Consumer law – unconscionable conduct – whether Kobelt, precedent or statutory interpretation requires…

…that exploitation or taking advantage of some pre-existing vulnerability, disadvantage or disability is a necessary element of statutory unconscionability

In Australian Competition and Consumer Law v Quantum Housing Group Pty Ltd[2021] FCAFC 40 (19 March 2021) the Full Court determined an important issue as to the meaning and application of statutory provisions that call for a standard of business conduct in Australia that is not, in all the circumstances, unconscionable, in this case s21 of the Australian Consumer Law(ACL)being Schedule 2 to the Competition and Consumer Act 2010 (Cth).

The Australian Competition and Consumer Commission (ACCC) brought proceedings against Quantum Housing Group Pty Ltd and its sole director and secretary, alleging conduct that involved misleading representations in contravention of ss18(1), 29(1)(l) and 29(1)(m) of the ACL and that was unconscionable in contravention of s21 of the ACL. The respondents admitted the contraventions, including unconscionable conduct under s21 of the ACL. The primary judge made orders including declarations for the contraventions of ss18(1) and 29(1) of the ACL and ordered penalties. However, the primary judge refused to conclude and to declare that the conduct was unconscionable. The ACCC appealed the failure of the primary judge to make a declaration as to unconscionable conduct.

The key issue in the appeal was whether, for conduct to be unconscionable under s21 of the ACL or cognate provisions such as s12CB of the Australian Securities and Investments Commission Act 2001 (Cth), there is required to be present vulnerability or disadvantage in the person or persons to whom the conduct can be seen as directed and that such was exploited or taken advantage of.

Allsop CJ and Besanko and McKerracher JJ held “[w]hilst some form of exploitation of or predation upon some vulnerability or disadvantage of people will often be a feature of conduct which satisfies the characterisation of unconscionable conduct under s21, such is not a necessary feature of the conception or a necessary essence in the embodied meaning of the statutory phrase” (at [4]; see also [78]-[93]).

The Full Court’s judgment involved a deep analysis of the different reasons for judgment of the members of the High Court in Australian Securities and Investments Commission v Kobelt (2019) 267 CLR 1 (at [37]-[79]). Having done so, the Full Court held that the primary judge erred in his understanding and application of Kobelt.

Allsop CJ and Besanko and McKerracher JJ “rejected[ed] the proposition that ratio or seriously considered obiter dicta of a majority of the High Court, indeed, of any justice of the Court in Kobelt (other than Keane J) requires in any case that for conduct to be unconscionable by reference to ss12CB and 12CC of the ASIC Act (or ss21 and 22 of the ACL) there must be found some form of pre-existing disability, vulnerability or disadvantage of which advantage was taken” (at [79]).

The Full Court allowed the ACCC’s appeal and made a declaration of unconscionable conduct under s21 of the ACL.

Dan Star QC is a Senior Counsel at the Victorian Bar, 03 9225 8757 or email danstar@vicbar.com.au. The full version of these judgments can be found at austlii.edu.au.

Share this article
Share on facebook
Share on twitter
Share on linkedin

Leave a Reply

Your email address will not be published. Required fields are marked *

Search by keyword