The day I was a litigant | Unfair Contract Terms

It was after 18 years of representing others, I ended up a litigant; Plaintiff, thankfully.

I assure you it was for the right reason, not a frivolous one; and, naturally, a legal reason.

You know that common complaint about that term in your contract which says, for example, if you have a 2 year contract but terminate it after 8 months, you still have to pay for the balance 16 months, known as ‘commitment fees’ or whatever jargon, even though you are not using the service? It’s that annoying term often found in mobile service contracts, gym subscriptions, internet subscriptions, and others where you have to sign up for a period of time.

It was that term I decided to take on using the Consumer Protection Act 1999 (“CPA99”) when the opportunity presented itself. But before we get to that, a short consideration of the relevant part of the Act is necessary and instructive.

It is regrettable the CPA99 has been given no prominence whatsoever and few opportunities for judicial consideration in the area up for discussion.

The bit about the Act I want to discuss now is Part IIIA CPA99. This has to do with Unfair Contract Terms (“UCT”), which covers sections 24A to 24J. There have been no reported cases about them. What these provisions do is allow the courts or consumer claims tribunal to declare a consumer contract or a contract term as ‘unenforceable or void‘ if it is found to be unfair. After this, I use the word “court” as a shorthand to include the court and tribunal.

Although this idea is not new, the fact it has arrived on our shores is amazing. England’s Unfair Contract Terms Act was passed in 1977 (and the consumer provisions are now housed in the Consumer Rights Act 2015). That should give you a sense of how long it took to get here.

So what is an unfair term? It is defined as:

“… a term in a consumer contract which, with regard to all the circumstances, causes a significant imbalance in the rights and obligations of the parties arising under the contract to the detriment of the consumer.”

Section 24A(c) CPA99

Under the CPA99, there are only two reasons a contract or a term is unfair:

When it is procedurally unfair or when it is substantially unfair.

A contract or term is procedurally unfair if it results in (i) the company receiving an unjust advantage or (ii) the consumer suffers an unjust disadvantage because of the company’s conduct, or the circumstances the consumer and company enter into the contract between themselves. This is housed under section 24C CPA99.

Section 24C(2) CPA99 sets out 11 matters for the court to take into account in deciding if a contract or a term is procedurally unfair. I won’t go into all of them. Just three to give a sense of what factors go towards procedural unfairness: first, whether the contract was a standard form contract or one that could be negotiated (d); second, whether the contract was difficult to understand or read because of fine print (f); and third, whether the consumer relied on the skill, care or advice of the salesperson (k).

Procedural unfairness is concerned with how you end up signing a contract.

There are 5 grounds why a contract or term is substantially unfair. They are: (i) harshness (ii) oppressiveness (iii) unconscionability (iv) excludes or restricts liability for negligence or (v) excludes or rejects liability for breach of terms without sufficient justification. Each of these reasons are stand alone. Each reason is sufficient to cause a contract or term to be substantially unfair. This is housed under section 24D CPA99.

Section 24D(2) CPA99 sets out 8 matters for the court to take into account in deciding if a contract or a term is substantially unfair. Again, I won’t go into all of them. Just four to give a sense of what factors go towards substantial unfairness: first, whether the contract was a standard form contract (c); second, whether it imposes conditions not reasonably necessary to protect the company’s legitimate interests (a(ii)); thirdly, whether the contract imposes penalties disproportionate to the breach of contract (h(ii)); or fourthly, entitles the company to terminate the contract unilaterally without good reason or without paying reasonable compensation (h(iii)).

Substantive unfairness is concerned with the fairness of the contract you entered.

The occasion arose in 2017 when I was unhappy with the network service of the YES mobile hotspot and terminated the contract with about just under 7 months to go. I was made to pay RM 584.20 in order to terminate the service. That amount being the balance of the unexpired period and other charges.

So given what I understood of section 24C and 24D CPA99, I sued YTL Communications Sdn Bhd and YTL Digital Sdn Bhd for the sum in the Sessions Court on the basis those provisions that enabled them to charge me those sums were unenforceable pursuant to Section 24D(1)(a) and (b) CPA99, amongst other arguments. I lost with costs of RM 3,500 against me. The Sessions Court judgment regrettably did not lend any insight into those provisions as I was hoping for. But at least grounds of judgment were prepared and I was given the courtesy of an explanation.

