Terry Truck Rentals Pty Ltd v Haseeb
[2016] WADC 101
•1 JULY 2016
TERRY TRUCK RENTALS PTY LTD -v- HASEEB [2016] WADC 101
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2016] WADC 101 | |
| Case No: | CIV:1617/2014 | 16 & 17 JUNE 2016 | |
| Coram: | BOWDEN DCJ | 1/07/16 | |
| PERTH | |||
| 25 | Judgment Part: | 1 of 1 | |
| Result: | Judgment for the plaintiff for $165,000 | ||
| PDF Version |
| Parties: | TERRY TRUCK RENTALS PTY LTD SAID AKBAR HASEEB |
Catchwords: | Vehicle rental agreement Terms not provided until after contract signed Whether terms incorporated into contract Incorporation by signature Unlimited liability if vehicle and keys 'unsecured' No definition of 'unsecured' Australian Securities and Investments Commission Act 2001 (Cth) Unfair contractual term Consumer contract Acquisition for personal use or consumption Significant imbalance Reasonably necessary to protect business interests |
Legislation: | Australian Securities and Investments Commission Act 2001 (Cth) |
Case References: | Australian Competition and Consumer Commission v CLA Trading Pty Ltd [2016] FCA 377 Gerrard v Slamar [2004] WASCA 253 Helicopter Sales (Australia) Pty Ltd v Rotor-Work Pty Ltd (1974) 132 CLR … Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220 Le Mans Grand Prix Circuits Pty Ltd v Iliadis [1998] 4 VR 661 Metal Roofing & Cladding Pty Ltd v Amcor Trading Pty Ltd [1999] QCA 472 Metropolitan Water Board v Colley's Patents Ltd (1911) 2 KB 38 Minchillo & Anor v Ford Motor Company (Australia) Ltd [1995] Vic Rp 78 Mount Bruce Mining Pty Ltd v Wright Prospecting Ltd [2015] HCA 37 Paciocco v Australia and New Zealand Banking Group Limited [2015] FCAFC 50 Re Jillawara Grazing Co v John Shearer Ltd [1984] FCA 30 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 Tottenham Investments Pty Ltd v Carburettor Services Pty Ltd (1994) Aust Torts Rep 81-292 Waldron v Baz [2005]WADC 187 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
SAID AKBAR HASEEB
Defendant
Catchwords:
Vehicle rental agreement - Terms not provided until after contract signed - Whether terms incorporated into contract - Incorporation by signature - Unlimited liability if vehicle and keys 'unsecured' - No definition of 'unsecured' - Australian Securities and Investments Commission Act 2001 (Cth) - Unfair contractual term - Consumer contract - Acquisition for personal use or consumption - Significant imbalance - Reasonably necessary to protect business interests
Legislation:
Australian Securities and Investments Commission Act 2001 (Cth)
Result:
Judgment for the plaintiff for $165,000
Representation:
Counsel:
Plaintiff : Mr T G Darge
Defendant : Mr D F Gordon
Solicitors:
Plaintiff : SRB Legal
Defendant : Alison & Associates (Legal) Pty Ltd
Case(s) referred to in judgment(s):
Australian Competition and Consumer Commission v CLA Trading Pty Ltd [2016] FCA 377
Gerrard v Slamar [2004] WASCA 253
Helicopter Sales (Australia) Pty Ltd v Rotor-Work Pty Ltd (1974) 132 CLR 1
Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220
Le Mans Grand Prix Circuits Pty Ltd v Iliadis [1998] 4 VR 661
Metal Roofing and Cladding Pty Ltd v Amcor Trading Pty Ltd [1999] QCA 472
Minchillo & Anor v Ford Motor Company (Australia) Ltd [1995] 2 VR 594
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37
Paciocco v Australia and New Zealand Banking Group Limited [2015] FCAFC 50
Re Jillawara Grazing Co v John Shearer Ltd [1984] FCA 30
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52
Tottenham Investments Pty Ltd v Carburettor Services Pty Ltd (1994) Aust Torts Rep 81-292
Waldron v Baz [2005] WADC 187
1 BOWDEN DCJ: The plaintiff runs a car and truck rental business operating under the Hertz Rentals franchise.
2 On 17 December 2012 Mr Haseeb rented a 2011 Hino truck fitted with a Hiab crane ('the vehicle') from the plaintiff.
3 It is not disputed that Mr Haseeb left the vehicle unlocked and unattended in the open on his brother's premises in Bickley Road, Kenwick ('the Kenwick premises') with the keys in the ignition and the engine running whilst taking a 30 to 45 minute lunchbreak in an office located on those premises. Mr Haseeb could not hear or see the vehicle from the office and the vehicle was stolen at an unknown time during that period. The Kenwick premises had neither a gate or guard nor video surveillance.
4 The plaintiff says that at the time of hire Mr Haseeb signed a rental agreement and acknowledged that it was subject to Hertz's terms and conditions (the terms) which provided that he was fully responsible for any loss of the vehicle if the vehicle and its keys were left unsecured. The plaintiff says Mr Haseeb breached the terms of the rental contract by leaving the vehicle and keys unsecured.
5 Mr Haseeb admits he signed the rental agreement but denies the terms formed part of the contract because he says he never received or even saw a copy of the terms and in any event, denies that his conduct breached the terms and says that the terms imposing liability are unfair contractual terms within the meaning of the Australia Securities and Investments Commission Act2001(Cth) (the Act).
