Paciocco Case: High Court Of Australia Appeal From Federal Court

Background

Part A 

Locate the full law report for the case referred to below at the Australian Legal Information Institute site (www.austlii.edu.au). Please be very careful that you find this particular case. The citation of the case is important. See the text in chapter 4. Most parts of the Part A answers can be taken from the case but you may also do further research or refer to Moodle materials in your assignment.

Read the case and answer the following questions. Use complete sentences.

1. In what court was this case heard and how did the case reach this court?
2. Is this case a civil or criminal case? Which party bears the onus of proof in the present case?
3. In your own words briefly outline the main legal issues in this case. The case, prescribed textbook and other research will be helpful.
4. Identify the legal arguments of the appellant
5. Explain how the doctrine of precedent and the hierarchy of Australian courts are illustrated by this case.
6. Explain how the terms of a contract and issues of legitimate commercial interests can be treated by the courts in Australia according to this decision.
7. Do you think the outcome of this case is fair? What business law lessons did you learn from reading this case?

Part B 
1. Starting in March 2016 Allan leases a coffee shop to Wendy in a new shopping centre on the outskirts of Brisbane for $1000 per week. The lease is for five years. The centre’s operations are not very successful and many of the tenant shopkeepers leave. After twelve months Wendy asks Allan if her rent can be reduced to $500 per week. In May 2017 Allan agrees and for the next twenty weeks Wendy pays the reduced rent. Allan hears a rumour that Wendy is about to vacate and give notice terminating the lease. Allan starts legal proceedings against Wendy to recover $10,000 arrears of rent for the twenty week period. Advise Wendy of her legal position and the likelihood that Allan can succeed in the case. Use case references in the analysis.

2. (a) Fred a farmer in South Australia is poorly educated and unable to read and write. He buys a tractor from Trust Tractors Pty Ltd on credit for his own farm and does not realize that the contract finance terms are at a very high interest rate. The interest rate makes it impossible for Fred to keep up the payments. He wishes to get out of the contract on the basis that the salesperson for Trust Tractors took advantage of his inability to read and write and failed to explain clearly the high interest rate. Advise Fred as to whether he can obtain a remedy under the Australian Consumer Law. Do not discuss the common law. 

The Case was heard at the High Court of Australia. The reached the High Court through an appeal from the Federal Court of Australia. It is instructive to note that the High Court of Australia is the final court litigant can appeal to of appeal in Australia. Pursuant to under section 73 of the Constitution is vest with the appellate jurisdiction to hear and determine appeals that from the State Supreme courts and the Federal Court of Australia.

The case is civil case. This stems from the fact that the case entails a private dispute between an individual and a corporate entity.  Ideally, in civil cases an individual or corporate entity organization usually referred to as the plaintiff brings a claim against another party an individual or corporate entity organization referred to as the defendant averring that the defendant has omitted to perform a legal duty that he owes the plaintiff. The Pacioco case can be said to be civil in nature because it involves a private dispute between an individual (Paciocco) and a corporate entity (Australia and New Zealand Banking Group Limited). Suffice to say, in a civil case the plaintiff pray to the court for certain relief such asking the court to compel the defendant to fulfill certain legal obligation owe to him. The fact Paciocco was referred to the plaintiff before the case to appeal and he sought to enforce certain rights that the defendant bank owed him favors the view that the case  is  civil case.

The burden of proof in civil cases rests with the claimant. This position is supported by the widely accepted Latin maxim ‘semper necessitas probandi incumbit ei qui agit’, which implies that ‘He who makes claim must adduce evidence to roof his allegations’. Therefore the appellant in this case, Paciocco bear the onus of proof. However it is of interest to note that the standard of proof is on a balance of probability.

The chief issue before the High Court for determinant was whether the exception fees clause that the respondent, Australia and New Zealand Banking Group Limited, were void and did not have the force of a penalty capable of being imposed on the appellant and; Should the response be positive, whether the applicant/ customers of the bank are entitled to repayment of the penalty that was impose on them.

The appellant’s ground o appeal was premised the fact that the exception fees clause are not a penalty in the strict sense of the law. This contention was triggered by the decision of the Federal Court of Australia where the court took the view that the exception fees are penalties.

