Zreika v Client Management Systems Australia Pty Ltd
[2017] FCCA 169
•2 February 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| ZREIKA v CLIENT MANAGEMENT SYSTEMS AUSTRALIA PTY LTD | [2017] FCCA 169 |
| Catchwords: CONSUMER LAW – Whether the Respondent contravened s.18 of Schedule 2 – Australian Consumer Law, to the Competition and Consumer Act 2010 because it engaged in misleading and deceptive conduct – common law claim of negligence – application dismissed. |
| Legislation: Competition and Consumer Act 2010 (Cth), ss.18,19, 232, sch.2 |
| Cases cited: Australian Competition and Consumer Commission v Turi Foods Pty Ltd (No.4) [2013] FCA 665 White v Baycorp Advantage Business Information Services Ltd [2006] NSWSC 441 |
| Applicant: | ZIAD ADEL ZREIKA |
| Respondent: | CLIENT MANAGEMENT SYSTEMS AUSTRALIA PTY LTD |
| File Number: | MLG 2278 of 2015 |
| Judgment of: | Judge Jones |
| Hearing date: | 17 October 2016 |
| Date of Last Submission: | 17 October 2016 |
| Delivered at: | Melbourne |
| Delivered on: | 2 February 2017 |
REPRESENTATION
| Counsel for the Applicant: | Mr Black |
| Solicitors for the Applicant: | Coopers Lawyers |
| Counsel for the Respondent: | Mr Baker |
| Solicitors for the Respondent: | J. King Legal |
ORDERS
The proceeding be dismissed.
Costs be reserved.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 2278 of 2015
| ZIAD ADEL ZREIKA |
Applicant
And
| CLIENT MANAGEMENT SYSTEMS AUSTRALIA PTY LTD |
Respondent
REASONS FOR JUDGMENT
Introduction
The facts of this matter can be summarised as follows:
a)the Applicant conducts a business as a plasterer/renderer and formerly operated as a sole trader under the business name Silk Touch Rendering;
b)the Applicant opened a credit account with Archiclad Pty Ltd (“Archiclad”), a supplier of building materials;
c)the Applicant accrued a debt to Archiclad in the amount of $2,815.82;
d)the Respondent “conducts a risk management, credit management and legal debt recovery business”[1];
e)the Respondent entered into a Deed (“the Deed”) with Archiclad on 1 December 2012 to undertake receivables management services as its agent from time to time. The services including collecting and overdue debt locating and making phone calls to the debtor, undertaking appropriate legal action and other action to recover a debt;[2]
f)pursuant to this deed the Respondent was instructed by Archiclad to initially recover the debt and subsequently to place a default on the Applicant;[3]
g)by correspondence dated 3 September 2013, the Respondent informed the Applicant that if the Applicant failed to pay the debt of $2,815.52, together with amounts of $77.05 interest and $433.88 collection charges, by 11 September 2013, Archiclad have instructed the Respondent to commence legal proceedings to recover the amount due. The Respondent also informed the Applicant that if this action continues, “a default may be lodged with Veda Advantage which will remain on your credit file for a period of 5 years and may impact your future ability to obtain credit”;[4]
h)on 6 February 2014, the Respondent reported the Applicant’s default on the Veda Advantage Information Services and Solutions Ltd (“Veda”) database. The report was listed on the commercial credit information of that part of the Veda database relating to the Applicant. The entry reported an amount of $3,326.00, the reason provided for the report was “Payment Default” and nominated the credit provider as the Respondent;[5]
i)on the 29 September 2015, the Applicant paid $2,815.52 (being the debt) to Archiclad, following which the entry listing for the Applicant was amended on 1 October 2015, to record that on 29 September 2015, a payment default in the amount of $2,815.00 had been paid in full and the account closed. The entry continued to record the credit provider as the Respondent and the reason for the report as Payment Default; [6] and
j)this entry remains on Veda’s commercial credit information records for the Applicant.
[1] Affidavit of Louise Avni (sole director of the Respondent) sworn on 10 December 2015 (“first Avni Affidavit”) at [1], CB 99.
[2] Annexure LA-14 to the first Avni affidavit, CB 145-153.
[3] CB 143.
[4] CB 141.
[5] Annexure ZAZ-3 to the Affidavit of Ziad Adel Zreika sworn on 9 December 2015, CB 94.
[6] Ibid.
There is no dispute that the entry on Veda’s commercial credit information records, incorrectly records the Respondent as the credit provider. The Applicant also complains that the report on 6 February 2014 was in error, as the debt was in fact $2,815.00, and not $3,326.00.
No evidence was provided to the Court about the business operations of Veda, it being presumably assumed that the Court would somehow intuit this. Ms Avni, a sole director of the Respondent, deposed that both the Respondent and Archiclad were members of Veda.[7]
[7] First Avni Affidavit at [1].