6 The parties agree that the plaintiff's losses are $165,000.
7 The first issue to resolve is whether the terms form part of the contract.
Are the terms part of the contract?
8 The rental agreement contains a typed acknowledgement stating as follows:
By signing I agree that: I and any additional driver acknowledge that this rental agreement is subject to the Hertz Terms and Conditions provided on collection of the vehicle or when registering as a #1 Club Gold Member. An Infringement processing fee of $36.30 will be charged for processing parking, speeding toll and other infringement notices.
I authorise Hertz to charge My credit card for all charges due to this rental. Cash rental refund due may be issued by a cheque.
9 Immediately below the acknowledgement is Mr Haseeb's undisputed signature and the handwritten date '17/12/2012'.
10 Although four witnesses gave evidence at the trial, very little evidence was in dispute, however the issue of whether Mr Haseeb received the terms and, if he did, when he received them, was in dispute.
11 Mr Haseeb denies he saw or was given a copy of the terms at any time. The plaintiff says the evidence of Mr McMeekin, their rental services assistant at the time, establishes that Mr Haseeb was given a copy of the terms before he signed the acknowledgment. The plaintiff also submits that an agreement to hire a vehicle is one which ordinarily is expected to contain terms and by signing the acknowledgement the defendant has represented that he has read and approved the content of the document or is willing to take the chance of being bound by the contents. The plaintiff's position is that the terms would apply to the rental agreement irrespective of whether the defendant actually received a copy: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 [45].
12 In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd the High Court after reviewing the appropriate authorities stated:
[47] Legal instruments of various kinds take their efficacy from signature or execution. Such instruments are often signed by people who have not read and understood all their terms, but who are nevertheless committed to those terms by the active signature execution. It is that commitment which enables third parties to assume the legal efficacy of the instruments. To undermine that assumption would cause serious mischief.
…
[57] The general rule, which applies in the present case, is where there is no suggested vitiating element, and no claim for equitable or statutory relief, a person who signs the document which is known by the person to contain contractual terms and to effect legal relations is bound by those terms and it is immaterial that the person did not read the document: L'estrang v Graucob explicitly rejected an attempt to import the principles relating to ticket cases in the area of signed contracts. It was not argued either in this case or in the Court of Appeal that L'estrang v Graucobshould not be followed.
13 Mr McMeekin's evidence was that he recalled the vehicle as it was reported stolen shortly after the transaction occurred and he recalled Mr Haseeb attended the office with a letter from the licensing authorities advising that he had the appropriate licence for the vehicle and the licence' card' would shortly be sent to him.
14 Mr McMeekin agreed he could not specifically recall handing the terms to Mr Haseeb. He said the rental agreement was printed straight off the computer, however the terms were in a booklet form and usually kept separate, in a drawer or on the desk and in an envelope, normally with the keys of the vehicle.
15 Mr McMeekin said sometimes customers would sign the acknowledgement section on the rental agreement before they received the terms. He agreed in cross-examination that the normal process was for the rental agreement to be signed by the customer who would then receive the envelope containing the keys and the terms. An inspection of the vehicle would then occur in every case and a document was signed by both parties confirming the inspection had been performed.
16 Mr Haseeb denied he received the terms.
17 The plaintiff suggests that Mr McMeekin's evidence of his training and routine procedures would satisfy me that the terms were given to Mr Haseeb.
18 Mr McMeekin gave his evidence in a straightforward, frank manner. He readily agreed with propositions that, on one view, were perhaps not favourable to the plaintiff's case. He struck me as a witness of the truth.
19 I do not accept Mr Haseeb's evidence that he did not receive the terms. His evidence was shown to be defective on a number of matters including his evidence that his brother who owned the demountables was overseas at the time of the contract. He later conceded that his brother was in prison. I do not place a great deal of weight on that issue as I accept this may have been a matter which embarrassed Mr Haseeb.
20 Of more significance was Mr Haseeb's evidence in relation to receiving contractual terms on the prior occasions when he hired vehicles from unknown hirers. Mr Haseeb's evidence varied from being 'probably' aware that there would be terms, to saying he was 'handed' terms, to saying he 'could' have got terms, to saying 'he did not know' if he got the terms (ts 97). Further, his inability to describe anything other than one of the two or three pages of the documents that on his version of evidence he received shows, in my view, that he had little interest in paperwork. His admission that he had not read the paperwork on the prior occasions leads to the same conclusion. Mr Haseeb also admitted that he could not remember 'very well' what was said to him when he signed the acknowledgement.
21 I find it inherently more likely that Mr McMeekin followed the routine procedure and provided the terms to Mr Haseeb, though it is clear from the evidence of Mr McMeekin that he could not say whether they were given before the rental agreement was signed or after.
22 I am satisfied on the balance of probabilities that Mr Haseeb received the terms prior to leaving the yard, however, I am not satisfied that he received them before he signed the acknowledgement.
23 I find that Mr Haseeb was aware that terms applied to the hiring of the vehicle and the acknowledgement specifically refers to the terms being provided on collection of the vehicle. By signing the acknowledgement Mr Haseeb was agreeing to be bound by the terms. It seems to me that Mr Haseeb had little interest in the contents of the terms. He was aware that there was a document containing the terms. He had that document before he left the yard. The fact that he did not read it does not assist him: Metal Roofing and Cladding Pty Ltd v Amcor Trading Pty Ltd [1999] QCA 472, 39 - 40.