Nature of the case

The idea inherent in the doctrine of precedent is that judges of a court are bund by the past decision of other judges. This implies that in making a decision judges ought to apply and follow the reasoning of the decisions in past judgments where fact of the present case are similar to those of the past case. It is imperative to note that, being the highest court of the land and the final court of appeal, the High Court of Australia is not bound by its past decisions. Below the High Court of Australia are the courts of appeal of different states and territories in Australia and then then state supreme court. According to common practice the courts below the high court are bound to by the decisions of the High Court.  This means that where the facts of a case in a lower court are similar to those of a decided case in the high court, the lower court is inclined to apply the reasoning of the decisions in the High Court.

 Ideally, a breach of contract will be deemed to be material if the term the term alleged to have been breach is a fundamental term of the contract. Exemption fee clauses in this case were regarded to be less fundamental terms of the contract. However, the court noted the exemption fee clause will only be fundamental terms of a contract capable of attracting serious consequences if breached, where there is a legitimate commercial interest.

The decision informs business that have standard contract that contain exemption fee clauses that a breach of a penalty clause does not amount to a breach of a term of the contract. This implies that not all exemption fee clauses will regarded to be penalties. 

Q.I

Issue

The issue in this case is determining whether Wendy will be allowed to enforce the promise made by Allan by applying the doctrine of promissory estoppel thereby compelling Allan not to go back on his promise to reduce the rent payable.

According to Tool Metal Manufacturing v Tungsten Promissory estoppel is an equitable legal doctrine that dictates that a promise will be legally enforceable even in the absence of formal consideration. The cardinal rule entrenched in doctrine of promissory estoppel was brought to force by an  obiter dictum of  Denning J pronounced in Central London Property Trust Ltd v High Trees Ltd where he affirmed that under the law of equity there are certain circumstance where an individual can be stopped from reversing a promise he made. According to Lord Denning in Brinkom Investments Ltd V. Carr any party seeking to rely the doctrine promissory estoppel bears the onus of proving that there was exiting contractual or legal relationship with the other party who going back on his promise. Brennan J in Waltons Stores (Interstate) Ltd v Maher cleverly crafted the prerequisite that must be satisfied if a party is to be stopped from deseing a promise made later and going to an earlier agreement. They include;

Burden of proof in civil cases

The party seeking to enforce the later promise must proof that at the time when the promise was made he harbored a reasonable belief that a legal contract will be formed if the promise was made good. Suffice to say terms it must be shown that that there was reliance on the promise.

The promisor should have made the promise in a clear manner without any ambiguity indicating that he will waive a certain legal right According to Woodhouse A.C. Israel Cocoa Ltd. v. Nigerian Product Marketing Co. Ltd the promise may be made and acted upon expressly or impliedly through conduct.

It must be evinced that if the promise is not acted on and the other party stopped from reversing the promise, the party seeking to enforce the promise will suffer a loss or damage. In the case of D & C Builders v Rees it was decided that the party seeking to enforce the promise musts show that it will contrary to equity let the other party reverse his promise.  

It be evinced that the promisor is not willing to fulfill the promise he made indicating that he is waiving his legal rights. In Alan v El Nasr it as held that it must be shown that the promisor has changed his position.

Allan has made a clear and unambiguous promise to Wendy that he will reduce the rent to $500. The promise has been acted on by both parties through conduct since Allan has been accepting the reduced week for twenty weeks.  It can be argued that the conditions for the promisor, Allan to be stopped from going back on his promise have been met because Allan and Wendy had a pre existing contractual relationship following the pervious agreement where Allan paid rent of $1000. In addition, when Allan made the promise Wendy believed that legal relationship was created after Allan fulfilled his end of the bargain for twenty weeks.  Allan also relied on the promise and commenced making the reduced rent payments. It is evident that if Allan is not estopped from going back on the promise he made Wendy will suffer a loss through paying the $10000 areas for the twenty weeks. It is also contrary to the doctrine of equity to let Allan go back on his promise. Culminately, the last prerequisite is also satisfied since Allan has changed hi position and I unwilling to enforce the later promise

Chief issue before High Court

Conclusion

It can be conceded that Wendi is not legally entitled to pay $10000 areas for the twenty weeks and Allan will not succeed in his case.  This all prerequisites of promissory estoppel have been satisfied thereby making Allan unable to go back on hi promise o reduce the rest.