Some assistance may be derived from a decision of Lindgren J in Dale v Veda Advantage Information Services and Solutions Ltd [2009] FCA 305 (“Dale”), a decision relied on by the Respondent. His Honour said at [4]:
Veda’s business centred on its operation of a computerised database. That database recorded information concerning the creditworthiness of individuals. Veda’s customers were credit providers. Credit providers have an obvious interest in obtaining information touching the creditworthiness of persons who seek credit from them. As subscribers to Veda’s system, they:
· electronically entered creditworthiness data concerning individuals to whom they had provided credit, directly into Veda’s database for the benefit of other subscribers; and
· extracted electronically directly from Veda’s database for their own benefit creditworthiness data that had been entered into it by other subscribers concerning individuals to whom the latter had provided credit.
…
Similarly, Campbell J in White v Baycorp Advantage Business Information Services Ltd [2006] NSWSC 441 (“White”), a decision relied on by the Applicant, described Baycorp Advantage Business Information Services Ltd (“Baycorp”) as follows at [64]:
… The Baycorp database is the largest single source of credit information in Australia. It contains more than 12 million consumer and 1.5 million commercial credit files. It includes records on the credit activity of Australian individuals, companies and businesses. A company can become a subscriber to Baycorp upon making application and being accepted. Once accepted, subscribers are obliged to report defaults to Baycorp. Over 800,000 reports of defaults were lodged in 2003, and the number has increased since then. Subscribers are able to obtain, from the database, reports which collate information contained in the database, of a type which the subscriber has requested. As well, an individual can obtain a copy of their own file if they have been refused credit, or require their file to assist in the management of their consumer credit arrangements.
For the purpose of this decision, I assume that Veda operates a similar business to Baycorp, in the sense that it provides a source of credit information in Australia comprising consumer and commercial credit files, which include records on the credit activities of Australian individuals, companies and businesses. I assume that the reference by Ms Avni to the Respondent and Archiclad being members of Veda, is equivalent to a reference by both Lindgren J and Campbell J to the ability of companies to become subscribers, including the obligations and rights which follow.
The Applicant seeks a declaration that the information provided by the Respondent to Veda on 6 February 2014 was incorrect, an Order that the Respondent take all steps within its power to cause the entry on the database maintained by Veda, because of the entry on 6 February 2014, be removed, and damages assessed in the amount of $9,625.00. The relief sought arises from the following:
a)it is alleged that the Respondent contravened s.18, Schedule 2 -The Australian Consumer Law (“ACL”) , to the Competition and Consumer Act 2010 (“the Act”), by engaging in misleading and deceptive conduct; and, in the alternative
b)a common law claim of negligence.
The relevant provisions of sch.2 of the ACL are:
18 Misleading or 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.
(2) Nothing in Part 3-1 (which is about unfair practices) limits by implication subsection (1).
Note: For rules relating to representations as to the country of origin of goods, see Part 5-3.
19 Application of this Part to information providers
(1) This Part does not apply to a publication of matter by an information provider if:
(a) in any case--the information provider made the publication in the course of carrying on a business of providing information; or
(b) if the information provider is the Australian Broadcasting Corporation, the Special Broadcasting Service Corporation or the holder of a licence granted under the Broadcasting Services Act 1992 --the publication was by way of a radio or television broadcast by the information provider.
(2) Subsection (1) does not apply to a publication of an advertisement.
(3) Subsection (1) does not apply to a publication of matter in connection with the supply or possible supply of, or the promotion by any means of the supply or use of, goods or services (the publicised goods or services ), if:
(a) the publicised goods or services were goods or services of a kind supplied by the information provider or, if the information provider is a body corporate, by a body corporate that is related to the information provider; or
(b) the publication was made on behalf of, or pursuant to a contract, arrangement or understanding with, a person who supplies goods or services of the same kind as the publicised goods or services; or
(c) the publication was made on behalf of, or pursuant to a contract, arrangement or understanding with, a body corporate that is related to a body corporate that supplies goods or services of the same kind as the publicised goods or services.
(4) Subsection (1) does not apply to a publication of matter in connection with the sale or grant, or possible sale or grant, of, or the promotion by any means of the sale or grant of, interests in land (the publicised interests in land ), if:
(a) the publicised interests in land were interests of a kind sold or granted by the information provider or, if the information provider is a body corporate, by a body corporate that is related to the information provider; or
(b) the publication was made on behalf of, or pursuant to a contract, arrangement or understanding with, a person who sells or grants interests of the same kind as the publicised interests in land; or
(c) the publication was made on behalf of, or pursuant to a contract, arrangement or understanding with, a body corporate that is related to a body corporate that sells or grants interests of the same kind as the publicised interests in land.