I appealed to the High Court and lost with cost of RM 5,000 against me. No reasons given; no grounds of judgment. A missed opportunity, again.

Sometimes the sense I get about the courts is that only the decision is important; the reasons are not obligatory. I have researched the issue whether there is a legal obligation on the courts to give reasons and unsurprisingly the answer, as the courts have determined, is, no; there is no obligation in common law for the courts to give reasons for its decisions, although Australia may have moved away from that.

Whatever the case, judges should understand a losing litigant needs to understand why and how of the decision. Winners don’t care; the judgment is simply confirmation of their convictions. The losing party, however, cares deeply because their reality has been show to be wrong in light of the court’s decision. It is they that have to calibrate themselves to now live in a reality that the court has determined – against them. When judges do not explain to the losing party why they lost, the losing party, who is unhappy and perhaps even angry, will speculate on the ‘real’ reasons (they are never legal ones) and settle on the most damning of choices. Where legal or political duties are concerned, silence leads to speculation.

If I had to total up the hours of sitting with disappointed, unhappy and angry clients with unexplained decisions ranting back at me the very submission I made a few hours ago and having to constantly steer them away from contemptuous speculation, I could have a decent career in a completely different profession by now. I sympathise with the present day judge’s workload and schedule but when a decision is made, they move on with life; the losing party has to live with that reality for the rest of their life (well, unless they win on appeal if that is available).

A decision in itself does not bring closure; reasons do.

Humans are meaning seeking creatures. An explanation allows for the possibility of meaning; silence provokes speculation of the lowest order. It is often said justice must not only be done it must be seen to be done. I cannot imagine how the failure to give an explanation is consistent with justice being seen to be done. The decision is justice being done and the reasons given is justice being seen to be done. But then, I have never been a judge and I have only practiced in courts of law.

I then appealed for leave to the Court of Appeal, which was dismissed with costs of RM 1,000 against me. No reasons given. Another one missed. At least, I can proudly say I contributed to YTL Communications Sdn Bhd’s and YTL Digital Sdn Bhd’s bottom line in some small way in 2018 when I settled all their awarded costs.

Now I come to the point of this essay – I want you that is reading this, whether you are a lawyer, law related work or enlightened member of public – to start thinking about using these laws to push back against unfair contracts and unfair terms – especially consumer contracts. The Malaysian way is to “settle” it amicably or politically instead of using the legal process to claim and protect our rights and entitlements. The fact there are no reported cases about the interpretation or application of Part IIIA CPA99, a reasonable inference to draw is its provisions are rarely called into service, and perhaps that is so because many don’t know.

Start thinking about how we are led into signing contracts. Was that salesperson overly aggressive? Did they miss out telling us any important terms? Did they promise us anything besides the service? Bear in mind the considerations the court has to in section 24C(2) CPA99. If we think a term is unfair – in our heart or gut – it most likely is, we should not accept that unfairness. Does it meet the criteria in section 24D(2) CPA99?

Just because you signed a contract does not mean all those terms are necessarily valid. A potentially invalid term will remain ‘valid’ as long as it unchallenged.

For those interested to read the case in its entirety, I have attached enough of the relevant cause papers to provide a complete enough picture of the matter. These documents were referred to during the course of argument and I assume were considered in arriving at the courts’ decision.

For these reasons I consider them public documents and available for public consumption. I am sharing this is the hope that you reading this (or your lawyer) now know about this provision and will not shy away form the challenge of pushing back against unfair terms in consumer contracts insisted upon by companies in Malaysia.

Not often is such a powerful tool handed to consumers; but if it is not used, then it might as well not exist.

I have Mr Aston Paiva to thank for acting as counsel at the High Court and Court of Appeal stages, and Encik Asim Ng and Cik Rafeeza Hamzah for acting as solicitors throughout and co-counsels in the Sessions Court.

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