Sanctuary Cove Golf And Country Club Pty Ltd v Robert Bruce Machon
[2017] QCAT 271
To print this judgment please return to the case and click on the PDF icon
next to the
case name. For court use, a full PDF copy is required or preferred.
Exit Distraction Free Reading Mode
Please Note: You are about to print a copy of the onscreen
version of
this judgment. For court use, a full PDF copy of the judgment is required or preferred. Please
return to
the case for PDF printing options.
- Unreported Judgment
- Sanctuary Cove Golf And Country Club Pty Ltd v Robert Bruce Machon[2017] QCAT 271
- Add to List
Sanctuary Cove Golf And Country Club Pty Ltd v Robert Bruce Machon[2017] QCAT 271
Sanctuary Cove Golf And Country Club Pty Ltd v Robert Bruce Machon[2017] QCAT 271
CITATION: | Sanctuary Cove Golf And Country Club Pty Ltd v Machon [2017] QCAT 271 |
PARTIES: | Sanctuary Cove Golf And Country Club Pty Ltd (Applicant) v Robert Bruce Machon (Respondent) |
APPLICATION NUMBER: | MCDO418-16 |
MATTER TYPE: | Other minor civil dispute matters |
HEARING DATE: HEARD AT: | 9 February and 31 May 2017 Southport |
DECISION OF: | Adjudicator Howe |
DELIVERED ON: | 14 August 2017 |
DELIVERED AT: | Southport |
ORDERS MADE: | The respondent pay the applicant the sum of $5,332.90 for claim plus interest of $2,624.08 plus costs of $174.25 within 14 days of the date hereof. |
CATCHWORDS: | TRADE AND COMMERCE – COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION – CONSUMER PROTECTION – golf club membership – where equity and other members – where third party corporate shareholding qualification as condition of membership – where no power to voluntarily terminate equity membership other than sale of share – whether unfair contract terms – whether the Tribunal has jurisdiction under ACL – whether contract renewal – what date of termination if available Australian Consumer Law and Fair Trading Act 2012 (Vic), s 184 Competition and Consumer Act 2010 (Cth) sch 2 (‘Australian Consumer Law’), s 23, s 24, s 25 Fair Trading Act 1987 (NSW), s 71 Fair Trading Act 1989 (Qld), s 250(1) Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 43 Trade Practices Amendment (Australian Consumer Law) Act (No. 2) 2010 (Cth) Ferme v Kimberley Discovery Cruises Pty Ltd [2015] FCCA 2384 Grant v Repatriation Commission [1999] FCA 1629 Kucharski v Air Pacific Ltd (General) [2011] NSWCTTT 555 Lida Build Pty Ltd v Miller [2010] QCATA 17 Salmond v S & S Accounting Services Pty Ltd [2012] QCATA 218 |
REPRESENTATIVES: |
|
APPLICANT: | Represented by Mr PD Hay of Counsel, instructed by Clayton Utz, Solicitors |
RESPONDENT: | Mr Machon represented himself |
REASONS FOR DECISION
- [1]Sanctuary Cove Golf and Country Club Holdings Ltd (Holdings) owns the golf course land at Sanctuary Cove. A separate company, Sanctuary Cove Golf and Country Club Pty Ltd (the Club), leases the land from Holdings and controls and administers the everyday operation of the golf club and facilities at the course. The Club is entirely owned by Holdings.[1]
- [2]That two-company structure arose in about 2006. By a prospectus offering, both the existing members of the former Sanctuary Cove Country Club and the general public were invited to become equity members in the new Club by buying a convertible note in Holdings. Ownership of the convertible note would entitle them to become an equity member in the Club.
- [3]Mr Machon completed an application contained in the prospectus in August 2006. He paid $23,554.93. He accordingly became an equity member of the Club. In 2010 the convertible notes were converted to shares in Holdings and consequently Mr Machon became the registered holder of one ordinary share in that company.
The Claim
- [4]The Club has filed a minor debt application in the Tribunal seeking recovery of $11,496.90 from Mr Machon of membership fees for 2015 and 2016, legal costs for debt collection of $123.75 and interest at 20% to date of application of $1,460.32. At hearing, the club applied to increase its claim by another $6,565 for the 2017 membership fees. Mr Machon opposed that very late amendment and I refused the extension of the monetary claim on that basis. The claim to debt collection costs of $123.75 was not pursued at hearing.
- [5]Mr Machon has not paid anything to the Club since February 2015. He says he should not have to pay membership fees or anything else. He filed two Responses to the claim although it is not clear why. The second was essentially an elaboration of the first.
- [6]I conclude from the Responses filed by Mr Machon that he refutes the Club’s claims for payment on the following bases:
- He became an equity member of the club without a proper understanding of the terms of the prospectus and club by-laws. He did not agree by becoming an equity member to pay for membership and other charges to the Club for the rest of his life;
- He has been locked out of the club since February 2015 and denied use of the club facilities since then and he should not have to pay club fees;
- The food and beverage charges claimed in advance are invalid;
- He should be entitled to return the equity share to the club and be compensated by being repaid the amount of approximately $23,000 which he paid for the share; and
- The membership fees claimed are “contrary to good conscience”.