24 The defendant argues that the terms are so onerous that they should have been brought to Mr Haseeb's notice: Toll [65] - [66]. The defendant relies on those cases establishing that documents containing an onerous exemptive provision must be brought to the notice of the party against whom they are to be enforced: Le Mans Grand Prix Circuits Pty Ltd v Iliadis [1998] 4 VR 661, 662. That case reinforces the principal that ordinarily, and in the absence of fraud, misrepresentation or mistake, a signature to a document known by the parties to be a contract which refers to the terms of that contract provides consent to the parties being bound by those terms, irrespective of whether they have read the terms: Le Mans Grand Prix Circuits Pty Ltd v Iliadis was factually different to the extent that the defendant was able to establish that he was not aware the document he signed was contractual. In this case Mr Haseeb knew the document he signed was contractual.
25 There may be misrepresentation type cases involving the circumstances in which an agreement is presented for signature or the presence in it of unusual terms that effect whether a person is bound by the terms: Toll. Even on Mr Haseeb's version of events he did not ask to see the terms. Exhibit 3 shows that the term in dispute is not unusual or abnormal. The acknowledgement refers to the agreement being subject to terms, Mr Haseeb seemed to accept that the hire of a vehicle would involve terms. The terms would be expected to contain matters dealing with a customer's responsibilities towards the vehicle. The terms in question are not extraneous terms that a reasonable person would not expect to find in the document.
26 Mr Haseeb knew that the document he signed contained contractual terms. I accept Mr McMeekin's evidence the terms were given to Mr Haseeb before he left the yard. The signature acknowledging those terms incorporates all the terms of that document, notwithstanding that Mr Haseeb chose not to read or investigate those terms: Toll. Notice of the existence of a specific term imposing on Mr Haseeb unlimited liability is not required. Where a person has signed a document which is intended to affect legal relations and there is no question of misrepresentation, duress, mistake or any other vitiating element, the fact that a person has signed the document without reading it does not put the other party in the position having to show that due notice was given of its terms: Toll [54].
27 I find that the terms form part of the contract.
28 Mr Haseeb further submits that the terms of the contract are unfair because the clause relied on by the plaintiff to impose liability cl 6(c)(x), which effectively states that Mr Haseeb is fully responsible and liable for unlimited damages under any circumstances where the vehicle and its keys are unsecured, lacks transparency as there is no definition of what is meant by unsecured and in any event the term is unfair within the meaning ofthe Act.
29 The plaintiff says the Act does not apply because the contract is not a consumer contract and in any event the term is not an unfair contractual term within the meaning of the Act.
The legislation
Australian Securities and Investments Commission Act 2001
12BF Unfair terms of consumer contracts
(1) A term of a consumer contract is void if:
(a) the term is unfair; and
(b) the contract is a standard form contract; and
(c) the contract is:
(i) a financial product; or
(ii) a contract for the supply, or possible supply, of services that are financial services.
(3) A consumer contract is a contract at least one of the parties to which is an individual whose acquisition of what is supplied under the contract is wholly or predominantly an acquisition for personal, domestic or household use or consumption.
12BG Meaning of unfair
(1) A term of a consumer contract referred to in subsection 12BF(1) 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 consumer 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:
(b) the extent to which the term is transparent;
(c) 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 paragraph (1)(b), a term of a consumer 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.
12BH Examples of unfair terms
(1) Without limiting section 12BG, the following are examples of the kinds of terms of a consumer contract referred to in subsection 12BF(1) that may be unfair:
(a) a term that permits, or has the effect of permitting, one party (but not another party) to avoid or limit performance of the contract;
(b) a term that permits, or has the effect of permitting, one party (but not another party) to terminate the contract;
(c) a term that penalises, or has the effect of penalising, one party (but not another party) for a breach or termination of the contract;
(d) a term that permits, or has the effect of permitting, one party (but not another party) to vary the terms of the contract;
(e) a term that permits, or has the effect of permitting, one party (but not another party) to renew or not renew the contract;
(f) a term that permits, or has the effect of permitting, one party to vary the upfront price payable under the contract without the right of another party to terminate the contract;
(g) a term that permits, or has the effect of permitting, one party unilaterally to vary financial services to be supplied under the contract;
(h) a term that permits, or has the effect of permitting, one party unilaterally to determine whether the contract has been breached or to interpret its meaning;
(i) a term that limits, or has the effect of limiting, one party's vicarious liability for its agents;
(j) a term that permits, or has the effect of permitting, one party to assign the contract to the detriment of another party without that other party's consent;
(k) a term that limits, or has the effect of limiting, one party's right to sue another party;
(l) a term that limits, or has the effect of limiting, the evidence one party can adduce in proceedings relating to the contract;
(m) a term that imposes, or has the effect of imposing, the evidential burden on one party in proceedings relating to the contract;
(n) a term of a kind, or a term that has an effect of a kind, prescribed by the regulations.
…
30 The District Court has jurisdiction to deal with this case as s 12GJ vests jurisdiction in any matter arising under the applicable division to the courts of the State.
31 It is agreed that the rental agreement and its terms are a standard form contract and the contract is a 'financial product' for the purposes of the Act and the provisions of that Act and not the Australian Consumer Law and Competition and Consumer Act 2010 (Cth) (CCA) apply. This issue was recently dealt with in Australian Competition and Consumer Commission v CLA Trading Pty Ltd [2016] FCA 377 (Gilmour J).
Is the contract a consumer contract?
