Suppliers beware - ACCC launches first small business unfair contract terms case

The Australian Competition & Consumer Commission (ACCC) has instituted proceedings against Australia's largest privately-owned waste management company, JJ Richards & Sons Pty Ltd (JJ Richards), alleging a number of terms in its standard form small business contracts are "unfair".

The proceeding is the first of its kind since the unfair contract terms regime in the Australian Consumer Law (ACL) was extended to small business standard contracts entered into, renewed or varied from November 2016.

The ACCC provided a 12 month transition phase from November 2015 allowing companies to alter their standard form contracts before the new regime was implemented but squarely put non-compliant businesses on notice that enforcement action would follow. This prosecution highlights the ACCC's heightened focus on enforcement action in recent months. 

On launching the proceedings against JJ Richards, Deputy Chair of the ACCC, Dr Schaper stated: 

"This action should serve as a reminder to large businesses that haven’t already to review their standard form contracts to ensure they aren’t considered to be unfair under the changes to the law".

JJ Richards - a test case

The ACCC alleges that eight clauses in JJ Richards' standard form small business contract are void for unfairness. These include the following terms:

  1. a unilateral variation clause which allows JJ Richards to unilaterally increase prices
  2. an automatic renewal clause which binds customers to subsequent contracts unless they cancel 30 days before the current term expires; and
  3. an unlimited indemnity granted in favour of JJ Richards.

What this means for you

Businesses should be proactively reviewing and assessing whether their standard form contracts with small businesses need to be amended to avoid prosecution by the ACCC.  

HDY's Regulatory Risk + Strategy team has significant expertise in advising clients on compliance with the unfair contract terms regime. The team would be happy to discuss this alert and how we can assist your business.   

Scott Atkins

I'm unapologetically determined and fearless. I pursue excellence. Always.

Scott Atkins Partner

Scott is the Chair of our Board and an internationally renowned insolvency and restructuring lawyer. He is an inaugural Fellow and a member of the Board of INSOL International. Scott is also Vice President of the Australian Restructuring Insolvency and Turnaround Association (ARITA).

Scott is a trusted adviser to Australia's leading banks and insolvency and restructuring practitioners and has acted on some of the industry's most complex and sensitive banking and insolvency advisory and dispute resolution matters.

Prior to joining HDY, Scott practiced for 7 years as in-house counsel with Commonwealth Bank Group. He is now our Client Relationship Partner for the CBA Group. He is also the co-leader of our cross-border insolvency practice and our regulatory enforcement practice. Scott is recognised by his peers for his leading expertise in cross-border insolvency, acting on both inbound engagements in Australia and advising Australian clients on outbound engagements in the USA, UK, Cayman Islands, Hong Kong and The Netherlands, among other jurisdictions.

Scott was the Australian delegate on the Advisory Committee on Comparative Law established by the American Bankruptcy Institute as part of its Commission to Study the Reform of Chapter 11 of the US Bankruptcy Code. This resulted in a landmark report for the reform of Chapter 11.

He is a published author on insolvency and cross-border insolvency. Most recently, Scott was one of the Australian contributors to the 2015 publication 'International Contributions to the reform of Chapter 11 U.S. bankruptcy code' which is volume 2 of the European and International Insolvency Law Studies series. He also authored the Australian chapter of Avoidance of Antecedent Transactions and Cross-Border Insolvency (INSOL International). Among other publications, he is the co-author, together with Professor Rosalind Mason, of the Australian chapter of Look Chan Ho's leading text: Cross-Border Insolvency: Cases and Materials (Kluwer International).

Scott is a visiting lecturer on cross-border insolvency at the University of Sydney in its undergraduate and postgraduate law programs lead by Professor John Stumbles.

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Mark Hilton

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Mark Hilton Partner

Mark specialises in banking recovery, including all forms of consumer and corporate recovery and insolvency. He has acted for banks and other financial institutions, receivers, liquidators and administrators for over 28 years.

Mark is a leading insolvency lawyer who has been involved in some of Australia's largest and most complex insolvency matters over the past decade.

He is known for his solid relationships with Australia's Big 4 Banks, as well as his expertise in recovery and enforcement, and litigation and dispute resolution.

Clients call upon Mark for his industry knowledge, achieved from being exposed to businesses across a spectrum of industries such as aged care, banking and financial services, retail, property development, manufacturing, pharmaceutical and infrastructure.

His background in commercial litigation has provided a basis for a substantial practice involving the recovery of loss associated with negligent valuations in connection with securitised loans.

Mark's willingness to embrace innovation is, among other things, evidenced by his coordination of the establishment of recovery extranets to assist financial institutions to monitor the status of recovery and enforcement action on secured and unsecured lending transactions.