- [7]I note at outset that the matter before the Tribunal is a minor debt claim. There is no counterclaim available in minor debt actions. If Mr Machon wants money from Holdings he must institute proceedings against that company, which in any case is no party to the action before the Tribunal.
- [8]Further, the Tribunal has no jurisdiction to make orders in the form of declaratory relief against Holdings, even if that company was a party to the claim.
Background
- [9]Mr Machon says he was a director of Palm Beach Golf Club in Sydney for 10 years in the 1990s. He retired as treasurer of the club in 2004 and moved to Queensland. With Palm Beach Golf Club, membership rights were clear-cut. You paid in advance for a particular term, 3, 6 or 12 months, and enjoyed the facilities. If one fell behind in payment one became non-financial and forfeited membership. No member was obliged to remain a financial member if they did not want to and could terminate their membership at the end of their paid term for any reason whatsoever.
- [10]He joined the Club in 2006 and enjoyed the facilities and paid the equity membership to early 2015. It was only after that, he says, that he became aware of the problem that existed with respect to termination. In 2015 his wife’s health deteriorated and he faced large medical expenses. He eventually decided he could not afford to maintain his membership.
- [11]The Club By-Laws do not allow an equity member to simply resign membership however. An equity member’s membership can only end when the member divests himself or herself of his or her share in Holdings.
- [12]Mr Machon says he attended a meeting explaining equity membership in 2006. He believes most people attending were existing members of the former club. He left without taking documentation made available on side tables because he thought it was irrelevant. He did not think he could afford membership at that stage.
- [13]He says it was not brought to his attention that he would have to continue to pay membership fees for as long as he had the equity share. In a subsequent meeting with the general manager, Paul Granger, to sign up, which lasted no more than 10 minutes, again his attention was not drawn to the ongoing terms of commitment to membership as long as he held the equity share.
- [14]He was familiar with traditional golf club rules and he believes it was not unreasonable for him to consider and expect similar rules about membership applying to the Club.
- [15]He paid all fees up until 31 December 2014 but after that was not in a position to pay further fees. He was suspended from the Club on 14 February 2015 because of failure to pay, and he attempted to resign from the club on 17 March 2015 but was not allowed. He paid $1000 after that as a gesture to continue with his playing rights. He has been denied access to the Club facilities since 20 February 2015. He has never considered his equity share as being connected to his compulsory payment of Club fees.
The Membership Contract
- [16]A significant part of Mr Machon’s claim is that he did not understand the ramifications of what he agreed to in becoming an equity member. That general complaint is not sufficient however to negate the claim of the Club to enforce the terms of membership which includes payment of annual fees and other charges.
- [17]Mr Machon makes clear in both his filed material and in his evidence given during hearing that the prospectus document was available in full for his perusal when he attended a presentation at the Club to discuss the purchase of a convertible note in Holdings which would lead to an equity membership. He said in a written statement filed in the Tribunal[2] he was impatient with the meeting and that he was entirely focused upon his playing options rather than the discussion about the offer of a share.
- [18]He had fair opportunity to consider the prospectus and terms of membership before joining. He had fair opportunity to take legal advice about the terms of membership if he so chose. He left the presentation, discussed the matter with his wife, and then when again contacted by the Club decided to proceed with membership. He signed the application form freely and paid a significant sum of money to become a member. There was no subterfuge or misrepresentation on the part of the Club with respect to the offer of membership. I conclude it was clear that the document he signed was intended to create legal relations, and upon signing it he became bound by its terms regardless that he did not bother to read it or read it carefully or does not view his membership as a contractual arrangement.
Unfair Term
- [19]In his Response filed 9 December 2016, Mr Machon asserts it was not until 2015 that he was informed and realised that he could not resign his membership unless he first divested himself of his share in Holdings. He says in 2015 he paid all outstanding fees up to date and resigned as a member.[3] Just when he tried to resign but found he could not is unclear.
- [20]At hearing I found it surprising that Mr Machon was unable to resign from the Club without first having to dispose of a shareholding in Holdings, seemingly an entirely unrelated third party. Further, his evidence was that he could not simply disclaim the shareholding voluntarily but had to pay someone to take it from him. He thought it would cost him approximately $9,000 to do that. He said he could not afford to pay the constant annual membership fees. He would have been prepared to give up the share without recompense for it, despite his initial outlay of over $23,000. But he said there were many people he knew who have put their shares up for sale and have been unable to sell them, in some cases for years. Accordingly he didn’t even try that with his share.[4]
- [21]The Club was represented by Counsel. Mr Machon had no legal representation. At hearing I raised with both parties the possibility that the unfair contract term provisions under the Trade Practices Amendment (Australian Consumer Law) Act (No.2) 2010 (Cth) (ACL) might apply. Counsel disagreed but at that stage was unable to offer submissions on the point. Mr Machon was not aware of the unfair contract term provisions though I note in his Response he contended that the Club’s claim to membership fees were against good conscience.
- [22]Accordingly I allowed the parties time to file additional material concerning divestiture of the share in Holdings together with submissions. Additional material was filed and submissions made concerning the application of the ACL and unfair contract terms, however in considering the matter and the applicant’s submissions it became clear to me that the relevant potential unfair term had not been addressed.