32 It is not disputed that at least one of the parties to the contract, Mr Haseeb, was an individual.
33 A consumer contract requires that the acquisition of what was supplied must be wholly or predominantly an acquisition for personal, domestic or household use or consumption.
34 The parties both addressed the court on the basis that what was supplied under the contract was the vehicle. Following Australian Competition and Consumer Commission v CLA Trading Pty Ltd I consider that what was supplied is more correctly referred to as credit facilities and the contract is properly described as a financial product. As those credit facilities were used to hire the vehicle, it makes absolutely no difference to my conclusions. As the parties addressed in terms of the vehicle being supplied I shall adopt that terminology. Either way, be it credit facilities or the vehicle, I find that what was supplied was wholly or predominantly acquired for personal use or consumption.
35 The vehicle was hired to transport demountable buildings located at the Kewdale premises to a nearby auction yard.
36 Mr Haseeb's unchallenged evidence in this regard, which I accept, was that he and his brother had been involved in a business venture that ultimately resulted in Mr Haseeb's bankruptcy. His brother owned some demountable buildings located on the Kewdale premises, also owned by the brother, and had agreed that these demountables could be sold by Mr Haseeb at auction and the proceeds realised from their sale used by Mr Haseeb to pay to his trustee in bankruptcy to hopefully annul or reduce his bankruptcy.
37 Mr Haseeb says that the hiring of the vehicle to transport items from one place to another was done for his personal use, the purpose being to transport the demountables. The hired vehicle, it is argued, was not used in selling the demountables nor was Mr Haseeb being paid for the use of the vehicle nor was it part of an ongoing business. Mr Haseeb points out that the hiring of the vehicle did not by itself bring any form of reward to him as the seeder was found to in Re Jillawara Grazing Co v John Shearer Ltd [1984] FCA 30 [152] - [153].
38 The plaintiff says that the use of the word 'personal' is to be contrasted with 'commercial or business purposes'. They point out that Mr Haseeb intended to use the vehicle to transport six demountables which he had advertised for $10,000 each and refer to Mr Haseeb's evidence that he had 'two' jobs, moving the demountables and the childcare centre (ts 108). The plaintiff argues that hiring the vehicle to transport demountables for auction amounts to a commercial activity and they refer to Minchillo & Anor v Ford Motor Company (Australia) Ltd [1995] 2 VR 594, 23:
Although the words 'domestic' or 'household' have a similar connotation, personal use is clearly intended to cover a wider field ,but the primary contrast intended to be drawn is with commercial business use whatever other personal activities a vehicle may be used for.
39 The act of transporting demountables' to an auction yard so they could be sold and the proceeds used to discharge or reduce a bankruptcy debt does not seem to me to amount to a commercial or business use.
40 A Hiab truck can be, but is not normally, used for personal use. A transportable building can be, but is not normally, used for personal use. The property from which the demountables' were transferred was a disused educational facility in use as a childcare facility; the demountables were going to an auction yard. None of those factors assist either way.
41 The vehicle or credit facilities were not being used for domestic or household use or consumption as they had nothing to do with Mr Haseeb occupying or using a house or dwelling: Re Jillawarra Grazing Co v John Shearer Ltd applying Metropolitan Water Board v Colley's Patents Ltd [1911] 2 KB 38, 40.
42 Whilst there is merit in the submission of both parties, I find the vehicle was not acquired for business or commercial purposes. Mr Haseeb's former business was in bankruptcy. The acquisition of the vehicle relate specifically to efforts by Mr Haseeb to annul his bankruptcy and this is personal in that it relates to, or affects specifically, his characteristics or status. The transportation of six demountables for that purpose does not result in the acquisition of what was supplied being for business or commercial purposes.
43 I am satisfied the acquisition of what was supplied was wholly or predominantly acquired for personal, domestic or household use or consumption and find the contract is a consumer contract.
44 I shall now consider whether the terms of the agreement in issue are unfair contractual terms.
The terms of the rental agreement
HERTZ TERMS AND CONDITIONS OF RENTAL
THIS Agreement ('Agreement') is between the signatory to the HERTZ rental agreement (The Rental Form), being the renter of the Vehicle ('You') and Hertz.
1. Nature of Agreement
(a) Except to the extent otherwise implied by law, the terms and conditions made available to You at the time of rental, together with the Rental Form and any Additional Terms, comprise the Agreement and set out all the terms, conditions, warranties and undertakings concerning Your rental of the Vehicle, any Accessories and on which Hertz agrees to rent the Vehicle and Accessories to You for the Rental Period.
…
(f) 'Ignition Key or Key' includes keyless start devices and/or combined ignition key and remote door devices.
…
5. Full Responsibility
You should refer to clauses 5.(e), 5.(f) and 6. for Your potential liability resulting from any use of the Vehicle for, or incurred whilst the Vehicle is being used for, any Prohibited Use or by any Prohibited Person or for any Full Responsibility Use referred to in this clause. You should refer to clause 5.(d) for Your liability for Accessories.
…
(c) Full Responsibility Uses
You will be fully responsible and liable for Damages under clause 6. where the Vehicle is used:
…
(x) under any circumstances where the Vehicle and its keys are unsecured; or
…
6. Your Liability
(a) Subject to this clause 6., You are responsible, to the fullest extent permitted by applicable law, for all Damages which occur during the Rental Period or which result from Your rental or use of the Vehicle or Accessories.
