Tutorial 10 - ACL s 237 PDF

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Class discussion from week 10 tutorial on s 237 of the ACL....

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Tutorial 10 Week commencing Monday 12th October 2020 ACL s 237 Conceptual questions What is the role of s 237? How does it differ from s 236? Loss or damage There is some uncertainty about whether loss or damage under s 237 is wider than loss or damage under s 236. This question is yet to be authoritatively resolved. Read the following cases. Note that they applied the Trade Practices Act 1974 (Cth). Section 87 was the equivalent of ACL s 237. Read Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 and answer the following questions: 1. What did each judge say about loss or damage? 2. Had the Ramenskys suffered loss or damage or were they likely to do so? Read Marks v GIO (1998) 196 CLR 494 and answer the following questions: 1. What did the joint judgment say about loss or damage? 2. What did Gummow J (with whom Gaudron J agreed) say about loss or damage? 3. What did Kirby J say about loss or damage? Read Murphy v Overton Investments (2004) 216 CLR 388 [44] – [71] and answer the following questions: 1. What did the Court say about loss or damage? 2. What was the Murphies’ loss or damage? Barbie and Aqua Barbie was interested in joining a gym. A new ‘Aqua’ gym opened near her home so she visited it to see what it offered.

She spoke to Ken who showed Barbie the gym. He said that the membership rate was $50 a month if Barbie committed to a minimum of 24 months and that the rate would be ‘locked in’ for the 24 months. $50 a month was the standard market rate for gyms. It was the same as Aqua’s competitor, ‘Malibu’. Barbie agreed to purchase a 24-month membership at Aqua. Barbie signed a contract. The contract provided that the monthly rate was $50 for 24 months. However, a term in the standard terms and conditions provided that Aqua could increase the monthly rate with 1-month notice. A year passed. Barbie enjoyed using the gym. However, at the beginning of the second year Aqua notified Barbie that it intended to increase the monthly membership to $60 per month. (Malibu had recently increased its rate to $60 per month.) Barbie protested to Ken, reminding him that he said that the monthly rate was ‘locked in’ for 24 months. Ken said that his hands were tied. Assume that Ken’s ‘locked in’ statement was misleading or deceptive conduct under Australian Consumer Law (‘ACL’) s 18. Answer the following questions: 1) Did Barbie suffer loss? When? -

Entered into a contract for 24 months - $50 a month.

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She hasn’t really lost anything because the other gym went up as well → might be that she hasn’t suffered a loss.

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Murphy v Overton → if Barbie signed up at another gym what would she be bound to pay? The same.

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Would she not have joined should the price have increased? If that is the case she has suffered a loss because she is now contractually bound to the contract (Demagogue)

2) Would your answer change if, when Barbie complained to Ken, he apologised and offered to terminate the membership? However, Barbie refuses, remains a member but seeks advice about her remedies? -

She would be entitled to damages because there is no other gym going at $50.

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Did she for go a better deal? no Malibu was the same price.

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Could she say she wouldn’t have joined although? → just being bound to the contract is a form of suffering? Had to quantify but the courts would still give it a go.

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But as she is staying then she caused her own loss… if this was not a market value then this would be a different case.

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Marks v GIO → GIO offered to allow Marks to walk away, he decided to stay so his loss and cannot claim.

3) What remedies are available to Barbie under the ACL? Only consider remedies for misleading or deceptive conduct. Do not consider consumer guarantees, unconscionable conduct or consumer guarantees. -

Marks cases → marks could not prove that he would have joined another facility

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Very similar to GIO

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Marks and GIO offered him to refinance but Marks decided not to so Marks caused his own loss.

Manuel and Basil Basil owned a hotel business called Browken Heights and the building in which the business was run. Basil wished to sell the business but retain the building and lease it to whomever purchased the business. Manuel was interested in buying the business. Basil gave Manuel a short, glossy brochure which set out important information on the business. It noted (accurately) that the hotel’s gross takings were $100,000 a month. It also highlighted that the hotel was lawfully permitted to host events of up to 150 people, which it regularly did. On 1 October 2018, Basil and Manuel signed a contract for the sale of the hotel business for $3 million. The sale agreement required Manuel to lease the hotel premises from Basil for $120,000 a year. While the lease expressly provided that the rent was “$120,000” (subject to rent review clauses, which provided that the rent would never fall below the “commencing rent”), the understanding was that the figure

of $120,000 represented 10% of the annual gross takings of the business (12 months x $100,000 per month). The sale of the hotel settled on 3 January 2019 and the lease commenced the same day. The takings of the hotel for the first two months $100,000 per month just as represented in the brochure. Manuel then introduced some cost cutting measures which were not popular. He also renovated some spaces and changed the ambience of the business to be more ‘family-friendly’. This led to some staff leaving and lost clients. On 1 June 2019, Manuel discovered that Basil had lied about the hotel’s permission to host events of up to 150 people. Basil had also doctored documents to make it look like the hotel had such permission. In fact, the hotel was authorised to host events of up to just 50 people. Manuel applied to the local council to have the maximum attendees increased to 150, but it refused to do so. Manuel complied with the ‘new’ limit and lost some routine clients because it this. From March to the end of 2019, monthly revenue steadily fell from $100,000 to $70,000 per month. At the beginning of 2020, Manuel seeks your advice on what he can do. The evidence shows that the market value of the hotel taking only $70,000 per month is $2.5 million. Assume that Basil has breached s 18 of the Australian Consumer Law. What remedies are available to Manuel? Identify them all and whether they are cumulative or mutually exclusive. -

Difference between $2.5 and $3 → difference between the value of the hotel.

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Court would have to separate the loss between the misleading and deceptive conduct and the changes Manuel made.

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Henjo v Marrickville → VERY SIMILAR → is it possible for restitution?

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If there has been significant changes made you cannot restore the parties to the pre-contractual position, like recission

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Is this a no transaction case? Maybe , the would go for recission…

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If recission possible then great with a monetary adjustment

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But to many changes so not recission go for variation

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even though the rent was set at 120000 we would argue that the intention of the parties was 10% of the takings → how much of this was Basil’s misleading and deceptive

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Once the venue capacity dropped to 50 then the takings also dropped

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REVERSE THE DAMAGE FROM THE M & D CONDUCT

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BASED ON KIZBOUE

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go for damages and rectification (variation)...