- [23]The applicant had also filed as part of its submissions an affidavit by its solicitors deposing to online searches made and exhibiting copies of the explanatory memorandum for the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 together with a publication by the Australian Competition and Consumer Commission (ACCC) entitled “A guide to the unfair contract terms law.” The affidavit was referred to by Counsel in his submissions to the effect that the Tribunal had no jurisdiction to consider unfair contract terms under the ACL.
- [24]As to Mr Machon’s submissions, most of his material concerned complaints about the poor management of the Club and were irrelevant to the issue of unfair contract terms.
- [25]As a matter of fairness I had the matter relisted for further mention and indicated to the parties that the relevant unfair contract term appeared to be clause 7.4 of the Club By-laws which permitted a member, but not an equity member, to resign voluntarily.
- [26]Further, given Counsel’s reliance on the ACCC publication I pointed out that a guideline publication by Consumer Affairs Victoria entitled “Preventing unfair terms in consumer contracts – guidelines for businesses” suggested individual consumers were entitled to defend themselves against debt collection and other contract enforcement actions by pleading that the terms relied on by the trader were void as unfair.
- [27]I allowed a further generous period to Counsel for the applicant to make further submissions.
- [28]The applicant’s further submissions were to the effect that the Consumer Affairs Victoria publication was not relevant because the Victorian Civil and Administrative Tribunal had more extensive powers granted them in respect of the ACL than did QCAT and also two other objections were raised. First as to matters being raised by the Tribunal which had not been raised by the respondent, and secondly as to the Tribunal having regard to materials beyond those submitted by the parties.
- [29]The last submission is rather extraordinary. The applicant sought to rely on the information in the ACCC publication. That was clearly intended to be a submission about law and the limited jurisdiction of the Tribunal with respect to unfair contract terms under the ACL. Having itself opened up the issue of published commentary by a statutory authority charged with administration of the ACL provisions, it is disingenuous to now argue against consideration of such commentary in a similar but different publication which suggests a contrary position to that argued by the applicant. The applicant was simply given an opportunity to comment on the Victorian publication. That is not to say that I take either commentary into account in interpreting the ACL provisions and the jurisdiction of the Tribunal, particularly given the jurisdiction granted VCAT to make declaratory orders which is unmatched in Queensland.
- [30]As to raising possible defences open to the respondent on the evidence, the Tribunal process is inquisitorial rather than adversarial. There are no pleadings in the Tribunal. The usual rule is to have parties represent themselves unless the interests of justice requires otherwise.[5] The procedure before the Tribunal is at the discretion of the Tribunal.[6] In conducting a proceeding the Tribunal must observe the rules of natural justice but is not bound by the rules of evidence, or any practices or procedures applying to courts of record other than to the extent the Tribunal adopts the rules, practices or procedures, and may inform itself in any way it considers appropriate.[7]
- [31]The former President of the Tribunal Justice Alan Wilson said in Salmond v S & S Accounting Services Pty Ltd [8]:
So far as Tribunal proceedings are concerned, the term “evidence” refers to any relevant information; generally, the Tribunal is not bound by the rules of evidence or practices of the courts. Evidence may be given orally or in writing. Adversary procedure is a long-established practice of the courts, but subject to relevance and natural justice the Tribunal “may inform itself in any way it considers appropriate”. It must act with as little formality and technicality as is lawfully possible, and must ensure, so far as practicable, that its decisions are based on all relevant material. These desiderata are quite capable of including, for what they are worth, assertions contained in parties’ pleadings or other submissions to the Tribunal, particularly when a party is unrepresented, or some other inequality is apparent. The Tribunal’s investigative role may require it to initiate inquiries suggested by material already before it.
- [32]Justice Wilson referred there with approval[9] to Grant v Repatriation Commission (1999) FCA 1629 at [18] where it was said:
An inquisitorial review conducted by the AAT ... is one in which the Tribunal is required to determine the substantive issues raised by the material and evidence advanced before it and, in doing so, it is obliged not to limit its determination to the "case" articulated by an applicant if the evidence and material which it accepts, or does not reject, raises a case on a basis not articulated by the applicant.
- [33]
… the Tribunal must take all reasonable steps to ensure that each party to a proceeding understands the practices and procedures of the Tribunal, the nature of assertions made in the proceeding and the legal implications of the assertions, and any decision of the Tribunal relating to the proceeding. While this provision largely reflects and embodies what the courts have said in recent years is the nature of the duty owed by the judicial system to, at least, self representative litigants, it also suggests that parties to proceedings before this Tribunal will receive, and have an entitlement to expect, assistance with the legal implications of the issues in the case.
- [34]In this matter learned Counsel for the applicant instructed by one of Australia’s leading law firms filed and rely on extensive written evidence exceeding weel over 1,000 pages, much of it apparently repetitive but with subtle changes to the Club rules (the By-Laws) over the years, which I have found required careful and somewhat challenging appraisal. This surely presented as a daunting and even intimidating exercise in comprehension to the respondent who was unrepresented. In the circumstances the Tribunal would be remiss in failing to raise what appears to be a defence available to the respondent under the ACL unfair contract terms provisions suggested on the evidence submitted by the applicant.