(b) Notwithstanding anything in this clause 6. or any other clause, there is no cap or limit on Your liability to Hertz resulting from any use of the Vehicle for, or incurred whilst the Vehicle is being use for, any Prohibited use or by any Prohibited person or for any Full Responsibility Use referred to in clause 5. (Full Responsibility).
Clause 5(c)(x) - 'the vehicle and its keys are unsecured'
The party's submissions
45 'Unsecured' is not defined in the contract.
46 The plaintiff argues that 'unsecured' is to be given its ordinary English everyday meaning. The Collins English Dictionary (online version) defines 'unsecured' as 'not made secure'. 'Secure' is defined as 'free from danger, damage etc' and 'in safe hands'. The Shorter Oxford English Dictionary does not define 'unsecured'. It defines 'secure' as 'make or keep secure or safe from danger or harm, guard, protect … guard or take precautions against danger'.
47 The plaintiff argues that if a vehicle is left in the open, unlocked and unattended with the keys in the ignition and the engine running, both the vehicle and keys are unsecured.
48 Mr Haseeb argues that cl 5(c)(x) lacks transparency as there is no definition of 'unsecured' and accordingly its meaning is unascertainable and therefore there is uncertainty as to its meaning. He also submits that the vehicle and keys were secure as the vehicle was parked on an internal road approximately 150 m in from the main roadway on private property and parked near some large trees and the vehicle was not visible from the road way (the position is shown on exhibit 4).
The evidence
49 The only evidence relating to the circumstances the vehicle was in prior to it being stolen was provided by Mr Haseeb. I accept his uncontradicted evidence on this issue.
50 Mr Haseeb said he hired the vehicle with the specific purpose of using the vehicle to load the demountables and to transport them to the auction yard for the purposes referred to earlier. After he hired the vehicle he drove straight to his brother's Kenwick premises. He parked the vehicle on an internal road approximately 150 m in from the main roadway on those premises. The vehicle was parked near some large trees and was not visible from the road way. He then performed other tasks and it was too late to take the demountables to the auction yard that day. At around 5.00 pm he drove to his home in Canning Vale in his wife's vehicle. He locked the hire vehicle because he was not in the vicinity and took the keys with him (ts 100).
51 The next day he went back to his brother's Kenwick premises at about 10.30 am to 11.00 am and the vehicle was where he had parked it the previous day. The Kenwick premises had a childcare centre on them with an office next to the centre (ts 104). Mr Haseeb said he prepared the site around the first demountable he intended to remove, which was down near the office, and then went to where the vehicle was parked. He turned on the engine as he believed the engine had to run for a while before the Hiab crane could be used. Having started the engine he went back to the office to heat up his lunch intending to return to the vehicle when he had done this, however other things occupied him in the office.
52 Mr Haseeb estimated he was in the office for about 30 - 45 minutes and then he went back to the vehicle to start collecting the demountables, however, the vehicle was gone. He searched the vicinity for the vehicle and then called the police at about 12.30 pm - 1.30 pm. He agreed that whilst in the office he could not see or hear the vehicle or see it if anyone drove it from the property. He agreed there were no gates or guards on the property nor was there any video surveillance.
53 The Kenwick property is approximately 1.8947 hectares (exhibit 1.21) and from the roof tops visible in exhibits 1.21 and four had five buildings in addition to the demountables located on it. The back portion of the property, amounting to about 55% of the property, appears to be vacant land.
54 I find that the vehicle was left unattended and unlocked with the engine running and the keys in the ignition and parked in the open on premises which had neither gates or guards or video surveillance and from which a childcare facility operated. The vehicle was parked about 150 m from the roadway in the position marked 'T' on exhibit 4.
Determination
55 A contractual term must be transparent and this requires the term to be in reasonably plain language, legible and presented clearly and readily available to the party affected by the term (s 12BG(3)). These matters are not disputed. These questions involve looking at the term when the contract was entered into. Mr Haseeb's point is that what the plaintiff means by unsecured is not known to him at the time he hired the vehicle.
56 The principles of construction of the terms of a contract are well known.
57 It cannot be expected that every term within a contract is provided with its own definition, it is after all a contract not a dictionary. Words that are not specifically defined by the contract are given their ordinary, natural English meaning. To give a word its ordinary, natural meaning does not involve any lack of transparency.
58 Terms are interpreted on the assumption that the parties intend to produce a commercial result. The contract or terms should be construed so as to avoid making commercial nonsense or working commercial inconvenience: Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37.
59 It is not necessary that I provide an exhaustive definition of the word 'unsecured'. Unsecured must be construed in view of the subject matter of the contract, valuable cars and trucks. In that sense the ordinary meaning of secure involves the concept of making the vehicle and keys safe so that they cannot be readily taken. The ordinary meaning of unsecured would be that the vehicle and keys were not secure.
60 The vehicle is a Hiab truck. As Mr McMeekin's evidence establishes for a person acting alone to operate the crane that person must enter the vehicles cab turn the vehicle's engine on, engage the clutch, turn on the power take-off by pushing a button on the dashboard, release the clutch then leave the cab and manipulate the crane's controls that are located outside the vehicle on the passenger side just behind the passenger door (exhibit 2.2).
61 The engine does not need to run for any length of time before the crane can be operated. As soon as the power take-off is engaged in the manner I have described, the crane can be operated, however the vehicle's engine must remain on. Mr Haseeb said he turned the vehicle's ignition on and went to heat up his lunch because he believed it was necessary to run the engine for a period of time before the crane could be operated. He had previously operated a Hiab crane and was advised on that occasion to turn the vehicle's engine on for about 15 minutes before the crane was used. He was not told by Mr McMeekin that this was necessary, as indeed it is not.