(5) An information provider is a person who carries on a business of providing information.
(6) Without limiting subsection (5), each of the following is an information provider :
(a) the holder of a licence granted under the Broadcasting Services Act 1992 ;
(b) a person who is the provider of a broadcasting service under a class licence under that Act;
(d) the Australian Broadcasting Corporation;
(e) the Special Broadcasting Service Corporation.
The Applicant submits that the Respondent, by listing the entry on 6 February 2014, engaged in misleading and deceptive conduct within the meaning of s.18 of the ACL and, as a consequence, he has suffered loss and damage; namely, a failure to procure contracts for his business because he has been refused credit by credit providers on various occasions because of this listing. Alternatively, the Applicant argues the Respondent owed a duty of care to the Applicant to ensure that any listing on the Veda commercial credit information in relation to the Applicant was accurate and that this duty of care was breached when it negligently made false representations when it entered the listing on 6 February 2014. He submits that as a consequence of this breach, he has suffered loss and damage in the terms set out above.
The Respondent denies that it engaged in misleading or deceptive conduct within the meaning of s.18 of the ACL. The Respondent submits that, even if the Court holds that it was engaged in such conduct in trade or commerce, s.19 of the ACL provides a complete defence, as the Respondent is an information provider within the meaning of that section and the publication was made in the course of carrying on its business of providing information. The Respondent further submits that, if the Court finds that s.19 of the ACL does not apply and that, accordingly the Respondent has engaged in misleading or deceptive conduct, then the Applicant’s claim fails as the Applicant has not established that the relevant entry on the Veda database caused him to suffer loss and damage.
Furthermore, it is submitted that the Applicant’s proposed Order requiring the Respondent to take all steps to have the entry removed should be dismissed. The Respondent argues that such an Order would be futile because it is contractually bound by Veda’s “Information Services and Solution Terms of Supply” (CB 241 to 243) to follow any procedures when using Veda’s information services and that, having regard to Veda’s “Default Information Guide” (CB 208 to 236), Veda would refuse any requests by the Respondent to remove the entry.
As to the common law claim of negligence, the Respondent denies that it owes a duty of care, relying on the decision in Dale to argue that the Respondent did not owe a common law duty of care to the Applicant because of the existence of statutory provisions; namely the Privacy Act 1988 (Cth) (“the Privacy Act”). It then argues that it did not, in any event, breach any duty of care to the Applicant. Finally, the Respondent submits that, in circumstances where the Applicant is unable to demonstrate any loss or damage caused by the relevant entry on Veda’s records, a cause of action in negligence is not established.
Australian Consumer Law – misleading and deceptive conduct
The ACL is contained in sch.2 of the Act, formerly the Trade Practices Act 1974 (Cth) (“the TPA”). Section 18 of the ACL replaces the former s.52 of the TPA, and s.19 of the ACL replaces the former s.65A of the TPA. There are no material differences between the former provisions of the TPA and the ACL: Australian Competition and Consumer Commission v Turi Foods Pty Ltd (No. 4) [2013] FCA 665 (“Turi”) at [74].
The Applicant relied on, for its case that the Respondent had engaged in misleading and deceptive conduct, the decision of Campbell J in White. The question in that case was whether entries on the Baycorp database, which represented that the Applicant had defaulted in payment of a debt to a company by 16 September 2004, were false, thus amounting to misleading and deceptive conduct.
Relevantly, Campbell J said: White at [65]:
65. An entry on the Baycorp database is one which is made available to the class of people who are potential acquirers of information from that database. In deciding whether a representation is misleading or deceptive, one considers the effect which the representation is likely to have on reasonable members of the class to which the representation is made: Campomar Sociedad, Limitada & Anor v Nike International & Anor (2000) 202 CLR 45, at 85, [103]. If a reasonable member of that class is likely to derive a particular message from a statement made, the substance of that message is a representation made by the statement, whether or not the person who made the statement intended to convey that message…
Campbell J found that the entries were false: White at [103]. His Honour stated, however, at [104]:
Not every false statement is misleading and deceptive. Whether a false statement is misleading and deceptive depends on the context in which it is made, and the purpose for which the statement in question is made to the person or class of people to which it is made. In the present case, if the database entries had stated the amount of a default as being a figure which was inaccurate by one dollar, but the database entries were otherwise accurate, I doubt that they would be misleading and deceptive. In consequence of no debt being owed by either White Holdings or Mr White to a company in the Capital group, however, the two particular database entries in question depart from accuracy in many ways, and those departures are significant. Each of the entries is misleading and deceptive.