Club Membership
- [35]There is no provision in the By-Laws permitting an equity member to resign independent of sale of his or her share in Holdings.[11]
- [36]In approximately 2002, Mulpha Sanctuary Cove (Developments) Pty Ltd became owner developer and manager of the Sanctuary Cove Resort which included the Country Club. In 2006 Mulpha determined to restructure and to that end incorporated Holdings as a vehicle to own the land and assets and the club (which would be wholly owned by Holdings) to operate the business. That restructure was undertaken by way of a prospectus offering.
- [37]At page 51 of the Prospectus of 97 pages, it is stated:
Equity members may not resign from the Club (and thereby avoid Annual Membership Subscriptions), however, upon transfer of a Share in the Company to an Applicant approved by the Company, the former holder of the Share shall cease to be an Equity Member and the transferee of the Share will (automatically) be an Equity Member holding Membership in the Club.
- [38]The Club By-Laws effective December 2015 provide as follows:
7.4 Resignation of Access Members
Any Member (other than an Equity Member) may terminate their membership in the Club at any time by voluntary resignation in writing, addressed, and actually delivered to and received by the Company.
7.5 Equity Member’s Membership Termination Upon Ceasing to be an Equity Member
Upon the transfer of an Equity Member’s ordinary share in Holdings Limited being approved by Holdings Limited and recorded by Holdings Limited in its members’ register, the Equity Member’s membership in the Club shall automatically terminate with effect from the close of that day.
The Equity Member who has paid membership subscriptions in advance will be refunded any membership subscription paid which is applicable to the period after the date of termination (after the Company deducts any amounts due to the Company).
Equity Member’s membership is not transferable (as such).
7.7 Effect of Termination or Resignation
Resignation (Access Members) or termination shall mean a Member’s rights and the rights attaching to membership (and any person whose use or access arises as a result of a Member’s membership including Corporation’s Nominees and Equity Member’s Alternates) and license to use the site is forthwith terminated. The Person is not relieved or released from his, her or its obligation to pay any fees or charges, debt or indebtedness owed by such Member whilst a Member of the Club (whether for fees or charges incurred or otherwise due and payable by the person prior or subsequent to the date of resignation (Access Members) or termination).
- [39]Accordingly all members other than equity members have a right to resign from the Club at will.
- [40]Mr Bastion the finance director and secretary of the Club since January 2016 and a director of Holdings filed an affidavit in the proceedings. He said equity members must continue to pay membership fees “until they find a replacement owner for their share in Holdings.”[12] Mr Bastion said this mechanism maintains the number of equity members in the Club and provides the Club with a certain revenue stream, which is important to the Club.
- [41]Following the hearing on 9 February 2017, Mr Machon was allowed to file further statements of evidence concerning the divestiture of shares in Holding.
- [42]In an affidavit by David James Wells sworn 11 March 2017 that person deposes that he and his wife hold two equity membership shares and they no longer need the second given certain changes to the By-Laws made in 2014. However they have not attempted to sell the second share because “…we cannot afford the cash loss of $7,000 by paying someone to relieve us of this unnecessary membership….”[13]
- [43]There is also a statutory declaration of Trevor Jensen, sworn 10 March 2017 in which he states he is an equity member and he has placed his share in Holdings up for sale since 6 May 2016. He has offered to pay a buyer $5,500 to take his share from him. However he has not been able to sell the share. He has not received any expressions of interest. Upon enquiry made with a member of the Club staff he says he was informed that the minimum trade for 2017 was $7,500 with most prospective buyers negotiating a significantly higher payment from the shareholder. He states “I was left with the distinct impression from this conversation that unless I am willing to increase my offer in excess of $10,000 the Club would be unlikely to engender any interest in my share.”[14]
- [44]Mr Jensen also exhibits to his affidavit an extract of the 67 shares currently listed for sale on the Club Share Register.[15] I note many shares listed there have been listed for sale since 2013, many at a nil exchange rate and I assume the others shown for a negative value – that is, the member is prepared to pay someone to take them.
- [45]According to the Club, this is simply market forces at play.[16] The value of the Holdings share may return to hold a positive value. Mr Machon is highly sceptical about that.
- [46]Holdings is an unlisted public company. Its shares may be traded like any other unlisted public company. Since 2015 it has operated an ASIC approved Low Volume Market sale register which is a list of interested buyers and sellers of Holdings shares.
- [47]Clause 4.4 of Holdings Constitution sets out circumstances in which Holdings must refuse to register a transfer. It also sets out circumstances in which Holdings may refuse to register a transfer. One such circumstance where Holdings may refuse to register a transfer of shares is where there are any amounts owing by the transferor to the Club under the Club’s constitution or By-Laws. Mr Bastion exhibits Holdings’ share transfer register to his affidavit.[17] I note the register makes provision in the register document in respect of each share transfer for confirmation that the transferring member has paid all moneys owed to the Club. The column is entitled “Has Club confirmed no debts owing by Vendor” and all entries are marked “yes”. According to Mr Bastion, since his appointment to Holdings Board in January 2014 Holdings has never refused to register a share transfer. I note he does not dispute it has that power to refuse however.
- [48]Additionally, there is provision in the Holdings share transfer register to record both Holdings approval to the transfer and also the Club’s approval of each transfer, with different dates recorded, though how the Club is given a role in the approval of a transfer of the public company Holdings share is unclear.
