(c)the contract is a standard form contract.
(2)The contract continues to bind the parties if it is capable of operating without the unfair term.
(3)A consumer contract is a contract for:
(a)a supply of goods or services; or
(b)a sale or grant of an interest in land;
to an individual whose acquisition of the goods, services or interest is wholly or predominantly for personal, domestic or household use or consumption.
…
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.
26. Terms that define main subject matter of consumer contracts or small business contracts etc. are unaffected
(1)Section 23 does not apply to a term of a consumer contract or small business contract to the extent, but only to the extent, that the term:
(a)defines the main subject matter of the contract; or
(b)sets the upfront price payable under the contract; or
(c)is a term required, or expressly permitted, by a law of the Commonwealth, a State or a Territory.
27. Standard form contracts
(1)If a party to a proceeding alleges that a contract is a standard form contract, it is presumed to be a standard form contract unless another party to the proceeding proves otherwise.
(2)In determining whether a contract is a standard form contract, a court may take into account such matters as it thinks relevant, but must take into account the following:
(a)whether one of the parties has all or most of the bargaining power relating to the transaction;
(b)whether the contract was prepared by one party before any discussion relating to the transaction occurred between the parties;
(c)whether another party was, in effect, required either to accept or reject the terms of the contract (other than the terms referred to in section 26(1)) in the form in which they were presented;
(d)whether another party was given an effective opportunity to negotiate the terms of the contract that were not the terms referred to in section 26(1);
(e)whether the terms of the contract (other than the terms referred to in section 26(1)) take into account the specific characteristics of another party or the particular transaction;
(f)any other matter prescribed by the regulations.
There could be little doubt that each part of the written contract, including the three critical information summaries, are standard form contracts. There are several terms in these contracts that appear to limit Telstra’s obligation to provide any particular service, the most relevant and significant of which is the mobile coverage clause set out above. On one reading of that clause, what Telstra is selling is the possibility of access to the 4G or 4GX network, where it is available. Telstra makes no guarantees that it is available anywhere, and certainly not to the purchaser who enters the contract. However, these terms are arguably transparent as per section 24(3) of the ACL and may well also be terms that define the main subject matter of the contract as per section 26 of the ACL.
Perhaps because of this, Dr Quach has not contended that the mobile coverage clause, or indeed any other written clause in the contract, is unfair under Part 2‑3. Instead, he argues that the 3G advice constitutes, in effect, an opaque and unfair term of the contract.
In other words, Dr Quach’s argument, as I understand it is:
(a)Telstra sold him a premium package that includes access to 4G and 4GX, but he is unable to use this package.
(b)Telstra then advised him that, in order to use his phone, he must lock it to another network, the 3G network – this means he cannot even use the 4G or 4GX where it is available, without unlocking his phone.
(c)The 3G advice that he must lock his phone to the 3G network was an implied term of the contract, because unless he complies with it, he cannot use either the phone or access the network – in other words, the term is necessary to give ‘business efficacy’ to the contract.
(d)Perhaps, alternatively, the 3G advice amounts to a unilateral variation of the contract.
(e)In either case, the term is unfair contract term within the meaning of section 24 of ACL because:
(i) the term has the effect of permitting Telstra to limit performance of the contract;
(ii) it caused a significant imbalance in the parties’ rights and obligations arising under the contract – that is, Dr Quach must pay a premium price, but Telstra need not supply a premium product;
(iii) it is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; and
(iv) it causes him financial detriment because he must pay for a service he cannot use and pay for an additional service.
(f)Because the 3G advice is an unfair term, it is void pursuant to section 23(2) of the ACL.
(g)Because the contract is not capable of operating without the unfair term, the whole contract is void pursuant to section 23(2).
In effect, Mr Quach appears to be asserting the existence of a contractual clause that appears to benefit the vendor, in order to have that clause declared void, with a view to having the entire contract declared void.
This is certainly a clever, if novel, argument. However, it is also fatally flawed, because the email advice is clearly not a contractual term. Telstra does not suggest that it is. There was no meeting of the minds between the parties to agree to its inclusion in the contract, and no capacity, under the contract, for Telstra to unilaterally insert it.