In Turi, Tracey J said at [75] and [76]:
75. The principles which govern the application of s 52 of the TP Act are now well established. Relevantly they were conveniently summarised by Weinberg J in CPA Australia Ltd v Dunn (2007) 74 IPR 495 at 500-1 as follows:
“[26] … When determining whether particular conduct was, or is, likely to mislead or deceive it is unnecessary to prove that anyone was actually misled or deceived: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 198; 42 ALR 1 at 7; 1A IPR 684 at 691. However, evidence that particular individuals have been misled or deceived is admissible, and may be persuasive: Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 at 87; 55 ALR 25 at 30 (Global Sportsman). The test is objective, and the court must determine the question for itself: Taco Co Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 202. Finally, conduct is likely to mislead or deceive if there is a real and not remote possibility that it will do so. It is not necessary to establish that the degree of likelihood exceeds 50%: Global Sportsman at CLR (sic) 87; ALR 30.
[27] It is clear that regard must be had to the relevant conduct as a whole, and in context. See generally Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45; 169 ALR 677; 45 IPR 481; [2000] HCA 12. The question whether a representation made by a person to the public, or a section of it, would be likely to mislead or deceive must be answered without regard to whether that person intends to mislead or deceive. It is not a question of whether, if the person makes these representations, he or she would be acting honestly and reasonably. It is simply a question of whether potential members of the class to whom the representations are to be addressed (which include the astute and the gullible, the intelligent and the not so intelligent, and the well educated and the poorly educated) are at serious risk of being misled or deceived: see .au Domain Administration Ltd v Domain Names Australia Pty Ltd (2004) 207 ALR 521; 61 IPR 81; [2004] FCA 424 at [12]-[15] and National Exchange Pty Ltd v Australian Securities and Investments Commission (2004) 61 IPR 420; 49 ACSR 369; [2004] FCAFC 90 (National Exchange).
[28] Statements that are capable of more than one meaning may be misleading or deceptive provided that the meaning for which the applicant contends is one that would be reasonably open, and might be drawn by a significant number of those to whom the representation is made. In the same way, a statement may contain a representation that is implied, rather than express. That is why a statement that is literally true can be misleading or deceptive: National Exchange at [48]-[52].”
76. In Google Inc v Australian Competition and Consumer Commission (2013) 294 ALR 404 at 425, Hayne J recently restated the fundamental proposition that a contravention of s 52 can occur notwithstanding the absence of any intention to mislead or deceive on the part of the person who makes a representation in the public domain. He expressly endorsed the statement of McHugh J in Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at 634 to the effect that s 52 “looks at the conduct of a corporation and is concerned only with whether the conduct misled or was likely to mislead a consumer. It is not concerned with the mental state of the corporation.”
There is no doubt that the description of the Respondent as the credit provider on the Veda consumer credit information for the Applicant dated 6 February 2014 is incorrect. The credit provider was Archiclad. It can be further said that the amount recorded; namely $3,326.00 was not the amount of debt the subject of the default by the Applicant.
I am not satisfied, however, that these errors or false statements constitute misleading and deceptive conduct within the meaning of s.18 of the ACL, for the following reasons. Firstly, it must be recalled that the relevant class of person in this case is a potential credit provider for the Applicant, for the purpose of conducting his business. The mere fact that the credit provider is incorrectly named in the Veda entry could hardly be said to be an error which would mislead a corporation or the agent of a corporation making enquiries about the Applicant’s credit history. As Campbell J observed in White, when considering the question of damages (at [169]):
…When a financier considering providing credit comes across an unfavourable entry it is not uncommon for them to seek further information from either the applicant for finance, or the entity who posted the listing. The results of those enquiries are likely to be taken into account, as well as the listing itself.
Second, one must have regard to the purpose for which potential credit providers, being subscribers or members of the Veda database, would be examining the Applicant’s commercial credit history. This could only be for the purpose of ascertaining whether the Applicant has what could be described as a good credit history; that is, a person who has made payments in a timely manner for any credit obtained and has not been subject to defaults. The critical aspect of the entry on the Veda database, which is the subject of the Applicant’s complaint, is the fact that the Applicant is reported as having defaulted on the payment of a debt arising from a 30 day line of credit account. This aspect of the entry is correct – the Applicant defaulted on repayments of the debt owed to Archiclad. The fact of the default being the relevant and critical information to any credit providers making enquiries on the Veda database is evident from the Applicant’s affidavit, sworn 9 December 2015, when referring to the rejection by the ANZ bank of credit card facility for $2,000.00. At [13] of his affidavit, the Applicant deposed that when he made enquiries with the ANZ bank about the rejection in or about August 2015, “they advised me that it was due to a default listing on my credit file” (CB 75).
