Dispute

The dispute between [The Customer] and [The Scheme Member] relates to the terms of [The Customer’s] plan, and if [The Scheme Member] are legitimately able to unilaterally vary those terms as proposed.

Jurisdiction decision

This is a complaint that TDR can consider as it is within the jurisdiction of the Customer Complaints Code (the Code).

This is about customer service and communication. It is about whether [The Scheme Member] has met its obligations in terms of the principles outlined in the Customer Complaints Code, in particular clause 5 which includes:

  • Scheme Members will treat Customers with respect and in a fair and courteous manner at all times.
  • All information given to the Customer will be accurate, up-to-date and in plain English, acknowledging telecommunications technology is fast moving and complex.
  • Scheme Members will be clear in their communications to Customers; deliver on promises ….
Dispute outcome

[The Customer’s] complaint is partially upheld.

Final determination

In making this determination I have considered the information provided by [The Customer] and [The Scheme Member]. I will also consider the following:

  • Fairness in all the circumstances
  • Any relevant legal requirements
  • The Code and its service standards, including position statements; and
  • Any other relevant telecommunications code.

Having discussed this with [The Customer] and [The Scheme Member] on 13 December 2022, I am satisfied that there is no settlement of the dispute.  Therefore, I make the following determination:

The Dispute

The dispute in this instance arose in relation to [The Scheme Member’s] decision on or around 18 November 2022 to modify the terms and conditions by which [The Scheme Member] provided [The Customer] services, specifically no longer waiving the costs of phone calls made by [The Customer’s] three nominated mobile phone numbers to India, Australia and New Zealand. [The Scheme Member] have reverted [The Customer’s] plan to the default international add-on terms (or similar), which incurs charges for any international calling minutes used over and above an allocated 250 minutes.

I have summarised the key developments below:

4.1         [The Customer] is an existing [The Scheme Member] customer. The services provided by the [The Scheme Member] include unlimited monthly calling to India, Australia and New Zealand, along with unlimited monthly data, for the mobile.

4.2         The [The Scheme Member] account was established on or around 03 August 2020 as a result of [The Customer] phone call and subsequent emails with a direct sales executive from [The Scheme Member]. This email thread forms part of [The Customer’s] formal submission.

4.3         Prior to 18 November 2022, the services per (4.1) above were charged at $160 per month. It has been explained by all parties that additional costs were incurred relating to international calls over and above the default international add-on allocation of 250 minutes, however these were previously manually waived from the invoice by [The Scheme Member] in order to honour [The Customer’s] plan as agreed.

4.4         On or around 18 November 2022, [The Scheme Member] decided not to waive any additional costs associated with international calls from [The Customer’s] nominated mobile numbers. Further, [The Scheme Member] advised that notice was given on 22 November 2022 to vary the terms of [The Customer’s] plan.

4.5         The variations per (4.4) above have been summarised in [The Scheme Member]’s written submission dated 30 November 2022 below:

“Unfortunately, [The Scheme Member] are no longer in a position to provide this service free of charge. If [The Customer] chooses to continue with [The Scheme Member] for his mobile services, he will be charged for any international calls exceeding the 250-minute allocation included in the international add-on to 20 select countries, including India”.

4.6         [The Scheme Member] have advised that they intend to honour the charges per (4.3) above for the period of 22 November 2022 to 22 December 2022 in recognition of the “period of when the override expired”.

Positions of the respective parties

[The Customer] position

[The Customer’s] formal submission contains the following documents:

  • A written submission dated 28 November 2022; and
  • An email exchange between [The Customer] and [The Scheme Member] from 15 July 2020 to 03 August 2020; and
  • A written submission dated 01 December 2022.

I will summarise [The Customer] position regarding the dispute below:

5.1        [The Customer] claims that during the phone call with [The Scheme member] per (4.2) above, [The Scheme Member] made significant representations, including that “the arrangement will be permanent”, in order to acquire [The Customer] acceptance of the proposed plan.

5.2        [The Customer] considers that, as the 30-day notice period was not raised by [The Scheme member] or any other [The Scheme Member]  representative prior to the establishment of the [The Scheme Member]  account, the 30-day notice period should not apply and [The Scheme Member] should not be able to unilaterally vary the terms by which [The Scheme Member]  provides [The Customer] services per (4.1) and (4.3) above.

[The Scheme Member] ’s position

[The Scheme Member’s] formal submission contains the following document:

  • A written submission dated 30 November 2022

I will summarise [The Scheme Member] ’s position regarding the dispute below:

5.3        [The Scheme Member] considers that clause 1.3 of the General Terms and Conditions for Consumer (copied below) apply to [The Customer] plan per (4.1) above and, as a result, [The Scheme Member] are able to unilaterally vary the terms of the plan.