- [49]Also according to Mr Bastion, from his perusal of the register, over 500 shares have been transferred between 1 February 2010 and 1 February 2017. The highest recorded price which a buyer has paid a seller to acquire a share was $40,000 on 18 February 2010. The highest recorded price a seller (equity member) has had to pay a buyer to take a share was $7,500 on 1 January 2017. In December 2015 there was one share transfer for $0, and two share transfers for -$2000. Then on 1 January 2016 three share transfers again for $0 and two transfers for -$2,500.[18]
- [50]The latest share transfers occurred on 1 February 2017 when one transferred for $0 and five for -$7,300.[19] There is no explanation of the circumstances of the transfer at $0 in February 2017.
Australian Consumer Law
- [51]Chapter 2 Part 2-3 of the Australian Consumer Law (ACL) deals with the use of unfair terms in consumer contracts:
Section 23 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.
(2) The contract continues to bind the parties if it is capable of operating without the unfair term.
(3) A consumer contract is a contract for:
(a) a supply of goods or services; or
(b) a sale or grant of an interest in land;
to an individual whose acquisition of the goods, services or interest is wholly or predominantly for personal, domestic or household use or consumption.
- [52]The Club submits the Tribunal cannot concern itself with unfair terms of contract. That, the Club submits, is exclusively the purview of the District Court which has power to grant a declaration that a term is unfair. By s 51 of the Fair Trading Act 1989 (Qld), a proceeding for the purpose of a declaration under s 250(1) of the ACL must be brought in the District Court.
- [53]In the matter before me there is no application to the Tribunal for any declaration. Unfair contract terms fall for consideration before the Tribunal, if at all, as a shield rather than a sword. That is, is the claim by the Club unenforceable because the claim turns on an unfair term of a contract made void by s 23 of the ACL? That is an entirely different matter to a party seeking declaratory relief and does not impinge on the jurisdiction granted the District Court to make such declarations.
- [54]In other jurisdictions adopting into State law the provisions of the ACL, the matter is made rather clearer by the enabling legislation. In Victoria the Australian Consumer Law and Fair Trading Act 2012 (Vic) provides by s 184 that VCAT may hear and determine a consumer and trader dispute and may amongst other things declare that a term of a contract is or is not void.[20]
- [55]In New South Wales s 71 of the Fair Trading Act 1987 (NSW) provides that an application for a declaration under s 250 of the ACL may only be brought to the Supreme Court of that State. But by s 71(3)(b) it is made clear that the availability of proceedings for a declaration by the Supreme Court that a term of a contract is unfair does not prevent a party to a standard form consumer contract from bringing proceedings in a court or Tribunal of competent jurisdiction for relief in respect of a term of a consumer contract that is void because it is unfair.
- [56]A note to s 71 offers the following explanation concerning the ACL provision:
Note: section 23 of the ACL provides that an unfair term in a consumer contract that is a standard form contract is void, although the contract continues to bind the parties if it is capable of operating without the unfair term. If a contract claim in relation to a consumer contract containing such an unfair term is brought before a court or Tribunal (such as the Civil and Administrative Tribunal) having jurisdiction to deal with the claim, the court or Tribunal will be required to treat the term as being void.
- [57]The New South Wales legislation simply clarifies, in my opinion, the general immediacy and application of s 23 of the ACL. Section 23 states an unfair term of a qualifying contract is void. Section 23 does not require a declaration to that effect before the provision applies. Any suggestion to the contrary would result in such unfair term not being invalid until a declaration is made, which is clearly not the plain meaning of the provision derived on any reasonable reading of the text. If the factors set out in s 23 and s 24 apply, the term is void.
- [58]Hence in Kucharski v Air Pacific Ltd (General) [2011] NSWCTTT 555 at issue was the fairness of the respondent’s terms and conditions as to non-refundable airfares. The passenger, Mr Kucharski, attempted to cancel his tickets before travelling but was only refunded approximately one quarter of the fares paid. The “no cancellations/no refunds” term of contract was not made clear on the e-ticket provided. The Tribunal found the matter involved a standard form consumer contract and that there was an imbalance in the parties rights and obligations in relation to passenger cancellations of bookings. The Tribunal also considered the various examples of unfair terms from the ACL provisions. The Tribunal found it was reasonably satisfied “that the term regarding passenger cancellation of bookings was unfair within the meaning of the Act. Consequently, that term was void in accordance with Section 60ZD.”[21] The Tribunal went on to consider the rights and obligations of the parties as they applied absent the void cancellation term of the contract. No declaration was necessary as a precursor to the term being found and treated as unfair and therefore void.
- [59]Whilst the New South Wales legislation makes specific reference to and distinguishes consumer relief from an unfair contract term and proceedings for a declaration in the Supreme Court, the basis upon which that is done has, in my opinion, equal application to the Queensland position. What the New South Wales legislation does is simply make clear that a term made void by virtue of the application of s 23 and s 24 of the ACL is void without necessary prior declaratory order being given.
- [60]As mentioned above, the Club relied on a publication by the ACCC available online entitled “Unfair Contract Terms, a Guide for Businesses and Legal Practitioners” dated March 2016 which addresses the availability of declaratory orders. It does not refer to a situation where the unfair contract terms are relied on in defence of a money claim brought against a consumer without declaratory relief.