In this context, it could hardly be said that the inclusion of the name of the credit provider in respect of which the default has occurred, which is false, could be misleading or deceptive. If a potential financier or its agent wanted to know further details about the relevant Veda commercial credit record, common sense dictates that an easily made telephone contact with the named credit provider, the Respondent, would establish that the actual credit provider was Archiclad.
There is of course the fact that the record on the Veda consumer credit information for the Applicant dated 6 February 2014, in relation to the amount of debt in respect of which the Applicant defaulted, was incorrect. The debt was $2,815.00, not $3,326.00 (which was an amount including interest and the Respondent’s debt recovery charges, as well as the debt). I do not regard the difference of $511.00 as an inaccuracy that could be said to be bound to mislead the relevant class of persons. In any event, this minor inaccuracy was rectified by 1 October 2015, when the commercial credit card information correctly disclosed that an amount of $2,815.00 was paid by the Applicant on 29 September 2015, this being described as a payment in full with the account closed.
In my view, the inaccuracies in the database, the subject of the Applicant’s complaint, fall within the exception described by Campbell J in White at [104] (see [15] above for the extract of this paragraph). In my opinion, they are not significant inaccuracies which misled, or were likely to mislead, the relevant class of corporate subscriber to the Veda database.
I find, therefore, that the Respondent did not engage in misleading and deceptive conduct by reporting commercial credit information on the Veda database on 6 February 2014 and/or 1 October 2015.
In the event that I am wrong in making this finding, and it could be said the Respondent did engage in misleading and deceptive conduct by providing commercial credit information on the Veda database in relation to the Applicant on 6 February 2014, then I would nevertheless dismiss the Applicant’s claim and relief sought on the basis of a contravention of s.18 of the ACL, for the following reasons.
I should firstly note that I do not accept the Respondent’s submission that s.19 of the ACL provides a complete defence to any finding that it engaged in misleading and deceptive conduct.
In Turi, the Fourth Respondent was a National Association for the chicken meat industry. It relied on a defence under s.65A of the TPA in respect of its’ contravention of s.52 of the TPA. Tracey J said of the former s.65A of the TPA at [134]:
Section 65A of the Act was added in 1984: see Statute Law (Miscellaneous Provisions) Act (No 2) 1984 (Cth). It became known as the “media safe harbour defence” because it was incorporated in the Act in response to concerns that, if news media published incorrect reports, the publisher might be liable for a contravention of s 52 of the Act: see Bond v Barry (2008) 173 FCR 106 at 113. In terms, however, the defence was more widely available because the definition of a “prescribed information provider” extends to all persons who carry on the business of providing information and is not confined to participants in the print and broadcast media who fall within one of the paragraphs in sub-section 65A(3): cf Sykes v Reserve Bank of Australia (1997) 151 ALR 579 at 593.
His Honour turned to consider the first issue, whether the Fourth Respondent could be said to carry on the business of providing information. His Honour considered the Fourth Respondent’s memorandum of association and evidence about the association’s activities. The evidence disclosed that the association acted as a publicist for the industry and that much of the information provided on its website (about which the complaint was made) was put up for this purpose.
Tracey J concluded at [138]:
To this extent, in my view, the Association may properly be regarded as a “prescribed information provider” because it carried on the business of providing information to the public. The various publications had been put up on the website in the course of carrying on that business. This activity was supported by its objects. The impugned material may be regarded as being of assistance to members by placing chicken husbandry in a good light in order to encourage chicken meat consumption in the community.
His Honour then proceeded to consider the exemptions contained in the s.65A of the Act to this defence at [140]:
The purposes served by the exemptions contained in s65A(1) of the Act were explained by the Minister for Communications in his Second Reading Speech on the Amending Bill:
“These provisions ensure that information providers are not exempt from the consumer protection provisions of the Trade Practices Act in respect of the provision of information where they have what might be regarded as a commercial interest in the content of the information. In such cases, information providers must take the same responsibility for the accuracy of information as any other person who publishes information in trade or commerce. This can occur, for example, where a newspaper has agreed to publish a ‘news’ item about a product in exchange for the product supplier taking out paid advertising in that publication.”
See Australia, House of Representatives, Parliamentary Debates (Hansard), 13 September 1984, pp 1296-7.
His Honour concluded at [142] to [143]:
142. The representations, made on the Association’s website, about chickens being free to roam in large barns were intended to promote the sale of chicken meat. That promotion was undertaken by the Association as the representative body of its members to advance the commercial interests of those members. As an information provider the Association was, like Baiada and Bartter, required to ensure that publication did not contravene ss 52 and 53(a) of the Act. This it failed to do.
143. As a result the exception provided for in s 65A(1)(a)(iii) and (vi)(A) applied. The consequence is that the Association is not able to claim the benefit of the “media safe harbour defence”.