The issue in this case is a determination of whether Fred can bring an action of unconscionable conduct pursuant to the Australia Consumer Law 2010 (ACL)against Trust Tractors Pty Ltd for taking advantage of the fact that he was not be to read and write when entering to agreement with it

The imperial rule according to section 20 of the ACL 2010 is during any trade or commerce all persons are prohibited from perpetrating unconscionable conduct. The test for determining an act that amounts to unconscionable conduct according to section 20 of the ACL includes the following;

There must be difference in the strength and bargaining power of the parties. Ideally, one party must have a better bargaining position, power and strength.

There must be undue influence from the strong party. This entails one party taking advantage of his bargaining position to influence the decision of another. In addition, the clamant in such case must therefore prove that the defendant took advantage of the fact that he was neither unable to exercise his free will nor make an independent judgment.  

The party with a strong bargaining position must use unfair tactics that to convince the party with the weaker bargaining power to enter in the agreement.

The strong party must exude the reluctance to engage the weaker party in negotiating he terms and conditions of the transactions

One of the parties must have failed to act in good faith.  

It is evident that Trust Tractors Pty Ltd has engaged in unconscionable conduct contrary to section 20 of the ACL during its transaction with Fred because the company had a better and strong bargaining position since it had specialized knowledge of the transaction. There was undue influence from Trust Tractors Pty Ltd since it took advantage of the fact hat Fred was not able not to read and write to make him the agreement. Fred was unable to make an independent judgment due to the undue influence. The company was also not willing to negotiate the terms and conditions of the garment with Fred.   In addition, the company did not act in good faith by failing to disclose to Fred the high interest rates.

Doctrine of precedent and High Court of Australia

Conclusion

It can be concluded that Trust Tractors Pty Ltd acted in contravention of section of the ACL prohibiting it from engaging in unconscionable conduct. Fred entitled to payment of damages arising out of the high interest rate or he may opt to avoid the contract.   

The issue in this case is a determination whether Big Z Inc store ill be liable for perpetrating misleading and deceptive conduct through its false advertisements contrary to the Australia Consumer Law 2010 (ACL).

The cardinal rule according to section 18 of the ACL is that during any trade or commerce all persons have been prohibited from perpetrating misleading and deceptive conduct.  In Google Inc v Australian Competition and Consumer Commission while interpreting section 18 of the ACL Hayne J held that conduct refers to any representations including those made in advertisements are relied on by the consumers. To prove breach of section 18 the following conditions musts be met;

The claimant must convince the court that he relied on the representations

The harm that has been suffered by that claimant following the misleading and deceptive conduct must have been resonantly foreseeable.

The claimant must show that he was actually deceived and misled by the defendants conduct.

It bears noting that the court in Australian Securities and Investments Commission v Fortescue Metals Group Ltd held that the intention of the perpetrator of the misleading and deceptive conduct is immaterial in finding liability for contravention of section 18 of the ACL.  

The television advertisement of Big Z Inc store is out rightly misleading and deceiving and is in in contravention to section 20  of the ACL the representations it made ere relied on by Linda. In addition its reasonably foreseeable that if the representation were not accurate Linda s likely to suffer loss.  The representations were actually misleading and deceiving because they did not reflect the true status of the bike. Linda bought the bike by relying on the representation on the advertisement hence she was actually deceive and misled.

Conclusion

It can be concluded that Linda is entitled to the payment of damages that she has suffered as a result of the injuries caused the defective product. She can replace or return the bike to Big Z Inc store. Suffice to say  Big Z Inc store, will be liable for  contravention of Section 20 of the ACL.

References

Brikom Investments Ltd v Carr ([1979] Q.B. 467, CA

Central London Property Trust v High Trees House [1947] KB 130

Waltons Stores (Interstate) Ltd v Maher - [1988] HCA 7

D & C Builders v Rees [1966] 2 WLR 28

Tool Metal Manufacturing v Tungsten [1955] 1 WLR 761

Woodhouse A.C. Israel Cocoa Ltd. v. Nigerian Product Marketing Co. Ltd. [1972] AC 741

Alan v El Nasr [1972] 2 WLR 800

Australia Consumer Law 2010 (cth)

Google Inc v Australian Competition and Consumer Commission [2013] HCA 1

Australian Securities and Investments Commission v Fortescue Metals Group Ltd - [2011] FCAFC 19