- [61]The power to make declarations as to unfair terms is not rendered meaningless in consequence of the Tribunal being able to take such into account in debt actions relying on unfair terms brought against a consumer. There are certain specific consequences which flow from the making of a declaration that a term is unfair. Where the District Court declares a term in a consumer contract unfair it is a contravention of the ACL for a person to apply or rely on that term thereafter. In such circumstances additional enforcement powers and remedies apply.[22]
- [62]I conclude if s 23 and s 24 apply to qualify a term of a consumer contract as unfair, the term is void. The contract continues to bind the parties if it is capable of operating without the unfair term. No declaration by the District Court is necessary as precursor to a defence of a void unfair contract term in a debt collection action before the Tribunal.
- [63]Accordingly the issue that I must determine here is is Mr Machon bound by the contract with the Club to keep paying annual membership fees regardless of any desire, intention or attempt on his part to terminate the contract without having first divested himself of his share in Holdings?
Consumer Contract
- [64]The annual membership fees are less than $40,000 and the contract is for supply of services wholly or predominantly for personal use. The membership contract is therefore a consumer contract within the meaning of the term as used in s 23 ACL.
Renewal
- [65]Prior to considering those necessary factors, I must deal with the applicant’s contention that the ACL provisions do not apply because the contract of membership was formed in 2006 before the ACL provisions came into operation, the contract has not been renewed and though there have been changes to the By-Laws over the years, the By-Laws have had continuous operation notwithstanding adaptions to meet operational requirements. Payment of annual membership fees, it is submitted, does not amount to a renewal of the contract.
- [66]Here, the effect of clause 7.4 is automatic renewal of the contract of membership annually. Though it is an automatic occurrence in my opinion there is renewal of the contract each year regardless that there may be no changes to By-Laws and annual fees remain the same year to year. But that is not the situation to be found here in any event.
- [67]Annual membership subscriptions and other Club service charges are at the sole and absolute discretion of the Club.[23] Those membership fees and charges have changed over the years, and Mr Machon made complaint about that in an email to the Club on 13 March 2015.[24] In the prospectus of 2006, the annual fees were set at $3,700. By 2016 the membership fees and charges had risen to $6,164, and the charges for the 2017 year increased yet again to $6,565.
- [68]But additionally there have been changes to the By-Laws since 2006, and significantly changes since commencement of the application of the ACL unfair contract terms provisions.
- [69]Prior to 2014, apart from equity members (and Corporate, Honorary and Country Club access members) a category of under 21 years Cadet Golf Access Members were permitted under the By-Laws. Their numbers were limited to 20. In the By-Laws effective from October 2014, the Cadet category changed to Junior Access Members and their number increased to 40. Then, in December 2015, that membership category broadened still further to a category of Golf Access Membership and the number increased to 50. Significantly, that permitted an adult under 32 years to use the Club golfing facilities.
- [70]In the October 2014 By-Laws children of equity members became eligible to become Junior Access Members, apparently not the case under the old By-Laws governing Cadet members.
- [71]Then there are the changes to the one-off entrance fee imposed on equity members purchasing a share in Holdings. In the By-Laws of August 2009, each new equity member was obliged to pay a one off entrance fee of $2,500 to the Club. The By-Laws from October 2014 reduced that fee to $1,000 for new members, and to nil for an existing equity member purchasing another share.
- [72]Finally there was the introduction of Equity Member’s Alternate[25] memberships (Jockey members) in 2014. An equity member was thereby allowed to find someone else to use the Club facilities in lieu of the member for up to two years before the Jockey member was obliged to buy an equity membership. It seems likely that that new Jockey membership could be attractive to individuals looking to utilise the golfing facilities without having to purchase a share from an equity member. Such Jockey members could potentially and perhaps even significantly reduce the potential available pool of buyers of a Holdings share available to existing equity members trying to sell.
- [73]In my view these changes to By-Laws, and annual changes of membership fees and service charges are not appropriately described as simple operational adaptions. The rights and obligations of members have altered over the years with such variations and changes. Had equity members been permitted to resign at will, some or all of these changes may well have have played a role in persuading them not to renew their membership if membership renewal was not automatic and there was a choice available to them.
- [74]In the affidavit of David Wells sworn 11 March 2017, he states the changes to Cadet Membership in 2011 and then in 2014 were of significant interest and concern to him and his wife who had initially purchased two equity shares to enable their children to enjoy Club membership. With the changes, only one would be necessary. That appears to have been confirmed by the Club, but there was apparently no preparedness on the part of the Club to offer any relief in respect of disposal of one of their unnecessary shares in Holdings.
- [75]
Standard Form Contract
- [76]Is the membership contract a standard form contract? There is no evidence or suggestion that any potential equity member interested in purchasing a share in Holdings in 2006 could negotiate with the Club or Holdings either about the purchase price of membership or about the terms and conditions of membership in the Club. An application form was detached from the prospectus and Mr Machon was presented with it to sign. There was no flexibility in the approach to or terms of membership in the Club. The onus is on the Club to prove that the contract of membership was not a standard form contract,[28] and it has not done that. Accordingly, I find the membership contract entered into was a standard form contract for the purpose of Part 2-3 of the ACL.