62 The defendant argues that whenever the Hiab crane was being used both the vehicle and the keys would be unsecured because it necessarily meant the vehicle's engine was on, which required the key to be in the ignition and the vehicle unlocked and the operator would be outside on the passenger's side of the vehicle at the Hiab controls. This it was said meant that Mr Haseeb would breach cl 5(c)(x) whenever he used the vehicle's crane notwithstanding that was the very reason he hired the vehicle.
63 I note that Mr Haseeb was not using the Hiab crane at the time the vehicle disappeared and I do not accept that the abovementioned scenario would mean either the vehicle or keys were unsecured. Neither the vehicle nor keys would be unsecured because a person was in attendance at the vehicle operating the Hiab crane.
64 In relation to making a vehicle secure that would require, in my opinion, at the very least, that when parked in an open area and unattended the vehicle be locked with the ignition disengaged and the windows wound to an extent that a person could not gain access either through them or by manipulating an object through them and the keys located other than in the vehicle.
65 In relation to making the keys secure that would require, in my opinion, at the very least that the keys not be left in an unattended vehicle.
66 To have a contractual term effectively requiring that the vehicle and keys not be left unsecured does not cause a lack of transparency or any uncertainty if that word is given its ordinary, natural meaning.
67 I find that a person leaving a vehicle in an open area on premises with neither gates, guards or video surveillance which vehicle is unattended and unlocked with the keys in the ignition and the engine running whilst that person is not in a position to either see or hear the vehicle is leaving both the keys and vehicle unsecured according to the ordinary natural meaning of those words. However, the word unsecured is defined, Mr Haseeb left this vehicle and the keys unsecured.
68 I now turn to the defendant's final argument that the term is an unfair contractual term.
Unfair contractual terms
69 Section 12G and s 12D empower a court to declare a term of a contract an unfair term. Any term which is unfair is void, but the contract will otherwise continue to bind the parties to the extent that it is capable of operating without the unfair term s 12BF: Australian Competition and Consumer Commission v CLA Trading Pty Ltd [39].
70 A term is unfair if it causes significant imbalance in the party's rights (s 12BG(1)(a)), is not reasonably necessary to protect the interest of the party's advantaged by them (s 12BG(1)(b)) and would cause detriment to a party if it were to be applied or relied on (s 12BG(1)(c)).
71 Section 12BG(2) permits a court to take into account such matters as it thinks relevant in determining if the contract is unfair but must consider the contract as a whole and the transparency of the disputed term.
72 Section 12BG(4) places the burden of proving that a term is reasonably necessary to protect the legitimate interest of a party on the plaintiff as the party advantaged by the contract. Section 12BH(1) provides a non-exhaustive list of examples of terms that may be unfair.
73 I now examine each of the three s 12BG limbs in turn.
Significant imbalance
74 Gilmour J in Australian Competition and Consumer Commission v CLA Trading Pty Ltd referred to some of the principles which assist in determining whether a contract creates a significant imbalance and summarised those principles as follows:
54 …
(b) The requirement of a 'significant imbalance' directs attention to the substantive unfairness of the contract: Director-General of Fair Trading v First National Bank plc [2002] 1 AC 481 at [37];
(c) it is useful to assess the impact of an impugned term on the parties' rights and obligations by comparing the effect of the contract with the term and the effect it would have without it: Director-General of Fair Trading v First National Bank plcat [54];
(d) the 'significant imbalance' requirement is met if a term is so weighted in favour of the supplier as to tilt the parties' rights and obligations under the contract significantly in its favour – this may be by the granting to the supplier of a beneficial option or discretion or power, or by the imposing on the consumer of a disadvantageous burden or risk or duty: Director-General of Fair Trading v First National Bankat 494 [17] per Lord Bingham, applied in ACCC v ACN 117 372 915 Pty Ltd (in liq) (formerly Advanced Medical Institute Pty Ltd)[2015] FCA 368 at [950];
(e) significant in this context means 'significant in magnitude', or 'sufficiently large to be important', 'being a meaning not too distant from substantial': Jetstar Airways Pty Ltd v Free at [104]-[105] per Cavanough J: Cf. Director of Consumer Affairs Victoria v AAPT Ltd[2006] VCAT 1493 at [32]-[33];
(f) the legislation proceeds on the assumption that some terms in consumer contracts, especially in standard form consumer contracts, may be inherently unfair, regardless of how comprehensively they might be drawn to the consumer's attention: Jetstar Airways Pty Ltd v Free at [115]; and
(g) in considering 'the contract as a whole', not each and every term of the contract is equally relevant, or necessarily relevant at all. The main requirement is to consider terms that might reasonably be seen as tending to counterbalance the term in question: Jetstar Airways Pty Ltd v Freeat [128].
The parties submissions
76 In assessing whether there is a significant imbalance in the rights and obligations of the parties, the court must compare the plaintiff's rights and liabilities as a result of the term and contract as a whole, with the rights and liabilities of the defendant as a result of that term and contract as a whole and determine whether there is a significant imbalance between the two.
77 The plaintiff says that in considering whether a term is unfair, the court must consider whether the term is transparent and the contract as a whole. This, they submit, is not an invitation to consider whether other contractual terms are unfair and if they are to determine that this term should also be considered unfair because of it, it simply allows a court to consider whether the term is unfair within the whole contractual matrix.