Granted, a Court may find that a term is implied into a contract, without the agreement of the parties, where the contract would be unworkable without it.[2] It is generally the party seeking to rely upon such a term that would assert its existence, so it is rather unusual that the party seeking to void the term is asserting its existence. However, setting that practical problem aside for one moment, the email advice does not meet the threshold of a term implied by fact in any case.
[2] Hospital Products Ltd v United States Surgical Corp [1984] HCA 64 at [66] per Mason J
In BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266 the Privy Council set out the requirements for a term to be implied ‘in fact’. They are that the term:[3]
(a) be reasonable and equitable;
(b) be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it;
(c) be so obvious that “it goes without saying”;
(d) be capable of clear expression; and
(e) not contradict any express term of the contract
[3] At [40]
The term contended for Dr Quach is, on his own argument, neither reasonable nor equitable. Such a term cannot be implied.
The 3G advice is just that – advice. Dr Quach was entitled to take it or reject it a he chose. As such, while I am sympathetic to Dr Quach’s general feeling of ‘unfairness’ – he appears to have paid for a premium product that he could not fully use – that problem does not arise because of the email advice. No issue arises under Parts 2-3 of the ACL as a consequence of the that advice.
Issue two: the repairs
The second ground of Dr Quach’s claim against Telstra is a claim for an amount he paid to a repairer to have the screen on the phone replaced. Dr Quach says that Telstra was obliged to honour a manufacturer’s warranty offered at the time of sale and to repair the screen for no cost.
The manufacturer’s warranty ran from 12 September 2017 to 12 September 2019. The terms and conditions provide that:
The manufacturers warranty, our policies and consumer guarantees don’t apply if you have misused the product in a way that caused the fault (Telstra device Care Assessment Form: Resolution Request p. 1 and 2)
The difficulty in the case was that the screen had a combination of damage:
(a)A dead pixel, which was a manufacturing fault; and
(b)Damage to the screen caused by use.
On 6 April 2018, Dr Quach approached Telstra and sought to have the pixel repaired.
On 20 April 2018 Telstra quoted $429 to repair the phone. This quote was based on the whole screen having to be replaced. In effect, the outer glass and the pixel screen were one piece, and Telstra’s position was that it was not able to replace one without the other, and it was in any case not required to honour the manufacturer’s warranty where there was damage to the phone.
Dr Quach sought a review on 7 May 2018, but the original quote was confirmed on 1 June 2018.
Dr Quach then went to an agent of the manufacturer, Samsung. This company repaired the dead pixel under the warranty, but also changed for an amount for the replacement screen, being $260.
Dr Quach is seeking to recover the $260 from Telstra, on the basis that Telstra should have been obliged to meet the cost of repairing or replacing the entire phone.
I am unclear on what basis Dr Quach makes the claim. No clear legal principle is cited. There is nothing in the manufacturer’s warranty that suggests that Telstra is obliged to repair that part of the phone that was damaged by Dr Quach, and indeed the terms of that warranty make it clear that Telstra is under no such obligation. Perhaps an argument could be made that Telstra was obliged to repair the dead pixel, whether under the manufacturer’s warranty, or under the ACL. However, Dr Quach did not set out any basis for this argument other than the warranty, and the express terms of the warranty exclude liability where the phone is already damaged.
In any case, Dr Quach accepted an offer by Samsung to repair the phone. Samsung repaired the dead pixel accordingly. Dr Quach then paid to $260 to Samsung for the additional repair of the glass. I understand his argument to be that he neither requested, nor wanted, the glass to be repaired. There may be some merit in that argument. However, to the extent that the $260 was not appropriately incurred, it should be recovered from the entity that charged that fee, not from Telstra. The damage is too remote.
Accordingly, the application is dismissed.
………………Signed……………..
Senior Member H Robinson
HEARING DETAILS
FILE NUMBER: | XD 1364/2019 |
PARTIES, APPLICANT: | Michael Van Thanh Quach |
PARTIES, RESPONDENT: | Telstra Corporation Limited |
COUNSEL APPEARING, APPLICANT | N/A |
COUNSEL APPEARING, RESPONDENT | N/A |
SOLICITORS FOR APPLICANT | N/A |
SOLICITORS FOR RESPONDENT | N/A |
TRIBUNAL MEMBERS: | Senior Member H Robinson |
DATES OF HEARING: | 26 May 2020 |
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