The director of the Respondent, Ms Avni, did not describe the Respondent as an information provider, this was an assertion made in the Respondent’s submissions. Unlike the circumstances in Turi, the Court was not provided with the benefit of any direct evidence which would suggest that the Respondent is a prescribed information provider. It was not suggested that the Respondent issues media releases, publications or operates a website, or otherwise has a memorandum of articles or a constitution which includes the provision of information for the conduct of its business as a risk management, credit management and legal debt recovery business.
I find that the Respondent does not carry on the business of providing information to the public. Veda clearly is in this business. On the evidence before the Court, the most that can be said is that the Respondent, pursuant to its Deed with Archiclad, completes reports on the Veda database.
Having dispensed with this defence, I turn to consider the Applicant’s claims for relief.
Damages
The Applicant submits that, by reason of the Respondent’s misleading and deceptive conduct in contravention of s.18 of the ACL, he has suffered loss and damage. I am not satisfied, having regard to the Applicant’s evidence produced in support of this assertion, that the Respondent’s misleading and deceptive conduct in contravention of s.18 of the ACL caused the Applicant to suffer loss or damage.
In his affidavit sworn on 9 December 2015, the Applicant stated that since February 2014 and the registration of a credit default against his name by the Respondent, he has applied for credit facilities from financial institutions and these applications have been refused. These applications for credit facilities were nominated (at [12] of the Applicant’s affidavit) as:
a)a credit card facility with ANZ bank for $2,000.00 to assist with day-to-day cash flow to his business;
b)a Bank of Melbourne business loan to assist with proceeding with a large contract that he had won for his business for $10,000.00; and
c)an ANZ overdraft facility for $2,000.00 to assist with day-to-day cash flow to his business.
The Applicant deposed in his affidavit, that when he made enquiries with the ANZ bank about his rejection in or about August 2015 for his overdraft facility, given his good standing with ANZ historically as a customer who repaid his loans, he was advised that it was due to a default listing on his credit file: [13] of the Applicant’s affidavit.
The Applicant deposed to two instances when he was unable to “take on” rendering jobs because, without credit or loan facilities, he had insufficient funds to “fund the job”. These were said to have occurred in the last six months: [28] of the Applicant’s affidavit. He deposes that a builder, who was his main referrer of work, no longer uses him or makes enquiries: [29] of the Applicant’s affidavit.
The Applicant’s evidence in support of his assertion that these financial institutions rejected his application for credit card, loan and overdraft facilities due to the Respondent’s misleading and deceptive conduct, including the 6 February 2014 report on his commercial credit information on the Veda database, is deficient. There is no direct evidence that the Applicant made these applications or that they were refused. Nor has the Applicant provided evidence of his financial position at the time he alleges he was refused credit by the two financial institutions: cf White at [171]. In relation to the Applicant’s record, the Veda database (which identifies inquiries from financial institutions and/or agents on their behalf between the period 3 October 2013 to 27 October 2015) discloses that neither the ANZ or Bank of Melbourne sought to access that database, so far as it related to the Applicant.[8] I am not satisfied that the false or inaccurate entries caused the above financial institutions to reject any applications for credit, overdraft or loan facilities as claimed.
[8] Annexure ZAZ-3 of the Applicant’s affidavit sworn on 9 December 2015, CB 95.
Moreover, I am not satisfied that the false naming of the credit provider and the inaccuracy of the debt recorded over the period 6 February 2014 to 1 October 2015, would have caused a financial institution to reject any application for credit made by the Applicant. As I said earlier, the Applicant’s evidence is that it was the fact of a default by him of a debt owed which was the reason for at least one of the financial institutions rejecting the Applicant’s application for an overdraft facility. I am not satisfied that there is a causal connection between those errors on the Veda database, which could be said to be misleading and deceptive conduct, and a refusal by a financial institution to provide credit, resulting in the inability of the Applicant to procure contracts for his business; that is, the loss he alleged he suffered.
Accordingly, I reject the Applicant’s claim for damages.
Injunction
The Applicant seeks an injunction under s.232 of the ACL, to the effect that the Respondent take all steps within its power to cause the entries on the database maintained by Veda made on 6 February 2014, as a result of the information provided by the Respondent in relation to the Applicant, to be removed.
Section 232 of the ACL relevantly provides:
232 Injunctions
(1) A court may grant an injunction, in such terms as the court considers appropriate, if the court is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes or would constitute:
(a) a contravention of a provision of Chapter 2, 3 or 4; or
(b) attempting to contravene such a provision; or
(c) aiding, abetting, counselling or procuring a person to contravene such a provision; or
(d) inducing, or attempting to induce, whether by threats, promises or otherwise, a person to contravene such a provision; or
(e) being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of such a provision; or
(f) conspiring with others to contravene such a provision.