78 The plaintiff argues that the contract requires the defendant to take proper care of the vehicle and recognises certain circumstances in which a failure to do so would result the defendant being entirely liable for the loss or damage to the vehicle. They say it is fair that the defendant keeps the keys and vehicle secure as for a relative modest fee of $350 per day the defendant was, in this case, renting a vehicle valued at approximately $160,000 which was hired to transport demountables, that on the defendant's estimate were valued at around about $60,000.
79 Mr Haseeb says the contract as a whole creates a significant imbalance. He says he is placed under onerous obligations in that he can be personally liable for unlimited liability regardless of how careful he was, without the events or circumstances in which that could arise being defined whilst the plaintiff protects itself from unlimited liability.
80 Mr Haseeb says that the plaintiff's approach of saying the term was in the agreement and he accepted those terms and therefore accepted unlimited liability is flawed. Mr Haseeb submits 'unsecured' could be easily defined and in view of the effect on him the plaintiff must do more to bring that provision to his attention than just handing him the terms at the point of hiring. Simply put, Mr Haseeb says that the plaintiff should not be allowed to state that the vehicle and key are not to be unsecured in circumstances where they do not define what is meant by unsecured and have not specifically drawn that provision to his attention.
81 Mr Haseeb points out that the law is to protect the consumer and whilst the law has not been significantly judicially considered, assistance can be gained from Paciocco v Australia and New Zealand Banking Group Limited [2015] FCAFC 50 and in particular Middleton J's statement:
The legislature has enacted the law in pursuit of the community standard or expectation of commercial behaviour which the court then applies to any given factual scenario [406].
Consideration of the term
82 The commercial effect of the contract as a whole is to allow a party for a relatively small cost to use an expensive vehicle for a specified time, however as it is a standard form contract, the contract would equally apply to the hire of a modestly valued vehicle.
83 As a result of the definition of 'Prohibited use' the use of the vehicle in certain designated geographical areas cl 5(a)(ii)(iii)(iv)(v) is prohibited as is certain behaviour by the authorised driver cl 5(a)(i)(vi)(vii)(viii)(ix)(x). The 'Prohibited person' terms prohibits certain persons from driving the vehicle cl 5(b)(i)(ii).
84 The 'Full responsibility use' terms prohibits the use of the vehicle in certain designated geographical areas cl 5(c)(i)(ii)(iii)(xi) and at certain times cl 5(c)(ix)), and imposes unlimited liability if damage is occasioned in specified circumstances cl 5(c)(iv)(v)(vi)(vii)(viii)(x)(xii).
85 Effectively, unlimited liability cl 6(b)) is imposed irrespective of any fault on behalf of the driver in some cases if, for example, the vehicle comes in contact with a stationary object overhanging or on a road surface cl 5(c)(v)) or for any damage to the roof cl 5(c)(vi)) or cl 5(d)) for any damage however caused to any accessories on the vehicle, to name but a few instances. Unlimited liability is imposed as well when the vehicle and its keys are unsecured cl 5(c)(x)). However, it must be remembered that the vehicle and key are entrusted to the hirer and require an act or omission on the driver's behalf before either the vehicle or key could be said to be unsecured.
86 It is also significant that Ms Terry's uncontradicted evidence was that MAX cover or other protective cover provided by the plaintiffs, in some circumstances, which reduce or limit the renter's liability, does not apply to those contractual terms applicable under the 'Prohibited use', 'Prohibited person' or 'Full responsibility use' categories. Ms Terry's evidence was that in any event at the material time MAX cover was not available on the hire of the vehicle (truck) involved in this case.
87 The terms of the contract limit the plaintiff's own liability significantly, basically to those liabilities imposed by consumer protection legislation (cl 7(a)) and to when damages, loss and expenses from an accident, breakdown or failure of the vehicle or equipment used in conjunction with the vehicle is caused by the negligence or wilful default of their franchisor (Hertz).
88 Some of the 'Full responsibility use' terms imposing unlimited liability on the hirer require a positive breach by some act of the hirer, ie, driving on an unsealed road or on a beach, refuelling with the wrong fuel, failure to heed a warning lights, other terms are so wide that they impose such liability even though there may be no fault on the hirer (undercarriage damage, roof damage, partial vehicle immersion).
89 Ultimately the test is whether the term under consideration is unfair. I have determined that the term unsecured is to be given its ordinary usage. The term and contract were readily available to the party affected by the term and legible. Both were presented clearly in the sense that there were able to be readily understood by a customer.
90 Without the terms under consideration (cl 5(c)(x) 'unsecured') and (cl 6(b) 'unlimited liability') the legal relationship between the parties would be that of a bailment for the mutual benefit of both parties. As such, Mr Haseeb had a common law duty to take reasonable care of the bailed goods and a duty to restore the property bailed to its lawful owner. The standard of care required is the standard demanded by the circumstances of each particular case. In the event of the loss of goods the onus would be upon Mr Haseeb as bailee to disprove that the loss was as a result of negligence on his part. Whilst he is not an insurer and not obliged to take every conceivable precaution to prevent loss of the goods, he had a duty to take reasonable care such as a person would take in respect of the person's own goods: Gerrard v Slamar [2004] WASCA 253 [18] - [19]; EM Heenan J citing Tottenham Investments Pty Ltd v Carburettor Services Pty Ltd (1994) Aust Torts Rep 81-292; Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220; Helicopter Sales (Australia) Pty Ltd v Rotor-Work Pty Ltd (1974) 132 CLR 1; Waldron v Baz [2005] WADC 187.
