Action by the Australian Competition and Consumer Commission has led to five Vietnamese market gardeners winning a dispute with their landlord who had tried to deny their lease and irrigation rights.
The Federal Court of Australia has declared that Avanti Investments Pty Ltd had engaged in unconscionable conduct and made various misrepresentations to the lessees contrary to the Trade Practices Act 1974.
The lessees were Vietnamese farmers with little formal education or knowledge of English.
"The ACCC pursued this case because the farmers appeared to have been exploited by Avanti and Dr Giuseppe Barbaro, a former director of Avanti, because of their lack of education, English language skills and inexperience in commercial dealings", ACCC Chairman, Professor Allan Fels, said today.
"The ACCC's case was that in 1994 Avanti entered into agreements with two farmers to lease the land. The leases had no limitation on the water available to be used from a bore on the land and were to run for eight years. This land was later sub-let to five other farmers, who were the victims. The farmers invested considerable resources into working the land. The leases gave the market gardeners unlimited use of the water available to the landlord (77,730 kL in 1994).
"In 1998 Avanti unlawfully claimed a right to break and vary the leases, and in 1998 and 1999, made the farmers sign new leases which each time reduced the amount of water available. The farmers were also told that the leases were the same as the 1994 lease except for the rent and the terms.
"In 1998 Avanti sold a significant proportion of the water allocated to the bore with the result that the farmers would incur excess water charges. The lease variation also meant that the farmers had to pay increased taxes.
"Avanti demanded payment from the farmers of over $67,000 for excess water for the years 1998/1999 and 1999/2000".
The court declared that Avanti had engaged in unconscionable conduct in breach of section 51AC of the Act, misleading or deceptive conduct in breach of section 52 and made false or misleading representations about the land leased by the farmers, in breach of section 53A.
It also declared that Dr Barbaro was knowingly concerned in, or party to, the conduct of the company.
The court granted injunctions which:
- restrain Avanti from demanding payment from the farmers and require it to indemnify the farmers for excess water charges for the financial years 1998/99 and 1999/2000
- require Avanti and Dr Barbaro to indemnify the farmers in respect of any excess water charges for water usage up to a maximum of 77,730 kilolitres during the terms of their leases which are due to expire on 1 January 2004.
Avanti and Dr Barbaro were also ordered to pay the ACCC's costs.
After the ACCC's case had commenced and a number of its witnesses had been cross-examined, the case was adjourned. On resumption of the trial the respondents consented to the orders sought by the ACCC.
"The unconscionable conduct could have cost the farmers potentially hundreds of thousands of dollars and severe financial hardship", Professor Fels said. "The situation now is that they may continue to work the land until their leases expire in 2004 without that financial burden.
"The ACCC is pleased with the outcome in this case. It shows that the new unconscionable conduct provision of the Act (section 51AC) is working to protect weaker parties in commercial transactions".