(2) The court may grant the injunction on application by the regulator or any other person.
(3) Subsection (1) applies in relation to conduct constituted by applying or relying on, or purporting to apply or rely on, a term of a contract that has been declared under section 250 to be an unfair term as if the conduct were a contravention of a provision of Chapter 2.
(4) The power of the court to grant an injunction under subsection (1) restraining a person from engaging in conduct may be exercised:
(a) whether or not it appears to the court that the person intends to engage again, or to continue to engage, in conduct of a kind referred to in that subsection; and
(b) whether or not the person has previously engaged in conduct of that kind; and
(c) whether or not there is an imminent danger of substantial damage to any other person if the person engages in conduct of that kind.
…
In White, Campbell J said that he was not satisfied that the Applicant had established that the inaccurate entries had caused the Applicant and White Holdings damage: [169]. With respect to the Applicant’s claim for injunctive relief, his Honour stated at [174]:
I have already said that an inaccurate entry on someone’s credit file has a tendency to discourage providers of finance from providing that finance. How important a discouragement it is depends in part upon the internal processes of the financier. This means that there is an inherent difficulty in an applicant proving that, because of the incorrect entry, a particular financier has failed to provide finance. Any assessment of damages in relation to a legal wrong consisting of making an inaccurate entry on a credit reference bureau database almost inevitably needs to be assessed by reference to the chances of that entry having caused damage. While assessing damages on that basis is often the best that the common law can do, and is better than providing no remedy at all, it is still an approximate remedy. Most importantly, it is a remedy which falls short of bringing about the situation which there would have been if the inaccurate entry had not been there in the first place, or did not continue to be a potential source of error in the future. For these reasons, in relation to the breach which the plaintiffs have established, damages are, in my view, an inadequate remedy. The appropriate remedy is an injunction requiring Baycorp to remove the offending entries, and requiring Capital Finance to take all steps within its power to cause the entries to be removed.
The Applicant relies on the decision in White to assert that a mandatory injunction directed towards the Respondent to take all reasonable steps to secure the removal of an entry by a third party, Veda, where the Respondent has breached s.18 of the ACL, is appropriate. It is to be noted that in White, Baycorp was named as a defendant and an Order was made directing it to remove from the database entries relating to the plaintiff, which were the subject of the plaintiff’s complaint.
The Respondent submits that the Order sought by the Applicant would be futile, because of its contractual arrangements with Veda. The contractual arrangements are said to arise from a document titled, “Information Services and Solution Terms of Supply.”[9] Reliance is placed on paragraphs 2.4, and paragraphs 4.1 and 4.5 of paragraph 4, which apply to either a credit provider or a debt collector. These sub‑paragraphs relevantly provide (CB 241):
[9] Affidavit of Louise Avnil sworn 26 February 2016, Annexure LA-19 (CB 241 to 23).
2.4 You agree to comply with this agreement and follow any procedures and other instructions we provide when you use our information services, for example our Default Information Guide and instructions….
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4.1 You must give us all “default information”, which is the information you are permitted to provide to use under the relevant laws such as the Privacy Act and the relevant contract. You must do so as soon as possible and no later than the time that the debt is written off.
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4.5 Once you give the information to us, we can use that information to supply our information services to you and others. Because our information services rely on the information we collect, we do not usually remove any information from our systems. Information is updated where it is proven (to our satisfaction) not to be accurate, up to date or complete.
The Respondent next relies on Veda’s “Default Information Guide” and instructions[10] and, in particular the part dealing with “Deletion or Removal of Default”. Under the heading, “When Veda will NOT Remove Defaults”, the guide relevantly provides, “[w]e will not remove defaults (including serious credit infringements),” and then specifies particular circumstances in which it will not do so, including at paragraph 4, where “the default is capable of being amended to make it accurate e.g the amount was incorrect”.
[10] Affidavit of Louise Avni sworn 26 February 2016, Annexure LA-17 (CB 208 to 236).
The Respondent submits that the interaction of its contractual arrangements with Veda, and Veda’s “Default Information Guide” and instructions, demonstrates that the Order sought by the Applicant is simply futile. It is manifestly clear, the Respondent argues, that Veda will not remove the entry relating to the Applicant first reported on 6 February 2014 from its database, regardless of any reasonable steps the Respondent takes.
The Respondent further submits that the Court should not exercise its discretion to Order an injunction in circumstances where there is an alternative remedy available, which could result in the relief sought by the Applicant, in respect of which the Applicant has not sought to avail himself. The Respondent submits that this alternative remedy exists in the provisions under Part 5 of the Privacy Act, which enable complaints to be made for investigation, including with respect to the accuracy of information contained in credit reporting agency databases, to the Information Commissioner. These provisions are summarised by Lindgren J in Dale at [63] to [68]. At [69] his Honour said:
As appears at [90] ff below, I do not find it necessary to address the question whether the provisions in Pt V of the Privacy Act noted above are inconsistent with the continued subsistence of causes of action in defamation and negligence. The provisions are relevant, however, to Veda’s contention that the common law did not impose on Veda a duty of care in respect of the accuracy of default listings (see [374] ff below).
