The applicant, the ACCC, claimed that Chrisco contravened Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010 (Cth)) (the ACL) in the course of Chrisco’s business which included supplying customers with Christmas hampers. The goods in the hampers were usually priced above retail prices. The customers paid Chrisco for the hampers by instalments over periods of up to a year.
Chrisco’s contracts with its customers contained a term called the ‘HeadStart term’ that required customers to allow Chrisco to continue withdrawing funds from their bank account even after they had made full payment for the goods. The term would apply unless the customer opted out. The money withdrawn from the customer’s bank account would be used for any future order made by the customer but the customer would not obtain any discount on a future order and if the customer did not place an order, but requested a refund of the money paid, the money would be refunded without interest.
The first issue concerned whether HeadStart was an “unfair term” within the meaning of s 24 of the ACL. The essential issue in this case was whether HeadStart caused a significant imbalance in the parties’ rights and obligations arising under the contract. The second issue concerned the meaning and application of the duty in s 97(3) of the ACL upon a supplier who is a party to a lay-by agreement to “ensure” that the amount of a termination charge is not more than the supplier’s reasonable costs in relation to the agreement. Chrisco charged its consumers a “cancellation charge” which, during one period of time, could have been as much as 50% of the cost of the order.
Michael Hodge (led by T Bradley QC) appeared for the Applicant, instructed by Norton Rose Fulbright.
The judgment is published here.