Unfair Contract Term
Section 24 Meaning of unfair
(1) A term of a consumer contract is unfair if:
(a) it would cause a significant imbalance in the parties’ rights and obligations arising under the contract; and
(b) it is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; and
(c) it would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on.
(2) In determining whether a term of a 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:
(a) the extent to which the term is transparent;
(b) the contract as a whole.
(3) A term is transparent if the term is:
(a) expressed in reasonably plain language; and
(b) legible; and
(c) presented clearly; and
(d) readily available to any party affected by the term.
(4) For the purposes of subsection (1)(b), a term of a 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.
- [77]By clause 7.4 of the By-Laws any member other than an equity member may terminate their membership in the Club at any time by voluntary resignation. Is that unfair on equity members?
- [78]To be an unfair contract term s 24 of the ACL requires three factors to be satisfied:
- The term must cause a significant imbalance in the parties rights and obligations under the contract;
- The term must not be reasonably necessary to protect the legitimate interests of the party advantaged by the term;
- The term must cause financial or other detriment to a consumer if it is relied upon.
The ACL gives examples of unfair terms in s 25. One is a term that permits, or has the effect of permitting, one party (but not another party) to terminate the contract. Another is a term that permits, or has the effect of permitting, one party (but not another party) to renew or not renew the contract. Both examples seem to apply here though “…(w)hether or not a particular term is unfair must depend upon more than the mere categorisation of the clause according to the examples given in s 25.”[29]
Significant Imbalance
- [79]Mr Machon is powerless to terminate his membership of the Club unless he rids himself of his share in Holdings. He originally paid over $23,000 for that share. That was back in 2006. To rid himself of the share in Holdings now it seems clear he is obliged to not only find someone else to become an equity member of the Club in his place, but also to entice that person to take his share to pay that person a significant sum of money. At the present time, and as has been the case for some years, it is doubtful that anyone will actually pay him for that share.
- [80]But finding someone else may not be enough. Even if he finds someone to take over his share in Holdings, given he has outstanding membership fees owed to the Club, by clause 4.4 of Holdings Constitution, Holdings is entitled to refuse to register a transfer of his share whilst he owes any monies to the Club.
- [81]Counsel for the Club suggested at hearing that perhaps Holdings was under a duty to act in good faith towards a member. As far as I can see, that is the only restraint placed upon Holdings power to refuse a transfer in such circumstances. In practical terms, the power of Holdings to refuse a transfer in such circumstances is nothing more than a debt recovery device for the Club.
- [82]But the imbalance between the parties as to rights and obligations does not end there. Club membership and other costs may be charged to a member monthly. That was the case with respect to Mr Machon. By clause 5.10 of the By-Laws, such charges are due and payable by the 15th of the month. If not paid by the 30th day of the month the member’s membership is automatically suspended and the Club is entitled to take action as prescribed by clause 5.12, that is refer the debt to debt collectors or solicitors.
- [83]If the member is suspended from the Club because of a delinquent account, that is deemed “conduct unbecoming a member” and by clause 5.13 if payment is not made within another 30 days, the Club is entitled to expel the member and notify Holdings. But in such circumstances where the member does not pay, perhaps because he cannot afford to pay, there is no corresponding entitlement in the member to simply resign his membership.
- [84]In my opinion there is a very significant imbalance in the parties’ rights and obligations under the contract.
Not Reasonably Necessary
- [85]Mr Bastion says that requiring equity members to stay as members until they find a replacement owner of their Holding share arises essentially to ensure the Club’s revenue stream from its equity members remains certain and constant and without that the ongoing viability of the Club and its ability to provide facilities to members would be threatened. Mr Bastion appears to be suggesting that if equity members had a choice to terminate their membership without ridding themselves of their Holdings share, many would.
- [86]Perhaps certainty and a constant revenue stream is an attractive aspect of the arrangement to the Club, however the concomitant aspect is that the responsibility of attracting new members to the Club is shouldered by outgoing equity members in lieu of the Club. This may well be very convenient to the directors of Holdings and the Club, but not an arrangement promoting competition and fair trade in the marketplace which is a purpose of the Competition and Consumer Act 2010 (Cth) of which the ACL comprises schedule 2.
- [87]There is no evidence to support the assertion that the Club might fail if equity members were, as with access members, entitled to resign their membership of the Club voluntarily. Their share holding in the public unlisted company Holdings is an entirely separate matter from membership in the Club. Indeed, the two-company structure has more the hallmarks of asset protection than anything else.
- [88]By s 24(4) of the ACL, a term of a consumer contract is presumed not to be reasonably necessary in order to protect the legitimate interests of the party advantaged by the term unless that party proves otherwise. The onus of proving that clause 7.4 in its present form is reasonably necessary to protect the legitimate interests of the Club rests on the Club. The Club has not come up to proof on that, merely asserting that 40 per cent of the Club’s turnover is based on equity membership. There is no evidence that if equity members were entitled to voluntarily resign the Club would lose 40 per cent of its turnover or any other significant amount.
- [89]Concluding the prohibition against voluntary resignation of equity members from the Club is void as an unfair contract term has no effect on payment of annual fees by equity members, does not change the benefits attached to equity membership, nor the requirement that an equity member hold a share in Holdings; nor does it impact on the application or effectiveness of clauses 7.5 or 7.7 of the By-Laws.