91 I find as a matter of fact and law Mr Haseeb's actions in parking the vehicle in the open, albeit on private property, 150 m in from the road, intentionally leaving the vehicle unlocked, intentionally engaging the ignition and leaving the engine running, intentionally leaving the key in the ignition and intentionally leaving the vehicle unattended whilst he attended to other tasks in an area from which he could not see or hear the vehicle, in circumstances where there was no video surveillance, gates or guards on the property would amount to the failure to take reasonable care of the bailed goods. Simply put, under common law principles of bailment Mr Haseeb would have been liable for damages claimed by the plaintiff in this case.
92 Considering the contract as a whole, I do not consider the term creates a significant imbalance as the term under consideration requires two acts of default, that is, a failure to secure the vehicle and a failure to secure the keys.
93 The term is not unfair in the context of the contract as a whole because it does not create a significant imbalance in the party's rights and obligations. Whilst I accept that it imposes unlimited liability and effectively makes the hirer the insurer of the vehicle, it only does so in circumstances where there are two acts of default committed by the hirer, one relating to the vehicle and one relating to the keys.
94 Some other contractual terms are clearly unfair and fall within the type of term contemplated by s 12BH. However, the focus of my inquiry must relate to the terms under consideration (cl 5(c)(x ) and cl 6(b)) and the definition of damages) when considered compendiously. I cannot find that because some other terms are unfair, therefore these terms are unfair, although clearly the unfairness of the terms and contract as a whole is relevant to the question whether there is a significant imbalance in the party's rights and obligations considering the term and contract as a whole.
95 I find that considering the contract as a whole the term cl 5(c)(x) considered alone or in combination with cl 6(b) and the definition of damages does not create a significant imbalance in the party's rights and obligations arising under the contract.
96 However in the event that I am in error in reaching that conclusion, I shall consider the remaining limbs of s 12BG(1).
Reasonably necessary
97 Section 12BG means that a term is presumed not to be reasonably necessary to protect the legitimate interest of the plaintiff unless the plaintiff proves to the contrary. The plaintiff must prove that these terms were reasonably necessary to protect its legitimate interests.
98 The vehicle forms part of the 'stock' in trade of the plaintiff's hire business and Ms Parkinson's evidence establishes that it was under finance (exhibit 2.1 and exhibit 2.4). Whilst the vehicle was insured, Ms Terry and Ms Parkinson's evidence establish that a $10,000 excess was applied to this claim (exhibit 2.3). That evidence also establishes that the insurance premiums and finance payments were required to be paid until the claim was settled, although the finance repayments were reimbursed by the insurance company from the date of the theft. The plaintiff's lost rental income on the vehicle from the date of the theft.
99 The plaintiff argues that the insertion of a clause such as this, requiring the renter to secure the vehicle and the keys is necessary to protect the vehicle from being stolen and allow the plaintiff to manage the risks of their rental vehicles being stolen. The defendant says the plaintiff can obtain insurance coverage for events such as this and it must be the plaintiff's legitimate interests which are protected not the insurance companies.
100 The plaintiff has satisfied me that this term is reasonably necessary for the plaintiff to protect its legitimate business interests. While I accept the plaintiff can cover his loss by insurance, the excess and the loss of rental income were not covered. The hire company is entitled to insist the when the vehicle is in possession of the renter that renter does not leave the vehicle and the keys unsecured.
101 The contract as a whole provides that if for example Mr Haseeb was involved in a motor vehicle accident or the vehicle was stolen in circumstances where he secured both the vehicle and the keys his liability would have been reduced to the amount of excess and in some circumstances even that could be reduced by paying for further protective type cover.
102 I find it is reasonably necessary to protect the plaintiff's business interest to insist that the person who rents the vehicle does not leave the vehicle and the keys unsecured. The plaintiff is entitled to take steps to ensure that its assets are secured particular an asset that can, regrettably, be easily stolen and an asset which forms part of their stock in trade and which forms the very basis of their business.
Detriment
103 Both parties accept that the imposition of the term will result in financial detriment to the defendant. I am also satisfied that it does.
Conclusions
104 For the reasons stated I do not consider the failure to define unsecured creates any uncertainty or lack of transparency in the contractual terms, the word unsecured is to be given its ordinary natural meaning.
105 I find that a person leaving a vehicle in an open area on premises with neither gates, guards or video surveillance which vehicle is unattended and unlocked with the keys in the ignition and the engine running whilst that person is not in a position to either see or hear the vehicle is leaving both the keys and vehicle unsecured according to the ordinary natural meaning of those words. However, the word unsecured is defined Mr Haseeb left this vehicle and the keys unsecured.
106 I find that the rental agreement is a consumer contract.
107 After considering the contract as a whole the term cl 5(c)(x) considered alone or in combination with cl 6(b) and the definition of damages does not create a significant imbalance in the party's rights and obligations arising under the contract.
108 Even if it did, I find that it is reasonably necessary to protect the plaintiff's business interest to insist that the person who rents the vehicle does not leave the vehicle and the keys unsecured. Accordingly, I do not find the term to be an unfair term.
Orders
109 The orders I propose are as follows:
1. There be judgment for the plaintiff against the defendant.
2. The defendant pay the plaintiff the sum of $165,000 with interest pursuant to s 32 of the Supreme Court Act 1935 (WA) from 5 June 2013 until judgment.
3. The defendant do pay the plaintiff's costs to be taxed or agreed.
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