[Redacted]

5.4        [The Scheme Member] rely on clause 1.3 of the General Terms and Conditions for Consumer to no longer waive charges for calls over and above an allocated 250 minutes from [The Customer’s] nominated phone numbers per (4.1) above.

Reasons for the decision

6.1        Prior to issuing this determination, I attempted to assist with the resolution of this matter through a mutually satisfactory, negotiated settlement. Due to the nature of the dispute, attempts to facilitate a mutually satisfactory, negotiated settlement were unsuccessful.

I will now explore the reasons behind my findings for this dispute.

6.2        In order for [The Customer] complaint to be upheld, I must determine the following:

a)    The General Terms and Conditions for Consumer do not apply to [The Customer] plan; and

b)    [The Scheme Member] are unable to terminate [The Customer] plan.

6.3        I will now explore these points in turn.

Do the General Terms and Conditions for Consumer apply?

6.4        Having reviewed the email exchange between [The Customer] and [The Scheme Member] from 15 July 2020 to 03 August 2020, it is clear that no express reference is made regarding whether or not any of [The Scheme Member’s] terms and conditions apply to [The Customer’s] proposed plan.

6.5        There are no submissions in support of [The Scheme Member] expressly stating that the General Terms and Conditions for Consumer apply to [The Customer] proposed plan.

6.6        Therefore, the question that I must determine is whether the General Terms and Conditions for Consumer apply to [The Customer’s] plan given the absence of an express reference by [The Scheme Member] prior to the establishment of the [The Scheme Member] account.

6.7        It is an established common law principle and a fundamental element of contract law that, in order for a particular provision to be relied on, the provision in question must first form part of the contract.

6.8        The question per (6.6) above is discussed in Burrows, Finn and Todd on the Law of Contract in New Zealand, 6th Edition, 2018 at paragraph 2.3.1, copied below:

Contract in New Zealand - paragraph 2.3.1

6.9        It is clear that no reference was made by [The Scheme Member] to the General Terms and Conditions for Consumer during the construction of [The Customer] plan per (4.2) above and therefore it is unable to be determined that the General Terms and Conditions for Consumer form part of [The Customer] plan per (4.1) above. [The Scheme Member] is therefore unable to rely on clause 1.3 of the General Terms and Conditions for Consumer to unilaterally vary the agreement as proposed per (4.4) and (4.5) above.

Are [The Scheme Member] able to terminate [The Customer's] plan?

6.10      It is important to note that [The Scheme Member’s] proposed changes per (4.4) and (4.5) above would amount to a variation of the contract. As determined at (6.9) above, the General Terms and Conditions for Consumer do not apply to [The Customer’s] plan, and as is evident based on the submissions, there are no variation provisions in the contract that the parties have agreed to. Without mutual agreement, I am unable to issue a determination that the contract is able to be varied in accordance with [The Scheme Member]’s proposals per (4.4) and (4.5) above.

6.11      [The Customer], in his written submission dated 01 December 2022, stated the following:

The sales agent of [The Scheme Member] convinced that the arrangement will be permanent and so the notice period [The Scheme Member] is discussing in this dispute was never discussed or agreed in writing by us

6.12      Although it has been determined at (6.9) above that [The Scheme Member’s] terms and conditions which did not form part of the agreement do not apply to [The Customer’s] plan, they are still a relevant consideration so far as they outline [The Scheme Member’s] standard practice.

6.13      Clause 2.1(b) of [The Scheme Member] ’s Terms – Mobile (copied below) provides that unless otherwise stated, a month-by-month plan is [The Scheme Member’s] standard practice.

[Redacted]

6.14      It follows that a permanent, fixed-term arrangement should have been clearly outlined if [The Scheme Member’s] intention was to offer such a term as [The Customer] alleges per (6.11) above.

6.15      Further to (6.14), if [The Scheme Member] intended to offer such a term as [The Customer] alleges per (6.11) above, [The Scheme Member] had multiple opportunities to record their intention as a binding term of [The Customer] plan. Having reviewed the submissions, it is evident that no documentation has been provided in support of [The Customer] claim per (6.11) above.

6.16      It is important to consider the intention and construction of the contract when it was established. [The Scheme Member] have advised that [The Customer’s] plan was an “out-of-toolkit offer and should never been made”. Through what can reasonably be described as an oversight, the General Terms and Conditions for Consumer were not incorporated into the contract. Therefore, per (6.10) above, the General Terms and Conditions for Consumer are unable to be relied on as a mechanism to unilaterally vary the terms of the contract as proposed by [The Scheme Member] at (4.4) and (4.5) above.