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Claudine Salameh Partner

Claudine has over 15 years' experience dealing with legal issues in the financial services sector.

She is a banking and insolvency litigator and regulatory expert. She acts for the major Australian financial institutions in matters involving customer disputes and litigation, fraud, regulatory and compliance issues, regulatory investigations, inquiries and enforcement matters, security enforcement and insolvency litigation. She also acts for insolvency practitioners in formal receiverships, voluntary administrations and liquidations.

Claudine is well known for her ability to manage risks posed by litigation and regulatory inquiries and investigations. She is particularly attuned to reputational and business risks. She is highly strategic and creative and is recognised by her clients for being able to achieve the perfect balance between legal arguments and commercial and practical outcomes.

Claudine has been instrumental in working with clients to provide insights into the field of behavioural economics, which over the past few years, has been of interest to policy makers and regulators as a tool to engage in 'choice architecture'. On a practical level, Claudine has worked closely with clients to design approaches to customer engagement that make use of behavioural insights.   

Claudine is an expert in the conduct of review and remediation programs and provided assistance to the regulator, by way of submissions and her involvement in an industry working group, on ASIC's regulatory guide on review and remediation programs.

Claudine is very familiar with ASIC's powers to obtain documents and information from financial institutions and is called upon by financial institutions to provide assistance in these matters. She has a style that is conducive to having a fruitful dialogue with both the regulator and the various stakeholders within a financial institution.

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Alex Whiteside

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Alex Whiteside Partner

Alex specialises in providing advice to the construction, infrastructure and mining sector. Alex focusses on providing advice during the delivery, completion and disputes phases of projects.

Alex acts for construction contractors, equipment suppliers and government entities and has extensive experience in drafting and negotiating project documentation, ranging from the Australian Standard suite of contracts through to project specific and PPP documentation.

Alex has a particular focus on disputes, including expert determination, adjudications, arbitration and Court proceedings. Alex has acted for clients in a broad range of construction and mining disputes including scope and variation claims, design, defect and delay/prolongation claims, injunctions and security of payment adjudications and appeals. Alex has significant expertise in Supreme Court actions in the Technology and Construction List.

Alex has completed secondments in the legal teams of Lendlease, Transport Infrastructure & Services and Sydney Trains.

Alex commenced his career advising insurers in relation to professional indemnity insurance policy coverage and claims.

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Rebecca Laban

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Rebecca Laban Senior Associate

Rebecca advises major financial institutions and insolvency practitioners on banking and insolvency litigation, fraud, debt recovery, security enforcement and financial regulation.

Rebecca is a banking and insolvency litigation and regulatory expert.

Rebecca's clients include banks and insolvency practitioners. Acting in both the State and Federal Courts, Rebecca has advised on, and is regularly involved in, security enforcement litigation, matters involving the Financial Ombudsman Service, fraud related matters, valuer’s negligence claims, receiverships, liquidations and general banking and insolvency related litigation. Rebecca is also involved in advising financial institutions in relation to their compliance with regulatory obligations.

Rebecca’s recent experience includes undertaking litigation on behalf of liquidators following the collapse of a well-known listed entity and its subsidiaries in relation to major voidable and uncommercial transaction claims commenced in the Supreme Court. Rebecca has also acted for an Australian bank in relation to a contested and multi-party enforcement proceeding in the Supreme Court traversing issues pertaining to fraud.

Rebecca has completed a 9 month secondment in house at an Australian bank.

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Helen Taylor

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Helen Taylor Special Counsel

Helen has more than 13 years' experience advising clients on a broad range of banking, insolvency and regulatory matters.

She has developed market-leading expertise in regulatory risk and strategy and has extensive experience supporting the financial services sector with the design and implementation of large-scale, complex remediation programs. Most recently, Helen played a pivotal role in the execution and strategic direction of a financial planning remediation program mandated by ASIC, with primary responsibility for overseeing compliance with the regulatory framework.

Helen has acted for financial institutions and government bodies in matters involving customers disputes, regulatory investigations and compliance, inquires and responses to compulsory information requests.

She has also acted on a diverse range of matters in the corporate restructuring, insolvency litigation and security enforcement context. She regularly advises clients on their exposures to distressed companies, debt recovery, workouts, administrations and liquidations and has significant experience acting on cross-border insolvency engagements.

Helen's recent experience includes advising the liquidators of the Octaviar group of companies on all aspects of the liquidation including complex proceedings commenced against a major non-bank lender in Queensland and the USA.

Upon being admitted as an Australian legal practitioner (expected to be in November 2017), Helen Taylor will become a member of the partnership of Henry Davis York.  Helen is currently a Special Counsel admitted to practice in England and Wales.

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