I reject the Respondent’s argument so far as is relies on the alleged effect of its contractual arrangements with Veda. The alleged effects clearly conflict with, and cannot override, the statutory provisions contained in the Privacy Act. For example, s.18G of pt.5 the Privacy Act relevantly provides:
A credit reporting agency in possession or control of a credit information file, or a credit provider or credit reporting agency in possession or control of a credit report, must:
(a) take reasonable steps to ensure that personal information contained in the file or report is accurate, up-to-date, complete and not misleading…
Section 18J of pt.5 of the Privacy Act further provides:
A credit reporting agency in possession or control of a credit information file, or a credit provider or credit reporting agency in possession or control of a credit report, must take reasonable steps, by way of making appropriate corrections, deletions and additions, to ensure that the personal information contained in the file or report is accurate, up-to-date, complete and not misleading.
Veda cannot refuse to do that which it is required to do under applicable statutory provisions.
The power to Order the injunction under s.232 of the Act is discretionary. I agree with the Respondent that a relevant consideration in exercising the Court’s discretion is whether the Applicant has availed himself of alternative statutory remedies to achieve the relief he seeks.
I would refuse to exercise my discretion primarily, however, because the Applicant seeks, in its proposed Orders, to achieve something which extends beyond that which can be said to be misleading and deceptive in the commercial credit information reported, in relation to the Applicant, on 6 February 2014 and updated on 1 October 2015. The Orders the Applicant seeks are directed towards the removal of the entry completely. As I have made plain, the record or information on the relevant entry, that the Applicant defaulted in relation to a debt, is accurate. It is plain from the updated entry that the debt was $2,815.00, which was paid in full on 29 September 2015. The Applicant is really seeking to remove from the database any record of the correct information that he defaulted on this debt.
I refuse to issue an injunction which goes beyond rectifying the mischief or error in the commercial credit information reported in relation to the Applicant on 6 February 2014, and updated on 1 October 2015.
Common law claim of negligence
The written and oral submissions made in support of the Applicant’s claim in common law claim of negligence were brief. In simple terms, to sustain his common law claim of negligence, the Applicant was required to satisfy the Court that a) the Respondent owed the Applicant a duty of care; b) that duty was breached and c) non-remote damages were caused by the breach.
The Applicant relies, in arguing that the Applicant had a duty of care to the Respondent, on the foreseeability by the Respondent that, in providing the information it did to Veda, it could and would affect the Applicant’s credit rating and ability to obtain finance. It then argues that the representations made by the Respondent, in the commercial credit information reported in relation to the Applicant on 6 February 2014 and updated on 1 October 2015, that the Respondent was the credit provider, had provided $3,326.00 in credit to the Applicant and that the Applicant had defaulted in payment or payments to the Respondent, were false representations which were made negligently. Consequently, it is argued by the Applicant that the Respondent breached its duty of care to the Applicant. The Applicant then argues that by reason of this breach of the duty of care to the Applicant, he has suffered loss and damage.
I am not satisfied that the mere foreseeability by the Respondent that false or incorrect reports made on the Veda database would affect the Applicant’s credit rating, is sufficient to give rise to a duty of care by the Respondent to the Applicant. In my opinion, much more would be required. Moreover, as will be apparent from the reasoning of my earlier findings, I reject any suggestion that the information reported on the database was false, so far as the undisputed fact that the Applicant defaulted on payment or payments of a debt owed. I have accepted that the name of the credit provider was incorrect. Equally, however, I have not found that this gives rise to an inaccuracy or false statement that could be said to be misleading or deceptive. Further, I am not satisfied that the amount of the debt originally reported ($3,326.00) was a significant inaccuracy. In these circumstances, I would not be satisfied that the Respondent breached any duty of care owed to the Applicant.
Even if I were to find that the Respondent owed the Applicant a duty of care which was breached by the Respondent’s negligent conduct, it will be apparent from my findings in relation to damages claimed for breach of the ACL (see [39] and [40] above), that I am not satisfied that any breach caused the Applicant loss and damage. On this basis alone, I would reject the Applicant’s claim in negligence.
Conclusion
For the reasons set out in this judgment, Orders will be issued dismissing the proceedings and that costs be reserved.
I certify that the preceding sixty (60) paragraphs are a true copy of the reasons for judgment of Judge Jones
Date: 2 February 2017
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