ACCC v Quantum Housing
Australian Competition and Consumer Commission
v Quantum Housing Group Pty Ltd
[2021] FCAFC 40 (19 March 2021)
Case details
Court
Federal Court of Australia
(Full Court)
Citations
[2021] FCAFC 40
Judges
Allsop CJ
Besanko J
McKerracher J
Appeal from
Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd (No 2) [2020] FCA 802 ➤
Judge
Justice Colvin
Issues
Unconscionable conduct (Statutory)
Overview
The Full Federal Court has upheld the ACCC’s appeal in Quantum Housing, finding that quantum Housing engaged in unconscionable conduct when dealing with investors regarding the National Rental Affordability Scheme.
The Court
The Court, in a joint judgement, opened with the following:
1 This appeal raises 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 s 21 of the Australian Consumer Law being Schedule 2 to the Competition and Consumer Act 2010 (Cth) (the ACL and the CC Act, respectively).
2 The issue is whether, for conduct to be unconscionable, 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. That vulnerability or disadvantage was expressed in argument in two alternative ways, although in both the vulnerability or disadvantage was necessarily something more than an attribute or feature of the relationship, whether contractual or commercial. At its highest, the vulnerability or disadvantage had to be a special disadvantage as would be required in the equitable doctrine of unconscionability in setting aside a transaction: see generally Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; 151 CLR 447; Kakavas v Crown Melbourne Ltd [2013] HCA 25; 250 CLR 392; and Thorne v Kennedy [2017] HCA 49; 263 CLR 85. Alternatively, if the equitable requirement of the taking advantage of a special disadvantage was not required to be shown, at least the taking advantage or exploitation of some vulnerability, disability or disadvantage of the person or persons was a necessary aspect of the character or structure of the conduct apt to attract a conclusion of unconscionability.
3 As is discussed below, contrary to the primary complaint of the appellant, the Australian Competition and Consumer Commission (the ACCC), the primary judge did not approach the matter by reference to a requirement of special disadvantage in the sense of the equitable doctrine. His Honour did, however, approach the matter on the basis of the alternative argument expressed above. This can be seen in how his Honour expressed himself at [35] and [53] of the reasons, to which we will come.
4 For the reasons that follow, we respectfully consider that this approach is erroneous. Whilst 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 s 21, such is not a necessary feature of the conception or a necessary essence in the embodied meaning of the statutory phrase. The circumstances of this case reveal why this must be so. Here the facts that were agreed for the penalty hearing are such as to permit the conclusions (substantially drawn by the primary judge) that the respondents engaged in deliberate systematic conduct of misusing their superior bargaining position by dishonestly misleading commercial counterparties (referred to as the investors of no proven particular vulnerability other than from their place in the relevant commercial circumstances) and pressuring the investors by imposing entirely unjustified and unnecessary requirements upon the investors as their contractual counterparties, thereby clearly exhibiting a dishonest lack of good faith, all in order to extract for at least one of them financial benefits which were surreptitious and undisclosed to the investors.
5 The primary judge considered himself bound to reach the view he did by the reasons for judgment of the members of the High Court in Australian Securities and Investments Commission v Kobelt [2019] HCA 18; 267 CLR 1. With respect, that conclusion was in error. Kobelt does not dictate that conclusion; neither does a consideration of precedent otherwise, principle or statutory interpretation.
Media release
In the media release ACCC Chair, Rod Sims, explained that:
‘The Full Court has made clear that for conduct to be held to be ‘unconscionable’ under the Australian Consumer Law and other similar laws, it is not necessary to establish that the business engaging in the conduct has exploited some disadvantage or vulnerability on the part of the consumers or small businesses affected, although this may often be the case.’
‘The Full Court has confirmed that the correct approach to assessing statutory unconscionability is to focus on the conduct, and assess whether it is a sufficient departure from the norms of acceptable commercial behaviour as to be against conscience or to offend conscience’
ACCC, ‘Quantum Housing decision appealed over unconscionable conduct’ (Media Release, 8 July 2021)
Commentary
Miklos Bolza, ‘In a win for ACCC, Full Court says vulnerability not essential to proving unconscionable conduct’ (Lawyerly, 33 March 2021)