Financial or Other Detriment
- [90]Is there financial detriment caused to Mr Machon as a consumer? That is clearly the case given in order to rid himself of his membership he must pay someone a substantial sum of money to take his share in Holdings to make him eligible to resign his membership.
Unfair Contract Term
- [91]In these circumstances I conclude clause 7.4 in so far as it excludes from its ambit and operation equity members is to that extent an unfair contract term and therefore void. Clause 7.4 and the Club By-Laws are capable of continued operation and effect absent the words “other than an equity member”.
The Claim Against Mr Machon
- [92]How does this effect the applicant’s claim in this proceeding? The Club points to a number of letters in November and December 2015 that indicate Mr Machon was happy to remain a member of the Club. However in an earlier letter apparently forwarded to the Club on or about 19 February 2015, Mr Machon stated “My use of the Club facilities has been almost non-existent over the past 2.5 years…. As you can see, I have limited time to enjoy the facility and should sell my share if it were possible.”[30]
- [93]In Machon’s email of 13 March 2015 previously referred to he states “… I am now… considering my resignation from the Club will prevail from the 1st January 2015 unless the Club decides to act in a commercial and responsible way.”[31]
- [94]In reply to that email the Club informed Mr Machon that he was obliged to pay annual fees whilst he owned a share in Holdings.[32]
- [95]At hearing Mr Machon said, concerning his letter of 20 December 2015[33] in which he states “As discussed I do wish to remain a member and could have placed my share on sale or applied for a Jockey arrangement but had considered our previous arrangements could be met as agreed….” that what he meant was if he could pay he wanted to remain a member. However he understood the By-Laws provided that the Club could take his share away from him if he did not pay his membership fees and he thought at that stage the share was still a valuable resource.
- [96]He did then enquire about selling his share, only to find the share was valueless. Indeed as at December 2015 the share sales register shows over the period October to November 2015 there were 15 sales and of those four were for nil value but the rest involved payments by existing equity members to someone willing to take over their shares ranging from $500 up to $2,000.
- [97]I conclude that from end December 2015, had clause 7.4 allowed Mr Machon to voluntarily terminate his membership without the prerequisite of divestiture of his shareholding in Holdings, he would have tendered his resignation effective from January 2016. Given my finding that Clause 7.4 in its exclusion of equity members from voluntary resignation was void as an unfair term of the contract of membership, I determine that outstanding fees up until that time are due and payable to the Club, but not those in respect of the 2016 year (nor subsequent) at which time, had he been able, he would have resigned his membership.
- [98]The applicant is entitled to the 2015 membership fees and charges however, which total $5,332.90, plus interest on that sum at the agreed rate of 20 per cent under the By-Laws from 16 February 2015 to date of judgment of $2,624.08, filing fee of $105 and service fee of $69.25.
Footnotes
[1] Prospectus 12 July 2006, 14.
[2] Dated 20 January 2017, 8.
[3] Ibid, attachment entitled “Background” item (f).
[4] T1-44 LL9-12.
[5] Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act), s 43(1).
[6] Ibid, s 28(1).
[7] Ibid, s 28(3).
[8] [2012] QCATA 218, [10].
[9] Ibid.
[10] [2010] QCATA 17, [6].
[11] Clause 7.5, Club By-Laws.
[12] Affidavit sworn 24 February 2017, [19].
[13] Affidavit sworn 11 March 2017, [10]
[14] Statutory Declaration, sworn 10 March 2017, [20].
[15] Annexure B.
[16] Transcript 1-40 L38.
[17] Exhibit WJB11.
[18] Bastion affidavit, exhibit WJB11, [46].
[19] Ibid.
[20] Australian Consumer Law and Fair Trading Act 2012 (Vic), s 184(2)(d).
[21] As at date of hearing the relevant State equivalent of s 23 ACL was s 60ZD.
[22] See Explanatory Memorandum of the ACL legislation (Trade practices Amendment (Australian Consumer Law) Bill (No.2) 2010 page 74 – injunctions, damages and compensatory orders and redress for non-parties.
[23] Ibid, clause 5.1.
[24] Statement of Evidence of Paul Sanders dated 3 February 2017, [4] and annexure 1.
[25] By-Laws, clause 4.1.
[26] 1 January 2011.
[27] Fair Trading Act 1989 (Qld), s 123(1): “The Australian Consumer Law (Queensland), chapter 2, part 2-3 … (b) does not apply to a contract entered into before the commencement. (2) Despite subsection (1)(b), if a contract entered into before the commencement is renewed on or after the commencement, the Australian Consumer Law (Queensland), chapter 2, part 2-3 applies to the contract as renewed, on and from the day (the renewal day) on which the renewal takes effect …”
[28] ACL, s 27(1): “If a party to a proceeding alleges that a contract is a standard form contract, it is presumed to be a standard form contract unless the other party to the proceeding proves otherwise.”
[29] Ferme v Kimberley Discovery Cruises Pty Ltd [2015] FCCA 2384, [28].
[30] Ibid, [22] and annexure 10.
[31] At paragraph 12 of the email.
[32] Statement of Evidence of Paul Sanders dated 3 February 2017 annexure 12, letter dated 16 March 2015.
[33] Ibid, annexure 14.