6.17      Due to what I have accepted as an oversight at (6.16) above, the express terms of [The Customer’s] plan are not sufficient themselves to constitute a practically functional contract, particularly in light of [The Scheme Member]’s proposals per (4.4) and (4.5) above. Therefore, an additional term is required to be implied into the contract, taking into consideration the parties’ respective intentions, in order to give practical function to the contract for this eventuality.

6.18      Further to (6.17), in order to give efficacy to the contract, it must be implied that either:

a)    the contract is binding on both parties in perpetuity; or

b)    each party has the ability to unilaterally terminate the contract if they so choose, given reasonable and sufficient notice.

 6.19      In light of the above discussion, particularly between (6.13) and (6.15), and when considering fairness in all the circumstances, I determine that the appropriate term to imply into the contract in order to give the contract practical function is that each party has the ability to terminate the contract if they so choose, given reasonable and sufficient notice.

6.20      Further to (6.19), implying a perpetually binding term could not reasonably reflect the parties’ intention as doing so would impose such an onerous obligation on both parties to continue with the contract on an unwavering basis, regardless of any changes to the parties’ respective circumstances, including those outside of their control. Further, there is insufficient contextual information in the contractual documents to imply such a perpetually binding term was intended. Industry customs and standards, such as the example provided at (6.13) above, contradict any suggestion that implying a perpetually binding term to the contract would be the commercially appropriate approach.

6.21      It is hereby determined that [The Scheme Member] are unable to rely on the General Terms and Conditions for Consumer to vary [The Customer] plan as is proposed above at (4.4) and (4.5). It is also hereby determined that [The Scheme Member] are entitled to terminate [The Customer] plan, should they choose to do so, given reasonable and sufficient notice.

Future actions

         7.1        All parties are invited to provide feedback regarding the proposed decision. In addition, I invite the parties to submit what they consider to be "reasonable and sufficient notice" for the termination of the contract. 

         7.2        Until the subsequently issued final determination has been accepted by [The Customer], [The Scheme Member] are to continue to provide [The Customer] services per (4.1) above.

         7.3        A determination regarding which party will bear any costs that have been incurred due to calls to New Zealand, Australia and/or India from [The Customer’s] nominated mobile numbers per (4.1) above will be made in the subsequently issued final determination.

Final Determination

         8.1        Per (7.1) above, [The Customer] and [The Scheme Member] have been provided with an opportunity to respond to the proposed decision. [The Customer] has not provided TDR with a response. [The Scheme Member] have advised that they consider 10 February 2023 to be a reasonable date for the termination of the contract. Given that [The Customer] was first notified that [The Scheme Member] would no longer honour the contract on 18 November 2022, I consider that it is reasonable to consider this as the date that [The Customer] notice period per (6.21) began. [The Scheme Member’s] proposal above therefore constitutes a period of 12 weeks.

         8.2        I note that [The Customer] made a submission to TDR on 18 November 2022, the same day which [The Scheme Member] advised that they would no longer honour the contract. Approximately 7 weeks have passed since that time.

         8.3        The concept of reasonable notice for a change to existing services has been previously considered by the New Zealand Telecommunications Forum (“the TCF”) in the Code for the Marketing of Alternative Services During Copper and PSTN Transition (“Copper and PSTN Transition Code”). Although the provisions in the Copper and PSTN Transition Code relate to changes in technology, they are relevant as they provide an insight into what the TCF considers reasonable notice for a customer when their provider proposes to unilaterally vary a customer’s service. Per clause 8.2 of the Copper and PSTN Transition Code, the purpose of such notice is to ensure that customers “do not have to make decisions under pressure”. The relevant provision is copied below:

Section 12 - Copper and PSTN Transition Code

         8.4        When considering the fact that [The Customer] has likely accustomed himself, and possibly his business, to operating in accordance with (4.1) above, along with the fact that a large portion of [The Scheme Member’s] proposed notice period per (8.1) above has coincided with this TDR process, I hereby determine that “reasonable and sufficient notice” per (6.21) above must be no less than 4 months.

         8.5        Therefore, [The Scheme Member] are unable to terminate the contract prior to 18 March 2023 and must waive all charges incurred as a result of calls to New Zealand, Australia and India from [The Customer’s] nominated phone numbers per (4.1) above before 18 March 2023. For the avoidance of doubt, [The Scheme Member] are required to waive the charges as requested by [The Customer] on 18 November 2022.

         8.6        [The Scheme Member] have requested that that the waiving of any future charges incurred prior to 18 March 2023 be capped to prevent excessive use from [The Customer] nominated phone numbers. Unlike the requirement for an implied term at (6.17) above, incorporating such a term into the contract is not necessary to give practical function to the contract and therefore TDR has not incorporated such a clause into the contract.