1.
Submission and argument that Financial
Services Providers reliance on deeming clauses within their terms and
conditions is mis-founded …
a. “Deemed’
– to adjudge a point of view as fact [my df].
b. “Can
an action or intention to action be deemed as unconscionable if that act or
intention is against good conscience but as yet has no victim”. The corollary is that there is no
unconscionable intent until someone is affected? [Has the tree fallen if no one
sees it fall?].
c. Take
for example a contract and in the fine print there is a clause which stipulates
that one party has the right to terminate the contract if they ‘deem’ any issue
they wish a breach of that contract and the contract becomes null and void
without loss of benefit to the author of the contract.
d. An
obvious nonsense.
e. Now
let’s assume, in the normal run of events, that a company is in a strong
position with services in demand or people needing those services. People sign off the contract including the
‘deeming clause’ because they have little choice. Say a tenancy lease or a credit card
contract.
f. At
what point and under what circumstances does the enforcement of the deeming
clause become unconscionable and do we even need an enforcement to recognise
this term as unconscionable and to be read down?
g. I
believe that it is enough to make such clauses unconscionable even if there is
no victim just because it may confuse, coerce and mislead people and it has the
intent of doing just that and advantaging the author unconscionably at the
expense of others.
h. Take
most credit contracts. They will all
have a similar deeming clause somewhere in their terms and conditions which
allows an FSP to summarily terminate an agreement and demand instant repayment
of a loan. Yet there are provisions
within the Code of Banking Practice, the Australian Consumer Law and the ASIC
act which specifically preclude an FSP from actioning their deeming clause
without due process.
i. So,
on one hand we have the FSP with their deeming clauses and alleged cancellation
rights and we have the law on the other stopping or at least modifying the same
alleged rights.
j. As
the FSP is well aware of the law and well aware of the way their deeming clause
is inappropriate then isn’t the inclusion of such a clause by definition,
unconscionable and unlawful because the intent of the clause is to take
unconscionable advantage - even if it’s never acted on!
k. Therefore
the precursor to any litigation is whether or not the deeming clause is unfair
because the intent of the FSP is unconscionable.
l. I
would say that any clause which purports to allow one party to just deem a
contract null and void to someone’s disadvantage must be read down as it would
be unconscionable to leave it there.
m. Now,
an FSP acts on the deeming clause and we have a victim. Mr Victim had a credit contract and was using
his ‘card’ for everyday things and accumulating frequent flyer points and
paying his monthly commitments. He was
late a couple of times but fixed the arrears and all was well. Then someone from the FSP decided to change
policy and deemed the victim’s card cancelled and the victim had to repay the
entire debit within a few days because that’s what the deeming clause said.
n. This
put the victim instantly in a state of special financial disadvantage for at
least two very important reasons.
Firstly, he had to find the money elsewhere to pay the loan [if he
could] and secondly he had relied on the line of credit and had no other money
to live on or pay bills. In effect he
had relied on the FSP acting conscionably and in compliance with all parts of
the law.
o. Mr
Victim complained but the FSP just pointed to the deeming clause as
justification for the cancellation. The
FSP was well aware of the law but chose to mislead and coerce the victim into
believing they had the right.
p. Now,
not only is the deeming clause unconscionable but the FSP has acted on that
clause in the full knowledge of its effect on the victim. The act is also unconscionable and caused Mr
Victim to lurch into a state of special financial disadvantage.
q. Perhaps
Mr Victim has an actionable case against the FSP on at least two grounds. Firstly, the FSP included such a clause with
obvious unconscionable intent and secondly, it acted on it possibly outside the
provisions of law.
r.
I would say that pecuniary penalties apply
for both inclusion and act and the victim needs to be compensated.
