Famous JJ Richards family in contract test case

ROBERT GOTTLIEBSEN
September 8, 2017
The Australian

What a tragedy for Australian entrepreneurship and our nation that the descendants of one of our greatest entrepreneurs, the legendary “JJ” — Joseph John Richards — have decided to take on the Australian parliament and try to make it tougher for 21st century Australians to be “JJ’s’’.

The empire that Joseph John Richards created in 1932 now collects waste from around 80,000 commercial customers and works for some 42 local authorities around Australia. His descendants still own and run the company and have been a great Australian family.

But according to the Australian Competition and Consumer Commission the company run by descendants of “JJ” issue contracts to their small customers employing less than 20 people that, as defined in the act, are blatantly unfair.

And so the empire that JJ created is to be taken to the courts.

At this point JJ’s descendants are innocent but if they are found guilty and the offending clauses declared void, the JJ Richards empire will never be the same again.

I don’t think local councils and government authorities will suddenly cancel their contracts but dealing with the company managed by the descendants of “JJ” will be something you would prefer not to do. Again I emphasise the ACCC may lose the case and so judgment must be withheld.

Before delving into the details I want to take you back to the depression period around 1932 when JJ won his first refuse and sanitary collection contract in Murwillumbah shire, which is part of the Tweed area of northern NSW. They were tough times. My father was living in a horse-drawn wagon travelling from town to town in NSW and Victoria selling baskets door to door. He made many of them in the wagon. I don’t think he reached Murwillumbah. 

In those days it might have been tough but the affluent lawyers from the big cities did not dictate horrendous contracts to be imposed on fledgling entrepreneurs. But they do it today.

So in 2015 all our major political parties combined to make those unfair contract clauses void.

It’s one if the few measures where we got agreement from all sides of politics, even though eight million contracts had to be changed.

Now to the JJ Richards details. 

If the ACCC is right then if I have under 20 employees and receive a standardised contract from JJ Richards, the Richards family will bind me to another term unless I cancel the contract within 30 days of the contract ending; the Richards family can increase the price and I have no rights; they can charge me for services not rendered for reasons that are beyond my control; and I must grant the family exclusive rights to remove all waste from my premises. 

And it goes on and on. 

The ACCC claims that the Richards company standardised contract has a series of clauses, which the parliament has declared as being void. The act came into operation last November and the ACCC want the courts to declare those clauses void. It doesn’t mean the base contract will be void. 

But if the ACCC is right then JJ Richards will either need to change its culture or have a very messy contractual situation which will affect its insurance and its relations with bankers and other groups. 

If JJ Richards loses the case it will be a reminder to a number of other Australian companies that are doing the same thing.

It is interesting that earlier this year the banks also decided to take on the parliament and issue standardised overdraft contracts, which had multiple clauses that were in breach of the act.

The bank that was publicly caught out was NAB and its CEO Andrew Thorburn responded by making some staff changes and, along with the other major banks, there is now an agreement to issue new overdraft agreements that comply with the act. 

If banks can change their mind so can the descendants of “JJ”.

Richards is a great Australian family company and I am frankly surprised that it wants to risk its relations with government and the community by becoming what many will regard as a rogue company.

It is really important for the nation that large companies like JJ Richards not just deal with smaller enterprises in a way that is fair but have contracts that are fair.

As time goes on employment in Australia is going to be much more orientated towards small enterprises and those enterprises can’t thrive if larger enterprises thrust down on the desk standardised contracts that are full of clauses which give all the power to the large enterprise.

I am not suggesting that this happened in the JJ Richards case, but small enterprises are often scared of bringing unfair contracts to the ACCC for fear of reprisals by larger enterprises.

I urge them strongly to do the right thing by the nation and inform the ACCC so we can improve the entrepreneurial spirit in Australia. 

In decades gone by people were reluctant to report crimes, particularly sex crimes, but now we do report them because we realise the consequences of silence.